Michael Howell – Liquidity Is the Main Driver of Asset Markets

<p><strong>BIO: </strong>Michael Howell is CEO of CrossBorder Capital, a London-based FCA-registered, independent research and investment company he founded in 1996.</p><p><strong>STORY:</strong> Michael was once in a meeting with the governor of the Bank of Thailand, who told him they would cut interest rates the following week. Even though all possible data showed this would be a wrong move, Micahel believed him. The bank didn’t lower the rates; instead, it increased them.</p><p><strong>LEARNING:</strong> Don’t listen to what people say, particularly central bankers; watch what they do. When participating in macro investing, understand where you are on the liquidity cycle and where investors are positioned.</p><p>&nbsp;</p><blockquote class="ql-align-center"><strong>“Don’t buy a market with a low PE because you think it’s cheap. It actually tells you a lot more about the liquidity background or about the investors’ positioning, which may be structural features of the markets.”</strong></blockquote><blockquote class="ql-align-center">Michael Howell</blockquote><p>&nbsp;</p><h2>Guest profile</h2><p><a href="https://www.linkedin.com/in/michael-howell-357b1416/" rel="noopener noreferrer" target="_blank"><strong>Michael Howell</strong></a> is CEO of <a href="http://www.crossbordercapital.com/" rel="noopener noreferrer" target="_blank">CrossBorder Capital</a>, a London-based FCA-registered, independent research and investment company that he founded in 1996. The firm provides asset allocation and capital markets advice to institutional investors and manages US$1 billion of assets.</p><h2>Worst investment ever</h2><p>In the mid-1990s, when Michael was working at ING Barings, there was evidence of some economies beginning to overheat. Michael had a lot of discussions with central bankers, and one of those meetings in early 1995 was with the governor of the Bank of Thailand. Michael remembers the governor saying that the bank would cut interest rates. Michael assumed that the governor wanted to inform people, so it’s no