BEING patient can be really difficult during turbulent times no matter how optimistic one tries to be.
2009 has been a very challenging year for a lot of people globally. Many lost their jobs, some were made homeless, others lost their fortunes. And it takes patience to rebuild.
And it is this time of the year when just about everyone is trying to gaze into the future. What we really want is a better 2010.
Indeed, it should be, with all pundits telling us that they are seeing signs of a global economic recovery. But they also warn that the recovery may be a long-drawn affair and we may hit roadblocks.
Mohamed El-Erian, chief executive of giant bond manager Pimco – a man who is watched closely as he has made a lot of money for his clients – wants us to be cautious. He was reported to have said “the recovery may be gaining steam but is no different than a kid who eats too much candy at one of the birthday parties his 6-year-old daughter attends. We’re on a sugar-high ... it feels good for a while but is unsustainable.”
His point is that “this burst of economic activity fed by government spending and near-zero interest rates will soon peter out.’’ It may be relevant to the United States, but undeniably, when the United States sneezes, we in Asia-Pacific do catch the flu and our stock markets get into a fit.
The Pimco Total Return Fund, which at US$203bil is the world’s largest mutual fund, has returned an average 7.6% annually over 10 years, after fees, versus 6.3% for Barclays Capital US Aggregate fixed income index fund.
Sceptics have differing views and are more optimistic of a recovery.
But something to watch out for this year is the possible China housing bubble, as it is said that 90% of the homes in Beijing are hardly affordable to ordinary people, giving rise to fears of a bubble. The question is will that bubble be similar to the one in the United States in 2008 and would we be affected as China is a big force in Asia?
Crude oil prices are also racing to breach the US$80 a barrel level in 2010. Even US$85 or US$90 a barrel level is not impossible. It is plausible and could trigger a hike in prices of goods and services. Let’s not forget that the misunderstood goods and services tax (GST) will be implemented eventually and that means we have to pay more for goods and services.
Hopefully, our personal taxes will drop, but whichever way it goes, we will end up paying more with GST.
Knowing your risks and rewards is important in any investment, and while the signs are good for a recovery, we must remain patient if the recovery is a slow one.
But for now, let’s just welcome 2010 and hope that it will be a year of real change in the world, with peace and harmony, prosperity, excellent health for all, an end to wars in Iraq and Afghanistan, and stronger economic growth.
Let us also hope there will be no more ugly power tussles like the one in Perak, as if you were Perakian like me, it was a test of patience waiting to see who really ruled the day.
·B.K. Sidhu, a deputy news editor at The Star, wishes readers Happy New year once again.