Montag, 27. Februar 2012

Bellyache

My belly's starting to hurt again.

Like it did an the end of 2004. As oil prices were beginning to push ever higher and the real estate bubble was becoming quite apparent for anyone with eyes in their heads. Markets were "recovering" as easy money, debt and deficite spending filled the books - while the troops were coming home from neither Afganistan nor Iraq.

Collapse was imminent.

Of course my timing was way off. For the momentum of the situation was only starting to kick in. My recommendation to sell excess real estate was mildly disregarded by family and friends who had no reason not to ride the continuing incoming tide of liquidity. I was reacting to the data blips by seeing the impending crack in the dikes.

The flood came instead three and a half years later - not good timing for a market prophet wannabe.

At the same time, I was actually an observer from the highlands, I must admit. We bought our house in partially deflated Munich - while watching the bubble inflate in "the rest" of the world. Not because we played the market right but because our landlords were selling and were not planning on waiting for higher prices.

And since housing was hardly touched in the 2008/09 crises and has certainly appreciated since then in Germany, our timing could not have been much better.

But back to my bellyache. Collapse did not come in 2004/5 like my bellyache suggested it would. Instead, I was years off. Rising money supply meant rising markets and only in the second or third step resulted in a bursting bubble.

And so it is again, I'm afraid.

Money supply is beginning to speed up. I'll see if I can get a chart in on that.
[Edit (March 5th):



Thanks Gordon Harms.
I'll try to update that in a while, so that you can see what the situation is like right now..]

Now, I wouldn't necessarily suggest buying something like real estate, at least not in the suburbs, as an investment, simply because it's hard to get rid of it once the market turns sour. At the same time, cash is not necessarily king, for it might just take a couple of years before deflation begins rearing its ugly head again.

For the central bankers have opened the floodgates to reflate the world's economies. Quantitative Easing. Trying to get the jobs back. And filling up the containers shipped to and fro China.

Gold keeps rising.
And oil.
And anything else that can't multiply when money=debt is doing the same.
Like stocks for a while too.
Or better yet: Start planning your IPO Now. Or better, just sell the company and get out!
Because: 2015 cash will once again be king.

That is, if my belly has anything to say about things.

2012 is probably not the end, at least not for the bulls surfing the tide of liquidity.

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