Wednesday, October 22, 2008

Currency exchange

The current financial crisis is causing havoc in the currency exchange market. The exchange rate for the currencies have fluctuated wildly. For example, the US dollar, which has been on a slide for most of the first half of this year, suddenly turned around. Similarly, the Japanese Yen has strengthened. As a consequence, many other currencies, including the Ringgit, have declined in value.

Mostly, the currency movement is caused by the shifting of funds by investors. The unwinding of the carry-trades by the Japanese is causing the Yen to rise and vis-a-vis the Aussie dollar to decline. Similarly, the repatriation of funds by US institutional investors is causing the US dollar to be on a tear.

The Ringgit had its best day against the US dollar in late April when it was trading at about 3.13. It is now at 3.54, a lose of 13%. The Ringgit has also gone to below 10 Baht. All this is good news for the expoters. However, for the average citizen, the price of imported goods has gone up. And with it .... inflation.

Warren Buffett

Warren Buffett sure drives a hard bargain. He exacts fantastic terms from the sellers when they are down and desperate. He puts his money where his mouth is by following his investment philosophy of being greedy when others are fearful. This makes him and Berkshire Hathaway shareholders a very happy lot. But what about the shareholders of the acquired companies? Or the CEOs of those com. Wouldn’t they feel being taken advantage of? Couldn't he showed them some compassion?

WB is the richest man in the world. He has already committed to giving most of his wealth to charity. So why does he still try so damn hard to make more money? Is there still a point for him to prove? Maybe he should use more of his heart than brain in his wheeling and dealing.

I think this is the best time for him to do some National Service. Resign as CEO of BH. Volunteer to be in a position that can help solve the credit crunch. Use his own money to help if need be. This way, he will leave a much better legacy.

Monday, October 20, 2008

US Election

It looks like Barack Obama is set to win the Nov. 4th election. How interesting, a person from the minority group becomes the president. America is really a land of hope and dreams.

That race is not a big consideration in the choice of president is a big plus for meritocracy. It shows that integration in US is more thorough. Race is not the top consideration in their daily life. This is also perceptible from the reality shows. Generally, they don't practise racial discrimination. The whites treat the blacks as equals even though the latter are subtly more cunning and devious.

Compare them to us, we are far far behind. Everything is done based on racial consideration. From the government policies to the local authorities, every action is carried out with a racial overtone. Worst still, because of majority control, racial discrimiantion is prevalent in policy implementation.

Even politic is played based on race. You have political parties based on race and fighting for the rights of their particular race. Verbal contests on each race's rights are often aired. The people's feelings are aroused. They become racial and think along racial lines. And this perpetuates .....

Friday, October 17, 2008

chicken market

They say when the US sneezes, the rest of the world catches the cold. But why does it have to be so?

The credit and financial crisis is a Caucasian problem. They are the ones having a credit crunch. Our banking and financial system is sound. The confidence of the people in the economy is intact. But, why is our market performing worst than theirs? For example, the DJIA was up some 400 points on Thursday, but our market was down about 14 points yesterday. For the week just ended, the Dow was slightly up, but our market suffered a severe beating in the week.

During the week, Public Bank announced improved results. However, its share price still experienced a sell off.

Granted a recession in the US will induce a slowdown or even a recession in our country. But our diversified economy should be able to weather the storm better. We should be able to survive the economic reverse.

My opinion is that our market is affected by the movement of hugh foreign funds. They cause the volatility in our market. When they start buying, the market outruns its fundamentals. Conversely, when they sell, the market drops into the abyss. The reason being that their size is big in comparison to our market. Big storm uproots the trees.

The only remedy is that our institutions should play a more active role in the market. They should counter the activities of the foreign funds. This will result in a less volatile market.