As the year 2010 draws to a close, lets see how am I going to remember this year. I want to document this because days will turn into months and months will turn into years and I can open up my diary and look back on the concluding year of the first decade in 21st century!

I will divide this post in couple of headers- Political, Economics, Finance, Technological, Entertainment, Geo Political and Climate. So let us get started:

Political- This was the year when we saw Obama slipping in approval ratings, Democrats losing Congress and the emergence of Tea Party in the national politics. What it means is , although Obama has done commendable work in dealing with this great recession, people in general are disillusioned with the pace of progress, particularly with unemployment still at 9.8%. Clearly Mr. Obama needs to get his act together and work with a vigor if he wants to get reelected in 2012 and seems like White House has already started a major overhaul in its administration.

Economics- This was the year which added a new word to our daily vocabulary – QE2 or the second coming of Quantitative Easing. So far it seems to have worked, as the stock markets close near 2 year highs. Does that mean economy is out of the wood? Not by a far shot, the unemployment is still close to 10%, the seven million jobs lost in recession have not been recovered and are probably not going to come back in near future either, the GDP although growing, it is pretty anemic like 1%. Corporate profit has registered some 20% year over year gain this year , but the outlook for 2011 is still murky. The deficit is only ballooning and with the recent extension of Bush era tax cuts, is only set to get worst. The extension of tax cut at a price tag of whopping $858 billion, although looks good short term, seems more like a sign of desperation in the fiscal policy think tank of the country.

Finance- This has been a crazy year for the markets and I would think the feds QE2 policy may have played a role. Here are some numbers in terms of price increases we saw this year(Source FT.com).
Silver : 72%, Gold:28%, Crude Oil:22%, Corn:52%, Wheat 48%, Cotton- 103%, Lumber- 46%, Coffee- 60%…the list goes on. Although the readers of this blog know that I am a Gold bull for a long time, but this rapid price increase in essential commodities is really worrying trends for the common man. I hope in 2011 Central Bankers around the world will stay guard for inflation to rear its ugly head.

Technology- Of course Mark Zuckerberg got Person of the Year recognition from Time magazine for his obscenely successful brainchild Facebook. The other notable trends are Cloud Computing really becoming main stream.Ebay, US department of Agriculture and other such big entities have moved to cloud services, picking Microsoft’s Azure as platform of choice. Read somewhere that the US Government is planning to consolidate its 800 data centers and moving to cloud. The iPad form Apple marked the arrival of tablets in a big way and the Smart Phone adoption continued its surge.

Entertainment- We broke some records this year in Hollywood and also the gaming industry. The epic tale “Avatar” really blew me away with its grandeur , extravaganza and the message itself by director James Cameron. I had truly never seen a movie quite like that in my life, the money spent on 3D IMAX seemed quite worth it. I later picked the Blue Ray disc as well just to find out what the Director had to say about his experiences making this film. There is something about these extraordinary successes, and it all starts with great thinking and here’s a quote from the genius Cameron himself “If you set your goals ridiculously high and it’s a failure, you will fail above everyone else’s successes”. Avatar has been the biggest grossing movie ever, with $4 billion in revenue and counting.The other notable success of the year was the video game- Call of Duty, black Ops, this may have set a new record in gaming too, with total sales already crossing the billion dollar mark!

Geo Political The year is closing with tension between North Korea and South Korea, we need to see what is in store for 2011. This year was also notable for leaking of sensitive US government document by Wikileaks. The founder of Wikileaks , Julian Assange , was the most popular choice for becoming person of the year online poll by Time magazine, he ended up becoming the runner up. The leaks have created embarrassing situation for US government which now has some explaining to do to its partner countries….and i know that’s an understatement…there’s lot more to it, probably deserves a separate blog post in itself.

Climate This year we saw devastating flooding in Pakistan, and the catastrophe in Haiti by the 7.0 magnitude earth quake which killed some quarter million people in minutes. Lessons, humans are but at the mercy of mother nature…let’s take good care of it otherwise the day of reckoning is not far away

>
As the year 2010 draws to a close, lets see how am I going to remember this year. I want to document this because days will turn into months and months will turn into years and I can open up my diary and look back on the concluding year of the first decade in 21st century!

I will divide this post in couple of headers- Political, Economics, Finance, Technological, Entertainment, Geo Political and Climate. So let us get started:

Political- This was the year when we saw Obama slipping in approval ratings, Democrats losing Congress and the emergence of Tea Party in the national politics. What it means is , although Obama has done commendable work in dealing with this great recession, people in general are disillusioned with the pace of progress, particularly with unemployment still at 9.8%. Clearly Mr. Obama needs to get his act together and work with a vigor if he wants to get reelected in 2012 and seems like White House has already started a major overhaul in its administration.

