«Real value», new «buzzword» in white paper from Credit Suisse

London Gold Exchange closes permanently and Credit Suisse’s Asset Management Division releases new white paper and video «How to Invest in Real Assets in a «New Normal» Environment». A very fundamental real value change seems to happen as we speak in the world of finance. Where are the medias? Den sveitsiske storbanken Credt Suisse har utgitt ett såkalt «white paper», der de nå vil gi råd om investeringer i reelle verdier, som om reelle verdier er noe nytt? Hva drev de med før?

Håper om ikke lenge å få laget en norsk versjon av den engelske artikkelen du vil se her.

I have decided to publish the pressrelease from Credit Suisse as it is. Real value is a «rare commodity» in the banking vocabulary, but that can not last long now. Are we looking at more than than days, or a few weeks at most before the 1,6 quad (the last number I saw) of derivatives come tumbling down. I know the real debt is much lower. But no matter how much lower it is , we all know it will be totally unpayable. The only option to solve this is to put the debt where it belong, in the hands of the ones who made it, and get a new real value/goldbacked system.

I believe London Gold (derivatives) Exchange must have the first victim of a new real value system. Probably not implemented for real yet. But the big banks of course knows what is coming, and I read this pressrelease from Credit Suisse as the bank preparing for a new real value world of finance to surface, in a quite foreseeable future.

The Release      
NEW YORK, Sept. 28, 2011 /PRNewswire/ — Credit Suisse’s Asset Management division today released a new white paper and brief video entitled, «Realflation Hedge Solutions Under a Modified Framework.» Authored by Yogi Thambiah and Nicolo’ Foscari from the Investment Strategies and Solutions (ISS) team, the paper tackles a key issue challenging institutional investors today: How to build an optimized real assets portfolio under a «new normal» environment of heightened volatility?

The «new normal» investing environment–characterized by sustained growth in emerging markets and continued sluggishness in developed economies–has created a «risk-on/risk-off» pattern defined by heightened levels of volatility. This environment has fostered many challenges for institutional investors, particularly how to quantify the impact of today’s loose monetary
policies and fiscal incentives in the developed world on tomorrow’s inflation and interest rates.

In the white paper, the team makes the case that an optimized portfolio of real assets may be an effective way for institutional investors to address many of the challenges associated with this «new normal,» while potentially providing protection across various inflation scenarios.

In the team’s view, investors can build an optimal real assets portfolio by following a modified risk framework that involves the following steps:

—  Assessing the intrinsic characteristics of the asset class, including its true drivers of return and degrees of inflation sensitivity;

—  Analyzing the asset class’ performance during different inflation scenarios, including phases of «unexpected» inflation;

—  Addressing the challenges associated with illiquid strategies through a risk framework centered on «non-normal» distributions; and

—  Tailoring the composition of the real assets portfolio to fit the liquidity needs of individual investors or plan sponsors.

The white paper also includes a case study that demonstrates how an optimized real assets allocation can help institutional investors’ portfolios weather a potentially long period of high volatility, and
enhance the portfolios’ defenses against the duration risks embedded in their long-term liabilities. The paper is accompanied by a video featuring Yogi Thambiah presenting the paper’s highlights.

For a copy of «Real Assets: Inflation Hedge Solutions Under a Modified Framework,» or to view the video, please contact Katherine Herring at katherine.herring@credit-suisse.comor visit the Asset Management site at www.credit-suisse.com.

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