Keieo's World

Officially Me

Practically, I am not a person just bounded to the economic books and after A-scores. Actually, during my study in Economics, I have followed the global crude oil market and gold, copper futures, traced NASDAQ, Chinese stock market and some other important EU share market, and tried to invest to Oslobørs. I am so fascinated by the global economics that I like to express my own opinion about the financial movements according to the news and media. I am a subscriber of Economist and Wall Street Journal on twitter and also take part in investment discussions on the Oslobørs forum on dn.no.(with username Keieo) Besides, I started analyzing the global market and giving out tips through my personal website www.keieo.com.

Experience investing in the stock market and work experience in Gerson Lehrman Group has provided me with the grounding to succeed on this major. Direct corporation with the Wall Street fund managers has impressed me by their comprehensive knowledge and set me examples of what my future should be. I have been working at Chinese private equity and involved in an investment project in Spain in 2011. During that project, the whole process was more like a war, our fund was the bullets, IRR and some other risk/return models were our measurement, and how to optimize the profit was our art. I was working as the analyst from collecting the relevant intelligence to set them into our models. Generally the Norwegian economy behaves much better than the most of other countries since the financial crisis, especially in the real estate market. A stable country with good economy growth was attractive to the risk-averse investors and I have noticed that the holdings of Norwegian kroner and Australia dollar have been steadily increased since the end of 2011.

 
The more I get into investment, the more I realized the importance of the formal education in financial management is to a financial manager. I do not want to limit myself to a personal investor and earn my own interest, I know I have the talent to work with the smart people and manage a hedge fund. But, obviously, my current comprehensive ability cannot manage it.  Financial manager must have comprehensive knowledge about accounting and financial statistics, corporate financial procedures, securities management (including derivatives pricing and analysis of the market behavior of the financial investors), as well the macro market environment. For me, to be a successful financial manager means always keeping myself abreast with the constant changes in the complicated local, national and global financial sector.I read several books such as Robot A. Haugen <Modern Investment Theory>, Nauzer J. Balsara <Money Management Strategies for Futures Traders>, moreover, I have also read some accounting books to have a better understanding of cash flow and financial statement report.

Personally, I love to travel during my holidays. I have been to Berlin, Paris, Barcelona, Milan, Rome, Copenhagen, Stockholm and some other small cities. I have a habit to keep all the bills I have paid during my travelling which I can not only double check my expenditures later and write them into my balance sheet but also can give me an idea of tax rate in different countries and use excel to compare their price level, or calculate the inflation rate. I think it is very interesting to get some first-hand information.

Ok, let’s talk about Greece

Greed, for lack of a better word, is good. –Oh, REALY?!

In Wall Street, there is a popular saying: greed, for lack of a better word, is good. For the genius investors, fooling others is easy, especially when you are powerful enough to control the media— even if fake news is forbidden, but postpone a news realising  or blowing about good expectations of something far away, can easily make you win. In most of cases, the right information worths at least 10% of your total project.

This conclusion comes from a real story. A production company tried to import the material from China, after requires from 10 suppliers, they chose the cheapest offer.The problem is that the cheapest offer is almost 40% less than the market price. When the materials unfortunately arrived, they found it was a tragedy. Although it was cheaper, but when it comes to waste, it became a total loss. And they had to bring the loss because 1.they cannot afford the time to find a local lawyer in the third country 2. they do not want their clients to know things did not go according to the plan. 3. any risk of extra financial cost investing in this case is seemed ‘irrational’.  I am not here to repeat a wrong decision but to tell you that when the information is not enough, please keep greed in your deams, not in reality.

International online trading is mature enough in all kinds of areas, I still have to warn you that be careful about asymmetric information. As big as Alibaba (Alibaba.com is a professional B2B trading website) , exact products in the Chinese page is cheaper than the English ones. And more reliable, because some cheaters know what difficulties/problems those international companies are facing. Hereby, I do not mean every online suppliers are liars,but to warn you to be extremely careful when you see some products/services are too much cheaper than the market prices.

———————Your business becomes a joke, when you joke with it.

Count down your time, the sickest governemnt

(Reuters) - China and the United Arab Emirates on Tuesday signed a currency swap agreement worth 35 billion yuan ($5.54 billion), the People’s Bank of China said, adding that the deal was effective for three years and would boost two-way trade and investment.

This news shows 1. China would have more oil-supply guarantee from the Arab side. Admit it or not, it showed the signal that Chinese government is ready for the worst case, that is Iranian current government might be taken over. 2. This contract is in CNY and AED. It can be a condition that China gives up Iran, because this can release the pressure of CNY domestic inflation& appreciation pressure since Iran is the biggest threat to both Arab countries and U.S. 3. As what I wrote in my last article, now the conditions to start a war aiming at Iran government are getting more and more ‘mature’. The only wall is Russia, but I really doubt it can stand up to the end.

