Thursday, December 25, 2014

RICS mandatory competencies - Accounting

Accounting principles and procedures M001 (Minimum Level 1)

One of the subject in my diploma course was elementary accounting. I am also an avid investor in the stock-market, reading financial reports and attending AGM. Hence, I have gained a lot of knowledge and understanding of accounting concepts and the format and preparation of management and company accounts, including profit and loss statements, cash flow statements and balance sheets. I am able to interpret company accounts and balance sheets in my area of practice.  
I had to prepare monthly cash flow statement to client when I was a consultant. When I was working for construction company I was required to prepare and submit the monthly Revenue/Expense statement for cost control purpose and present the quarterly reporting to the top management at the head office. From here I had learn how to apply appropriate accounting and regulatory standards to my reporting.

REVENUE
Project Revenue Statement - Accumulative Certified Revenue to date (Before retention) :
Forecast Cashflow (up to-date)  c/o :
Forecast Claim (Net & Accumulative)
Actual   Claim (Net & Accumulative)
Architect's Certified amount (Net & Accumulative)

EXPENSES
Estimated Current Month Project Cost/Expense Statement c/o :
1)      Work Cost/Expense
Salaries, CPF, Quota Fee, Bonus, Incentive, Allowance etc 
Wages / FWL / Labour Supply
Labour Related Costs
Materials & other supplies (Purchase order only)
Fuel, PUB & Utilities
Small Tools & Equipment
Rental of Machinery & Equipment
Depreciation
Maintenance of Motor Vehicles & Equipment
Administration & Other Expenses (Excluding Head Office Management Expenses)
2)      Payment Summary For Sub-Contractor/Supplier
3)      Accrual Expense  Summary

4)      M & E  Works Payment 

RICS Mandatory competencies - Business planning

Mandatory competencies - 1000 words in total (4 pages)

Business planning M002 – (Minimum Level 1)

At level 1
Demonstrate knowledge and understanding of how business planning activities contribute to the achievement of corporate objectives.


At level 2
Provide evidence of application of the principles and demonstrate your ability to use the tools of business planning appropriate to your area of practice.

At level 3
Provide evidence of reasoned advice given to clients and others of the principles and tools of business planning and be able to evaluate your performance and outcomes.


 Every company have their own corporate objectives. Business planning is to identify those objectives for the business and formulate realistic strategies for reaching those goals.
 Planning
- decides what objectives to pursue during a future period,
- what actions to undertake to achieve those objectives.

Business planning is a systematic and formalized approach to accomplishing targets such as  sales fore-casting, capital budgeting, cash flow  analysis,  inventory control,  and time and motion studies

