Saturday, October 18, 2008

In response to....

Vulnerable toes asked,
why another tumble? u saved up a warchest full of cash ready for the stike [sic]?

i wish.....
my warchest needs replenishment.

anyway, my take when I read about the rally following consolidated efforts by governments around the world was that the rally was a reflection of the expected volatility.

What are the governments using to guarantee anyway? Borrowing public monies and making future generations pay? Moreover it's never easy regaining trust and confidence, in this irrational market, you're more likely to predict movement by flipping a coin. The technical analysts see STI potentially going down to 1660s and we're already hovering below 1900 at the moment. Not shocking cause looking at the charts, STI was above the 2000 mark just before the 1997 Asian financial crisis. It dropped by 60% and was around 800 when all the dust settled and the body count tabulated in 3rd qtr of 1998. Took 2 years to recover before the bubble burst/post 9-11 but quickly recovered again. Recovery was followed by a fantastic run until the sub-prime crap hits the fan.

Initially, there was still rationality. People held onto things that had value. Oil was the priciest just 4 months ago and now it's the lowest in a 12 months. Even the prices of precious metals are going down. Maybe it's good to buy limited edition watches and art pieces as a better way of retaining value. But even auction houses are complaining of weary bidders. Policy makers tell us that this impending crisis is gonna be long drawn. Yet we get conflicting information from them who tell us that they have "policies" in place to ensure this and that. So what we know is that this crisis is different from other crises. The way it will recover will be different from how others recovered. That's not exactly rocket science. More like social science.

I like the saying "a rising tide lifts all boats". A corollary would be that an ebbing tide will sweep boats out to sea - the old-grey widow-maker, as described by Kipling. Unless we've storm sails, otherwise best to trim our sails and ride out this storm. Venturing further would be crazy.

Good thing we have time horizon, relatively. But I do fear a little about the KL property. But at least as of May 08, it's still pretty much good news. Hope our 8-characters (haha!) don't clash and we should make visits to Waterloo Temple for the Lunar New Year.

Hopefully by 2011 and beyond, after we receive the notice of delivery of vacant possession, we do a successful sub-sale...hiak hiak hiak....but in the mean(est)time, cross our fingers that the risk factors don't kill us. By the way, at the end of it all, with a successful sale (if and only if), I would like to think it was a good choice, given the prevailing conditions. Money was not kept as cash and not subjected to crazy fluctuations or suffering as investments in low-yield bonds. But the risk we are exposed to is much higher. But KL is KL and will remain as KL for a long long time. It's not like the Iskandar Development Region.

Of course it could have been invested elsewhere (dollar-cost averaging etc etc), but we're still ok I think. Even without a sale. the yield of 7% means that your principal is doubled in 10 years. Just use the Rule of 72 : 72/i = y where i = yearly interest rate and y = number of years to double your principal.

Some links to calm our and here.


vulnerable toes said...

my fren said this of our property in KL: "your apartment is near the golden triangle area. Sure will appreciate in value... Alot of embassies nearby too... Should be a good investment lah...there are a lot of serviced apartments coming up at that area now"

goats "fan tai shui" AGAIN next year. better watch our investments! haha! i suspect that report has taken the economic downturn into consideration.

.::: .: :.:. :.: ... ::: :. .::. .: :. ::. said...

was going thru with auntie. all the investment stuff for sure takes into consideration of the downturn...

fingers crossed anyways.