Pre-Warning: Bubble Burst On The Way?
Written by gkm2020
This morning, reports came in from CNBC, Bloomberg and other media, pointing worsening economic conditions despite the bailouts!
Notes: Malaysia still OK? Won’t be affected? Beware of the liars! We’re facing uncertainty now!
Obama’s New Stimulus Plan May Be the Needle That Pops the Treasury-Bond Bubble
Frighteningly, like the rush into tech stocks, then the rush into real estate, and then the rush into commodities, the rush into U.S. government bonds has created a Treasury bubble. In a cruel twist of economic fate, passage of an aggressive Obama administration stimulus plan could further inflate that bubble – before popping it.
The United States of America is an expensive household to run. In order to pay the nation’s bills, the U.S. government levies taxes. When expenditures exceed tax revenue, the government has to borrow money. The United States borrows money by ordering the Treasury Department to sell government IOUs to investors in the form of Treasury bills, notes and bonds, known as “Treasuries.”
How much does the government owe? As of Friday, according toTreasuryDirect.gov, total U.S. public debt stood at $10,620,397,126,433.54 ($10.62 trillion) – and counting.
The Case for Treasuries
Investors throughout the world – including those here in the United States – buy Treasuries because they pay interest and, moreover, because they are backed by the full faith and credit of the United States. What underlies the faith that investors have in repayment is the knowledge that the U.S. government has the power to levy taxes to raise money to pay back creditors. In addition to its taxing authority, the government can literally print money and pay back investors with dollars fresh off the U.S. Federal Reserve’s printing presses.
Because investors in the United States and around the world have been fearful of the collapsing residential and commercial real estate markets, declining equity markets, and potentially insolvent banks, they have had a tremendous appetite for safe U.S. Treasuries. The extraordinary flow of money into Treasuries caused their prices to rise. When prices rise on fixed-income investments like Treasuries, their yields fall.
In some cases, the demand for safe Treasuries drove yields on short-term bills down to zero; in fact, for a brief few days last November, yields were actually negative, meaning investors were paying the government for the right to own those Treasury securities.
At the end of the first week of January, the three-month T-bill yielded 0.08%; the two-year note yielded 0.87%; the 10-year note yielded 2.4%; and the 30-year bond returned a miniscule 2.82%, Barron’s reported.
It’s a good thing that there’s been a huge demand for U.S. Treasuries, because the United States has been spending billions – if not trillions – bailing out banks and acting as the investor of last resort during the ongoing credit crisis.
Troubled Assets, Troubled Times
Last October, as part of the so-called Troubled Assets Relief Program (TARP), Congress allocated $700 billion to buy “troubled assets” from banks that were losing money. Those institutions were truly troubled: They were unable to sell non-performing assets, were taking huge write-offs and, as a result, were not making new loans.
The initial TARP outlays – about $350 billion – went to suffering banks, in a few cases so they could buy lipstick and pretty themselves upbefore courting other wallowing institutions. Merged companies still declared massive losses and – as a result – bank-lending declined. In fact, 10 of the 13 largest beneficiaries of bailout money received $148 billion and saw outstanding loan balances drop by $46 billion, The Wall Street Journal reported on Monday.
None of the TARP bailout money actually went to buying troubled assets from floundering banks, earning the Treasury Department a stern rebuke from a congressional watchdog. Instead, most of the capital given to banks went onto their balance sheets as a capital asset and most of those institutions bought the highest-yielding government and agency paper they could find.
For instance, of the $45 billion Citigroup Inc. (C) received from the Treasury Department, $10 billion was invested in short-term commercial paper issued by Fannie Mae (FNM), said a person familiar with the situation.
The other $350 billion that Congress authorized from the original bailout package was released last week, without any clear plan as to where it should go.
