Wednesday, December 10, 2008

'Highway to Hell'? No, it's 'Ride On'

'Highway to Hell'? No, it's 'Ride On'

Korea's currency has collapsed and looks set to fall further, American banks are going bust, but we refuse to cry wolf.
What to tell fretful expats that you don't already know? Hold on to your hats, folks we ain't seen nothing yet? Batten down the hatches? Dig a hole, burry your cash? Hands up - give me all your money? Don't buy stock - any stock?

Try these bits of advice:

Armor your thoughts with facts rather than wooly conjecture; aim your exertions to more fruitful mental toils. Yawn your way through this crisis. Study, read - do something constructive. Instead of reading the Business section, pick up a novel.

Whatever you do, don't check the Dow or the KOSPI more than once every couple of weeks - or just check back next summer.

As banks drop like flies, it's pretty clear they have no idea what to do with your money. You might as well start putting yourself first.

If your heart is drawn to art, then buy art. If you pine for gold, then buy gold. If you crave cheap wine, then by all means gorge on cheap wine.

These are all investments, to varying degrees. Remain in corporeal good humors despite the current economic turbulence and respond to every reflex check as if you were indeed economically sound yourself. As well as you can, maintain a sense of sanguinity, even if you are up to your neck in debt and bad investments - c'est la vie. Most people are. Take solace in your willingness to chip away at it.

Those of you that are monitoring this madness probably feel squashed. But squashed is better than flat-out broke.

Buying opportunities abound, if you are brave - or foolish - enough, according to whichever analyst you choose to revere.

As long as you have picked a vehicle that you have researched well enough (with a long-term approach) you are probably putting your money in the right place.

And despite newspapers' crisis-screaming headlines and Korea's very own economic Nostradamus forecasting doom (if Nostradamus were a blogger, that is), there is still money to be made all around us.

For the buyer who bought and sold Citibank at the right time, you were bequeathed 41 percent gains on rumors it would soon become Metro Goldman Sachs.

To forge ahead, one must at times block out bad news.

Avoid extremes of thought, with pitched market plunges courtesy of Bloomberg, et al. Otherwise you may succumb to undue frustration, exhibited by Max Keiser's demand that Hank Paulson's head be seen bouncing down the steps of Congress.

Bouncing heads would sorely be a constructive solution to a global crisis. However, who would want the job after that? As appetizing as revolution might seem, stave off such dreary ends, at least in the short- and mid-terms where we may all remain in the opening, and perhaps fleeting, stages of the world's latest financial meltdown.

Don't pay any attention to economic pundits that have "Dr. Doom" or "The Master of Disaster" in parenthesis. Yes, this is a reference to Nouriel Roubini, the bass-baritone chairman of Roubini Global Economics and an economics professor at New York University's Stern School of Business. Everything he paints looks dark and reminds of Francisco Goya. Whatever he says, take it with a grain of salt.

Separate what you have been told by the media from reality.

It is in fact an extremely difficult task to separate what you have read, what you have been told, and what you already should easily relate. It is a fuddle. Digressions and soliloquies might best do it. Just try to chew your way through it all.

Separate fear from fact.

Market volatility is worsened by fear. Make market and company analyses based on tangible facts and data.

Don't buy or sell equities because that's what everyone else seems to be doing.

Never lose your cautious optimism.

Imagine this painting: A collection of small fishing boats near a rocky coast. The sea shimmers in its luminescent grace, rocking the boats gently in the shallows. The distant horizon is wide and unknown, uncharted and beyond scope as a dark flannelette foreboding sea. In the middle distance, glints of moonlight pierce the dark, imminently breaking through to change the entire view.

The office painting is wrapped in a beautiful gold gilded frame and it speaks of cautious optimism. Do not allow market fluctuations to dictate your investment decisions.

Otherwise you are, in reality just a speculator. Avoid spectulative pitfalls.

But to be sure, only short-lived fishermen go out to sea before, or in the middle of, a storm. Such fishermen face the risk of going under and losing everything.

Never listen to anyone that says "never." Or something like that.

A lot of Wall Street suits represent sales plays and vested interests already outed by the short shrift they gave economically challenged mortgage holders with the sub-prime motto, "the value of your house will never decrease, you can use it as a cash machine indefinitely."

In commodities, they spouted the motto, "Dig up as much as you can - demand will never cease and prices will never fall."

To trade credit buyers, the motto was once, "You'll never be denied credit." To consumer markets, the motto appears to be, "You'll never get lower prices."

Pick up a copy of "Devil Take the Hindmost: A History of Financial Speculation" by Edward Chancellor. Read it cover to cover to get a sense of the leverage busts and booms of old and new financial instruments.

So as this latest economic crisis plays out around the world, is the theme song "Highway to Hell" or "Ride On"? Make up your own mind, but we prefer the latter.

By Daniel Costello and Matthew Lamers

To contact Daniel, visit his website at To comment on this column, e-mail - Ed.


No comments: