SOS What NEXT?

What NEXT?

For:

1. Oil (think it will go up higher and then collapse like in 2008)
2. Gold (think it will go to USD1500 per oz and then a meaningful correction 10-30%)
3. Emerging Market Stock Market - corrections (due to overbought position)
4. Developed Market Stock Market (will do better than EM, could be down but lower down lower than EM)
5. Agriculture commodities (will have a meaningful correction)

This is the prediction of a few economist, MISH, Prechter and Gary Shilling.

MyView

I am more interested on how the derivatives plays out. In USA, there is about USD43 trillion derivatives are marked to model and their losses not reflected in the books, like Citibank, with USD1 trillion not shown the real value.

Of course, what will happen to countries that print lots of money? And countries that keeping the interest at near zero? Most likely it will cause CARRY TRADE. Why not, borrowing at zero costs, any investment will give a good return.

SOS Who will POP next?

According to MISH or Mike Shedlock,

1. China (building city that no one lives in - malinvestment)
2. Australia (property is 8-9 times its household income)
3. Canada (property is 7-8 times its household income)
4. EM (that rely on serve China malinvestment)

Well, time will tell.

SOS What is happening to stock markets?

1. Stock markets all over the world tank at the same time. Up at the same time. Last time we talk about Yen carry trade, today, it is US Dollar carry trade, which I believe is many times bigger than its brother Yen.
2. Foreign currency exchange about USD4 trillion a day. World GDP is only about USD60 trillion. Foreign currency is a very very huge CASINO. Imagine, any investor/players, with minimum of USD300.00 can put their hands on currency speculation. It became a full time game for many.
3. Hence, we must really watch out for the currency war. It is very very VOLATILE. There is no economic benefit in trading in forex, similar to guessing head or tail in a flipping of coin game. It is so huge that no single person on earth can INFLUENCE it unlike stock markets.
4. Would it be the reason why when USD up, commodities, stocks, other asset class DOWN. It is like a see-saw, when USD is DOWN (currently), there rest of the asset class is UP. Is it a turning point now? Perhaps.

MyView

Investing in whatever class of assets is actually a probability game, valuation is relative, and there is no tools in the world can tell you exactly where any prices will goes up or down. Hence, valuation is simply depends on the eyes of the beholder. Price is what you pay, value is what you get. (Mr Buffett said). By the way, Buffett had been selling lots of shares lately. I wonder why?

SOS Malaysia Economy & Stock Market

Malaysia:

Household debt is HIGH i.e. 36% of total loans from banks

Corporate Debt is Not Low, i.e. commercial loan for properties

Government Debt - Hmm, not sure about it

Food price, especially from Chinese stores in coffee shops has increase about RM0.50 per plate from RM3.50 or RM4.00. Similar increase in previous years. Food inflation in DOUBLE Digits.

What about HOUSE price, needless to say, prices increase in 20-50% p.a. And as usual, developers always says that they are catching up on the lost year 2008/9.

What will happen when INTEREST rates increase?

What will the hot money turn COLD?

What will happen to property SPECULTORS when prices drop?

What will happen new buyers having problems getting financing from BANKS when NPL starts to peak as a result of interest rate spike after the General Election?

What will happen to your share prices when the government is tired of supporting the share market?

What will happen when BNM increase INTEREST rate rapidly like China?

MyView

Of course, there is a lot of what ifs. The spike in asset prices mainly resulting from 2 factors, one is the low interest rate regime (plus easy money, 5/95 scheme) + hot money (from overseas and speculators). REMEMBERS both factors is in for the SHORT RUN. So, it is a matter of time before the MUSIC stops. Be very cautious.

Reduce when GE is annouced or US stock market tank, whichever is earlier.Take the Government statistics with a lot of salt.

SOS the market can stay irrational longer than the investor can stay solvent

SOS there is a major GAP between the reality as against what is REPORTED.

Market capitalisation vs NTA
Share price vs intrinsic value
GDP vs Debt over GDP
Household debt vs household income
Household debt over GDP

The market can stay irrational longer than the investor can stay solvent. In short, although in reality it is a fact that the economy is weak, but the report statistics can be translated and perceived that the economy is strong.

MyView

There is always a GAP between the perceived truth and the REALITY. What the governments do is to provide a perceived truth to their citizens as the REALITY will not benefits its government.

In short, people like to hear what hear what they want to listen. Until one day, the gap between the perceive truth and the reality is so huge, REVOLUTION will began.

