MENA region was taken for granted. Whilst some countries had namesake elections for presidents, others were ruled by monarchs. Some of the monarchs are better than acclaimed democracies in the world. The best example is UAE where the governance is much better and where both nationals and expatriates live side by side and enjoy living standards better than in the western world.
However, not all of the MENA is like that. Many are poor and corrupt with exploding population due to large families with five or more kids, who fought from childhood for chances of betterment of life against intense competition for limited opportunities available.
Overall comparable to the situation in France in 1789. Such frustrated population, if enlightened by non-religious thinkers speaking fearlessly about ‘Equality, Liberty and Fraternity’ is capable of making a radical change. French revolution was aided by the technology of that day, i.e. printing machines. Once the French decided to revolt, Europe was never the same again. The revolutionary ideas resulted in the separation of state from the religion, which enabled the free thinkers to explore ideas with new inventions and theories, without fearing the backlash of ‘traditionalists or religious extremists’ who dwindled away as the new thoughts and ideas took root in the minds of population and new generations.
I don't know about any such non religious thinkers in MENA region; however a revolution did take place in Tunis late last year. It is reported a poor frustrated fruit vendor when his fruit cart, which was his only livelihood, was confiscated by the police, in the moment of desperation, he set himself on fire. The rage of frustration that gripped the population was unleashed and spread like wild fire across the region, of course partly technology – i.e. social media. Like in French revolution the army sided with the people and turned against 'monarchs'. It was repeated in Egypt. It looks like it may repeat in Libya and who knows who is next. Let us hope this revolution will bring in 'Equality, Liberty and Fraternity’ into MENA region. Also hope that MENA region will produce free thinkers, new inventions and theories, without fearing the backlash of ‘traditionalists or religious extremists’.
If you talked about such events will take place 6 months ago, no one will believe you. Such events have all features of 'black swan' theory developed by Nassim Nicholas Taleb. The theory ridicules the belief that today’s 'normalcy' will continue into the future and hence predictions are possible. It says that the high-impact, hard to predict, rare events shape the history, science, finance and possibly anything human. Nassim goes on to say that once such rare and unaware events happen, the human nature find explanations for its occurrence, and wonder how they missed it i.e. makes it explainable and predictable.
Well, based on the events in MENA the prediction gurus are out there forecasting possible oil prices beyond USD 250 p/b and the problems and opportunities it could bring in. Whilst every one agree that the normalcy of MENA is upset with 'outlier' events, the financial markets in the world more or less still behaves in 'normalcy standards'. Although the oil prices have moved up significantly, which will impact automobile manufacturers to transportation to energy based manufacturing companies and almost all players in the oil based global economy, the world economy tries to behave as if 'normalcy' continues.
The recent past when the oil price touched USD100 p/b was in the early 2008 (due to demand > supply?) and peaked in July 2008 at USD 147 p/b. However, when world of finance crashed along with Lehman, oil price also crashed. Now the oil prices are back at USD 100/- plus due to entirely different reasons.
Many investors are now worried about their investments, which is quite right. What should be the risk appetite? Should they sell now and place them in fixed deposits? Or since many markets are down in double digits already during this year, is it not the time to buy? Best example is India. Again should not we buy into the possible rally of economies coming out of recession in style with several positive indicators on the horizon? The best example is USA.
What will be the oil prices after one year? Answer to this question will solve the concerns about the future performance of many stock markets in the world and hence consequently several portfolios. Of course you can try to predict the oil prices and can have an investment or portfolio strategy depending upon your views.
But be aware of the 'black swan' that could be lurking somewhere out there.