Several assumptions to save Euro-zone

For Greece,I think the only solution is to give out part of its sovereignty, but in the same time they actually missed the best opportunities. The E.U. financial problem is bigger and bigger and I really doubt Germany can make up for the big hole alone. Euro zone is facing collapsing if no more actions are taken. 1. Higher interest rate for loaning money (loaning is not the final solution for the financial crisis, it just postpones the time) 2. Domestic investment runs away for safer return.  What can Europe do to save its economy? Printing more euro is impossible and stupid. 1. EU is not a country, issuing more euro means to rob the rich countries, e.g. Germany to pay for the poor, e.g. Greece/Italy. 2. Reduce the credibility. Although euro is a global settlement currency, it is not so widely circulated as USD. (I personally think some reasons resulted to the Euro zone financial crisis is because Wall Street felt the threat of euro to dollar, the bomb was planted when Greece turned to Goldman Sachs for evaluation)
What can save Euro-zone?

1.  Start a war towards Iran.

• The war signal is obvious.The last unconquered country in the Middle East is Iran.
•  If Iranian government is down, the neck of big oil export countries like China, Japan and Korea are in hands.
• Much easier to get support loan from arms merchant. The war consumption can be paid, by controlling of oil.France was the most active country in the Libya War, even more active than the U.S.
• Russia is suffering the domestic political instability and inflation.
• There can be better deals with Russia to exchange for its neutral.Iranian government and people are separated

2.   Sell sovereign of parts of relevant countries. It is a painful decision but it is a must. The EU is not as reckless as an iron. The more time being wasted, the less price can be sold.Repeat the history in 1989 but I really doubt EU has enough ‘bullets’ to manage it.
3.    Repeat the history in 1989 but I really doubt EU has enough ‘bullets’ to manage it.
4.    Declare the collapse of euro, dismiss Euro-zone. In the short term, I don’t think it might happen. But nothing is impossible.

my second tips, 2012

After the storm, strong and thick pine trees can be broken down but never ever happened to bamboos.  Why? It is not because bamboos go more deeply to the soil. The reason is that it  bows towards the wind direction.

Now it is clear, dollar wants to eliminate the threat of euro. The potential bombs were set when Greece and Italy asked Goldman Sachs to help them to make up a ‘beautiful balance sheet’.  To know the reason is not my topic, I focus more on what to make money.  Euro is on the way to collapse, gold is overpriced, the East Asia is over-invested, and soon the U.S. would again be the ‘safe land’ for all types of fond. If you do not want to risk buying properties in Europe (which I think is the best investment opportunities for the investors), convert it to dollar or US bonds.

My Grandma’s Gold Story

Although I cannot totally understand why and since when human beings have started having a “gold fever”, I definitely know why my grandma keens on gold. Tracing back to 1940s, when the Japanese invaded China, thousands of people were running away from the invaded area, and my grandma together with her two children were among them. Road was occupied by refugees,  hunger was everywhere, money was as useless as used tissue, many people fell down and never stood up again. My grandma finally managed to take her two children to a relative peaceful villiage in the south just because of gold. Although she used all the gold she got from my grandpa, she saved her two childrens´s and her own life and it is the best deal at that time. Nothing can be more precious than lives. Even today, she still regards gold as “real money” and the cash, well, she does not trust them much.
 
If you remember wha I have written (Everyone loves gold)  http://www.keieo.com/?p=120 one ywar and eight month ago and invested on a gold company when the gold price was at $948.9 per ounce, then you would be surprised about today´s rate, staying above $1527/ounce. a more than 50% increase. When the market is uncertain about the future,  especially when the U.S.´s economy does not have a obvious recovery, (make it easier, the Federal Reserve holds a easy-money policy, weaken dollar), the gold would have the biggest possiblity to go up. The another reason to support my idea is that when the whole world is fighting for inflation(the after-effect of the recession), any bulk stock would be appreciated.

I can hear the sound of sharping knives

No bull market during inflation is non-sense in the Hedge Fund managers’ concepts. According to EPFR Global’s report, up to 2.March, weekly”escape” fund is 2.5billion dollar from the booming economy, and it has been 6 weeks in a row for fund outflow.

The common characters of the booming economy(Vietnam, Brazil, Russia and China ect) now are high inflation, real estate bubbles, and a tight monetary policy. In Economics, a 6% inflation is”seriously dangerous”, 10% is “Extremely dangerous , if it is over 10% , then the economy would be “distorted”. The currency would be depreciated at a big rate in a short time. (This has happened to Argentina in history) The inflation rate in Vietnam in February had been up to 12.31%, India was at 8.82%, which resulted to the drop of BSE30 up to 16.3%, the same has happened to Turkey, Indonesia, Brazil, which all of them had suffered a drop around 10%.