SOS SADistics & SCAtisitcs

USA GDP about USD14 trillion

USD Debt (2010)
Government - USD14 trillion (USD1 trillion in 1980)
Household - USD13 trillion
Business - USD23 trillion

CPI is now 620 (1970 is 100)

Unfunded debt (medicare & medicad) - USD130 trillion
Derivatives outstanding in USA - USD240 trillion


Market cap of NYSE is about USD15 trillion
Trailling PE of NYSE is about 18 times
Hence Earnings of NYSE is about USD0.8 trillion a year
Dividend Yield now is about 1.71% (long term average is about 3%)

MyView

Red Flags

• debt growth is alarming, now is 3.6 times the GDP


• unemployment is currently about 9.6%


• consumption before 2008 crash is about 76% of GDP


• housing inventories about 2 million UNSOLD


• saving rates is increasing since 2008 (consumption will drop)


• PE of 18 is relatively high against long term average of 13


• QEs and zero interest rate will have adverse financial effect on economy


• Derivatives issues not address since 2008

The sadistics and scatisics do not look good. It is a matter of timing when it implode. Remind me of a corporation of over gearing and under capitalised with incompetent staff.

SOS Claus Bubble in USA markets unveiled

The U.S. Stock Market Is Even More Vulnerable!

Year-to-date the S&P 500 is up 5.6 percent. It’s up 13.2 percent since late November and 26.7 percent since late August, when Fed chairman Bernanke first announced QE2. According to Bernanke himself, this huge rally is the result of his quantitative easing efforts. He is probably right, since there are very few other reasons to support a stock market rally.

Here’s why I say that …

First of all, the fundamental valuation is extremely unattractive. The PE-ratio based on 12-months trailing earnings is at 18.5 (middle panel of the chart below). And the dividend yield is down to a paltry 1.71 percent (lower panel). Both are classic valuation metrics. And both are telling me that stocks are poised to deliver dismal long-term results.

Second, sentiment indicators are telling us that bullish expectations have reached extremes. According to the Investment Company Institute, mutual fund cash levels are down to 3.5 percent. They got that low only once, in early 2010, shortly before the flash crash of May 6, which started a 20 percent correction and got Ben Bernanke to announce QE2.

Third, the stock market is extremely overbought. Momentum indicators of nearly all time frames are stretched to the point where a bigger correction has to be expected.

Fourth, longer-term interest rates have risen considerably since mid-2010. Rising interest rates and a stock market rally at the same time has historically been a rare coincidence. And when it did occur, usually it wasn’t long until stocks caved in to the pressure of rising rates. This is especially true when stock market valuations were high, markets were overbought, and irrational exuberance reigned — as is currently the case.

For the third time in a dozen years the U.S. stock market qualifies as a bubble ready to burst. And emerging markets’ relative weakness can be interpreted as a warning sign that the party may be over soon.

MyView

Well, figures or statistics seldom lie. It is the interpretations that decides the differences. The irony about the media and expert, everyone seems to have different yardsticks to evaluate the figures or statistics. There are thousand of figures and statistics to review and each one can have differing views on each statistics.

We can debate until the cows comes home, if the economy is sustainable, why QE2? why interest rates remain near to zero? why so much geopolitical issues? why an outburst of food inflation issue? why China is frantically trying to tame inflation? Why Claus is recommending to short emerging market EEV? why aggressive investors short US Market like TWM or TZA?

Well, whenever there is a ying, there is a yang. But one have forgotten, there is one more element, called yo. Ying Yang Yo. Yo is the equilibrium that can never be achieved. Yo is the government intervention of the free market that eventually will make thing worst, period.

SOS Ahead of the Game by Gary Shilling

Anticipate the anticipators.

• Hot money (normally leverage) to find the best yield return;
• currently this is what happen to commodity
• Example, LTCM, highly leverage, predicting the equilibrium (they were the market), when the music stops, they collapse
• recently the housing bubble, since 1930, house prices never goes down
• there is no such thing as free lunch (allocation of scarce resources)
• Forecasting in a business sense, interview the stakeholders (concensus forecast)
• concensus already discounted into the market (does not add value)
• value added must exceed cost (look beyond concensus)
• must be important; good chance of happening (not contrarian but based on track record); find out what is important, likely to happen and not in the concensus
• history will playout (under the similar environment)
• history never repeat but it rhymes.
• early 70s, we are short of everything, inflation is running on double digits (we look at steel industry, massive hoarding, because supply exceed demand tonnage, inventory is not reported) 1921 is similar environment like early 1970s (inventory built up)
• over or under regulations is in the eye of beholders (government alway react during a financial crisis)
• micheal lewis said that financial sector is the parasite of the real economy (financial sector went beyond its role - derivatives)
• excess houses inventory (about 2 million), 1.5 million a year, it takes 5 years to clear the inventories

MyView

He suggested to look beyond the concensus forecast (already discounted). Look for value add.

