SOS Wake Up!

US economy is turning from bad to worst
Europe economies is turning from worst to disaster

Both Europe and US economies contributes >60% of world GDP

Why are they not doing well in the long run?

• Over borrowing


• Over spending


• Participate significantly in derivatives


• Government interventions, protections and bailouts


• Government is broke and continue to print money (spending money from more debt, as they do not has reserves or surplus like the Asian economies)

Is the Asian economies any better?

• in the short term no, because they over invest and over produce for the Europe and US


• in the long term, they are better off because they have strong reserve and surplus to reinvest into their own countries, and sell to their populations, esp China, which still has lots of room to grow


• they are rich in resources and commodities and that is what the mass population needs, infrastructure development and better food

So, for investment for LONG TERM (more than 5 years), what is the asset class should we be investing?

• the banking system has collapse, new credits are shrinking, hence investment in mining, agriculture and other resources will be impeded, hence causing low inventories, and as the demand increases in the Asian countries esp, lack of credits will suffocate the supply, and demand will gradually increase when the Asian economies recovers, hence, causing an imbalance of demand exceeding supply for COMMODITIES. Hence, one class that is critical for LONG TERM investment is critical.


• with this crisis prolonging, and low interest rates regime, and printing of trillions of dollars without a strong reserve by Europe and US, it will cause hyper inflation, hence, the next logical asset class to invest is precious metals like GOLD, SILVER and PLATINUM.


• One more class that is hard to avoid is the EQUITIES. For LONG TERM, avoid equities in Europe and US, but there may be rebounds (25% to 50%) in a secular bear. Go for Equity in Asia or Resource rich countries like Australia or Canada. LONG TERM equity should focus on the fundamental that is not impaired by this crisis, i.e. in the LONG RUN, demand will exceed supply type of business. Some of the countries would be like China, Canada, Australia, Brazil, NZ. The equities in the resource rich countries and strong reserves will recover and do much better than their counter part in the Western countries.


• Last but not least is CURRENCIES as an asset class. This is a hard call as it very much depends on the government taking the correct actions. Some that we would like to consider is China's RMB, Canadian dollars, or Aussie dollars.


• The incentive to saving (for Asian countries) will not be advantagerous as inflation and low interest regime still in place.