At this point in time, senior management of established companies like Boustead, Lee Metal, Hoe Leong are being cautious in the outlook for the next 2 years. In stark contrast, people are very optimistic about their future. Their optimism has spilled over to the housing and car market. So much so that the HDB flat cash over valuation has even hit $50,000. This $50,000 is the cash forked out by buyers, which does not include agent fees, lawyer fees. Car COE (certificate of Entitlement) has reached $57,000. This piece of paper to buy a car has probably exceeded the cost of manufacturing the car.
Only one party is right. I choose to stick with the senior management of established companies because of their experience and knowledge of their business. Every decade has excesses which will eventually be cleaned up. This decade is no exception.
Will the buyers of HDB flats, condominiums and cars suffer buyer’s remorse in later years? Time will tell us.
Tuesday, March 6, 2012
Thursday, March 1, 2012
An example of deleveraging
I would like to use my neighbor example to illustrate an example of deleveraging.
My neighbor used to own only a Mercedes. When his children started working, each of them owns a luxury car. I saw a BMW, Sports car, a Toyota Camry, a sports utility vehicle, a 7-seater 2-litre car etc. After the financial crisis in year 2008, many luxury cars disappeared in the blink of an eye and are replaced by a 2nd hand vehicle. A year later, even the house was sold.
This is an example of deleveraging.
I suspect the past 6 years of excesses in cars, houses, will go through this process of deleveraging.
My neighbor used to own only a Mercedes. When his children started working, each of them owns a luxury car. I saw a BMW, Sports car, a Toyota Camry, a sports utility vehicle, a 7-seater 2-litre car etc. After the financial crisis in year 2008, many luxury cars disappeared in the blink of an eye and are replaced by a 2nd hand vehicle. A year later, even the house was sold.
This is an example of deleveraging.
I suspect the past 6 years of excesses in cars, houses, will go through this process of deleveraging.
A suggestion to help our people
My sixth sense flashed an idea to help the people here. Every block of flat has about 100 families. Each block can elect 5 village chief or assistants or ( block chief) to assist needy families with unemployment issue, family conflicts, financial difficulties, marriage problems or addiction issues. If these volunteers are busy to help, the needy families can seek help from adjacent block chiefs.
Our flat void decks has plenty of spaces for us to build business centers to help small business to grow into future Google, Apple, Microsoft.
We have plenty of elderly and teenagers who can help to paint motivational slogans, beautiful paintings or anything that interest them on our void deck walls.
Our flat void decks has plenty of spaces for us to build business centers to help small business to grow into future Google, Apple, Microsoft.
We have plenty of elderly and teenagers who can help to paint motivational slogans, beautiful paintings or anything that interest them on our void deck walls.
The collapse of Europe
What does the collapse of Euro means to the rest of the world?
A cascading effect that will flood the USA, Asia and the rest of the world with bad news, interest rate hike, company restructuring, retrenchment followed by a collapse of the car resale market, stock market, housing market and bond market. Usually, the stock market will react followed by real economy like car resale market, bond market and housing market. This is similar to a household deleveraging. What are the items to be sold first? First in line is stock, bonds, cars, boats and lastly houses.
I hope that the process will be quick and painless for many people though I doubt so. God bless us.
A cascading effect that will flood the USA, Asia and the rest of the world with bad news, interest rate hike, company restructuring, retrenchment followed by a collapse of the car resale market, stock market, housing market and bond market. Usually, the stock market will react followed by real economy like car resale market, bond market and housing market. This is similar to a household deleveraging. What are the items to be sold first? First in line is stock, bonds, cars, boats and lastly houses.
I hope that the process will be quick and painless for many people though I doubt so. God bless us.
Wednesday, February 29, 2012
An example of deleveraging
I would like to use my neighbor example to illustrate an example of deleveraging.
My neighbor used to own only a Mercedes. When his children started working, each of them owns a luxury car. I saw a BMW, Sports car, a Toyota Camry, a sports utility vehicle, a 7-seater 2-litre car etc. After the financial crisis in year 2008, many luxury cars disappeared in the blink of an eye and are replaced by a 2nd hand vehicle.
A year later, even the house was sold.
This is an example of deleveraging.
I suspect the past 6 years of excesses in cars, houses, will go through this process of deleveraging.
My neighbor used to own only a Mercedes. When his children started working, each of them owns a luxury car. I saw a BMW, Sports car, a Toyota Camry, a sports utility vehicle, a 7-seater 2-litre car etc. After the financial crisis in year 2008, many luxury cars disappeared in the blink of an eye and are replaced by a 2nd hand vehicle.
A year later, even the house was sold.
This is an example of deleveraging.
I suspect the past 6 years of excesses in cars, houses, will go through this process of deleveraging.
Tuesday, February 21, 2012
A vision
All of a sudden, I have a clear picture of what is coming in the next 2 years.
1) In the coming months, the crisis in USA and Europe will worsen and this will send a financial shockwave to the rest of the world. S$ will strengthen against US$ to 1 :1. This is the right time to change S$ to US$.
2) To arrest the outflow of funds from USA to asia, USA is forced to raise interest rate drastically. This stemmed the outflow of funds to asia. US$ to S$ rise 1: 1.6. time to change back to S$
3) The rise in interest rate in US and Asia, caused massive deleveraging. Companies and government downsized to cope with the reduction in demand. Jobs were restructured and lost. Many homes, cars, investments were sold as consumers could not afford to pay the installments. Time to buy stocks or properties.
4) In the blink of an eye, a few years passed and things got better. Stock and property market rebounded.
1) In the coming months, the crisis in USA and Europe will worsen and this will send a financial shockwave to the rest of the world. S$ will strengthen against US$ to 1 :1. This is the right time to change S$ to US$.
2) To arrest the outflow of funds from USA to asia, USA is forced to raise interest rate drastically. This stemmed the outflow of funds to asia. US$ to S$ rise 1: 1.6. time to change back to S$
3) The rise in interest rate in US and Asia, caused massive deleveraging. Companies and government downsized to cope with the reduction in demand. Jobs were restructured and lost. Many homes, cars, investments were sold as consumers could not afford to pay the installments. Time to buy stocks or properties.
4) In the blink of an eye, a few years passed and things got better. Stock and property market rebounded.
Tuesday, January 31, 2012
Flavour of the month
The “in” thing to invest now is 1) bonds 2) gold 3) US distressed real estate. Many seminars have sprung up touting gold, bond and USA distressed real estate as safe or alternative investments. These alternative investments seemed to me like the DBS bank “Minibonds” which was highly touted to conservative investors 6 years ago. I find it strange that people prefer to buy something new like gold after losing money in stocks. Perhaps it is a case of the grass is greener on the other side.
These are exactly the investments I m wary investing right now when it is touted highly to the retail investors. Maybe the bubble will go on for a year or two before bursting. But I prefer to buy something of value. Patience is the key here. Let us monitor the situation and await our opportunities.
These are exactly the investments I m wary investing right now when it is touted highly to the retail investors. Maybe the bubble will go on for a year or two before bursting. But I prefer to buy something of value. Patience is the key here. Let us monitor the situation and await our opportunities.
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