# When will the downward spiral in the stockmarket end?



## Janman07

I have been making (seeming sensible) investments for a few years now with help from AAM, financial advisors and a good bit of study on the subject.

I feel like I am doing things by the book - diversification, euro cost averaging, maximising pension tax relief, buying on weakness etc., yet every time I check the value of my 'investments' things have gotten worse.

Would anyone care to speculate as to when things are going to turn around? Should I continue to average down or should I sit tight until things improve? I would be way ahead if I had just put the money on deposit. In fact the only thing propping up my portfolio at this stage is bank interest from regular savers etc.

Pleased to hear opinions.


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## markowitzman

*Re: When will the downward spiral end?*

you are only long the market. You can make money as market falls also.


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## tiger

*Re: When will the downward spiral end?*

You'll need to remember you're in it for the long hall and need to be able to sit out these dips.  If I remember correctly, at the beginning of the SSIA scheme, most people who had gone for equity funds were losing money, but after 2-3 years they'd caught up with the deposit funds.  By the time most SSIAs matured last year, the equity funds were looking very nice.


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## Janman07

*Re: When will the downward spiral end?*

It's beginning to look and feel like a bit more than a dip. Did you see the ISEQ today? Yikes.


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## MichaelDes

*Re: When will the downward spiral end?*

Short answer - bottom out Q3 2009 to Q1 2010.

The ISEQ is on a one way path with a 3.76% loss today. It is caught immediately in a currency void strangling the economy, namely sterling and dollar continually weakening. The medium term outlook for building stocks and financials [which are tied disproportionably in the construction lending], these two sectors make up too much of a weighting on the index, combine this to house price growth going negative and America entering recession, could IMO drag the index all the way down to the 2004 lows. International investors no longer see Ireland as a good opportunity on a low P/E, but as a problem that can malign further. The money crisis of available corporate finance will affect through 2008 and a good part of 2009, again IMO and subjective, this only weakens any opportunity to recover further. Averaging and all the other book strategies are not applicable. It seems to me like a mother of trouble has yet to come over the hill, market sentiment always overshoots on the way up and on the way down. 

Watch the unemployment figures this year. A greater weighting of my investments, prior to Christmas have been converted back to cash. But I will await the next buying opportunity. Its sectors outside Ireland, possibly if stg to euro goes to 90p then convergent Telco’s possibly and other anti cyclical stocks will be seriously looked at.

I tend to be bullish and see the glass half full etc, but with the stats etc, I've never been more bearish. The last 10 years of extraordinary increase in money supply, globally, has to be reset.


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## Gautama

*Re: When will the downward spiral end?*

These things are cyclical.
Ireland's ecomony has been a strange thing, so it's hard to use as a barometer.
Use the US economy instead. Remember the adage, "when the US catches a cold, the rest of the world catches the flu". Obviously, because of the bizarre behaviour of Irish economy this doesn't apply to us (remember the dot-com recession of 2000-2003, affected all sectors worldwide, except in Ireland where only IT was affected.)
The US markets peaked in March 2000 (Y2K anyone?), the economy hit rececssion in mid-2001 (pre 9-11, I'll remind you). Came out if it all in 2003.
I expect the US economy to come out of this sometime in 2010.

As for this...



SPC100 said:


> This is easy, buy, buy, with every spare penny.
> 
> As you can't predict the bottom, keep on buying with all your excess cash each month (from salary-living expenses).


 
I would totally disregard this advice. The markets are going south. It's better to buy when the markets are going up, and that won't be for a couple of years.
You know where the bottom is when you've passed it, and you look back and see it a few months behind you.
Nobody but a dreamer expects to be able to buy shares at their bottom price. But if there's been a series of gains after a long time of losses, then you can mark *that* as the bottom. Then you buy equities. And you can probably start offloading them as theY rise past the prices of Jan 2008,  and pick up more bargains as other home traders level out.
Dow Jones dropped 2.5% today after the bell.
ISEQ dropped 250 points today.
If you'd bought this morning, you'd already be a loser!


