1. Climate Change – South African Conferences 2009 Climate change Ian Ling Five stages of grief

2. Climate Change – South African Conferences 2009 Loads of grief 1.Equity markets have fallen sharply

3. Climate Change – South African Conferences 2009 World Equity Markets (USD) 30 April 2008 to 30 April 2009 Index% change USAS&P 500-37.01% UKFTSE 100-48.11% FranceCAC 40-46.45% GermanyDAX-41.88% JapanNikkei 225-32.84% Hong KongHang Seng-39.40% AsiaASX200 Index-48.05%

4. Climate Change – South African Conferences 2009 MSCI World 0 400 800 1200 1600 Mar-70 Mar-73Mar-76Mar-79 Mar-82 Mar-85Mar-88Mar-91 Mar-94 Mar-97Mar-00 Mar-03 Mar-06 Mar-09 Liquidity crunch

5. Climate Change – South African Conferences 2009 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??

6. Climate Change – South African Conferences 2009 Nikkei Index Since 1970 0 10000 20000 30000 40000 Jan-70 Jan-74 Jan-78 Jan-82 Jan-86 Jan-90 Jan-94 Jan-98 Jan-02 Jan-06

7. Climate Change – South African Conferences 2009 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

8. Climate Change – South African Conferences 2009 2006 2005200420032002 2001 2000 1999 Australia's All Ordinaries Index The Coppock Indicator The indicator is trend-following, and based on monthly averages, so by its nature it doesn't pick a market bottom, but rather shows when a rally has become established. Buy signal

9. Climate Change – South African Conferences 2009 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

10. Climate Change – South African Conferences 2009 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

11. Climate Change – South African Conferences 2009 Five stages of grief Elisabeth Kübler-Ross 1. DENIAL 2. ANGER 3. BARGAINING 5. ACCEPTANCE 4. DEPRESSION

12. Climate Change – South African Conferences 2009 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?"

13. Climate Change – South African Conferences 2009 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 branch The Financial Times 02 Apr 09 Protestors smash into RBS branch The 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. Former RBS chief's house attacked amid pay outrage The Financial Times 26 Mar 09 Former 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

14. Climate Change – South African Conferences 2009 Kübler-Ross Model – 5 stages of grief 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?

15. Climate Change – South African Conferences 2009 Sorting it out – director/shareholder relationship Pre 2009 – companies not run for the benefit of shareholders run 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.

16. Climate Change – South African Conferences 2009 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

17. Climate Change – South African Conferences 2009 Kübler-Ross Model – 5 stages of grief 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”

18. Climate Change – South African Conferences 2009 Caution Certainty Disbelief Concern Belief FEAR GREED Ian Ling Fear and Greed Model – (patent pending!!) Capitulation

19. Climate Change – South African Conferences 2009 MSCI World 0 400 800 1200 1600 Mar-70 Mar-73Mar-76Mar-79 Mar-82 Mar-85Mar-88Mar-91 Mar-94 Mar-97Mar-00 Mar-03 Mar-06 Mar-09 Trading range GREED FEAR

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