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CLSA's Jim Walker On Asia: The Game Is Up

Tyler Durden's picture




 

Must read article over at ExposAsia by Jim Walker, former head of CLSA.

Jumping to the conclusion for the ADD impaired:

"For 2009, and perhaps beyond, preservation of capital will again be the name of the game. Cash is king with a liberal helping of government securities in the portfolio as well - even at today's richly inflated prices. Our key message to investors is that the asset management game has now changed. Unfortunately, for those that believe we are still in the same economic world as was the case in the Greenspan era, the game is up."


hat tip Bikegirl

 

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Wed, 08/12/2009 - 12:42 | 33970 D.O.D.
D.O.D.'s picture

The astrological charts are showing some bear signs too...no joke....

"Could the position of the sun, in relation to Jupiter really effect the S&P 500"

http://newsusa.myfeedportal.com/viewarticle.php?articleid=393

Ok, maybe a little joke, but we shall see...

Wed, 08/12/2009 - 13:32 | 34050 My cognitive di...
My cognitive dissonance's picture

With all the weirdness going on lately, it wouldn't surprise me.

Wed, 08/12/2009 - 14:05 | 34118 D.O.D.
D.O.D.'s picture

It worked for Reagan... Nancy that is...

Wed, 08/12/2009 - 20:29 | 34486 georgetown (not verified)
georgetown's picture

For an investor with an eye on his risk-reward ratio, the article offers some cogent arguments and based on coherence is how every piece of research should be evaluated. If you want 30 min guide to investing nirvana then you still have Jim Cramer!

good articles;

target="_blank">my newest bookmarked finance website

Wed, 08/12/2009 - 12:44 | 33973 Steak
Steak's picture

It is this guy's humble opinion that Asia can continue being bubbliscious as long as the dollar can continue to slide.

In related news, Caijing has a fantastic series of articles about the Chinese property market in several cities.

http://english.caijing.com.cn/2009-08-12/110223009.html

China has been successful thusfar in re-flating their bubble, yet my impression from these articles was that its not yet ready to burst again.  Either way, really fantastic series, I strongly recommend folks check it out.

Wed, 08/12/2009 - 12:48 | 33976 freedom21
freedom21's picture

Agreed.

 

The total dollars that were available before to price all goods and services has taken a large permanent hit on the credit side.

What does this mean ? All prices need to shift down, particularly all sales that were previously credit driven.

ie. If GM thinks that a $40, 000 price tag is going to move, they are mistaken.

In general anyone that thinks prices do not have to come much further down, do not understand the cumulative credit's role in previous pricing.

Prices in gerneral have a long long way to go, DOWN, to the new normal.

Wed, 08/12/2009 - 12:54 | 33995 PragmaticIdealist
PragmaticIdealist's picture

Then why is M3 still rising as calculated by www.shadowstats.com (since the Fed stopped producing it)?

Wed, 08/12/2009 - 13:01 | 34006 IE
IE's picture

Velocity and funny-business accounting are my guesses.

Wed, 08/12/2009 - 13:40 | 34067 SWRichmond
SWRichmond's picture

What happens to all of this debt in a lower-priced (lower earnings) environment?

Wed, 08/12/2009 - 13:47 | 34090 VegasBD
VegasBD's picture

defaults probably

Wed, 08/12/2009 - 12:46 | 33977 Fish Gone Bad
Fish Gone Bad's picture

Perhaps the Perseids will hit the stock exchanges.

Wed, 08/12/2009 - 12:53 | 33992 lettuce
lettuce's picture

negative... the colo space where the HFTs have placed themselves are like NORAD's command-control center. although... there's always a chance that they could be taken down. the crater would look something like http://www.sott.net/image/image/6289/kt_impact3.jpg . looks like it would be fun to watch!!!

Wed, 08/12/2009 - 12:58 | 34001 IE
IE's picture

Well, "cash is king" certainly aligns well & supports the concept of "new (govt) debt floated with ease"... doesn't it?   

I agree that the Chinese are probably incapable of controlling their markets for very long in the face of other, larger fundamentals, and I believe the same is true for our larger markets. 

Sure, Dr. Frankenstein can make his monster sing & dance for a while, and sure Dr. Moreau can achieve short-term civilization for his creatures ... but the true nature of the beasts will reveal itself sooner rather than later ... much to the chagrin of the mad doctors who arrogantly believe themselves to be in control.

