climate change – south african conferences 2009 climate change ian ling five stages of grief

Climate Change – South African Conferences 2009

Climate changeIan LingFive stages of grief


Loads of grief

1. Equity markets have fallen sharply


World Equity Markets (USD)30 April 2008 to 30 April 2009

Index % change

USA S&P 500 -37.01%

UK FTSE 100 -48.11%

France CAC 40 -46.45%

Germany DAX -41.88%

Japan Nikkei 225 -32.84%

Hong Kong Hang Seng -39.40%

Asia ASX200 Index -48.05%


MSCI World

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Liquidity crunch


Loads of grief

1. Equity markets have fallen sharply

2. Property market collapse

3. Commodity prices collapse

4. Corporate bonds tank

5. Interest rates fall to zero

…….worries over another depression

… are we following Japan??


Nikkei IndexSince 1970

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What can we expect?

Edwin Coppock– 1960’s

• Technique to determine long term investment opportunities

• Investors need time to mourn the death of a bull market

• 10-14 months according to Church Bishops

Look at the thoughts of two analysts who have assessed the link between grief and market behaviour


20062005200420032002200120001999

Australia's All Ordinaries Index

The Coppock Indicator

The indicator is trend-following, and based on monthly averages, so by itsnature it doesn't pick a market bottom, but rather shows when a rally hasbecome established.

Buy signal


The Coppock Indicator

1. Very close to a buy signal for the S&P

2. Interestingly almost exactly 9 months after Lehmans collapse and Fannie Mae and Freddie Mac rescue


What can we expect?

Elisabeth Kübler-Ross

• Developed a behavioural pattern of people suffering from terminal illness, and later to any form of catastrophic personal loss (job, income, freedom)… loss of capital!!

• Identified five stages of grief


Five stages of grief

Elisabeth Kübler-Ross

1. DENIAL

2. ANGER

3. BARGAINING

5. ACCEPTANCE

4. DEPRESSION


Kübler-Ross Model – 5 stages of grief

1. Denial - "This can't be happening, not to me."

2. Anger- “It's not fair!"; "Who is to blame?"


Goodwin defiant over pension as investors heckle RBS Board The independent 04 Apr 09

Goodwin defiant over pension as investors heckle RBS Board The independent 04 Apr 09

Protestors smash into RBS branchThe Financial Times 02 Apr 09

Protestors smash into RBS branchThe Financial Times 02 Apr 09

Fury at $2.5bn Lehman bonus- The Times 21 Sep 08

Fury at $2.5bn Lehman bonus- The Times 21 Sep 08

Eleven AIG executives quit despite bonuses up to $4.6 million

The Times – 17 Mar 2009

Eleven AIG executives quit despite bonuses up to $4.6 million

The Times – 17 Mar 2009

Merrill Lynch’s CEO spent over $1 million to redecorate his office—even as the firm faced a financial crisis.

Merrill Lynch’s CEO spent over $1 million to redecorate his office—even as the firm faced a financial crisis.

Former RBS chief's house attacked amid pay outrage

The Financial Times 26 Mar 09Former RBS chief's house attacked amid pay outrage

The Financial Times 26 Mar 09

The people v The banker: The payouts party is over

The independent 15 Feb 09 The people v The banker: The payouts party is over

The independent 15 Feb 09

AIG chief urges staff to return bonuses

AIG chief urges staff to return bonuses



1. Denial - "I feel fine."; "This can't be happening, not to me."

2. Anger- Why me? It's not fair!"; "How can this happen to me?"; "Who is to blame?"

3. Bargaining - “how can we sort this out?” – G20? G2?


Sorting it out – director/shareholder relationship

Pre 2009 – companies not run for the benefit of shareholdersrun for benefit of directors

• Options…Exactly that…not a long-term commitment

• Borrowing to buy back shares. Increased share price – make options more valuable Increased gearing

• Excessive pay – Oligarchic. Justify paying in comparison to peers.

• Shareholders passive – stock going up so no concern.


Post 2009 - Change of sentiment

• Companies will be run for the shareholders again (e.g. Japan)

• In some cases CEOs have to buy a number of shares determined in relation to their overall remuneration.

• Proposal for average wage to appear in report and accounts and the difference between the highest and lowest salaries and male and female wage differential.

• Shareholders becoming more activist

Sorting it out – director/shareholder relationship



1. Denial - "I feel fine."; "This can't be happening, not to me."

2. Anger- Why me? It's not fair!"; "How can this happen to me?"; "Who is to blame?"

3. Bargaining - “how can we sort this out?” – G20? G2?

4. Depression – “why bother with anything?"; What's the point in saving?“

5. Acceptance - "It's going to be okay."; "I’ve taken the pain and can start again”


CautionCertainty

Disbelief

Concern

Belief

FEAR FEAR

GREED

Ian Ling Fear and Greed Model – (patent pending!!)

Capitulation


MSCI World

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-76

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-88

Mar

-91

Mar

-94

Mar

-97

Mar

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Trading range

GREEDGREED

FEAR FEAR

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climate change – south african conferences 2009 climate change ian ling five stages of grief

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