Gold: Going, going… gone September 22, 2008
Posted by mylastresort in analysis.Tags: analysis, Chart, Commodity, Gold, Gold Bullion, Outlook, Rise, subprime, XAU
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The past week was not only exciting for the stock markets it was a new adventure for Gold. Historically, investors flock to Gold in times of financial crisis’ or geopolitical instability since the metal has intrinsic value. Since the beginning of the month Gold has been extremely volatile trading in a wide range from $828 to $888. On September 17th, Gold experienced a massive increase spurred by the following events: (more…)
Coming soon: “A Massive decline in oil prices” June 29, 2008
Posted by mylastresort in analysis, sovereign funds.Tags: analysis, Crude Oil, Decline, Decline in Oil, Energy, Finance, Futures, investment, Low, Margin Requirements, Oil, Prediction, Record Level, speculation, Speculators
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An emergency meeting by OPEC, a decision to raise output, rumors of prices well above $170, and news agencies covering the latest developments of oil prices all the while I am thinking of shorting! The price of oil, I beleive, will continue crawling at a steady pace upward and it might reach the levels predicted by the big investment firms and generate another 20% in the next couple of months. Again yes, I want to short oil. I am not contradicting myself!
I could do as most have done and follow the trend and be satisfied with the 20% return. On the other hand, if the market price declines we could see well above a 40% decline in prices. A closer look at the price of oil shows a decline in the making. I will explain my thoughts in the following points:
First, lets dissect the price of oil. Today, if oil is trading at $140, 29% ($40.60) of the price is composed of actual physical oil receivers, the remaining 71% ($99.40) are speculators in the market purely betting to make profits and then rolling over their positions never receiving the oil traded.
Second, oil is traded on the futures market. To trade crude in the market all you need to pay is a margin requirement of $10,000 for every 1000 barrels of crude oil (worth $140,000). Oil is sold in lots of 1000 on the exchange. The margin requirements for the exchange may change (and do change) periodically depending on market volatility. (Crude oil futures margin requirements have changed from $8000/1000 lots to $10,000/1000 lots four weeks ago)
Third, all investment portfolios are diversified in such a way that percentages are dedicated to sectors regardless of the amounts of dollars invested. For instance a hedge fund manager (major players in the market) running a $1,000,000,000 portfolio beleives that oil prices will increase therefore designates 20% of his portfolio to oil futures and the remaining to different sectors. They purchase oil until they satisfy the requirements of the 20%. An initial payment of $200,000,000 is needed to purchase the 20,000 lots required. (Equivalent to buying $2,800,000,000 worth of oil!)
My prediction is that the margin requirements of crude oil futures will (drastically and without warning) increase from $10,000/1000 lots to $20,000/1000 lots (even more) forcing speculators to sell half their holdings to meet margin requirements and new funds to purchase half the amounts they are purchasing today, leading to a 50% drop in the 71% ($99.40) of the price of oil taking it back down to atleast $90.30 [price including physical buyers of oil] instantaneously!
Waiting for the decline will pay more than the rise will, therefore I am going to start selling at $155 (approximate & may change) and cover once the price reaches $90.30.
Kuwait’s future is (blank) June 18, 2008
Posted by mylastresort in analysis.Tags: analysis, Corruption, Crisis, Education, Environment, Future, investment, kuwait, Parliament, Police, politics, Security
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To those who said we have reached the bottom (and it cant get worse) I suggest we DONT wait and see who is right:
Politically incorrect policies implemented by the Parliament
One of the best examples is the politician who was accused of vote-buying in elections joins the committee on safe guarding public funds. The same parliament initiates a committee to overlook and enforce Kuwaiti customs and traditions (I have yet to meet a family who has the same customs and traditions as mine?)
Bureaucratic government policies
Government policies have proved so inefficient that a miniscule sector was created to fill the gaps. This small sector is run by friends, or acquaintances, of government sector employees who complete various tasks rapidly in return for a fixed sum.
(This example is borderline corruption/bureaucracy)
Corruption
Extreme cases of corruption exist on all levels and through every sector and industry. Instead of fighting corruption in the country, Kuwait actually managed to raise its annual corruption index ratings. Money and influence (via wasta) are major sources of facilitating the damaging nature of the country.