SOS Peace at the expense of Justice?

"And the great owners, who must lose their land in an upheaval, the great owners with access to history, with eyes to read history and to know the great fact: when property accumulates in too few hands it is taken away. And that companion fact: when a majority of the people are hungry and cold they will take by force what they need. And the little screaming fact that sounds through all history: repression works only to strengthen and knit the repressed." - John Steinbeck - Grapes of Wrath

I want to put a tag of shame on the greedy bastards who are responsible for this [the Great Depression and its effects]."

The bankers who took their farms and cast them aside like a piece of trash, the Wall Street speculators who got rich by peddling debt to the working class, and the wealthy land barons who treated the migrant farm workers like criminals, were to blame for the suffering of millions. The pyramid of wealth was as unequal in 1929 as it is today. The 1% of the population at the very top of the pyramid had incomes 650% greater than those 11% of Americans at the bottom of the pyramid. The tremendous concentration of wealth in the hands of a few meant that continued economic prosperity was dependent on the high investment and luxury spending of the wealthy.
By 1929, the richest 1% owned 40% of the nation’s wealth. The top 5% earned 33% of the income in the country. The bottom 93% experienced a 4% drop in real disposable income between 1923 and 1929. The middle class comprised only 20% of all Americans. Society was skewed heavily towards the haves. By 1929, more than half of all Americans were living below a minimum subsistence level. Those with means were taking advantage of low interest rates by using margin to invest in stocks. The margin requirement was only 10%, so you could buy $10,000 worth of stock for $1,000 and borrow the rest. With artificially low interest rates and a booming economy, companies extrapolated the good times and invested in huge expansions. During the 1920s there were 1,200 mergers that swallowed up more than 6,000 companies. By 1929, only 200 mega-corporations controlled over half of all American industry. The few were enriched, while the many wallowed in poverty and despair.

When self proclaimed experts on the Great Depression, like Ben Bernanke, proclaim that the Federal Reserve contributed to the Depression by not expanding the monetary supply fast enough, they practice the art of the Big Lie. The Great Depression was mainly caused by the expansion of the money supply by the Federal Reserve in the 1920’s that led to an unsustainable credit driven boom. Both Friedrich Hayek and Ludwig von Mises predicted an economic collapse in early 1929. In the Austrian view it was this inflation of the money supply that led to an unsustainable boom in both asset prices (stocks and bonds) and capital goods. Ben Strong, the head of the Federal Reserve, attempted to help Britain by keeping interest rates low and the USD weak versus the Pound. The artificially low interest rates led to over investment in textiles, farming and autos. In 1927 he lowered rates yet again leading to a speculative frenzy leading up to the Great Crash. The ruling elite of society were the Wall Street speculators. Only 1.5 million people out of an entire population of 127 million invested in the stock market. Margin loans increased from $3.5 billion in 1927 to $8.5 billion in 1929. Stock prices rose 40% between May 1928 and September 1929, while daily trading rose from 2 million shares to 5 million shares per day. By the time the Federal Reserve belatedly tightened in 1928, it was far too late to avoid a stock market crash and depression.

The Federal Reserve was created by bankers to benefit bankers. The Federal Reserve purchased $1.1 billion of government securities from February to July 1932, which raised its total holding to $1.8 billion. Total bank reserves only rose by $212 million, but this was because the American populace lost faith in the banking system and began hoarding more cash, a factor very much beyond the control of the Central Bank. The potential for a run on the banks caused local bankers to be more conservative in lending out their reserves, and was the cause of the Federal Reserve's inability to inflate. From its backroom middle of the night creation in 1913, the bank owned Federal Reserve has sought to benefit its owners, the large Wall Street banking interests and its politician protectors in Congress. The working class has always been nothing more than hosts used by the parasites to tax and peddle debt to.

Income and wealth inequality reached a new peak in 2007, the highest level of inequality since 1929. William Domhoff details this inequality in the following terms:
In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.7%.