Business Planning - Interim Strategic Analysis in Top Tier Hotel development in China
I have prepared a strategic Analysis Recommendation to assess the current competitive position of Hotel development in the luxury hospitality industries in China Market
In analyzing the potential feasibility of a proposed hotel, the process is to find out whether the market support a new hotel, will the hotel generate an acceptable return on investment. In order to answer these questions, a market study that analyzes supply and demand and provides only rate and occupancy information which may not tell the developer enough for him to make a thoughtful decision as the income potential is only one part of the equation. 
Now the market study comes in, the question is will the proposed hotel be able to achieve a rate and occupancy that supports the construction cost
Does the hotel has an above average competitor, achieving average daily rates in the middle of its competitive set and above average occupancy. Does the property consistently achieves 105 percent RevPAR penetration. Can the hotel achieve solid occupancy and average daily rates in the next 10 year period, In addition, there is a likely increase in new hotel and a conversion from a mid-price to upscale hotels open in the next 10 years, increasing the number of rooms in the upscale sub-market by 20 percent. These factors combined to produce a significant drop in market occupancy as the new properties gained their fair share of the upscale market. 
 In determining the success of many types of hotel properties, the construction cost of the project is probably the most critical determinant of hotel feasibility. In order to set up a framework with which to evaluate the potential success of a proposed hotel, we recommend to study based on the following criteria :
Strategic analysis and understanding competitive markets
An organization’s strategy is embodied in its mission, plan, and actions. The challenge is to identify value competitive positions at the intersection of values, capabilities, and opportunities. A firm whose return on equity is higher than its opportunity cost of capital definitely earns positive accounting profits and positive economic profits.
In tandem with the increased flow of tourist both within the country another distinct group of travelers emerged. As China shifted to a market oriented economy in the 1990s commercial activities spread throughout the country amid urbanization and as a regional business centres. Domestic and foreign companies have expanded into these areas, thus creating a greater need for business trips across the country.
 In China the high end hotel sector is dominated by international branded operators, whilst domestic form the bulk of the economy and budget hotels. The mid-tier market have a better foothold on developing larger footprints and have stronger brand power. Local and international hotel brands differ quite substantially in their clients and profit models. Both have their own niche markets,
Analyzing Industry structure
The spectacular growth in the number of hotels in China has inevitably led to concerns over the risk of oversupply. The situation is further magnified by the global financial tsunami which has already begun to contribute to the easing of Chinese economic growth.
The intense competition in the budget sector has already begun to squeeze profits due to increased operating costs from higher inflation and wages. Overall market entry is anticipated to become increasingly difficult as the industry matures and becomes more competitive.
International operators have been observed to tweak their hotel brand identities and make them relevant at a local level For example, Days Inn China, which operates under the parent US group chain, currently features five different grades in China tailored to local tastes to capture more customers.
The barriers to entry in a capital intensive industry such as top tier hotel development though is higher but capital investments can be fully recovered if the firm exits the industry at the right time of hotel boom. The deterrent to entry into this industry is when there is excess capacity within the industry and the economy is heading for slow growth.
Understanding industry structure is important for firms so that firms can position themselves to minimize the threats posed by competitive forces.
Analyzing Firm’s capabilities                         
For high end hotel developers, construction costs required may be too high if weighed against required return on investment. Although the current market is suffering from declining occupancy and stalled growth in room rates, the long term outlook of the China top-tier hotel market remains positive with tremendous potential in developing geographical coverage. In addition, the Central government are expected to promulgate more favourable policies to stimulate long term growth of tourism and the hotel industry.
Going forward, brands with larger operations and strong capital flows will have a competitive edge. Large international players still have a competitive advantage in brand recognition over local players as customers may prefer international branded lower cost alternatives to local owned five star hotels.
For a capability to provide a sustained competitive advantage it must be difficult for competitors to imitate, durable over time and aligned with the organization’s value proposition.
A brand like Shangri-La is competitively valuable because the brand has been built over time through substantial investment.  
 Therefore they have the capability to continue to produce economic profits even when one rival firm can develop a highly effective substitute for the asset.
They are also in a strong position to acquire value-creating asset from a competitor for less than the value of that asset because of superior information about the underlying value of the capability which are derive from tight combinations between resources and activities.
The organization has also built a superior capability from Investing in branding to technology innovation from development to operation.  
Analyzing competitive dynamics
Being a top leading brand hotel developer and operator may provide a competitive advantage. When there are significant learning curve effects, they have established pre-commitment contracts with their suppliers and customers.
 Leading brand proven luxury and high quality outfits is a mark on their IP being strong and generic, such patents are most likely to result in an innovator’s capturing most of the rents from an innovation.
Determining competitive positioning
The company pursuing a strategy of differentiation to occupy a generally profitable niche in a focused market leader in the industry is a good strategy for gaining generic competitive position in the high end market industry.
They can determine their competitive positioning within the organization and geographical by :
 - having a good strategic cost approach of a cost leader as they engage in cost-efficient, bulk purchase management
 - flexible procurement strategy with good contract and cost management
 - supply chain management;
 - build market share to gain economies of scale thus minimize development and hotel operation overheads and advertising;
 - harness the talents pool by rewards scheme, treat every employees with respect, honor by giving them a sense of accountability and ownership in the company;
 - harness on innovation and technology to improve on works processes, thus increasing productivity and minimizing waste and repetitive or recurring processes;
 - create a distinctive brand through long term high end customer focused which characterizes the strategic approach of a differentiated player;
 - adopt total top-tier hotel quality and value engineering with risk management in place techniques that characterize an integrated strategy;


The best competitive position in a market for a company is determined by how contested is that position, whether the company can establish and defend that position. I think Shangri-La Hotel chain has proven it through the years.

