guess the time, page-2

Good post Platinum.

Some comments so far as they relate to UMC:

1. First question here, is the clock relevant on this occasion? Is this one of the traditional seven year cycles?

If we look at some of the major crashes of the past hundred years:

(a) In Australia:

(i) The crash of 1914 took six years before parity was regained.
(ii) The crash of 1929 took six years before parity was regained before a further crash in 1937 occurred. It was not until 1945 that parity was then again regained. Again, a time-lag of six years.
(iii) In 1952, there was another big crash. It was not until 1957 that we again saw level pegging.
(iv) From 1960, the index tracked sideways until 1966.
(v) After 1968, we didn't head north again until 1980. A timeframe of twelve years.

What's my point?

UMC is a junior IO company with a great asset.

This time it is most probably not about surviving the cycle and capitalising on the upswing.

It is most probably, as FM said earlier getting taken over while value can be realised, or selling the asset for some decent value, so that sufficient cash is realised to get it through to the end point.

The haul here could be very long if previous big crashes offer any guide.

A study of major crashes in the US reveals similar recovery timeframes. I'll talk about that in a minute.

Sometimes, investment strategies, and models, must be adapted to what is taking place around us.

As this is not a blue chip company, - in some respects, it is a speccy - we can be particularly vulnerable: if care is not taken.

What's also interesting about the note is that it talks about the traditional cycle of high interest rates driving SP declines driving a conversion to property, as happened after '87.

That's not the case here: interest rates are nearing 1% in the US and are relatively low here in Australia.

This time there is a major asset price and stock market bubble that appears to be in need of severe readjustment.

The seven year cycle is a good rule of thumb, leaving aside exceptional events. The question is, is this an exceptional event? One that parallels what we experienced in 1973-4?

Perhaps what we're seeing is one of those equilibrium events that puts all the amazing growth of the last few years in Brazil, China, India and Russia, among other places of the world, and the mountain of debt that's been accrued elsewhere, back into balance.

Let's hope there's not too much suffering along the way.

But then again, all of what I'm saying may be wrong. The best thing in times like this, is do your own research, and back your own judgment.

BUSH

PS. In the US, Dow saw the following returns during the following extended periods:

(i) 1906 - 1922 (-1.1% annualised return);
(ii) 1930 - 1942 (annualised returns of -10.6%);
(iii) 1966 - 1984 (-1.5% annualised return).

A key thing preceeding all major crashes was that people said that there was a fundamental shift in the economy this time around. Sounds very familiar.