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  • OCTOBER 8, 2008

Money is nothing

We hate to start the day on a sour note. But the (financial) world around us is so full of despair these days, that this is what we begin with and this is what we end at. Take for instance the lead story on CNN's financial website today. It shouts out - "A 5-year low", reporting on the US stock markets' continued slide as the credit crisis worsens.

With a 500 points decline yesterday, the Dow Jones Industrial Average has dropped 900 points in a span of two days. The index the world looks up to now stands at its lowest point since 30th September 2003. However, it still isn't the lowest point for the index in this decade. October 2002 it was.

In the meanwhile, stocks across Asia are trading deep in the red as well. Markets in Indonesia and Hong Kong are down the most - 9% and 5% respectively.

"Money vanishes. It is nothing. The only solid reality is the word of God," says Pope Benedict XVI reflecting the crashing stock markets and capitalism. He further says and we quote, "He who builds only on visible and tangible things like success, career and money, builds the house of his life on sand."

As reported on Bloomberg, the Pope 'doesn't just have a spiritual interest in the current turmoil'. Earnings from roughly US$ 1 bn in stocks, bonds and real estate are what he and his institution in the Vatican City rely on apart from the donations they receive.

The Pope is right - money is vanishing round the world, more so in the US and Europe. But will 'greed' that created so much money in the first place ever vanish?

We do not think so.
Greed will come back. Irrational expectations from money, stocks and companies will again find their place under the sun. The imperative for you, the long-term investor, is to arm yourselves against the hubris that too much of money creates. The idea is to stay away from greed and get over the fear factor.

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