100% Tax on Luxury Goods June 4, 2008
Posted by mylastresort in analysis.Tags: analysis, bahrain, Doha, Dubai, gcc, Gulf Cooperation Council, kuwait, Markets, oman, qatar, saudi arabia, Tax, taxation, uae, Value added tax, VAT
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The Gulf Cooperation Council (GCC) is planning to introduce up to 100% tax on ‘harmful products’ & luxury goods likely to include cigarettes, luxury cars, private planes, & yachts, among others. A team has been commissioned to list items that could be liable to the new tax from 2012. The GCC team looking into the proposed taxes would next meet in October. The GCC has already set 2012 as the deadline for implementing a new value added tax system.
Each of the Gulf countries suffers from lack of productivity and sophisticated staff, including a very bureaucratic environment in the public sector. The GCC is just that multiplied by 6, therefore I doubt any decision will be made anytime in the next 20 years regarding taxation (if anything useful).
Some notes to consider:
The rich - are the powerful - therefore taxing their latest toys will not make them very happy buying in their own countries and will therefore register items across borders. A good example would be to buy the yacht and register it in Yemen, for instance, and then take it to Dubai marina. This is a simple way to avoid taxes. This will move the companies to areas where the wealthy will pay a more reasonable rate than the 100%.
There will be an increase of ‘wastas’ (quanxi) at the ports and customs to avoid paying the tax. We are already bombarded by having to payoff officials to get the latest DVD, book or game in to the country just imagine bribing one of them to bring in a Ferrari, this will take things to a new extreme.
The Governments DO NOT need any extra income. The future plans and growth in Dubai, Bahrain, and Qatar all involve a marketing plan that clearly states ‘a tax free’ incentive for company’s & employees to relocate. Although everyone knows the slow pace of government policies any threats such as this will deter future companys/individuals from relocating.
3rd mobile operator IPO in June April 27, 2008
Posted by mylastresort in analysis, rumors.Tags: analysis, IPO, kuwait, Ministry of Commerce and Industry, Mobile, rumors, Saudi Telecom, Telecommunications
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An official at the Ministry of Commerce has stated that Kuwait could launch the anticipated IPO for the 3rd mobile operator as early as June. The overly optimistic remark also claimed that the firm may be operating as early as October. The 3rd telecommunications company in Kuwait had initially scheduled its IPO for February, later it was rescheduled with no date set.
“If all went as planned there is a possibility that the IPO will be before the end of June,”
- Daoud al-Sabej, Ministry of Commerce and Industry
Company ownership will be as follows:
- 24% owned by the government
- 50% will be offered to the public
- 26% already sold to Saudi Telecom (for KD 248.7 million)
Kuwait: Record inflation level April 8, 2008
Posted by mylastresort in analysis.Tags: analysis, Central Bank, CPI, Data, December, inflation, kuwait, news, Record
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The annual consumer inflation in Kuwait has just been reported at 7.54% in December 2007. Government data shows that the Consumer Price Index (CPI) rose to 124.1 points at December 31, compared with 115.4 a year earlier.
Last three inflation figures were as follows (chronological):
- October 7.26% (previous record)
- November 6.68%
- December 7.54% (New Record)
Hedge fund returns 1000% in 2007 March 23, 2008
Posted by mylastresort in analysis.Tags: analysis, Andrew Lahde, Capital, Commercial, Credit, Ethic, Exceptional, Fund, Gain, Hedge, Hedgefund, investment, Lahde Capital, Loss, losses, Manager, Millionaire, Money, Moral, Mortgage, New Millionaires, New Money, Performance, Ranking, Real Estate, recession, Residential, Return, Slowdown, subprime
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One of the most successful hedge funds of all time earned over 1000% in one year betting against the subprime market. Andrew Lahde’s Lahde Capital, is a small California-based hedge fund which made a massive bet against the subprime market late in 2006. This bet has proved to be successful and has returned a whopping 10x for its investors.
“Our entire banking system is a complete disaster. in my opinion, nearly every major bank would be insolvent if they marked their assets to market”
- excerpt from Andrew Lahde’s letter to shareholders
Lahde’s strategy was to (more…)
