SOS Bono vs Brown

Bono (Ireland rock star and private equity fund partner) named as worst investors in America.

Gordon Brown sold few hundred tonnes of gold at its historical low of USD254 per oz years ago.

Demand & Supply (oil) vs Demand & Supply of financial intruments (oil)

Demand and supply of commodities via leveraging, shorting, options, does not in anyway reflect the actual demand of supply of oil.

Read this:

The result of massive financiarization of oil and commodities, in 2008, was shockingly clear. Exactly the same way that a 2% growth of the economy since March 2009 drove a 60% growth in most equity and commodity prices (over 90% for oil), the 3.5% fall in world oil demand through 2008-2009, now bottoming, drove a 75% fall in day traded oil prices.

MyView

Just like stocks, the prices of stocks does not reflect the real intrinsic value of the business. Similary, the prices of oil or commodities does not reflect the real intrinsic value of the oil or commodities or any other assets traded in the stock exchanges or commodities exchanges.

Hence, stock prices seldom reflect the real intrinsic value, it depends on the social mood & actions by its environment. It will be overvalued when the mood is positive and undervalued when the mood is negative.

So, in order to be a good investor, one has to read the social mood. How? Any tools? Does experience help? Does gut filling helps? Just imagine, 95% of the learned economist did not predict the collapse in 2008, what is your odds to outperform these economists?

SOS Main Street vs Wall Street

US used to be contributed by Main Street

US now mainly contributed by Wall Street

• Clinton deregulate, continue in full gear by Bush and Obama
• Credit default swaps is built
• Concentration not on productions of goods or services, but financial products which do not add value to the REAL economy, is basically of music chair system
• Current recovery is fundamentally based on new money printed by the entire world, and create other bubble or prolong the toxic assets to go bust or in short, debasing the currency
• The real productive capacity is gone in developed world
• In ordinary business, when market slows, spent less or pull back on spending, not more stimulus
• Per Gerald Celente, if he is president, support local goods, not from China and stop eating junk (not genetically modified and, spiritually, people must reconnect
  

MyView

• Perception vs Truth in Economy, Truth will prevail when perception ran out of gas (when, nobody knows, as long as government pump in more perceptions, people will be misled longer at their own expense).
• Decision made today by policy makers will be the seeds for the future generation, hence, look back 10 to 20 years back, what had the government done right and wrong then you will see the result TODAY
• Prepare yourself, in worst situation, one will be prepared to handle crisis.
  

SOS Great music

SOS Tsunami

According to the people that experience the tsunami in 2004, they will say, the first wave was catastrophic, the second wave was the killer.

Well, we have went through the first one since 2007 Oct to 2009 Mac, where DJIA has dropped about 50% from 14,000, and it climb back to near 11,000 since Mac 2009 to March 2010.

Will there be a second wave, absolutely. It is a matter of timing. Q1, Q2, Q3 or Q4 of 2010, take your pick. Until you see the second one, the first one is child play.

Better get your safety gear ready, when it comes again, better be prepared.

One way is to SHORT the market. Why? US is going through a deflation depression. Robert Sheller's think the double deep is probable. So is Robert Prechter, or Harry Dent, or Gary Shillings.

SOS Gem Of Life

What is a gem of life? A cantonese series? Some of the characteristics found in the show:

1. greed


2. pride


3. fame


4. revenge


5. glory


6. comfort


7. lust


8. conflict


9. competition


10. cheating


11. corrupt


12. hatred


13. jealousy


14. lie


15. outsmart


16. achievements

Well it is just a series, but I believe also happen in real life. Morality is down the drain. So what is it got to so with Finance world today? Well, there are not far away from this series. That's why power corrupt.

Look at what happen in USA during the crisis, the taxpayer is paying for the sin of the too big to fail. When they gain, they keep it, when they fail, they get the bailout. The elite really get away with crime.

SOS End of the World

Are we towards end of the world as far as financial markets? Nope, just pure deflation in many major assets, ranging from financial assets to commodities to properties, stock markets, derivatives etc.

Just look at the poor guy up there, can he handle the DEBT? No doubt about it, he will be crushed sooner or later if not for the stimulus (extending the debt life, but not improving the assets value of securities). Once the stimulus dies off, the DEBT will come crushing down faster than you can handle, exactly like Sept 2008.

So, be careful especially if you are highly invested.

MyView

I have been warning of the eventure FreeFall since August 2009. I am totally wrong in timing wise, but there is a saying in investment, one have to preserve its capital, failing which, all his gains and capital will be wipe out the moment the Tsunami comes.

If you are prepared for the Tsunami, even you are one year early, that is fine, at least you won't be drowned when it comes, you already have a head start. That is the whole idea, I rather be wrong for a year or two in timing, but, I am still alive when the party is over. Until then, have fun with your party, but the question is, would a drunk person knows how to stop, especially the tap is free?

SOS Freefall

Greece makes up of only 2% of Europe GDP. What about the entire PIIGS. Total of 15%? Well, your guess is as good as mine.

