No doubt about property has hit its peak for near term. Reit price with mostly trade at discount to its NAV is also the sign market also believe property has hit its peak.

Any investment that potential give a return rate higher than FD carry the risk, this is basic of 'investment game', so does Reit. As long as one can afford the risk and fully aware of it, the it is the risk and reward game. I don't mean Reit is a sure good place to invest nor I put significantly high position bet on it, just for me, it is part of diversification to look for yield which is much much better than those potato chips in the market.

Especially for the market like KLSE, there is not many stocks can be choosed from. One think good about Reit is they have and will give 90% of the earning to the shareholders. So fraud accounting like Transmile chance is minimised, as those 'reveiables' can't be 'played' around as distribution need cashflow. For cashflow, either you have it or not. There is no in between.

In the case if economy situation deteoriate going into recession, I can 90% say of one thing, all shares including good one also will go down to the hill, just the degree of more and less only, no one will spare from it.

But still one can't have 90-100% in cash position even one pessimistic about the market, as no one can be sure market or economy behave as people or one predicted. Even share price goes down, if those blue chips with strong fundamental continue to earn consistently dividend for you (might be lesser in economy bad time but still comparable to FD rate), still it can weather the storm and hope for better days ahead.
But for those potato chips, those 'sampan' might sink into the sea bottom in the storm, as seen by a handful of listed company goes burst, delisted, massive capital reduction etc.

That's where calculated risk implied with diversification of asset, at least for my personal preferences.

Just my 2 cents.

This post has been edited by cherroy: Jun 14 2008, 10:38 AM

US Federal Reserve and European Union Central Bank are risking another 1987 crash rerun.

Signs:
a) Ben Bernake and Co said they wanted a stronger dollar to counter inflation

Result: Dollar rallied, oil drop

b) ECB Trichet said he will aggressively increase interest rates to counter inflation

Result: Dollar fell sharply, oil jumped 10 dollars, Dow Jones and S&P tumbled 3.1 %

G8 meeting this weekend:

What will the Feds do?

Probably nothing. US core inflation rose 0.2%, which was in line with economists' estimates.

The core inflation is understated; its much higher than 0.2%. I be looking for a bigger increase few weeks from now

A bit OT here but has anybody claimed the RM625/RM150 today?

Just got the cash

Actually I don't like the term of core inflation.

Consumer pay in full cash for headline inflation, who care about core inflation is low. If headline inflation is serious then consumer face serious price increase even if core inflation is zero.

Core inflation strip out energy and foods price which is the essential part of daily life expenditure!
They strip out because they see those energy and foods price is volatile, so they 'create' another term of core inflation.

So core inflation is not a good picture to look at or represent the actual situation as we knews foods price has been one of the serious inflation factor, but Fed only concern about core inflation.

This post has been edited by cherroy: Jun 14 2008, 03:44 PM

Precisely, the fact is inflation is rising rapidly in everywhere in the world. IT doesn't matter how the Fed or the market dissects core CPI because consumers still have to pay more on EVERYTHING now.

cherroy,

I disagree with you.

1) For most people in USA, food and energy is a small portion of their living expenses. It is around 10% to 20%. Yes, American whine like everyone else.

2) There is a VIEW where may or may not be wrong that HIGH OIL PRICE is unsustainable. It is DRIVEN by speculation. So, it will go down.

Dreamer

This post has been edited by dreamer101: Jun 14 2008, 06:36 PM

I share your taught, yes, food and energy cost won't impact the US consumer too greatly as compared to Malaysian. But apparels are included in core inflaton figure but isn't it apparels cost is even lower or smaller portion than foods and energy?

The main discussion is why Fed totally ignore the headline inflation all together. Even it consists of 10-20% of consumer spending, still consumers need to pay for the extra cost of it.

I fully agree high oil price has significant portion of speculation factor, with more and more pension fund and mutual fund buying oil futures as part of their portfolio, it drives oil price even higher, which also part of reason why oil price reluctantly to go down and make worse the situation. They create artificial demand for oil.

Market has said oil price is not sustainable since USD 60-80 level, but still it goes up to USD 135 level because of people want to hedge against inflation by buying commodities futures while in the process making inflation situation worsen, kind of funny, right?

Even it is not sustainable as mostly agree, damage is done on the like on Malaysian consumer side. For sure, Malaysia will face a tough time ahead.

Cheers.

" The oil bubble burst" would come when the US currency has the the ability to strengthen strongly to the point investors worldwide found the reasons to invest in US currency assets.

It is better to a sudden than a gradual event. Abandoning the existing US 's Iraq policy is even better.

It could be after the next US election. To a small extent, it has something to do with Bush. After Bush, the supply side could be a little bit more flexible n negotiable.

US has the abililty to declare wars, but when comes to trade and accounts deficits, she made up her mind to lose even long before the war ended.


Just my 2sen opinion.

This post has been edited by SKY 1809: Jun 14 2008, 08:17 PM

Dreamer,

Even if its 10% to 20% of consumer spending, it will dampen heavy item purchases because high prices of oil and food will sour the overall consumer mood. As you know consumer spending is 2/3 of the economy, and all leading indicators have shown a slowdown in consumer spending. Also, if the consumer inflation expectations increase, then the FED has no choice but prepare to raise interest rate.