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## MichaelDes

*Re: When will the downward spiral end?*



SPC100 said:


> academics show that your long term return is based on the length of time you are invested in the market, and that attempting to time the market is futile


 
To me all the information says the market is heading south on a long break. So buying at this time is a zero based proposition. Is this definitive - No. But it's like walking home alone from the pub, ahead is a drunken crowd of hoodies, brandishing knifes. Do you walk past? You don't know for sure, but you have a good idea it'll be ugly. That's the crossroads we are at. Instinct says stop, wait for them to pass. Same with the markets.


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## markowitzman

*Re: When will the downward spiral end?*



> I believe I have read that frequently the largest gains in the market after bear markets are on a just  few days,


Very true SPC100 and very good advice. Stay invested. Other advice on this thread totally disregard!
You have to stay invested. Timing entry and exit points from cash is a mugs game.
That said allocating a small % of wealth to follow trend via puts and shorts etc helps to hedge losses from overall portfolio, but the main tenet remains stay invested as if you don't you will miss the upturn which NOBODY can predict.
A lot of loose and dangerous sentiment on this thread that the newbie investor could easily be sucked into!
In summary asset allocate, hedge and hold for long term.


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## ixus

*Re: When will the downward spiral end?*

I'm shocked that someone would encourage the OP to continue to invest in equities in the current climate! The idea of averaging into equities at present is foolish. In general, timing the market is tough but it's "easy" as SPC100 put it to see that there are tough times ahead in the US, UK and Ireland. You don't have to get in at the bottom and out at the top, just be there on the up. Be it fundamentals or tech analysis, or just common sense, these 3 markets are in trouble.

In the US, the financials are only suffering with subprime at the moment. Wait until the CDS and CDO problems start. The whispers have been of recession for a while now and with Goldmans announcing they thought it was here and Bernanke's statement mdiweek you can take it as a given. 

What do you think the fall out for Ireland is going to be? I know people working for major US financials over here have already suffered at bonus time this year. Where do you think the job cuts are going to happen? Dublin has a significant number of US financials here for back office, CDS and CDO. These will be hit.Friends of mine have recently taken voluntary redundancy at a large US micro chip manufacturer in Ireland. They say the majority of the rest of the staff are all waiting for it. If(when) these job cuts hit Ireland, do you think they'll come back after a recession? I doubt it, cheaper labour will take them. Will the sovereign funds not have a say where the US financials should relocate their back office work?
How will this affect the ISEQ, when will it recover? 

There is money to be made at present in shorting the markets, hard and soft commodities, certain currencies but the only stocks that should be looked at are those in the defensive sectors, utilities etc.


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## ixus

*Re: When will the downward spiral end?*



Janman07 said:


> I have been making (seeming sensible) investments for a few years ...... yet every time I check the value of my 'investments' things have gotten worse.
> 
> Would anyone care to speculate as to when things are going to turn around?



How long have investments been getting worse? Since the beginning or just over the last number or months? 

Where is your diversification, just in Ireland, across Irish sectors? What sectors,what are they dependent on? Is your pension further diversified from other investments? How do these correlate? 

What "things" are you reliant on turning around? 

If you could be more specific (without being too specific ) maybe you will get some more helpful advice.


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## MichaelDes

*Re: When will the downward spiral end?*



markowitzman said:


> Very true SPC100 and very good advice. Stay invested.


 

http://uk.finance.yahoo.com/q/bc?s=%5EFTSE&t=my

If you invested in a FTSE tracker in 1998 per the above chart then in real terms, against indexation, the account would remain in negative territory. That is excluding any entry commission or sizeable management charges that gobbles the fund continually. Where is the timing in this scenario? IMO the market is in the Millenium scenario that will continually downtrend. 

