Why the able remain in hiding

The ongoing great bear markets of 2008 have and continue to destroy much wealth all over the world. Many an investor have been severely hurt whether they were invested in stocks and shares, bonds, real properties, commodities, foreign currencies, works of art or antiques. Some lost entire fortunes or their retirement funds. How badly burnt they got themselves, is relative to their means.

Tycoons and owners of quoted companies probably lost much more than the man-in-the-street in terms of quantum. Quite a number of the Forbes Asian billionaires watched their fortunes, measured in stocks; dwindle by 40 to 60% according to Bloomberg. At least, they can do something since they know much about their own companies’ businesses and with it, their very chances of recovery.

It differs with those professional chief executives of global (or your local) giant companies who hang on to their lucrative paid jobs and try to fool their government into throwing more and more money at the huge problems that the incompetent had created. Think of AIG and the rescued casino banks.

If you happen to read some of the balance sheets of the US titans, freely available at Yahoo Finance at a click, you may wonder if their CEOs or their major institutional investors actually read the companies’ financial statements.

While the 2007 Balance Sheet of a titan showed net liabilities in tens of billions which depicts that the company is already insolvent then, its CEO still have the cheek to claim it can survive, if the government pumps in huge sums of money. The financial crises and the stock markets meltdown had actually started in 2008 and not in 2007. So there you go.

Then there is another example where a global bank had financed a gigantic amount of long termed investments with short term loans. The investments amounting to more than a trillion of US dollars in its books is rather frightening and would rank third, in terms of countries’ foreign reserves, behind those of China and Japan. Its CEO has recently ‘fobbed’ that his bank company is still liquid, even though its balance sheet showed that current liabilities exceeding current assets by hundreds of billions.

Without a doubt, the US Fed and the Treasury can make this global bank and others very liquid or solvent by pumping in tens or hundreds of billions.

Already the US government has committed or provided for nine trillion for financial markets liquidity and rescues, a more genteel word than bailouts, as if it really matters now! Together with Europe’s announced bailouts or rescues, the total required funding tops USD 11 trillion, which probably exceeds the combined foreign reserves of the entire world.

Ever wonder how the US and Europe fund that colossal sum designated for the rescues? Who can bail these countries out if and when necessary?

With the huge plunge in assets value and depressed commodity prices after the first half of 2008, renowned economists have started to predict a severe recession or even another Great Depression. The US President had announced why the US needed the USD 700 billion rescue package after its approval. He was told by those in the know that there could be a Great Depression more severe than the 1930s if no such major rescue were pending.

Yet Malaysians are bombarded almost daily that their country’s economy would be alright going forward and why, similar rhetoric to the last four months of 1997 when the Thai Baht was being attacked and rapidly devalued. Obviously, like some other Asian governments, the Malaysian government does not see the necessity to jolt her citizens out of their stupor while the financial tsunami wrecks havoc elsewhere on earth. The Malaysian government may have a valid reason, this time round because of the country’s large foreign reserves.

The KLSE still ranks among the best performers in 2008 amid the battered global stock markets falling less than most. That was one reason why I had not provided a free lunch to Malaysian pensioners or retirees, since the KLCI blue chips may have some ways to fall.

Pensioners could be catching falling knives, even if they have the means and planned lower targets to buy, when the remaining huge foreign funds decide to rush out of the KLSE for a reason or other. By coincidence, British Telecoms recently plunged to an all time low in the London Stock Exchange before rebounding.

Prescient plays a very important part in surviving this financial tsunami and preserving capital for opportunities of a lifetime. But we have to be wary of false prophets.

Amid the worsening global scenario and big corporations failing elsewhere, it peeves me to read in The Star publication an absurd article by the CEO of a tiny Malaysian investment fund which implied that people should not wished for a Great Depression 2 to happen.

If people can ‘wish upon a star’ or pray and get back their recent lost wealth, I am sure billions in the world would do so, if they have not done that already.

When your parts of the world is ruled by or have public quoted corporations run by incompetents, it is best for the able to go into hiding otherwise they could get slaughtered too, so say the ancients and the Yi. Why?

For with the closure of Heaven and Earth on September 15 2008, and without Tao, not even the gods can help.

So it is best that the able remain in hiding to avoid the final cut.

