Back in 2000 when global financial markets became similarly overvalued to where they are today, I remember talking to one of Dubai’s wisest independent financial advisers about where people should be putting there money.
"How much longer can I ask clients to pay me a fee for telling them to keep their money in a bank account," he said. "The only thing I can come up with for the more adventurous is to buy some gold or gold shares."
Those who bought US treasuries as the stock market boom topped in 2000 ... made a excellent return because interest rates fell heavily afterwards, and bond prices are inversely related to interest rates.
It proved to be sage advice. Those who held cash could buy shares at low prices after the global stock market rout that began with the dot-com crash and ended on the eve of the Second Gulf War in March 2003.
I was a little early in becoming one of the first expatriate buyers of Dubai property in late 2002, but after a nervous year or so local house prices also bottomed out, and that proved to be the very best time to buy before the six-year boom really got going.
Of course, gold buyers in 2000 did much better. Gold was trading around $300 an ounce that year and rose to $1,923 in 2011. Even at today’s price the yellow metal has actually outperformed the S&P 500’s spectacular run since 2003.
Those who bought US treasuries as the stock market boom topped in 2000 also made a excellent return because interest rates fell heavily afterwards, and bond prices are inversely related to interest rates.
So, are we facing a similar scenario this year?
History never repeats exactly but it does rhyme, to misquote Mark Twain. Historic parallels can also be very misleading. But the recent past is the often the best guide to the impending future.
Indeed, you don’t have to look back more than a few weeks at the moment to see the red flags flying. Dr Copper is sick: falling copper prices are a reliable recession indicator.
The Australian dollar has gone down the pan: the economy with the most exposure to Chinese trade is telling us something bad about the growing US-China trade war.
Brexit blues have knocked house prices in every London borough bar two, and the spillover effect of Britain’s drawn-out departure from the European Union is weakening the economy of the whole continent, and sending the US dollar to further overvaluation.
Meanwhile, US stock markets have continued to suck in money from a troubled world and have headed to even higher levels of overvaluation, despite the violent correction last December. Increased volatility in financial markets almost never ends well, and they looked none too healthy last week.
What could possibly go wrong from here? Well, there's the geopolitical developments n the Arabian Gulf over the past couple of weeks and the oil price moving higher.
So will cash, gold and US treasuries prove to be the safe haven to sit out the next crisis in global financial markets –whenever that might happen?
To be fair markets do always throw up a few surprises to confound analysts with their heads in the history books and charts of past performance.
Cryptocurrencies have enjoyed a sharp revival over the past month with the bellwether Bitcoin up from sub-$3,000 to over $8,000.
However, even ardent crypto fans have been quick to admit that this movement looks highly manipulated by the exchanges and very unstable; any asset that shifts daily in double figures cannot be judged more than a risky speculation.
Surely if crypto was the dot-com asset class of our day then past precedent would suggest huge financial losses for investors followed by the survival of the fittest as the new champions, albeit as global currencies rather than technology giants.
But how likely is this? No central bank has embraced a crypto currency. On the contrary China has banned them completely, and other central banks treat them with distain and warn they are a paradise for fraudsters.
Could the cryptos not collapse completely if the global financial system enters another period of maximum stress, and that would send speculators back into their traditional favorite port in a storm – precious metals?
For good measure you could also worry about the sustainability of the US dollar as a store of value in a global crisis. It would be vulnerable to a return of money printing and lower interest rates, while gold would profit hugely again.
Yet in the crises of 2003 and 2009 you were much better holding the greenback or the dirham than pretty much anything else. In 2009 the UAE even added an unlimited three-year guarantee for all money held in its banking system to secure deposits.
So, what goes around come around. Safety should come first now. Moving to cash, gold and treasuries seldom made more good sense.
Peter Cooper has been writing about finance in the Gulf for two decades
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Killing of Qassem Suleimani
Going grey? A stylist's advice
If you’re going to go grey, a great style, well-cared for hair (in a sleek, classy style, like a bob), and a young spirit and attitude go a long way, says Maria Dowling, founder of the Maria Dowling Salon in Dubai.
It’s easier to go grey from a lighter colour, so you may want to do that first. And this is the time to try a shorter style, she advises. Then a stylist can introduce highlights, start lightening up the roots, and let it fade out. Once it’s entirely grey, a purple shampoo will prevent yellowing.
“Get professional help – there’s no other way to go around it,” she says. “And don’t just let it grow out because that looks really bad. Put effort into it: properly condition, straighten, get regular trims, make sure it’s glossy.”
Ultra processed foods
- Carbonated drinks, sweet or savoury packaged snacks, confectionery, mass-produced packaged breads and buns
- margarines and spreads; cookies, biscuits, pastries, cakes, and cake mixes, breakfast cereals, cereal and energy bars;
- energy drinks, milk drinks, fruit yoghurts and fruit drinks, cocoa drinks, meat and chicken extracts and instant sauces
- infant formulas and follow-on milks, health and slimming products such as powdered or fortified meal and dish substitutes,
- many ready-to-heat products including pre-prepared pies and pasta and pizza dishes, poultry and fish nuggets and sticks, sausages, burgers, hot dogs, and other reconstituted meat products, powdered and packaged instant soups, noodles and desserts.
UAE currency: the story behind the money in your pockets
more from Janine di Giovanni
Essentials
The flights
Emirates and Etihad fly direct from the UAE to Los Angeles, from Dh4,975 return, including taxes. The flight time is 16 hours. Alaska Airlines, United Airlines, Delta Air Lines, Aeromexico and Southwest all fly direct from Los Angeles to San Jose del Cabo from Dh1,243 return, including taxes. The flight time is two-and-a-half hours.
