Crazy, yet can be fun times
It’s been absolutely crazy month so far. Global markets are panicking. I myself made a quick trip to St. Petersburg, Russia. I’ve got to admit, despite the financial crisis now hitting Russia and the small-medium businesses there, never mind the foreign corporations with offices there, I wouldn’t mind working abroad. Nothing ought to stop an ambitious young individual from maximizing the opportunities and intellectual openings provided by the ability to work in more than one country.
Speaking of the deepening crisis - this is the time at which those who can digest news quickly and derive conclusions and reasonable projections on one’s feet will succeed. I am not speaking of obscure financial instruments such as derivatives or complicated transactions such as foreign currency exchange transactions made in N currencies (think of such transaction: euro->yen->pound->dollar->euro). I am speaking of basic conclusions such as that the lower price of oil will eventually give rise to profits at trucking companies, profits at large corporations such as WalMart - those whose products’ prices will lag the trends in oil prices by 6-12 months. Why? Because currently the goods’ prices are higher, have been increased to pass down the increased cost of transportation and oil to the consumer. Now that oil is trading at $63/barrel, these companies derive higher profit, as they aren’t decreasing the prices of the goods just yet. This will bump up their balance sheets for next 6-12 months, thus improving the overall business sentiment. This will inevitably lead to bull market in stocks, etc. This is just one of the thoughts. Obviously, this insight is dependent on assumption that the customer will not cut consumption by say, 30%! Let’s see what happens.