YieldReport appreciates analysts who go out on a limb to make bold calls about markets. This is not always easy to do within the confines of a large bank or brokerage firm but nonetheless when it does occur we tip our collective lids to them. If nothing else it makes for a good headline. There have been some great calls in recent times including from people like Vimal Gor from BT Investment Management and Warren Hogan when he was chief economist at ANZ who both called for multiple cash rate cuts below 2.25% in Australia.
Big calls doesn’t always go to plan though and YieldReport readers may recall back in early February 2016 when commodity markets were been savagely sold off and market volatility was tremendously high. The team at Royal Bank of Scotland in the UK made a bold call to sell everything because the risk in owning non-cash assets was too high. Cash was the only safe option, although we note that the team didn’t mention which currency to hold.
The chart below shows how markets have performed since that infamous call. And sadly for RBS the news isn’t good. In fact most of the asset classes in the chart below are higher. The same can’t be said for the RBS share price which has slumped over 40%.
