Friday, October 10, 2008

Financial Tsunami

Being an average folk, a small potato of a financial corporation, I'm no different than most folks on the street in the current financial tsunami that swamp almost everyone. My personal fund and stock holdings are mostly in red. As I don't believe that I should sell anything to realize the loss, maybe I'm dumb (won't know till someday I look back), I'm going to ride it through and stay being trapped for years to come. Thank God for few things:

1. I'm not going to retire in next few years.
2. Still have a job (touchwood, knock knock!)
3. Not all my assets are in stocks or funds

So, I will try to look at this current situation unfold as just like most previous financial turmoils. Though I really doubt this one is like the others, cos the extent of damage of this one is gonna be the larger than most of the previous, like most folks say "Once in a life time, once in a century". However, the more news that I read or heard, the more I learn about the causes of this tsunami, that's really something everyone should learn: Don't spend more than you earn! Don't borrow more than you can repay! So simple right? but Greed and short-term enjoyment just cover our eyes. Then, shit happens and we are in this hell-hole.....

I'm no expert, but based on what are said in the media, plus a bit of person 'feeling'. I think the following is gonna happen :-
- Local economy is gonna turn really really bad in next 2 years
- Goods will be on sales really soon, as they merchants want money and will dump whatever they can sell.
- Shops will close, companies will go bankrupt as they can't afford the rent though the sales revenue in the coming season should not be bad.
- We will start hearing layoffs across the board in all business - tourism, restaurants, banks, retails, real estate, etc.
- Some folks will commit suicide because of financial difficulties
- Political scene will be chaotic between the legislative and executive branches, and there will be more and more protests
- Unemployment rate will rise as graduates can't find jobs, and more people will need to rely on social welfare.
- The poor will become poorer and the rich will still be ok

People may say what I mentioned above are nothing new. But, I think the pain for this tsunami will be unlike anything before. Yes, people say that we have the backup and support from the 'North', but I don't think there is so much they can do, cos this problem is global. When the existing engines stall, and the 'newer engines' have not been completed and run well. There is no real driving force that we can see in the horizon. Unlike in SARS, we know that there would be cure and was more or less regional. The tech bubble in 2000 was more for tech industry, so it was fine in other industry. However, this is one is about credit for the whole financial industry, which is the key or driver of all. Like a patient is suffering from both blood cancer and stroke! It is gonna be really bad and it will take a long long time to recover.

At personal level, I will just do my job, take care of my family, continue to invest monthly, hopefully dollar cost averaging will play the trick down the road, and hopefully my portfolio will see the light at the end of the tunnel someday. Oh more important is that I need to maintain my physical and mental health for myself and my family. I think that's all I will do...all I can do...I guess!

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