On this raining wet day when we a marooned indoors, it is
time to reflect.
I am able to feed myself by watching my investments. But I don’t
read financial statements or pay attention to financial experts. Financial statements
and expert advises are fast becoming more fictional by the day. I do pay
careful attention to political developments in the world. All investment
markets are influenced by world events. If you can read it right, you can make profits.
This post is to tap on the brains and experiences of members
on your reading of current political events. It is not about politics as in
which government is better. It is about political and social events affecting
our investments.
To start of, there is now an important change in the Middle
East. The ripple of toppling dominant
governments have started in Tunisia and now in Egypt and a smaller extend in
Yemen. Saudi stock market is shaking.
There are still many dominant
governments in the Middle East. This revolutionary
change of government if continued. will eventually affect the world supply of
fossil fuel, world economy and your investments. This
may be the biggest political upheaval this century but I may be wrong..
Let me have your views on the world today.
You have nowhere to go in this rain anyway.
If we always have the benefit of hindsight,well, Terence Seah could be the Prime Minister….for me well, I might stick to being FUN Minister…..hahaha
Mine is just a statement of fact. nothing more & nothing less. If the west think they can export ‘opium’ to china 21st century style…they can dream on. This’s just my humble contention. hehe
Hi Henry,
I agree with your sentiments but have you wondered why the same Communist govt didn’t do this 30 years earlier?
Wouldn’t it have been better, earlier and benefited more?
They are still guilty of all those ludicrous programs initiated during the Cultural Revolution.
They should give more credit to Deng Siao Peng than the ‘Great Helmsman’.
“Beijing not taking any chances” “Toying with the Chinese Dragon” ST today. This morning, I wish to express heart felt thanks to the Chinese Government for having uplifted more than 500 mio chinese citizens from poverty in the last 30 years. ( equivalent to the entire population of the european union). Continue your Great work, as the entire world is cheering you on. THANK YOU!!!!
Hi All,
An inspiring story of someone, now aged 62, who has achieved success through his investments portfolio. Read about him here…
http://www.nextinsight.com.sg/index.php/story-archive-mainmenu-60/912-2011/index.php?option=com_content&view=article&id=3451&Itemid=1
Points I gathered from the interview was as follows…
1. Be daring – he dared to buy when the mkt was in crisis on 2009.
2. Be conservative – he bought ‘safe’ stocks that give high dividends so that he could sleep well at night.
3. Employ positive gearing – His assets always gave him nett positive cashflow, after deducting bank finance costs.
4. Develop a balanced personality – maintain a healthy lifestyle, having positive attitudes, a proper mindset and correct relationship with family and friends.
Maybe Terence can invite him to become an SHC member to share his experiences with us…
Hi guys!
Maybe flogginh a dead horse… but investment and retirement topics have always been a top subject in SHC forums (other than dancing and eating, haha!)
I’ve read thru a lot of posts with a lot of ideas and opinions on investing. Can anyone give a total account of his/her investment record?
The older I get, the more careless and less thinking I may put into my investment decisions. I just read an article about the “Silver Effect” which is basically about older investors (50 and above) making poorer decisions and being less effective compared to those younger.
It seems that the older ones are more prone to make investment mistakes and are susceptible to financial scams. We try to compensate for our reduced skills by relying heavily on our experience, wisdom (of age) and knowledge.
We are also liable to the “Positivity Effect” which means that as we age we become more positive and optimistic. This may lead us to ignore the bad news or risks in investment ideas e.g. we may trust a financial advisor and make a wrong choice in a product like MiniBonds.
On a more optimistic note: Last year August I proposed investing in some 10 China US-listed shares. Well, to date the portfolio has a return of 31% with half the investment in cash and the other half in the original shares. If only I had the guts to put my money where my mouth was!
Hi Jeremy
The monetary policy adopted by US seems to trigger a inflated reaction from many quarters. One must try to understand the reasons for such a implementation.It has suffered deficits in balance of trade payments and the enomous spendings by the military mainly on fightng wars in Irag and Afghanistan. The printing more of its currency by any country is only to a degree to solve a temporary problem. The consquence of this act is a devaluation of its curency which in turn will change the balance of trade payment. It cannot do so incessantly and idefinitely with impunity. Whenever there is a devaluation or re-valuation of currency, it sets off
other desirable and undesirable relationship changes between
countries. Every major economies like China, India, Japan,Korea understands well that certain value of the US dollar has to be maintained so as not to disrupt the big volumes of trade transacted in US$ through the Letter of Credit between them and US.
Which leads us to this question of interdependence of nations.
Hi Jeremy
I share your sentiment in #8. The Chinese have started to move their USD horde into hard assets oversea buying properties and companies. They have too much USD now and cannot rock the boat. They will continue to buy USD bonds to avoid a USD collapse.
The current Middle East crisis have cause the rulers there to take measures to pacify their respective populous. The question of Petrol Dollar will surface again. Some oil rich states are already nervous about continuing to sell their oil in USD only.
As China and India gets economically stronger, the rest of the world will feel more comfortable to drop their dependent on USD.
The Americans do not know the word austerity. Any President who dare to use this word will not be a President any more. That is the beauty of democracy??? So they will continue to spend beyond their means and print more money.
But the question for us, little people, is how do we benefit from this information?
Maybe;
1. Get rid of all our USD.
2. Get rid of any currency that is backed by USD.
3. Open a Renminbi account – Kenneth’s idea.
4. Stay way from investments in US companies except those producing weapons…of mass destruction.
5. Delay your holiday to the US. It will get cheaper.
6. If you are a gambler, sell USD short but take longer contracts because there will not be a sudden collapse.
Hi Robert,
Our major concern is the massive US$ money printing by US government as a way to solve their recent economic problems. The world is fully aware of it but could not do much in the short term as most of international trades are done in US$. This will eventually lower the value of the US$ and may eventually lead more international trades to be done in other currencies (such as Yen, RMB ,Euro, etc.). One of the reasons why gold price keeps on going up as most people looks for safe heaven to pack their money. Thank God, so far S$ is still good!