Wed, 08/12/2009 - 13:22 | 34034 cougar_w
cougar_w's picture

Like a surfer. If you knew no better you might think the surfer is somehow controlling the wave under him by deft board movements, rather than the alternative being that the surfer is just riding the wave and making a good show of being on top.

Doesn't last, though. The wave does what waves do; they eat surfers.

The problem with economic policy is that the economists really do believe they are controlling the waves under everything. Bunch of clowns. They are now being eaten.

cougar

Wed, 08/12/2009 - 14:51 | 34215 dnarby
dnarby's picture

Yep.  The tail may *think* it wags the dog, until the dog decides otherwise.  The tail is typically the last to know.

Wed, 08/12/2009 - 12:58 | 34003 Anonymous
Anonymous's picture

You can't be serious posting this article. It's from January 5, 2009. If an investor focused on Asia would have listened to this guy (who bottom ticked the mkt) he would've missed a 65% rally.

Wed, 08/12/2009 - 13:24 | 34037 Anonymous
Anonymous's picture

Hard as it is to believe, some of us are actually interested in this site for its insight into longer term political/economic implications as opposed to short-term trading recommendations.

Wed, 08/12/2009 - 13:40 | 34069 Anonymous
Anonymous's picture

Hard to believe, I read it too for that purpose (and I think this is a great site) but Tyler is so bearish he will throw anything at the wall that supports his argument, even if it means putting up an article that called for one to get out of Asian stocks on 1/5/09. 6 months is hardly short term. And to miss all or part of a 65% rally is disastrous.

The web is full of bloggers who make recommendations. The problem is there is no accountability. That's my point. Why should I listen to someone who missed a 65% rally. Zero Hedge is better than that.

Wed, 08/12/2009 - 13:43 | 34075 Tyler Durden
Tyler Durden's picture

actually i prefer the phrase "factually supported". And the opinion of a former head of CLSA is pretty relevant regardless of interim market movements.

Wed, 08/12/2009 - 13:47 | 34087 Anonymous
Anonymous's picture

Opinions are opinions. An opinion is only as good as one's track record. How good is his?

Wed, 08/12/2009 - 13:53 | 34101 Anonymous
Anonymous's picture

About as good as Tyler's

Wed, 08/12/2009 - 14:07 | 34123 Anonymous
Anonymous's picture

What is Tyler's track record?

Wed, 08/12/2009 - 17:10 | 34562 whacked
whacked's picture

Tyler's track record

 

10.2 secs 100m

 

Tyler's No 1 record

 

Black Dog by Led Zepplin

 

Personally the comments made by Jim Walker are the same old same old.

 

Pettis understands the internals of China better than most and his students are actually gyrating their wares in the econobureau.

 

As regards the rest of Asia's sovereign investment companies, they are full of political cronyism that is allowed to survive as long as they serve the ruling party. Asia has the experience of down and hard times, US has none.

 

The mentality of investors in the US is something to behold. You are not the center of the universe and your attitudes spruik arrogance, instead of understanding of others. That is a mistake. China micro manages better than most. It is the need of the powers to transform internal consumption around that is important. They have the money!

Wed, 08/12/2009 - 13:25 | 34038 cougar_w
cougar_w's picture

Rome is burning. Picking up a few rugs at a discount on the way out the gates heading into the wilderness is not much to brag about.

cougar

Wed, 08/12/2009 - 13:44 | 34079 Anonymous
Anonymous's picture

Not only that (missing a 65% equity rally), but he would have also have lost his ass owning Treasuries.

Wed, 08/12/2009 - 14:37 | 34175 Anonymous
Anonymous's picture

Hmm...confounding comments. I agree missing a 65% rally would be death for a money manager but then again no money manager would have left his portfolio unchanged between Jan till now. Thrashing him while implicitly assuming a static portfolio is not rational. More importantly, i don't believe any serious investor looks to an economist for a prescription on constituents of his portfolio. Look at the data he cites and plausible effects of policy changes vis-a-vis labour law changes in China, centrally planned stimulus leading to a malinvestment cycle and resulting new paradigm for money mangers. For an investor with an eye on his risk-reward ratio, the article offers some cogent arguments and based on coherence is how every piece of research should be evaluated. If you want 30 min guide to investing nirvana then you still have Jim Cramer!