The OP may not be sophisicated in terms of adopting shorts and puts. Other than through spreadbetting, I would not know where to buy these but I understand the merit of the hedge. If the OP invested in five ETFs at €2000, in diversified markets and sectors this would be rationale, or in a large investment house with low switching costs? Maybe this is the case.




markowitzman said:


> A small % of wealth to follow trend via puts and shorts etc helps to hedge losses from overall portfolio


 
Outside individual shares how can you short, spreadbets?




markowitzman said:


> A lot of loose and dangerous sentiment on this thread that the newbie investor could easily be sucked into! In summary asset allocate, hedge and hold for long term.


 

US, UK and Irish property are speculative instruments that pay dividends, of sorts. Would you recommend investors to throw part of their hard earned money into these areas at the moment? These too are cyclical and are as difficult to predict? Averaging or buying more in a market like this to me is sheer foolish. But each to their own.


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## demoivre

MichaelDes - any decent online broker  will  have a trading platform that allows you to trade options, futures , options on futures etc so it's as easy to be short the market as it is to be long.  They are not instruments for the novice imo but that's a different story.


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## Gautama

If I could find a graph of the Dow Jones (or any index) on the web, giving the last 20 years, I could explain. But frankly, I don't have the time to go get a good example. Apologies.

Yes, in the long term you will always be a winner, if you have a diversified portfolio.
Yes, hold onto what you have, I never said otherwise.
Yes, keep investing, just not in shares at present.
The big four are equities, bonds, properties and cash.
The markets are going south. Property is on the slide. Try bonds.

If a market is dropping from 10 to 9 to 8 to 7 to 6 this is not a time to buy.
But if it then goes to 5 to 4 to 5 to 6 there's good reason to believe that 4 was the bottom. 6 on the way up is a better time to buy that 8 or 7 or 6 on the way down.

Note, by bottom I mean (and a graph would be handy here) a big bottom (we're talking J-Lo here).  Not the troughs in a steady oscillation. I mean a distinct downward spike.


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## Gautama

*Re: When will the downward spiral end?*



markowitzman said:


> Stay invested...
> You have to stay invested.


 

I agree, stay invested.  Just don't *start *investing.  The trend is that of a bear market.


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## markowitzman

> US, UK and Irish property are speculative instruments that pay dividends, of sorts. Would you recommend investors to throw part of their hard earned money into these areas at the moment?


Yes.........I have this week bought another Irish property from a very motivated seller. All this hype is panicking "investors" into dumping very good assets for the long term.


> Outside individual shares how can you short, spreadbets?


Options etc etc.


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## Gautama

Of course, it doesn't actually matter if you make 5%, 10% or lose 5%, 10%.  You have to spend the money to realise the value of it, to enjoy it.
You can't take it to the other side, and you've no inkling what your grandchildren will do with it.

There's some adage along the lines that an entrepreneur spends his/her life creating a business, his/her sons/daughters spend their lives enjoying the fruits of that business, his/her grandsons/granddaughters spend their lives wasting that business.  Same can apply for investments.


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## markowitzman

Ah Gautama I feel like ringing the samaritans after that!


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## Thomas22

Once the global property markets (mainly the US, the UK and yes Ireland)have significantly readjusted then the stock markets will start to return to normal.


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## barryl

I agree with a long term play on shares and have started to invest into the irish market,the old adage "buy value" comes into play now,I also believe that over the next 6 months is a good time to purchase an investment property in ireland,buyer markets can be short lived


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## Thomas22

barryl said:


> I agree with a long term play on shares and have started to invest into the irish market,the old adage "buy value" comes into play now,I also believe that over the next 6 months is a good time to purchase an investment property in ireland,buyer markets can be short lived




What yield on property do you think would make a good purchase price?


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## MichaelDes

barryl said:


> I also believe that over the next 6 months is a good time to purchase an investment property in ireland,buyer markets can be short lived


 
I give up! Banks will now allow as a maximum 70% LTV, under the current climate for BTL investment. Net cost yields need to be at 7%+ to cover mortgage payments, excluding apartments which have larger management costs. The IO days and self certs are over. The fundamentals of property are five to six times income is bubble territory, and that’s according to vested interest of Nationwide/ONS surveys. So that's the most basic fundamental within the property, now try getting a loan above x4.5 time’s income. Impossible in my opinion to achieve - unless the banks are still mad to give out credit. If you are using other assets as collateral, compared to 12 months ago these are having major write downs and anyhow, each investment must now make sense on its own, to them.