Go on to greater heights

The Master said,

‘To live in obscurity, and yet practise wonders, in order to be mentioned with honour in future ages:- this is what I do not do.

The good man (Junzi) tries to proceed according to the right path (Way), but when he has gone halfway, he abandons it: - I am not able so to stop.

The superior man (Junzi) accords with the course of the Mean. Though he may be all unknown, unregarded by the world, he feels no regret: - It is only the sage who is able for this.
[Chapter 11 – Doctrine of the Mean – Legge]

It is characteristic of the most entire sincerity to be able to foreknow. When a nation or family is about to flourish, there are sure to be happy omens; and when it is about to perish, there are sure to be unlucky omens.

Such events are seen in the milfoil and tortoise, and affect the movements of the four limbs. When calamity or happiness is about to come, the good shall certainly be foreknown by him, and the evil also.

Therefore the individual possessed of the most complete sincerity is like a spirit (shen).
[Chapter 24]

Past eminent Confucian scholars have had discussed this chapter 24 in detail according to Legge but he penned this in a footnote:

“The whole chapter is eminently absurd, and gives a character of ridiculousness to all the magniloquent teaching about ‘entire sincerity’. The foreknowledge attributed to the Sage, - the mate of Heaven, - is only a guessing by means of augury, sorcery, and other follies.”

By rubbishing the chapter, renowned sinologist James Legge showed his religious bias and ignorance of Yi divination. His unfounded opinion probably misled a few generations of Yi aficionados in the West to believe that the future cannot be foreseen with the Book of Changes.

Perhaps Legge had never heard of Guan Lo of late Han or those Yi students who can divine like a spirit.

Over the years, regular readers have probably seen plenty of happy and unlucky omens, and heaven’s secrets in this blog. So much so that one fellow Yi aficionado even complimented me being akin to Shen Suan Liu Bowan, the adviser to a Ming emperor.

Do you really think I have been guessing, using sorcery or other follies, all this time?

When one can divine like a spirit, what next?

In the Great Treatise, the wise tell Yi aficionados to assist the gods!

For that you may need to raise your spiritual level and know what gods (include Daoist deities, heavenly immortals and Buddhas) actually do on earth.

The Way which the superior man pursues, reaches wide and far, and yet is secret.
[Chapter 12]

Cheerio!

Wise and generous mother earth

Perfect indeed is the sublimity of the Receptive. All beings owe their birth to it, because it receives the heavenly with devotion.

The Receptive in its riches carries all things. Its nature is in harmony with the boundless. It embraces everything in its breath and illumines everything in its greatness. Through it, all individual beings attain success.

A mare belongs to the creatures of the earth; she roams the earth without bound. Yielding, devoted, furthering through perseverance; thus the superior man has a direction for his way of life.

Taking the lead brings confusion because one loses his way. Following with devotion – thus does one attain his permanent place.

In the west and south one finds friends, so that he proceeds with people of his own kind. In the east and north one must do without friends, so that he finally attains good fortune.

The good fortune of rest and perseverance depends on our being in accord with the boundless nature of the earth. [W/B]

In writing the commentaries to the decision or judgment on Hexagram Kun, the wise depict their understanding of the wisdoms contained in the Book of Changes for posterity. Like mother earth, being broad and generous, they do not have preference if their thoughts are read by Confucians, Daoists, Buddhists or any other doctrines. All are welcome.

They left behind the words for all Yi aficionados including those who had attempted to read the Book of Changes. If students cannot find the meanings or wisdoms then nothing else can be done, since the Yi is not meant for everyone on earth. Only the earnest and sincere can find the true meanings in what is written in the Book of Changes.

That remains the truth for the past few millennia.

Here is my simple take:

There are times to be creative and times to be receptive. By following and being receptive to Heaven, the governor of time, the Junzi know what to do and what not to do.

A touch of Tao

Keeping still
The body quivers
Quietness
Listen to the songs of immortals

Cold air plunges down to Kun
Fire the bubbling water
Steam rises up to Qian
Qi brightens and cleans the home for shen

One heavenly cycle completed
Followed by others
Clouds, first dark then bright
No more forms or emptiness

When wu wei stops
From sheer darkness, it appears
Shimmering lights
Colourful diamonds

Beautiful, magnificent
The golden flower
A touch of Tao
To climb the stairs of heaven




Related references:
The Zhouyi, Tao Te Ching, Neiyeh, Secret of the Golden Flower, Hundred characters Steele, Shurangama and Diamond Sutras.

