Disclaimer

Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. But I can't by law give you advice, and I do make mistakes. Remember: the unexpected sometimes happens. Oddly enough, the expected does too, but all too often it takes longer than you thought it would, or on the other hand happens more quickly than you expected. The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

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Monday, March 23, 2009

Daily Obsession

Curious how the market commentators focus on day-to-day movements and try to draw insight and understanding from them. The market is down/up today by x%.

What matters is the longer-term sweeps, and since these are made up of shorter shallower sine waves intertwined with longer deeper sine waves, what matters is the waves. Or, if you like, is the tide coming in or going out, never mind the ripples on the sea. So Wall St was down 2% Friday. Big deal. What do you expect, after a 10-14% rally? All advances consist of up days and down days, just all all retreats are interspersed with days when the market goes up.

China is 30% off its lows, Chinese eco and financial data show a recovery has begun, and it will prolly take the rest of Asia up with it, just as it took Japan, South Korea, Taiwan etc down when it spiked downwards in the second half of last year. China doesn't have a banking crisis (this time anyway) It has the financial wherewithal to stimulate. And guess what? Its balance of payments might well go into deficit as it assumes the locomotive role in the recovery. Will that be a worry? No. And it will be perfectly consistent with the US moving into surplus as savings rates rebound.

So... the short-term waves are probably down or sideways, the longer-term up. Except perhaps in the US which is in such deep trouble that the best it can expect is an L-shaped recovery. We will prolly test the previous lows here in Oz. But I'm confident they'll hold.

Interesting times.

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