Fundamentals within s/exchange have changed, principally the credit that washed over the markets through crazy hedge fund leverage and consumer leverage is gone. IMO there is no bounce. Markets are on a long term correction without these instruments of credit, madness, intertwined. Good luck though if that's what floats your boat?

I'm not a doom merchant, far from it. But 12 months from now across many asset classes, real value will only emerge. Patience is a virtue. As mentioned previously by other posters, a month or two of +ive growth to confirm things rather than -ive, would be my view only. No one is trying to buy rock bottom, that's near impossible.


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## z109

Thomas22 said:


> Once the global property markets (mainly the US, the UK and yes Ireland)have significantly readjusted then the stock markets will start to return to normal.


That's really one of the most naive things I've read all year (but it's only the seventeenth, so the year is yet young...). Of course it is entirely right, but leaves so much unsaid!

The problem in the US is that the consumer has no money. He's broke. He's taken out all the home equity he can, he's maxed out his credit cards, and his car is bought on credit. The company he works for builds, sells, or finances real estate so his job prospects don't look great either. The bank he keeps his money at didn't do too badly in the sub-prime farango, but it has lots of ARM mortgages that reset to higher rates this year, next year and into 2010. It also gave lots of loans to commercial real estate developers to build condos in Florida, shopping malls in Fresno, and real estate offices in Frisco. Commercial real estate declines about 5 quarters after residential real estate. It's just started to pop.

Much of this is not priced into global stock markets. A recession in the US is not priced into the US markets yet. The US consumer is 70% of GDP in the US. If he has no money, where is economic activity going to come from?

The US is 25% of global GDP. Who is going to take up the slack? Do you really think that commodity and oil prices will remain high in this environment? Who are the BRICs going to export to? Us? Do we have vast amounts of spare cash? Or indeed of credit?

So the likelihood is that a US recession will spread around the world.

The median time for a house price deflation to work it's way through is 4 and a half years (I believe the research shows). The US is still in year 2. We are still in year 1, the UK has just started year 1. (The Japanese are in year 17). For those of you who remember the UK house price crash of the nineties, house prices took ten years to recover in real (inflation adjusted) terms and they fell for four successive years (at varying levels).


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## Thomas22

yoganmahew said:


> That's really one of the most naive things I've read all year (but it's only the seventeenth, so the year is yet young...). Of course it is entirely right, but leaves so much unsaid!




It isn't naive I know what the problem and I know the length of time that is going to take to work its way out of the economy. I agree with you that is going to take 4-5 years (minimum) for the global house price bubble to deflate.

Most people seem to think the "sub-prime" market going sour that has caused the problem. It isn't!

The problem stems from the fact that house prices in the US are falling.
If house prices continued to rise in the US then we wouldn't have any of the current problems as distressed owners could simply have refinanced or sold at a profit. With these options no longer available default rates have soared. Leading to bank loses, tightened credit markets, more falling house prices, more defaults and the cycle continues.


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## MichaelDes

Thomas22 said:


> The problem stems from the fact that house prices in the US are falling.


 
The problems stems from the banks inability to prospect CDO's it bought from marginal mortgage companies, who had sold 120% mortgages to people with zero chance of affording long term. That is, if interest rates increased. This phenomenon also was being sold in Ireland, UK and further afield to a lesser extent, but world banks bought these CDO AAA products which are now junk bonds status.