Up to now, you might be happy that I still have not mentioned my biggest concern, China, which I have warned since last year   I have read the news today that several famous hedge fund companies have moved their office to Hongkong to gamble that Chinese economy would be on “hard landing”. (VAM) There are some obvious reasons to support that 1. real estate is over priced which has resulted to social conflicts(political instability), high manufacturing or living cost which would  prevent China from expanding their export territories and most attractive investment destination, and would result to high inflation.Make it easier, overvalued real estate price would damage the sustainable development. The problem is the same as the great recession in the U.S. in 2008, banks would have to support the high price, otherwise the loan would be bad-debt.

But, if you really think the  hedge fond would do as they have claimed, then you are very naive. I think their aim is not just the real estate, their real aim is Chinese yuan. Everyone knows that the Chinese government is kidnapped by the “land policy” which has contributed a big part of their public income,  considering the foreign reserves the Chinese government hold, do you really think several fond can compete with them? The story happened in 1997 would not repeat. The reason I think their aim is Chinese yuan is that 1. appreciation in Chinese yuan would benefit the rest of the world except China. U.S. government has never stopped their press on this issue to Chinese government. The hedge would not fight alone with the economy giant, the whole Wall Street and the world is behind them. 2. Otherwise, if they try to simply short sell the Chinese real estate, which would result to a recession in China, the rest of the world would not benefit. Although hedge fund are not angels but becoming the enemy of the whole world is suicide. 3. easy to convert. Hedge fond are not for the long term profits, if they attack Chinese yuan, because of the flexibility, easier for outflow the profits.

hinese government o

Source

http://www.tradingeconomics.com/Economics/Inflation-CPI.aspx?Symbol=INR
http://finance.ifeng.com/news/20110325/3750465.shtml

Made in Japan, time to say goodbye

It has been more than 1 months since the 9.0 earthquake in Japan, but still the Japanese cannot control the radiation. I am not going to accuse Japanese government did very bad on management, coordination and crisis handling, if the same case happened in another country, which government dares to guarantee that they can do a better job?I think very few, maybe NONE. but this is not what I concerned,  as I have said before, the earthquake will not just shake the Japanese land, but also the global industry layout.

Japan is known as the leading Asian country in car-, electronics production, although facing the big challenges from its competitor, South Korea, Taiwan or even China mainland. But because of good will (brand reputation), customers prefer to choose Japanese brands instead of South Korea, which, unfortunately to other countries,  have to compete with their Japanese rivals at the cheaper price, even if the products itself is more advanced,  meaning they have a less profits. Even if more and more people are admitting that Samsung is growing up as a BIG brand, but not a “fabulous” brand  like SONY, or APPLE. The earthquake might change the view.

1.the model of zero-stock has brought the Japanese manufacture good profits, but it would bring an end to it. Because of its manufacturing distribution, f.eks. the TOYOTA’s ODM in China had to stop producing because of lacking  some parts which should be sent from Japan.  After the earthquake, if the nuclear power is limited, the production, life quality would have to adjust.

2.If you had a little knowledge about mechanical engineering, you would know that water plays an important role in electronics manufacturing. One reason that some “made in China “are bad quality was because of the water quality.How much would the radiation affect the water quality? I do not know, but definitely damage has occurred.

3.Big debt to Japanese insurance company, and fatal destroy of factories would make the finance system in a time “tight credit” but the problem is in the long run, as far as the radiation tension is not released, the bad influence would affect shipping, export and even tourism. The relevant industries have to face a long term recession.

4.The biggest possibility of rebuild fond comes from the foreign exchange reserves, international direct  investment, loans, which resulted in a short time, Japanese yuan appreciated, (although it would not last long) which would again hurts its export(although also in the short run)  in the long term, the profits from abroad investment is decreased. The foreign exchange reserves is decreased, which would drop the GDP growth. Take away international direct investment also means the break down of Japanese OEM products.

Think the way WallStreet think

If you want to be rich, you have to think the way the rich think. Although the majority of the world is made up by the poor but  it is definitely much more easier to earn $1000 from a billionaire than earn the amount from 1000 poor. The same rule applies to investment. For exmaple, judging from history, after 1995 Kobe earthquake, idle capital assumed that Japanese yuan would be depreciated, so that  they sold short Japanese yuan which they underestimated the Japanese government ‘interveneand civilians’ patriotism. So that this time, they have learnt the expensive lesson and after the earthquake, they started press Chinese yuan to appreciate. The reason is obvious, 1. Japanese yuan in a short time will be appreciated a little unless the reactor is getting worse. Otherwise, we can expect the Japanese central bank can manange to the stability. 2.  Chinese has now been the second lagest economy in the world, together with one of the biggest bond holder in U.S. and biggest exporter to U.S. market. Appreciation in Chinese yuan will help to reduce the debt. 3. Obama has announced the previous Commerce Secretary,  Gary Locke to be the new U.S. Ambassador, aiming at open the Chinese market. Appreciation in Chinese yuan would directly help export in China. So that my conclusion is that Chinese yuan would definitely appreciated, but it just limits to forex action. As what I have mentioned, China is now experiencing inflation, PPI in China is very high.