It now appears that January 26 was a major high in US stock markets with the S&P 500 finally topping out at 2,872, up from its previous low of 666 set on March 6 2009, the so-called devil’s bottom.
The huge swings in share prices seen around the world since January are also typical of topping action. Volatility is back with a vengeance after a couple of years of almost vertically ascending stocks.
As the months have passed, the chances of this proving to be a momentary aberration - some kind of a blip in the long bull market - have become lower and lower.
Economic Cycle Research Institute chief operating officer, Lakshman Achuthan, says the US economy started slowing last autumn. Guggenheim investment head Scott Minerd warns the market is on a ‘collision course with disaster’ with a recession next year and a 40 per cent crash in stock values.
A trade war with China is another big worry. But the real gorilla in the front room is the scale of the overvaluation in this long bull market for US equities, now exceeding that witnessed before the Great Crash of 1929 on some metrics.
What goes up must come down. The law of gravity cannot be suspended, merely postponed.
For Gulf investors this will create a very different economic climate to the one enjoyed in the post global financial crisis era. Indeed, it may at times feel more like 2008 to 2009 than any other recent experience.
You don’t need to look far to find evidence of the slowdown here, as well as in Western financial markets.
Since the New Year there has been a sharp reduction in the Purchase Manager’s Index in the UAE, though it remains in positive territory, partly due to the introduction of VAT.
Meanwhile the Dubai real estate sector has been hit with a 46 per cent drop in off-plan sales by value in the first quarter, and a 24 per cent decline in previously owned resales, according to data from consultant Reidin-GCP. Blame a risk-off market and oversupply.
Trade has been broadly flat while tourism and aviation remains a bright spot. The Dubai Financial Market is down almost 10 per cent year-to-date.
Emaar Properties founder Mohammed Alabbar has warned realtors to be careful of taking on too much debt and expressed his fears about the business outlook for 2019.
So how should savvy investors behave in such circumstances?
Sticking your head in the sand and waiting for the coming storm to pass is one approach. However, even if you are cash-rich and debt-free this inaction is unlikely to be the most successful strategy.
I would be particularly concerned if I had all my savings into tracker funds at this stage. These passive investment vehicles have behaved wonderfully well in the past decade - even beating Warren Buffett’s Berkshire Hathaway. But they will now faithfully follow the market down as per their prospectus.
Do you really want to see your savings plunge 40 per cent or so? The main issue is just how long it might take for this savings pot to recover in value.
Remember how after the dot-com crash in the year 2000 it took 17 years for the Nasdaq to get back to its old high. That’s what happens when market valuations become really over-inflated.
Therefore, at the very least please consider whether you have money tied up that you will need in the next few years. If so, why not get it out of the market while it is only 10 to 15 per cent down?
Holding cash for a period in any financial storm is a comfortable safe haven.
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Read more from Peter Cooper:
Using the catch-up theory for investment in global property
How to maximise your gains in a gold rally
Beware of the great cryptocurrency con
What Warren Buffett is really telling investors in his latest letter
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It’s also worth looking at US treasuries, or even locally issued UAE bonds. Sure just about everybody is against bonds now because interest rates are supposed to be on the up and up.
But will those rate rises actually now happen if the stock market falls get bigger? Cutting rates is the standard medicine for avoiding an economic slump after a stock market crash.
This time may be no different and 10-year yields have actually been trending lower recently, despite the last Fed rate hike.
Only the boldest contrarian would buy treasuries now, but the very fact that nobody is doing so might suggest this trade is now too one sided.
I recall how in the recovery from the financial crisis, it was Dubai bonds where local investors first scored a hit, before going on to buy into the real estate upturn and, years later, local stocks.
But do you really want to hold the US dollar now and its local proxy the UAE dirham? The dollar does look a busted flush and on the way down from its decade-plus high of two years ago.
It might be more prudent to also diversify your currency holdings.
The classic safe haven currencies are the Swiss franc and the Japanese yen, but Eastern European currencies might also be worth considering.
Italian investment bank UniCredit ranked the Czech Republic and Hungary as the European countries set for the highest GDP growth this year of around 4.5 per cent, and both still have currencies independent of the euro.
Multicurrency online accounts like www.swissquote.ae make this an easy way to spread your risk.
Apart from going into cash, the other classic reaction to bear stock markets is to short-sell individual stocks or indexes. Tesla is the most widely shorted US stock today. Shorting means that you make money as the value of a share falls.
However, I have lost money in the past trying to short the stock market indexes with ETF products and would advise against it: you really have to be unnaturally accurate in your forecasting to get these instruments to go up and not down.
Finally, even a modest holding of precious metals is likely to prove a good investment in unstable financial markets. Gold has been a great hedge so far this year and still trades well below its 2011 high.
Silver is lagging behind gold and some say it is primed for a huge rally against the general trend in major asset markets. Bitcoin and the other cryptocurrencies I would avoid like the plague.
