Is this a Global Mania and if so when will this Global Mania End?

We all have a lot of money invested in the markets globally in one way, shape or form. Either we are working for companies that are dependent on the global players, or are invested in the stocks of the global companies, or are trading partners of these companies that trade across borders. Either way, we are 'invested' in them, and therefore dependent on the growth of their trade......

Is the Indian, Australian, Chinese, Hong Kong, Argentina, Brazil etc emerging markets going to continue it's growth and stock market mania or will 2007 show a topping formation that will take it all stumbling down. Neither of these markets when looked inside-out have any great reasoning to do so (i.e. future view is very bright), but it might not be any single country or market that will correct, but, it will be one feeding the other. We often call it a domino effect. As I was traveling from US to Asia in Apr'2006, I noticed this phenomenan.....So, if you have done homework to see how 2006 corrections started, and what happened, you will soon see that it was 'more' a correction of 'excesses' than a correction with logic, that started from one country, and was bleeding over to another, as if in a spiralling wave downward! If we have the same thing happen in 2007, we are starting at higher level across the board on all markets.

If you dip into the historical accounts of financial manias in classics like Extraordinary Popular Delusions and the Madness of Crowds, or even more contemporary accounts like Devil Take The Hindmost: A History of Financial Speculation, you are struck by one thing. The collective psychology of financial manias remain remarkably similar, no matter the time or place. The French were right: Plus ca change, plus ces't la meme chose. "The more things change, the more they stay the same." There are various forums analyzing and debating this same point. But, very few want to heed this advice, cause we are trained to be 'wanting to be on the train, rather than being left behind at the station' (smile now if you agree!!!!!).

Look at the Chinese markets.....It has been on a rocketing move and the mania in China's mainland has as much in common with the Tulipmania of the 17th century, as it does with the Internet boom of the late 1990s and early 2000's. In particular, the run-up of the Shanghai index is remarkably similar to the recent meteoric rise and collapse of the Arab markets -- down 70% since February 2006. Both took root in a country that had little or no experience with a stock market. And, a "this time it's different" atmosphere pervaded, a set of new fangled heroes drew in millions of unsuspecting small investors, and those who came late to the party ended up suffering devastating losses after the inevitable crash. Like the Arab markets, the Shanghai market is closed to foreign investors. But as the 9% drop in the Shanghai index on Feb. 27 shows, unlike the collapse in the Middle East, the impact of the Shanghai swoon can be felt all the way to Wall Street.

Even the biggest China Bulls around admit that China is in a bubble. The Shanghai Composite Index is now approaching 4,000 -- a rise of nearly 40% so far this year after a 130% increase in 2006. The Shanghai and Shenzhen exchanges now have a market cap of about 15 trillion yuan ($1.8 trillion). While that doesn't make it a big market globally -- the New York Stock Exchange had a total capitalization of $26.5 trillion as of Dec. 31 -- China's market places second in Asia, behind Japan, after surpassing Hong Kong just last month.

Every stock market rise leads to a level of pride not experienced before for the current investors (notice, I did not say happiness), but every stock market correction of any magnitude ends in tears -- as has every other mania in history.

With all the 'deeply engrained cultures from centuries', nothing prepares mankind in China or India or Hong Kong to handle the oncoming correction.....

You may call me bearish after all of the above, but, I am also waiting for that 'eternal' signal when I feel I will come out and side-step the correction with my investments in the US, India, China, and other Emerging markets. But, will I? More importantly, will you?

KKP

ps: Excerpts taken from SeekingAlpha as well as Yahoo to write the above article