I am BACK! MyView for 2010

Before I start, I need to apologize for not writing for so long. Things just kept coming up and have been traveling too much over the past 3 weeks. Until I got an msn msg from a friend asking why I have not updated my blog with new ideas, only then did I realise that time has flown by over the past weeks. I would just like to say that I am here to stay with this blog and I hope you all will get more of your friends to follow it. Trust me, readers will definitely get more insights and truths here than most other websites or investment gurus as you will be getting unbiased views with no vested interests.

Suddenly, we are at the end of the year and let us take a look at how things have panned out over the year. Overall, global markets hit a low in March this year and rebounded very strongly for the rest of the year. We have continued to rally with strength till now and the markets are all near their year highs at this time. It is easy for us to get carried away with this year's rally. But it is always good for us to stop and re-evaluate things before going into next year.

Have things changed?

Things seem to have gotten better, with all the economic data showing us that the economic situation is improving in most countries and the worst looks like its behind us. While writing this, I would like to point out that "less bad" does not mean "good". Lets take for example, exports globally are still weak, employment has been weak (except in Australia, those aussies are really solid, I guess kangaroos have strong legs), deflation is still cited as a worry, asset bubbles forming in emerging markets etc, protectionism is rising and MOST IMPORTANTLY....sovereign ratings are dropping, just look at Greece, Spain, Portugal..this is definitely not the end. Over the next year, debt levels in the US and UK are only going to rise, with tax revenues falling as unemployment continues to plague global economies and stimulus spending continues to be used to substitute for private consumption, more developed economies may start to face credit downgrades.

Yesterday, the great Mohammad El Erian (possibly the most brilliant mind in my view) commented that too much hope is placed on China to lead the world out of this global crisis, this may be too hopeful on investors and economist's part. How can we expect a country with an average per capita income of US$6,000 to lead the global recovery? Developed countries like the US and UK are averaging US$40,000 or more per year, how is China going to replace the consumption lost by these nations? What he said woke me up to reality. Things are not that great....

Don't get me wrong, I am not entirely bearish, but before we turn on the music and put the champagne on ice, I really think we have to be realistic and keep our feet on the ground. If you are expecting markets in 2010 to deliver returns like this year, I would say that it is wishful thinking. But I do believe with prudence and good research, we will be able to bring back decent returns.

2010 Strategy

Country bias: Japan...I am a contrarian, it is the worst performing market this year and did almost nothing, so I am actually very bullish on Japan next year. This is a country that has done nothing wrong during this financial crisis and their companies have been languishing for the past 2 decades. They have been prudent and hold very strong balance sheets so they are going to be relatively safe investments. Expect Jap companies to consolidate more because many of them are flushed with cash.

Sector bias: Shipping, Hospitality and Agriculture
Trade should start to pick up next year and shipping stocks are still trading at very reasonable levels. However do pick those that have low gearing and not expecting too many ship deliveries. Tourism will pick up too, this will spell better times for hotels, casinos, airlines etc.

Why Agriculture? I believe that Agri is going to be the sector to watch for the next decade. Arable land is falling in supply, farm workers are starting to urbanize with fewer people willing to work on farms, technology although improving is not going to make up for the drop in labor supply. Demographic changes are going to be the main drivers for this sector; larger population, growing affluence, excess liquidity..all are compelling arguments for this sector.

This is how I am going to position my portfolio and stay tuned for more. It the middle of the night already and I am falling asleep, so will not say much more. Christmas is approaching and expect markets to remain strong till 2010, but let us cross our fingers that its going to be more than just the usual capricorn effect.

Truly,

SVI