Grand Union Markets broker reviews | Grand Union...

Zombification of the financial world, Grand union...


2020-03-07 20:57:00

According to Grand union markets broker, United States bond market in its current state is more like a financial bubble ready to explode - in the last few years this point of view has become widespread. Indeed, the US market is now overflowing with a huge volume of junk bonds, and defaults are constantly growing in quantity. This situation applies not only to the United States market. China, for example, in 2019 experienced a four-fold increase in the number of defaults compared to the 2018th. Such processes are taking place all over the planet now, and this is the most obvious signal that a “bubble” is growing in the global bond market.


What could’ve become the main reason for this? Perhaps, the fact we live in an era of cheaper money and low rates. There are a lot of zombie enterprises that can exist solely on borrowed funds, and their number is constantly growing. At the sight of this, investors agree to ever greater risks. In parallel, remember that the stock market looks just the same in this regard - there are a lot of “bubbles” there either, and this tendency begins to look scary. Opinions of experts, such as the Grand Union markets review, on this issue split into opposites - someone says that the markets will collapse soon, someone stick to the thought that the problem really does not exist and you should not expect a crisis.


Money is lighter than air


In 2019, the P/E indicator (capitalization / net profit) for the companies of the S&P 500 index rose to 23.01 with a median of 14.78; this, and research by Grand union markets forex tells us that the US stock market is very “overheated”. In the West, experts are saying more and more frequently that there are already too many companies that are being evaluated not by the usual standards (profit and revenue), but by what investors expect from them.


A good example is the comparison of the value of Tesla Motors ($ 62 billion) and Ford Motor ($ 36 billion). Just think about it — in the minds of investors a start-up that showed some decent profit only last year, stands higher than a car manufacturer, which ranks third in the market share in the States and has a long history. Some experts, including Grand union markets scam analysts, believe that many assets , should not exist at all according to the economy rules - for example, Uber. If you compare it with Lyft (Internet taxi service), Lyft has $ 3.76 billion of assets, and Uber has $ 23.98 billion. At the same time, both companies have negative P/E, and are still valued by the market at $ 46.07 billion (Uber) and $ 12.87 billion (Lyft).


The situation is similar on the bond market. The report of Grand union markets broker review for the first half of 2019 looks rather creepy. The increasing debt burden of corporations, the growing volumes of high-risk and low-liquid securities in the portfolio of institutional investors and the increased dependence on loans in countries with developing economies are indicated in it as the main weaknesses.


UST10 and UST30 have reached historic lows in terms of their profitability - 1.8 and 2.3%, respectively. As of August 2019, these figures were even lower, about one and a half and two percent. Some government securities in Europe are generally traded at negative returns, that is, the investor must pay extra for the ownership of such securities. Not so long ago, a record was set for the number of securities with negative yield - they were issued for $ 17 trillion, and this is the best indicator that the debt market, to put it mildly, has seen some better days.


Financial Zombie Apocalypse


According to a study of reviews, in 2018 there were 12 issues in the AAA rating, while in 2007 (the year before the crisis) there were nine, and the BBB rating shows 522 issues versus 311. Extremely cheap bonds are issued not only by small companies - such giants as Fox, Verizon, McDonald's and United Technologies were issuing them too. When Netflix streaming service issued junk bonds worth more than two billion dollars, investors also instantly bought them, despite the fact that Netflix is actively preparing for war with Disney and Apple. The number of zombie enterprises, according to Grand union markets broker, is estimated at 12 percent in Europe and about sixteen in the United States. This amount is steadily increasing.


Among the companies that recently went bankrupt, Grand union markets review notes the famous Barneys New York clothing store chain, which went bankrupt in March 2019. The same kind of "zombie", albeit acting and not planning to declare bankruptcy, is currently General Electric.


In the European arena, Deutche Bank is the leader in this regard, it wasn’t in the green since 2012 in terms of net profit. Chesapeake Energy Corporation, one of the leaders in the US oil shale industry, also seems to have “zombified” with eleven billion dollars in debt and negative net cash flow with tons of debt. Precedents also regularly appear with “zombie” startups, who planned to develop rapidly, but rolled into stagnation for various reasons. Some argue that such startups can include the WeWork coworking network.


Grand union markets forex also indicates that there are quite a few companies that formally do not fall within the definition of “zombies,” but at the same time they are overflooded with debts and survive solely due to the constant issue of new bonds. One such company is the mail giant UPS, whose debts are growing faster than revenue and profits.


All this provides a rather sad picture: bonds usually play the role of a balance for the stocks held by investors, since the local market has high volatility and, accordingly, is more prone to the appearance of “bubbles”, but they are clearly not able to perform this function anymore, as Grand union markets scam analysts believe.


The best attempt to fix the system


The mathematician Harry Markowitz is the creator of the so-called classical portfolio theory (also referred to in the Grand Union markets broker review as the Markowitz portfolio theory). Its main provisions were formulated in 1951 in the process of study for a doctoral degree. It finally took shape by 1952, when Markowitz's article “Portfolio Choice” was published in the Journal of Finance.


It stated that investors should take into account not only the expected return, but also the possible risks, and that there is a direct link between them. Risk, as Markowitz wrote, should be observed and measured, a mathematical formula was created specifically for this, and securities should be evaluated not only by individual characteristics, but also by what impact they will have on the portfolio.