Hi Tian Soo
We are living in a fragile interdependant world and uncertainties are always lurking around. Very few people can predict the onslaught of crises from unexpected quarters. The recent financial crisis was originated in the US from sub-prime housing loans.The contagion effect spreaded very quickly throughout the whole world.There is a cliche: “When US sneezes, we catch a cold.” The US economy is too big that not a single country can be insulated from the ripple effect. Why do countries like China and Korea buy US Tresuary Bonds?
As for Egypt political crisis, the transitional change of government is very likely to happen, as President Mubarak is in poor health and the military will not come out in full force to quell the protesters. This will not adversely derail the ME region. More likely, the crisis will be a protracted scenario. As the world receives sporadic news from Egypt, the financial markets will react accordingly,thereby causing a roller coaster effect.
The oil price will continue to climb quite rapidly due to demands from emerging economies such as China and India even without political upheavals. Of course, the crisis exacerbates oil price increase.
Hi Weng #2,
Just for general information. Technics oil & gas shares were substantially increased when their warrants were converted to almost 71 milions additional shares on 2 Dec 2010, making a total company’s shares at 200,825,706. This may in time dilute the earnings per share unless the company is able to increase their profit, going forward by more than 35%.
JL2e
TS
Haha. didnt see this yesterday when it was raining. Weather’s good today :)
Actually, money is going to flow out of Asia bec of ME. Asia is still consider EM and the instability in ME highlights the risk of EM. Already before ME crisis, money was flowing to the West bec it was felt that 2010 was too good a year for Asia; so pendulum had to swing back. This said, I havent shifted my portfolio and am still heavily weighted Asia.
I dont think that the crisis will really affect the flow of oil. Whichever govt is in control will want the oil revenues. There may be momentary disruption but then it will start flowing again. But traders will definitely push price of oil up in the short-term. This will be good for oil palm stocks
ST wont benefit from the aid because as you said, it can only be used to buy from US manufacturers.
As with all wars, SGX likely to be down. It wont stay down, though, as the region is not as impt as US, China, etc.
My 2 cents
Hi Tian Soo
It’s raining and there’s nothing better to do than read the SHC website… and your post.
What to do if the Egyptian crisis worsens?
There’s more threat also coming from Iran. And North Korea hasn’t stopped shaking their sabres.
We little guys are unfortunately lost in the midst of most world-changing events. We sit back and watch our tiny assets get tinier, surrendering ourselves to rising prices, inflation and the dismal interest rates that the banks pay us.
What to do with our stocks? Sell them if you have made a nice profit and the charts show a drop. You can also put stop losses on some accounts like US online brokers.
Buy energy stocks and ETFs. The iShares Dow Jones US Oil & Gas Exploration & Production Index Fund ETF: IEO has seen a surge in price. Or Energy Select Sector SPDR: XLE.
Buy Gold and Silver with some part of your funds.
Buy Commodities ETFs.
Open a Renmimbi bank account.
Now all I need to do is to find the money to do all that!
Thanks Bobby Bok and Tham Weng Hon for your contributions.
Here are more questions to consider.
1. Middle East would now go into a period of instability. Does it mean more cash is going to flow into Asia and how can we little guys get our hands on some of that?
2. The Mubarak government gets US$1.3 billion ‘aid’ from the US each year. These money are largely used to pay for American weapons. Would Singaporean weapon manufacturers benefit from a change?
3. During the IndoChina war, many Singaporeans make fortunes trading in Rubber, Copper and Crap Metal. Can we do the same in the Middle East?
4. If war breaks out in Middle East our stock price would go down. Is it time to buy or sell?
it may be the rght time to watch and buy stocks like: Tech oil&gas and Sky Petrol
Weekly Fundamentals – Protests in Egypt Lifted Commodity Prices
The financial markets made dramatic changes on Friday as protests in Egypt escalated. Equities plunged while safe-haven assets including the US dollar, bonds and gold jumped amid risk aversion. Oil prices also rebounded strongly as investors worried that protests will spread to the Middle East, affecting oil shipment from the OPEC. With the exception of agricultural products, commodities generally traded choppily for most of the week. While the Fed pledged its accommodative monetary stance and macroeconomic data continued to show improvements, potential tightening in emerging countries, especially China and India, raised worries about the demand outlooks.
The unrest in Egypt follows an uprising in Tunisia 2 weeks ago. The chaos in Tunisia was driven by people’s anger over rise in food prices, high unemployment rate and corruption. These problems have also been shared by people in Egypt. Protests happening in Cairo, Alexandria, Suez and many other cities in the country have caused casualty and President Hosni Mubarak to appoint a new government. Egypt is the most populous Arab state and the market worries protests in Egypt, if spread to other Arab countries, will have huge impacts to the world.
China and India are the 2 biggest commodity demand drivers. Inflationary pressures have triggered the needs of monetary tightening. India’s central bank raised the benchmark interest rate to 5.5%, the highest level in 2 years on January 25. While China has remained silent since the beginning of the year, the market focuses what will happen during and after Chinese New Year. Meanwhile, the State Council has announced measures to curb property price hikes last week, showing the government’s commitment to prickle asset bubbles.
After Fed’s pledge to leave interest rates at exceptionally low levels for an extended period of time. The ECB will be meeting for monetary decisions next week. We expect policymakers to level the main refinancing rate unchanged at 1%. Comments from President Trichet and other ECB members about inflation spurred rate hike speculations and boosted the euro last week.