Global Recession 2012

Negative news has been going around the world for the last two weeks. Take a look at the US market. For the last two trading weeks, Dow has corrected more than 10% for its peak with extreme high volume only seen during the global recession 3 years ago. US economic problem is getting into cronic situation. well what is taking stage in the US is "EGO". If you screwed-up, confess and take the paint and move on. Instead of taking the boring and conventional move (ie to deleverage its debts be it public or private) the US had choosen to inject the half dead body with another dose of deadly steriod to extend it economic life without taking a back seat to rebuild its immunisation.

QE1 & QE2, possibly QE3....these are all short term measures to the economic health. But what choice does the US has? Do you are damn, dont you are damn. Just google the google the gobal recession 2012, i m sure thousand of listing. The follow through is mounting. Fear among investors is building up typically a 10% correction in major market. As market situation is always exaggerated by news spread sporadically. with the advent of internet technology, news spreads, whether rightly or wrongly even faster than light speed. the interesting is, during bad time, investor will only focus on the negative points, positive points are ignore. Hence, market could collapse faster than you think.

Besides VIX, another best measure of fear factor in the market is Gold price.

The Gold price has doubled since 3 years ago. Probably you are aware, investemnt communities do not believe in investing in gold as it does not produce income, worst is you need to incur cost to safe keep gold. Seriouly, i believe a lot of activities has been going around to promote gold and instead of the everlasting believe that US will continue to grow. Hence, gold price always has inverse relationship equity market. why would for the last three years both have direct relationship. Interesting. for me is simple, really money has gone in the gold, where as the excess money (ie money not earned from productive acitivities has gone in the world equity market). Equity market has been pushed up artificially. Investors are not worry after all, those money are free. Hence, printing more money is theoritically boost the economy in short term but you cant control where will the money goes to. As there was no real fundamental supporting the upsurge of equity market for the last three years, the equity market has an artificial market height. It will be disasterous fall when the equity buble is prick.

Hence put your money in where real money reside. A lot of people think that Asia is going through Real Estate bubble. It is a yes to a certain extend as the demand for property has suddenly surge while supply side take times. But atleast these are real money. How do i know those are real money? Well quick money will not be put in property as the turnaround time is long. So long as the US economy does not recover in real manner, the property bubble will continue to hold. The major pressumption is the young demographic population in emerging asia. Should there is correction in property market, it would be temporary in nature. Eventually, with the growing population with concentration of urbanisation, it is a pillar to the price surge in property market. Just compare the population in Tokyo, New York, London to Jakarta, Kuala Lumpur, Bangkok. There is tremendous opportunity.