The financial sector is fighting in different areas right now. A huge wave of new regulations has to be implemented by January 2018. Promoted as protection for investors, it will result in a higher cost structures and in addition it will be a massive challenge for the operations of all financial services companies. At the same time, several of the big banks are still in the course of processing their troubles from the financial crisis. One can read that Deutsche Bank plans to cut down about 50 % of their 97.000 jobs. Only the future can tell, if such a step is what it takes to make the bank fit for the coming challenges. The question remains: What will be the subsequent steps?
In a zero-interest environment with quite high evaluated equity prices the question about the most suitable investments arises. Cryptocurrencies are a trend right now. A well-known example, the Bitcoin currently shows an unbelievable price-move. A view weeks ago Bitcoin was traded at 3.000 USD. The price increased to nearly 8.000 USD before the split-off of Bitcoin Cash brought the price down to 5.512 USD. A rollercoaster ride and nothing for nervous investors. Leading bankers warn about fraud and misuse. Highly complex programs, which need steady increasing computing capacity and which even IT-experts quite often just understand partially, are the fundament of this currency. Do we blow up the next bubble or is this only scepticism against the unknown new product? At the end of a multi-year bull market we see quite often excessive moves. Linda Ferentchak, President of Financial Communications Associates Inc. is warning that a superstorm in the financial markets could happen, which would cause massive damage: “Only time will show us – but early planning is the best protection if a disaster will happen”. For us this is a further confirmation for our investment strategies which we implement with hedging mechanism to protect our investors’ assets.
BY WOLFGANG ZEHENTER*