Excellent post pecoraI was trying to do a post explaining the...

Excellent post pecora

I was trying to do a post explaining the possible ways that a reduction in financial liquidity could impact on the real economy (just as the post 9/11 liquidity expansion led to the subsequent economic expansion), but my brain is not up to this.

While I have not sold out most of my portfolio, it is esential to have a strategy to deal with adverse market conditions, especially those investors that are leveraged.

Without China buying commodities like there is no tomorrow, metal prices would be far lower and our sharemarket would probably be no more than around 4000. I can recall when the wool market collapsed in late 1990/early 1991 as a result of both Russia and China stopping their purchases. The impact for wool growers was massive for years, and eventually China became the dominant buyer of our wool. The concern is also that due to our weak governements China would just buy up our mineral companies on the cheap now that they have masive foreign echange reserves.

t4p is clever enough and has heaps of financial backing so he could either hold or trade his way out of a major downturn, but for most investors the pain of a major longer-term market downturn would be unbearable.

Loki




for those who want to remain in this game