A snapshot of where taxpayer money has already gone reveals that what’s been spent and lent is a little more than the headline news services report. According to a Bloomberg analysis incorporating data from the Treasury Department and Federal Deposit Insurance Corp. (FDIC) and interviews with regulatory officials and others:
- $300 billion has been spent on Fannie Mae, Freddie Mac (FRE), American International Group Inc. (AIG) and Bear Stearns Cos. (now part of JP Morgan Chase & Co. (JPM).
- $300 billion on Citigroup.
- $700 billion on TARP – though not on what TARP was intended for.
- $800 billion on Fed-directed asset-backed debt-purchase programs.
- $1.4 trillion on FDIC bank guarantees.
- $2.3 trillion on Fed commercial paper programs.
- And $2.2 trillion on other Fed lending and government commitments.
That totals a little bit more than US$8.5 trillion.
Stop the Presses?
As if it isn’t frightening enough that the Treasury is selling huge amounts of cheap debt to investors to bail out bloated, insolvent banks and inefficient industries, the Federal Reserve is printing money to buy commercial paper and illiquid assets from just about everybody to facilitate lending in almost every corner of the economy – and is then carrying these “assets” on its balance sheet.
Isn’t that how the credit crisis got started, with banks holding illiquid “troubled assets” on their balance sheets?
Since nothing the Treasury or Fed has done has alleviated the credit crisis in any meaningful way, and the economy is threatening to reprise the Great Depression, the newly installed Barrack Obama administration is being forced to formulate another “new” stimulus plan.
With an “introductory” price of a mere $825 billion, there should be little doubt that the ultimate plan – once all the bells, whistles and pork have been added – will actually cost taxpayers several trillion dollars.
And government borrowing is already off to a flying start this year. Last year, the Treasury Department sold $892 billion of notes. According to Goldman Sachs Group Inc. (GS), one of the 17 primary dealers that buys Treasury debt directly from the government, the United States is expected to borrow a record $2.5 trillion in the current fiscal year.
This week’s Treasury calendar is set to top all previous records of debt issuance. After selling $8 billion of Treasury Inflated Protected Securities (TIPS), last Monday, the Treasury Department last Tuesday sold $40 billion of two-year notes, the largest two-year auction in history. Then on Wednesday, in another record-setting auction, the Treasury sold $30 billion of five-year notes. So far, the supply has been absorbed, but like the song says, “If it keeps on raining, the levee’s gonna break.”
A Blueprint for a Burst Treasury Bubble
In something like a cruel joke, because all the banks are still holding the bad assets that the original $700 billion Troubled Assets Relief Program was supposed to buy, the new “Plan B” may include going back to “Plan A,” this time around forcing the government to actually buy those bad assets.
The same problems exist with the old plan, and no matter how it’s attempted, it will require a lot of money. In addition to this new Plan B, the new stimulus package will require additional outlays for infrastructure investment, as well as for the additional stimulus plans that are still to come.
Here’s where the aforementioned cruel twist of economic fate comes into play. The government will spend trillions of dollars of additional taxpayer money that hasn’t even been collected, yet. Even so, the Treasury Department will have to issue more debt. That means the Federal Reserve will have to print and spend more “worthless” paper money in order to pump liquidity into the failed U.S. credit system.
In spite of all that, of course, the stimulus package should eventually revive the U.S. economy. And when it does…the hugely inflated bubble in Treasuries will burst.
Investors poured money into safe-haven Treasuries and accepted yields so low that in any normal market they would be unacceptable. When the investing horizon looks more promising, investors will dump their low-yielding Treasuries and venture back into the markets for real estate, the domestic equities, international stocks, corporate bonds, junk bonds, emerging economies, and all the other usual investment nooks and crannies that offer greater return potential.
The cruelest twist of economic fate would be that the Treasury Department will eventually have to raise interest rates to generate demand for the debt they have to continue to issue. And higher interest rates are the last thing our struggling economy needs.
While the Treasury has been issuing huge quantities of debt and the Fed has been printing money, the credit crisis and recession have reduced tax revenue across the board. As the recession deepens and unemployment rises, there are fewer taxpayers contributing to the income tax base. Furthermore, as fewer goods and services are produced and consumed, there will be less sales tax and other tax receipts for the states and federal government to collect. As we all know, if there is less revenue coming in, we’ll have to issue more debt to make up for the shortfall.
