Investing Ideas for 2008

The Best investment ideas for 2008

1) Taiwan

The recent election of Ma Ying-jiu as the next president of Taiwan. An anti-corruption and pro-China candidate is set to reverse the deteriorated relations that his predecessor Chen Sui-bian had created. Ma Ying-jiu has already made it his agenda to improve relationships with Beijing and loosen and increase trade between Taiwan and China. As a gesture, Beijing plans to remove half of the missiles that are currently aimed at Taiwan.

The better relations will bring many benefits:

Currently laws in Taiwan has it that Taiwanese companies may only move up to 40% of manufacturing onto the mainland. Should these laws be loosened, the immediate benefactors will be Taiwanese export companies as their manufacturing costs will go down. This will be an immediate boost to their near term financial results.

As Jim Rogers has articulated. Taiwan may become an island paradise for Chinese tourists. Tourism is sure to increase as travel restrictions are loosened.

The Taiwanese Dollar is also on a rise. It has already risen 10% against the American dollar since January of this year but still lags behind the Euro which has risen 15%. The Euro has risen tremendously in the last few years not so much because it is the most attractive currency but more so because investors need a major currency to hide away from the depreciating American dollar. Until the Chinese Yuan becomes freely convertible and accessible for foreigners, The Taiwan dollar is a good alternative to place your chips on Chinese growth and to diversify away from the American dollar.

The easiest way to invest in Taiwan is through the Exchange traded fund listed on the NYSE as EWT. Buying EWT presents two advantages. One, is you are buying and believing in future growth of the Taiwan economy, no need to pick and risk in specific companies. Second, it is a hedge against the US dollar as the assets that EWT buys are Taiwanese stocks priced in Taiwanese dollars. Therefore, should the US dollar fall further against the Taiwanese dollar, the assets (and thus EWT) will increase in price since EWT is priced in US dollars.


2) Australian Dollar

Australia, just like Canada, Norway, Argentina, Saudi Arabia etc are mainly resource based economies. Meaning that the staple of their economies are on the natural resources that they sit on. Oil, timber, wheat, metals, soybeans, whatever they may be, these economies have seen a strong comeback in recent years due to the much increased demand and high commodity prices that have followed.

I have previously favored the Canadian dollar which has risen over 60% against the US dollar over the last 7 years. The Canadian dollar has also historically traded at a 10% premium to the Australian dollar. Meaning one Canadian dollar has historically fetched $1.10 Australian. This trend has recently been broken and as of this writing, one Canadian only fetched $1.05 Australian. I see two reasons for this sudden surge in the value of the Australian dollar:

Firstly, the Australian dollar is yielding 7% versus the Canadian dollar at 3.25%

Secondly, as increasing world trade and focus is shifting from the US to Asia and China. Australia is set to benefit. Canada is highly dependent on the US in her economy. Whereas Australia is more on her Asia and pacific rim partners. Australian prime minister Keven Rudd recently was on the Chinese island of Hainan to meet with Chinese leaders. There, he made a speech in mandarin! And fairly good mandarin at that. He is a prime minister that understands well that his countries economic well being is highly inter-dependent with Asia's. Australia is sure to benefit from these ties and future projects and business trade over similar economies such as Canada.

This is also a hedge against the falling US dollar.

3) Solar, Wind and other alternative energy

A recent survey by Tobin Smith's Changewave Alliance research shows Solar power to be an overwhelming first choice for alternative energy source. The reasons are obvious. Solar power is plentiful and unlike ethanol, it doesn't take away from other needs such as corn for food. A quick search and filtering will show that eight out of every ten Solar companies are in China. Germany and US companies are also at the cutting edge. Many governments around the world are encouraging the use of Solar and providing tax incentives to do so.

I see solar as the next 'leadership industry group' a term used by the Investors Daily group. Some of the front runners in this space are FSLR, JASO, SOL and LDK all listed on NASDAQ and NYSE.

