MH370 Search Diverting Attention From Ukraine and Syria?

Nathan and I call it ‘minding other people’s business’. A quote we stole and adopted from Robert Kiyosaki’s bestselling book Rich Dad Poor Dad. It’s amazing how easy it is to get up caught up in minding other people’s businesses without even noticing. The funny thing – we are victims of our own making because even being aware, we guise the whole setup by justifying it as essential. ‘I have to work.....’ That voice, yes that deep internal voice, always pushing you into a sense of insecurity. Even after becoming conscious of the need for change, we always end up getting pre-occupied with the need to survive. If it’s not for the next day, it’s for the next month (bills, mortgage, that car loan, summer holiday, wedding). Trying to survive for the next year and then there is that inevitable retirement. Oh yes, almost forgot and then that work pension. So I can’t really leave work can I? Slave to the grind.

The last two weeks saw me minding other people’s business meaning I missed my weekly update. In this article I will recap a bit on activity of the markets in the last 2 weeks but I think I want to devote a sizeable chunk to an experience I had last week when I made a quick drop in to my local bank. I was rather unimpressed by the whole experience/situation which then got me thinking. If things are this bad, am I the only one seeing this or why do many people appear not bothered?

Ukraine - Russia - China

Week ending 14 Mar saw a decline in stocks with markets giving up the previous week’s positive run. As I indicated in my previous articles investors are getting slightly anxious about the renewed slowdown in China coupled with the increasing geopolitical tensions in Ukraine. As I type this, Putin has just finished his Media briefing following the weekend referendum and is now signing the Russia – Crimea treaty. On the other hand it is widely reported that Chinese exports fell drastically in February while industrial output for January and February were also lower than expected. Any stimulus by the Chinese government is highly unlikely as the Chinese premier indicated. It even looks more worrying for investors as overall real economic growth for the year looks set to fall lower than previous forecast with Chinese government officials seemingly looking to tolerate that outcome.

As for commodities, because of how China had driven the global economy in the last few years it’s important to note that any further slump of the Chinese industrial output will have a direct adverse impact on the price of oil. Price of crude oil slumped on news coming out of China however in my opinion the tension in Ukraine and Russia is the single important factor holding back the price from a further slide. Tail end of the week also saw GLD making a golden comeback which could be an indication that the momentum is slowing yielding towards safe haven investments. I briefly touched on ETF’s in a recent article as way to further guard investments and positions – still think I am just a pessimist?

Bailed Out Banks

Important tickers to add to your watch list will be the troubled American government owned Fannie Mae and Freddie Mac. Certainly 2 stocks you would love to hate but after having paid back – in full – the $187 billion government bailout out, the question is where these 2 go from here. There is obviously talk about winding them down but….just add to your watch list, sit on the sidelines paying close attention. Don’t let them be the ones that got away. The UK government is also reeled in the same situation with RBS and Lloyds Banking Group. There has been loads of teasing talk about the UK government reducing its ownership in the 2 banks. I guess another one to watch and observe though personally they really don’t excite me as much. There are a lot of fundamental issues still to be dealt with before they become attractive enough to stalk.

The heading for what was supposed to be my post last week was ‘Don’t panic, be Cautious’. Even though some readers of this blog are not advent stock market participants, anyone can clearly see and gauge the mood in the markets. Most of my previous posts made me appear more of a bear flag bearer but proof is always in the pudding. The sentiment on the street is clearly one of those where we have to be cautious about where we place our hard earned money/profits.  We should certainly not to start panicking because I still believe there is a lot of money to be made in this kind of environment. There is a mad rush of IPO’s across the board and a lot of news in the grapevine about takeover and mergers so if you do your homework right – your own homework – emphasised there, you will capture a gem.

Who Owns and Controls Your Money

What is it that make us so trusting that we allow banks to fornicate with our hard earned money to the point we literally self destruct at the idea of taking matters in our own hands. The very few occasions we show the slightest bit of interest in having a piece (piece) of the action, all hell breaks loose. Banks are not really amused by that. Words like risk, safe guard, savings, retirement, protection are quickly deployed with the desired effect of inducing chronic fear.

  

These words immediately paralyse any level of reasoning rendering us ineffective to do even the simplest of kindergarten arithmetic. It’s like we are suddenly thrown into a trance or sort of robotic mindset needing some remote controlling. Jump...! How high? Anything coming hence forth from them will get automatic responses as if our minds have been going through years of covert neuro-linguistic programming. To top it off, just as to confuse and convince us, they have us believe we are actually in control, which we, unfortunately believe.

As if being told I had to pre-book a cash withdrawal with my local bank instead of the ‘cold calling’ – ( exactly their word), wasn’t enough the innocent young lady then went on to a well rehearsed sales pitch about ISA’s. I got ushered to an advisor who then went to great lengths explaining to me the benefits of ISA’s and how much return on the investment I would get. It was interesting to note that at no point was the return expressed in monetary terms. It was all referred to as a interest percentage and quickly compared with the central bank base rate. The advisor was however pitch perfect and giving a polished well rehearsed delivery and could easily make a successful sales man. What was he doing in that job? Talent wasted, I thought to myself.

I was indeed listening but just wanted to know one thing from him. Eventually taking breadth mid way a point he was trying to make - sensing an opportunity I asked him what the annual rate of inflation was. Talk about a hole in one. The question was never intended to catch the guy out but the fact that he did not even know the answer got me very worried. This, in front of me was a financial advisor, educated to discharge the duties required of him, trying to tie my money for a fixed period only to get a rate of return lower than inflation.

Many people have been fooled and sold over these ISA’s without actually realising that in real terms they would end up worse off (1) in the real time value of their money (2) loss of possible income using alternative investment vehicles. I got digging and got even more disgusted by my findings. I have been a willing victim of the greatest story of covert enslavement the world will ever see. As a bare minimum in my books I will not entertain an ISA talk from an account that does not beat inflation after any sort of deductions but chew on this – only 46/47 ISA accounts actually beat inflation. That’s a very small figure considering that almost £450 billion is invested in these investment vehicles. The biggest selling point is a perception of taxation protection which we are so quick to buy into. Do your own digging, a little bit of research, you will be astonished but better still, educated. Wake up!