Naveed Yaseen replied on Wednesday, December 3, 2008 07:27 PM
> What will be the value of Euro / Pound sterling against dollar in coming days ?
> How much do you think euro and sterling can drop further ?
What will happen in coming days I don’t know.
Currently however I believe US dollar is over-valued, and euro near value. On pound sterling I don’t understand it enough to opine.
> What are the fore cost for oil price and gold price and where it will stand firm ?
I don’t understand dynamics of gold business (and I doubt gold traders understand either).
On oil prices, again its difficult to predict because of several factors,,,
- energy production in different forms, especially coal, hydrocarbons, hydropower and nuclear power
- energy consumption in different forms, especially heat, mobile mechanical power and electric power
- energy inter-convertibility of different forms at production points
- energy inter-convertibility of different forms at consumption points
- energy transportability of different forms, from production points to consumption points
- energy storability of different forms
- technology innovation/efficiency in all above
- trade confidence
- investment confidence
- dynamics of reference currency
All these factors may be somewhat predictable for 2-3 years, but I won’t count on ‘price’ after that, except as a calculated uncertainty.
(Price uncertainty set aside, on the conducted business side I feel reasonably certain that in coming 10-20 years some new energy technologies like solar power, fuel cells, advanced batteries and electric/hybrid vehicles will be in quite wide use.)
> Do you think investing in property is still good
I feel prevalent property prices in Pakistan are not over-valued. Although I think there are better investment alternatives than property, still if I would have to invest in property I would buy where,,,
- it has smaller units
- and/or it's landscape is changing (i.e. development and/or construction going on or very certain)
- and it is not over-valued, preferably below my assessed value (where my value assessment won't be by horizontal comparisons but by verticals in inherent business)
,,,and I would exit when,,,
- it gets over-valued in market, say 10% more than my assessed inherent value
- or landscape changing pace has slowed down
- or better opportunity arrives.
> or this time it is better to swith from one to an other currency is better options ?
On holding currency, I believe currencies loss value at around 4%-10% per year, depending upon currency type. I often think holding value in currency is like holding petrol in uncovered container! It keeps evaporating value every minute and second.
On speculating in currency (or speculating in anything), I believe it is better to gamble on cards.
> Don't you think the hike in interest rate indicate that there will be regular depreciation
> in the value of Pak Rupee in coming years ?
In today’s environment central banks are gradually becoming less dominant player in investment market, especially so for smaller central banks like Pakistan integrated with international economy.
So a hike in interest rate alone by SBP is a very small factor in forex value determination compared to other dominating factors. The major forex rate determinants in Pakistan are security, political stability, business facilitation (or barriers reduction) and money printing. I am optimistic about betterment in these factors.
Although in last 25 years Pakistani rupee has perhaps lost value at around 8% per year compared to average basket of consumer valuables. Unless there is a very drastic change in leadership and policies, I do not expect this trend to change much. But if you are holding value in hard assets or instruments of hard assets (like business or share of business), then the price of your assets would automatically keep shifting (generally) thus protecting value evaporation by monetary inflation.
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Note: Everyone has unique way of thinking about things. In my own financial decisions I do not weigh future much. Rather I consider relative weights like following,,,,
- like 70% weight to current inherent value discrepancies
- like 25% weight to past performance with near past higher weight
- like 5% weight to future expectations with near future higher weight
- negative weight to suggestions/claims/ads/buzz of future being too different than present |
