Posts filed under 'Environment'
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 3rd quarter of this year. Thus, I feel that between now and the entire 3rd 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!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”! Welcome to visit the #1 value-added stock and option investment education website in the world, www.master-rider.com!Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
June 18th, 2008
NW Teong
In fact, most of us are going to get hurt if the inflation rate is carry on at the current rate of 4-5% per annum in most countries in Asia. We blame it on commodities which include both food and non-food commodities, but the real culprits are truly ourselves, the human beings.
I for one, am really surprise that no concerted effort have been made by the governments of influential economies to address the following global issues: food shortage which could cause severe famine, environmental issues due to massive de-forestation, and other abuses as well as general hardship for all mankind due to severe price hike in crude which translates to higher transportation cost. If there are actions already being taken, they are simply too little. If we do not take these issues seriously, we would face very dire consequences in the not too distant future. The key question here is that do the governments of the influential economies have the wisdom to realize these (potential) calamities and have the resolute to address these ultimate urgent issues? Do they have the wisdom to decide wealth (i.e. economy as well as political interests) over morality as well as humanity issues? More importantly address these issues with top most urgency?
We will surely see more natural calamities such as earth quakes, cyclone, tsunamis, floods and other erratic weather going forward. We all know that our only planet mother Earth, just like human beings’ body, need to strike a balance. While we need to eat right, rest and exercise well to stay healthy, the Earth needs to maintain its internal and external balance too. Unfortunately, we human beings have relentlessly abused the Earth in pursue of wealth. This is akin to investors’ psychology: the greed and fear! At the moment, we seem to be more interested in pursuing the wealth with total ignorance of the risks that associated with it. We build more roads, more houses, more cars, more planes etc to cater for our insatiable needs. I am afraid and truly worried that when we realized our silly mistakes, it might be too late to address all the related issues. If we are not at risk now, our future generations surely are. I feel rather helpless when I see people debate over food versus fuel. To me the answer is obvious! Without fuel, we can still survive but without food we will surely die, full stop!
There is huge amount of wealth being transferred due to high crude oil prices. While the rich ones continue to enjoy their luxury lifestyle, the poor ones are made even poorer. The rich ones can afford to cruise in personal jet plane, eat at the most expensive restaurant, the poor ones can only survive one day at a time. Let’s face it, we all accept the fact that life is never fair. However, I feel that we should have the basic morality to help our fellow earthlings who might be struggling to survive elsewhere. The very least we could do is to become a responsible earthling where we are mindful of fellow human beings (both current and future generations) and take good care of the only earth that we live in. If by giving up driving (or at least drive less) you can save some lives some where, then why not?
For a start, I feel that we should all (governments, private sectors and individuals) make a serious effort to save energy and be environmental friendly. I wonder, why can’t we have special lane for bicycles in major cities in the world? I think it is high time to encourage cycling as an alternative to driving. Governments can surely help by having a bicycle friendly transport system in place, such as special lane for bicycles on every road, sufficient parking facilities for bicycles and so on. Perhaps, governments can even consider giving out bonus or incentives (just like carbon credit) for cyclists who have traveled certain kilometers within a certain specified period of time. We may also allocate some R&D funds to develop “cycling cars”, i.e. cars that are light enough to be powered by human legs. Such cars should have rechargeable batteries that could be re-charged by our legs, These batteries can then be used to power the car for certain distance when our legs are taking a break. Obviously, there are many efforts going on to look for alternative energy sources. While the obvious choice is the solar energy, personally I feel that a combination of a mechanical (e.g. bicycle, better still a weather friendly bicycle!) and a human system will be a perfect combination. This can also help to solve the obese problem in many major cities!
Of course, we still need a good public transport system. However, we truly need multiple approaches to ease this problem.
Human beings use to have sharp common sense and great instincts; however these instincts are being blunted by our greed and fear, just like the way they have blunted our ability to make wise investment decisions!
Take actions now before some one is going to get hurt, really very hurt!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”!Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
June 6th, 2008
NW Teong
While SUVs help to push up the crude oil to its record price recently, SIVs help to spread the pain due to the sub-prime loans crisis in US. Indeed, SIVs are the core concern of the sub-prime loans crisis. What are SIVs and what are SUVs? SIVs are Structured Investment Vehicles and SUVs are none other than Sport Utility Vehicles. While we are all familiar with how much SUVs help to consume the petrol, most of us are not so familiar with these SIVs.