4) Agriculture

For those who follow the markets, the word 'Ag' should not be unfamiliar because Agriculture companies have seen a rise especially over the last two years. But this trend of growing demand for food is set to continue and some of the companies best set benefit from this bull market are POT, VT and MON. ETFs are also available, DBA and JJA listed on the NYSE

5) Water

World wide water shortages is becoming serious and many Water distillation companies and filtration companies are set to benefit. The best way to invest in this space is through ETFs such as PHO listed on NYSE

6) China

The Shanghai stock market has seen a 50% haircut since its peak in early November of 2007. The hit has mainly been due to a pull back from over extended levels and a pullback in the US which many still believe will have large effects on the Chinese economy. Where people stand varies on this but my understanding is that the two economies are not as correlated as people think. Sure, a slowdown in the US will affect the world, but it won't stop the rest of the world at its track. A slowdown in the US economy should cut 3% of GDP from China's 9%+ GDP growth at most. Internal demand is also strong. I therefore encourage all to begin investing in China if you have not so already. The best way is through FXI traded on NYSE which is a basket of Chinese H stocks listed on the Hong Kong stock exchange.

7) Supermarkets

Supermarkets are great investments during a recession. Some of the best supermarket chains around the world are Seven Eleven and Carrefour. Both very competitive and doing well in international markets outside of their home markets. Seven Eleven is wholly owned under Seven and I in Japan under the ticker symbol 3382. Carrefour is traded in France.

Middle East Tension

Almost immediately after I made the call that oil has made a temporary peak, trouble breaks out in the middle east between Israel and Lebanon. Oil almost immediately broke the old high and is currently settled at $77. I guess that's the risk of putting my neck out and making a call. I will continue to monitor the price action of crude prices to determine if it is wise to be long again in oil.

But one thing worth noticing is that the price of Crude stocks in service and exploration are still 10% or more below their peak when crude prices reached $75 previously in May. What this tells us is that investors do not believe that the current crude prices are sustainable long enough for oil companies to benefit. In other words, the current spike in crude prices is temporary due to uncertainty of war between Israel and Lebanon. There is at least a $15 war premium built in to the price of crude today.

Further, the liquidity problem today has dampened speculation capital. Another reason worth noting for the continuous decline in equity prices.

Apple computers has been a favorite short of mine recently. The volume and price action of this stock is not bad for trading. I've been shorting it on and off since it was about $60. It closed at $50.67 this Friday. The problems of Apple are many and beyond the scope of this entry but I'd thought I'd mention what I've been doing in the markets recently.

Middle East Tension

Almost immediately after I made the call that oil has made a temporary peak, trouble breaks out in the middle east between Israel and Lebanon. Oil almost immediately broke the old high and is currently settled at $77. I guess that's the risk of putting my neck out and making a call. I will continue to monitor the price action of crude prices to determine if it is wise to be long again in oil.

But one thing worth noticing is that the price of Crude stocks in service and exploration are still mostly over 10% off their May 10th peak. What this tells investors is that Buyers do not believe that the current crude prices are sustainable long enough for oil companies to benefit. In other words, the current spike in crude prices is temporary with a large war premium built in.

Further, the liquidity problem today has dampened speculation capital. Another reason worth noting for the continuous decline in equity prices.

Apple computers has been a favorite short of mine recently. The volume and price action of this stock is not bad for trading. I've been shorting it on and off since it was about $60. It closed at $50.67 this Friday. The problems of Apple are many and beyond the scope of this entry but I'd thought I'd mention what I've been doing in the markets recently.

Oil has peaked ....for now

Yes, you read that right. I have been an oil bull for over 2 years but it is my belief that oil has reached a temporary peak. The peak was reached on 7th July 2006 at $75.78 per barrel of light sweet crude. My only reservation to this prediction is if war breaks out somewhere, or there is escalation of troubles in the middle East. Based on fundamentals, oil prices have peaked.

What this means is that prices at the pump will ease.

