Friday, 8 July 2011

Energy Crisis

Energy is part of our civilization. It is what keeping the economy to move and prosper. The energy provide us the source of light, heat, power and drive for our idea to be manifested in physical world. Energy give factory to produce, keep computer to work, keep the light to on, keep the building warm during winter, keep the vehicles to move and more. Energy enable us to erect 400m length of giant ship, enable us to send space ship to the moon, enable us to build bridges and roads, and finally enable to keep food production to sustain 6.5 billion life on earth (maybe not all 6.5 billion). Energy is playing a very important role in our everyday life, keeping our civilization stable and sustain. Energy is what drive the economy engine to run. Imagine what will happen when energy runs out?

Most of us will likely to believe the scientist will take care of it. The politician will not let such things to happen. It will not be at least during my time. Regardless which mindset you are, is irrelevant. It will never change the facts, indeed the cheap fossil energy we enjoyed for the pass few decade is running out. What could explain the recent surge of fuel price despite we undergo a major financial institution downsize in the history? What could explain despise the automobile market is on all time low, with jobless at America (the world major consumers) at 9.2%, and many European countries are on the brink of default (Greek for example); the energy price still on surge? With many economy calamities on global scale, which in fact will drive down the market demand (on aftermath effect); the energy price surge to all time high at 100 USD range. The simplest way to explain, is the supply had fall. As supply and demand is the most fundamental rule to govern the price of items (acknowledged there are other facts such as taxes, government policies and physiology of market), we now should be able to see the implication of energy supply crisis in near future. The crisis will bring severe recession, then depression, with hyperinflation ending (Wiemar republic German during 1910s); our known civilization world can collapse. Such implicitness incident are not new to us, as happen during 1970s, 80s. But, we human are very forgetful. Most of us reluctant or choose not to acknowledge the problems, let alone to act for prevention nor cure. How to please our boss tomorrow seem to be a more divine jobs to do for most of us.

As for every disease, come with certain cure. The crisis we might faced are not totally deathly. It just require a total new way of thinking and reformation of lifestyle in global scale. I am no expert to comment or suggest any solution but innovation and transition from dependence on fossil energy to clean conservative renewable energy (wind, solar, etc) is logically one of it. Unfortunately, such innovation effort are not even at half of silicon valley efforts (IT which is good to have, but without it, we still survive, as refer to our grandfather days) . Experts estimated as for US alone to do such transition will cause about 1 trillion dollar (equivalent to the expenses of world war 2). It require both public and private cooperation to make the change happen. It is worth it, if human can perceived the most obvious essential thing in life - heritage (civilization & our next generation survival) and our planet earth. What uses for the wealth (pseudo paper money), if the civilization are no longer exist, or be worst our used to be a clean green equilibrium world are on the brink of disastrous. It is not the 200% return of investment the good investment for us to made next year, but a negative return investment to our mother earth, which the only reason we able to survive until now.

Monday, 4 July 2011

Analysis Paralysis

Analyst - one of the formidable position in the world of investing. The job of analyst is to gather data and information pertaining to certain investment deal, put it into organized manner on a more comprehensible scale for investor to judge rationally whether or not to go with the deal. Analysis provide impersonal facts and justification for decision making. It a way of investing against speculative method. It is believed to be a logical method to eliminate, ideally all the risks with maximum reward - a perfect plan.

Back in 18th century to mid 20th century, to be a analyst is a privilege for only big institutions such as banks. Information were difficult to be accessed. It's belongs only to certain small group of manipulator - those who are rich and powerful. Then, after the cold war, and the Berlin's wall came down, world wide web went up. Today, the information age enable almost everyone to be their own analyst. Information is there to reach by plug in a Ethernet cable and a mouse click. The problem now is not where to get the information, but too much information. Just to separate between useful one from the non-useful one, takes a lot of time, despite the powerful computer leverage we possess. Other, is obsolete information where the world is moving so fast today. The answer yesterday are no longer valid by tomorrow. Our mind have to think as quickly as the world is moving or else we will be left behind. From supply and demand, market psychology, trend, consumer pattern to legal structures; it eat up brain cells of most investor to analyze a deal. As top down analysis is the what the prevalence way of most investor choose today, it often lure them into a paralysis pattern. With overwhelming information to be processed, they end up never ending processes. By the time old information is digested, they have to invite new information to be cross check. Imagine how exhausted you will be, while finding an answer for yesterday, but do not sure whether it will be useful today. It is like living in the shadow of yesterday forever - analysis paralysis.

Therefore, to avoid being trapped into analysis paralysis, one should consider innovation of analysis. Bottom up is good for small investor who wanted to start small by narrowing down the economy scale, for instance a city to a small town. bring in a team to leverage the brain power will be another feasible idea to do the analysis effectively. Finally, one should not look for the perfect result, but a guideline according to what you are looking for and your conditions. By counter off some detail, with greater detail to others, one can come with a optimum risks to rewards result, which depend of each individual situation. Analysis is never designed to eliminate 100% risks or making a perfect plan, but to create a pictures on how things will work out with given certain risk to reward ratio.