Resolution for the New Year 2010
As per the Chinese calendar, 2010 is the Year of the Tiger. Being symbolic of strength and vigour, the animal is expected to bring good luck to the world this year. We truly hope so after having endured a couple of years of bankruptcies, corporate scams, job losses, terrorist attacks and painful recovery in the recent past. While stock markets the world over have already run ahead of the euphoria about 'the worst is behind us'; we believe that a reality check would not hurt.
Emerging markets, in particular, have reaped the biggest benefit of this euphoria. And they could be the worst affected in case of a sudden change in economic scenario. Don't mistake this to be a guide on how to make better returns from near term economic trends. For the simple reason that hoping to maximize 12-month returns based on economic projections is a lost proposition. However, there are a few trends that we would like to caution you about.
A sudden spurt in inflation triggered by the massive increase in money supply
A sharp fall in stock prices triggered by the unwinding of loose monetary policies by central banks
A shift from a weakening dollar trend to a strengthening dollar trend if the Fed decides to tighten interest rates.
Sovereign debt default by a major world player or a significant downgrading of sovereign debt (the most likely candidates being Greece and California)
So, ensure that you have these contra trends in mind while managing your money to derive smart returns.
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