Will there be a freefall of stock markets? Yes. When? Well, it follows like the nature. When a fruit is ripe, it will fall. Of course, there are certain way you can keep it longer up there by slowing down the rate of letting it ripe.

Will it be one month, one year, or two years? If you have good holding power of 2 years, an investment today can give you a 100% return. Try TWM, 2x gearing of Russell 2000 small stocks that short the market, currently at USD20.50 per share.

As at 19 March 2010 - TWM @ USD20.50, will look back to see if it double in 2 years, i.e. 19 March 2012.

SOS Perception or Reality

In politics, they said, perception is reality.

In economics, perception is not reality. Reality is the real fact behind the perception.

Similarly in life, a person mind or notion is formed from its environment, schools, teachers, classmates, parents, government, medias, economics conditions etc.

One of the more influencial of a person's thinking and believe is the MASS MEDIA and its propaganda used to shape its people's mind.

For example, the Chinese Communist Party propaganda of stripping away human rights and rights to the believe in spirituality and replaced with improving economic standards.

For those whole like to know more about the Reality behind the communist party of China, you may google "Nine Commentaries of Chinese Communist Party".

SOS Are we there yet?

Shanghai Tower Projected completion by 2014.

This is not superstitous, neither is it science, or it is just coincident? Actually it is economics, simple economics. Why does a country want to build the tallest building in the WORLD? Well, mainly for two reasons, one is for pride and the other, misallocation of resources due to excesses.

Tallest building mainly reflect excesses.

So I figure to short the Shanghai Stock Exchange stocks in 2013.

SOS When?

When what?

When will the DJIA collapse?

April, May or June?

When it is still in huge debt

When consumptions is unsustainable

When too much of toxic debts issues in a form of derivatives

When debt to GDP is more than 300%

When credit collapsed

When savings starts instead of overspending

When PIIGS collapse, UK too

When unemployment is high

When not many sees it coming?

Now who is talking about the unsustainability of the rebound of DJIA from Mar 2009 to Mar 2010?

1. Jim Rogers
2. Peter Schiff
3. Marc Faber
4. Robert Prechter
5. Michael Shedlock
6. Max Keiser
7. Gerald Celente
8. Gary Shillings
9. Noureil Roubini
10. Steve Keen
11. Janet Travokali

MyView

The question is the risk reward. What is the chances of UP for DJIA to 14,000

What is the chances of DOWN for DJIA to 6,000

Now it is 10,600 (4 March 2010)

Chances 14000 - say 30%

Chance 6000 - say 60%

Well, of course we bet on the 60%, that goes without saying. Why not the other way round? Take a pick, it would be fun. If we strongly think DOWN chances is high, then SHORT the Market, why not try TWM @ 22.50 on 4 March 2010 and have a look within the next one year or shorter.

Historical High is 116
Historical Low is 22.50

SOS The 8 Myths of Market

Claim #1: “Interest rates drive stock prices.”

Claim #2: “Rising oil prices are bearish for stocks.”

Claim #3: “An expanding trade deficit is bad for a nation’s economy and therefore bearish for stock prices.”

Claim #4: “Earnings drive stock prices.”

Claim #5: “GDP drives stock prices.”

Claim #6: “Wars are bullish/bearish for stock prices.”

Claim #7: “Peace is bullish for stocks.”

Claim #8: “Terrorist attacks would cause the stock market to drop.”

Bob Prechter had proven all the 8 Myths above. So, don't waste a brain cell to debate otherwise. Just accept it.

His view is that the outcome or forecast of the market is probabilitics and can be predicted via Elliote wave principle that manifest the social mood into a chart.

MyView

His predictions:

Hold Cash, wait for market to collapse, then only slowly start buying much later. Chances are high that he is right, based on his track record, as the chart now almost turn out a perfect chart heading for wave 5.

SOS Faith Vs Fact

What types of IOUs/Debts created over the last 10 years?

1. Conventional type

2. Derivatives type

How much IOUs/Debts created over the last 10 years?

1. About 40-50 trillion

What will happen when they become non-performing?

1. Credit by banks will disappear for a long while

What will happen if credit disappear?

1. Banks cannot give new loans

2. Non financial banks giving mortgages will collapse

3. Smaller banks with commercial mortgages will collapse

4. Banks become weaker or goes belly up

Are the financial institutions/non financial lenders add value to the economy?

1. Not much, merely act as intermediary for capital

Is the US over consumed?

1. Yes because they spend more than they earn. i.e. negative savings over many years until lately

What will happen if over consumed?

1. Starts saving, reduce consumption

What will happen to economy then?

1. economy will slow down after the stimulus fizzle out

MyView

From the deduction above, you will realise the debt level is unprecedented, i.e. 360% of US GDP. Only one way out, debt will become uncollectable, people will start savings, bank will stop giving new credits, people will consume less.

In short, social mood will be NEGATIVE. Hence, most assets bubble class will burst, i.e. Stocks, Bonds, Commodities