Wednesday, July 25, 2012

Stock Market; Where Are We Heading?

Where is the market heading ...

Various indices as at current:

DJIA            12,617                        S&P              1,338         Hang Seng    18,844
Nikkei             8,388                       Shanghai                 2,147        STi                 2,987
KL Bursa        1,647

If the stockmarket is the barometer of the country's health, then the signals of recession may be over soon (not so soon though & no miracles) but not until after a major sell-down.

Unlike the Asian Financial Crisis (AFC) 1997/98, where Asia bore the full brunt of the onslaught; distressed assets were sold and restructured, inefficient economic entities collapsed like a deck of cards, bankruptcies rose, currencies were dis-aligned and/or fixed, IMF-aids came with decimating demands and expectations, less decisive leaders lost their authorities and were replaced, limited but definitive social chaos exploded but 'from the ashes rise the phoenix'.

The European Financial Crisis (EFC) 2007/08, like always, did not suffer the same brutalities of AFC. Instead of allowing failed entities to collapse or fire-sold, they were provided with soft life-lines and bailouts. 'Too big to fail' become the slogan! The West did not apply what they applied to the East!

Why was bitter medicine good for the East but not applicable to the West? The world of economics and econometric models have universal application and are not race nor regional bias. The West are selfishly protecting their lifestyle, extravagance and assets against the foreign acquisition 'on the cheap' aka protectionism. They are mired in self-denial

If it's 'Too big to fail', then why do you need IMF bailouts (Asian nations are a big contributor to the Fund) without the bitter medicine that were applied to Asia? Self-serving and protectionist.

US growth is low, Europe is engulf in endemic debts, China has slowed down substantially, Japan is at a standstill (deflationary turned minor inflation), commodities prices have eased and unemployment and underemployment is rampant; globalisation and greed @capitalism have peaked and will take a hit before cures can surface.

We (the World) cannot live on borrowings and handouts and the rich cannot live in a sea of poor.

Will the World experience and survive a 3rd World War? Unlikely but an economic war is inevitable. Protectionism, interventionists policies, proxy wars and regional conflicts, social unrest, uprisings and revolutions will be the norm before order return after massive elimination and sufferings.

Coupled with above, natural disasters and diseases will add further damage to an already depressed globe. Why? You can't prevent natural disasters while Nations selfishly deny existence of diseases, when happens, henceforth allowing it to spread across border. It could be an act of selfishness or deliberate.

2012 is still hopeful; nobody blinks, nobody sinks. 2013 is going to be a tough year with sights of rebounds and recovery. Complacency, greed, selfishness and military gamesmanship will prolong global sufferings; until we accept the interdependency of life & living, sufferings continue.

The World will see its worst by 2016 (economic wars can be as trying as any military adventures).

The World will not end, just that sufferings will increase.

Stockmarkets will take a few hits before recovering,  Its not when! We are in the midst of some major correction; hold tight and make sure you survive this whipsaw! Similarly, the property market will be affected; negative equity will be a norm for some years to come. 

It is not how long or how bad, it is the going through process; can you take the punches?  

Be forewarned. . . there will still be spots of hopes and profits. Everyone wants to make profits but few are prepared.

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