Trends for the Next Decade

Discussion in 'Economics' started by amanda33, Aug 19, 2008.

The Next Decade?

  1. Financial Armageddon

    10 vote(s)
    20.4%
  2. Japanese Deflation

    1 vote(s)
    2.0%
  3. Below average returns in almost all equity classes

    24 vote(s)
    49.0%
  4. Elvis returning

    8 vote(s)
    16.3%
  5. What I said

    3 vote(s)
    6.1%
  6. Booming equities and low inflation (Goldilocks economy)

    3 vote(s)
    6.1%
  1. Thanks for that, Cutten. I'm more of a top down picker and balance sheets give me the heebee geebees. A couple of stocks I'm looking at (only because other, more informed, people have done the research) are China Mobile (CHL) and GlaxoSmithKline (GSK.L). These would both be long-term holds if I dipped in, although when that time comes is something I'm not too sure of - maybe when the S&P goes above the 200DMA.
    Any thoughts?
     
    #11     Aug 22, 2008
  2. I agree that the article went to far. I actually don't think you can blame China for any of that except pegging their currency to the dollar. That, I think, has had very negative consequences for the U.S. and for the globe. I would also argue that it is in their own beset interests not to "corner" commodity markets, but all is fair in love and open markets, eh?
     
    #12     Aug 22, 2008
  3. I agree with just about everything you said, but I would add

    a) TIPS will be weak because let's face it: the government estimate for CPI is understating true inflation.
    b) There is a risk in real estate unless you can be substantially in cash: your investment may dip below equity putting you at risk.
    c) The bear may last longer than anticipated if the malaise spreads further, which it appears to be doing, into ALT-A and Commercial.
    d) I'd leave the emerging market stock picking to either indexes or the pros myself. There are some funds that have good LT track records and will do better than 99% of us avg Joes trying to take into acct currencies, political conditions, timing, markets and balance sheet considerations.
     
    #13     Aug 22, 2008
  4. Yes indeed, I don't see any advantages to China's currency restrictions except building her manufacturing/export industries.

    Saying that, with China's middle classes growing at such a rate, that must be good for a World economy - I don't think they'll only be buying Chinese-made stuff when the quality and cachet of western-made goods is still higher. I know from personal experience that many Chinese prefer to spend twice as much on shopping and food (Nike, Nokia and KFC for example) if their budget runs to it. They certainly have the shopping bug.

    A link to a decent interview on future trends:
    http://online.barrons.com/article/S...mod=9_0031_b_this_weeks_magazine_main&page=sp
     
    #15     Aug 25, 2008
  5. Nice summary article/interview but nothing really new there. Everybody is waiting to see if ALT-A and the commercial real estate sectors will now collapse and how extensive the bank failures will be. In the meantime, get ready for the great oscillating market...
     
    #16     Aug 26, 2008
  6. #17     Aug 26, 2008
  7. #18     Aug 26, 2008
  8. Jubak is one of the good guys in the financial press...
     
    #19     Aug 27, 2008
  9. Btw, there are many forces at work on the superpowers because of all the account deficits. This link documents and models some of them.

    http://www.resourceinvestor.com/pebble.asp?relid=45716

    Here is an excerpt:

    Turning the implications for the change in real GDP (third column), we see that large changes in relative GDP translate into much more muted changes in real GDP. For instance, the real GDP of the U.S. falls by only 2%. The reason is that the more the U.S. relative wage (and hence relative GDP) needs to decline to make U.S. exports (e.g., tractors, wide-bodied aircraft) more competitive abroad, the lower the price of what Americans produce for themselves (e.g., medical services, personal training, auto repair), which comprise the lion's share of what Americans (and other people) spend money on.

    The outcomes for the large surplus economies (Japan, Germany, and China) are the reverse image of those for the U.S. Note that in either scenario the U.S. pulls down the relative GDPs of Canada and Mexico, even though Canada starts out running a surplus and Mexico only a small deficit. The reason is that these countries' largest foreign customer shrinks substantially. Despite the decline in the size of the Canadian economy, Canadian GDP can buy more, since goods from its largest foreign supplier have gotten much cheaper still. Hence its real GDP rises.

    To summarise, the realignment that is necessary depends on flexibility, with more flexibility requiring less adjustment. Even if movements in relative GDP's are substantial, however, once price changes are taken into account real effects are much more modest.

    The adjustment in progress
    In fact, there are signs that the correction has already begun. From 1 March 2007 to 1 March 2008 the value of the U.S. dollar declined by nearly 18% against the Canadian dollar, over 16% against the Mexican peso, by nearly 14% against the Euro, and by over 8% against the Chinese yuan. Various trade-weighted exchange rates reported by the IMF show a U.S. dollar decline of 10 to 13% from the first quarter of 2007 to the first quarter of 2008. During this same period U.S. merchandise exports grew 18.4% and merchandise imports grew 12.7%. Some of this growth is the consequence of the commodity boom. But even removing soybeans, corn, and wheat from exports leaves growth in the remaining categories of U.S. exports at a hefty 16.8%. Moreover, if imports of crude oil are taken out, U.S. spending on imports grew by only 5.9%.
     
    #20     Aug 27, 2008