My prediction is based on a number of indicators:

- Slowing of the US economy. This will affect even China. US spending has fueled much of the growth in the worlds economy in services and products. A large percentage of Chinese growth is in selling products to the US. When the customer reduces buying, the shop surely will feel the pain
- Demand destruction of high oil prices is becoming evident
- Tightening of worldwide monetary policy. Reduced liquidity worldwide will keep speculation money in check
- Technical analysis of crude prices over the last two months with action on Friday 7th July critical
- Marginal increase in Supply due to high prices motivating maximization of old oil wells, Canadian Oil Sand coming online and increased drilling worldwide

The peaking of prices is ofcourse only temporary. It is still my firm belief that we are in a long term commodity bull market for at least the next 10 years. We are only in the early stages but as in all bull markets they are never without temporary set backs.

Nardelli needs to go

I have never invested in Home Depot but having watched Nardellis' (CEO) interview with Maria on CNBC, my impression of him could not be worse.

His demeanor and avoidance to answering the questions asked was pathetic. What I found most annoying about him was his repeated use of the word 'Again' to precede ever answer as if he was asked to repeat himself.

For a guy from GE trained by Jack Welch, this guy is pathetic. Robbing the companies vaults and mistreating the shareholders.

Nardelli needs to go. The day Nardelli announces his resignation is the day to buy Home Depot.

The History of Wall Street

I am about to finish reading a fascinating book called 'The Plungers and the Peacocks' by Dada L. Thomas. The author through his research presents the history of Wall Street from its inception to the infamous Tech bust at the turn of the century. The stories are intriguing and grips the reader from page to page.

As a student of history, I am a big believer that history needs to be studied and remembered to avoid the same catastrophes from re-occurring. The chapters on the Crash of 1929 and the following Great Depression are must reads for any student of the markets. According to the author, the event that preceded the Crash was a liquidity problem. The US government at the time had just begun to implement measures to halt credit from being to easily loaned to brokers and stock traders. Further, interest rates were on a rise at the time. The liquidity problem eventually lead to the crash where fortunes were wiped out, many people unable to handle the shock committed suicide and there was panic everywhere. A ten year depression followed in which the economy suffered and the market continued to fall. Many a veteran trader who escaped the crash of 1929 unscathed returned to the market shortly after to buy 'at the low'. The way it has worked for them so many times in the past. Unfortunately, the unforgiving markets continued its slide and wiped them out also.

Could history repeat itself in today's sophisticated markets and watchful government regulations? Nobody knows for sure, but to completely ignore the possibility would be foolish. May 10th 2006 was the day the US markets begun to fall. Gold had hit a high of $740 and commodity futures and stocks were at all time highs. The big sell-off was followed by markets all around the world. Many blamed new Fed reserve chairman Ben Bernanke for his stance on further interest rate hikes. However, the real reason lay beneath the surface. The real reason was the reduction of liquidity by the Bank of Japan of 200 billion dollars. Some resemblance to 1929? As a result of the reduction of liquidity, investors especially large hedge funds have been liquidating their holdings, unleashing a big wave of selling.

The market hit what may be a temporary bottom a week ago and is currently showing a small rebound. The bigger question is whether markets will continue to fall. Interest rates are rising in the US and worldwide. Liquidity will continue to be a problem The housing boom in the US which has been driving most of the economic activity in the last 4 years is slowing. Oil prices are rising and consumers, already debt ridden are pushed harder than ever before. Experts argue that economic activity continues to look strong but I would argue that things look the best just before they turn south. Looking forward, investors need to be mindful of the lessons from the 1929 crash in our current investment climate.

Bill Gates to retire in 2 years

It has been exactly one year since I last updated. I apologize for the lack of updates. I have been busy and travelled for 9 months over the last year and in the process observed the economies and culture of many countries. I hope to share some of those thoughts on this blog in the future.