SIVs are basically entities that raise funds by issuing short-term, low-yielding notes called commercial papers and invest in longer-term, higher-yielding instruments such as credit card debt and mortgage-backed securities. SIVs can be hurt in two ways, one is that the funding dry up and two the assets that SIVs hold suffer huge losses. The funding dry up actually happened at the peak of sub-prime loan crisis in the middle of August 2007 where there were no takers of the commercial papers that these SIVs issued. In short, investors were spooked by the sub-prime loans problem that they refuse to look at other debt papers except the Treasurys which are considered risk-free. As most SIVs are affiliated to banks, banks were forced to provide the funding or liquidate the vehicles altogether. This creates severe liquidity problem as banks scramble to raise funds for these vehicles. At the same time, the assets that these SIVs hold suffered huge losses as investors are dumping the debt papers, be it asset backed or not. In short, banks face liquidity problem as well as suffered huge losses. The worst thing to happen will be that these banks are forced to sell the assets in order to repay debts. If all the banks with exposure to SIVs started to this, it will cause a negative chain effect. So much so that the whole debt market will collapse, this means the breakdown in the whole financial system which will have dire impact on the real economy. In order to cushion this, Citibank has initiated to create a Super fund which in essence is to provide funding as well as to prevent panic selling among the players.
Both SIVs and SUVs are smart creations of human beings but they are still not perfect. It is challenging to come up with a financial vehicle so as to give you a decent return and yet shield you from any market turmoil all the time. Of course, it is equally challenging to create a SUV (with the same power and performance) that consumes little petrol or gasoline. While we cannot overcome this issue (powerful and consume little fuel) overnight, I am very sure we will have better products over time with the advancement of technology and financial innovation.
Someone asked me right after lunch today, “Hey Mr. Teong, why don’t you talk about markets today as the regional markets are under great pressure?” I replied this gentleman that I have said what I wanted to say about markets days ago. Didn’t I talk about The Big Trend on 9 Oct, Liquidity Play Intact on 10 Oct, Heightened Volatility on 12 Oct (mind you, I talked about this last week), A Tale of Two Markets on 16 Oct and Eve of Black Monday Anniversary on 18 Oct 2007? In short, my view is that the markets would be very volatile in Oct but I feel that any correction would be short term as the liquidity play will resume after each correction barring unforeseen circumstances. My take is that there might be “small” (small if you compared to the fall on 19 Oct 1987) correction in global markets today (all eyes would be glue to US markets tonight), i.e. there will not be any huge correction that will cause panic among investors. By the way, US Fed still have plenty of ammunitions to be deployed should the need arises. Cheers!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”!
Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
October 19th, 2007
NW Teong
If we look at the global stock indices now, they all look with great similarity, i.e. up and up and up! For instance, look at the Dow Jones Industrial index chart below.
Many of the indices are making historical highs and the trend is nothing but bullish. In short, the huge surge in global indices due to the re-emergence of liquidity is being played out nicely as I have predicted in my earlier blogs weeks ago. This is also being helped by the fact that while US economy is probably slowing down, the global economy is humming along pretty well. If we look at the Baltic Exchange Dry Index (“BADI”), it has also closed at historical high of 9860 yesterday.
The BADI index has surged at an incredible speed, it was just about 2000 in early Jan of 2006 and in a space of less than 2 years has surged more than 390%! If we use this index as a proxy to world economy, then we can say that the global economy is doing fine but if we use it as an indicator to measure how fast human beings consumed our limited resources, then we should be worried. We should start to worry for the earth that we live in. Can our earth satisfy our insatiable demand of raw materials from food to energy? Can our earth withstand the pollution that comes along with further developments and perhaps exploitations? In short, can our earth withstand the abuse that we human beings exert on it for a long period of time?
In a materialistic world today, human beings are perpetually in search of greater profits at the expense of perhaps our only living place, i.e. the planet earth. We dig and dig for what ever treasures that we can find from the earth and we dump any kind of garbage back to the earth. At times like this, it is good to pause for a while to think of how we can contribute to the society and to protect the environment that we are living in. The very least that you and me can do is to do things without causing harm to our environment and to others. To me, an act that will harm our environment such as littering is a blatant act of selfishness. Those who caused harm to our earth really have no consideration at all for other human beings and for our future generations.
As for the stock markets, enjoy your uptrend ride but remember to build in some profit locking mechanism. For instance place a trailing stop order at all time, this stop order will be triggered only if the condition that you set is breached such as a fall of 5% in stock price. In this way, you can enjoy the surge but able to lock in profit should the market started to change direction. Cheers!
Master “The Essence of Stock Investment” and ride towards the journey of your financial freedom to be the “Master of Your Own Destiny”!
Disclaimer: Investors are investing at your own risk. Please read full disclaimer at the end of the blog or from the main page of the website.
October 10th, 2007
NW Teong
