Sunday, November 05, 2006

Secular trends

Secular trend is one phrase that makes monkeys on Wall Street salivate profusely. It is as if they see bananas coming to them in tsunami waves or something. Well actually, investors probably also imagine tsunamis of dividends pouring over them and that's why they scramble to ride these trends at all cost.

Our world is defined by huge trends or secular trends that last for some time, usually 5-10 years. In the 60s and 70s we have autocars, 80s we have Japan Inc, and the beginning of the 20yr US bull market. 90s was IT and Tech, Media, Telecoms (Ouch!), and now China and commodities.

Note: more often than not, the trend goes into bubble mode and the Greater Fool Game begins. It it important to know the difference and decide for yourself if participating in the Greater Fool Game is what you want.

Betting on these trends will reap you rewards far bigger than day-trading or any other money-making scheme you can ever think of, including building 2 x Integrated Resort to attract oil money, Chinaman yuan, high rollers' money and dunno what else.

Ok, perhaps the reward is not as big as being faithful and good to your spouse. Real life example: University Don flirting with China Gal. Umm, there are other ways to bet on China okay, and they don't need $7k per mth.

Anyways, identifying such trends require good grasp of global condition and some innovative thinking. This I would say 99.99% of the brokers and their analysts lack. For a good reason. If you identify a trend, you need not buy and sell all the time. Just ride with trend until the cows come home. And this is not good for the brokerage business.

So what are the trends going forward? By right, you should go think for yourself, but since I am writing this, and you are reading fervently, I guess I am obliged to share. Most of these are not new, so pls don't say I have no orginality or what.

1) Silver market: The world is aging rapidly as the baby boomers retire, cash in their pension money or CPF, they will need to find ways to spend it. In most other countries, they spend in on travel, buying houses, cars, buying LCD TVs etc. Hence the global boom in real estate, LCD TVs and autos. But sadly in Singapore, our baby boomers spend it on? *Drumrolls* China Gal! So Buy Prada.

The stock, not the bag.

2) China consumer market: Let's face it, The 21st century belongs to China. We have probably only been through 1/3 of the big China story. So far they simply built 10,000 factories and produced enough stuff to drown Mordor's army 2 times. The Chinese consumers haven't even started spending yet. When they do, it will be interesting.

Again buy Prada. Okay enough of Prada, buy Ferragamo.

If you think about it, in the past 5 yrs, every big secular trend was actually due to China. Why did commodities go up? Why did steel prices tripled? Why did oil price shoot through the roof? Why can Walmart conquer the world with its cheap stuff? China. China. China.

Why is Singapore building 2 x Integrated Resort? To create more jobs for China gals and get more University Dons to spend $7k on China Gals. In short, China again.

Although the whole world has been talking about China for the past 10 yrs, we are probably not finished yet. China is probably Singapore in the early 80s. We have more to go.

Of course, there will be other secular trends. They will be up to us to find out. It will probably be difficult. You need probably 10 mental workout per week, and talk to 20 think-tank people regularly. But when you do, pls update this blog.

See also Good stock but not a good buy
and Mr Market
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