And to today's topic:

Bill Gates announced last night that he will be retiring from Microsoft in a couple of years. The Microsoft empire has obviously changed the world and the way we live. But many question where Microsoft is heading. With Google leading the internet advertising space and leading the next generation of on demand software and web-based software. Can Microsoft remain King for much longer?

Bill Gates is a legend. He will be remembered as one in the tech world as well as the most generous philanthropist in history. He is a great visionary and a great man.

I think the bigger question for Microsoft is Steve Balmer and the rest of the top management and architects. If they can innovate and mobilize Microsoft to be nimble, they have a great chance to remain on top in the next change wave of software technology. If they cannot, the departure of Bill Gates may be remembered as the day Microsoft turns south

Gushing with oil? Oil reaches new highs

The price of light sweet crude reached new highs today at over $58 a barrel. For those of you who followed my advice in my March 23rd blog entry 'Oil Investments' will have made a nice 20% gain on XLE (Energy ETF). In that entry, I suggested accumulating shares of XLE when a barrel of oil corrects below $38. Oil retreated during the months of April and May and by mid-May, Oil was below $38. XLE fell below $37 on May 16th and today closed at $45.84.

My prediction is that oil will continue its streak and peak beyond $60 before retreating back to the low 50's. People have to understand that the days of cheap oil are days gone by. We have to get used to living in a world with high energy prices in a larger 10-15 year commodities boom cycle. We are in a demand driven oil boom with tight supplies. Add in the terrorism factor and natural oil disruption factor (such as hurricanes in the gulf of Mexico), we get the high prices of oil we have today.

In the past Saudi Arabia has had the ability to significantly increase their oil production overnight. This is no longer the case: at least not with sweet crude. They are able to increase the production of sour crude only. What is the difference? Sweet crude is more expensive than sour crude and the problem is that most refineries in the USA does not have the infrastructure to refine sour crude. The end result is that sour crude supply may increase but it will not affect increases of price at the pump.

This handicap at most refineries creates a huge opportunity for refineries that can refine sour crude as the gap between sweet and sour crude prices widen. They are able to sell the final petroleum products at the same high prices as others while purchasing their crude at a discount.

One of the biggest sour crude capable refiner in the US is Valero Energy (VLO). This stock has risen from as low as $56 from the sell off in May to the current $80. This company has a great balance sheet, good management and leveraged to the price of oil. I would recommend picking up shares when oil pulls back as anticipated in the near future.

Collusion in Real estate?

The information super highway has dramatically upended the way many businesses operate: particularly profit margins. Retailers now have to compete with online retailers and eBay. The competition drives prices down and the consumer wins. Stock brokers have to compete with online brokers with trading costs that are a fraction of what they used to be. Again, the consumer wins. Auto salesmen now have to compete with previously unavailable information to the public such as manufacturer rebates and dealer costs. They can no longer charge outrageous prices because consumers know when they are getting ripped off.

These are only three examples. But how about the real estate industry? In the US, real estate agents charge a 6% fee on the closing price. In Canada, agents charge 7% on the first $100,000 and 1.5% on the remaining balance. These fees have not dropped and those in the industry continue to enjoy such fat margins. The question I have in my mind is how this strong hold has resisted what so many other industries could not. I speculate some possible reasons:

- Selling and buying homes are very personal. The crew on Fox's 'Cavuto on Business' jumped on guest Tom (a real estate agent) this week about the non competitiveness of the industry. Tom argued that buyers and sellers get security because agents can screen the buyers. He also argued that commissions have dropped from 6% to 5% but that is despite the average home value rising from $200K to $800K

- Selling a home is unlike selling stocks. The buyer has to enter and view the home. This aspect cannot be done online.

- Listings online are limited

- The industry is doing whatever it can to maintain the status quo by minimizing the possibility of competition

The realestate market has been booming the last 4 years. When everyone is making money, they don't necessarily question the fees that they have to pay. However, as the market slows and less profit is made, people will begin to question the value that they got for the fees that they paid. This is especially true for homes that practically sold by themselves the day they were listed.