The main point of portfolio theory is the idea that a portfolio should have the lowest possible risk with the highest acceptable profit at such risk. Despite all its advantages, the theory did not bring Markowitz any immediate fame, since in the fifties the development of the stock market was, to put it mildly, not active enough. The big players in the financial market began to show much more interest in it after the crisis of 1987, as suggested in reviews, when risk suddenly became an important concept for investors. After this, portfolio theory began to rise, and its creator deservedly received the Nobel Prize. 

In short, the main feature of a portfolio compiled by this theory is diversification by asset classes, in the sense that a portfolio should not consist solely of stocks or solely of bonds, or stocks strongly correlated with each other. For example, if an investor purchases shares exclusively in the metal market, then any crisis in the industry will immediately affect the share price. Grand union markets broker also argue that the portfolio requires periodic rebalancing in accordance with what the market shows.


The “sixty to forty” rule (portfolio composition, 60% of shares and 40% of securities) is still the most popular among investors. It has almost become synonymous with the correct balancing of the portfolio, having strengthened the opinion of investors as the most effective over several decades. Grand union markets review suggests that this is quite logical - if the price of stocks falls, bonds soften the blow, because they do not suffer so much from these jumps in a bear market, negative portfolio returns can be leveled by bonds.


But it seems that in our time such a traditional approach to the distribution between classes of assets is losing efficiency due to bubbles. This point of view, as Grand Union markets forex experts found out, is supported by companies like Morgan Stanley (which believes that the portfolio compiled by Markowitz principles in the following ten years will show a return of about 3 percent, despite the fact that over the past two decades it averaged to 6%) and Bank of America Securities, which claims that there is no longer any inverse correlation between stock and bond returns.


Some analysts believe that the quantitative easing approach and the systematic reduction of rates have become the reason that the traditional portfolio building system has ceased to be effective.


At the same time, they argue that stocks are still overestimated. Grand union markets  It all looks like now is the moment when you need to get the money, but it is extremely difficult to predict how much this can drag on and how much revenue will be lost. The solution, according to Grand union markets broker review, may toile in search for promising securities whose value is not inflated by market hype, assets that the market underestimates. The reference point in this case may be the average P/E of the S&P 500 index (23), and on this basis you can search for enterprises with a lower cost, and preferably with higher dividends.


At the moment the United States stock market is full of industries that investors do not really like, for example, the traditional communications industry, or the oil industry. Experts also believe that if we take a more global look at the problem, then some states (even if you take their additional risks into account), look very underestimated. First of all, of course, they talk about China, where the average company has a cost of about three times lower than the cost of a similar American company.


Of course, there are quite the opposite points of view. Some analysts (including reviews) say that the two types of bonds that existed on the market before still remain there. There are still junk bonds and investment bonds. It can be derived from this fact, that the garbage bubble that has formed does not have any effect on portfolio balancing if bonds with high reliability are present in it. Moreover, even the principle of building a sixty-to-forty portfolio is criticized, and it is noted that it would be better to tie the portfolio structure to the investor’s risk profile.


All the experts, at the same time, agree with the importance of instruments diversification. This rule remains effective and is unlikely to lose its importance in the nearest future.


Views: 112


Damian Author

I have been trading Forex for more than 5 years, mostly with manual and automatic trading. I set up advisors for round-the-clock automated trading. I'm sure I can help to establish your trading skills....


Comments ()

  1. Fletcher McClure 03.04.2020
    You shouldn't think about Grand Union Markets difficulties unless you have harmonized your own finances tbh. Let brokers take care of that for you, they exist for a reason.
    1. Oliwier Dean 14.04.2020
      I imagine a lot of brokers getting out of business this year due to the market hardships. Don't think that Grand Union Markets will be among them though, they hold their positions pretty tight.
      1. Vinay Curti 19.04.2020
        I'm still in doubts about joining the trading business, gotta check the brokers list and choose some to work with. Grand Union Markets maybe? Would appreciate any info on them. Only guys who actually worked with them pls.
        1. Simon Lancaster 25.04.2020
          Working with Grand Union Markets might be a good idea in the beginning, but you really have to expand your knowledge, to make a concious selection.
          1. Jack 04.05.2020
            It would be better if they have webinars, articles and something useful for newbies. But looks like they still have good points
            1. Michael 13.05.2020
              Could be interesting. Me and two my friends using for six months, seems legit.
              1. Owen 20.05.2020
                I am interested in the product, of somebody can help me to start please PM me
                1. Jared Corrigan 21.05.2020
                  Got myself some initial amount and thinking about getting into trading; need a nice broker. Does anyone knows anything about guys from Grand Union Markets? My friend did recommend them but I'm afraid I'll be a poor judge in this matter.
                  1. Bradlee Peterson 23.05.2020
                    Grand Union Markets falls somewhere in the middle of a broker's chart. They are fine, but you'd need to work really hard to find anything distinctive about them. Still I see a lot of people trading with them and that's a plus
                    1. Jevan Begum 25.05.2020
                      Yeah, if you're thinking about choosing a broker, you might consider Grand Union Markets. I've never worked with them, but at least they've been on the market for some time and it means that they're at least decent.
                      1. Montana Clark 26.05.2020
                        Grand Union Markets experience can vary a lot from one trader to another, but I dont think a lot of people would put them ahead of the class. They're okay, that's it.