Peter Cooper has been writing about finance in the Gulf for more than 20 years
if you go
The flights
Emirates have direct flights from Dubai to Glasgow from Dh3,115. Alternatively, if you want to see a bit of Edinburgh first, then you can fly there direct with Etihad from Abu Dhabi.
The hotel
Located in the heart of Mackintosh's Glasgow, the Dakota Deluxe is perhaps the most refined hotel anywhere in the city. Doubles from Dh850
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Events and tours
There are various Mackintosh specific events throughout 2018 – for more details and to see a map of his surviving designs see glasgowmackintosh.com
For walking tours focussing on the Glasgow Style, see the website of the Glasgow School of Art.
More information
For ideas on planning a trip to Scotland, visit www.visitscotland.com
UAE currency: the story behind the money in your pockets
Famous left-handers
- Marie Curie
- Jimi Hendrix
- Leonardo Di Vinci
- David Bowie
- Paul McCartney
- Albert Einstein
- Jack the Ripper
- Barack Obama
- Helen Keller
- Joan of Arc
SPECS
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
Results
Women finals: 48kg - Urantsetseg Munkhbat (MGL) bt Distria Krasniqi (KOS); 52kg - Odette Guiffrida (ITA) bt Majlinda Kelmendi (KOS); 57kg - Nora Gjakova (KOS) bt Anastasiia Konkina (Rus)
Men’s finals: 60kg - Amiran Papinashvili (GEO) bt Francisco Garrigos (ESP); 66kg - Vazha Margvelashvili (Geo) bt Yerlan Serikzhanov (KAZ)
Top 10 most polluted cities
- Bhiwadi, India
- Ghaziabad, India
- Hotan, China
- Delhi, India
- Jaunpur, India
- Faisalabad, Pakistan
- Noida, India
- Bahawalpur, Pakistan
- Peshawar, Pakistan
- Bagpat, India
The Woman King
Director: Gina Prince-Bythewood
Stars: Viola Davis, Thuso Mbedu, Sheila Atim, Lashana Lynch, John Boyega
Rating: 3/5
The five pillars of Islam
COMPANY PROFILE
Name: Floward
Based: Riyadh, Saudi Arabia
Founders: Abdulaziz Al Loughani and Mohamed Al Arifi
Sector: E-commerce
Total funding: About $200 million
Investors: Aljazira Capital, Rainwater Partners, STV and Impact46
Number of employees: 1,200
TWISTERS
Director:+Lee+Isaac+Chung
Starring:+Glen+Powell,+Daisy+Edgar-Jones,+Anthony+Ramos
Rating:+2.5/5
Confirmed bouts (more to be added)
Cory Sandhagen v Umar Nurmagomedov
Nick Diaz v Vicente Luque
Michael Chiesa v Tony Ferguson
Deiveson Figueiredo v Marlon Vera
Mackenzie Dern v Loopy Godinez
Tickets for the August 3 Fight Night, held in partnership with the Department of Culture and Tourism Abu Dhabi, went on sale earlier this month, through www.etihadarena.ae and www.ticketmaster.ae.
The Last White Man
Author: Mohsin Hamid
192 pages
Published by: Hamish Hamilton (UK), Riverhead Books (US)
Release date: out now in the US, August 11 (UK)
The biog
First Job: Abu Dhabi Department of Petroleum in 1974
Current role: Chairperson of Al Maskari Holding since 2008
Career high: Regularly cited on Forbes list of 100 most powerful Arab Businesswomen
Achievement: Helped establish Al Maskari Medical Centre in 1969 in Abu Dhabi’s Western Region
Future plan: Will now concentrate on her charitable work
KEY DATES IN AMAZON'S HISTORY
July 5, 1994: Jeff Bezos founds Cadabra Inc, which would later be renamed to Amazon.com, because his lawyer misheard the name as 'cadaver'. In its earliest days, the bookstore operated out of a rented garage in Bellevue, Washington
July 16, 1995: Amazon formally opens as an online bookseller. Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought becomes the first item sold on Amazon
1997: Amazon goes public at $18 a share, which has grown about 1,000 per cent at present. Its highest closing price was $197.85 on June 27, 2024
1998: Amazon acquires IMDb, its first major acquisition. It also starts selling CDs and DVDs
2000: Amazon Marketplace opens, allowing people to sell items on the website
2002: Amazon forms what would become Amazon Web Services, opening the Amazon.com platform to all developers. The cloud unit would follow in 2006
2003: Amazon turns in an annual profit of $75 million, the first time it ended a year in the black