Saturday, November 29, 2014

I bet on a stock market crash in 2016 and ending of great prosperity in 2015

Many aren't aware that the economy has taken a nose-dive since 2013. The economy will not do better this year and next year
Many are saying the US economy will improve in 2014. "But the Fed does not help the economy nor Europe solves their banking woes since the Great Recession.

My prediction is based on Federal Reserve ending its quantitative easing end 2014. That would be the removal of artificial life support for the economy. The Fed's stimulus had created huge inflation in the stock, commodity and property market, which would have to deflate when all the free money ended. It is no brainer that you see the oil prices came crushing down immediately after QE ended.

There are many reason for the global economic deterioration :
1) problems with Russia and Ukraine, which I said last spring would turn into a sanctions war that would damage Europe and to a lesser extent the U.S. because Russia would not back down on Crimea; 
2) China's economy would continue to settle, creating a dead weight on the global economy
3) Japan entering into recession 
3) Ebola  -the fear of it is enough to unsettle the economy
 
While the stock market is soaring to new heights, Tech stocks in particular were looking like similar to the pre dot-com crash in 2001. 

The investment banks are the biggest players in the market; so, if the market crashes, it could also take down some banks, turning into something much worse than just a bear market.   

Singapore is not immune to the economic collapse espicially our banks are highly geared in mortgage and business loans.  

2015 will probably be that last year of great prosperity for the western world including Singapore, China. A season of great darkness to mushroom into worldwide devastation probably sometime after 2015.
Many will see a culminating explosion of darkness taking place soon possibly by the fall of 2016.
Be pre warned my friends

Tuesday, November 11, 2014

A 27-year-old millionaire reveals how he built his wealth

Anton Ivanov makes his money from taking smart risk in investing in mutual fund stocks and property
He also did not take loan nor scholarship to study Instead he works first, then study. He was also working to earn some money while in high school and doing freelancing work to earn extra money.

Can our kids today emulate this type of independent self reliance self starter kids Parents in Singapore spoil their kids by spoon feeding and giving too much that they become a liability in society.
One classic example is our highest paid government in the world coupled with a too big force of civil servants that are less productive. They have a self deserving self demanding altitude instead of listening and doing things for the larger good of citizen which they are called to do.

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http://finance.yahoo.com/news/27-year-old-millionaire-anton-ivanov-financessful-184823184.html

Anton Ivanov isn’t your average millionaire.
For starters, he’s barely 27 years old, he doesn’t work in Silicon Valley and he isn’t heir to a family fortune. He doesn’t live in a tiny house or get his food from a compost garden in his backyard, either.
Ivanov, who shares wealth-building tips on his blog, Financessful.com, made his million the old-fashioned way: He read books. He saved early and often. And he started planning his rise to millionaire status before most kids his age had their driver’s license.
“I’m a testament that if you want something bad enough and you keep working towards it ... you will get to where you want to go,” he says. "It was my habits and my principles that made me rich." 
Here’s how he did it.
Starting young
A decade ago, Ivanov was like any other teenager in the U.S.. He went to high school, earned decent grades, and held down a minimum-wage job at Subway. His parents, who had moved his family from their native Russia in 2002, both worked full time — his mother as an attorney, his father as an accountant. They lived a moderately middle-class life in the suburbs of San Diego.
But Ivanov realized early on that there was something different about his new neighbors — they all seemed a lot wealthier than his family. His parents were heavy spenders and harbored a deep mistrust of financial services. He couldn’t quite blame them — they had moved to the U.S. just a few years after living through one of the worst depressions in Russian history. But at the same time, he felt like he was missing something.
“In high school, there was pretty much no financial education and my parents wouldn’t talk to me about money,” he says. “Everything I learned about money I had to learn myself.”
He devoured books on wealth building. An early favorite was “Think and Grow Rich,” the 1937 classic by Napoleon Hill, which details strategies that can be used to overcome psychological barriers to wealth.
“That book was extremely influential,” Ivanov says. “It wasn’t a ‘how to get rich’ book but it gave me a vision and a mental system that I could use to achieve pretty much anything I wanted.”
At age 16, he had one goal in mind: become a millionaire.
College or career?


