jianwei85
22-05-2006, 03:08 AM
I suggest investors to stay off share markets for a while..the correction in Dow Jones is gonna be a major one..Will definitely affect regional markets including our KLCI..currently, in the US, it's becoming a seller's market..even their day trader's are advising to sell.
What's happening:
US government with their debts piling up resorted to "creation of more money". They had Japan and China to 'finance' a substantial amount of their debt. As Japan and China took over the the debts (in USD) their foreign reserves of USD oso increases.
Its like u have debts, and u ask your Japanese uncle to pay u the money in Japanese Yen while u owe them USD. Your uncle needs to convert to USD so more USD floats in the market now. With more USD in the market it will affect the value of the USD.
Example, when Japan invaded Malaya. Remember the story of the Duit Pisang? it was the Japanese currency at that time. They printed so much of it until the currency's value became 'just a piece of paper'. So the correction is to ensure that the USD do no become 'just a piece of paper' but no one can be sure of how much the USD is really worth now, with so many uncertainty in their own markets and also the influence of their Federal Interest Rates and inflation.
Besides, their housing bubble is now burst and many of those who took loans are unable to cover their loan payments and are defaulting. The banks are also getting less from the auctions as the value of houses are dropping. It is like u lend Ali rm6000 to buy a kancil as Ali is able to sell back the Kancil at rm8000 at the moment. Ali did use up all the rm6000 to buy the kancil. However , government announced that AFTA will make cars cheaper. Kancil drop value to RM 3000. And Ali can pay back. So he gave the car back to u. Ur stuck wif losses of RM3000 even after u sell the car.
To speculators who hold USD. Do ask for further suggestions and do more research with those consultants. If not a 'burning' session gonna visit ur USD on hand.
To investors who wanna invest in shares now. Do have a selective appproach and do thorough research of the US dow impact on ur selected shares. Get a portfolio which could cover the risk of impact from US dow jones index. And of coz...timing is important. Need to look for clues of a rebound.
Currently: Real estate industry in US--Downturn (bubble burst)
Automotive industry in US--GM and FORD--Down (GM filing for bankruptcy protection)
Financial Institutions--60/40 chance of crisis (defaulters are rising, the assets that they hold are being revalued way lower.)
Inflation ---High
Fed. Interest Rates -- High
Good side: USD cheaper.Maybe a change to Euro/Gold standard (but is highly improbable as Japan and China holds LARGE amounts of USD.)
Bad side: Worldwide 'unforeseen' consequences.
What's happening:
US government with their debts piling up resorted to "creation of more money". They had Japan and China to 'finance' a substantial amount of their debt. As Japan and China took over the the debts (in USD) their foreign reserves of USD oso increases.
Its like u have debts, and u ask your Japanese uncle to pay u the money in Japanese Yen while u owe them USD. Your uncle needs to convert to USD so more USD floats in the market now. With more USD in the market it will affect the value of the USD.
Example, when Japan invaded Malaya. Remember the story of the Duit Pisang? it was the Japanese currency at that time. They printed so much of it until the currency's value became 'just a piece of paper'. So the correction is to ensure that the USD do no become 'just a piece of paper' but no one can be sure of how much the USD is really worth now, with so many uncertainty in their own markets and also the influence of their Federal Interest Rates and inflation.
Besides, their housing bubble is now burst and many of those who took loans are unable to cover their loan payments and are defaulting. The banks are also getting less from the auctions as the value of houses are dropping. It is like u lend Ali rm6000 to buy a kancil as Ali is able to sell back the Kancil at rm8000 at the moment. Ali did use up all the rm6000 to buy the kancil. However , government announced that AFTA will make cars cheaper. Kancil drop value to RM 3000. And Ali can pay back. So he gave the car back to u. Ur stuck wif losses of RM3000 even after u sell the car.
To speculators who hold USD. Do ask for further suggestions and do more research with those consultants. If not a 'burning' session gonna visit ur USD on hand.
To investors who wanna invest in shares now. Do have a selective appproach and do thorough research of the US dow impact on ur selected shares. Get a portfolio which could cover the risk of impact from US dow jones index. And of coz...timing is important. Need to look for clues of a rebound.
Currently: Real estate industry in US--Downturn (bubble burst)
Automotive industry in US--GM and FORD--Down (GM filing for bankruptcy protection)
Financial Institutions--60/40 chance of crisis (defaulters are rising, the assets that they hold are being revalued way lower.)
Inflation ---High
Fed. Interest Rates -- High
Good side: USD cheaper.Maybe a change to Euro/Gold standard (but is highly improbable as Japan and China holds LARGE amounts of USD.)
Bad side: Worldwide 'unforeseen' consequences.