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Paul Gambles

Recognized as a regional financial expert, Paul is a regular speaker at industry events on market forecasting, financial planning, investing and legal issues for foreigners living or doing business in Asia.  Besides Paul’s blog, Paul previously distributed his ‘almost-daily’ email – “Daily Updates”, where he gave his views on timely issues affecting financial markets, macro economics, micro economics and everything in-between.

Born in South Yorkshire, England, Paul graduated from the University of Warwick with an Honours degree in English and European Studies.  He began his financial career in the early 1980s as a technical inspector at HMIT with Inland Revenue.  Following a successful career change to the Bank of Scotland in 1987, Paul moved to Bangkok in 1994 to help set-up an investment counseling practice, which today is known as MBMG International.

www.mbmg-international.com

  

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3 June 2010

Epilogue: mutton dressed as......

We’ve been looking back with Jeremy Grantham of GMO and John Sheehan of GMA and trying to see if the past can help us foretell what the future holds in store. Of course of even more relevance to the future are the current economic fundamentals. Based on where we are right now, Jeremy Grantham believes that we’re facing a clear range of possibilities:

Grantham forecasts probabilities

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This is of course also the same great divergence referred to during his Bangkok visit by Scott Campbell – where anything can happen and probably will. Interestingly (for those who believe that history repeats or has patterns or maybe just “rhymes’ many of the problems of the ‘Tragic Year’ started in Europe which also seems to be at the centre of heightened risks and problems right now. The difficulties that the global economy faced in 2008 were comparable to the scale of those faced in 1929 and the equity markets’ initial reactions until the beginning of last year were very similar. Just look at the similarities:

The Dow 2008 vs 1929_1.JPG
At that point the stimulus packages helped to distort the picture by providing strong temporary support to equity markets. We note that observers such as Ron Paul have recently claimed that the GDP and market rebound is due entirely due to stimulus and this has led to an artificially overvalued position today:                                                                                  
The Dow 2008 01-10.JPG
OA Dow below 6,000 today is what we might be looking at without the short term artificial boost and this coincides much more closely with Jeremy Grantham’s views on the real value of the DJIA today.
Whilst that might be alarming in itself (implying a 40% fall when the stimulants wear off) just look at what could happen if we then track the tragic year of 1932 and the consequences……
The dow 27Oct.JPG
It may be much too early to start thinking that the worst is over and it might be time to wake up to the real possibility of a DJIA fall all the way back down to below 2000 and a target 3 years hence of just over 3000 if history repeats itself when the unprecedented stimulus, which has helped to paper over the cracks, wears off.