Anton opened a savings account at a local bank and socked away 100% of his Subway wages over the course of three years. By the time he graduated high school, he had saved about $10,000. He might have used the cash to cover part of his college tuition, but he knew it wouldn’t be enough to cover all of his expenses. He didn’t relish the thought of taking on tens of thousands of dollars in student loans to make up the difference, either.
"My family wasn't really prepared to pay for my college tuition, so I knew I would have to rely on at least some student loans to get me through, which I was very much against,” he says.
He had other ideas for kickstarting his career. While his friends signed up for college classes, Ivanov celebrated his 18th birthday by opening his first Roth IRA. After spending some time working (mostly administrative jobs near home), he decided to enlist in the U.S. Navy at age 20. He earned about $55,000 a year as an electronics technician and took distance learning classes to earn a Bachelor’s degree in information technology and programming. Uncle Sam picked up the tab for his tuition and fees.  
“When I compared [going to college] to joining the military, the latter seemed like a smarter idea because I would be earning income right away instead of waiting until I graduated,” he says. “And I could receive an education pretty much completely free, which I did.”
The ‘lazy’ investor
After Ivanov maxed out his Roth IRA (the annual contribution limit is $5,500), he opened up a small brokerage account with TradeKing. Years of careful research convinced him stock-picking wasn’t for him. His investing strategy was simple: focus on low-cost stock mutual funds that covered a variety of major asset classes and let the market do its job.
“It’s what I would call a lazy portfolio,” he says. After doing research, Ivanov decided to invest in seven asset classes: domestic, large-, mid-, and small-cap funds, emerging market funds, commodity funds, with a small chunk in bonds. Then he let it ride. He rebalances his portfolio once a year, if at all.  
A couple of years into his stint with the Navy, Ivanov faced his first true test as an amateur investor. By saving 60% of his Navy income and taking on freelance jobs on the side, he had been investing somewhere between $40,000 to $45,000 per year when the financial crisis hit in 2008.
He says he lost “a good amount,” but when the market sank he didn’t sell like many other investors did. “I powered through and when the market hit bottom, that’s when I tried to save and invest even more. To me, it was a no brainer,” he says.
Getting into the real estate game
Heavily influenced by books like “The Millionaire Real Estate Investor” and “The Millionaire Next Door,” Ivanov knew he wanted to start investing in real estate. His timing couldn’t have been better. The bust had essentially turned the housing market into the world’s biggest bargain bin.
In 2009, Ivanov put down $80,000 on a $400,000 condominium in San Diego, which he rents out for a $36,000 a year (he nets about $12,000 a year after making his mortgage payments). Today he estimates the property’s value is well over $600,000.  
Since then, Ivanov has added another property to his nascent housing empire. He purchased a $430,000 duplex earlier this year. He collects $21,000 a year in rent ($12,000 net after his mortgage is covered) renting out one of the apartments, while he and his fiancee live in the other.
“I believe in taking smart risks,” he says. “If you see an opportunity and you think it’s a good opportunity, you should take it and understand that you may be wrong and understand what the repercussions may be.”
He hopes to own at least 10 properties by the time he hits his 40s, but he’s in no rush. Once his housing expenses are taken care of, he puts all of his income — from his rental properties, his job and his freelance work — first into his retirement account, emergency savings account, and then into his taxable brokerage account. Once those goals are met, he contributes to a separate high-yield savings account, which he sets aside for future real estate purchases. You can see a full breakdown of Invanov's assets here, or check out the graphic below. 
Keeping it simple
Committing to saving 60% of his income was no small feat for Ivanov. The average American manages to save only than 5% of their income per year.
He swears by one basic savings strategy: automate everything and never rely on credit. 
“The day my salary gets deposited, I don’t even see that money,” he says. “It’s in and out of my account, which keeps me honest and keeps me on track.”
The emergency fund he’s been carefully maintaining since his days at Subway has come in handy as well. When both his parents unexpectedly passed away a few years ago, he was able to rely on that money to cover his airfare and funeral expenses. 
Fortunately, military life was the perfect environment for a single person looking to save. The bulk of his fixed expenses — housing, food, transportation, insurance — were covered. He set up automatic transfers for his savings and investment accounts and followed a strict schedule. First, he maxed out his annual Roth IRA contribution. Then he contributed the maximum to his annual Thrift Savings Plan (the federal employee version of the 401(k)). He split the remaining balance between his brokerage account and the savings fund he keeps for future real estate investments.
While he studied, he earned extra cash through one-off web design and programming gigs he got through freelance job websites like elance.com and odesk.com. He estimates these side jobs added another $15,000 to $20,000 to his annual income.
“Definitely being in the military helped a lot, but I also had a mature outlook on life,” he says. “Buying expensive things isn’t really fun for me. I realized those things don’t really make me happy.”
Reaching the $1 million mark
Ivanov left the Navy in 2013, but even after he moved back to San Diego, he kept up his frugal lifestyle. Eager to add to his investments, he made increasing his income a top priority and landed a full-time job working as a software developer and test engineer. Combined with the freelance work he continues in his free time, he earns just shy of $100,000 a year (not including income form his rental properties) and still saves at least half of his net income. 
Every expense — from his gym membership to his pending wedding in 2016 — is planned for and saved for well in advance. His detailed planning regimen is, he says, the key to his success so far.
“Usually, at the beginning of the year I look at my life for the next two to five years and I plan it out,” he says. “I write out any expense I’ll have that I won’t be able to cover using my paycheck and figure out how much I need to save each month to meet those goals by my deadline.”
Ivanov crossed the $1 million net worth mark just two months shy of his 27th birthday in June this year. He was thrilled to finally reach this milestone — but not surprised.  
“If you have a really strong desire in your head, you can power through any obstacle you may face,” he says. “I truly believed that when I was 16 and I believe it now.








