By Liu-Yue (Louie) Lam, Co-founder, CEO, & Chief Investment Strategist, Oxstone Capital Management
The ongoing crisis in Egypt is much more important than people realize. I think the scary black swan scenario is that this crisis leads to a contagion effect across MENA. Much like the Asian Financial Crisis in the late 90’s led to political turnover across southeast Asia including Indonesia, the current crisis may lead to political turnover across the middle east. Which middle east country will this crisis engulf next? Iran? Saudi Arabia? That would be scary!
Social discontent from soaring food prices and the growing income gap between the rich and poor are fueling thoughts of revolution. There is also a darker element behind the scenes as potential extremist groups and opportunists seek to exploit the masses of social unrest to grab for control and ruling power. Which is better? The old dictatorial regimes or a newer unknown ruling class? Think of Iraq and beware.
The continue crisis may lead to gold at $1,800 and oil at $200 which would lead to another global recession in short order. Be prepared. Geopolitics and macro events will impact your portfolio.