Double Edged Sword
June 24th, 2008 | by winsonlee |
Australia economy is heading towards a double edged sword situation. Price of petrol has contributed to majority of the economy inflation. The value of the currency will become smaller if this is situation persist. Eventually what we will be able to buy will be lesser compare to what we suppose to. So eventually the rising of petrol price will just kill the economy and the people. The only way Reserve Bank is able to control inflation is through the increase of interest rate. Guess what will happen if the interest rates increase further ? People will get killed even faster as what they earn is insufficient to pay for the mortgage. That is only applicable if you have owing towards the bank. For those who consider buying a property, why borrow money from the bank at this point of time ? Isn’t it a bit risky to hold on to a double edged sword now ? You would have hurt your self if you do not use it wisely. This may sound cruel, but why not let the government hold on to the sword and get rid of those who did not manage to meet the mortgage repayment ? When the times is good eventually the government will just break the sword. For those whom choose to play with sword at this time would have hurt themselves. For those who didnt will be able to enjoy the benefit from the recovered economy.
Crude oil have increased more then 30% since 26 March. In just a short period of time, oil price went up to $136.16 / barrel. Reffering to the trend line from the above, the price of the petrol is still heading towards up. What should you do now ? Stop reading this post, get out from the house and goes to the nearest petrol station. Buy as much petrol as you can and stock it at home. Keep it for 5 years and sell it out during then. This might make you your first million. Do you think this will work ? Seriously I think it wouldnt. But no harm trying it. Now those who earn the most is countries that are producing crude oil. Will all this problem be ending soon ? This is just the beginning.
Middle of May, many would have thought that the worse is over as ASX 200 index nearly break through 6000 point. 6000 point may be a strong resistant level as it has never went above 6000 point ever since Jan 08. It is a good sign if it did. But eventually it didn’t. Take a closer look at the chart for this year. The lowest is at 5087 in middle of march. Predicting the bottom maybe even harder if it breaks the 5000 support level as it is hard to tell how much more it will drop. According to one of the article in financial review, it mention that the market will remain uncertain till october. Situation have changed from the time I played the ASX game till now. When I was playing the game, for every stock that hold, I actually plot the level that I should be buying and selling. During the game, when A.B.C went below $1.40, I would have bought it. Now I wouldnt buy it even if the share is at $0.66. Who whould actually expect that A.B.C will drop another 50% ?
