Wednesday, October 29, 2008

Panic 2008!

"Market Crashes", "Dow Plunges", "Global Recession".

Its enough to make you feel like Edvard Munch on a combination of speed and cocaine.

Headlines blaring across the worlds financial and main news organisations are saturating investors brains to the extent that they can hardly see their way out of all the gloom.

Of course there are practical and real reasons why most of these headlines exist and we haven't seen the worst yet but lets face it the world ain't going to come to an end.

All things must pass!

I am fed up with all the negative stuff and I am looking past the drama of "Panic 2008" and "Black October"(whats up with October for down stockmarkets?) and towards what lay on the other side of it.

We are coming close to the bottom of the down part of a financial cycle and the big economic impact is likely to hit soon and last until well into 2009/early 2010-of course the reactions by politicians to it may delay growth -at the same time though the seeds of an economic recovery are being planted.

The New Zealand dollar has been decimated and will continue to fall and this of course will help an export led recovery, one that is sustainable, rather than the tax and spend merry go round we have been on for the last 9 years.

Lower New Zealand interest rates, and US ones in particular will lead to an increase in business growth through cheaper lending and a pick-up in job numbers and in home lending this will lead to all the knock-on industries benefiting as a result.

Lower asset values will lead to more prudent buying by investors and a gain for those who have bought in a falling market and for those who haven't had to sell their house, stocks or rental property.

Lower commodity prices for oil, grain, sugar and a whole host of other staples that make economies tick will be a welcome relief for citizens lumbered with less employment or problems with high debt.

My point is that with every downside associated with the current financial and economic turmoil there is a mirror upside in the future and that is just how economic cycles work.

The fact that the upwards cycle has been a steep one unfortunately means the downside will be reasonably lengthy but in the process of movement back towards the top there are opportunities to be had for investors to capitalise on by buying cheap assets and benefit from their foresight when things inevitably get better.

All we need now is a little more faith in the future to make the upside a reality sooner rather than latter.

Panic 2008 @ Share Investor

Why I am optimistic about the Global recession

Learning from History
Strap yourself in baby!
Will the stalactites hold?
Follow the Monopoly Board
Free Market to Pollies: We don't want you
The $700 Billion question: How much will the bailout affect your investment?
Not so sweet Fannie Mae
Financial weapons of mass destruction
Global credit squeeze: There is no free lunch
The Global economy looks bad now? But wait there's more
Current Credit crunch a blessing in disguise
Lenders must come clean over losses to restore faith in credit marketsWatch for dead cats bouncingGlobal Market Meltdown: I can smell the fear from here
Warren Buffett's The Intelligent Investor
Global Market's dropping and your portfolio
Global Market Meltdown: What is Warren Buffett doing?
A sensible approach to global market volatility

c Share Investor 2008