Tuesday, October 30, 2007
Middle East and Central Asia
IMF released a servey about the global economy.
"The Middle East and Central Asia is undergoing a remarkable transformation driven by rapid GDP growth and high oil and non-oil commodity prices. The report presents common economic trends and reviews prospects and policies for the coming year in light of the global economic environment. This latest REO includes boxes treating both regional topics--such as growth in the Maghreb countries; developments in the oil markets; the boom in the GCC countries, and the impact of the recent global credit squeeze on the region--and country-specific reviews, of Kazakhstan, Armenia, Egypt, Pakistan, and the UAE." -- IMF Oct 2007.
I believe the smart money would flow towards the emerging markets and higher risk investments. Both China and the middle east countries may change their policy towards the US dollar. If this trend of "depeg" go on, the dollar will be in trouble while the oil and gold will be sky high. At this level, the inflation risk would help the investment returns. The market volatility will no doubt increase. My investment plan in 2008 would be :
- shift to more aggressive investment
- increase the holding of cash
- buy on dips
"The Middle East and Central Asia is undergoing a remarkable transformation driven by rapid GDP growth and high oil and non-oil commodity prices. The report presents common economic trends and reviews prospects and policies for the coming year in light of the global economic environment. This latest REO includes boxes treating both regional topics--such as growth in the Maghreb countries; developments in the oil markets; the boom in the GCC countries, and the impact of the recent global credit squeeze on the region--and country-specific reviews, of Kazakhstan, Armenia, Egypt, Pakistan, and the UAE." -- IMF Oct 2007.
I believe the smart money would flow towards the emerging markets and higher risk investments. Both China and the middle east countries may change their policy towards the US dollar. If this trend of "depeg" go on, the dollar will be in trouble while the oil and gold will be sky high. At this level, the inflation risk would help the investment returns. The market volatility will no doubt increase. My investment plan in 2008 would be :
- shift to more aggressive investment
- increase the holding of cash
- buy on dips
Thursday, October 18, 2007
Some thoughts
Just reduced my investment and took profit in China, BRIC and ASEAN.
Some thoughts:
The Fed cut rate more than expected on Spe 18, this encourage the investment towards more risky area ... the emerging markets and commodities. I did it right, and now I am reducing my position there.
I recalled that Ben said earlier that the 1929 crash was related to mistakes in the Fed. He also comment that an earlier cut in rate and excess money supply in 1929 could have save the market. So, I believe the Sep cut was an preemptive move towards a possible crash in '07 or '08.
If slightly overdoing the rate cut, some inflation in US would eat up sufficient from the international investors and help the US property market. But, I would rather prepare for a further decline in US property market and a even deeper debt crisis. If that really happen, the cutting of international investment would reinforce the crisis. Then remaining problem would be - how to know this before hand and how to profit from this. I may still have a few months to figure out this.
In the short term, the flushing of money supply would weaken the dollar and create a huge bubble in the emergung markets. There are risks about governing policies in India and China. Sooner or later, the market will correct and revalue upon this. I would look close at the Euro-Yen rate. So long as the Yen is still a source for easy money, the hot money is still there.
Some thoughts:
The Fed cut rate more than expected on Spe 18, this encourage the investment towards more risky area ... the emerging markets and commodities. I did it right, and now I am reducing my position there.
I recalled that Ben said earlier that the 1929 crash was related to mistakes in the Fed. He also comment that an earlier cut in rate and excess money supply in 1929 could have save the market. So, I believe the Sep cut was an preemptive move towards a possible crash in '07 or '08.
If slightly overdoing the rate cut, some inflation in US would eat up sufficient from the international investors and help the US property market. But, I would rather prepare for a further decline in US property market and a even deeper debt crisis. If that really happen, the cutting of international investment would reinforce the crisis. Then remaining problem would be - how to know this before hand and how to profit from this. I may still have a few months to figure out this.
In the short term, the flushing of money supply would weaken the dollar and create a huge bubble in the emergung markets. There are risks about governing policies in India and China. Sooner or later, the market will correct and revalue upon this. I would look close at the Euro-Yen rate. So long as the Yen is still a source for easy money, the hot money is still there.
