The current market conditions are unfolding in such a way that every day brings something unbelievable that the day before would seem unfeasible. Today I overheard a trader saying “We keep looking for the bottom, and then it hits that mark, and the bottom isn’t there. It’s like ’strap on your seatbelts boys we’re in for a ride’ and nobody knows where we’re going”.

I sit near the trader’s desk. Every day I would usually hear one of the traders laugh and say “the bull markets back” to which I hear a kind of positive swell of sentiment swirl around the room. Lately, it’s been silent. I did hear one swish of positivity today, on closing, which sounded and felt more like relief that it was over.

Here is a snapshot of what the market looked like from a trader’s perspective today. For your information, the desired colour is green.

Last week I met a guy in a pub who claimed that he was the king. “I own everything, I’m the king,” he told my colleague and I. He reeked of alcohol, and obviously looked in some kind of distress. It turned out that he was in banking - no surprises there as we were in the banking district. What is interesting about his statement which I treated with such disregard at the time is that the value of so many good companies has become so eroded that he may well “own everything”.

At some point, the fundamental value of decent “Warren Buffet” style of investments will come to the light. A journalist today told me that Australian shares are like the canary in the mine. They boom a little higher and in some cases earlier than their global counterparts, and they also bottom out harder too. That being said, at some point the fundamental value of a good company like Woolworths for example, with an understandable business, positive free cash flow, strong management and a great market leading brand - should at some point soon be able to be valued at a sensible level.

We are seeing that the Australian equity market is being discounted against it’s compatriots in the Dow Jones, the FTSE, The Nikkei and the KOSPI. The Australian dollar is trading at a discounted rate with analysts today suggesting the true value to be around 80 cents but the current trading value of between lows of 64.3 cents and highs of 83 cents, with today’s price resting at about 64 cents. This discount, interestingly for me in financial marketing, is a type of grand currency marketing.

I never knew this kind of thing happened, but it does. The AUD currency discount is not only a reflection of global sentiment of equating the AUD with global risk, however it goes further than that. For example, it is well known that Australia’s foreign debt is largely financed by counterparties lending to Australian banks rather than to the Australian government or Australian corporates. The shutdown of global funding markets has pushed the Australian banks back onshore for the bulk of their new wholesale funding. Other foreign lenders/investors will be required to replace the traditional foreign lenders to the banks. That process is likely to require the AUD to fall further to attract new investors/lenders. The AUD decline is a form of discount … a marketing strategy!

We are indeed in the most remarkable of times. One analyst today said “The difference between the depression in 1929 and now, is that in 1929, you didn’t need to read the paper to know you were in a depression.” What he was referring to is that with employment at what government calls full levels (unemployment is sitting at 4.3-4.6% over the last few months), and a record trade deficit this month, times are changing, but we haven’t seen the full effects of this downward trend yet.

In fact, with the recent full 1% RBA rate cut this week, many people in Australia will find themselves with extra money in their pockets, and even where full time jobs growth has slowed, there has been a balancing force which can be seen in the upward trend in part time jobs.

Prime Minister Rudd suggests that our country is fundamentally strong. Some senior analysts like to hedge that statement by saying ‘we are not immune to the global markets’.

We are also nearing the end of the 30 day ban imposed on short selling, which has been eating away at liquidity in the markets while doing it’s job of ‘maintaining order and reducing volatility’. In many cases, this cut has reduced brokerage by 15%, and has cost many people in finance their jobs. Some broking houses have also capitulated due to this policy.

Everywhere I look, I see volatility. There are glimpses of greener pastures, but as the above IRESS screen shot suggests, they are so small, and hardly what anyone could call a safe haven.

Well I have heard of the fashion police, but today as the USA Kitty Hawk is on our doorstep, I saw something innovative and new. A correctional orange jumpsuit, not unlike this picture.

It really took this perception of the average black guy as a would-be criminal to the next level.
It’s like, tried, convicted and proud criminal, only the authenticity is somewhat scarred when you consider that the suit probably cost more than $200 US dollars, and he was skinny and tall and working in the Navy.
Anyway, I liked it. He was the fashion persecuted, and even the drunkest aboriginal woman scabbing cigarettes on Oxford Street recognized the irony of it. It wasn’t lost on me either.

Its 33 days till I have to sit for the Level 2 exam of the CFA.
it is not looking good.
Although the study material is pretty straightforward and at times downright easy, the sheer volume of it can sometimes be overwhelming. My conundrum however is that the test material is so different from the actual end-of-chapter practice questions given that I would be willing to bet that anyone who does not use prep material or use mock-exams is surely bound to fail the exam.
Having recently forked out a small fortune for access to Schweser online mock exams, I have been preparing for the exams but with the two exams I have already done, the future does not look too rosy. Although I have the knowledge to answer the questions, the wording and structuring is sometimes so baffling that I am left floundering and have to resort to guesswork. I am hoping that the third mock exam I am currently doing will be different.

