If you have been following the news lately you know that stock markets across the world have been tumbling over the last few weeks. It all started in early January 2008 when stock markets in Asia started falling amid fears that there could be a looming economic recession in the United States of America.
This was triggered by economic data that showed that a recession was possible following the effects of the much touted credit crunch in the U.S.A. that was in turn triggered by a collapse in sub-prime mortgage lending. As a matter of fact the credit crunch was so serious that major mortgage houses such as J.P. Morgan and Citigroup had to make huge accounting write-downs in their books late last year, to make provision against the impending loses. At the same time these companies also announced huge job-cuts on top of resignations by their respective CEOs.
If you have been reading business news lately, or have been watching television you will recall that this has been the major topic on all major television networks across the world including CNN over the last couple of weeks. In fact at one time, it was reported that trading had to be suspended in the Indian stock market, the Bombay Stock Exchange to forestall further loses after loses of over 10% per day were recorded in early January.
What followed was a series of stock market loses across Europe, North and South America and Africa, with the major stock market indicators at the New York Stock Exchange, such as the Dow-Jones Industrial Average and the NASDAQ recording some of the worst stock market loses in recent times.
Panic started when world oil prices escalated to a record high of 100 dollars a barrel following the weakening of the U.S. Dollar against all major currencies. This precipitated a major migration of assets held in U.S. Dollars by big investors across the world to other denominations such as the British Pound and the Euro.
I think it is in order to mention that exactly one year ago, the price of oil was standing at around 55 dollars a barrel while the price of gold was around 600 dollars an ounce. Currently gold is trading at nearly 1,000 dollars an ounce!
Ironically, while all this was happening, world leaders, economists, industrialists, scientists, management gurus, thinkers, environmentalists, entrepreneurs, businessmen/women and financial experts were meeting at the World Economic Forum in Davos, Switzerland, to discuss the current global economic turmoil, environmental degradation and to chart the way for the future. For your information, the list of participants comprised economic movers-and-shakers including some of the wealthiest people in the world such as Bill Gates and George Soros.
How do we make sense out of all this?
Well, first of all we need to realize that economic turmoil is not new. In 1929 amid similar circumstances the world witnessed one of the greatest stock market crushes in history. This followed a prolonged global economic recession from 1933 just before the onset of the Second World War in 1939 – 1945.
Secondly, we need to realize that economic turmoil is largely man-made. The other day I was watching an interview on CNN, of the Indian minister for Commerce and Industry who was also participating in the Davos Forum. When he was asked by a CNN reporter to explain what he thought might be the cause of the fall in stock market prices across Asia and in India, he said he was convinced that the price falls were triggered mainly by panic selling due to “sentiment”. That's interesting. He went on further to explain that economic fundamentals in India were relatively strong, perhaps even better looking than in most other developing economies. He said for example, that the price-to-earnings ratio (the measure that determines if a stock or a stock market is overpriced) in the Indian stock market for example, was relatively low compared to other stock markets, therefore the price falls were not justified in face of the stable economic indicators.
Of course, the Indian minister was right and he might as well have been speaking for the entire global stock and financial markets. There's nothing wrong with the economies or the stock markets of the world.
What is wrong is the panic of men and women amid fear.
A long time ago I read a novel titled Fear Is The Key by best-selling author, Alistair MacLean. In the book, the author suggests that fear is the most effective weapon for control of human beings no matter how strong a person may look.
Here are a few common fears:
Fear of losing money
Fear of losing a house
Fear of losing a car
Fear of losing a job
Fear of a looming economic crisis
Fear of money (yes, people fear money!)
Fear of becoming broke
Fear of becoming poor
Fear of becoming rich (believe it or not!)
Fear of starting a business
Fear of losing a business
Fear of investing
Fear of losing an investment
Fear of travel
Fear of losing a girlfriend
Fear of losing a boyfriend
Fear of losing a husband
Fear of losing a wife
Fear of marrying
Fear of war
Fear of death
Fear of the unknown
The list is not exhaustive. You may also think of many other fears also known as phobias. You must realize that a lot of the things that people fear may or may not happen.
Historically, powerful individuals have often used fear to manipulate or control other people, and also to manipulate world economies and stock markets for their own benefit. An interesting tale is told that the lion is the most fearless animal in the African jungle. It is a fearless predator that intimidates its prey and enemies alike by its sheer fearlessness. On the other hand the Maasai of Kenya, are said to be the most fearless people in Africa. A young Maasai moran (warrior) can kill an adult lion single-handedly armed with only a spear and a sword. But it said that the most lethal weapons a Maasai moran possesses are fearlessness, patience and focus. Once the lion senses the fearlessness in the moran, its courage and mental strength slowly wane. Without much courage left and strength quickly wearing down, the lion doesn't have any more patience left and out of fear and panic, it lunges carelessly into the moran's already drawn, razor-sharp spear and to its death. The moran's sword is only used afterwards to slaughter the already injured animal and to cut off its claws, which are highly prized among the Maasai.
"The successful warrior is the average man, with laser-like focus."– Bruce Lee, 'Kung Fu' martial arts legend.
In one of my earlier posts, I wrote a comprehensive article on wealth – What it is and what it is not. For example, I mentioned that wealth is not physical as many people think. Physical wealth is only the outcome of the wealth within. Real wealth is spiritual and usually manifests into a condition known as wealth consciousness. This can happen with the full consciousness of the individual or as it often happens in life, subconsciously. In the late 19 th century, a gentleman by the name Wallace D. Wattles wrote an extraordinary book on this subject. The book is called The Science of Getting Rich . Download a free copy of the book here .
Wealth consciousness and money is also a topic I covered extensively earlier and if you would like to explore this topic further, you may purchase another amazing book called A Happy Pocket Full of Money by David Cameron . Get this extraordinary book here . David Cameron is a renowned wealth consciousness guru and his extraordinary books, which can be obtained in his website , have made a significant impact on the lives of many people across the world.
As I write this article, stock markets across the world are again on a rebound. What had changed? The answer is, as you might expect – Nothing! Only the value within human beings had changed. This value within human beings is usually eroded by fear. And once this value is eroded, panic sets in and is usually reflected very fast in the physical in the following forms:
Panic selling of stocks at throwaway prices
Falling stock market prices
Bad financial decisions that result in wrong investments
Bad management decisions
Bad economic policy decisions
Weakening of foreign exchange rates
Weakening of world currencies
Escalating oil and food prices etc.
The list is endless.
Remember the cause and effect principle?
What you see in the physical is only the effect – not the cause. Always remember that when you panic for any reason, another individual takes advantage of the situation. For example, when stock market prices fall, many so-called retail (small) investors tend to panic and in a frantic effort to "cut losses", they sell their precious stocks at throw-away prices. Predator investors and speculators also called crocodiles, then move in for the kill, thereby making huge profits. In the book, The Warren Buffet Way by Robert G. Hagstrom, Billionaire Warren Buffet says that if you cannot tolerate to see your stock fall by at least 50%, you should not be an investor.
The key to any meaningful success is patience, focus and fearlessness. Whenever there's an economic crisis of whatever kind, there are also countless opportunities that only the patient, trained eye can see – not the average man or woman.
Train yourself for all these things and your success and wealth is guaranteed. Of course this requires much discipline, time and effort but the rewards are enormous. Seek information and knowledge, which you can obtain easily in this information age. Above all seek wisdom, which comes out of a combination of information, knowledge, and discipline, and of course, divine help.