The boom has also encouraged many to become agents. This will increase the competition and lower prices. 1% flat agent fees have already begun to be popular and this should become the norm in the future. A slowing market should also result in slashing fees as more agents fight for reduced deals.

Jim Rogers - Riverside Conversation 2

I've got some great stuff here. A thought provoking conversation between Jim Rogers, Marc Faber and Anthony Burgmans on the economies of Europe and where they may be heading. This cannot be missed!

Go here. And click on the video link on the right (the second one down is the high bandwidth video)

Find out about Jim Rogers here.
Find out about Marc Faber here.

Whiplash

Feeling some pain in the back of your neck? That's how I feel after the whipsaw action in the markets this week. Down big one day and then up big the next. If you are trying to time this market - good luck. I don't think anyone can and I pity the TV commentators who have to change their tone everyday. Sounding bullish on one and bearish on another. What I don't like are analysts who caution viewers not to buy after a bad day and then say 'I told you to buy' after an up day.

A recap of the whipsaw action the past five trading days:

Friday - Markets down big. DOW down 191 pts, Nasdaq down 40 pts. This was capitulation but many thought this was only the first stage of capitulation and that a second and final sell off would take the DOW down to 9800 pts.

Monday - Markets ended flat. The bounce that some predicted did not happen. Maybe this was just a break before the second leg down.

Tuesday - UP day! DOW up over 50 pts and Nasdaq up 20pts. Maybe we are out of the woods? Maybe the bottom has been reached on Friday.......but wait...

Wednesday - SELL! Big down day. DOW down 115 pts and Nasdaq down 20 pts.

Thursday - HUGE up day! Biggest up day since the year 2003. DOW up 206 pts and Nasdaq up 48 pts!

What is going on? Are you feeling dizzy yet? Pessimism was rampant in March with fears of inflation, rising Fed rates, decreasing corporate profits. Negativity everywhere. IBM's poor earnings and apples estimates miss last week were oil on fire.

This week, Intel had great earnings. Followed by Yahoo, EMC and Google. These companies beat estimates and raised guidance. Hey, maybe the economy ain't so bad after all?

I'm excited to see what tomorrow brings.

How quickly things change in the stock market. Just last Friday the markets tanked with the DOW dropping 191 points. Voices screaming 'sell! sell!' and 'economy is falling of the cliff' could be heard from the myriad of market bears. This week, a ray of warm sun light has landed on the markets and they are looking good so far with solid earnings coming out of Texas Instruments and Intel. If you sold on Friday then you really need more patience. Patience is gold for anyone wishing to win in this market. In fact, you need nerves of steel.

I have come to the conclusion that with the introduction of online trading and ever improving trading technologies available, trading has become easier, faster and more accessible. As a result, markets have become more volatile with wilder gyrations. The volatility comes faster and goes away faster than ever before. Markets can now have huge swings from overvalue to undervalue in the matter of days. The folks at CNBC giving daily commentaries can barely catch up!

This week is shaping up to be a good week for the technologies. The semiconductors in particular should have a nice bounce tomorrow. If you hold these stocks then I caution that you sell into strength this week because the outlook for the sector is still weak for the rest of the year.

Anticipating a tough day

After IBM's disappointing earnings announcement, everyone is expecting a tough tough day tomorrow in the markets.

After market open in Europe this morning, a commentator on CNBC World, looking at the down market numbers across Europe said to viewers - 'If you are long in the market, go take a break, lie down and take an aspirin'.

Golden words of wisdom.

Bitter Sweet Apple Earnings

What a tough market. Apple reported earnings after market close yesterday beating estimates and showing sequential growth and higher revenues. But Apple stocks fall and are now trading at $37 falling from $41 before earnings release.

Sometimes, markets are all about expectations and reality and where the two meet. When a stock has low expectations but releases good numbers in reality, it rises. In the case of Apple, expectations have ballooned so big that even a great reality is not great enough. So the stock sells off.

