Current World Economic Crisis & How We Can Navigate through.
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History has our back that regardless of all turmoil, if we use our brains then we have all ability to navigate through everything. |
This brief summary from my research blog about "what's happening in the economic world & ways for capital preservation" would be very elementary for you. Confirmation where right; comments where wrong will be very much appreciated. {This article is a copy of my post on Medium}
"Can an internal crisis in one end of the world impact a distant country at the other end?"
It would seem yes and here is an effort to connect the dots.
Follow each step very carefully and understand before moving through to the next.
(1) (a) Pre-COVID: Related to real estate in 🇨🇳 China - locals customers (potential owners) committed to purchasing units in construction projects, taking bank loans for the entire cost, paying some portion in advance.
(B) Onset of COVID- builders unable to deliver - supply chain and labor related disruption - COVID related effect.
(C) Locals are defaulting on EMI.
(D) Banks are in trouble and don’t have cash flow. Bank failure risk. Locals queue up to withdraw life savings balances (also ones unrelated to real estate our hard).
(E) Liquidity is essential and banks have none.
(F) The Communist partly led Government can help. But will most likely sell their US treasury bonds to find this (China hold almost 1 trillion) - see link :
(2) US has issued almost 30 trillion in Treasury bond. A nation sinking in deep s#it and deep debt.
These bonds are issued and offer interest pegged to the prevalent FED interest rates.
So when the FED rates are at zero or close to zero is a bad time since no one will buy.
However when the FED rate is at max then these bonds compete with equity market.
US is already raising interest rates in the past few months (two times - three basis points and it is continuing to increase since inflation is a concern.)
From a US equity market perspective this is already bad since new treasury bonds have better interest rates.
(3) China holds vintage US treasury bonds that were pegged to FED interest rates that were higher bought in sunny days.
If these are dumped to finance the banking and housing crisis in China then the equity market is further hurt.
Bottomline expect China will dump and expect to see low stock prices during the remainder of the 2022 year.
India stock market is no longer insulated and will also be hit. Especially hit hard will be technology stocks that are valued at a premium and the (beta) volatility is higher.
I also expect block chain initiatives and crypto will also be impacted. Also all the crypto which very similarly follows the same trend of the equity market (at least till now)... moreover in times of uncertainties everyone seeks security avoiding the risky bets (and crypto being the very risky for the market in general)
So roll up your sleeves, standby, keep the liquidity handy. There can be a window for a shopping spree once the equity market bottoms out.
Save your family's wealth folks! And then serve the world!
Views on preservation of our earned captital & family wealth.
We are amidst the toughest time in terms of world economic situations. A Stock Market Crash and a Great Economic Crisis is looming, something the world has never witnessed. We are in uncharted territories.
Hence for me capital preservation comes first, capital growth second. I believe that profits are acutely important but are secondary. At the moment, I am standing 96% in cash ... I was already 55% in cash since the start of this year and also cashed out all from crypto on 31st March of this year, & I cashed out the rest in the last 40days... I am totally hedged and have been shorting the markets since April-May... Right now I am in PUTS. I have been watching the past month's Bear Market Rally in the US and seeing the close of the week, I see more blood coming on the street. We are in a situation which is even worse than the Great Depression of 1920.
Also to listen & confirm from the smartest minds, following is a research documentary (someone recently sent to me) & it perfectly aligns with the points affirmed. It is from Ray Dalio (one of the smartest economists of our time & also the world’s best Hedge Fund Manager having one of the largest AUM) LINK & also go through this link for some more detailed financial research and statistical content on the internet by him.
I'll also recommend going through the twitter handle of @WifeyAlpha ... It has incredibly awesome research and all content is free and pinned. He is very very transparent and very powerful in his purpose.
I have been exploring the rabbit hole for the past few years now, based on my research and the clear conclusions that followed, Its quite reasonable and logical to see what's going on in the world and the outcome of the current situation save for the timeline- it is very very very difficult to time exactly when all this things will unfold because the markets are very very manipulated and controlled by them but yes based on scientific research and clear conclusion that follows from a clear, calm and unbiased mind it is very easy to navigate through by knowing in reality the overall situation.
Do let me know your thoughts.
P.S. 1 At least Indian markets are bit better as they are significantly less leveraged as a result of SEBI regulations & proper systems in place but the Wall Street is totally broke as the systems allow reckless borrowing, also US is going through deep political & social unrest. (can read this bold to understand how broke the systems are in the USA) and also this one.
P.S.2 This article is a copy of my post on Medium & Here's my Twitter
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