Fear Factors

Those invest in share markets will know that volatility is the key of making profit. But it is just like a double-edged sword, potentially giving you the profit and along with it a hidden liability. US stock market suffered it worst day since the 2008 crisis and Dow Jones declined steeply by 513 points in a single day yesterday and wept out almost US 1.9 trillion in the market value over the past two weeks.

What happened in US may not be that of our concern but this morning Bursa Malaysia lost more than 20 points and the 1,500 level seems to be very shaky as the crisis in US doesn’t seem to recover over the short term. I have spoken to many elderly friends who are planter by profession who are also investing in share markets and their advice was always to be resilient, and to be able to do so is by adopting a stingy policy, extra careful on the expenditure so as to weather through the unforeseen tough time.

This is quite a right way of doing things, anything as long as profit and lost is concerned. For example, the plantation companies are all quite bullish over the past one and a half year due to increasing CPO prices and thus would incline to spend extra money to fertilize the palms but when the price of CPO was low a few years ago, many of them were cutting down their expenditure on fertilizers very drastically and not realizing that this may end up in crop decline when the price recover. Just like the share market, the plantation companies are also driven by sentiments. Good sentiments spend more, bad sentiments cut cost.

The PM had recently appointed another full minister even though the general election is just around the corner, expanding his cabinet to 39 full ministers. Does a small country like Malaysia need that many ministers? One thing for sure is that those politicians which were made into ministers or other important portfolios will be exhausting the taxpayers’ money in building a big fortune for themselves.

Sadly, as politicians become richer, more and more people are suffering to cope with the pressure of inflation and other persistent problems such as increasing house prices and so on. When the gap between the rich and poor becomes bigger and the government which is run by the “rich people” are still reluctant to look into the problem of those underprivileged, sooner or later a hidden liability of poor governance will explode just like what happened in the middle east.