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.
# posted by Lobo @ 7:08 PM 