In addition to bailouts and projected stimulus spending, the administration’s package includes tax breaks for businesses and, eventually, promised tax reductions for the U.S. middle class. While lower taxes, theoretically and historically, have a stimulative effect over time, in the short run, there will be still less government revenue at a time of increasing government expenditures. Investors will come to fear that, without an expanding tax base, the government will have to continually roll over its debt or will print still more money to pay off creditors.
If it appears as if we’re in a vicious cycle that’s spinning out of control, it’s because we are. Boosting debt even as we print more money will have a devastating effect on the U.S. dollar. While a devalued dollar makes U.S. manufactured goods and services cheaper overseas, it also makes the goods and services we import more expensive, as it takes more dollars to buy the same amount of imported products – especially oil.
The United States is a net importer and runs a huge current account deficit with its trading partners abroad. At some point if the dollar falls too low or collapses, the government will have to raise interest rates to support the dollar. If interest rates in the U.S. market rise relative to other countries, investors buy dollars and deposit them with U.S. institutions for higher yields. But, again, higher interest rates are exactly what the United States must avoid as it works to stimulate domestic production and consumption.
The problem with huge deficit spending and with printing money to pay for anything – particularly “troubled assets” – is that more money floating around in the system eventually spells inflation. If there’s more money in the system and there are fewer goods and services being produced, when the demand for those goods and services inevitably returns, the prices will be bid up.
That’s inflation.
While the present concern for policymakers is how to combat deflation’s detrimental effects, overspending on a new stimulus plan could cause the bursting of the Treasury bond bubble, and create immediate consequences that can only complicate recovery plans.
The trillion dollar question is this: Can a stimulus plan address the credit crisis, fund recovery spending, reinvigorate confidence, lay the groundwork for revenue enhancement and not throw taxpayer money down a black hole?
The answer is yes. There is a much quicker and safer way out of the credit crisis that takes us forward toward an economic recovery. The problem is that no one wants to hear it because no one wants to swallow the politically devastating harsh medicine that’s necessary to cure the plague we’ve infected ourselves with. As usual, there are too many vested interests protecting the same old turf.
Throwing good taxpayer money after badly wasted taxpayer money will not fix anything. But throwing out overly leveraged, overly greedy, overly dependent banks and bankers is a good start.
Uncertainty will continue to be the watchword for at least the first part of the New Year. Little wonder, as the global financial crisis continues to whipsaw the U.S. financial markets in a manner that hasn’t been seen since the Great Depression. It’s almost enough to make you surrender.
Pre-Advice: To all Dayak communities and the brotherhood of Dayaks let us set aside our political grievances and ideologies or differences for the moment. My sincere advice to you all please kindly manage your saving well. Don’t go entertain yourselves too often, hold on your plan to buy new car/house, hold on apply more loan and others, the financial crisis or future is very unpredictable. We have seen and heard so many companies all over the world have closed down and/or retrench their staffs, and so many have lost their jobs. So for those who still having their jobs, please work hard and don’t “play-play”. This is the time; we should come forward to work together, as Oneness and to come forward to become united. God have mercy on us (pro-poor, poor, moderate citizens and the rich colonies)!
Happy reading and pray!
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Inspirational word from gkm2020
Those sectors of the Malaysian economy which are dependent on industrial exports to the US and UK will suffer and companies will have to shut down their operations. Western Digital in Kuching is one example.
Sabah isn’t dependent on industrial exports. Not sure about Sarawak.
Generally, the economies of Sabah and Sarawak are neither that big, nor that sophisticated, and so can be expected to escape the brunt of the current crisis.
Singapore industries will be badly hit but the government there is readying an economic stimulus package.
Malaysia will be hit by workers returning from Singapore and elsewhere. Sabah and Sarawak will be hit by workers returning from Peninsular Malaysia as well. This would be an opportunity for local employers to utilise these skilled workers and venture into new areas.
