2015 will be pivotal. I believe either 2015 or 16 is where a major financial crisis will occur, and a transfer of wealth from the foolish to the wise will happen. A global recession either in 2016 or 17 is highly likely. What can trigger a global recession?
1. China's corporate loan bubble bursting, causing a systemic failure like the Asian crisis of 1998. In this case the developed countries may survive just like they did in 1998. However, all markets peaked in 2000, two years later....
2. Over leveraging of financial instruments caused by cheap money. Private bank clients and hedge funds over borrowed to buy stocks and bonds. A rise in interest rates will cause unwinding, triggering a chain reaction. If your bond tenor is less than 3 years, you should be ok.
3. Asian developers getting into trouble due to unsold units. I'm very concerned that residential property prices are over 20x of income, far higher than London's 16x, or Manhattan's 9x. Many of the developers are over leveraged and may fail.
4. As wages rise in the US, inflation rises above 2%, forcing the Fed to hike rates to 1% - 1.5% end 15, and 2% - 3% end 16. The yield curve will invert at some point because it will cause some corporates to burst. Remember that after QE, most companies would have over borrowed due to cheap money. Many of these companies will quickly unravel once the debt burden becomes heavier. Once inflation is above 2.5%, it is very difficult for the Fed to fire QE4. The US could enter into a stagflation like in the 1970s....
2015 is a very crucial year for me, because major investments number 4, 5 and 6 will mature. I will be able to securitise at least 1 property in London and pocket over 150k. In the US, the Colony American Home will probably IPO and I can pocket a hefty amount. I can easily generate around 15 - 20k of net cashflow a year from dividends and another 20 - 30k of net cashflow (after servicing mortgages) from rentals. It sets the stage for 2016 and beyond because I will shift to become a private equity partner by the end of this decade.
1. China's corporate loan bubble bursting, causing a systemic failure like the Asian crisis of 1998. In this case the developed countries may survive just like they did in 1998. However, all markets peaked in 2000, two years later....
2. Over leveraging of financial instruments caused by cheap money. Private bank clients and hedge funds over borrowed to buy stocks and bonds. A rise in interest rates will cause unwinding, triggering a chain reaction. If your bond tenor is less than 3 years, you should be ok.
3. Asian developers getting into trouble due to unsold units. I'm very concerned that residential property prices are over 20x of income, far higher than London's 16x, or Manhattan's 9x. Many of the developers are over leveraged and may fail.
4. As wages rise in the US, inflation rises above 2%, forcing the Fed to hike rates to 1% - 1.5% end 15, and 2% - 3% end 16. The yield curve will invert at some point because it will cause some corporates to burst. Remember that after QE, most companies would have over borrowed due to cheap money. Many of these companies will quickly unravel once the debt burden becomes heavier. Once inflation is above 2.5%, it is very difficult for the Fed to fire QE4. The US could enter into a stagflation like in the 1970s....
2015 is a very crucial year for me, because major investments number 4, 5 and 6 will mature. I will be able to securitise at least 1 property in London and pocket over 150k. In the US, the Colony American Home will probably IPO and I can pocket a hefty amount. I can easily generate around 15 - 20k of net cashflow a year from dividends and another 20 - 30k of net cashflow (after servicing mortgages) from rentals. It sets the stage for 2016 and beyond because I will shift to become a private equity partner by the end of this decade.
