tag:blogger.com,1999:blog-5240825841702558410.post2547686698207436295..comments2023-08-07T07:05:00.386-04:00Comments on Mike Lipper's Blog: Will Monday Morning Show More Blood in the Streets and Contagion?Monday Morning Musingshttp://www.blogger.com/profile/17104142477007392525noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-5240825841702558410.post-53558730390466063812011-02-01T09:46:40.751-05:002011-02-01T09:46:40.751-05:00Mike,
I have never contributed to a blog before, ...Mike,<br /><br />I have never contributed to a blog before, so you'll have to be patient. I can't even find the space to post a response! Perhaps you can cut and paste this for me, since I'm too much of a technophobic Neanderthal to do it myself.<br /><br />It may be just as well that I'm reacting late --- i.e. after the market closed on Monday. Confounding all logic, the market closed UP. It is either clueless, or else very smart, confirming the adage that one should buy at the sound of cannon and sell at the sound of trumpets. Likewise, gold, supposedly the ultimate safe haven, has bee relentlessly declining since the beginning of the crisis in the Arab world. Go figure. I can't, unless it's the prevailing idea that cash is trash and needs to find an outlet in financial assets rather than the real world.<br /><br />The risks in developments in Egypt are huge. It is not only the dominant and most populous Arab country (some 75 million, with approximately 19 million in Cairo alone), but by far the most influential, politically, culturally, and militarily. It is at the crossroads of three continents. It also contains the Suez Canal, critical for transporting oil from the Persian Gulf, as well as Western trade with India and the Far East .<br /><br />It is also a poor country, with few natural resources. It fits the description of an oasis: a place in the desert where water exists. Herodutus' observation that " Egypt is the gift of the Nile " is apt.<br /><br />But other countries with few or practically no natural resources have survived and even prospered ---- think of Japan and South Korea . Indeed, there is a commonly cited statistic that is worth pondering. When Gamal Abdel Nasser came to power in 1952 after overthrowing King Faruq Egyptians were rightly proud, correctly saying that this was the first time since the Pharaohs that a native son of the Nile was in charge of the country, and would set free its creative energies and potential. At that time Egypt 's per capita GDP was the same as South Korea 's. Today South Korea 's per capita GDP is nine times larger than Egypt 's. There are many reasons for that, but for the most part you won't find them in academia or the media pontificariat.<br /><br />Not that we're doing to brilliantly in the States or in Europe , in my opinion, as we continue to collectively avoid painful self-confrontation after some 50 years of self-indulgent living beyond our means.<br /><br />My own pusillanimous asset allocation: (proportionately) a high percentage in cash , commodity and natural resource equities, gold mining stocks, exposure to emerging market consumption and infrastructure, selected technology stocks, and high dividend paying equities. Not as smart as it looks: the cash has a negative real rate of return but allows me to sleep at night, amazingly the gold mining vehicles historically leveraged to the gold price have underperformed the metal in recent periods, and the simple emerging market consumption thesis have proved disappointing during the past six months ---- one would have been better off in U.S. multinational participants.<br /><br />Andre SharonAndre Sharonnoreply@blogger.com