RBS sees crash - Time to stop buying and wait?

What a terrible month June is! We are seeing oil rising to $140, major stock markets tumbling, worldwide interest rates rising, and even worse, inflation or stagflation knocking on our beds. I haven't got a good sleep for many days and the reason is that I find myself poorer everyday.

Nothing matters anymore when we are getting poorer everyday. In Hong Kong, we have public protests and demonstrations every week and most of them are caused by inflation, high oil prices, high food prices, unfair treatment by employers or the local government. Public discontents are everywhere: you can find protests around Asia. Have you got the news that people in Shanghai have held a demonstration against the government because the government refuses to bail out the losers in the stock market? What a terrible world we are in!

Perhaps, this is the time for all of us to stop buying equities, bonds, funds, etc. This is a time for investors to retreat and meditate, to think about spiritual peace of mind, to think about those who are more unfortunate than ourselves and to think about how to build a better world with better investment environment for everyone. Don't ever hope that the ruling elite in our capitalist society will help you. They are the rich and super-rich speculators with unlimited wealth and resources and are the guys enriching themselves everyday behind inflation and stagflation!

RBS has just released a "Doom Report" on world stock market crash after June or July. It's just too easy to predict doom but it's never easy to predict at the right time. Why didn't RBS make such prediction earlier? Pretty useless to foretell the crash now when global stock markets have fallen by at least 20-30% this year. Anyone can make such prediction now. So I won't give too much credit to such Doom Report.

Now let's go back to reality. Once you stop buying stocks, etc., you must start protecting yourself against the risk of losses from inaction. How about putting cash in the bank? Yes, if your bank gives you deposit interest that is NOT negative interest. Unfortunately, in a place like Hong Kong where consumer protection is zero or extremely lacking, we can only get negative interest for many decades and this will never change as the banks are part of the ruling elite here. We will end up poorer everyday.

How about earning interest by buying bonds? Didn't we say not to buy bonds? Bonds in Hong Kong are mostly a waste of your time. A medium term bond in HKD for 3-5 years will only you 2-3% interest at most and after deducting charges and fees, you may get something even less than that in a normal saving account! A better bond is RMB bond but such product is not available in our retail market now. There is too much RMB capital in Mainland China banks and no one is interested to get more RMB. However, speculators on RMB are always pushing the currency up. So you see what a deadlock people in Hong Kong are in!

It's just one step to death if you keep cash in the banks. But it may be a quick death if you jump into the stock market now. Think about those who made a leap by buying financials from March this year. Think about those who purchased expensive properties earlier this year or in 2007 by borrowing huge loans from banks. Think about those who are stuck with their investments in markets like Vietnam, China "A" shares, Japanese stocks, India, etc. Think about those who bought gold when it touched $1000 this year. Well, why are we only wise after the events?

Yes, this is time to stop buying and wait. Now is the time to give up and surrender! The rich and super-rich speculators have won (they never lose). Sometimes life is more enjoyable if you can retreat. Remember the tale of the race between the rabbit and the tortoise? Remember what the snake will do in Winter? It's like the third world war coming now. We must keep our survival first and prepare for the nightmare coming after the end of this world war.