The Future Fund has sold more than a quarter of its Telstra shares, according to today’s Age. That’s interesting. The most underused word in investing is “sell.” If you don’t sell, you can’t make a profit. We’ve been working with Swarm Trader Gabriel Andre to see if buying and selling the blue chips is more profitable than buying and holding.
Of course it’s impossible to tell based on the results of a couple of months of testing if trading the big stocks is a better retirement strategy than simply buying them and forgetting them. We’ll keep you posted on the results. In the meantime, the Fund is counting on it 1.3 billion remaining shares in Telstra to help fund the pensions of Australia’s public sector. Good luck with that.
Not much happened overnight on the markets. We read in this morning’s Australian Financial Review that the Swiss government has sold its stake in UBS. UBS, meanwhile, has begun cooperating with US authorities who are cracking down on what they call tax evasion. UBS will turn the accounts in question over to the Internal Revenue Service.
And so we begin the inevitable path toward capital controls in America. This first step is to crack down on tax evaders. The next is to prevent capital and currency from leaving the country. When the government is starved for revenue and refuses to cut spending, they have to prevent people from switching out of dollars and into other currencies or assets.
This highlights what many people are now saying openly: the end is near for the U.S. dollar as the world’s preferred reserve currency. The dollar isn’t going away, of course. But already the Chinese have set up currency swaps to conduct bi-lateral trade with larger trading partners. These transactions are outside the dollar.
There is more to say about this. But your editor is hard at work on the weekly update for Diggers and Drillers and will have to leave this week’s notes here. Until next week.
for The Daily Reckoning Australia