SOS Bailout

1. Fed Reserve will buy up USD1.3 trillion - another bailout, this time, China or Japan is not buying them, Fed has to buy them with their bankrupted balance sheet



2. Citigroup issue USD3.0bil worth of consumer credit cards



3. Continue bailout of car suppliers

Impact:

1. Hyper inflation period

Action (ASAP):

1. Commodities - Energy, Precious Metals & Agriculture

SOS Deleveraging

1. Corporate Profits are mainly generated from Debt
2. Debt is healthy if it is within one's mean (which is not the case for US)
3. As a result of over consumption and over leveraging by US, the only save prediction is that US will need to reset their normality (i.e. deleverage back to a healthy level i.e. about 200% of GDP instead of 358%)
4. When US is resetting its new norm, consumption is expected to dropped as it is a fallacy consumption driven by debt and saving will gradually improve.
5. Similarly, this is the same that is happening in UK and Europe, GDP for last quarter for US is -6%, UK & Europe is -6%, Japan is -12%, Singapore is -16%, China is about +6%.

MyView

1. World GDP will be in negative mode for next few years due mainly to deleveraging in US and Europe, so set a new normacy from its over investment and over consumption party over the last 10-15 years.
2. Hyper inflation (mainly on food, medical, & education, less on property & equity) will set in over the next few years resulting from printing of money.
3. More importantly, knowing what the cause of the problem is important, it is far more important to be able to "predict" what will be the future so that our INVESTMENT is in the right sector to maintain or sustain its disposable value arising from this unprecedented crisis.

SOS Reality Check

It is difficult to convince someone especially they are very much influnced by the mass media.

Let me give you an anology:

US is laden with the following problems

1. Over gearing i.e. too much debt


2. Over consumptions i.e. more than what they earned with a view that their properties will make them good returns


3. Sub prime mortgage bubble created due to artificial low interest rate as a result of government intervention


4. CDOs, CLOs, MDS, CDS and other derivatives created arising from mortgages, credit cards and education loans


5. Banking sectors collapse due to derivatives which are not disclosed in the accounts and become a time bom

What the US Government doing about it?

1. Printing money i.e. encourage more spending and credit, which is the cause of the problems


2. Putting good money into bad investments like buying toxic assets


3. Force spending on alternate energy and infrastructure, which the intervention prevented good resources for other deserving sector and also the government is already broke and incurring more debt to finance all this spending will only deepen and lengthen the problem

What will happen next?

1. longer recession and deepen recessions


2. hyper inflation as can be seen now in the education, food and medical expenditure


3. gold price will double or triple


4. agricutural prices will go up the roof due to shortage of food (inventories is 50 years low)


5. credit will collapse

SOS Harvard

1. Harvard has the biggest endownment fund in the world.
2. Sadly in late 2008, it has invested about USD7.2 billion in commodities, and foreign equities, which later tanked in Oct to Dec 2008. Doing at 15.7% for the last 15 years. Then came the margin call and Harvard is fully invested!
3. Harvard has to raise USD2.0 billion IOUs at 6% while its investment is having a negative return.

MyView

Everyone thought that they are the brightest kid in town until they lose their pants. The moral here is "Greed", "Ego", "Pride" and "Stupidity"

With all combined, you will have a Harvard graduate. That is why, in the ancient time in China, morality is cultivated before a student are thought. Morality comes first, education comes second.

SOS Fed

Jim Rogers said Fed is a bankrupt

Marc Faber said Fed is a bankrupt

Peter Schiff said Fed is a bankrupt

Roubini said Fed is a bankrupt

Matthias Chang said Fed is a bankrupt

It is important to note that the experts above speaks based on hard facts and figures, not rumours or hear say.

So is Bank of England

MyView

1. First and foremost, get out of US dollars and UK sterling. Go to Yuan or Yen. Or go to resourse rich countries like Australia, Canada or high reserve countries like Singapore, Hong Kong.
2. Invest in precious metal or mining companies of precious metals like gold, silver or platinum as save haven when currencies are in the tail spin
3. Invest in crude oil related companies, at about USD40 per barrel, in gold terms it is very attractive because gold is USD900 per oz. During the peak, USD900 per oz of gold is equivalent to crude oil at USD100 per barrel
4. Invest in Agricultural related stocks
5. Invest in high dividend yield stocks

For Malaysian, looking at the politicians, it is quite save to said that it will lose its competitive advantage after this crisis as non of the politicians border about the economy or know how to handle the crisis. In short, Malaysia economy will be in deep trouble, which will eventually, the currency willl lose its competitiveness. Foreign investment will come to a halt, export will halt as well, and so will our foreign reserve in USD which eventually become toilet paper.

Hence, proper planning is critical, just to maintain the "disposable" value of Ringgit Malaysia as this crisis is much worst than the Asian crisis in 1997 as it was isolated mainly on Asian currency problem.

SOS Bargain?

Oil Companies Are Trading As If Their Oil Reserves Are Worth As Little As 15 cents on the Dollar!
Consider …

Anadarko Petroleum with 2.4 billion barrels of proven oil reserves that are now trading at a mere 15 cents on the dollar when compared to the company's current market value.
Occidental Petroleum with over 2.8 billion barrels of oil, valued at just 33 cents on the dollar .
ExxonMobil whose share price currently values the company's oil reserves at just $2.54 a barrel . That's a 94% discount from the current market price of oil!
Major Oil Company Values are Dirt Cheap Compared to the Value of their Reserves!

