Major Life Changing Event
In 2003 or 2004 (cannot recall, must be tired from the trades this week), when china announced rmb appreciation the world reaction was initially very muted. I bot china life then at 5.6 and made a bundle selling it at 30 (too early I guess as china life went to hit 50) in 2007. Of course china life is a proxy to the china rmb and many others. Last week, US announces printing more money. Market reacts wildly and could see a pull back soon but the road has been defined. We should bear in mind this is a BIG EVENT, and the trend will not reverse course unless we go into depression. The policy move will only lead to higher asia asset prices. Pls bear this in mind when making all investments decision.Implications over next 3 years:
1. Higher commodity prices and asset prices over the cost of 3 years
2.Higher hard currencies
3.High inflation expectations and borrowing cost
4.Higher input cost
5.Neutral equity cos the deflation weight will be replaced by inflation.
6.Weak corp will get weaker, only bonds in quality co.Long aud, cad, xau, nok, copper and gold shares, agriculture on pull back.Feedback and questions and brainstorming are welcome.
Addendum to the above:-
To clarify, although I am neutral on equity, the liquidity and reflation will bring liquidity to asia market and is positive to ich biz. But we should take big position only for private equity and not public equity. Our public equity fund will concentrate positions on those positives mentioned below and not equity in general.