What has become the world?

What the world has become?

Have we deviated from our very human nature? Has consumerism and materialism driven us out of our innate human nature?

As there isn't really any strong correlation between wealth and happiness, so why are we trying to gather wealth with so much greed?

If wealth is a function of happiness, then Bill Gates should be the happiest man on earth.

Although having more money is of course more preferable, it does not equate to happiness. There may be short term happiness when you know that you received more money than you previously have. But after awhile, the effects dissipate and one seeks more wealth. The more wealth one have, the more one will be afraid of losing it, most of the time.

That's why most wealth people realised that having so much money does not have that meaning in their lives. Therefore they distribute their wealth, with enough to live comfortability and meaningfully.

However, having no money is equally unhappy, unless you are a monk, because it is a human creation that will enable us to eat, to have a shelter and for family needs.

One explanation can be that after so many years of economic growth, we tend to strive harder for excellence and for more growth, disconnecting us with our families and friends.

Maybe this recession can be a path for us to walk, to strengthen ties and bonds in times of adversity.

The only catalyst left

The only catalyst left for the markets are the actual results of companies. If the next 2 quarters of financial reporting by all companies show significant damage caused by the systemic financial problem, at that point, no one would be in the market. Conversely, those companies that can absorb the shock are set to be in demand.

today, some stocks are already at rock bottom price and I cannot imagine it going any lower - but it will. However, as times goes by, our perception of reality would again be distorted as we become too pessimistic at the point where earnings are beginning to pick up after a period of deflation in productivity.

I'm not trying to imply deflation in monetary terms, because the injection of 2 trillion in fiat money is going to cause inflation where it is not when too much money is chasing too little goods, but when the value of money is diluted aka the diminishing purchasing power of money because it has become banana notes.

DOWn Jones

Its going down and under. The P/E ratio is still too high for the end of the bear market of single P/E ratios. Furthermore, there would be earnings downgrades in the next few quarters. It will go down further, a breach of a lower low is highly possible.

The $700 billion should have been used for other purposes because one of the problem is leverage. The leverage has to be unwind. Stock market prices have to go down too. It can't go up and up forever.

If the bull revives now, the next downturn would be more serious because it is unsustainable.

Caveat Emptor (Buyers Beware)

For the SG AM O MENA fund, it has a T + 2 dealing basis. It means that the price will be based 2 days after the transaction date. I didn't realised it until I saw a price gap.

I had sold on 8 Oct but the price transacted was lower by 3.7%. I was lucky I sold before the crash.

But this difference is huge because $10000 in the fund stands to lose $370 because of time difference. If a person sold $10000 on 10 Oct, he would have been in deep trouble because the difference would have been 0.692-0.649=0.043 which is 6.2%, a loss of $620. And he would had sold at that very low when the market bounce temporary upwards.

The lack of transparency has got many "investors" angered and never to touch unit trust again. But as financial firms will offer new products in the future, there will definitely be a buyer. It is a matter of time.

So are there alternatives?
Yes there is, it is in ETFs, which provides price transparency on real time trading basis. The disadvantage is that for small investors, they cannot dollar cost average.

The future will see more money in ETFs than unit trust because of the real time trading basis because of the increasing uncertainty in this world which investors react with increasing speed - as proven with the average holding period of investments.

End of the Bear Market?

It's in the news, its on people's faces, its on the charts, market prices and all.

Pessimism is here. Although there are still people who still thinks that prices are at a bargain etc, their predictions may be flawed because perception does not equal reality.

For example, the STI index, which is at the 2000 level, can, at the most, reach below the 1000 level. But it is quite impossible to achieve that. The reason is that once at that level, market prices for all stocks would be below book value and companies should liquidate instead of continuing to run.

Imagine a stock price at $0.5 per share with a Net Total Asset of $2. The ratio is a 75% discount of a P/B ratio of 1. Even if assets are sold on a fire-sale at a 50% discount, every shareholder would still earn $0.5.


But at this period of time, fundamentals are rarely considered. There are real gems in the market right now, which can be confirmed with 2 more periods of financial reports which good faith is entrusted in them.

However, my argument is flawed because of the possibility of decrease in future earnings. But note that I'm talking more on the asset value, which is similar to buying Gold at $900 currently for $450 although gold does not earn any interest for you.