I have several rather diversified portfolios which all have lost more than 50% in one year. Though it may be true that as long as you don’t sell, your loss is not materialized. But the truth is that in this kind of market, some stocks may take many years to recover and some may never do or even go down to zero because the underlying companies have gone belly up.

Now I am so discouraged that I start to question the strategy of longing stocks in general. I feel like it is pretty much a scam because it violates the number one rule of investment that is to preserve capital before getting any return on capital. Now my capital is being lost big time. You know once you buy into a stock, it is out of your control. All you can do is to sit there and wish or hope that it will go up. Trying to make money based on hope is fundamentally no different from gambling in casinos. As one poster has pointed out that Hang Seng has become a gambling den, it really is. This drama has taught me that you can't make real money by buying things. Here I mean real money not occasional winnings by a few lucky winners.

No wonder the stock-buying business is called playing stocks. It is indeed a game. You are told to play it with play money only that you can afford to lose completely. But this is not a viable strategy to make a living. So I am now refraining myself from buying any stocks at this moment. Saving up the cash is more important for me to plan for my future travels. In this deflationary period, cash is king.

No you are FORCED to take such gambles , because CPI is so high (CPI is fraud anyway) IIRC in HK CPI is 8.1% while bank interest rates float around the 0% mark , which means that just to preserve your capital you need to take out risky investments else you lose 8% year on year.

I believe we have entered a deflation instead of inflation since October last year. Can't comment on HK, but prices of many things in the States have gone down dramatically. We all know gasoline price has come down to the 2002-2003 levels. All the stores are tramping onto each other's toes to lower prices just to survive. Pertinent to my mongering, I know my plane tickets and my hotels are definitely becoming cheaper in dollars than this time last year. The only laggards are saunas and pussies that still remain constant for the time being.

All signs however seem to tell us that this period of happy prices will not last. I guess before the end of the year, prices of all things will go back up. So enjoy the lower prices now while you can.  

in HK, except for gas prices, consumer costs have remained relatively the same, food costs seems to have gone up !

True - but the biggest costs of living is property, and property is tumbling nicely.  

Not as far as the HSI (yet) but still a long way - and basically that means bro thickskin's 50% portfolio loss is nowhere near as bad in terms of purchasing power.  Still relatively a loss, but the gap is closing.  So as long as he's still got his salary, which is now able to buy much 30-50% more than it could have 9 months ago, his purchasing power may be close to even.

Property prices in prime areas > 700 - 1500 sf flats have not come down much, its only investment flats like in cyber port that's come down, rental prices have come down even less ...
when developers lowers their prices for new flats this month lets see what happens.

The local property market is slowly becoming more of a buyers' Market. Most landlords are now more open negotiations on rent reductions or offering discounts on selling their property.

For the rental Market, landlords are willing to lower rents as they are afraid that their tenants would move out to cheaper flats. So they have no option to meet tenant demands - tenants' market - to maintain cashflow or meet mortgage payments. This is much similar to the SARS period...but will get worse for the luxury end.

In addition, with the banks not willing to offer mortgages unless you drop a deposit of 30% or more, it's getting harder for people to buy a property. To get around this issue, especially for new properties, developers are offering heavier discounts so that potenial buyers can obtain mortgages.

It is kind of comforting to see my loss in the stock market may be partially offset by the price deflation on the main street. Yes, I still got salary which is why I can still think about mongering. But nobody can be too complacent in this uncertain times. If my employer finds out that I am fooling around on this website, my days of getting paid will sure be numbered.

That leads to my general question about the mongering climate in HK. If you read headlines these days, all get are those horrific numbers on factor closures and job losses. That means that the major impact of recession is less on the deflation of the marketplace be it stock market or real estate market but more on jobs and employments that affect the livelihood of average Joes. For those Hong Kong based mongers, will that translate into fewer trips to Macau for puntering?

Gotta say that you and I seem to be seeing a different picture, Twice.  

Yes, ASKING prices have not moved much, 10% here, 15% there, but still seemingly holding firm ... at least ...