(source: marketoracle.co.uk)

MyView

Injustice from the "so called" elites at the expense of the middle and lower class is norm in modern society and USA in particular. It happens around the world, the "financially rich" will always bully the "poor and incapable", no matter which way you look at it.

In Malaysia, the Government

1981-2003 RM1.15 trillion spent (22 years)

2004-2009 RM0.985 trillion spent (5 years)

SOS A Gary Shilling interviewed by Jim Puplava

1. Many are interested and participating in the mortgage loan;
2. Bubble give great opportunity, 3 factors, sth out of consencious, right yardsticks and right reason for the right call;
3. History never repeat but it rhymes;
4. Late 70s - disinflation instead of inflation (gold is money) - inflation peak at 1980
5. Inflation is normally results from big government spending
6. Housing bubble call, no money down loan & junk mortgage with AAA
7. Developing from 2002, housing bubble into 2005, the point is loose lending practices, regulation problems
8. Investors trusted rating agencies work hand in glove with wall street derivatives
9. Another notion is prices of properties never drop (since 1930)
10. Rating agencies got away with their actions
11. Wall street leverage from 20 times to 40 times (Lehman and Bear Stearn)
12. Slow growth ahead, consumer zeal to save, private sector cost cutting (over last decade)
13. New reality, Greece, Ireland, Portugal, (Spain?)
14. UK will be a show case, private sector loan decrease from 15% to -3%.
15. Stimulus is a control experienment, the multiplier is only 0.5 times instead of ONE or more time (save half and spend half of stimulus)
16. Protectionism arises from slow growth and high unemployment.
17. Free trade benefits the leading economy (UK in the 90s).
18. US, no help from anywhere.
19. Social contract to retire late.

SOS Mr GloomDoomBoom

What Mr Marc Faber said in Feb:

• US market will outperformed Emerging Markets, not necessary up, but if goes down, it will go down lesser than the EM because EM had rebounded stronger than US.


• Correction of gold may be expected


• Current bouyant stock markets mainly due to bailouts, stimulus, zero interest, government interventions, which will not be sustainable for long term

MyView

2011 is unlikely to do better than 2010 due to large stimulus. A major correction of stock market (10 - 20%) is around the corner. Get ready for a rough ride. Shorting the market may be a good idea (if you are an aggressive player)

SOS China's hard landing in a year or 2

Gary Shilling spoke with Bloomberg’s Tom Keene yesterday in a wide-ranging interview. I have posted the video below for you to watch. But let me say a few words about the interview.

First, it is noteworthy that in this multi-faceted interview Bloomberg chose the title "Shilling Says Commodity Markets ‘Clearly in a Bubble’. I see this as confirmation of the increasing worry many of us have regarding the ever-increasing prices of commodities, especially energy and agricultural varieties. Yesterday I wrote another post on the topic of food price inflation. Just this morning, I noted two more articles on emerging markets related to this issue. One on the tragic Brazil floods that have left 500 dead. And the second on India confirming my view from the latest food inflation post that we are likely to see export restrictions on energy and food. As I recently commented to a reader, here we are only one-and-a-half years into the economic cycle. And already we are facing an environment in tech that is akin to 1996 or 1997, in EM like 1996 or 1997 and in commodities like 2007 or 2008. That is worrying.

As for the rest of the Shilling interview, he takes the more dour 2% growth side as a foil for Byron Wien’s 5% US GDP growth call. His view is that the secular deleveraging which began during the recession is likely to continue in some fashion and be a check on US GDP growth. My view is more skewed to growth. Households do not deleverage to a significant degree when asset prices are rising. Nor do they deleverage unless financial distress or the prospect of financial distress causes them to do so. I think Shilling’s secular view is right but I believe that it will be manifest in a more chaotic fashion – little or no deleveraging, perhaps even re-leveraging during the up-phase, followed by extreme deleveraging during economic downturns. My expectation, then is for much more volatility and that invariably means aggressive policy responses.

Despite the fact that I am cautiously optimistic for 2011, my longer-term view is still very much in tact. In October 2009, I wrote The recession is over but the depression has just begun, saying:

• all countries which issue the vast majority of debt in their own currency (U.S, Eurozone, U.K., Switzerland, Japan) will inflate. They will print as much money as they can reasonably get away with. While the economy is in an upswing, this will create a false boom, predicated on asset price increases. This will be a huge bonus for hard assets like gold, platinum or silver. However, when the prop of government spending is taken away, the global economy will relapse into recession.
• As a result there will be a Scylla and Charybdis of inflationary and deflationary forces, which will force the hands of central bankers in adding and withdrawing liquidity. Add in the likely volatility in government spending and taxation and you have the makings of a depression shaped like a series of W’s consisting of short and uneven business cycles. The secular force is the D-process and the deleveraging, so I expect deflation to be the resulting secular trend more than inflation…
• From an investing standpoint, consider this a secular bear market for stocks then. Play the rallies, but be cognizant that the secular trend for the time being is down. The Japanese example which we are now tracking is a best case scenario.