The MBO, CBO, SIV's and all the other beautifully named and inventive products the banks dreamed up, for the ABX or Credit markets, have exploded in their faces. The lack of credit now available, as a result of banks consolidating, adds to the bad timing of other cyclical issues. Hedge fund and consumer leverage, now that it has gone the other way, must readjust into market valuations.



yoganmahew said:


> The median time for a house price deflation to work it's way through is 4 and a half years (I believe the research shows). The US is still in year 2. We are still in year 1, the UK has just started year 1. (The Japanese are in year 17). For those of you who remember the UK house price crash of the nineties, house prices took ten years to recover in real (inflation adjusted) terms and they fell for four successive years (at varying levels).


 
Absolutely correct, house markets typically follow a 14 year cycle. Buying on year one of a seven year downturn [if it follows pattern] both nominally and in real terms, is a mistake. Catch a falling knife.


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## barryl

Thomas22 said:


> What yield on property do you think would make a good purchase price?


Looking at a few properties at the minute,all have been reduced in price and all yielding above 5.4%


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## Thomas22

MichaelDes said:


> The problems stems from the banks inability to prospect CDO's it bought from marginal mortgage companies, who had sold 120% mortgages to people with zero chance of affording long term. That is, if interest rates increased. This phenomenon also was being sold in Ireland, UK and further afield to a lesser extent, but world banks bought these CDO AAA products which are now junk bonds status.
> 
> The MBO, CBO, SIV's and all the other beautifully named and inventive products the banks dreamed up, for the ABX or Credit markets, have exploded in their faces. The lack of credit now available, as a result of banks consolidating, adds to the bad timing of other cyclical issues. Hedge fund and consumer leverage, now that it has gone the other way, must readjust into market valuations.
> 
> 
> 
> Absolutely correct, house markets typically follow a 14 year cycle. Buying on year one of a seven year downturn [if it follows pattern] both nominally and in real terms, is a mistake. Catch a falling knife.


 
I'm not really disagreeing with your analysis of the problem I just think the problem has a different source than you do.

I think that if the property market was still rising it wouldn't matter whether the people could afford the mortgages or not. Any time they were at risk of missing payments they could simply re-finance or sell up.

When property markets are falling this option no longer exists so the banks face loses on defaulted mortgages with collateral that is no longer worth enough to cover the loan.

I agree that the CDO's and other exotic instruments have magnified the loses but if the property market was still booming the loses wouldn't be nearly as significant in the first place.

I also agree that there is no point trying to "catch a falling knife" but I would go further, IMO anyone who buys property in the current market needs to book an immediate appointment with a shrink.


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## Markjbloggs

When will the downward spiral in the stockmarket? 


August !!

Jim from Taxi


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## Thomas22

barryl said:


> Looking at a few properties at the minute,all have been reduced in price and all yielding above 5.4%




Is that net yield including all taxes, empty periods and maintenance costs?


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## barryl

Thomas22 said:


> Is that net yield including all taxes, empty periods and maintenance costs?


 
OF COURSE NOT! ITS GROSS YIELD


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## Thomas22

barryl said:


> OF COURSE NOT! ITS GROSS YIELD




I don't think a risky asset that yields less than the risk free rate is a great investment especially when that asset seems to be falling globally at the moment.


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## z106

barryl said:


> OF COURSE NOT! ITS GROSS YIELD


 
good answer barryl.

A man will do well to fiund 5.4% net these days.

Out of curiosity - what are the details on this 5.4% property
i.e. price,location,rent etc.

I'd be surprise if it actually exists.


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## barryl

Thomas22 said:


> I don't think a risky asset that yields less than the risk free rate is a great investment especially when that asset seems to be falling globally at the moment.


WHATS THE RISK FREE RATE?


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## Thomas22

barryl said:


> WHATS THE RISK FREE RATE?




About 4.5% on a 20 year government bond at the moment


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## barryl

Thomas22 said:


> About 4.5% on a 20 year government bond at the moment[/quot
> WHY DO YOU SAY THAT 5.4 IS BELOW THIS IN YOUR PREVIOUS REPLY?


