I can tell u the financial market deteoriation is going to eat up even more market capitalization and leave you wondering where has all the money suddenly vanished to ? You might probably stand back and ask where can i put the cash that is safe and not going to lose value, then u start to think hell i have diversified my asset and practiced the asset allocation of 10,20,20,30,10.. 10% fixed rate bonds/ deposits,20% cash, 20%gold,30% stocks,10% in risky security.
Then u start to form a thought, i dun think all will go bust at once, so diversified is going to keep me safe, I think one way u are right and the other way u are wrong! If the dollar really go bust, only gold is going to safe u! But if central bankers cartel is going to manipulate gold prices again, how would u guarantee it is going to bail your portfolio from total destruction, as u all know average cost of producing oil stands at65-72 level, deflation of assets has started to infect commodities but below cost would send the sellers to hoard oil and push it up again.
I mean if u feel the dollar will be the one going up and interest rates are coming down, hell ur bonds are going to take a hit, shares are going to plummet, as exports drop affect gdp, inflation will kick in food prices, ur cash holding has not the same purchasing power and suddenly all looks so much more expensive like when gasoline was 4 bucks.
Then i recalled an article titles SPEND spend SPend, that emphasize on spending smart as the prudent investor, spending at the current value not onli ensures that ur purchasing power is maintained and chances of losing purchasing power decrease in a volatile economic period, and in addition to spend wise may also mean to restock for ur biz when time is rite, to replenish staples before pricing sparks, but if purchasing power is par by earning power, if income is consistent but spending keeps increase it will affect our balance sheet/portfolio.... Are there nothing that is sure and concrete in the world ? i am asking the same question, so a trading plan, is inevitable
Saturday, October 18, 2008
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