And so it is? So what's in store for this year? Will the market be good? Or bad?
To be very honest, I dont know. Of course, everybody knows that the KLCI is now at an all time high. But what could knock it down? Let's speculate:
(1) US property resumes price drop.
(2) Bursting of Chinese property `bubble'.
(3) Panic over creditworthiness of European sovereign debt.
(4) Commodities inflation/ speculation.
(5) Surprise Malaysian general election result
(6) Black swan event, e.g. terrorist nuclear attack on Seattle.
Bottom line is, I honestly do not know. All I know is, stocks are not attractive right now. And so I'm keeping my cash in my wallet.
Sunday, January 2, 2011
Monday, March 9, 2009
Long break
... from this blog, that is. Its been more than a month from my last post.
Its been a pretty bad month for equities, with the S&P falling from about 900 points to 687 currently.
The KLCI is also kind of wobbly, at 858 now. Its being dragged down by TMI and Maybank, both of which have been bashed down due to their enormous rights issues.
I dont own either stock so i dont really care. I'm more interested in the outlook for the global economy. Things still seem to be sliding downwards. the US unemployment rate has reached 8.1%. From a personal perspective, I'm hoping this mess lasts for as long as possible so that I can buy as many stocks as possible for cheap as possible. A long mess wont be very good for the average person, of course, but, well, I guess its conflicting interests.
Anyway, going to bed now.
Its been a pretty bad month for equities, with the S&P falling from about 900 points to 687 currently.
The KLCI is also kind of wobbly, at 858 now. Its being dragged down by TMI and Maybank, both of which have been bashed down due to their enormous rights issues.
I dont own either stock so i dont really care. I'm more interested in the outlook for the global economy. Things still seem to be sliding downwards. the US unemployment rate has reached 8.1%. From a personal perspective, I'm hoping this mess lasts for as long as possible so that I can buy as many stocks as possible for cheap as possible. A long mess wont be very good for the average person, of course, but, well, I guess its conflicting interests.
Anyway, going to bed now.
Thursday, January 15, 2009
Malaysian workers- trapped in quicksand?
Today, the press reported that the World Bank's World Development Report (WDR) 2009 stated that Malaysia was the only country in East Asia whose real wage per employee has not changed from 1994 to 2007. The report also apparently points out that the wages of government employees have been rising although that of the private sector have not.
I think such findings will hardly feel surprising for most Malaysians, especially among urbanites. I just have a feeling that the material achievements of my parents' generation (e.g. house, a couple of cars etc.) are becoming harder and harder to reach.
Despite my pessimism about my own prospects as an educated, white collar, blue chip company employee, I can only shudder when I think about the plight of the average working class person. Persistent inflation, unrelenting competition from the hordes of imported menial labour, the degradation in affordable public services- life must surely be one hell of a struggle.
Despite Malaysia's dubious honour of being east asia's most stagnant wage market, I think Malaysia is hardly unique, and across the world the gap between the rich and poor has gotten steadily wider over the last decade. The gap is partially noticeable in the huge increase in asset prices (i.e. stocks, houses, commodities, precious metals) in the 15 years or so ending in 2008, which of course benefited asset owners, i.e. the rich.
And the day of reckoning is here.
Asset prices are dropping or in outright collapse, credit and spending have slowed, and the world is in the grip of the worst economic crisis since the great depression. If only most of the losses could be borne by those who have most benefited from the excesses of the last 15 years.
Alas, the world doesnt operate on notions of justice, and so the weak, the poor, and the ignorant will continue to suffer more than the rich and powerful.
If only it didn't have to be this way.
I think such findings will hardly feel surprising for most Malaysians, especially among urbanites. I just have a feeling that the material achievements of my parents' generation (e.g. house, a couple of cars etc.) are becoming harder and harder to reach.
Despite my pessimism about my own prospects as an educated, white collar, blue chip company employee, I can only shudder when I think about the plight of the average working class person. Persistent inflation, unrelenting competition from the hordes of imported menial labour, the degradation in affordable public services- life must surely be one hell of a struggle.
Despite Malaysia's dubious honour of being east asia's most stagnant wage market, I think Malaysia is hardly unique, and across the world the gap between the rich and poor has gotten steadily wider over the last decade. The gap is partially noticeable in the huge increase in asset prices (i.e. stocks, houses, commodities, precious metals) in the 15 years or so ending in 2008, which of course benefited asset owners, i.e. the rich.
And the day of reckoning is here.
