Many thanks!
There are 4 possibilities regarding the current US economy. Without sounding like an economist, I will only be making the points that I think are significant to each here:
- Hyperinflation - super high prices of precious metals and commodities;
- Inflation - high prices of precious metals and commodities;
- Stagflation - zero growth with Inflation; and
- Deflation - all assets down right across the board.
Personally, I am ruling out the possibility of Stagflation, which is regarded as the "at best" scenario by Wilbur Ross. Upcoming US corporate profits are set to disappoint and US consumers, who make up the majority of the US economy, are now going bankrupt, if not with negative equity. The US economy, in my view, is already in a recession if reported figures have not been manipulated. The latest surge in US unemployment simply confirms my prediction made back in September 2007.
I am also ruling out the possibility of Hyperinflation. Each recession is unique. The present one happens with the US Dollar as the world's reserve currency. It is falling in value, but it has been gradual because central bankers around the world have been cranking up their printing presses to prevent a dramatic crash that could have taken place in a short amount of time. It is not in the interest of foreign governments, which have been financing the spending binge of the US consumers and invested in US treasury, to see their investments depreciating in value. However, this doesn't mean the US Dollar can be saved. It simply means the crash will be gradual, with rebounds and rallies along the way, of course. As you might have noticed, I have been shorting the US Dollar against the Japanese Yen for a number of times now.
So that left us with Inflation if not Deflation. Either case, Inflation will lead the way since central bankers are still printing money like crazy.
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9 comments:
Major thanks, Boon. Appreciate your opinion.
Now let's see if Ah Ben's(I like to call him that)200 bazillion dollars can manage to keep the big boys from crying buckets of tears(and cash) in the coming future.
Cheers!
would you recommend turning all my equities position into cash and wait for the 1000 mark? Currently im holding hsplant(3.10), twsplant(2.28), mtdinfra(0.70), npc (2.70), gamuda (4.10), bursa (5.60), mmm (0.31), hil (.55) combined a closed to 400k current value. Just need another opinion. thanks
As I have repeatedly cited many times since September 2007, I don't see myself buying any stocks. I am proud to be one of the 5% who foresaw the present global financial turmoil. Even at today's levels, I still don't find stocks attractive at all.
However, I cannot tell you what you should do with all the positions you have taken. You have to figure that out yourself.
or do u have the opinion that US dow has bottomed up or are we going to see new lows in the months ahead? or the markets are presently just factoring ahead the full blown effects of credit mess come 2nd & 3rd quarter of this year?
hellthy correction,
a lot of pro traders like Jim Rogers and Marc Faber already said that recession is coming ....
we have not seen the last of the subprime issues... and fed keep pumping money into the system will make it even worse.....
but, like boon said, what u do with your money is ur decision and solely yours....
yuen,
thank for yr opinion. Feds cutting %rates again though unprecedented (on a sunday) then JP saving Bears. Looks like the fed is more worried about a major collapse of equities than the whole subprime mess and even for that matter the inflationary figures. I guessed it would be silly not to hold on to cash at the moment.
hi correction :p
i am not holding onto cash at the moment. I turned my fix d and my stocks into gold n silver holdings instead :p
mayb going into agriculture in the future
commodities way too risky for me. besides i could have a heart attact revisited. however i got myself some cnooc over in hkong @ 11hkd...i think unless there is a clear trend in the mkt direction it would be useless to bottom fishing. time to golf if the weather permits.....cheerio
My best wishes for you healthy correction.
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