GOING THE WAY OF THE DODO?
October 21st 2008 07:30
I can't help but wonder about one thing: Are humans going the way of the Dodo bird?
I just bought a copy of the book of Billionaire Investor George Soros “The New Paradigm for Financial markets,” published in the U.S. by PublicAffairs, 2008.
The way the author presented it in his introduction, it seems that the woes consuming the world economy these days could have been prevented were it not for too much greed. I've seen a story about “ninja” loans somewhere else before (those loans that were given to people with no job, no income, no assets), but Soros immortalized it in his book.
Can you imagine that? Loans that were given to people with no job, no income, no assets!
Of course, there would be all sorts of reasons why it was the right thing to do at the time, etc, etc, etc., but none of those reasons would admit to the real reason behind such grants.
And so, the subprime mess has unraveled and the rest is, well, unfolding history...
The whole thing did not happen without precedents according to stories. There was the experience on Collateralized Mortgage Obligations (CMOs) to name one. But greed, it seems, is like love. It blunts all reasons.
Let's go to oil again. Back in the early parts of 2007 the price of oil was rising but not as much as it did after the world economy began to collapse.
In those early parts of 2007, oil producing countries were doing just fine. They were among the richest and reasonably so. One cannot blame them for having so much oil deposits beneath their lands (or oceans). The world needs oil and, naturally, the world has to pay for it.
But when the price of oil jumped to $147/barrel and started to go down again, defenders of the high price of oil suddenly started to say that the price of oil has to be protected (initially at $100) because... (?)
What, we would like to seal the lid of the world economic coffin?
Those oil producing countries were doing okay before the oil price leaped exponentially high, right? How can their economies be in trouble if the oil prices go down simply because they just had a windfall of profits?
Oil does not only run cars and factories and power plants. It also fuels inflation. Inflation stunt economic growth, etc., etc., and with the kind of economic condition that the world is in...
Well, maybe the geniuses in the world of finance are not bringing us into a global economic suicide...
Maybe there are just too many people whose reasoning are blunted by too much greed.
Let's keep those green cars coming!
Extinct Dodo Bird. Pic source: Wikipedia
I just bought a copy of the book of Billionaire Investor George Soros “The New Paradigm for Financial markets,” published in the U.S. by PublicAffairs, 2008.
The way the author presented it in his introduction, it seems that the woes consuming the world economy these days could have been prevented were it not for too much greed. I've seen a story about “ninja” loans somewhere else before (those loans that were given to people with no job, no income, no assets), but Soros immortalized it in his book.
Can you imagine that? Loans that were given to people with no job, no income, no assets!
Of course, there would be all sorts of reasons why it was the right thing to do at the time, etc, etc, etc., but none of those reasons would admit to the real reason behind such grants.
And so, the subprime mess has unraveled and the rest is, well, unfolding history...
The whole thing did not happen without precedents according to stories. There was the experience on Collateralized Mortgage Obligations (CMOs) to name one. But greed, it seems, is like love. It blunts all reasons.
Let's go to oil again. Back in the early parts of 2007 the price of oil was rising but not as much as it did after the world economy began to collapse.
In those early parts of 2007, oil producing countries were doing just fine. They were among the richest and reasonably so. One cannot blame them for having so much oil deposits beneath their lands (or oceans). The world needs oil and, naturally, the world has to pay for it.
But when the price of oil jumped to $147/barrel and started to go down again, defenders of the high price of oil suddenly started to say that the price of oil has to be protected (initially at $100) because... (?)
What, we would like to seal the lid of the world economic coffin?
Those oil producing countries were doing okay before the oil price leaped exponentially high, right? How can their economies be in trouble if the oil prices go down simply because they just had a windfall of profits?
Oil does not only run cars and factories and power plants. It also fuels inflation. Inflation stunt economic growth, etc., etc., and with the kind of economic condition that the world is in...
Well, maybe the geniuses in the world of finance are not bringing us into a global economic suicide...
Maybe there are just too many people whose reasoning are blunted by too much greed.
Let's keep those green cars coming!
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Comment by Fobzy
Fobz
How about some great tips to make a fast buck, ah...I feel it in my blood, but musn't tell mother.
That bird is dead set ugly, it would need one hell of a good personality, or even a very large bank account, don't you think?
Comment by British Bulldog
Well I guess now that today the PSE fell 12%, the chickens have finally come home to roost''! Yes the world is falling in around us with every day another country running to the IMF for money, whereas a month ago it was just banks that needed rescuing.
I've read one of George Soros's books and he was right on the money'' in his repeated attacks on market fundamentalists'' who do not see the wild gyrations that come with unregulated markets and even those that are ( credit rating agencies in the pockets of their customers) are a failed loosely regulated model.
So what are we in for when the IMF money runs out and the answer is starving millions around the emerging world! It's no joke.
