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Friday, 16 January 2009

Good post by Conrad Alvin Lim

It was nice for Santa to give us an extremely tiny rally between 24 Dec to 6 Jan - if you call that a Santa’s Rally. I call it “Hope on Low Volumes”. The reality of the rally between the 21 Nov 08 low and the 6 Jan 09 high, now seen in retrospect, was only a rally in a downtrend. As more and more of these analysts and economists call a later recovery date (they initially said that the market was at a bottom in Oct 08) of mid to late 2009, and others calling a bottom by early 2010, I am maintaining that we won’t see a real rally into a Bull market till 2012.

In Jan 2007 during my tutorials, gatherings, WA and at various speaking engagements, I called a flat to negative market for the next 4 years with the next real rally in 2012. This was supported with various postings in my old forum and on this blog: http://www.conradalvinlim.com/?p=73

And now, as expected, January is looking like it is going to suck big time. The market is expected to re-visit its Nov 08 lows. I am expecting more new lows.

On December 1, 2008, I wrote;

So in summary, DOW for 6,000 on the low between now and May 2009 and daylight will not get much brighter than 9,500. A break above 9,500 might just give us a return of Santa but I won’t be holding my breath.

So while shoppers hit the malls and others rush out to buy cars, I will remain conservative with my wallet. I expect things to get worse. As mentioned in a recent posting in my blog, the Singapore economy will take a big hit, I don’t care what the papers are reporting. Car owners will be hard hit, construction will burn and financials will hurt. Unemployment will rise, foreign workers will depart, rentals will fall, property prices will tank and I will go shopping for a new house.

In reference to my second paragraph, take a look at what’s making the news in the last few weeks … construction is hurting - even our own Integrated Resorts are expecting late deliveries, foreign workers are being sent home by the droves, more people are losing their jobs everyday (more than I expected), property prices are declining as owners panic to sell now than later, rentals are indeed falling (all these are happening sooner than I thought it would) and still, many are still behaving like this is going to end soon and it won’t affect or hurt them.

The last time I thought like that was in 1998 and I went bust in 2001.

The exodus of fancy cars to the used car lot has begun. More and more cars are parking at such lots but the worrying trend is that they are parked there without being bought over by the lot owner - in other words, they are desperate to sell their cars even if the used car lot owner is not interested in buying it. Almost all these cars are on a 100% financing scheme which means that the owner can’t sell until he pays up the entire interest owed.

The number of home buyers (from 2006 to 2008) defaulting on their payments is increasing. As TOP dates mature, the major sum of deferred payment schemes are due. Buyers on such deferred payment schemes are finding it impossible to fulfill their obligations and developers are in a quandry; do they repo or assist? Repo is not going to help them because finding new buyers is more difficult today and assisting is not in their interest or business model. Regardless, defaults are rising and fire-sales are inevitable for those hoping to recoup some of their losses (especially amongst the speculators).

Shop owners are hurting and one by one, slowly but surely, they are closing down or downsizing. Commercial rentals are starting to fall or at best, stagnated. Have you noticed how you don’t have to wait for a cab these days? Have you noticed how thin your daily news papers have become? Have you started noticing that peak hour traffic is not as bad as it was about a year ago?

All these point to the obvious - that we are not yet at the bottom and it is going to be a while before we get back to normalcy. If this true, then those with day jobs without secondary incomes will suffer. Those who are living in denial that “it won’t happen to me” will hurt the worst. Those who believe in their comfort zones will soon find discomfort. Those who still have credit card debts that can’t be paid off with two months’ salary will find the going getting tougher.

Survival Tip #1: Get real. Even when the market does recover, the economy will still be in pain for another 6 months to a year after.
Survival Tip #2: Get a secondary income. Create a second income from simple ideas and common needs. Supply to the need and you have a second income. (Still don’t get it? Then you really need my help)
Survival Tip #3 Get my up-coming book in May 2009. It’s all about surviving bad times, creating money making ideas, finding opportunities in adversity and everything you need to know about bankruptcy - in short, how I survived and recovered from my time in financial hell.
Finally, get smart. Stop living in denial and stop dreaming. Wake up and smell the roses … they stink now because no one cares about watering their roses. Wake up and smell the coffee … it’s watered down now because kopi tiam owners are scrimping as coffee prices rise in a recession.

Wake up and wake your friend up - shit is happening and if you still don’t smell it, you definitely smell it when it’s too late.

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