In the case of Sabah and Sarawak, the respective state governments must make sure that the Federal Government lives up to its promise of funding for the 9th Malaysia Plan targets in the two states, the economic corridors and the special RM one billion each allocation promised in May last year to “reward” both states for their performance in the GE last year and to compensate them for their poor representation in the Federal Cabinet and Federal Government.
In the case of Sabah, the Federal Government promised RM 20 billion for the 9th Plan and RM 2.3 billion for the Sabah Development Corridor, besides the RM one billion.
Not a sen of the RM one billion has been received. Of the RM 2.3 billion, only RM 10 million was received last month. Not sure about the 9th Plan funding.
Overall, the financial system is liquid and healthy after the 1997/98 Asian Financial Crisis.
It is clear that the state governments of Sabah and Sarawak would have to play their role in insulating their respective economies from the financial tsunami and economic crisis sweeping the developed world and creating contagion effects in Peninsular Malaysia, Singapore and elsewhere.
Cash is king. Those who have cash need not worry. In fact, this is a time of unprecedented opportunity to pick up bargains in the market at rock bottom prices, if not in Sabah and Sarawak, at least in Peninsular Malaysia and Singapore.
Those who are working with the government and dependent on government contracts need not worry either.
Commodity prices are down but here you have to take the fat years with the lean ones.
The rural areas will be relatively immune.
Tourism is a fairly recession-proof industry and there should be greater emphasis on domestic tourism as well.
The education industry will continue to do well. Re-training during an economic downturn and education will continue to be vital. Here, the government should pay for unemployed workers to go back to school. While the total bill will be peanuts to the government, it will make a big difference to these “students”.
BRIC (Brazil, Russia, India, China) economies are booming and will continue to boom irrespective of what happens in the US and UK which are suffering the brunt of the financial tsunami and economic crisis. Europe remains positive.
The US can be expected to come out of the financial tsunami and economic crisis within the next two years. The financial system is being re-capitalised and once credit starts flowing again, businesses will pick up.
What is important is not the level of debts but whether you have the ability and willingness to repay your debts. A good credit rating and access to credit are vital in today’s business world. In that sense, no one doubts the credit rating of the US Government.
The big problem in Malaysia will be the continued political uncertainty in Peninsular Malaysia.
BN is a good organisation but not the racist anti-Indian, anti-Borneo and anti-national Umno which continues its skim cepat kaya ways of managing the economy through AliBabaism, makan atas angin, cronyism and nepotism and where a minority — the umnoputras — continue to squat in the rest of the population to finance their indulgent lifestyles. The umnoputras have their political proxies in Sabah and Sarawak in return for a share of the spoils.
I have heard it somewhere before we entered this millenium, the world will be facing a serious economic crisis. Yes, it looks like. It’s scary.
Is our Haja Ummoh still kin with his plan to build another 12 HEP? Parai, parai kitai Sahawak tu dibai Haja Ummoh nya gila ambis duit, nyau benkrap ila. Angka ka haya agi ga kinsil seduai melaki bini ila.
Ngagai sida dayak dulu dili din, tanam meh memayuh buah empansa, jagong, pun sago, tanam padi pengambis munggu, tupi ikan empurau, semah, ikan jabu, ikan empelekong, ikan siakap, ikan kerapu, ikan manchong, ikan yu, ikan bam, tupi sida jani, manok, embo, kambin awak ke bisi dempa dijual kita ila. Nadai nya pedis amat nanam empansa, changkok manis, rumput kemiding, paku keru, tubu nya deh unggal. Semina tak dujak ka aja ba tanah meh paong iya tang anang ga buruk nyempiang iya tauka jaga meh kantok enggai ke ambis dipusil sida husa, kijang, sambi joi pelandok.
