"Drink Less, Work More", Billionaire's Lesson... Time to Take Profit

http://sg.finance.yahoo.com/news/drink-less-more-billionaire-tells-152654355.html

Gina Rinehart was right when she said the non-rich should stop attacking the rich and go to work. "If you're jealous of those with more money, don't just sit there and complain. Do something to make more money yourself - spend less time drinking, or smoking and socializing and more time working." The comments were part of a treatise on what she sees as Australia's decline due to high taxes, high wages and over-regulation. Rinehart said taxes should fall, red tape should be cut, environmental rules relaxed and the minimum wage should be lowered. Her quotes are sure to escalate the already heated debate in the United States, Britain and Europe over class warfare, taxing the wealthy and "fair shares." When governments target the rich, she warns, they really hurt the middle and lower classes.

I think she has hit the nail in the head with the problems in the West. When UK's Nick Clegg said that he wanted to tax the rich, I knew that Britain could be heading the same way as Europe. French President Hollande also targeted the rich, as with most European countries. That is why more and more wealthy people are flocking to Singapore. The rich are mobile, they are welcomed in most countries. They also tend to be entrepreneurs who hire workers, spend more, which in turn help the economy.

As for investments, I do not think Fed Chairman's Ben Bernanke speech at Jackson Hole mattered much. The impact of each successive QE on stocks is diminishing. Ultimately, it is the real economy that will drive corporate profits. Interest rates are already near zero so the reflationary effects of a further QE may be minute. However, gold and silver are a different thing altogether. They tend to be poorly correlated to stocks, and move in lockstep with the balance sheets of major central banks.

When I look at the AUDUSD chart, it has broken below the key 1.04 support. The next support is at 1.00. It is a strong risk off indicator and with that trend line broken I have further hedged my portfolio and taken some profits off the table. Although the Dow rallied on 31 Aug after Bernanke's speech, the AUDUSD hardly rebounded as I expected. However, gold and silver did shoot up. It could mean that the stimulative effects of further balance sheet expansion is waning.

I do not think that a correction that follows will be more than 20%. Valuations are near 2008's level, especially those of China and European stocks.