2005: Amazon Prime is introduced, its first-ever subscription service that offered US customers free two-day shipping for $79 a year
2006: Amazon Unbox is unveiled, the company's video service that would later morph into Amazon Instant Video and, ultimately, Amazon Video
2007: Amazon's first hardware product, the Kindle e-reader, is introduced; the Fire TV and Fire Phone would come in 2014. Grocery service Amazon Fresh is also started
2009: Amazon introduces Amazon Basics, its in-house label for a variety of products
2010: The foundations for Amazon Studios were laid. Its first original streaming content debuted in 2013
2011: The Amazon Appstore for Google's Android is launched. It is still unavailable on Apple's iOS
2014: The Amazon Echo is launched, a speaker that acts as a personal digital assistant powered by Alexa
2017: Amazon acquires Whole Foods for $13.7 billion, its biggest acquisition
2018: Amazon's market cap briefly crosses the $1 trillion mark, making it, at the time, only the third company to achieve that milestone
Kill
Director: Nikhil Nagesh Bhat
Starring: Lakshya, Tanya Maniktala, Ashish Vidyarthi, Harsh Chhaya, Raghav Juyal
Rating: 4.5/5
DEADPOOL & WOLVERINE
Starring: Ryan Reynolds, Hugh Jackman, Emma Corrin
Director: Shawn Levy
Rating: 3/5
Sarfira
Director: Sudha Kongara Prasad
Starring: Akshay Kumar, Radhika Madan, Paresh Rawal
Rating: 2/5
EMERGENCY PHONE NUMBERS
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
Company profile
Company name: Fasset
Started: 2019
Founders: Mohammad Raafi Hossain, Daniel Ahmed
Based: Dubai
Sector: FinTech
Initial investment: $2.45 million
Current number of staff: 86
Investment stage: Pre-series B
Investors: Investcorp, Liberty City Ventures, Fatima Gobi Ventures, Primal Capital, Wealthwell Ventures, FHS Capital, VN2 Capital, local family offices
The biog
Name: Fareed Lafta
Age: 40
From: Baghdad, Iraq
Mission: Promote world peace
Favourite poet: Al Mutanabbi
Role models: His parents
Guns N’ Roses’s last gig before Abu Dhabi was in Hong Kong on November 21. We were there – and here’s what they played, and in what order. You were warned.
- It’s So Easy
- Mr Brownstone
- Chinese Democracy
- Welcome to the Jungle
- Double Talkin’ Jive
- Better
- Estranged
- Live and Let Die (Wings cover)
- Slither (Velvet Revolver cover)
- Rocket Queen
- You Could Be Mine
- Shadow of Your Love
- Attitude (Misfits cover)
- Civil War
- Coma
- Love Theme from The Godfather (movie cover)
- Sweet Child O’ Mine
- Wichita Lineman (Jimmy Webb cover)
- Wish You Were Here (instrumental Pink Floyd cover)
- November Rain
- Black Hole Sun (Soundgarden cover)
- Knockin’ on Heaven’s Door (Bob Dylan cover)
- Nightrain
Encore:
- Patience
- Don’t Cry
- The Seeker (The Who cover)
- Paradise City
Results
Stage 7:
1. Adam Yates (GBR) UAE Team Emirates – 3hrs 29min 42ses
2. Remco Evenepoel (BEL) Soudal Quick-Step – 10sec
3. Geoffrey Bouchard (FRA) AG2R Citroen Team – 42sec
General Classification:
1. Remco Evenepoel (BEL) Soudal Quick-Step
2. Lucas Plapp (AUS) Ineos Grenaders – 59se
3. Adam Yates (GBR) UAE Team Emirates –60sec
Red Jersey (General Classification): Remco Evenepoel (BEL) Soudal Quick-Step
Green Jersey (Points Classification): Tim Merlier (BEL) Soudal Quick-Step
White Jersey (Young Rider Classification): Remco Evenepoel (BEL) Soudal Quick-Step
Black Jersey (Intermediate Sprint Classification): Edward Planckaert (FRA) Alpecin-Deceuninck
MEDIEVIL (1998)
Developer: SCE Studio Cambridge
Publisher: Sony Computer Entertainment
Console: PlayStation, PlayStation 4 and 5
Rating: 3.5/5
UAE v West Indies
First ODI - Sunday, June 4
Second ODI - Tuesday, June 6
Third ODI - Friday, June 9
Matches at Sharjah Cricket Stadium. All games start at 4.30pm
UAE squad
Muhammad Waseem (captain), Aayan Khan, Adithya Shetty, Ali Naseer, Ansh Tandon, Aryansh Sharma, Asif Khan, Basil Hameed, Ethan D’Souza, Fahad Nawaz, Jonathan Figy, Junaid Siddique, Karthik Meiyappan, Lovepreet Singh, Matiullah, Mohammed Faraazuddin, Muhammad Jawadullah, Rameez Shahzad, Rohan Mustafa, Sanchit Sharma, Vriitya Aravind, Zahoor Khan
Indika
Developer: 11 Bit Studios
Publisher: Odd Meter
Console: PlayStation 5, PC and Xbox series X/S
Rating: 4/5