Ngagai sida jang manchal ke selalu nyadi kulatmalam ke rindu ngempok merok sida endun kulat pik dia, kurang ke agi meh nemuai ke tempat nya unggal. Kati ku tau tak ka ngirup lady’s drink sida endun nya ke berega nyau lebih duapuluh ringgit segelas. Nya gaji merok iya nya unggal. Akai dai….nemu endar ga Api Kiek tu bejaku neh baka ke kala ngereja pengawa ke baka nya. Hmmmmmm….enti nadai ribut, dini daun kayu ka beguyang deh unggal.
Ngagai sida ke bangat enggai enda lelebih ke enda chukup siku ini andan, badu meh ngembuan juluk ati nya, unggal. Ukai ulih pelanja ke injin nyau udah dua iti disangking ke ba kemudi langkan panjai lima nya. Enti kitai tebelika enjin ke rua amat, lembau bejaku. Rumah enggau kerita pen kitai tentu ka meli ke sida nya. Rekong sida pen enggai enda dirantai enggau rantai ke kuning perechiq. Enti iya udah lapar amat, akai dai, bendar endar nyapi sida nya unggal. Aku enggai bula, sigi nadai tulang danjong ngelaban utai ke lebih ari siku. Ukai baka tulang ati agi nembiak suba. Enti baka kelia, aku sigi enda alah tiap manggai semanggai. Nyau baka ke aus, ayi nyamai dirup baka ke udah bekau makai upa lalis. Manis asai ayi, unggal.
Kurang ke agi meh amu mata diatu, unggal.
Dr John, thanks for the pre-advice. I supposed it would be followed by the real advices in time to come? Hope so, esp. about investing. For instance, with all the Dayak brains around irrepective of political differences, there must be some Dayaks who could advise us to invest during the worst of economic crisis. I mean to help us to look out for the bottom of the market, the timing, etc. and then to advise us to invest, taking the risk of buying at cheap-cheap prices; houses and stocks, etc. with the hope to make more money thereafter…may be this way some Dayaks can benefit from bad times too – what say you?
Stock Market: To invest or not?
This is written good faith. Charcoal Art asked about “timing” and “bottom” of the present economic crisis. This is not a reply to him, but having been in the market since 1990, let me share as another input, not as an expert.
In the equity industry, there is a branch of discipline we called Securities research. Every broking house would employ several experts, mostly CFAs and MBAs qualified. They would check the fundamentals of stocks and then assisted by the technical chartists, try to make qualified predictions. They look backward (historical) and forward (expectations) on earnings and market events.
Having friends doing such job, we could be counted as the experts in the market. Unfortunately the recent sub-prime triggered crisis refuted any claim to acclaims or prowess. Big international broking houses can collapse despite employing the best grains in the finance world.
Having said that, there are some basic things we look for in this industry.
1. Basic economic circle. There is the boom, recession, depression and recovery, before boom again. Despite the Malaysian government denial, most CEOs are not optimistic about the economic climate prevailing. Their outlook for this year is also not optimistic.
If we are in recession, we are trying to gauge the distance of our fall. The joke among economist, when two or three economists gather together, there are four or five opinions. There is no two economists who can agree on the where we are in the economic circle now.
Yet we can’t ignore economic circle because that basically determine the value of the stock we purchase now. Average trading PEs now is 12 to 15 times, cheap under normal circumstance. Unfortunately these are figures derived from last year’s income. If depression is going to follow, what is the average PEs half a year from now? What is the PE next year?
Market argument is that stock movement is independent of the economy. Strict followers of Warren E Buffett would not look at the economic factors. They are not looking at investment from an efficient market. Instead they concentrate on the company; looking for undervalued buys, more or less Grahamic (Benjamin Graham) in approach. They might not be very “friendly” with the present approach of “portfolio theory”.
But our KLSE history seemed a mixture of fundamentals and “slingers.” Fundamentalists are buying then and now, deciding based on the book value and the expected performance. The slingers are watching and waiting; is there any big crowd that can be pulled in? The scenario now; slingers are at the side. If you find enough reason to buy a stock, go ahead.
