Blood on the financial streets!

Global financial markets have gone crazy! Every investor will say this is the best buying opportunity but it takes real steely nerves to invest liquid funds at this time. If you have the funds and can commit to a 2 to 3-year holding period, there are real nuggets out there. If you know a company that has a great product, plays in a growth market, it has a proven management team and Board, I'd say buy!

Many have jumped on the commodities bandwagon. There are good stories there, no doubt. But look beyond commodities; consider small caps; and if you have a very healthy heart, a lot of patience and strong nerves, consider the banks.

Excellence

Among those that profess a trade

Many are barely good enough to grade

Just as many practice an ordinary claim

All reputed to the crowd by the brilliant trifle

Forge application and skill in tedium,

To win your place on the reputed podium.

Borrowed glory only lasts so long,

An unworthy mare never ran a furlong;

Genuine talent will endure.

Stroked dispassionately by Time,

Failure sharpens to a keen edge.

Success is monumental; why do you fudge?

Yet another from my collection. My amateur attempts at poetry is a relaxing way to pass my spare time.

When times are good...

...that's when you think ahead.

The World Bank estimates that Ghana's economy will grow by 20% on the back of crude oil, gold and cocoa (See here). What are we going to do with it? It would be good if we spent our new riches on platform services such as infrastructure, health and education which will yield sustainable returns in the long term. However, with our penchant for waste and an election around the corner, I have my doubts.

Here's to hoping against hope!

The Greatest Ponzi Scheme Ever

The beauty of social insurance is that it is actuarially unsound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in - exceed his payments by more than ten times (or five times counting employer payments)!

How is it possible? It stems from the fact that the national product is growing at a compound interest rate and can be expected to do so for as far ahead as the eye cannot see. Always there are more youths than old folks in a growing population.

More important, with real income going up at 3% per year, the taxable base on which benefits rest is always much greater than the taxes paid historically by the generation now retired.

Social Security is squarely based on what has been called the eighth wonder of the world - compound interest. A growing nation is the greatest Ponzi game ever contrived.

Paul Samuelson

I would say that this is relevant to all aspects of economic growth. Inherently, assumptions of long-term economic growth will assume a growing population AND increasing productivity. What if one or both of these factors don't actualise? Then, like the USA, the economy will be in deep-seated trouble.

Just like any individual is supposed to manage his affairs, those who control national economies should be conservative in their long-term projections, set as much as possible aside for a rainy while they work smart and hard in the present.