Wednesday, November 5, 2014

Wall Street Traders Go All In For Poker

Dec. 7, 2009





As poker stars go, Burt Boutin isn't the best known. Still, the player nicknamed "Red Bull Burt" has won more than $2 million in World Series of Poker tournaments and has been a regular face on ESPN's featured tables.
Although it's not like this full-time Las Vegas resident doesn't have a regular job. He does: Professional money manager.
Boutin could, if he chose to, trade slow days tracking S&P blue chips in exchange for fast nights amassing chips at the tables. But he's not giving up his day job.
"I get burned out playing poker," Boutin, 42, admits. "It gets old – but the stock market is constantly challenging me."
In recent years, the financial industry and high-stakes professional poker realms have been increasingly intersecting, with a number of Wall Street figures crossing over into the WSOP scene. Online poker's popularity, meanwhile, has exploded into a $10 billion-plus industry despite government measures to curb Internet gambling.
Poker playing may well be today what day trading was in the 1990s. On any given day, at any given moment, hundreds of thousands of players are glued to their computer screens competing on virtual tables. "PokerStars" and "Full Tilt" are two of the more popular sites featuring more than 60,000 combined games between them that run nonstop and cost between $10 and $200 to buy into.
Online poker is extremely popular among Wall Street types.
"Poker is a trader's game," says Scott Redler, cofounder of T3, a Manhattan-based day trading firm. "Roulette, blackjack, those are based more on luck. But with a game like No Limit Texas Hold 'Em, you need patience and discipline, or in other words the exact same skills needed to be a good trader."
Boutin, a Philadelphia native, started out as a stock broker in the 1990s and made his way to the Las Vegas poker circuit in 2001.
"He's a sharp guy and a good card player but it was surprising to see how quickly he made it into the upper echelon of that world," says Burt's younger brother, Clinton Boutin, a financial consultant based in New York City.
The older Boutin began to snag some coveted WSOP event bracelets (awarded to winners of the many various poker tournament events that are affiliated with the WSOP beyond the signature $10,000 No-Limit Texas Hold 'Em Main Event) right around the time national interest in poker, in particular Texas Hold 'Em, began to surge.
The popularity of the 1998 movie "Rounders" coupled with ESPN's decision a few years later to regularly televise Vegas poker beyond the annual WSOP Main Event, transformed the game from smoky back rooms to a worldwide phenomenon.
Along the way, celebrity players, such as Johnny Chan, became household names. Chris Moneymaker, an online player, won the main WSOP event championship in 2003, giving hope to regular guys on home computer players everywhere.
"It's just gotten unbelievably competitive," Boutin says of the professional Vegas poker scene.
An exploding poker scene has created a whole new subculture in Vegas and in turn helped grow Boutin's other enterprise, managing money. His firm, Securities Services, has around $50 million in assets under advisory on behalf of some high-net worth clients, including several professional card players. Boutin, who employs three other financial reps besides himself, has a value-oriented trading style, leaning toward distressed companies coming out of bankruptcy.
Lately, he's had a lot of those to choose from. Boutin also says that during the worst period of the 2008 financial meltdown he was making money hand over fist shorting financials.
"Both pursuits are about calculating risk," Boutin says. "But playing poker professionally can be exhausting – sometimes you just go and go all night. It takes a toll." (He's known for gulping Red Bull -- hence his moniker).
