August 17, 2009

Decoupling of Stock Market & Economy

Business/Management,Finance/Investment,The World

The recent stock market rally signals a decoupling between the stock market and the economy.   The economy, given its current state, would have a L-shaped recovery at best.   As the consumers facing terrible job market, and high debt levels for households and government remains if not worsen, the economy powered by consumption is not likely to have a robust recovery. On the other hand, aggressive cost cutting has fueled a recovery in corporate profit. However, sales trend still remains weak.  […]

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June 12, 2009

A case for buying a house – with mortgage

Finance/Investment,Strategy

Buy a house on mortgage.  This is the only way you can load up a lot of debt.   We are marching closer to the inflection point beyond which deflation turns into inflation.  Interest rates are still low – although they are feeling the pressure to go up.  By loading up on debt, you are taking advantage of the coming high inflation, which would wipe out the your debt. Of course, heed your cash flow, you don’t want to be forced […]

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June 12, 2009

Wrong economics teachings

Finance/Investment,The World

The mainstream of economic teachings in highschools and universities is Keynesian economics.  Unfortunately, the Keynesian school of economics has gotten everything wrong and has driven our economy towards total collapse.   When a economic bubble burst, the excesses from the boom period must be allowed to be liquidated so the profitable and efficient businesses can absorb the resources tied up by unprofitable and inefficient businesses. Government bailouts, stimulus spending, injection to money supply would only increase the inefficiencies in the […]

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April 15, 2009

Some thoughts on the Current Economy

Business/Management,Finance/Investment,The World

I’ve been following Peter Schiff, Jim Rogers, George Soros, Warren Buffett and Marc Faber lately.  I’ve also been watching Obama and Bernanke’s speeches.   And here are some thoughts about current state of the economy and where it is going: The recession is deflationary because the current price levels are the results of the excesses of the consumption and credit bubble.   After the bubble busted, there are an over-supply and over-capacity of everything:  oil, houses, cars, cloths, over-paid employees.  Deflation […]

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January 30, 2009

Employement Trends

Business/Management,Finance/Investment,The World

During economic recessions, employment data has become a very important economic indicator. Increasing unemployment is a sign of decreasing consumer spending and economic slow down. Here are some employment related indicators that are useful in assessing economic conditions: 1. Unemployment Rate (See Graph of Unemployment Rate) Unemployment Rate leads economic downturn and lags economic recovery. 2. Weekly Earnings (See Graph of Weekly Earnings) Higher Weekly Earnings bodes well for the economy. 3.  Total Layoffs (See Graph of Total Layoffs) Layoffs […]

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