Bikegirl
*This is not meant as a defense of Jim Walker, only a certain way of looking at research.

Wed, 08/12/2009 - 14:03 | 34115 Anonymous
Anonymous's picture

Anon 34003, you could have said the same thing in March, 2000 after the Nasdaq rallied from 3000 to 5000. Of course it then headed to 1200, so was a decision not to invest at Nasdaq 3000 on the way up wrong?

I'm all for good contrary arguments, i.e. bullish arguments supported by fundamentals. Do you have anything to contribute other than the market went against you therefore you're wrong? Because frankly that doesn't add any value.

Wed, 08/12/2009 - 14:07 | 34121 Anonymous
Anonymous's picture

You obviously don't manage money for a living.

Wed, 08/12/2009 - 14:36 | 34173 Anonymous
Anonymous's picture

You obviously do manage money based on the greater fool theory. How did that work out for you in the last 10 years? Good luck to your clients if you still have any.

Wed, 08/12/2009 - 14:08 | 34124 D.O.D.
D.O.D.'s picture

+1

Wed, 08/12/2009 - 13:34 | 34056 Anonymous
Anonymous's picture

USD on a cliffs edge (video) -
http://newsusa.myfeedportal.com/viewarticle.php?articleid=394

"Eventually dollar holders will lose 2/3’s of their dollar purchasing power via devaluation and default."

Wed, 08/12/2009 - 14:53 | 34220 dnarby
dnarby's picture

Hmm...  Sounds like fodder for a dollar short squeeze.  That trade is pretty crowed at this point AFAIKT.

Wed, 08/12/2009 - 19:34 | 34712 IE
IE's picture

"Default will cause people to lose 2/3 of their dollar purchasing power"? ...

Debt default is exactly why the dollar will UH-ppreciate - debt deflation destroys the "monies out there" harder/faster/stronger than they can be printed.  Default makes monies go "poof", and that is in today's equation. 

Inflationists only look at the printing/dillution side.  It is as if they don't even see the trillions upon trillions vanishing into thin air via asset value declines. 

In the immortal words of Pvt Hudson, explaining the (apparently alien) debt deflation to the people trying to re-inflate ... "maybe you haven't been keeping up on current events, but we just got our asses kicked pal! ..."

Wed, 08/12/2009 - 20:29 | 34477 georgetown (not verified)
georgetown's picture

In related news, Caijing has a fantastic series of articles about the Chinese property market in several cities.

good articles;

target="_blank">my newest bookmarked finance website

Wed, 08/12/2009 - 16:51 | 34512 Gordon_Gekko
Gordon_Gekko's picture

Sure. Cash is (and will remain) King - for at least the next decade. But the right kind - not fiat tickets of some corrupt government.

 

Got Gold?

 

Wed, 08/12/2009 - 19:41 | 34721 IE
IE's picture

Currency is what appreciates & depreciates.  Gold is priced in currency.  At least today it is.

Thu, 08/13/2009 - 01:40 | 35009 Apocalypse Now
Apocalypse Now's picture

I think everything else is actually priced in gold with Larry Summers trying to manipulate the price through the large bank derivative positions - oil is relatively stable when priced in gold.

The ETF paper gold is actually very much like our original dollar when it was backed by gold, it is theoretically supposed to represent gold in storage.

GG- nice to see you back.

Wed, 08/12/2009 - 22:21 | 34916 Anonymous
Anonymous's picture

You know the equities market has become like the wild west. How did this come to be?

Certainly there is a lack of trust that is very prevalent. Perhaps it has always been there but now has simply moved into the public conscience.

Everyone waxes on about how regulation has failed but I think the problem is much simpler. There has been a fundamental breakdown in ethics on a grand scale which has no doubt played a significant role. When it comes to MONEY most of us will abandon any shred of decency, ethics and honesty to make a quick buck.

"Money is the root of all evil"
Timothy: 1 Timothy 6:10

Truer words were never spoken.

Sat, 08/15/2009 - 01:10 | 37718 Anonymous
Anonymous's picture

Didn't Jim Walker pass away in 2004?

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