Friday, January 22, 2016

Random thoughts: Life is full of uncertainity (Parroting Howard Marks)

Warning: Low Energy Post

Note: I was alerted that this post was similar to Howard Marks memo, I did read his, but I have no intention of deliberately parroting his. I had this post idea for several days, but perhaps I unintentional did copy his thoughts. I will leave the post as it is. Howard marks memo link can be found in valuebuddies. 

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Just a few days ago, I was wondering aloud how the news reported the sell-off in market as rather amusing. Here are some of the causes of sell-off

Mainly we can traced it to China, and China has the following problems:

1) High Leverage of companies, and the government linked investment vehicles by municipal governments

2) Equity sell-off and hence the apparent policy missteps, and the missteps lead to questions on the competence of the China Team on the broader economy

3) Commodity sell-off and weak prices putting a squeeze on commodity-rich exporting companies

Then we have the oil sell-off that lead to the cut-throat war between OPEC and US shale producers. The low price plus the ongoing political crisis took out the B and the C in the magical BRICs economies

Russia is never the same after Ukraine.

Finally, we have the impending normalization of interest rate that would cause funds outflow from Emerging economies.

And we have old news like Greece default, Koreans tantrum, etc.

It sure look rather gloomy and no light in sight, isn't it.

But I have 2 puzzling thoughts.

1) None of these news that explained causes to the sell-off are hardly "New", as compared to the taper tantrum. With the exception of Koreans tantrums, most are around for many months.

Well, it could be explained by Market Inefficiency that Mr Market has been too optimistic about the troubles and hence only pricing in the risks now.

Now, lets us go back to 2 - 3 crisis. Euro-Crisis, the breakup of Euro will throw the world currency order in disarray. It is uncharted waters. Then the banking crisis that causes liquidity to freeze. 

Commodity low prices keep inflation in check, allowing some monetary tools to be utilized.        

I do not understand why the news are complaining about China's investment lead growth model for years, and now they are trying to transit to service-lead economy with higher reliance on domestic demand, everyone seem so scare of the fall to 6.8%. I now they are clamoring for more stimulus and more domestic debts?

Head you die, tail I win. 

Why is cheap oil bad for consumers? A bedrock of US economy.

I am not saying "what the hell! buy now" I am saying there is unknown unknown in trading/ investment

Can sleep, good enough

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Now, just when I am at a high in my personal management, one mishap befall one after another. I can feel my positive energy sapped. Although I still feel rather sturdy. 

I am glad I have "transformed" and I have more mindfulness and keeping my sanity although it is scarily mindful that it is slipping away. 

Smile... 

When others are shaken and behaving irrationally, the beacon stand strong with its untainted energy

Tough time don't last, tough man do. 

When the chill of winter comes to hell, only the fittest resist the bell.


3 comments:

  1. I guessed you have read Howard Mark's memo

    ReplyDelete
  2. I guess you mean I parroted it ...

    Well. This blog post idea is here before I even read his...

    I did read his....

    Maybe subconsciously I copied... My apologies

    ReplyDelete
  3. Cheap oil may not necessarily be bad for the US economy. But it is definitely bad for the Singapore economy as many of our industries are directly/indirectly dependent on a decent oil price.

    ReplyDelete