On the money so far and longer term (5 year forecast)

Setp 8

To share my two cents about the near term, we will have sharp ups and downs. Some actions (QE3 or 2.5) from the Fed at the end of both Sept and Oct will probably hold the market around the current levels (could be up by more than 10%) till Nov. However, we are likely to have a recession toward the end of the year or at the start of next year, and that is when the big market tank will likely happen. I also attached my longer term predictions (5 year) at the very end. If we are patient enough, most, if not all, will pan out in a few years.

Aug 4

If you still remember that I mentioned that we will have another deflation scare latter this year at our dinner during your visit to Boston this spring, it is now in full force. It will probably last at least until after the third quarter when the Fed could have more political capital and will to do QE3 (The risk of US severe recession is still not too high though). In the meantime, which is still at least a couple of months ahead, we will have rocky downward market with sometimes sharp rallies. We should see a repeat of risky asset rally (globally) when the Fed finally comes out with QE3 again. It is opportunity to be had when that happens. 

Longer term forecast

n  China will face sharp slow down in growth in five years (say from 10% to 3%) for many years to come

n  Related emerging markets and commodity producers will suffer as well.

n  HK’s housing price will drop substantially

n  Chinese people may not suffer in their satisfaction

n  The world will not come to an end with the slowdown in China’s growth

n  Eurozone will not survive in the current form

n  The U.S. will become stronger in relative terms if it can get the political act together