Who took my kway chap - Why rising oil prices is good

Today while having lunch I realised that my kway chap, although still at an affordable $3 was looking suspiciously skimpy. After I poked around a little, I wasn't shocked to find that someone had taken my kway chap. Mr Oil leads to inflation, inflation leads to missing kway chap, which leads to suffering!

Is there a bright side to rising oil prices you may ask. Of course. In fact it would serve well to have oil (and food prices) remain at a high level.

Here are some reasons why

High oil prices means less people will buy cars. We all know how much cars add to assets. Nothing. (higher oil prices is also my best excuse now when someone asks me the irritating question of why I did not get my driving license)

Higher prices means people will think twice about driving. Environmentalists stop your camping in trees. Horde oil now!!

The push to alternative energy gets a leg up. Nothing motivates people to be creative about alternatives like expensive oil.

Higher food prices = thinking twice before snacking = less obesity / appreciating food more.

Higher food prices will shift profits to nations that actually PRODUCE something and away from nations that repackage stuff. Agricultural nations rejoice!

Higher oil prices leads to governments removing oil subsidies. Subsidies screw up actual demand. People should be exposed to the full "pain" of the lack of supply. Otherwise they will just be demanding the same in a climate where there is less.

Of course no one wants oil prices to remain high. Just let it stay there for long enough to make people wake up, consume less, think more, save more to beat inflation (which most people have been assuming does not exist), invest more in our future.

I still want my kway chap back though.

Ride the roller coaster but close your eyes

I've had many people ask me. What's up with the markets why did i gain back my losses only to make more losses again?

My advise for them is to just not look. When the roller coaster is at the top of the hill and you know it's going down. Close your eyes. Or scream. But try not to jump off the coaster cause that'll be instant death.

There will be MANY more loop the loops to come. Enjoy the ride.

Remember : US economy cannot recover fully till housing recovers. The market in the short term is a voting machine. Voters act like lemmings. Lemmings rush off cliffs.

Why the rich get richer

The rich make use of prudent leverage because they are aware of their limited resources. There is little leverage less prudent than the house you stay in or your insurance policy.

The rich delegate because they understand the rules of division of labour, doing everything yourself makes trading (and friends) redundant .

The rich appreciate expert advise because they are experts themselves and understand that you cant be the master of all trades.

The rich take chances and understand the effects of risk, you can't learn swimming without getting a little bit wet. Fixed income is good for not drowning but it won't get you off the island of the poor.

The rich maintain good networks and never break promises, because rich people who know rich people become richer people.

The rich don't pinch on pennies they save on dollars. Paying a premium for value is what enriches the rich. Paying for cheap shoes will result in a cupboard full of broken shoes just like fishing for cheap advice will result in a plethora of useless dated advice.

The next time you are presented with a new idea don't close yourself up with paranoia and passed bias experiences. Open up and ask why? How? Does it make sense?

A healthy does of judgement combined with a dash of optimism (not irrational exuberance) when it comes to new concepts is the key.

Start today. Be Bold. Trust expert advice (never listen to salesmen).

Having your cake and eating it too

Some cases of having your cake and eating it too when it comes to expectations about planning.

1. When was the last time you heard someone market investment linked policies as a one sized fits all planning for all needs. For Investment AND protection. When something (or someone) claims to do two things that are so different at the same time, expect to be forced into a decision. When the shit hits the fan, try telling your agent that you want to claim the cover AND at the same time continue your investments. Investments AND protection my ass. Replace AND with OR and you'll have a more realistic idea of how it works. Schrodinger's cat only exists in the theoretical realm, investment linked policies however lie squarely in the physical realm. Bummer.

2. High returns with no risk. Does this even make sense? If such a product existed I wouldn't have a career left. Or at least I wouldn't bother to work. I would be liquidating my assets and so busy borrowing money and filling in my own paperwork that I would have no time to meet clients. Much less bother to go around marketing a product (That probably only exists in my imagination) to people who couldn't care less.

3. Cash Back while saving money. I put my money in, I take my money out, I put my money in and I shake it all about. I do the hokey pokey and turn around, in the end no money saved. Some things just can't be rushed. Patience my young padawan, patience.

4. High guaranteed with high liquidity. Let's give the company absolutely no time to make use of our money and expect them to generate a decent return. So far no one has invented a way to return clients money as and when they want it and still stay invested for the long term. At least not legally, not until the day printing money gets approved by MAS.

5. Spend every single cent and retire rich. For guys : Inheritance. For Girls : Marry someone with an inheritance. For the rest : Fat hope.

Philosophy? Economics? Philonomics?

In philosophy it's a matter of opinion.

In Economics it's a matter of opinion except you lose money defending them.

Each side of an argument in philosophy is heavily camped.

Each side of an argument in economics is heavily camped, except that "He who is solvent will have the last laugh" Nothing says you are right like clocking 20% gains year after year even if you are wrong. It's like writing a crappy thesis and still being quoted by your peers. Except that you can't write a thesis that is crappy and still get quoted.

You can get a Phd in philosophy chasing a theory that is fundamentally flawed. Just like you can create an economic model that is fundamentally flawed that will earn you a Phd in economics. And even a Nobel Prize (Think options pricing model)

Although there is a distinct difference between wiping out a trillion brain cells with convulated arguments that no one other than other philosophers (pretend to) understand

and

wiping a trillion dollars of market value with a convulated pricing model that no one but other economists (pretend to) understand.

If people started treating economic debates with the same level of respect they deal with philosophical debates, which is not very much, the world would be a better place to live in. This is because economics like philosophy (and some say religion) is man made and thus subject to subjective subjection. Fads, irrationality and cult-like behaviors do apply.

So the next time you cling on to an economist's forecast like it is the gospel truth, do remember that even the gospel truth is sometimes open to interpretation.