.. until you check up on CLOSING prices - yes, they have moved a lot, across the board.  Lots of examples of rentals and purchase prices for mid-range properties (800-1500sf) being at much less than 6 months ago.  Same picture in commercial - I know people who got great deals both on price and location.  

Property moves much more slowly than stocks.  It takes a while for rental contracts to lapse, and for owners to be forced to accept aggressive low-ball offers, and for the true picture of supply and demand to emerge.  But I'm hearing offers which even 3 months ago would have been snapped up, being offered again, and again, at sweeter prices.  

For sure, is it's not a good time to be short of cash or long on debt.  Hold onto that salary with all your strength, and cut your outgoings where you can.  

Is it a dip?  Will it correct soon?  Sure, I also meet a lot of people who have both cash and cash-flow, who are saying they "are looking" and "expect to start buying in about six months" ... but they were saying that 3 months ago and they're still saying 6 months now ... so I'm not seeing much support for a rebound just yet.

Erm I think they are optimistic actually in that paper money is backed by NOTHING , ever since Nixon in 1971 broke the gold standard of the US and fiat money took over there is NOTHING to stop governments printing out masses of money other than devaluation and inflation.

The point is that the US is printing money enmasse, the 790bn Obama bail out for example did taxes just increase suddenly by 790bn , did the US suddenly issue 790bn of bonds to foreigners? .

Nope the US government issues 790bn worth of bonds and the Federal reserve prints out 790bn USD to buy that bond..

The money supply is constantly exponential and it is in effect like a drug addict eventually the addict builds up a tolerance and needs more and more of the drug to get ever diminishing highs.


I think the only way to fix it is another Bretton Woods type system , stop to printing money and going back to the Gold standard.

Must watch: Money As Debt

Great video - shows where money came from, and what happened after the gold standard ended.  

Can't turn the clock back ... and it's NOT the governments printing the stuff!!

Money is now no more and no less than someone's confidence that he can earn and pay a given amount.  More people x more confidence = more money.  

... and anyone who thinks gold is a reliable standard should check out how it was Louis XIV made his money ... eye-opening stuff!

[ Last edited by  DArtagnan at 16-2-2009 23:42 ]

Great insight on the current situation in the US. You must be working in the financial arena, I suppose. Since my income is and will be in US dollars, I am seriously concerned about the possibility that the dollar is going to blow up. What to do? Are you suggesting to hoard gold?

I don't know the IMF is about to sell 480 tons of gold to raise money to bail out countries, they recently bailed out the Ukraine and Pakistan and Eastern Europe is about to implode also.

Also the USA has a bad precedent regarding gold in that Roosevelt in 1933 ordered that all private ownership of gold was illegal and sent people out to seize it.

In the UK when you buy any gold over £100 invalue excluding jewelry which isn't that useful as gold investment anyway, you have to log this with the government and VERY large quanities of gold has to be stored in government values, which makes seizure by the government incredibly easy.


Lui Ping however of the PRC government said this

“Except for US Treasuries, what can you hold?” he asked. “Gold? You don’t hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the only option.”

Which means that the USD is going to stay as a reserve currency, all this means though is that the pyramid scheme which the USA is built upon (since the end of the 1971 gold index being canned) is just going to be kept going for a bit longer and ultimately like ALL pyramid schemes will collaspe ....

But at some later stage in the future and that collaspe will be more calamatous than now much much worse.....

The danger is that the US prints ANYWAY, and thus the 1.1 trillion USD the government of China holds becomes worthless something which is already happening , I remember an article and it stated that China had lost so much value on their USD holdings in terms of purchasing parity power that with the money devalued the US could build 25 Nuclear powered carriers.

I'm currently not sure what to do , as the UK£ is doing badly but HK and Yuan are dollar linked...

interesting times indeed.

... and of course, quietly and behind the scenes, the Chinese are buying up as many of the World's natural resources as they can find for sale ... strategic purchases of the stuff they will need ... little by little making sure they don't need any of their $ reserve by the time it becomes worthless.

True Russia and China signed a 20 year deal to buy Russian oil and petrol worth 300,000 barrels a day increasing 10% YoY.

And they are using this to get rid of their USD holdings.