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## Thomas22

barryl said:


> Thomas22 said:
> 
> 
> 
> About 4.5% on a 20 year government bond at the moment[/quot
> WHY DO YOU SAY THAT 5.4 IS BELOW THIS IN YOUR PREVIOUS REPLY?
> 
> 
> 
> 
> 
> 
> Because I was talking about the net yield as the gross yield is irrelevant.
Click to expand...


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## barryl

Thomas22 said:


> About 4.5% on a 20 year government bond at the moment


THIS BOND IS MORE RISKY AT PRESENT BECAUSE INFLATION IS AS HIGH OR HIGHER THEN THIS RATE,SO WHATS RISK FREE ABOUT THAT?


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## z109

barryl said:


> THIS BOND IS MORE RISKY AT PRESENT BECAUSE INFLATION IS AS HIGH OR HIGHER THEN THIS RATE,SO WHATS RISK FREE ABOUT THAT?


Do please stop shouting (writing in capitals).


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## Thomas22

barryl said:


> THIS BOND IS MORE RISKY AT PRESENT BECAUSE INFLATION IS AS HIGH OR HIGHER THEN THIS RATE,SO WHATS RISK FREE ABOUT THAT?




What makes you think that a property investment is going to be better or even match inflation over the next 10 years?


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## barryl

Thomas22 said:


> What makes you think that a property investment is going to be better or even match inflation over the next 10 years?


 
1  res.property has a long history of beating inflation over any 10-15 year period in Ireland
2  average income also has a long history of increase in Ireland

3population growth forcast to increase


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## Thomas22

"Past performance is no guide to the future" and after the longest and most extreme period of house price inflation this country has ever seen i think that statement is very important. To see where we COULD be headed you need to take at the previous property bubbles in Japan and the UK and just at Ireland.


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## MichaelDes

Thomas22 said:


> "Past performance is no guide to the future" and after the longest and most extreme period of house price inflation this country has ever seen i think that statement is very important. To see where we COULD be headed you need to take at the previous property bubbles in Japan and the UK and just at Ireland.


 
Look at the malaise on the markets today, again. This bloodbath is not for stopping. The credit being pushed out of the markets, combined with inflation and recession in UK and USA is affect the s/markets big time which react fastest, this will soon spread to all other asset based classes.

As property is an asset class built on the same foundation of insane credit, in the next couple of years you can kiss goodbye to a considerable amount of value. Compared to average salaries and affordability outside 100% mortgages or interest only, a lot of people won't have the same feel good factor, or it'll be the opposite which is very bad. This hubris of capitalism on steroids has to come to an end, it had to eventually. See you on the upcycle, whenever that kicks in!!?


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## coola

the credit crisis is almost over. Libor rates have plummeted. foreclosures in the US will not nearly be as bad as anticipated as mortgage rates are falling rapidly and they are all re-financing, plus bush's plan to help subprime borrowers is working. this quarters results are goign to be terrible for banks but i believe that next quarter the banks will say that the subprime losses have stabilised. thats all the stock market needs to make it start rallying again. no bank will go under. this has happened b4 and pessimism was overdone then too. let the market sell off, enjoy watching it collapse and when the FED cut on jan 30th and a US bank comes out and says its lossess are stabilizing then buy! buy! buy!


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## Purple

It took another (big) downward spiral this morning.


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## coola

look at the FTSE, its up . i dont recommend buying irish shares at all. the markets are in capitulation i.e. selling in panic mode. this is making the bottom. when its on the news every morning its nearly at the bottom


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## Duke of Marmalade

_"News is just coming in that the Iseq has fallen 1.6%" in just the first minute of trading"_. That's how the newscaster interrupted the 8.0c RTE bulletin this morning. It was spoken in such a sensational manner as to imply _"another couple of hours of this and there will be nothing left"._

But a move like that at the opening of an exchange is not at all remarkable, in fact given overnight activity in Asia it was positively restrained, but it's not in the RTE psyche to have seen this as a positive indication.


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## MichaelDes

Purple said:


> It took another (big) downward spiral this morning.


