Don’t Dump Gold Just Because GIC Is Bullish

GIC’s director of economics and strategy, Yeoh Lam Keong, made an interesting statement on Tuesday that there will be further weakness in financial markets. He advises investors to go for gold, hold government bonds and currencies such as the yen, yuan and Canadian dollar. The US dollar is to be avoided “like the plague” as the United States monetise their debt by printing money.

That is all rather belated and even, ironical, considering GIC’s multi-billion dollar stakes in Citigroup and UBS. Nevertheless, it serves no purpose crying over spilt milk. As a matter of fact, I don’t believe any investors have been immune in this period of wealth destruction. The world’s richest are collectively poorer, with $2 trillion of wealth vaporized. Warren Buffett sufffered his worst year ever, losing $25 billion, but is still the second richest man.

Read the full article here.

Worst Year For Warren Buffett As Recession Bites

A new month, but it did not bring new hopes. This week’s stock market opening wasn’t any different as it continues to test new low. Asian bourses were jolted by bleak data while Wall Street fell to fresh 12-year lows on heightened fears about the murky financial sector.

AIG announced $62 billion losses (a cool $460,000 per minute) and a third bailout package was injected which brought the insurance giant closer to becoming absolutely owned by the US government.

Read the full article here.

Only In Bad Times Do We Know Who Is Swimming Naked

Financial course fees for investors are getting ridiculously expensive. In the Lehman Brothers debacle, some investors parted with their life savings to learn complex financial terms, like collaterized debt obligations, derivatives, credit default swaps, first to default, credit linked notes, etc.

Read the full article here.

Treasury Bills Developing Characteristics Of A Bubble

This fancy for Treasury bills is no longer a flight to quality. It is an exodus away from all asset classes, followed by a musical chairs version of quality. 

If investors were to regain their risk appetite and start buying riskier assets in the U.S. such as stocks, corporate bonds, and real estate, then the effect (decline in face value and the US dollar) could be spectacular.

Read the full article here.

Invest Only What You Can Afford To Lose

Every day we open up the newspapers, we are hit by depressing news – what with retrenchments (DBS axes 900, NOL ships out 1000, Citigroup eliminates 52000 worldwide, etc) and pay cuts (Temasek staff and Cabinet ministers). Taken together, the “contributions” from DBS and NOL are close to surpassing the retrenchment figures for third quarter.

Read the full article here.

One Way Traffic: Dow Plunges Below 8000

It is one way traffic: Dow Jones plunged below 8000, a first since 2003. There was a bear rally on Tuesday but it is a folly to be tempted by profits in all these technical rebounds. For those who are drawn in and end up selling in a panic, you risk doubling your losses. You are doing just fine having the bulk of your money in the bank. If you want to go long (very long), then just nibble at the stocks.

Read the fulll article here.

Spend Our Way Out Of Recession

Recession, recession, everywhere we turn, we are reminded of this dreaded scenario. For those who are still shy to utter the word “recession,” let’s not kid ourselves anymore. The earlier we face up to the truth, the faster we are on the road to economic recovery.

The week actually didn’t start off with a pall. On Monday, the bulls came charging back in Asian and European stock markets. Read the full article here.

A Ray Of Hope For Stock Investors

Red October, one of the worst month in Wall Street history, ended on a sweet note on Friday as stocks rallied to cap a week of impressive gains. For the week, the Dow Jones was up 10.1%, S&P 500 was up 9.5% and the Nasdaq had gained 9.8%.

There are storm clouds gathering but at the moment, investors are caught up in the euphoria and unmoved by grim economic indicators. Read the full article here.

Flush DBS High Notes 5 Down The Drain

After a prolonged wait for embattled investors who bought into Lehman linked products, their worst fears have been confirmed. While mediation for Hong Kong Lehman minibond investors is currently underway, for those who purchased DBS High Notes 5, they might as well flush them down the drain.

Read the full article here.

Global Stock Markets Pricing In Recession

Stock markets are now entering a period of painful decline as countries around the world face up to the prospect of recession. While interbank lending has eased tentatively as central banks’ measures to inject cash loans to banks unblocked the credit crunch, investors have little time to absorb the good news.

Read the full article here.