In the 1930,s stocks fell 90% and don't rule that out! ( though I favour 80% today) Many are 60% down already with a whole lot of bad news ahead. This week in the US we've got a rate cut coming which might lift the markets for one day if deep enough ( like korea today) but alongside it we've got 3rd quarter GDP and Consumer Confidence this week and next week Industrial production and monthly unemployment. Make sure you hear the US economic news in these monthly reports on Bloomberg, CNN, CNBC or BBC World for a feel for how things are going down and deeper down for the next 6 months or so and keep your money in your pocket, for in a few months you're going to be able to buy some incredibly cheap stocks, when looked at backwards from the year 2013.
Regards to all!
Comment by Market Newbie
Gizmo Peek
Stock Market Punk
You were right on the money yourself when you predicted the PSE to go down to 1700 level or lower. But I supposed I am hard headed (or a fool) eh? I am still picking up stocks that have fallen on the wayside.
Comment by British Bulldog
US down again 3% last night on no particular bad news, just general negative sentiment, so no let up for the declines in Asia!
Don't be in a rush to pick up stocks yet! I know they look cheap to the inexperienced, but the key to a situation like this is to think through all the bad news that will come through in the first quarter of 09. It's only after then that the market will bottom and that could quite easily be nearer PSEI 1,000 or even 750, so my advice now would be to wait for PSEI 1,500 and buy at that and all points below in 10% portions of your avaialble money during the early months of 09.
By the way, I may be peso millionaire but that doesn't count, for me being British and I'm not even close to being a pound millionaire, but I know how I can become one and this is the strategy you must have too.
I*'ve been fuly leveraged short the month of October and made 60% profit so far, but I've still had to trade to avoid bouncebacks like the US fed will try to create Wednesday night or with the TARP bailout which produced the one day 10% 938 gain you've referred to in your blogs which wiped out a lot of short profit, so it is not easy. This week and next there's so much going on, you need a degree to work out when you should be short and not as well as what time of the trading session ( as the fed give their rate cut when we should all be asleep).The current volatilty is terrible for all but the most committed of investors
Below is the method to become a millionaire over 2 economic cycles. Going backwards, if you'd invested in 1984 you'd have certainly got here by 2006-7!
Buy stocks very low with say 50,000 pesos in 09, sell for 200,000 in 2014, (go short if you can, here or anywhere else) and turn that into 300,000 in the next 1 year recession, then buy low again and turn the 300,000 into 1 million by 2020. It's a long game, but so is life and you'll notice that the Warren buffet's of this world are never young men in fact are nearly always very old men!.
What doing this did for me was made me able to retire at age 46, but not in the UK, but a cheaper place to live like here. I'll return to 1st world Europe if and when I get my million pounds, but as I spend a lot of my time judging the markets I consider myself only semi retired.
Once you have a million you can then really take advantage of both bull and bear markets by committing big resources to them, but it still demands difficult work judging the duration and intensity of economic peaks and troughs that produce cyclical market moving events, but on the other hand it'a ''no brainer'' that it will be good to be short in the first week of the next 6 to 9 months as that's when the US industrial production and unemployment numbers come out, but not to be short immediately before a Bernanke rate cut.
Your first profit from 50,000 to 200,000 will be 5 years of hard work for a gain of 150,000. Twenty years later, you'll be able to make that in 6 months as you'll have both the money and the experience.
I don''t generally give market tips, but here's one. China Life insurance is one of only two big Chinese insurance companies and even now the Chinese consumer market is growing at 20% per year. The Chinese know that now global demand has slowed they have to do even more to build up domestic consumption to replace lost exports and this company will benefit.
China Life were priced at 49HK $ last October, today they're at 16.and I believe that the stock will touch 10 soon. I expect this stock to be worth 500 HK$ some time in the next ten years and will be investing in it myself on that expectation early next year. You my have to travel to Hong Kong to invest in it as this is where the internationally traded China H shares are to be bought, though as I buy it in the US you may be able to buy it at JP Morgan in Ayala.
Good luck,
British Bulldog.
Comment by Market Newbie
Gizmo Peek
Stock Market Punk
Rest assured that I take all the pointers I can get specially from seasoned investors as yourself (and I hope, so are all the other newbies out there) but naturally, rightly or wrongly, I make my own judgments. My next post is coming out in less than 30 mins. from now and you'll find it different from what one would expect considering your generous tips this morning.
Anyway, that post was written earlier than this exchange.
I wondered about that IMF thing and the World Bank as well. With their contributors suffering from the same economic down turn, where are they going to get their money to save everyone?
I have my eyes on China too, (which may turn out to be the world's saviuor) though I am not sure how writing about it would affect anything (if one takes seriously Soro's theory on "Reflexibity").
There's another book I am reading about China that recounts that country's political and economic history (these books are eating all my stock market profits, at the moment, believe me) and China is beginning to look to me as both the past (to learn from) and the future (to earn from).
That is, if I can get through their alphabet soup of stock market shares. But I guess, "H" is the only letter I have to remember, so far.