Economics- This was the year which added a new word to our daily vocabulary – QE2 or the second coming of Quantitative Easing. So far it seems to have worked, as the stock markets close near 2 year highs. Does that mean economy is out of the wood? Not by a far shot, the unemployment is still close to 10%, the seven million jobs lost in recession have not been recovered and are probably not going to come back in near future either, the GDP although growing, it is pretty anemic like 1%. Corporate profit has registered some 20% year over year gain this year , but the outlook for 2011 is still murky. The deficit is only ballooning and with the recent extension of Bush era tax cuts, is only set to get worst. The extension of tax cut at a price tag of whopping $858 billion, although looks good short term, seems more like a sign of desperation in the fiscal policy think tank of the country.

Finance- This has been a crazy year for the markets and I would think the feds QE2 policy may have played a role. Here are some numbers in terms of price increases we saw this year(Source FT.com).
Silver : 72%, Gold:28%, Crude Oil:22%, Corn:52%, Wheat 48%, Cotton- 103%, Lumber- 46%, Coffee- 60%…the list goes on. Although the readers of this blog know that I am a Gold bull for a long time, but this rapid price increase in essential commodities is really worrying trends for the common man. I hope in 2011 Central Bankers around the world will stay guard for inflation to rear its ugly head.

Technology- Of course Mark Zuckerberg got Person of the Year recognition from Time magazine for his obscenely successful brainchild Facebook. The other notable trends are Cloud Computing really becoming main stream.Ebay, US department of Agriculture and other such big entities have moved to cloud services, picking Microsoft’s Azure as platform of choice. Read somewhere that the US Government is planning to consolidate its 800 data centers and moving to cloud. The iPad form Apple marked the arrival of tablets in a big way and the Smart Phone adoption continued its surge.

Entertainment- We broke some records this year in Hollywood and also the gaming industry. The epic tale “Avatar” really blew me away with its grandeur , extravaganza and the message itself by director James Cameron. I had truly never seen a movie quite like that in my life, the money spent on 3D IMAX seemed quite worth it. I later picked the Blue Ray disc as well just to find out what the Director had to say about his experiences making this film. There is something about these extraordinary successes, and it all starts with great thinking and here’s a quote from the genius Cameron himself “If you set your goals ridiculously high and it’s a failure, you will fail above everyone else’s successes”. Avatar has been the biggest grossing movie ever, with $4 billion in revenue and counting.The other notable success of the year was the video game- Call of Duty, black Ops, this may have set a new record in gaming too, with total sales already crossing the billion dollar mark!

Geo Political The year is closing with tension between North Korea and South Korea, we need to see what is in store for 2011. This year was also notable for leaking of sensitive US government document by Wikileaks. The founder of Wikileaks , Julian Assange , was the most popular choice for becoming person of the year online poll by Time magazine, he ended up becoming the runner up. The leaks have created embarrassing situation for US government which now has some explaining to do to its partner countries….and i know that’s an understatement…there’s lot more to it, probably deserves a separate blog post in itself.

Climate This year we saw devastating flooding in Pakistan, and the catastrophe in Haiti by the 7.0 magnitude earth quake which killed some quarter million people in minutes. Lessons, humans are but at the mercy of mother nature…let’s take good care of it otherwise the day of reckoning is not far away

As I watch the markets soar in almost all asset class, seems like a Deja Vu… Market goes in a gut wrenching tailspin and then a violent snap back, I almost saw it coming and noted earlier in my blog post here. How did I know the bounce was coming, well I didn’t know it exactly, I just thought it was a high probability event, the market could as easily have gone 20% lower.

Silver up 77% year to date( $15.65/ Oz), crude up 45% ( $66.50/barrel), emerging markets anywhere from 45 to 75% , Dow Jones, S&P, Nasdaq all have bounced noticeably from their nadir made in the beginning of this year. Similarly German DAX has bounced from 3600 to 4900, Hong Kong HSI from 10600 to 18000+. All the currencies have rallied sharply – GBP from 1.35 to 1.62, Euro from 1.23 to 1.42, Canadian Dollar from .75 cent to .92 cents, Indian Rupee from 52 to 46. At $980/oz Gold is about to challenge its previous high of $1050/oz. The long term reader of this blog know I have been bullish on precious metals for a long time, I eagerly wait Gold to take out $1050 and move to new highs!