In my mind, this is how it is playing out right now, with commodity price inflation rising and the technology sector in particular displaying nice levels of growth in earnings and valuations. The wild cards are the ones I presented in my 2011 forecast.

MyView

Boom bust effect from money printing is very apparent now. The moment the stimulus or bailout is remove, like the moment the morphin is remove, ask the addict, how does he feel.

SOS by Kee Thuan Chye of Mallaysia Digest

Please spend 10 minutes to read this. Spammed by the Prime Minister!

by Kee Thuan Chye

NO less than the Prime Minister has just spammed me! In an e-mail wishing me Happy Chinese New Year. I’m not pleased. In fact, when I got the e-mail, I freaked out. How did he get my address? I take strong umbrage against whoever gave it to him. It is an invasion of my privacy. Najib Razak (or rather, his assistants) reportedly sent out that e-mail to 1.5 million people. The Star reported that many were happy to get it – in a report quoting only three people. And two of them had Muslim-sounding names! From the tweets I’ve seen, it seems many Muslims have been getting the e-mail too. Some tweeters considered the greeting “insincere”, some suggested reporting the matter to Cyber 999 and even the police. Many questioned how Najib or his assistants got their e-mail addresses. There’s a theory going round that it came from the database of a media conglomerate. If this is true, the practice is, of course, not right. It contravenes the cyberworld law of data privacy. Whoever gave the data to him showed that they did not respect that privacy. My wife got a CNY greeting from Najib too – via an SMS. Did her telco give her number to Najib and Co? Is that a proper thing to do? And, by the way, who is paying for the SMSes? Najib or the rakyat? This episode shows that the personal details of Malaysians are not safe from prying and abuse. And that Big Brother is watching. That’s a scary prospect. Najib’s greeting is yet another of the public relations campaigns he has been mounting for more than a year now. Those who are aware realise they are nothing more than efforts to win votes for the next general election, but there are plenty of others who are not so clued-in. This Chinese New Year campaign seems to have had an effect, especially on fence-sitters. Some of them said they were touched. They seemed swayed into believing that the PM cared enough to send them the greeting. This is not surprising, because gullible Malaysians often fall for cheap tricks all too easily. The number who have fallen victim to Internet scams must be substantial. As a politician of long experience, Najib must surely know that. More public relations at work can be seen in the awarding of datukships in conjunction with Federal Territory Day. The number of Indians being awarded this year is relatively high. Seen in relation to Barisan Nasional’s bid to sustain its regaining of the Indian vote, this is to be expected. Among the awardees are former football ace Santokh Singh, who is himself surprised to be recognised 26 years after he retired from the game, and karate exponent P. Arivalagan, who expressed mixed feelings because earlier this year he was nearly axed as national coach. Najib’s own special assistant, Ravindren Chelliah Ponniah, also gets to be a datuk. So do a couple of other Singhs. And guess who else? R Thanenthiran, president of Parti Makkal Sakthi Malaysia. For what? For forsaking Hindraf and crossing to the other side? What about the Datuk Seri title for the president of the People’s Progressive Party (PPP), M Kayveas? What has Kayveas done of late to deserve this higher award? That’s how the next general election is going to be won – by public relations. Of which BN being in government has plenty of resources to invest in. Similarly, it has the resources to hijack Pakatan Rakyat’s recently announced pledge to abolish toll on all highways within 100 days of coming to power. A few days ago, Najib declared – in perfect time for the Tenang by-election – that the toll for the Salak to Taman Connaught stretch on the East-West Link Expressway would be abolished by May. He also announced that the toll for two other expressways would not be increased for the next five years. According to him, no compensation would be paid to the highway concessionaires, implying that it would not cost taxpayers anything. Whether this is true remains to be seen. An engineer of long experience in the relevant industry that I spoke to is very skeptical about it. He feels that there will be other ways of compensation made to the concessionaires that will ultimately involve payment by the rakyat. Last December, when Pakatan Rakyat announced its pledge to abolish tolls, Najib pooh-poohed it and said it was irresponsible. But now he’s going for it himself. He has even hinted that there will be more good news on the same subject soon. I suspect he will make the North-South Expressway toll-free. He might announce this on the eve of the next general election and make a major score from it. If that happens, you can bet that the taxpayer will not be able to avoid compensating the concessionaires in one way or another. Regardless of what Najib might say then to the contrary. We have to be circumspect. We have to learn not to be so easily fooled. On the surface, a proposition may sound good, but there can be hidden drawbacks underlying it which of course will be kept secret at the time of announcement. We have also to be aware that all these public relations efforts made by Najib are intended for one main purpose. Apart from that, they also distract public attention from the questionable goings-on. Only last week, it was revealed that there is now a new department in the Prime Minister’s Office called FLOM – for First Lady of Malaysia – manned by a staff of six. And it looks after the operational needs of Najib’s wife, Rosmah Mansor. Never in our history has there ever been such a department. It reeks of nepotism and other things besides. Why should the PM’s wife have a department all to herself? Are there institutionalized provisions for such a thing? Who is paying for the upkeep of this department? We need to snap out of our distracted state and pressure Najib to justify the setting-up of FLOM. Let’s see how his public relations advisers will respond to that. For CNY, they came up with spam; for FLOM, will they come up with flam? Just for fun, here are two Urban Dictionary definitions of “flom” – 1) To untie someone’s shoe lace while they aren’t looking, so they get pissed off and have to retie it (e.g. “Hey, stop it! This is the fifth time you’ve flommed me!”); 2) to do something sexual to someone of the opposite sex. Either way you look at it, it sounds naughty!

