Readings: GDP growth, The Power of Fear, Know yourself
- Economic Times: India’s GDP growth to slow to 8% in 2008: Calyon
India’s gross domestic product (GDP) growth may slow to 8% this year from 8.5% in 2007 as the impact of the central bank’s tightening begins to show, Calyon said in a research report on Tuesday.
“We do not expect much more monetary tightening in H1 2008, but the economy may continue to feel the impact of past tightening measures.”
“We look for dollar-rupee to reach 36 at end-2008 and 35 at end-2009, which is consistent with our optimistic medium-term outlook for the Indian economy.”
- Via BeEarly, Credit Suisse: The Power of Fear
By the time Risk Appetite enters the panic zone (1.5 standard deviations below average), the worst is usually over for world wealth and global equities; small declines tend to occur between entering the panic zone and the ultimate trough; and very strong performance is typical in the three and twelve month periods following the risk appetite low. Note that the buildup to this panic episode has been close to average, although the distribution is different, with emerging equities doing a lot better than average, Japanese equities much worse, Germany a little better and the US a little worse. Absolutely in line with the real economy.
Time to buy?
- Bill Rempel: Know Your Leverage, Know Yourself
When someone comes to the market without a clearly-defined method, blows up from using too much leverage on a single trade, a trade which was known to be an account-threatening bet when it was made – then I believe that person didn’t want to make money, or at least, that money wasn’t their primary motivation for trading. I believe that person wanted the thrill of the game, the excitement and ego-boost of the big score, and was using trading, at least primarily and at the moment of blowup, as a venue to work out some serious emotional issues, primarily related to risk-taking.
Know your leverage. Know what level of adverse move is dangerous to your account, and whether or not you can stand that kind of move. Just because your broker lets you use that much leverage, doesn’t mean it’s a good idea.
Wise words.
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