If you thought all was honky-dory, well not so quick! There are some noticeable markets which have gotten clobbered and so have some iconic stocks.. GM is still preparing for a bankruptcy filing as soon as this Monday, end of an era according to some. Natural Gas at $3.65/ Million BTU is 35% down for the year, I knew there’s supply glut in this market, but this kind of price weakness, I find hard to explain, given that all other major commodities have nicely moved off their bottom. Same deal with Treasury bonds, boy what a huge sell off. Fed has kept its overnight lending rate between 0 and .25% since last December, which kind of made the bond investors complacent . No wonder, what appeared like small profit taking in the beginning of this year, has turned into a complete run for the exits. The 10 year yield has made a complete U turn reversal, from a 2% yield in the beginning of the year, it has rocketed to a recent high of 3.75%, an almost doubling. The bond investors have really taken a hit on their chin, a complete opposite of the healthy return they enjoyed last year.

I am a follower of technical analysis, my thought process is always around probabilities and I am ready to bail out when market does not behave as I expect it to. Seems simple..right, but it is tough to follow, it runs contrary to human mental makeup. Human’s have a predisposition to hope, but in markets hope could be your worst enemy. Similarly logical thinking, intelligence, not accepting defeat is considered a virtue in life and we certainly expect that from our leaders. The same trait can turn out to be very dangerous in market. You start to think, you are very intelligent logical thinker, how can you possibly get it wrong, and you take this high-headedness to the market. Rest assured the market is going to humble you very soon, it could be a very sobering place. I have been there, I know first hand, now I am a life long student of markets, and hopefully it will pay off.

Markets are all about getting your hands around the uncertainties, accepting risks, accepting frequent defeats and moving on. It is not a sprint, it is a marathon, you need to conserve your energy and capital to outlast the market volatility. Lose the small battle but win the war. Lose your ego, but not your capital, cut your losses and run. Use your left brain but not to predict market moves and stubbornly wait for vindication while the market decimates your account. Instead use your left brain to map out scenarios, what if games, what are your profit targets, what is your game plan, what kind of market move will prove you wrong and you will close the position. What kind of risk management you will employ- fixed dollar loss, fixed percentage loss, break of trend line, adverse move of greater than 2.5 ATR ( Average True Range), break of Bollinger bands, break of Keltner channels, break of moving averages, non confirmation from other indicators, deteriorating market internals….pick your favorite and have a strategy in advance and then the courage of convictions and discipline to follow your strategy. Do not start to second guess your risk management decisions and get in hope mode…I will make the exception only this time..nope, bad idea! You never know when an innocent move can snowball into a carnage. As in life, so in markets, a well thought out strategy has a high chance of working..have one!!

I read a nice book on risk management by ken Grant called Trading Risk. You can read my review of this book on Amazon here. Ken likes to call money spent on managing risk really an investment rather than a liability. Just like we take out insurance policies, protecting ourselves from situation beyond our control, same deal with spending money on risk management, it protects your capital..and if you have the capital, you can comeback and play a second inning or third or fourth…you get the idea. Risk Management has never been more important than today given there is no place to hide in an adverse market move. Diversification which can be a good risk mitigation strategy turned out woefully inadequate in the bear market of 2008 where every single asset class spiraled down in a highly correlated way. Risk Management would have been the only tool to really save you from yourself.

Once again, I like to put my usual disclaimer, none of the above should be considered a recommendation to buy or sell any asset class. The opinion here are solely my personal and is not intended to be a professional advise. Investing is a “Risky Business” ( à la Tom Cruise.. topic of another blog ). All I am trying to do here is to help you make smart decisions, it does not take away your own due diligence in any investment you make.

>
As I watch the markets soar in almost all asset class, seems like a Deja Vu… Market goes in a gut wrenching tailspin and then a violent snap back, I almost saw it coming and noted earlier in my blog post here. How did I know the bounce was coming, well I didn’t know it exactly, I just thought it was a high probability event, the market could as easily have gone 20% lower.

Silver up 77% year to date( $15.65/ Oz), crude up 45% ( $66.50/barrel), emerging markets anywhere from 45 to 75% , Dow Jones, S&P, Nasdaq all have bounced noticeably from their nadir made in the beginning of this year. Similarly German DAX has bounced from 3600 to 4900, Hong Kong HSI from 10600 to 18000+. All the currencies have rallied sharply – GBP from 1.35 to 1.62, Euro from 1.23 to 1.42, Canadian Dollar from .75 cent to .92 cents, Indian Rupee from 52 to 46. At $980/oz Gold is about to challenge its previous high of $1050/oz. The long term reader of this blog know I have been bullish on precious metals for a long time, I eagerly wait Gold to take out $1050 and move to new highs!

