I am beginning (?) to sound like a stuck CD! Here he goes again, they say, casting a wet blanket over the market euphoria; making Nouriel Roubini look like an optimist. Frankly, as I have said on numerous occasions previously, I have neither been a premature pessimist nor a blind optimist - but I hope, a realist.
In the last few weeks I have watched, with mouth open, as markets around the world have shrugged off the deathly spectre of recession and carried on rising as if it was a whole new dawn. I have read the optimistic commentaries from the analysts who, time after time, have got it wrong. I have been watching the antics of those commercial banking institutions that wrote off more bad loans in the first quarter of this year than they did for the whole of 2008. And listening aghast to the investment banking community crowing about their best quarterly results in recent memory - and heralding the return of bonuses to their "hard done by" executives!
Knock! Knock! Is anyone at home?
Some years ago, I used to enjoy a writer in the SCMP called Teresa Norton who I think is still here in Hong Kong. She used to start her weekly columns with a phrase something like - "I don't know, maybe I'm nuts...". I wish I had thought of that phrase, because it's how I'm beginning to feel. Have I missed something here?
The stock market recovery has clearly taken its inspiration from the Book of Revelations and if, as I suggested you should, you took up your rights in HSBC at HK$28 per share, you will have done okay! And look, I really don't want to be the grouch, because the recovery will have helped many people - for the time being. But for every piece of front page news extolling the virtues of the market, announcing that the worst is probably over, that the green shoots are beginning to bud, there is "inside page" news about more job losses, more companies folding, more trouble for the airlines and car manufacturers. The job losses themselves adding fuel to the fire, by creating more people who can no longer pay their mortgages, auto loans and credit card debts.
The job losses in the USA last month have been greeted with relief that there were only about 325,000 of them. So, compared to the 700,000+ figures people have been used to it is better but, good grief, since when has the loss of another 300,000 jobs been something to rejoice about - with US unemployment still standing at a record high 9.4%. Not forgetting that in a few months time these latest figures could be subject to "adjustments" which are likely to go largely unnoticed.
In banking terminology when you write a cheque incorrectly, it often gets returned with the comment "words and figures differ". That's how I feel right now. Just like the multi-handed economists who say - on the one hand there is all this good news, and on the other hand there is all this bad news. Which is right?
So, I talk to people I know. People whose opinions I value and respect. I ask them to help me, as an interested observer, decipher my own thoughts and where my "gut feel" is flawed. They listen to my points of view and say they agree. In fact many have said "we've sold most of our shares and are now mostly holding cash, despite the zero interest rates". And if the market goes up any further we'll sell the rest too, they say.
More; I help out a couple of Pension Fund schemes operated for the benefit of some non-financial people. And even the Fund Managers agree with me.
Well that makes me feel better, but my self-doubt remains highly corrosive. If my mentors are in agreement, why is it that the markets seem to defy the realities of the world around us? Or is this where we came in? Markets ignoring logic, creating speculators who are out for a good time.
In a Blog I wrote in August 2007, I reminded people of the old saying related to the Stock Market - "Sell in May and go away". It would have been a good idea to heed that advice in May 2007. It seems to me it would be a good thing to do in 2009 (even in early June) - but then, maybe I'm nuts!!
Your stuck CD was reported.
Posted by: Sukyi | June 08, 2009 at 06:22 PM