1. Name & Ticker
2. Recent Price
3. Market Cap (billions)
4. P/E Ratio
5. Oil Reserves millions of barrels of oil equivalent)
6. Market Value of Oil Reserves @ $44 oil (billions $)
7. Based on Market Cap, Oil Effectively Valued at (cents on the dollar)
1. Anadarko Petroleum Corp (APC)
2. $35.00
3. $16
4. 7.18
5. 2,431
6. $106,979
7. 15 cents

1. Chevron Corp (CVX)
2. $78.08
3. $159
4. 6.56
5. 10,777
6. $474,188
7. 34 cents

1. ConocoPhillips (COP)
2. $51.49
3. $76
4. 4.22
5. 10,560
6. $464,625
7. 16 cents

1. Exxon Mobil Corp (XOM)
$79.30
$403
8.79
21,757
$957,308
42 cents

Hess Corp (HES)
$44.04
$14
4.72
1,330
$58,505
24 cents

Marathon Oil Corp (MRO)
$24.82
$18
4.38
1,225
$53,900
33 cents

Occidental Petroleum Corp (OXY)
$52.10
$42
5.52
2,865
$126,038
33 cents

Are these companies bargains?
Just based on the valuations of their oil reserves, I think they are an absolute steal. Factor in the following and they're even greater bargains …
Anadarko is trading at 7.18 times earnings
Occidental at just 5.52 times earnings
ExxonMobil trading at just 8.79 times earnings
Or how about ConocoPhillips … trading at just over 4 times earnings?

Do you think oil and gas companies are the only ones that are dirt-cheap right now?
Think again …
Gold Miners Are an Outright Steal, Too …
Goldcorp whose 43 million ounces of gold is currently valued by the market at a mere 55 cents on the dollar when compared to gold's current price.
Newmont Mining with over 93 million ounces of gold, valued at just 21 cents on the dollar!
Gold Companies are also Dirt Cheap

1. Name & Ticker
2. Recent Price
3. Market Cap (billions)
4. Proven & Probable Gold Reserves (millions of ounces)
5. Market Value of Gold Reserves @ $765 an ounce (millions of $)
6. Market Cap of Gold Reserves Effectively Valued at (cents on the dollar)

1. Barrick Gold Corp (ABX)
2. $28.14
3. $25
4. 124.6
5. $95,319
6. 26 cents

1. Freeport-McMoRan Copper & Gold Inc (FCX)
$20.68
$7.78
41
$31,365
25 cents

Goldcorp Inc (GG)
$25.21
$18
43
$32,895
55 cents

Kinross Gold Corp (KGC)
$15.16
$9.98
46
$35,190
28 cents

Newmont Mining Corp (NEM)
$32.27
$15
93
$71,145
21 cents

And it's not just energy companies and gold miners that are trading at such incredible bargain basement levels …
Almost All Natural Resource Companies Are Grossly Undervalued!

Consider the two largest in the world …
BHP Billiton , sitting on over $1 TRILLION worth of aluminum, tin, oil, bauxite, gold, silver, and industrial diamonds. Yet its share price is valuing those reserves at less than 12 cents on the dollar!

Rio Tinto , with more than $2 TRILLION of natural resources that are currently valued at less than 2 cents on the dollar , making Rio one of the best bargains on the planet, in my opinion.
Now, let's widen the scope even further, because there are a lot more companies that are dirt cheap …

Companies of all kinds from all over the world are ON SALE — trading at valuations that are less than the cash they have on hand.

Put another way, they are trading as if their profits today and earnings tomorrow don't even exist. Is that amazing, or what?

Consider …

The Cogo Group, serving China's wireless telecom sector, is trading at just $3.40 a share. Yet the company has almost $3.30 of cash per share … zero debt … and $.49 a share in earnings.

South Korea-based Namyang Dairy is another debt-free company. Plus it has a $270 million pile of cash that is 44% greater than the market value of its shares.

Italian-based machinery manufacturer Danieli has $1.49 billion in cash on hand, 40% more than the value of its publicly traded shares.

The Bank of New York Mellon has $45 billion in cash in its piggy bank, $12 billion more than its $33 billion market cap.

In fact, according to a recent Bloomberg report, there are now 2,267 companies around the world that are effectively offering their profits to the public for free!

Compare that to the low in the 2002 stock market, when according to the same Bloomberg formula, there were just 276 publicly traded companies in the world that were valued so cheaply.
Do you know what those companies' share prices did in the ensuing 12 months? They soared an average of 112%!

Bottom line: There are bargains and profits galore in these markets.
So get ready to make some real money in the weeks and months ahead.

MyView

1. Calculation above is inaccurate. The cost of extraction and marketing and transportation are not included.


2. Calculation above has ignored time value of money (inflation) - we must include the discounted rate of return on the future cash flow


3. Calculation must also plus the net cash balances at time of investment as a value to the said investment

SOS Where to Invest

The continuity uncertainty in the global economy has cause HAVOC to many countries, not only in UK, US or Eastern Europe, but also to a certain extent the BRIC countries as well as Asia Pacific countries.

First we have to do a comparison of your own country currency and others in the long term, then if you think your country currency may not be able to withstand the financial tsunami, start diversify into other currency, the country where they are financially or economically stronger for the next 3 to 5 years.

Where to Invest?

1. HIGH DIVIDEND stocks as recommended by Peter Schiff (go to his website, he recommended 5 stocks, in Canada, HK, Singapore and Australia.
2. GOLD or gold mining stocks.
3. AGRICULTURAL STOCKS in China but listed in HKSE.
4. ENERGY STOCKS - crude oil related or natural gas stocks for long term recovery

The crisis is unprecedented, so one has to diversify into various asset class to protect our hard earned net worth.