2. Earnings and earnings
Price is dividend over the result of rate minus growth, {P=d/(r-g)}. This is our rough guide. We really don’t know the actual price though sometimes we try to make things non-understandable with all sorts of formulas. But what is true that stock prices are determined by growth and earnings (so they can pay dividends).
Trying to decipher value (price), we have to look at the annual reports, notably balance sheets, P&L and cash flow. The we try to understand the company better by looking at some acceptable formulas – things like book value, NTA, Acid ratio, leverage (debt:equity), etc.
If you get your figures, you could still ask: So what? Will this stock perform? In fact the same formulas applied in the bank are being used by the brokers, but if you apply them to actual investing, you would be a very poor investor.
That shows earning is not the ultimate determinant of stock prices.
3. Technical charting
This is the efficient market hypothesis at work, though I would define it as behavioural science captured into statistics. This has been found rather accurate, double bottom is up, head and shoulders is down, flag on up market to continue, etc etc. Combined with the Japanese candlestick (read Steve Nison), you would see the dark and while candle, the doji and the hammer, the hangman and the shooting star. Yet we hardly scratch the surface in our description here.
Conclusion:
PG Woodhouse: “I always advise people not to give advice.” That sentence disqualifies me from giving advice, certainly not on the market. There are a lot of factors to consider, sir. Fund manager Peter Lynch has one good advice; never trust the experts. (Read his books eg One Up on Wall Street).
Seriously, I approach the market with great respect. Don’t gamble. “Pick a stock I like, at the price I find comfortable with, managed by people that I trust and keep the stock until it goes up.”
Ibans or Dayaks in this industry – must be a few around.
Thank you.
We have discussed in length in forums of what to be expected from early last year even before the high of subprime in Oct 08. The crucial period will be the next 6 months down the road or if not more. There is no sign of rock bottom yet. This week WEF in Davos witnessed the point blank speech from Wen Jiabao and Vladimir Putin lecture all western leaders for their “inapproriate macroeconomic policies, blind pursuit of profit, and lack of self-discipline.”
Today, the STAR quoted 10,000 people will lost their jobs since Jan 09 alone. Situation is very critical now as many companies are struggling to stay afloat for survival.
Back to home front, our GDP growth for next year has yet to be revised by our Finance Minister and his team. Wonder are they still in bed by now? The current lawmakers in the government is very slow in reacting and formulating everything. It seem they are not up to the mark or they just have no means to react.
Look back to our sourthern neighbour Singapore, they are very transparent in managing their economy by telling their citizens upfront rather than later when their annualised Q408 data of GDP into recession trajectory. It is better for them to adapt quickly. While here our government start with denial mode – “we will survive and not going into recession”. How could a small country like Malaysia not going to be affected if about 60% of developed economies affected by global meltdown of which our main trading partners? Which school are they from anyway?
Here in Malaysia, government seems to have many things to hide from the truth. The first stimulus package of RM7 billion was announced 2 months ago has yet to be released for its first disbursement into our economy system. Wonder are are they waiting for?
Not enough with late disbursement of the first stimulus, now our Finance Minister announced that there will be second stimulus package. Just go to his blog website. It seems he just don’t know on what to do next as he asking for public’s suggestion! Wonder why are they elected into power at the very first place?
Those packages should be disbursed to the system soonest to mitigate against further slow down or maybe contraction in our GDP growth.
Our government focus to much on petty issues nowadays! It really make young generation feel really tired. In Nov 08, the Indonesian lawmakers passed the anti-discrimination in parliament. This law making it is an offence to discriminate against race. On contrary, our cabinet last month discontinue the debate on the proposed Race Relation Act by merely saying – it is not appropriate to enforce it. Yet Malaysian race relation situation today changed from bad to worst. What a crab is happening now?
We doubt our current leaders have much clues on economic management. Would you agree that “The Wind of Change” must continue to blow and need to further blow harder and stronger now?