If you thought all was honky-dory, well not so quick! There are some noticeable markets which have gotten clobbered and so have some iconic stocks.. GM is still preparing for a bankruptcy filing as soon as this Monday, end of an era according to some. Natural Gas at $3.65/ Million BTU is 35% down for the year, I knew there’s supply glut in this market, but this kind of price weakness, I find hard to explain, given that all other major commodities have nicely moved off their bottom. Same deal with Treasury bonds, boy what a huge sell off. Fed has kept its overnight lending rate between 0 and .25% since last December, which kind of made the bond investors complacent . No wonder, what appeared like small profit taking in the beginning of this year, has turned into a complete run for the exits. The 10 year yield has made a complete U turn reversal, from a 2% yield in the beginning of the year, it has rocketed to a recent high of 3.75%, an almost doubling. The bond investors have really taken a hit on their chin, a complete opposite of the healthy return they enjoyed last year.

I am a follower of technical analysis, my thought process is always around probabilities and I am ready to bail out when market does not behave as I expect it to. Seems simple..right, but it is tough to follow, it runs contrary to human mental makeup. Human’s have a predisposition to hope, but in markets hope could be your worst enemy. Similarly logical thinking, intelligence, not accepting defeat is considered a virtue in life and we certainly expect that from our leaders. The same trait can turn out to be very dangerous in market. You start to think, you are very intelligent logical thinker, how can you possibly get it wrong, and you take this high-headedness to the market. Rest assured the market is going to humble you very soon, it could be a very sobering place. I have been there, I know first hand, now I am a life long student of markets, and hopefully it will pay off.

Markets are all about getting your hands around the uncertainties, accepting risks, accepting frequent defeats and moving on. It is not a sprint, it is a marathon, you need to conserve your energy and capital to outlast the market volatility. Lose the small battle but win the war. Lose your ego, but not your capital, cut your losses and run. Use your left brain but not to predict market moves and stubbornly wait for vindication while the market decimates your account. Instead use your left brain to map out scenarios, what if games, what are your profit targets, what is your game plan, what kind of market move will prove you wrong and you will close the position. What kind of risk management you will employ- fixed dollar loss, fixed percentage loss, break of trend line, adverse move of greater than 2.5 ATR ( Average True Range), break of Bollinger bands, break of Keltner channels, break of moving averages, non confirmation from other indicators, deteriorating market internals….pick your favorite and have a strategy in advance and then the courage of convictions and discipline to follow your strategy. Do not start to second guess your risk management decisions and get in hope mode…I will make the exception only this time..nope, bad idea! You never know when an innocent move can snowball into a carnage. As in life, so in markets, a well thought out strategy has a high chance of working..have one!!

I read a nice book on risk management by ken Grant called Trading Risk. You can read my review of this book on Amazon here. Ken likes to call money spent on managing risk really an investment rather than a liability. Just like we take out insurance policies, protecting ourselves from situation beyond our control, same deal with spending money on risk management, it protects your capital..and if you have the capital, you can comeback and play a second inning or third or fourth…you get the idea. Risk Management has never been more important than today given there is no place to hide in an adverse market move. Diversification which can be a good risk mitigation strategy turned out woefully inadequate in the bear market of 2008 where every single asset class spiraled down in a highly correlated way. Risk Management would have been the only tool to really save you from yourself.

Once again, I like to put my usual disclaimer, none of the above should be considered a recommendation to buy or sell any asset class. The opinion here are solely my personal and is not intended to be a professional advise. Investing is a “Risky Business” ( à la Tom Cruise.. topic of another blog ). All I am trying to do here is to help you make smart decisions, it does not take away your own due diligence in any investment you make.

My last weeks call on Dow Jones Industrial Average was right on the money! Gosh, sometime it just works like magic ( I called the market a buy at Dow 6500 two weeks ago, and the market ended at 7750+ last Friday, after briefly touching 7950). Nope, I don’t have a crystal ball- just some smart calculations, some chart readings, some sentiment readings, years of market watching and little bit of luck!! BTW Barrons has a good article this weekend on electronic retailer Amazon. Seems like this company is on a roll, what with entry into Cloud computing ( pay as you go model), the innovative Kindle eBook reader and the most efficient logistics in the industry. I agree with the conclusion of the article( rates it a buy at $71), but do worry about the high PE valuation ( north of 30). The company may be good, but going for the stock at these prices seems like a leap of faith!

