Double dip recession or just very slow growth?

Stock markets around the world had a very bad week. Everyone it seems is expecting a global recession and the accompanying deflation.

In a truly deflationary environment, all assets will suffer and see their prices fall. Equities and precious metals were all sold down across the board, therefore.

However, reading an article in Bloomberg, it is interesting to note that in the USA, "railroads shipments are the highest in almost three years." This defies concerns of an impending double dip recession.

Art Hatfield, a transportation analyst in Memphis, Tennessee, at Morgan Keegan & Co: “We’re not seeing declines in rail volumes that are synonymous with a recession... We remain in a slow growth environment.”
Read article: here.

If we were to look at the Baltic Dry Index (BDI), we see it rising in recent weeks and I wrote a piece on whether it could be time to load up on shares of Courage Marine again not too long ago.

The suggestion is that there is an increase in demand for shipping capacity and because "dry bulk primarily consists of materials that function as raw material inputs to the production of intermediate or finished goods, ... the index is also seen as an efficient economic indicator of future economic growth and production. The BDI is termed a leading economic indicator because it predicts future economic activity." Source: Wikipedia.

So, is there going to be a double dip recession after all? There are analysts who believe that a recession is a given and some who believe that Europe will get its act together and a recession will be averted. With such conflicting signs, at this point in time, however, it is just a sea of opinions.

Personally, I do not believe in being overly bullish or overly bearish. I believe in being pragmatic. Putting all our chips on a single bet either way could be quite disastrous if we should be proven wrong.

What is being pragmatic? Knowing what the current conditions are, what kind of investments are likely to do better and act accordingly. It is about wealth preservation, if not growth.

Related posts:
1. Courage Marine: Added at 10.5c a share.
2. Should we be staying invested or in cash?
3. Sleep well at night with a plan.
4. Why do I not panic?

What the very rich are doing with their wealth?

I read an article provided by Bloomberg News that Singapore will become the world's top wealth management centre by 2013, surpassing Switzerland and London.

It looks like our tiny island nation is attracting a lot of wealth from around the world and we are not just talking about HNW individuals. We are talking about super HNW individuals and families!

These families are setting up family offices to manage their millions instead of entrusting their wealth to private bankers. They view private bankers as salesmen instead of custodians of their wealth.

Clinton Ang, 38, prefers to manage his family's wealth of about $100 million himself.  About 90% of his family's investable assets are in cash after he sold from October to March its investments in stocks, bonds and most property assets.

Some family offices cater to more than one family to gain economies of scale. It is said that it costs at least $1.5m a year to run a family office that includes an investment team. So, a family will need a minimum of $100 million to justify the expenses.

Personally, I know some very rich people but they never talk about their wealth. So, it is not easy to get a peek into the way they manage their money. Usually, those boasting about their wealth are the newly rich and who might have just attained their HNW status.

There is wealth and there is WEALTH.