Managing Expectations

Ever heard the notion “expectations lead to disappointments”?

Yes, I was one of the 500,000 people in line expecting to get tickets for the upcoming Argentina v Indonesia game next Monday (19 June). I was one of the 500,000 people anticipating a chance to witness Lionel Messi on the field – be it to see him participating in the game, or even to catch a glimpse of him on the sidelines.

Out of the 500,000 people in line, however, only 60,000 were lucky enough to secure admission tickets to the much anticipated football game.

Unfortunately, over the weekend, news of Lionel Messi canceling his visit to Indonesia circulated on social media. This announcement surprised and disappointed many Indonesians, to say the least, as you could imagine how much Messi’s name alone drew immense attention and excitement from the audience.

The notion that "expectations lead to disappointments" suggests that when we have specific hopes, desires, or predictions about a particular outcome or situation, there is a risk of being let down if those expectations are not met.

As active participants in the stock market, how many times have we based our expectations on initial announcements or certain predictions over something that happened before and we believe could happen again?

For example, a million dollar question that has been asked many times - will coal prices return to US$400 level again?

Source: World Bank

Ever since the Russian-Ukraine war broke out in 2M22, there has been a surge in prices and disruptions in the supply chain of energy.

No nation can afford to rely solely on a single supplier for its energy needs, and energy security in the future will be based on having a diverse range of fuels and sources, as well as prioritizing domestic resources.

However, the global market has shown remarkable adaptability to swiftly respond to high prices, as is driven by the reduction of demand.

Oil and commodity prices, after surging in the first few months following the war, have plunged back to pre-war levels, showing that the global market is currently adequately supplied.

Energy security in the future will be defined by achieving self-sufficiency at a reasonable cost, relying on domestically produced low-carbon energy supported by domestically owned technology and supply chains.

Most countries had already planned to undertake this transition in the long term as part of their progress towards achieving net-zero emissions.

Due to the war, this transition has simply experienced an accelerated pace of transformation.

Source: International Energy Agency

Take one example - Gulf oil nations.

Historically, Qatar and Saudi Arabia, known for their abundant gas and oil reserves, have among the highest per capita carbon emissions in the world. As of 2019, Qatar ranked first in terms of carbon emissions per capita, followed by Kuwait, Bahrain, the United Arab Emirates, and Saudi Arabia, according to the World Bank.

However, these Gulf monarchies are taking steps to address their carbon footprints by making substantial investments in the renewable energy industry.

Through these investments, they aim to strike a balance between sustainable practices and meeting the energy needs of the world.

* On May 16, 2023, Azerbaijan's Energy Minister Parviz Shahbazov and Masdar CEO Mohamed Jameel Al Ramahi joined forces to inaugurate the installation of the first solar panel at Azerbaijan's solar power plant.

Source: Energy Ministry of Azerbaijan

As such, regardless that at times expectations lead to disappointments, managing expectations is crucial to maintaining emotional well-being and resilience. It involves recognizing the potential gap between expectations and reality and adopting a more flexible and adaptive mindset.

In terms of managing expectations in financial investments, it is crucial for us to prepare for every possible risk. This can be mitigated through comprehensive financial planning, and the flexibility to pivot as new circumstances arise.

Regardless of the unfortunate event that Messi will no longer participate in next week's game, there are certainly still reasons for us to believe that it will be a game to look forward to nonetheless.

Chin up! Here's to starting the week right.

Cheers,

Boris the Broker🐾

SucorSekuritas