Enough on the stock market, moving on to a different topic…movies..watched two movies back to back..Friday night and Saturday afternoon, although the one on Saturday was not planned, just happened as I turned on the TV during my workout sessions. Do I have plenty of time on my hand, gosh no…., seems like the more work I have left over, the more I get attracted to these reality evading movies and other such distractions!! But no regrets, both were light hearted movies and gave me a much needed break. The Saturday one was actually a chick-flick which I usually don’t watch – or even if I do , I am not going to admit it here , turned out to be a nice one- sensible, touchy, delightful and at times humorous-tickled my funny bone! Given the low expectation I had with the movies, the engaging drama came as a pleasant surprise!

I am amazed sometime these seemingly new actors and actresses deliver a top class performance in an underrated movie and make that crucial connection with their audience…you start rooting for the underdog, you feel the vulnerability of the relationships, you relate to the pain and sufferings…By the time movie was over ( no I did not find myself fighting tears…an emotional wreck..reaching for the handkerchief.., if that is what you were thinking..), I had done 30 minutes on the treadmill, 30 minutes on the elliptical and another 30 minutes on my strength training equipment..not bad , watch movies, get some fitness to boot!! Look forward to doing the same next weekend- chick-flick, action, comedy, romance- any genre- bring it on!

Oh boy, the busier I get, the more I start missing the simple happiness of life- reading the best sellers, watching an old classic, going to the swimming pool, the sea beaches, kayaking in the nearby creek, swing practice at the golf course, spending time in my garden, going to the nearby ski resorts, the gondola ride to the mountain top, the roller coaster rides in the city theme park, brisk walking in the neighborhood trails…gazing the stars, getting drenched in the rain, watching the sunrise and the sunset! At times these cravings get to a feverish pitch, that point I just know to follow my heart…off I go…live in the now…worry about the work some other day..life here I come

>
My last weeks call on Dow Jones Industrial Average was right on the money! Gosh, sometime it just works like magic ( I called the market a buy at Dow 6500 two weeks ago, and the market ended at 7750+ last Friday, after briefly touching 7950). Nope, I don’t have a crystal ball- just some smart calculations, some chart readings, some sentiment readings, years of market watching and little bit of luck!! BTW Barrons has a good article this weekend on electronic retailer Amazon. Seems like this company is on a roll, what with entry into Cloud computing ( pay as you go model), the innovative Kindle eBook reader and the most efficient logistics in the industry. I agree with the conclusion of the article( rates it a buy at $71), but do worry about the high PE valuation ( north of 30). The company may be good, but going for the stock at these prices seems like a leap of faith!

Enough on the stock market, moving on to a different topic…movies..watched two movies back to back..Friday night and Saturday afternoon, although the one on Saturday was not planned, just happened as I turned on the TV during my workout sessions. Do I have plenty of time on my hand, gosh no…., seems like the more work I have left over, the more I get attracted to these reality evading movies and other such distractions!! But no regrets, both were light hearted movies and gave me a much needed break. The Saturday one was actually a chick-flick which I usually don’t watch – or even if I do , I am not going to admit it here , turned out to be a nice one- sensible, touchy, delightful and at times humorous-tickled my funny bone! Given the low expectation I had with the movies, the engaging drama came as a pleasant surprise!

I am amazed sometime these seemingly new actors and actresses deliver a top class performance in an underrated movie and make that crucial connection with their audience…you start rooting for the underdog, you feel the vulnerability of the relationships, you relate to the pain and sufferings…By the time movie was over ( no I did not find myself fighting tears…an emotional wreck..reaching for the handkerchief.., if that is what you were thinking..), I had done 30 minutes on the treadmill, 30 minutes on the elliptical and another 30 minutes on my strength training equipment..not bad , watch movies, get some fitness to boot!! Look forward to doing the same next weekend- chick-flick, action, comedy, romance- any genre- bring it on!

Oh boy, the busier I get, the more I start missing the simple happiness of life- reading the best sellers, watching an old classic, going to the swimming pool, the sea beaches, kayaking in the nearby creek, swing practice at the golf course, spending time in my garden, going to the nearby ski resorts, the gondola ride to the mountain top, the roller coaster rides in the city theme park, brisk walking in the neighborhood trails…gazing the stars, getting drenched in the rain, watching the sunrise and the sunset! At times these cravings get to a feverish pitch, that point I just know to follow my heart…off I go…live in the now…worry about the work some other day..life here I come