Free lunch for senior citizens!

Currently the world is enveloped in crisis after crisis. The pinyin for the word Crisis is ‘Wei Ji’. ‘Wei’ means danger while ‘Ji’ means opportunity.

In a crisis, it means that within danger, there is also opportunity; if one plans ahead and has the means. When there is one crisis after another like now, opportunities of a lifetime would abound and ripe for the taking if one had planned it well.

What does one mean by having the means?

If you are cash rich and hold minimal stocks or none at all at the moment, you have the means.

What does one mean by planning ahead?

Soon there would be lifetime opportunities for the taking, if not already. One would suggest to senior citizens – retirees, pensioners or those near to retirement – who have the means to plan to buy the bluest of the blue chips in your country, be it the US, Canada and Europe.

Look for utility companies, beverages companies and tech stocks for example ATT, Nestle, Coca Cola, IBM, Microsoft Corporation and British Telecoms to invest in. Ensure that the companies you want to invest in are making profits from their operations, cash rich, hold minimal debt and pay regular dividends by looking up their financial statements and/or annual reports for the past few years.

Ask your financial advisors to look up these criteria if you do not understand financial statements or reports. With the current dwindling trades in the stock markets, I am sure the financial advisers would be more than willing to provide you this service.

After obtaining the necessary information, and feeling comfortable with the companies, set realistic target prices to buy their stocks; setting new lifetime lows are okay but do not set too low a target or you may never be able to own a good and safe stock which may still be profitable, paying regular dividends during a severe recession or even in a great depression, if any.

Keep monitoring your target companies’ share prices and news reports on them. Start buying once the set targets have been reached. Never put all your money in just one stock.

Do not mind stock analysts or market gurus’ lower calls, unless something is really wrong with the company concerned! If they know so much about markets and timing, their funds or hedge funds would not have lost their shirts or had to close shop.

From online news, I gather that share prices of some old established institutions in the US have already reached a few decades low. If they are good and safe companies, have a look at them. These are examples of opportunities of a lifetime within the crises, are they not?

Start doing your homework now to plan ahead.

Once your country’s economy turns good again, you could reap huge capital gains from those stocks that you have planned ahead and bought, if you want. And do not forget to donate some money to your favorite charity from the realized gains that you made from the stock market during the current crises. The needy, the orphanages, the old folk’s homes and those in dire straits need our help.

No, you guys and gals do not have to buy a billion US dollars worth of CDO and CDS off me for this free lunch! (In case, some do not understand the joke, US investment bankers had been providing free lunches for the old fools flying in from Europe for the past few years to encourage them to buy the now toxic products and other derivatives, according to online news.)

Lunch is on me because of your continued support over the past few years.

Thanks and good luck!

Dawn raids on pension funds

Just when you think that your money is safe, your government after using up the country’s reserves and emptying your children’s piggy banks (in relation to the future tax burdens they have to bear), will soon, if not started already, make dawn raids on your parents’ and your pension funds.

(At the time of writing, Argentina has just announced the nationalization of the country’s private pension funds while our government has already announced that they will borrow a few billion from our largest pension fund of which I am still a member to support the stock market.)

No, you cannot blame the government. The conventional wisdom of not to bail failing companies has been thrown out of the window, as expected.

Desperate times need desperate measures, and governments are indeed desperate since they don’t know what to do.

The safety net has widened considerably if you have not noticed. (Think of the bail outs of insurers, real property companies, and businesses, for example Korea, that betted heavily on the continued appreciation of their country’s currency against the US dollar and got severely whacked.)

A country’s financial system, her stock market and currency have to be saved at any cost – unless the government officials have to use their own money. Every government leader wants to be the hero or heroine of the day in the current crises.

Every moment is just a breath-take away from the reversal of the bottom of the global stock markets. If dumping tens and hundreds of billions of US dollars into the system do not work, and when the chips are down, why not try trillions? Brilliant strategy!