 
Martin Luther Day in States yesterday. Expect an imminent announcement from the Fed, since its left holding the baby. Far East stoxx took a hammering last night, watched till 2 am. Worst case scenario - 9% Dow wipe. Futures already 5% off.


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## Sunny

coola said:


> the credit crisis is almost over. Libor rates have plummeted. foreclosures in the US will not nearly be as bad as anticipated as mortgage rates are falling rapidly and they are all re-financing, plus bush's plan to help subprime borrowers is working. this quarters results are goign to be terrible for banks but i believe that next quarter the banks will say that the subprime losses have stabilised. thats all the stock market needs to make it start rallying again. no bank will go under. this has happened b4 and pessimism was overdone then too. let the market sell off, enjoy watching it collapse and when the FED cut on jan 30th and a US bank comes out and says its lossess are stabilizing then buy! buy! buy!


 
Wow that is bullish!!! Have to say I don't agree with you though. Libor rates have plummeted because the central banks have flooded the market. Not because banks are more willing to lend to each other. Sub prime losses will be larger than expected and bush's plan helps very few of these borrowers. All the banks have stated that they expect more write downs in 2008 especially in Europe. (Rumours of massive write downs in Soc Gen about to be announced). In the US, the problems have spread to consumer market in the form of higher delinquiences in credit cards which has the potential to be as big a problem as sub prime. 

The Fed will cut rates TODAY in my opinion.


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## MichaelDes

Sunny said:


> The Fed will cut rates TODAY in my opinion.


 
100% agree. Ed Balls conceded a definitive IR cut by BoE. Could be Black Tuesday for the States. No days left to tarnish. Expect FTSE to plummet when Dow opens then bounce back prior to end of trade. Daivd Buick at Cantor has just been on Sky screaming for a 1% cut but Henk Potts at Barclays wants no emergency rate cut, as it'll exaccerbate any sell-off. MPC will move only .25 bps next meeting.




More turbo juice for the Gold rocket.


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## Stifster

It's not a spiral, it's a plummet. My former SSIA is taking a hell of a beating (say that in a Norweigian accent)


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## coola

the FED will bail out wall st, no matter what they say. i dont know if bernanke will cut until next week, he could then take .75% off fhe funds rate. you are really looking at worst case scenario, this never plays out. it wont be as bad as first feared and the recession if there is one will be shallow and short lived. unemployment is 5% in US (very low) and average weekly claims fell the past 2 weeks. i think it contracted in Q4 and possibly Q1 so that is a recession but as i say, all you need is the FED to cut big again and then a major bank i.e bank of america today to say that delinquinces have stabilised and we are off to the races


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## MichaelDes

coola said:


> the FED will bail out wall st, no matter what they say.


 
Thank God for easterlies today. I can already smell the fear in Wall Street.


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## coola

why do you say that michealdes


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## coola

this is much the same as october 1987 crash. market recovered in 2 months. will sell off hugely today in US maybe tomorrow as well. it will be short lived. can i post some company names on here that are good stock picks or is that a violation


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## coola

listen to this joker

Thomas McManus, a strategist at Banc of America Securities, said investors may want to increase their holdings of stocks if the market drops as expected at the open. 

what rubbish advice. no one should be involved in this market


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## Sunny

Do your two posts above not contradict each other??


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## z109

coola said:


> listen to this joker
> 
> Thomas McManus, a strategist at Banc of America Securities, said investors may want to increase their holdings of stocks if the market drops as expected at the open.
> 
> what rubbish advice. no one should be involved in this market


What on earth are you talking about?

You've just been asking if you can give stock picks (which, yes, is a violation of posting rules) and now you are rubbishing someone else who is giving sector picks for some unnamed market! 

Let me guess, you have holdings in certain companies that you want to pump. Penny shares anyone?