IF you notice also, the usage of credit card in America dropped, but the overall debt increased. This is the next CRISIS as more and more people are out of job and with high inflation, there is no way middle/low class Americans can clear its credit card debt.


Speculation or non speculation, crude oil prices are driven by DEMAND and the LACK of SUPPLY and solid production. Simple rule, demand exceeds supply. OF course when China starts to lift its subsidies on fuel, demand drop, hence price of oil will in turn drop.

---

Added on June 14, 2008, 8:35 pmThe Feds , and the G8 had agreed that the strength of the US dollar is the key in managing inflation. How does the FED do it? The easiest is increase interest rate. Performing open market transactions is insignificant especially the US dollar marketplace is $2 trillion USD daily. Unless ECB and BOJ coordinates a series of open market transactions (purchasing US dollar) then the Federal Reserve can avoid increasing interest rate.

However, do you guys remember back in 1987? What did West Germany do? Increase interest rate while the US Feds was conducting open market transactions.

Result: 1987 crash, Dow Jones drop 23% and the worldwide market cascaded.

With Bernake being a very inexperience Fed Governor, and EU being a very young concept; a crash will likely happen when both Trichet and Bernake differs in policy.



This post has been edited by AdamG1981: Jun 14 2008, 08:35 PM

Has your President ( or next ) found the reasons to work with Feds ?

No body is in the the position to work standalone. More to the mindsets than the technical details ( to solve your problems ).

This post has been edited by SKY 1809: Jun 14 2008, 09:06 PM

AdamG1981,

The MAJOR problem in USA is not the OIL PRICE like in Malaysia. It is the HOUSING collapse. And, the consumer mood and etc are ALL affected by that. It is NOT the OIL PRICE. The OIL PRICE only affect new car purchase and what kind of car that American buy.

HOUSING collapse is SIGNIFICANTLY worse than OIL PRICE by an order of magnitude. BTW, historically, in USA, the housing boom or collapse last around 6 to 8 years. And, this is the FIRST NATION WIDE housing collapse. So, problem will not go away for a LONG LONG time.

Dreamer

P.S.: USA Presidential Election is on November 4, 2008.

This post has been edited by dreamer101: Jun 14 2008, 09:14 PM

Again you are wrong. Fuel price affects everyone, to businesses to consumers. The subprime woes would have pushed USA into recession and that's why Ben & Co reduced interest rates 7 times to help the US market to avoid recession. However, inflation and high oil prices dampen consumer spending significantly. That's why Dow Jones doesn't react to the news of more foreclosures because inflation is a much bigger issue and will linger longer.

PLEASE get your facts right. IT's not about mindsets that matters the most for a Fed banker. ITs the credibility. IF you notice, one week its about saving the financial sector, and the next week is fighting inflation? So which is it? The credibility of the US Federal Reserve is severely questionable.

Housing market will recover, and it takes time, but inflation is much harder enemy to combat with.

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2008-06-14 14:25

（吉隆坡）富時大馬指數諮詢委員會宣佈，科恩馬集團（KNM，7164；主板工業產品組）被納入富時大馬30指數成份股，取代金務大（GAMUDA，5398；主板建築組）的位置，變動將於2008年6月23日正式生效。

OMG... another round of Gamuda sell down on monday....stay tune~

It's both. They are both important. But saving one will affect the other negatively, so it's a juggling and balancing act. Not just a simple matter of one or the other.

That's why the ECB is only targeting inflation. There isn't one time ECB Trichet said he's going to cut interest rate to spur growth. It has always been targeting inflation. This is what the FED has to do; if the FED flip flops on its policy, it will cause more pain than the housing market.

ECB is only targeting inflation because they don't have a sub-prime to deal with. But the Fed doesn't have that luxury. A single minded inflation-fighting stance will be even worse on the housing market, the stock market and everything else.

---

Added on June 14, 2008, 11:19 pmHere's hoping KNM will go up.

This post has been edited by howszat: Jun 14 2008, 11:19 PM

US subprime woes affected many non US banks too; such as Barclays and UBS. Not only that, EU unemployment rate has ticked up with German consumer confidence falling. Even with those signs, Trichet is sticking to his guns.

I beg to differ, if the Fed doesn't have a constant mandate, it will be disastrous in the long run. Take a look at Vietnam currently having a problem with runaway inflation because inflation wasn't dealt with in the first place. India and China too has taken steps to cool down their economy due to inflation. Bombay Sensex, China Shanghai and Vietnam stock exchange have all retraced 40-50% due to inflation fears.

My point is; inflation is the greater enemy here. Recession is part of the economic cycle but a lingering inflation will decrease the standard of living worldwide.

I hate to say this, but i do have to agree with George Soros. The 1987 crash looks more likely to happen now.



This post has been edited by AdamG1981: Jun 14 2008, 11:23 PM

Besides US, in other parts of the worlds ( I mean in Asia ), Fed is all about Alan Greenspan, and Alan Greenspan is all about Fed.

About Ben & co, to many of us is like the new kid in Town ( on the block ).

Sorry to say that, people come and go. We remember only some very powerful ones.

Those could not perform would soon to be forgotten.