If the country runs out of money trying to rescue all the sinking and rotten toxic laden boats, the easiest or the softest touch is to raid the huge cash pile still available in the pension funds. After all, Japan has had set the precedent during the early 1990s. And look how well she has been doing since then, despite the so called lost decade. That is if you do not mind paying the banks like the Japanese did, a small annual interest or a fee for keeping your money with them rather than keeping cash under the mattress or in the safe for years on end.

The rather unfortunate thing to this is that almost all governments in the world are caught up in the game and feeling rather feverish in the loins. In case, you do not understand gaming analogy, gamblers feel feverish after laying heavy bets all across the table hoping that the roulette ball will eventually fall on their betted numbers.

A roar goes up if they win but they feel peevish when they lose. Perhaps these governments should just stick to playing red or black since they have already lost tons of their country’s money playing the numbers, don’t you think? Or perhaps, they should ask those French who frequent Monte Carlo, how to really play roulette.

Playing red or black can certainly provide a better percentage of wins than the numbers. Instead of the numerous I don’t knows you get from those government officials who are supposed to be in charge, after quickly burning up the country’s reserves and money in your children’s piggy banks.

Of course the global stock markets had roared for two days after the weekend announcement that the US and Europe would pump in almost three trillion US dollars to bail out their financial systems. Mr. Market approved and the markets rose by the same amount in value, if not more. A fair exchange, one would say.

However you cannot blame the markets for plunging again after the initial euphoria. Mr. Market is probably now waiting for more trillion dollars announcements before he decides to roar again. That is one reason, the governments may dawn raid their countries’ pension funds rather than resort to continuously print money up till late next year to pay for their recently acquired gambling habits and those of their rescued or adopted kids – those unrepentant hard core gamblers who still point fingers at others for the fall of world renowned institutions.

And in a very wrong way, these well heeled Americans and Europeans have become more Chinese than expected.

Instead of learning their ancient virtues, they have learned their vices and have finally taken over the mantle from the Chinese to become the new kings of gamblers, in terms of magnitude.

The Chinese men in the street who have gambling in their blood can only afford to lose their shirt or their lives while these well heeled and learned guys can lose hundreds of billions (almost 700 Billion to date) and bring down giant institutions. And still managed to get well paid plus huge bonuses to boot – outstanding back pay and bonuses amounted to 69 Billion US dollars, I last heard.

Therefore, no contest, these well heeled intellects win hands down. And the whole world including you and me loses.

No, I am still sitting on my hands, if readers want to know if I have started to invest in the stock market. And since no institution or government wants to pay anything for the trillion dollar answer of when the bear markets will reverse, which can be provided at a very reasonable price, I will go into hiding.

There you go no free lunches and spoon feeding, even if kin, good friends and regular readers ask. Unless I can sell you a CDO or CDS worth a USD billion that no one else wants!

Watching heaven fall (2)

Less than a month after seeing the closure of heaven and earth on September 15, people across the globe are currently witnessing yet another lifetime phenomenon, that of the falling of heaven.

The way global investors in great panic scrambled out of the stock markets in the flight to safety last week looks as if heaven is falling down, does it not?

The status quo of human nature remains since time immemorial. Humans rely on their basic instincts of survival and run for cover fleeing to safety whenever there is pandemonium on earth.

In such times of crises, the West talks about the phenomenon of the sky falling out, while the Chinese call it, heaven falling.

Within the week ended October 10, the Japanese, Russian and Indonesian stock markets had fallen 20% or more. The Russian and Indonesian markets were temporary suspended to stop the incessant selling down of stocks. Many other stock market indices across the world including the Dow Jones plummeted 10% to 20%.

Trillions of US dollars in value have simply disappeared from the global stock markets in the cascading falls commencing from September 15 just when Tao has receded all under heaven.

Repeating history, like what the Japanese people did in the early 1990s, the Americans have resorted to buying safes (sales of safes have shot up by 44% in the USA, the last couple of months according to online news reports) to keep cash at home rather than putting their trust in banks or relying on the government to look after their hard earned money. This says a lot, doesn’t it?

If you really think that the Japanese and Americans are rather silly or that the investors fleeing to safety have completely lost their minds, you could be the one fooling yourself and/or had been acting like an ostrich amidst this falling of heaven.

Hunker down, batten the hatches, like the able man withdraw into the dark for safety and security as advised by the Zhouyi before it is too late to do anything.




P.S.

Readers are again reminded that they are solely responsible for their own actions or non actions.