I believe the core of the issue is that although ipod sales have gone up 16%, profit margins have fallen 16%. This means that although they are selling more, they are having to reduce prices to do so. In addition, the halo effect of ipod owners buying MACs have not yet materialized with MAC sales increasing only 2%.

Sit tight, this apple ride is very bumpy.

Investing in Apple Computers

Jim Cramer from CNBC's Mad Money thinks that Apple Computers earning report will be good this week. He also thinks they will give good guidance.

Apple has doubled over the last 6 months riding on the tremendous success of the IPOD. IPOD and accessories sales are now half of Apple's total sales!

Most understand that the IPOD will not and can not rule forever. Competition from Creative Labs and other manufacturers are heating up and prices are sure to fall. It is however the halo effect of the IPOD that will bring fortunes to Apple. Many believe that a high percentage of IPOD owners are likely to switch to the MAC from the PC. This will drive Apples future growth.
I personally won't be switching to MACs anytime soon, but I can understand why many would. MACs are good looking and trouble free - a great combo for most users.

For these reasons, I believe Apple would be a good trade at least for the short term to take it a few points higher.

Investments: Buy Energy Sell real estate

Winds of change are constantly blowing on our economy into different directions. What direction the economy ends up taking is difficult to see day to day. But slowly the trend becomes visible akin the pattern of the sands on the beach.

Some indisputable truths are visible: Energy prices are increasing, interest rates are increasing, inflation is increasing, real estate has been on a tear upwards for the last 3 years.

Before I continue further, let me remind you that all markets go in cycles. Nothing goes up forever and nothing goes down forever. Bubbles form when crowds become irrational and chase for profits. Bust cycles follow with people who chased the tail end getting burned the most.

Energy prices are going to go up for the long term. Oil in the $20-30 dollar range will never be seen again in our lifetimes because exploration costs and refining costs alone are above $25 a barrel. Add the increasing global demand from emerging markets (China, India etc) and you can see why both supply (decreasing) and demand (increasing) is going to push prices to knew highs.

In the short-term, oil may retreat. That I anticipate. Oil related stocks and investments have gone up quickly recently and a correction should be around the corner. Nothing ever goes straight up. But in the long term, buy energy.

Interest rates are increasing and it has to stomp inflation. There has been a lot of speculation on housing with people flipping condos and houses like stocks. This has largely been fueled by the low interest rates. But as the rates increase, demand will slow. The overblown bubble will burst. People stretched on their mortgages with a tiny down payment and floating rates will get hurt the most. Its unfortunate that such events happen but history shows it always happen when people flock to a place where there seems to be endless flows of easy money. If you own several homes hoping to flip them, I advise you sell them while the market is still good because by the time the masses see the bubble bursting, they will be flooding to the emergency exits and those slow to move will get tramped on amidst the frenzy.

Recession?

Yes, the horrible R word. I don't know for sure if we will be entering a period of recession in the near future but there is a possibility. Higher oil prices affect everything that we do beyond just at the gas pump. Food gets more expensive to produce, transportation of goods get more expensive, utility bills increase, holidays get more expensive - EVERYTHING becomes more expensive. What's the immediate result? People spend less. The economy slows.

Spending slows, people hold back in buying that new condo, they go to the mall less and they go to restaurants less. The weekly high prices they pay at the pump decreases their appetite to spend.

The cost of businesses due to higher energy prices also increases. Combined with slowing spending, companies may close shop or would need to cut cost and unfortunately workers lose their jobs. This viscous cycle continues.

Could all this trigger a global recession? Possible. Slowing spending in the west would hurt many economies around the world including China and India whom sells most of their goods here. The world's economies are intricately bonded to each other.

The end result is be very careful and diligent with your investments. We are entering a difficult period.

