Its Recession time
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Hi Friends,
Its Recession time… make your own judgment, don’t panic! Do what is wise.
The recession looks very eminent. It is really time to take proactive steps to avoid a painful time, as markets are not going to reach a new high during the next two years( according to Shankar Sharma, an Economy Analyst – to an interview on CNN IBN).
Suggestions:
1. Don’t take any loans; buy homes, properties with loans, or even cash. Keep as much cash as possible.
2. Pay off as much of personal loans, private loans, as debt collection will be hastened.
3. Sell any stocks you can even at lower prices.
4. Take money off from Trust Funds.
5. Don’t believe in huge sales forecast from customers, be extremely prudent, lowest inventories, reduce liabilities.
6. Don’t invest in new capital.
7. If you are selling homes/ properties/ cars, do it now, when you can get good prices, they are going to fall.
8. Don’t invest in new business proposals.
9. Cancel holiday plans using credit cards.
10. Don’t change jobs, as companies will retrench based on ‘last in first out’.
Stay cool, wait, and if you took all of the above actions and more, you probably will be better off then many. This is not a rumor.
Bear Stearns is the first of many banking and financial institutions that will start falling in the not too future. If Bear Stearns can fall, so can JP Morgan, Citibank, HSBC, and the whole world. US economy falls, the rest will crumble.
India and all those self economies will be the most protected, but not gullible.
Europe may be a little stronger, but not China, another giant place!
Malaysia will see significant impact.
Be alert
Jessil pls post the source, i mean url.
And i also come to know internally that financial waves are hitting uae economy too, but govt is trying to show that everything is cool. Whereas all uae markets are down, banks stopping personal loans, housing loan and even car loan soon.
Yest at Ramy’s i come to know that Toyota selling less than 2 FJ a day, where as they use to sell 20-25 FJC, just because bank isnt processing loan and if they are doing with wasta they are doing at higher rates and lower finance amount.
It looks like freezing stage is coming, then we can go to desert everyday :p
It’s clear that liquidity is draining out of this market.
The major reason for the unbelievable growth here was the negative real interest rate (makes borrowing PROFITABLE – eg. you borrow at 6% and invest/speculate at 20%, making a 14% gain with the bank’s money).
Once liquidity drains out, money supply tightens and the price of money (interest) increases, thereby making borrowing expensive.
Coupled with banks being very sensitive to liquidity right now due to the exposure they are carrying vis-a-vis the US markets, only top rated borrowers will be sanctioned.
What this means for you & me is that growth will slow, projects will be delayed (meaning supply does not come online and rents stay high or increase further due to population growth), financing in general will become more expensive and difficult.
If you can, put your money in assets (do not leverage). Slowing growth almost always means inflation (stagflation) – meaning your money is worth less.
If you have your money in an asset, it will appreciate in value in line with inflation (eg. property)
OR
You can use benefit from use of the asset (eg. car).
Thanks Shan !! Finally you put your ACCA to sum use. 😀
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