On the soccer front Chelsea are traveling to Liverpool with a goal in hand and the hope of progressing to the Champions League finals in Athens in a couple of weeks. It won’t be easy though, with the Merseysiders having lost out in all other competitions, it is do or die for them and I expect the cunning of Rafael Benitez to ensure that his side beat Chelsea……. I am obviously biased and would like nothing more than a Liverpool-Man United final, but the very able boys of the San Siro stand between United and the finals, which I have to admit is a barrier as insurmountable as they come. AC Milan have one of the stingiest defences in Europe, anchored by the ageless Maldini and an amazing attack led by the marauding Kaka, arguably the most technically astute striker in the world. With United missing more than 5 of their starting 11(including Ferdinand, Neville and Vidic at the back), the odds are very much against Sir Alex and his team. But with Ronaldo and Giggs marshaling the midfield and Smith and Rooney upfront, everything is possible so let keep our fingers crossed and hope that Van der Sar has no mishaps in Italy.
The chillies in the garden have Trev all excited, a joy which, am sure, she will soon be sharing with the rest of the world on these pages.

Although some of the quotes often found on Google are sometimes sappy and at times downright tacky, the ones from today seem a tad more interesting.
Admittedly both Bohr and Frost are among some of my favourite people in history, Niels for his contribution to the understanding of Chemistry and especially his work on the atom and atomic energy for which he was eventually honoured with the 1922 Nobel Prize in Physics.
He is also the subject of folklore for his escape from Denmark at the height of WW2 when Hitler was supposedly hoping to employ his skills in the creation of an atomic weapon but as luck would have it, he managed to escape to the US where he was instrumental in the Atomic Project.

The opposite of a correct statement is a false statement. But the opposite of a profound truth may well be another profound truth.
- Niels Bohr

The reason why worry kills more people than work is that more people worry than work.
- Robert Frost
As for Robert Frost, he need no introduction to these pages, he is the writer behind my favourite poem (The Road Less Traveled), which in essence is a very accurate parallel to my own life.
In addition to is poetic brilliance, he also possessed a sharp wit, not quite in the same league as my other favourite, Oscar Wilde, without a doubt the wittiest writer in history, but very good in his own right.
Well, I’d better stop worrying and get back to work (watching soccer), it might prolong my life….

Although Trev would like a mention of the offer that cannot be refused, it is too early and still imprudent to describe it as yet. So suffice to say that when the time comes I will spill the beans and share the story, but since it is still very much a work in progress, and there are a few more in the pipeline, I shall wait until the dust settles and the wheel stops its spin before I dare write a conclusion to the story.
Otherwise the weather seems to be taking a turn for the better, no more blistering summers, it is cooler and the beers are gradually giving way to a glass of red wine every once in a while. shorts are gone back into storage, same for singlets, short-sleeved shirts and all other summer gear and the jeans and jumpers are stepping out of their hibernation.
The gym (city gym on Crown St.) is looking better by the day, the renovations are a real improvement, the cardio-room is great, and am sure the men’s change rooms will be lovely once all the work is finished.
There is a new lizard in the garden, a tiny little one that made a brief appearance last Thursday but hasn’t been seen ever since, but am certain it will make a re-appearance sooner rather than later.
………..
Man Utd are in the FA Cup finals, the only downside is that the team they play is not Blackburn but the Boys of Stamford Bridge, who are also coincidentally in the semi-finals of the Champions league, setting up the intriguing possibility that they might meet Man U in the final in Athens in May if they both qualify.

Charles got an offer he can’t refuse!! I would like to tell you all about it, but its his story so I won’t.
I will tell you about other exciting things like how lovely the garden is looking. The chillies are getting so big, and soon they will be red and delicious.
For now, I have some baby snap dragons, and Charles tells me there was a baby lizard too!
Here is a pic of me in the garden:

And here is Charles:

and here is one of the chillies!

And here is the flower, its still quite young and fragile.

I just found out that Lizzie is a Delicate Garden Skink (Lampropholus delicata). I haven’t seen her today because the day before yesterday I caught her running into the kitchen from the garden. Little did she know that by chasing her out I was saving her from certain death: Charles is fond of saying he will eat her for breakfast. (And kittens belong in the fridge, and all dogs are waiting for their opportunity to bite, and most birds want to poo on your head or land on your head).
Here is a picture of one of her cousins. I would love to find a friend for her, but she made it to our my little garden so who knows, another one might too.