SOS Deleveraging Unveiled by A. Gary Shilling

Interview of Gary Shilling on Bloomberg on 13 Jan 2011

This is what he said, in a nutshell:

• Saving rates will increase from 5.5% to double digits in 2011
• real estates stocks level is still high
• state government is in financial trouble
• 30 years of leveraging is coming to an end, the new phase is a deleveraging phase
• exports improve slightly but this is not going to bring the economy out of the wood
• 1981 to 2009 Disinflation from 16% to 3% for 10 years treasury and more to go
• commodities is in bubble and stocks may have little legs to go
  

MyView

It would be wise to listen to his ideas in his new book called "Age of Deleveraging"

SOS Will the PIIGS be roasted?

The last of the PIIGS, i.e. Spain said on 2 Feb 2011, that it will not need help from IMF.

IRELAND in Dec 2010

In Dublin, Prime Minister Brian Cowen rebuffed calls to request a bailout, saying the government was fully funded until mid-2011, and insisted that only the banks may need help.

MyView

Couple of days later, Ireland needs a bailout of about Euro 90 billion. Spain said there are enough jobs in the renewal energy business. Spain denial sounds the same to Greece and Ireland days before they collapse.

SOS Hedge Your Portfolio

It may be a good idea to hedge your portfolio, if you are invested in NYSE stocks, a newly launch ETF bear with ticker "HDGE", who short on specific stocks it deemed overvalue.

With such a volatile market lately, although most may be bullish, it would be wise to hedge your portfolio if the bull reverse. After all the market has went up quite substantially since March 2009, from 6,500 to 12,043, i.e. almost 100% over the last two years.

High dividend yield and strong cash flow stocks should be the priority.

MyView

The stocks had move up for almost 100% since March 2009. Hence, it is not unwise to have some protection now, just in case a reverse to the 2008 downturn. We have seen the PIIGS being roasted and unemployment rate had hardly move. Currently the HDGE is about USD24.80 per share. Remember this is not an investment advice, it is just a personal opinion.

SOS MORTGAGE RATE WENT UP!

Why? it follows long term treasury rate in US. Inflation should goes up together, not selective i.e. CRB index will goes up, not only precious metal or crude oil, or just wheat.

Hyperinflation only comes after bonds market implode.

MyView

Market is going into high uncertainty, high volatility and more crisis in Europe and Middle East. PIIGS are roasted. Egypt's pyramids are collapsing. Brisbane flood is bigger than France & Portugal combined. Volcano in Japan has errupted.

IOUs is imploding. States Minicipal Bonds is defaulting.

SOS Egypt Crisis

Egypt Crisis = World financial crisis

TRUE or FALSE?

Iceland Crisis
Greece Crisis
Ireland Crisis

What is next? Spain Crisis?

MyView

Very odd, whenever there is a crisis, the world stock market drop. What is the economic or political impact? It is doubtful that it is related.