Blood on the Streets October 2008

This has to be the worst October for the investor finance world in a 100 years. Well at least in my working life time of 27 years.

Global stock markets have sunk to historic lows. With it, our hard earn savings invested into stocks, bonds, unit trusts, property and what have you. Value lost would play in the 50 - 100 % from that of 1 year ago or even 1 month ago.

Certainly the investment strategy of "invest for the medium and long term" no longer sound wise. So what does one do in the current situation. Clearly, to sell into the lows is not a good idea. However, if there is any perception that the markets could go further down, the temptation is to sell now and buy later. Only 1 fault here; we do not have the crystal ball of future market moves. So really the only strategy is one of hold and look for bargains to add to your portfolio of investments. The strategy that is called into play " buy low and sell high" an advice that has stood the test of time. The assumption is that you have time and the additional financial resources to implement. And really that is what I would recommend to self and you readers.

A thematic approach here is also suggested. Buy into stocks which can take the brunt of the current market scenarios. I am not saying that these stocks will not fall further in price. However, the buy dips into these should be considered. These stocks will typically fall into the following labels:
1. food
2. commodities
3. utilities e.g. power, water, gas, telecommunications
A general principle advocated here : what you would typically have to use and consume, no matter what the world may look like.

And for the rest of time when you are not thinking you about investments; to review what you would consider as the more important matters of life. The thoughts should direct you to the meaningful relationships in your life. This is perhaps also a good time to stop and "smell the roses" ie appreciating the nature and the buzz of life that surrounds you.

Many of life's ills can be traced to the psychological impacts of relationships. The lucky, who have the privilege of being loved and shares love with another. And for those who are perceived less priviledged should perhaps consider re-looking at why they are missing out and to review what ways to change the result. Really the message is about not giving up before trying to look at the world from a different perspective. Change the way you look at the world, and you change the world!

Blood on the streets was a description of the battle of Waterloo, fought between Nelson and Napolean Bonaparte. The finance world has taken the tag line to imply the opportunities which are becoming available and that the worst has probably passed. So a dose of positivism is recommended. Negativism will simply paralyse you from the opportunities which are there but am afraid to reach out. I do not just mean this for the financial investments but rather the good relationships which can be built and cultivated.

See you all at the next blog.

The bailout of Corporate America -or is it?

The financial markets continue their downtrend. And there isn't much light at the end of the tunnel that can be seen. The US $700 billion package has been passed. Every one of the lawmakers, Democrat or Republican alike, shake hands, high fives and hugs. "Well done", "We've done it". And now we wait for the healing to begin.

This bailout is not the panacea for all ills. The package will come with many conditions. The higher good: the welfare and well being of the American people. And during an election year, these are the rhethoric that will sway and win votes. Noble and good these intentions are. But as always, the devil is in the details, the implementation.

Safeguarding bank deposits, creating jobs, no further governmental deficit spending, protecting homes are phrases that we will hear and read a lot about in the next weeks to months. And why not? People are voters and during election, politicians need the people's votes.

Does this mean that weak banks will be shored up and prevented from failures? Does this mean that institutions which practised imprudence or even mismanagment will be saved? Does this mean that "Fat Cats" who perpetrated the complex network and created the environment for failure, will get away with their Fat pay checks and exit packages?Does this mean that tax payers money will be used to "reward" the wrong doers who put the financial security of tax payers in harm's way?

These are the questions which the American people will need to answer for themselves or get answers, before and as they cast their votes this November. And then after the election, the next question: will the election promises be kept? Kept away or make happen?

The developments which are happening in the USA provide many useful lessons for people like you and I, who do not reside there. I will blog some of these in the weeks to come and look forward to seeing you then.