Talking about American Treasurey Bills, in Obama’s statements, he said his administration’s economic rescue package already projected budget deficit of $1 trillion for years to come. That’s mean at least for another 4 years down the road.
What is this mean to all of us in other part of the globe? This will translate into Fed will be selling more American Treasury Bills to public, companies, and neighbor countries to finance their Debts. It would be like vacuum cleaner – sucking world liquidity from other global markets to US. All current free liquidity most probably will run into American Tresury Bills and let other part of the world dry. They got no choice in their prowess to save their ailing economy.
Timothy Geithner, the incoming new US Treasury Secretary at the same time accusing China of manipulating its currency(Yuan) to maintin their cheap exports to cushion their GDP target of about 8% in 2009. If China to revise their exchange rate vs. USD, their GDP could be further lower than projected of 8%.
As China is also one of our main trading partners, and if they accommodate to US request, indirectly, Malaysia will feel the pinch. Remember Ringgit at one time was pegged to USD follow Yuan closely although now already lifted. If MYR to appreciate in tandem, our exports also will be suffered. When export suffers, more companies will be wiped out and maybe never afloat any longer. The treat is very real!
Seliong,
thanks so much for the article. I like your honest approach when comes to stock market. Indeed no one is invicible to losing money in the markets, including those who have made a lot of money in the past. One of my brother in laws was a fund manager in a big corporation in Singapore at one time; he told me once he made so much money for his company that he was given 6 months bonus; but at another time, he lost a lot of money too – he said he was simply following his own’s advice!
Suffice to say, caution is always wise. But to stretch the imagine, the dreams of making more money, I think it is no harm as well.
For instance I have witnessed twice how Maybank stock price had dived so low and then reached maximum. Likewise for Public Bank. What if I thought, had I bought Maybank when it was as low as RM2.50 in 1998, when no one was interested in the stock market then, I would have made a lot of money when it was RM11.00. What say you Seliong? Would such opportunity presents itself this time around, when the so called global economy experiences such turbulence? If nothing at all, it is still worth thinking.
Ibans and Dayaks in investment research? economist? I don’t think too many around – or may be I am wrong.
How about a more conservative properties investment – which is safer. Will the price of say houses at Bandar Utama go down as much as 50% when we see the worst time in Malaysia i.e. when we “blood in the streets” so they say. Perhaps yes, perhap no huh.
Cheers
For those who have abundant cash and not hardup with cashflow now, this is the time to invest in the market in a long term basis. Those who do it for short term interest better go to hell coz one will soon die for being so short sighted! Remember, no contra or AhLong.
Saya perchaya, ku aya Sami Buda Bilu, kitai Iban, kitai dayak enda tentu tusah iga kena tempias ekonomi ke majak timpang kemaya ahi tu enti sida enda angkoh ke jalai pendiau pengidup di mengehi. Kapa sida ka nunda sida ke diau di mengehi, unggal. Enti dulu din, enti sida rajin, pintar, landik ngena tulanag empat kerat sida empu, sida sigi muntang ngidupka dihi amat meh ekonomi tu nyau lachak amat sampai ke Akih Obama pen nyau bama makai sebarang ba sebelah dalam Tong Sampah di Bandar Wasington din.
Nyau ka semua utai ke diguna sida di mengehi ulih digiga, digaga kitai ba menua ulu din. Enti nadai paong iya, sida tau mai paong ari mengehi lalu ditanam, diperanakka di dulu din, unggal. Enti hega gula udah niki puchuk tapang, kitai tau nanam tebu memayuh. Enti garam nadai, kitai tau ngauk ayi tasik maya ke mansa iya. Enti minyak berapi, kitai tau nanam kelapa sawit kadihi. Enti ikan nadai, kitai tau minta tolong aya Abu meri kitai ikan Jabu lalu dilepas ba sungai alai kitai diau. Anang aja meh kitai nyau nubai sungai sebahang. Enti embo, kambin nya, kitai tau minta ngagai sida upis betanam deka dilepas ba kampong menua kitai. Dagin sida jelu nya tau ke ganti daging husa, kijang, landak, angkis. Enti kitai ka mayuh duit, hajin hajin meh kitai ngaga pemansang ke udah disebut aku datas nya. Mayuh agi iya digaga kitai, mayuh agi ga ke dijual kitai agai sida ke suntok sendat di mengehi din. Enda iboh jual mar. Asal sida di mengehi din ulih meli lalu barang kedijual kitai laku, kita pen ulih bulih mayuh duit ga.
