I came back to Jakarta and got myself entertained with the “unprecedented” market crash. We had market crashes before but they were not quite like this one. Yeah, I don’t know how many times I heard this word “unprecedented” (in the media) because there are indeed lots of unprecedented stuffs: unprecedented volatility, unprecedented concerted global movement by bank centrals, unprecedented government bail out, unprecedented losses, etc.
So, the bubble has burst out. Even worse, it burst unprecedentedly ;-)).
I had got myself off the hook. I had kept my portfolio cleared from stocks. Still, the magnitude of the crash surprised me. I try hard to put my excitement out of sight whenever I am meeting with friends who lost 50-70% of their stock values. By no means I’m happy for their losses. It’s just that I’d been waiting for this to happen to do the bottom fish. Some friends got quite bored when we were talking about stocks because I had repeated the same phrase to them: “I had been sitting on cash.” It’s hard not to gloat about this ;-).
Like other disasters, this market crash should or have had taught us something. Capitalism (or is it the American capitalism?) is being questioned. The market players who in the normal situation hate the government interventions have no choice but to turn to governments for help. Believe me, it has hurt their pride.
The business practices must change. Leveraging has gone too far. Giving bonuses based on the short-term performance will only lead to higher risk exposure.
Anyway, I just don’t get it. Why on earth do people think that the stock price will keep on going up? Unsubstantiated optimism. But nobody is willing to consider the risk when the money is good. This attitude has cost them a fortune. An unprecedented huge amount of loss!
4 comments:
Interesting blog. Thanks for the writing.
well, that's the thing, u never know what'll happen. we could be in for a great depression / japanese scenary where there's no world growth in the next quarter of century.
no one knows, anyone who says they do definitely knows less than those that confess ignorance. : )
r u back from papua for good?
i wrote about this hot money bubble last year. i just didnt know when it's gonna burst out. the thing is, we could know the trend but not the timing. we could never time the market. still, like i said, the magnitude of the "correction" surprised me.
how's your fund doing? gosh, thank goodness, i didnt manage any funds at the moment. cant imagine the rush of redemption of the money market fund in the face of the time deposit increasing rates.
for the moment yeah john ... i'm back to jakarta ... would love to go back to papua ... but we'll see ...
thanks christopher ...
i don't have a fund thank god!! : ))
(or was that q aimed at christopher?)
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