Master Rider Blog

Wake-up Call!

June 18th, 2008 NW Teong

I have warned investors on the impact of a high crude price in my blog posted on 9 May 2008. I wonder how many have heeded my advice.

While the macro picture is murky at the moment, it is crystal clear that most bets (on the stock markets) are off if crude is able to stay at current price level (i.e. between US$125 to US$135 per barrel). The logic is simple, if the crude is staying at current price level for a sustainable period of time, it will have a dampening impact on most other industries. In short, it will single handedly drag down the world economy. The worst scenario is GREAT DEPRESSION. However, before we reach great depression, the world economy will slow down fast enough to force the crude price to drop to a more reasonable level (something below US$100 per barrel?). Then a new equilibrium is achieved among various parameters including the crude oil before we experience the global growth again. I do not know when this will be, however in one of my earlier blogs last year, I have “predicted” that the credit crisis triggered off by the US subprime loan will only be over by the end of 3^rd quarter of this year. Thus, I feel that between now and the entire 3^rd quarter, we will still witness a highly volatile stock market!

For those die-hard investors, you have to be very selective and invest only when great opportunities are present. Otherwise, it is better to extend your holiday (as mentioned in my blog on 9 May 2008). Before you do that, make sure you put your money in one of the safest instruments.

I am really surprise that most governments have done so little to help solve this (high crude oil) issue knowing its dire impact on world economy, and thus all mankind. Every one in the world should change our lifestyle IMMEDIATELY, i.e. do everything one can to conserve as much energy as possible. Government can surely help by building the right infrastructure and thus creating a more conducive environment for walking, cycling etc. It will be my dream to see all major cities to have special lane or path which have plenty of trees at both sides for cyclists. If the environment is nice to walk or cycle, I don’t see why people have to take a car ride to travel 300 meters from point A to point B in a city. This will increase the quality of life in a city as the air will be less polluted.

In fact, I am sad to notice that most governments are still being boxed down by own domestic affairs so much so that they have lost focus on these urgent issues such as preservation of environment, food crisis, energy issue etc. Current situation (earth quakes, heavy floods, etc) really warrants a top most attention from governments of major economies. If I have to use the color code to describe the degree of crisis now, it should be a RED ALERT now. At the moment, some people in different part of the world have died due to environmental havoc such as earth quakes, floods etc and many more are dying due to impending food crisis. Do we want to wait till the lives of half of the world population are being threatened before we take serious actions?

With the rate that we, human beings are destroying the environment, I wonder how long can we continue to breath in fresh air, drink clean water and eat un-polluted food. All of a sudden, an image of Martian with head gear and oxygen tank flashes across my mind……… This really sends a shiver down my spine!

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Entry Filed under: Environment, Macro, Stocks