The skill sets of a trader or portfolio manager match up well with those required to compete in poker – a penchant for risk taking and a dispassionate regard for large sums of money.
A New York City securities industry recruiting firm, The Options Group, recently was asked by an unnamed hedge fund to find candidates proficient at online poker, no financial experience needed. Daytrading titan Steve Schonfeld is also known to consider card playing savvy when evaluating new trading candidates.
In general, money managers have tended to distance what it is they do from gambling, insisting that stock selection is far less a crap shoot than, say, shooting craps. This is particularly so, it is widely believed in the industry, if there's some form of a research-driven edge.
It's recognized even among gamblers that only a small percentage of them can consistently turn a profit. However, poker enthusiasts can be sensitive to perceptions that chance more than skill underpins what they do. And as the M.I.T. students featured in Ben Mezrich's book "Bringing Down the House" showed, there is an edge to be had at some games when a little intellectual firepower is brought to bear.
A Wall Street background can be an edge in the high-stakes poker circles.
Steven Begleiter, a Bear Stearns trader prior to the firm's demise, pulled down $1.6 million earlier this year when he finished in sixth place in the main WSOP event. Hedge fund heavyweight David Einhorn, who famously shorted Lehman Brothers into oblivion last summer, finished 18th in 2006. Aaron Brown, who works as a risk manager at mammoth Greenwich, Connecticut hedge fund AQR, was a former professional poker player.
"If you love trading, if you are good at it, then odds are you also love poker," says one Wall Street trader who enjoys playing in live games. "In the same way, if some young kid proves themselves really adept at playing poker online where it has become so competitive then chances are he might be well suited for becoming a trader."
In New York City, there's an unofficial Wall Street poker circuit, an ongoing series of semi regular games held almost every night of the week attended mainly by bank and hedge fund traders.
Taking risk and assessing information quickly are elements of both trading and poker playing. Before a trader moves on a stock he might have to weigh the last trade, insider purchases or sale, a rumor on the Street, a news story, and so on within minutes or seconds. A skilled card player, similarly, looks at the odds of his hand being the winner, his opponents' prior hands and actions, his last bet and the look on an opponent's face.
Of course, playing online, where reading a face is impossible, requires a distinctly different approach, says one online poker enthusiast.
"Playing online poker is all about paying attention to the betting patterns of the people you are playing, and you get to know them by their alias," says Lee, a 42-year-old Manhattan real estate agent.
Having worked as a Catskills cabana boy growing up, Lee was around poker from a young age. But in 2004 Lee says he began to play nightly and on weekends to supplement his income (and because, he admits, is hooked). While he doesn't consider himself a pro he does view poker as a "part time job," and claims to pull down, in a good month, $3,000, with his worst month ever costing him $500.
Lee says he plays on PokerStars, mainly at $50 tables, accruing enough to buy into the nightly $100,000 tournament that carries a $162 buy in. Lee has played in PokerStars' weekly "Sunday Million" Sunday night game, once placing 200th out of around 8,000 people.
"Online poker is something anyone can do so it has become super, super competitive," one trader explains. "Trading is harder to break into. Anyone with a computer can get into online poker."
Says Boutin, "The way to get good at poker is just to play, constantly."
And to be a good money manager?
"You have to be able to take risk."





