Is there a Global financial crisis coming down the road?

people are over reacting here and everywhere else. armageddon is not around the corner. we are just entering a period of high inflation, stop start economic growth. this has happened before . to profit from it you have to be knowledgable on what happens in this type of scenario
 
i read fabers "tomorows gold" back in 2004 , and it was a like a big light was switched on, and gave a whole new understanding of how the world works, it is grounded in economic history looking at trends stretching back to the 17th century, doing this is now fashionable among media commentators now, everybody seems to be looking at long term trends now but it wasn¨t so back in 2002 when "tomorows gold" was published, it makes more sense today than in 2002 and like all great books its stature grows with time
 
spursman said:
the stock markets will rise when the dollar dies because as ringledman says the excess liquidity will have to find a home. commodities and companies are seen as hard assets and save havens in times of currency crisis.

for an extreme example look at zimbabwe. their inflation was off the charts in 2007 and their stock market rose 12000% over 12 months.
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Investing in a market/country that is facing high or hyper inflation is the last thing you want to do. Even if, as you point out with Zimbabwe, the stock market rises by 12000% all that increase will be more than nullified by inflation.
 
Hi Chris,

I re-read Faber's chapter on inflation and he reckon's that the time to invest in hyperinflation economies is right at the peak, i.e. Zimbabwe 2008-09.

He provides empirical evidence to show that investing at this point can provide exceptional returns as the currency in question stabilises and the improvement against other currencies can therefore provide a huge return against one's home currency.
 
chris
so you are telling me that in the US had hyper inflation you wouldnt trade the US stock market from here in europe if we didnt have hyper inflation. the increase would not be nullified by inflation if your trading from a differnet country (assuming hyper inflation is not all over the world of course)

ringledman - by the way good luck in predicting the "peak" in any countries economic cycle :)
 
ringledman said:
Hi Chris,

I re-read Faber's chapter on inflation and he reckon's that the time to invest in hyperinflation economies is right at the peak, i.e. Zimbabwe 2008-09.

He provides empirical evidence to show that investing at this point can provide exceptional returns as the currency in question stabilises and the improvement against other currencies can therefore provide a huge return against one's home currency.
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Haven't read the book, but will certainly look it up. However, that scenario assumes that the currency actually survives, AND that you catch the peak of the inflation period in a time when technical and fundamental analysis is pretty much worthless.


spursman said:
chris
so you are telling me that in the US had hyper inflation you wouldnt trade the US stock market from here in europe if we didnt have hyper inflation.
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Absolutely!!! I am not aware of any hyper or high inflationary time in the past when the increase in the stock market managed to keep up with the inflation rate.

spursman said:
the increase would not be nullified by inflation if your trading from a differnet country (assuming hyper inflation is not all over the world of course)
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Yes it would, as the inflation would impact the exchange rate in an equal or larger amount.
 
spursman said:
chris
so you are telling me that in the US had hyper inflation you wouldnt trade the US stock market from here in europe if we didnt have hyper inflation. the increase would not be nullified by inflation if your trading from a differnet country (assuming hyper inflation is not all over the world of course)

ringledman - by the way good luck in predicting the "peak" in any countries economic cycle :)
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Investing in a hyperinflation economy from another country would produce a poor return as the nominal value of your investment would soar but the real return would definitely be negative.

This is why I am bearish on the US. The S&P may double but the dollar could more than halve, hence the return for us over here would be negative.

Any investment whether property or stocks needs to be measured in terms of gold and not a currency that can be printed at will.

With regards to predicting a peak or trough in any market, isn't that what we as investors do all the time?

Or should we just make the mistake of buying yesterday's investment which has already outperformed other investments? This is bad investing IMO.

I wan't to get in at a time when few other do and the market is rock bottom. Hence I am currently bullish on Japan after 25 years of terrible returns and the market is dirt cheap. Hence why I believe Zimbabwe is in a stage 1 market recovery currently.

The hyperinflation has now resided. The country has huge potential within Africa. High risk sure but also high reward.

http://news.bbc.co.uk/2/hi/business/8258723.stm
 
Haven't read the book, but will certainly look it up.
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http://www.amazon.co.uk/Tomorrows-Gold-Asias-age-discovery/dp/9889894211/ref=sr_1_1?ie=UTF8&s=books&qid=1253879485&sr=8-1

One of the best investment books ever written IMO. If you are into macro investing from the top down then this is excellent.
 
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