Jim Rogers' daughter learns Chinese

I'm a fan of Jim Rogers as you probably know by now so I certainly cannot miss sharing with you a Business Week article that I've found. A little old from 2004 but interesting nonetheless. If you are interested in Jim Rogers and his investment ideas, be sure to check this out.

Jim Rogers' Home Truths

Oil investments

By now you should have heard and seen the rising oil prices. As I write this, oil is at $56 a barrel. Some believe that oil is clearly overpriced while others feel it will go even higher.

No doubt high oil prices have a negative effect on the economy. Businesses cost more to run, people spend more money on gas and less in consumer products and overall sales and profits fall.

Oil bears argue that oil have risen too much based on speculation. Oil Bulls argue that although oil prices are high, it is still low historically on an inflation adjusted basis.

I am on the oil bull camp. Oil may have a short to medium term adjustment back to about $45 a barrel but it will never reach the $30 again. The reasons are many but for one, most of the 'easy to acquire' oil from the existing oil wells have been drained. The cost to acquire the remaining oil has risen to $22-$25 per barrel and new oil exploration has also diminished. Add the fact that China and India are fast becoming huge oil importers, buying up all excess capacity that used to act as a price cushion for increased demand in the west . The thirst for oil in China and India is expected to continue to increase for the foreseeable future.

As investors, where can we direct our investments? My advise is to invest selectively in oil stocks. An oil ETF (Exchange traded fund) I recommend is XLE with a very low expense ratio (0.27). XLE has large holdings in many oil stocks such as Exxon Mobil and Chevron Texaco. It has risen over 20% already in 2005. It is trading above $43 and I would start to accumulate below $38 on a pull back.

An adjustment in oil price is normal and expected by about June when the US government will make available some of the 700 million barrels of reserves to help curb prices. They however cannot fight the underlying fundamentals for long and the trend in higher oil prices will continue to increase in the long run.

I will share with you about other oil investment possibilities in my next blog entry.

Good luck investing!

Surprise--Gates is still world's richest person | CNET News.com

Want to see who the billionaires are according to the latest data from Forbes? Maybe our investments will take us there some day....;)

Surprise--Gates is still world's richest person | CNET News.com

Rejection, argument, anger and finally acceptance

I'd like to share an excerpt with you today:

".....I am reminded of the various stages of grief: rejection, argument, anger, and acceptance. It is true of terminal disease and the progress of great ideas as well. When somebody first comes up with a new idea, everybody ignores it. Then people ridicule it, coming up with vehement arguments against it, before arriving at acceptance and support. Then not only do they find themselves explaining why it is a good idea; they go on to say, 'Yeah, I thought of it.' It has been proved to be true though out history and is true of politics, economics and warfare. General Billy Mitchell was drummed out of the service in the 1920s for claiming the aircraft carrier was the wave of the future. Nobody remembers that now, of course, certainly not the people in the armed forces".

-Jim Rogers, in 'Adventure Capitalist'

Why is it that new and great ideas are always met with ridicule and rejection? History is laden with great men whom introduced radical new ideas, only to be shamed and accused of heresy.

Galileo, in the early 16th century, proved through his scientific research that the Sun did not revolve around the earth. Instead, he proposed that the Sun is in the centre while the Earth rotates on itself and moves around it. We all know this today as common sense but Galileo was found guilty for proposing such heresy and condemned to lifelong imprisonment.

When people hear a new idea that doesn't affect them, they greet it with indifference. However, if it does affect them, they greet it with rejection and argument because it changes their world. It is unfamiliar and it makes them uncomfortable. It creates a feeling of insecurity.

These emotions are followed by anger. An emotional reaction against the person whose idea has threatened to disrupt their world (as in the case of Galileo condemned guilty).

Finally, after the evidence is undeniable, the once radical idea is accepted as fact. In some cases, the same people who most violently rejected the idea now claim the idea to be theirs. It is too bad that this type of human behavior keeps repeating itself. Would we ever change? I often have to fight my natural tendencies to reject new ideas and instead to keep an open mind. How open minded are you?