Hello Malcom, Don’t worry, I am not going to write about the weather, cicadas chirping, falcons flying, beach BBQs, or other bits of irrelevant nonsense, and go straight what happened at the party I was at last night :0)
My friend who hosts Message 19675716
<<January 10th, 2004
The Annual Party That Is A Contrary Indicator – the big play of 2004 hosted last nights BBQ party for about 30 folks at the American Club in HK. The Country Club americanclubhk.com is a quick 10-minute ride from my abode, is on the ocean and quite pleasant in a casual way. The bother these days are the real paranoid but otherwise truly worthless security feature of getting folks to sign in as they enter.
The folks who attended the wedding anniversary party are the same crowd as the above mentioned Annual Party That Is A Contrary Indicator.
Yes, yes, you guessed where I am going with this post – it is interim update time!
Let me give you a hint first, “the signs are bad, because the sentiments were bullish at the party, not only that, but they were bullish for the short, intermediate and the long terms”.
First up, the Club itself is in financial difficulty, and is now trying to attract non-US citizen members. The Club had traditionally relied up on a clientele of US expatriates based in Hong Kong, with their companies paying for the not insubstantial membership entry-fee and tolerable monthly dues. These days, for a variety of reasons you can work out, things are not as they once were.
To make ends meet, the club is now open to non-US citizens, namely the local population, or specifically, the local moneyed riff-raff.
The club is a good place for kids to hang out at on the weekends, with it large pool, open lawn, and after school programs. The club however does not offer fine dinning, and what it calls food is simply traditional American fare of burgers and dogs, chips and sandwiches, and the usual pot roast, spaghetti, pizza and such, and all not as great as the restaurants that specialize in such foods. It is a toss-up whether the Club Membership is a good value or not.
My bet is that membership entrance fee will decline, and substantially too, in the coming days, weeks, months and years. My bet is that the club will have to sacrifice the capital value of membership in exchange for current cash flow, so as to be able to survive the Excel spreadsheet dictated inevitability of fewer and fewer patrons, and less and less visits per week.
We will see if fractal math works or not.
The women folks did their usual thing, talking about whatever and looking after the quite well-behaved kids. There were a few pregnant women and they of course hung out together, comparing notes and giving each other’s advice.
The men folks at the party did our usual thing, that is to say we gathered, pondered, drank, and powwowed, about all the important issues of the day and of the nights, which boiled down to money and women. We turned away spouses who dared to approach, one husband as bluntly as, ‘why don’t you go hang out with the women over there?’. Ah, the good old days of talking about women outside the earshot of women ;0)
The consensus amongst the boyz was:
(a) Interest rate will head up
(b) Economies are mending for the short through to long term
(c) Stocks are not good value
(d) Bonds are worse worth
(e) Real estate is a sell
(f) USD is perfectly OK
(g) Euro is dangerous
(h) AUD and CAD will not reach parity with the USD
(i) China will hard land
(j) Japan is recovering for real
(k) Energy price will moderate
(l) Gold – never heard of it
My host had followed me into energy royalties, and when we talked about them, more guys gathered around us, many challenged the bets based on heavy does of unawareness, but no one asked for specific symbols, because they believed energy price will moderate.
Several folks later asked me later what I thought the consensus was at the party, and felt slightly uncomfortable at the above package of answers :0)
My conclusion? We are doomed, and deliciously so ;0)
Energy royalties, non-USD currencies, and gold appear to be the way to go, and one can short stocks in favor of going long on bonds.
I do not know what to make of the pair, "Real estate is a sell ... Japan is recovering for real" yet. On the face of it, one ought to sell Japan shares and buy Japanese real estate. Or should that be buy HK real estate and sell Japanese shares? I get so confused at these parties :0)
Chugs, Jay
P.S. The rest of today is for deep think about my businesses, do swimming, eat brunch, accept reflexology, dine in good cheer, and then watch "PayCheck" on DVD.
To remind you, the above-mentioned URL on parties past is
Message 19675716
<<January 10th, 2004
The Annual Party That Is A Contrary Indicator – the big play of 2004
I had a lunch with an Australian friend yesterday, and at the table next to ours sat a couple who attends a party held by a mutual friend that I have traditionally attended. The annual party is held sometime during the month of December, and it has been the case (and is a running joke amongst some of us) that whatever aggregate bullish conversation takes place at the party, sell, and whatever consensus bearish thoughts get expressed at the event, buy.
The party indicator has worked for the buy-in and sell-out of Hong Kong real estate, Red Chip Mania, Asian Financial Crisis, DotCom Boom, Currency Bust, Nasdaq Reflation (although I chose to ignore this play) and The Age of Gold/Commodities.
I was not able to attend the party this past December because I was in Beijing, and so I interrupted the couple at the next table and asked what the gist of the conversation was at the December party. The man, a bond trader, said, 'the conversation all around was how wonderful everything is'.
I just spoke on the phone to the host of the party, and yup, he is hunkering down.
The host also noted that the guests at the above-mentioned party were finding it increasingly difficult to hold USD/HKD in the current context Message 19675660 , but with the exception of my friend the host who tags along on some of my trades, no one else is even thinking gold.
I thought, after mulling over what I heard, 'oops, stocks will crash, bonds will tumble, but the USD will bounce up, even though the gold bull may have a long healthy future yet'.
So, is there a scenario where stocks, bonds, real estate and non-USD currencies gets trashed, and the USD cash and gold goes up? This is the play indicated by the 'contrary Xmas party'.
In fact, the answer to my question is yes. The trigger would be stagflation, accompanied by a rising USD interest rate AND a rising gold price!
2004 is getting difficult to navigate already, for I may need to short more of the general equity market soon, in some fashion, or by other ways, even as I might have to de-camp my cash troops from Euro/Yen/DKK/AUD/CAD territories and send them into USD-space
Here are some postings about the Contrary Indicator Parties past, and you may recognize some of them, as they are from the magical Softbank era :0)
Message 12436491 <<January 1st 2000>>
Message 14980719 <December 8th, 2000>>
Message 16843039 <<December 29th, 2001>>
Message 16843049 <<December 29th, 2001>>
There was no contrary party held by my friend in 2002 Xmas season as he and family were out of town, and so the party started in earnest on Wall Street in 2003. |
