Wisdom Phrase

The block of granite that is an obstacle to the weak is a stepping stone in the path of the strong.

Over Night Policy Rate lowered by 25 basic points

Bank Negara has lowered the over night policy rate (OPR) from 3.5% to 3.25%. It has also lowered the statutory reserve requirement (SRR) from 4% to 3.5%. These actions are designed to inject some liquidity into the banking system. It will make borrowings a little bit cheaper at the expense of depositors. Those who have money in the banks should prepare themselves to get less interest for their deposits.

The banks pay 3 to 3.5% interest per annum presently. This is hardly enough to cover inflation. However, in the days ahead,inflation is likely to soften. This means foods and other necessities will become less expensive. Super markets are urged to bring prices down. Consumers should cut off all unnecessary expenses; waste must be avoided. When demands soften, the prices of goods will surely come down.

Stock markets all over the world have been badly battered by the bears. Even the most astute investors do not have the ability
to maintain their portfolio in the plus territory. In fact many have seen their market value slashed by as much as 40 to 60%. So rest assured that you are not alone in this calamity.

I have recommended that cash should be preserved for a better buying opportunity in my previous posting. However, if you can identify some good stocks to buy, by all means go ahead. We invest in the stock market for capital gains and dividend income. If you can indentify good dividend-yield stocks with sustainable earnings and dividend payouts, then you should put in some of your money to buy these stocks.

In the present scenario, it's best you forget about capital income in the short term. The market is most unlikely to make a V-bottom. At best, we will a round bottom.

At the recent summit meeting of 20 countries, the leaders are of the opinion that it will take 18 months to quell this financial meltdown. How the calculation comes to 18 months is anybody's guess. They have not provided any details. They say that in 18 months this financial meltdown will be overcome. Does this mean that the situation is supposed to become worst before it becomes better? They have not worked out a plan as to what each country should do. Plenty of talk and no well- thought out plan is hardly the stuff for success. I hope they will do better in the next meeting.

In the meantime, you should pay close attention to your charts. The downtrend has not shown any reliable buy signal yet.

Best wishes.

Hold on to your cash

The Americans have overspent! They are now between the devils and the deep blue sea. What's going to happen next? So many countries are now in recession. Singapore has retrenched 500,000 Malaysians according to one Chinese newspaper. Where can these people go? Can you imagine the pain, agony and desperation for one to lose his job when his monthly installments for his house and car are already in arrears?

Pakistan, Ukraine, Argentina, Iceland, New Zealand, Australia, Hungary, Japan, Germany and England are all in financial crisis. The global financial meltdown has clearly shown that demand for everything has dwindled. Crude oil had tumbled from $147 to $50 per barrel. Palm oil dropped from RM4486 to RM1450 per metric ton. Landed properties are sure to follow the downward path.

Now is the time to be ultra-cautious with your money. All unnecessary expenses must be hived off. Cash will become more and more valuable. Not long from now, you are likely to have the opportunity to have some real-cheap buys, not only in the stock market but in real estates as well.

Some governments will cut interest rates to spur spending. This may work in the short term, but over time, the cure will be more deadly than the disease.

Obama is said to be in favor of an alternate fuel. If he is successful even to a certain extent, crude oil has no way to find its way back to its glorious days. Already demand for the product has dropped as reflected in its price. Brazil, Russia, India and China are said to be strong enough to weather the American crisis. This assumption may not hold water now. In the foreseeable future, deflation is sure to set in. The days when you are able to buy very much more than what is offered now may become a reality in the not too distant future.

Hold on to your cash. You will have a better tomorrow....... for your buying.

Cheers and Happy Waiting!

Wisdom Phrase

People who are afraid to fail can never experience the joys of success.

Pete Zafra

Wisdom Phrase

It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.

Charles Darwin

Wisdom Phrase

You may be disappointed if you fail, but you are doomed if you don't try.

Beverly Sills

Wisdom Phrase

Luck is what happens when preparation meets opportunity.

Elmer Letterman

Wisdom Phrase

Personal development is your springboard to personal excellence.
Ongoing, continuous, non-stop personal development literally assures you that
there is no limit to what you can accomplish.

Brian Tracy

Wisdom Phrase

Successful and unsuccessful people do not vary greatly in their abilities.
They vary in their desires to reach their potential.

John Maxwell

Wisdom

To be successful, you must decide exactly what you want to accomplish, then resolve to pay the price to get it.

Bunker Hunt