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

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

AdamG1981,

<<However, inflation and high oil prices dampen consumer spending significantly.>>

A) Prove your point with some data. American use their house equity loan as ATM to withdraw money. Without either interest cut (reduce monthly payment) or house price price appreciation, there are NO ADDITIONAL money to spend.

Inflation and high OIL PRICE only affect marginally when American is saving negative 1% anyhow. Aka, they are spending ALL their income to begin with. They have NO savings.

USA is different from any other country in the world.

B) The other SIGNIFICANT impact on spending is UNEMPLOYMENT rate.

C) Inflation and OIL PRICE is NOT even in the top 5 factors. Inflation is GREAT when you are debtor. Aka, you get to pay back with less valuable money.

D) OIL PRICE only matter when your food costs is TIED to the cost of the food to begin with.. For USA, most of the food costs is tied to the labor aka processing costs as opposed to the price of grains/ rice/ corn/ beef to begin with.

Dreamer

AdamG1981,

1) I would have to remember where I read it. Basically, for developed country, most of the food costs is tied to labor as opposed to actual material and transportation cost. This is different from developing and under-developed country.

<<"Inflation is GREAT when you are debtor" Then do you think more lenders would want to lend money if there's runaway inflation?>>

2) People are still buying US Treasury Bond even though technically it is in negative REAL interest rate now. This ONLY work in USA and but not any other country in the world.

3) There are TRILLION worth of money from Middle EAST, China, Japan, Taiwan, and South Korea. There NO OTHER PLACE beside USA that is BIG ENOUGH to absorb this amount of money.

Dreamer

AdamG1981,

<<Today the G 8 nations have said they wanted a strong dollar and also said commodity Prices Replace Credit Squeeze as Major Risk to worldwide economic growth. >>

What makes you think that USA listen to anyone??

<<Technically, countries such as China purchases huge amount of T-bills because USA is a country that has never DEFAULTED before. However, China has also recently hinted that it might diversify its holdings. The main reason why Americans got cheap financings in the first place was because of China's huge purchase of T-Bills. Again, this might change in the future. (Monday- Treasury auction)>>

Let's say you are right. Then, where could China put their money?? There are NO OTHER COUNTRY / ECONOMY large enough to absorb that amount of money. EU has even worse problem. Japan? China's itself is overly invested.

<<Here's my take:
Inflation is a bigger threat because it affects everybody and its costlier to us in the long run.
Consumer spent more for necessity items such as food and gas. As a result of more money coming out from the consumers pocket, the consumer sentiment sours because now he /she thinks that everything's expensive when actually it is not!>>

Let me REPEAT one more time. Which country that you are talking about?? You statement works for other countries but it is LESS RELEVANT for USA. FOOD and GAS is ONLY a small portion of average American monthly expenses. It is around 10% to 20% in total.

<<Automatically when your fuel and food budget represents a big chunk of your paycheck, then you will not want to spend.>>

Which is NOT the case in USA even with the recent oil price increase.

Dreamer

keith_hjinhoh,

American like to whine too.

AdamG1981,

Do you know that you are talking to someone that had lived in USA for 20+ years. And, I kept my expenses in Quicken for at least 10+ years.
And, I have family in 30+ countries. I have first hand information.

<<China has multiple investments she can make; such as drilling oil at offshore Cuba, finding more resource. IF you have notice lately, China has been aggressively signing agreements with countries that have black gold so that its future is not threatened. >>

http://www.chinability.com/Reserves.htm

Do you have ANY IDEA on the size of money that we are talking about?? China's foreign reserver grow about USD $40 billions per month. China's economy itself can only absorb about USD $100 billions worth of investment.

We are talking about trillion worth of dollars

Dreamer

sharesa,

If you BUY high dividend yield stock, you get PAID every year. Let's say that your annual dividend yield is 8%. You MADE 8% every year. You have return of 8% per year WITHOUT SELLING. Why do you CARE what is the CURRENT stock price?

I BOUGHT PBBank at RM7. Now, the dividend is RM0.75. So, my dividend yield is around 10%. Unless PBBank cut the dividend significantly, why should I care even if the stock drop to RM5 tomorrow? In fact, I will buy a lot more if the stock went down to RM5.

You make money when you buy. Not when you sell.

Dreamer

All,

1) I learn it from "Rich Dad, Poor Dad" of Robert Kiyosaki.

2) I lost 50% of my life savings during Internet / Telecom bubble. So, my patient is learned through making HUGE MISTAKE.

SKY 1809,

3) When I reached USA, it was in a middle of HOUSTON OIL BURST. Then, we had Texas Saving and Loan collapse (house price always went up?). A few recessions. 97/98 Asian currency crisis and so on. So, in summary, I was NEVER comfortable.

4) Many of my peers in my age group cannot FIND a job now. Or, they have to be under-employed aka getting a lower paid job. So, if I DO NOT SAVE this last pile of income, I will ended up with NOTHING.

Hopefully, the younger folks will learn this before it is too late.

Dreamer

All,

Just to clarify my positions:

A) 90+% of my money is in high dividend stock and asset allocation aka SAFE and SURE investment. I am hoping for 9% long term average annual return. So, I will reach my goal slow and steady.

B) 5% to 10% of my money is on speculation aka gambling stock. I am aiming for 2 to 10 times return. Anything less is NOT worth my trouble. If I am LUCKY, I will get rich. If I am UNLUCKY, it will NOT hurt my portfolio in any significant fashion. For speculation of 2 to 10 times returns, you DO NOT NEED that much money to get SIGNIFICANT contribution. 5% to 10% is enough.


For (B), I do not even look at KLSE. USA stock market is where the action is.

http://finance.yahoo.com/echarts?s=TASR#ch...=0;logscale=off

For example, this stock went up 30 times in 2 years. USA market is BIG enough that a tech company can go from nothing to 1 billions capitalization with a few good rumors.

http://finance.yahoo.com/echarts?s=ATVI#ch...ource=undefined

I do own a little bit of this stock, ATVI. It doubles in one year.

Overall, I am doing BADLY with my speculation / gambling portfolio. But, I have FUN looking at it. And, it is HARMLESS for my overall investment portfolio.

Dreamer

Jordy,

I am WAITING for people to panic and start selling PBBank. I am WAITING for a megasale on PBBank. I am keeping 2 to 5 years worth of emergency fund preparing for the recession to last quite a long time.

Dreamer

dreams_achiever,

Be neutral with stocks that u currently have. Love it when u dispose it with handsome profits.

Love is emotionally loaded word. You SHOULD NEVER love your stock. It is AN INVESTMENT to make money. When it is NO LONGER making money for you, you dispose of it. Or, you can get BETTER RETURN from somewhere else, you move the money.

You MAY dispose of the stock when you have better use for the money. And, you dispose of it even if you lose money too especially if you believe you can lose even more by keeping.


Bottom line is NEVER get emotional with a stock.

Know why you buy it. Know under what condition, you will sell it.

For example, I like PBBank now. But, if Malaysia opening up the financial market and let foreign bank like OCBC to open as many branches as possible, I will have to re-evaluate whether I should keep PBBank.

Dreamer

This post has been edited by dreamer101: Jun 30 2008, 09:32 AM