Bloomberg News recently reported that former Federal Reserve chairman Alan Greenspan is predicting an impending 'burst bubble' in terms of the Chinese stock market which has surged 170 percent this year. Interesting.
I've often pondered the potential to capitalize on fallen markets since the post 9/11 stock decline in which the markets took a sharp (but decidedly temporary) dip.
It seems in stock investing, the prevailing wisdom is to ride out the storms, ignoring short-term fluctuations, to capitalize on the long term growth of the economy. That may be sage advice for those seeking a safe return and a place to park their assets, but is it the best advice in terms of making money from your money?
History has shown time and again that the stock market is a fickle beast with a propensity to twitch and overreact to every tidbit of bad news. A sparrow contemplating a visit to a feeder in a room full of hungry cats has calmer nerves. From a slight reduction in anticipated profits to a suspected terrorist plot, the market reacts like a turtle on it's seventh can of Red Bull, pulling its head in so fast it gets whiplash. Time after time, history shows that the sky was falling and the dips in the market were temporary.
You may be asking yourself what this has to do with the price of rice in China? Well, maybe we all ought to be working real hard to increase our liquid reserves right now. Maybe, when the Chinese market bubble bursts, we ought to be ready (with cash in hand) to buy out the timid investors who sell out at the first sign of trouble?
Would you rather invest in the market at the peak or at the 'height' of a slump? What's that you say? You aren't comfortable investing in foreign markets? How about saving your liquid assets for the next post-9/11 slump? According to Edna Moog, "Luck favors the prepared."
Wednesday, October 31, 2007
Can You Wanna Say "Finances?"
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2 comments:
So I was just reading _The World Is Flat_, which you would love and should definitely be next on your plane reading list. It says one of the major ways India and China got in on the global, technological economy is by 1. enjoying access to the cheap fiber optics built during the dot-com boom and then 2. buying such cheaply after the bust.
I like all this big thinking you do in your downtime. But I do believe it's Edna Mode (as in fashion).
Hmmmm...Mode huh? While that does seem to make sense on the surface. Those who are truly in the know are privy to the fact while she is fabulous at design, Edna actually spends her daylight hours at Moog (pronounced "moeg") chassis parts. A company she founded taking advantage of her superb engineering skills which, among other things, come in handy for after-hours dabbling in the science/art of super-suit faabrication.
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