Ngagai kitai ke diau di mengehi baka aku empu enggau dek empu, kitai anang balat peiga iga deka amu. Anang ka lelebih idup sampai ke umbang enda ngipak ke kapak. Gaji semina ka seribu einggit tang enggai enda nunda sida Apai Jang ba sepiak nya dia ka meli moto daba kibin Hilux, dimak, triton. Mati kitai baka nya, unggal. Nyepi dihi ke kanji amat, kitai nyau ka bebini mayuh. Apo, ukai naymai nupi embo kelalu mayuh. Beli aja meh ayi tusu iya aja, unggal, enti bangat tak enda ulih tatka. Enti bangat tak gian ke ayi bisa, tanamka meh memayuh kayu ijok. Ukai nya memudah hega kemi himau, kemi jugam, ayi Chibai.
Nya alai enti kitai nitih ke lalau aku enggau beamai amai, kitai sigi enda ngeliat kena ekonomi ke runtuh. Tegap pungka kitai, unggal. Tu meh kitai be bisi duit extra melabur ba saham. Ingat! Kitai ukai melabur jangka pandak tang gaga pandai ke baur ginti nya unggal, nya baru ulih ngulurka umpan ba mulut ikan empuran di benong lubok din.
Charcoal Art, lets have discussions on this in RD forum. Thanks.
Dr M: 1)anti America 2)anti semitic 3)anti KFC 4)anti McD
Sheikh Seliong:
“3. Technical charting This is the efficient market hypothesis at work, though I would define it as behavioural science captured into statistics. This has been found rather accurate, double bottom is up, head and shoulders is down, flag on up market to continue, etc etc. Combined with the Japanese candlestick (read Steve Nison), you would see the dark and while candle, the doji and the hammer, the hangman and the shooting star. Yet we hardly scratch the surface in our description here.”
Oh ya, that fortune teller in suit. Between fundamental analyst and technical analyst (chartist), it depends on how convincingly fake their advices like a feng shui master vs palm reader. Apparently, just take their advice at face value. Even stocks can be as phony as you think since mostly can be rigged thru insider notes and short-selling. It is the art of mastering both gambling (uncalculated risk) and investment (calculated risk). Another note for Sheikh Seliong to share for us here perhaps the unit trust offered by private investment banks like Public Bank group etc. Some even offer much higher returns than conventional govt-backed ASB, while beware as well those managed by fund manager named Bernie or something. Maybe some short-term and long-term tips on private unit trust, will ya Sheikh Seliong.
The idea of ‘buy cheap, sell high’ is quite tempting now with current stocks movement and some folks even investing in forex taking advantage of weak US dollar but never think too close of fancy buying Zimbabwe dollar (RM1 = Z$5 million), it’s not gonna work.
It’s important to make sure your savings is liquid and mobile. Take EPF savings for instance. You can withdraw part of your EPF savings and re-invest it at your ASB accounts or transfer some of your savings to ASB also. In a challenging period like now, keeping more savings is a must but you need to maximise the returns as well. Take advantage at higher returns (ASB, EPF) against typical savings account and FDs which currently offer lower interest rate.
Do not believe that Malaysia is the sole recession-proof nation in the world as Malaysia could gone bust like Iceland (minus the gay PM). But Dayak remain recession-proof particularly the rural folks, with simple life eating tapioca leaves and some squirrel meats will do. Only those depends on ill-gotten money to survive will suffer the most believe me when I tell ya so for those living beyond their means, start eating tapioca leaves and some squirrel meats now and get used to it.