The trip
Lindblad Expeditions National Geographic’s eight-day Whales Wilderness itinerary costs from US$6,190 (Dh22,736) per person, twin share, including meals, accommodation and excursions, with departures in March and April 2018.
THE TWIN BIO
Their favourite city: Dubai
Their favourite food: Khaleeji
Their favourite past-time : walking on the beach
Their favorite quote: ‘we rise by lifting others’ by Robert Ingersoll
Various Artists
Habibi Funk: An Eclectic Selection Of Music From The Arab World (Habibi Funk)
8 UAE companies helping families reduce their carbon footprint
Greenheart Organic Farms
This Dubai company was one of the country’s first organic farms, set up in 2012, and it now delivers a wide array of fruits and vegetables grown regionally or in the UAE, as well as other grocery items, to both Dubai and Abu Dhabi doorsteps.
www.greenheartuae.com
Modibodi
Founded in Australia, Modibodi is now in the UAE with waste-free, reusable underwear that eliminates the litter created by a woman’s monthly cycle, which adds up to approximately 136kgs of sanitary waste over a lifetime.
www.modibodi.ae
The Good Karma Co
From brushes made of plant fibres to eco-friendly storage solutions, this company has planet-friendly alternatives to almost everything we need, including tin foil and toothbrushes.
www.instagram.com/thegoodkarmaco
Re:told
One Dubai boutique, Re:told, is taking second-hand garments and selling them on at a fraction of the price, helping to cut back on the hundreds of thousands of tonnes of clothes thrown into landfills each year.
www.shopretold.com
Lush
Lush provides products such as shampoo and conditioner as package-free bars with reusable tins to store.
www.mena.lush.com
Bubble Bro
Offering filtered, still and sparkling water on tap, Bubble Bro is attempting to ensure we don’t produce plastic or glass waste. Founded in 2017 by Adel Abu-Aysha, the company is on track to exceeding its target of saving one million bottles by the end of the year.
www.bubble-bro.com
Coethical
This company offers refillable, eco-friendly home cleaning and hygiene products that are all biodegradable, free of chemicals and certifiably not tested on animals.
www.instagram.com/coethical
Eggs & Soldiers
This bricks-and-mortar shop and e-store, founded by a Dubai mum-of-four, is the place to go for all manner of family products – from reusable cloth diapers to organic skincare and sustainable toys.
www.eggsnsoldiers.com
Planes grounded by coronavirus
British Airways: Cancels all direct flights to and from mainland China
Hong Kong-based Cathay Pacific: Cutting capacity to/from mainland China by 50 per cent from Jan. 30
Chicago-based United Airlines: Reducing flights to Beijing, Shanghai, and Hong Kong
Ai Seoul: Suspended all flights to China
Finnair: Suspending flights to Nanjing and Beijing Daxing until the end of March
Indonesia's Lion Air: Suspending all flights to China from February
South Korea's Asiana Airlines, Jeju Air and Jin Air: Suspend all flights
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The biog
Favourite car: Ferrari
Likes the colour: Black
Best movie: Avatar
Academic qualifications: Bachelor’s degree in media production from the Higher Colleges of Technology and diploma in production from the New York Film Academy
Neil Thomson – THE BIO
Family: I am happily married to my wife Liz and we have two children together.
Favourite music: Rock music. I started at a young age due to my father’s influence. He played in an Indian rock band The Flintstones who were once asked by Apple Records to fly over to England to perform there.
Favourite book: I constantly find myself reading The Bible.
Favourite film: The Greatest Showman.
Favourite holiday destination: I love visiting Melbourne as I have family there and it’s a wonderful place. New York at Christmas is also magical.
Favourite food: I went to boarding school so I like any cuisine really.
Manikarnika: The Queen of Jhansi
Director: Kangana Ranaut, Krish Jagarlamudi
Producer: Zee Studios, Kamal Jain
Cast: Kangana Ranaut, Ankita Lokhande, Danny Denzongpa, Atul Kulkarni
Rating: 2.5/5
'Panga'
Directed by Ashwiny Iyer Tiwari
Starring Kangana Ranaut, Richa Chadha, Jassie Gill, Yagya Bhasin, Neena Gupta
Rating: 3.5/5
WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
Rating: 4/5
Turning%20waste%20into%20fuel
%3Cp%3EAverage%20amount%20of%20biofuel%20produced%20at%20DIC%20factory%20every%20month%3A%20%3Cstrong%3EApproximately%20106%2C000%20litres%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cp%3EAmount%20of%20biofuel%20produced%20from%201%20litre%20of%20used%20cooking%20oil%3A%20%3Cstrong%3E920ml%20(92%25)%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cp%3ETime%20required%20for%20one%20full%20cycle%20of%20production%20from%20used%20cooking%20oil%20to%20biofuel%3A%20%3Cstrong%3EOne%20day%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cp%3EEnergy%20requirements%20for%20one%20cycle%20of%20production%20from%201%2C000%20litres%20of%20used%20cooking%20oil%3A%3Cbr%3E%3Cstrong%3E%E2%96%AA%20Electricity%20-%201.1904%20units%3Cbr%3E%E2%96%AA%20Water-%2031%20litres%3Cbr%3E%E2%96%AA%20Diesel%20%E2%80%93%2026.275%20litres%3C%2Fstrong%3E%3C%2Fp%3E%0A