Thursday, October 23, 2014

Peter Jones How we made our Millions - Full (Michelle Mone, Richard Reed)

 

Dragons' Den star Peter Jones meets two of the country's most well known and successful entrepreneurs to get into the DNA of what made them millionaires. 


Take a look at this video on YouTube: if you run a business or aspire to, this is great.  


Richard Reed - Smoothie business


Michelle Mone - MJM International - Bra business



https://www.youtube.com/watch?v=foWMmY3xSuk

Feel free to give your comment


Commodities Will Be Ugly Until At Least 2020

This is not news. Most professionals already know commodities and real estates have peaked since 2011 but it is worthy to take note of even know....hmm!! if you are still thinking to buying property or gold

http://www.businessinsider.sg/paul-tudor-jones-and-druckenmiller-panel-2014-10/#.VEjbICKUes-

PAUL TUDOR JONES: Commodities Will Be Ugly Until At Least 2020

Paul Tudor Jones 60 Minutes
Paul Tudor Jones II
Commodity prices have been falling around the world, and Paul Tudor Jones II thinks this trend will play out through 2020.
Yesterday, the legendary macro trader was interviewed by another legend, Stanley Druckenmiller, at the Robin Hood Investors Conference.
The conference, which is stacked with hedge fund heavyweights, is off limits to the press. We have a source inside who was kind enough to share his notes from yesterday evening’s panel.
According to our source’s notes, Jones said that we are in the downturn for the current commodities cycle. Having reached the peak of the cycle a few years ago, we’re still heading down to the bottom.
Jones explained that these commodity cycles run in roughly 30-year cycles between peaks. 1999 was a valley and April 2011 was the peak. He said this cycle will play out through the downside through 2020 or so, but it will be net positive for the U.S. economy.  
Jones also touched on a number of other macro topics during the discussion. 
Jones talked about deleveraging in China and how that will be negative for the financial sector as well as commodities there. He basically said that there’s a credit bubble and the “the piper will be paid and the bubble will burst.”
He said in about 2029 the U.S. will breach Greek debt levels, according to our source.
He also talked about Japan and Japanese Government Bonds, which are up over 30% with extremely low trading volume. He’s wondering when will the yields pop. 
Later on in the panel, Jones said that the European Central Bank and the Bank of Japan will keep cutting rates. He said the yen needs to depreciate 15% per year to increase inflation 1 to 1.5%.
His trade is get long the dollar versus the yen. According to our source’s the notes, the dollar rally versus other currencies may have run its course.
Yesterday’s panel fell on the anniversary of Black Monday— a market crash event that Jones famously predicted back in 1987 and also netted him millions.
According to our source’s notes, Druckenmiller asked Jones about the similarities between 1987 and what’s going on now. Jones explained that the 1987 crash was derivative inspired. The S&P futures were down 33% before the open on that Monday.
He also said that 1987 is dissimilar to what’s going on now. He said we have a bubble now and he’s not sure whether it’s in the stock market, according to our source’s notes. 
As for last week’s market activity, Jones said that on Thursday we saw a five standard deviation (that’s a volatility measure) kind of movement in one day. He said we will see this kind of volatility in the future.
Speaking of the volatility of the last two to three weeks, he said that was due to position clearing and it’s similar October 1998. (Our source pointed out that’s when the Long Term Capital Management event happened. Jones didn’t explicitly say that, though.)