Asset prices are dropping or in outright collapse, credit and spending have slowed, and the world is in the grip of the worst economic crisis since the great depression. If only most of the losses could be borne by those who have most benefited from the excesses of the last 15 years.
Alas, the world doesnt operate on notions of justice, and so the weak, the poor, and the ignorant will continue to suffer more than the rich and powerful.
If only it didn't have to be this way.
Monday, January 12, 2009
Seth Klarman on our debt culture
Seth Klarman is one of the most lucid writers on value investing i've ever come across. Here he puts the credit troubles in perspective, by comparing the borrowing culture of today's generation with those of our forefathers:
" We live in an era of leverage not just on Wall Street but on Main Street. For two generations, credit has become much more widely available and acceptable. In our grandparent’s era, there were no credit cards, home equity or subprime loans, or CDOs. People paid cash for what they purchased, and worked hard to earn that cash. The sequencing of that mattered, too: first you worked hard, then you bought what you wanted. Even the federal government was expected—except in times of war—to run a balanced budget.
But during our parents’ lifetimes and our own, credit has become increasingly available and standards increasingly lax, to the point where credit cards and checks backed by credit lines arrive unrequested in the mail, where your house can be used as an ATM, where people with dismal credit histories are eagerly sought after to provide them with loans, where investors flock to buy junk bonds and shaky companies seek to issue them, and where investment funds are offered the opportunity to enhance their return through structured products, derivatives and exotic financings, all of which embed high amounts of leverage.
The moral imperative of repaying the banker—your neighbor—who granted you the loan across his imposing desk has been replaced by the moral vacuum of anonymous lenders using credit scoring—who quickly resell your loan to someone you will never meet—and who are actually comfortable with the actuarially determined probability that you may default. Credit rating agencies have embraced the debt orgy with lax standards and naïve models, brewing conflicts of interest and accepting healthy fees to label toxic waste as investment grade."
Here's a 2005 letter by Seth Klarman bemoaning the intense competition for stocks ("Fans of Warren Buffett now fill a sports stadium when they flock to Omaha in May for the Berkshire Hathaway annual meeting."), the consumer debt bubble, housing bubble and the need to conserve cash because of the impending correction in the markets.
" We live in an era of leverage not just on Wall Street but on Main Street. For two generations, credit has become much more widely available and acceptable. In our grandparent’s era, there were no credit cards, home equity or subprime loans, or CDOs. People paid cash for what they purchased, and worked hard to earn that cash. The sequencing of that mattered, too: first you worked hard, then you bought what you wanted. Even the federal government was expected—except in times of war—to run a balanced budget.
But during our parents’ lifetimes and our own, credit has become increasingly available and standards increasingly lax, to the point where credit cards and checks backed by credit lines arrive unrequested in the mail, where your house can be used as an ATM, where people with dismal credit histories are eagerly sought after to provide them with loans, where investors flock to buy junk bonds and shaky companies seek to issue them, and where investment funds are offered the opportunity to enhance their return through structured products, derivatives and exotic financings, all of which embed high amounts of leverage.
The moral imperative of repaying the banker—your neighbor—who granted you the loan across his imposing desk has been replaced by the moral vacuum of anonymous lenders using credit scoring—who quickly resell your loan to someone you will never meet—and who are actually comfortable with the actuarially determined probability that you may default. Credit rating agencies have embraced the debt orgy with lax standards and naïve models, brewing conflicts of interest and accepting healthy fees to label toxic waste as investment grade."
Here's a 2005 letter by Seth Klarman bemoaning the intense competition for stocks ("Fans of Warren Buffett now fill a sports stadium when they flock to Omaha in May for the Berkshire Hathaway annual meeting."), the consumer debt bubble, housing bubble and the need to conserve cash because of the impending correction in the markets.
Best Resignation Letter Ever
Andrew Lahde, manager of a small Californian hedge fund which returned 866% last year by shorting the ABX index (index of mortgage securities backed by subprime assets), closed his fund and sent his last letter to his investors saying, among others:
"I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.
I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth,
might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.
So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to
emails or voicemails within normal time frames or at all...
I have no interest in any deals in which anyone would like me to participate. I truly do not have a
strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle."
This guy makes a lot of sense.
"I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.
I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth,
might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.
So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to
emails or voicemails within normal time frames or at all...
I have no interest in any deals in which anyone would like me to participate. I truly do not have a
strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle."
This guy makes a lot of sense.
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