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Predicting Death and Markets

By TAN Kee Wee

(MediaCorp 938LIVE’s Money Talks, Thursday, 4 October 2007, 7.45 am and 7.20 pm)

In February 2006, at the age of 80, Art Buchwald, the Pulitzer Prize-winning author and humor columnist, was told by his doctor that his kidneys were failing and that he had just weeks to live.

Instead of continuing with his five-hours-a-day and three-days-a-week dialysis, he decided to check into a hospice and cheerfully wait for his death.

For those of you who have forgotten, a hospice is like a hospital. Except that, it is for those with incurable diseases, and who have a few months left to live. A hospice does not try to cure patients. It only provides pain management and emotional support to the patient and his family during his last days.

As it turned out, Buchwald didn’t need any emotional support. Throughout his hospice stay, he held court to an endless stream of celebrity visitors. The meetings were always lively and funny. All went away feeling better for it.

Four months later, in June 2006, instead of dying, Buchwald’s kidneys miraculously began to work again. He was discharged and went on to write a humorous book about his experiences.

Buchwald’s miraculous recovery was not exceptional. Doctors’ predictions can be wrong. In recent years, some 8% of all US hospice patients did not die within the period expected. And about 5-20 percent of discharged hospice patients went on to live normal lives.

Investment advisors, like doctors, have also been caught with wrong predictions all too often. In March this year, after global stock markets fell, many said that recovery would be a long way off. They were wrong. Stocks hit new highs soon after.

After the August meltdown, many sang the same sad song. As I speak, they have been proven wrong again. Most global stock indices have hit new highs.

Of course, it is too early to dismiss the sub-prime issue. Unlike previous US Fed rate cuts, the latest one has not lowered interest rates enough in the money markets. And bond yields are still high. But it does not mean that disaster is around the corner.

When the dot com bubble burst in year 2000, there were fears of a prolonged weakness in US domestic consumption. But the US housing boom stepped in and proved those fears wrong.

In predicting the markets, all too often, we miss out on an important factor which, when we look back after the event, we realize that it was the factor which turned the market around.

Just as it is difficult to predict the fatal course of a disease, it might be too early to predict the positive impact of rising stock prices, and the many benefits of a weak US dollar, on reviving the US economy and exports.

In other words, the much-feared US economic recession, if it comes, could be brief, with the US economy picking up early next year. In the meantime, Asian stocks would still enjoy the boost from Chinese investment money rushing in.

Despite his success as a humorous columnist, Buchwald fought against depression and suicidal tendencies throughout his life. His kidneys finally gave up on him and he died on 17 January 2007, about eleven months longer than predicted.

The doctor who wrongly predicted Buchwald’s early death, must have missed an important factor. It certainly was not making more money. It must have been his desire to make the world a better place through his humor.

Buchwald once said, and this could come out of any Buddhist monk from Myanmar: “It’s what you do on earth, and the good deeds you do on earth, that are important.”

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