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## coola

excuse me. i said no one should be buying in this current market today and tomorrow but when the sentiment changes after the FED cuts then you should buy, how is that a contradiciton. you should never increase your positions in shares when they are falling in value, you shoudl only increase them if the share is rising in price.

this guy did not give sector picks, he said the markets as a whole. i have no holdings in anything at the moment . i was going to give some stock pics that will rocket with sentiment changes. forget it


----------



## badabing

I don't think its illegal to talk about sectors though..how about the banking sector..the yields are higher than ever even if you factor in a short term wobble in profits..I think it will recover moderately, but the construction sector will take time, food has got decent medium term prospects, and emerging markets have got better long term prospects than developed markets such as Ireland, EU, UK of US, so it would be good to diversify into them rather than being in the ISEQ totally. Any comments Coola?


----------



## coola

indeed. i wudnt agree with you about the US though. stocks there are undervalued and the fed are way ahead of the ecb in monetary easing. construcion is not good. i think banking shares will lead the next rally up, everyone will reliase that the banks are not going out of business and they will be bought up sending their prices and the markets higher. agri shares are the top notch ones especially ones that are developing drought resistant strains etc. two of these companies blew away wall st recently with results, their shares are way down with the sell off. India is my favourite emerging market, they dont rely on manufacturing as much as china


----------



## flaka

For those with no current exposure to the ISEQ - wouldn't this be a good time to buy?

Isn't the decision "do I think shares are going to continue to drop over the next few days?"

Then hold on for a recovery?


----------



## demoivre

flaka said:


> For those with no current exposure to the ISEQ - wouldn't this be a good time to buy?
> 
> Isn't the decision "do I think shares are going to continue to drop over the next few days?"



The decision for me is " where is the market going  to be in 10 to 15 years time ". I'm a buyer.


----------



## coola

are u that confident about the irish economy


----------



## demoivre

I am exceptionally bullish long term as I was back in the mid 80's when I first started buying assets. Moooooooooooooooooooo !


----------



## Sunny

Fed has just cut rates by 75bp!!


----------



## z106

Sunny said:


> Fed has just cut rates by 75bp!!


 
Where di you see that?

i don't see that anywhere.


----------



## DrMoriarty

http://www.marketwatch.com/news/sto...F-46AE-80D1-C79AEF777BBF&dist=SecEditorsPicks


----------



## charttrader

qwertyuiop said:


> Where di you see that?
> 
> i don't see that anywhere.



Cut half an hour ago.

http://biz.yahoo.com/ap/080122/wall_street.html


----------



## coola

what a cut by the fed. bank of america cut their prime lending rate by the same ammount. did anyone hear of the book winning on wall st by marty zweig. this would be considered extremely bullish scenario. 6 months from now, the dow will be at 15000


----------



## Calico

coola said:


> 6 months from now, the dow will be at 15000



rubbish!!!!!!!


----------



## coola

put a bet on it. come back here on october 10th and tell me that


----------



## z109

coola said:


> put a bet on it. come back here on october 10th and tell me that


Blimey, I hope your financial maths is not as bad as your counting, October is nearly ten months away, not six.

Have a look at what prompts the Fed to cut rates like this (I'll give you a clue, it starts with "R").

Then have a look at what happens to stock markets in a recession. (Damn, just gave the answer away).


----------



## coola

oh whatever. the end of the year anyway


----------



## Sunny

yoganmahew said:


> Blimey, I hope your financial maths is not as bad as your counting, October is nearly ten months away, not six.


 


Don't think it matters either way...


----------



## askalot

Interesting reading here :

www.newstarget.com/z019659.html


----------



## demoivre

askalot said:


> Interesting reading here :
> 
> [broken link removed]



I always read the last paragraph in articles first and then when I read "As a subscriber, you'll receive an email alert when I publish new solutions " I know it's yet another piece of doom and gloom drivel for the masses who haven't the forsight to see to the end of their noses.


----------



## coola

oh god. i just read the first line and closed the article

The coming financial collapse of the U.S. government: Fed papers reveal what's in store for Americans


----------



## smurf

strange solution to increase credit to a nation with NINJA'a, inability to payback credit card debt, is this the famous dead cat bounce .... where to next .... any predictions will ECB follow, Irish financial's up is that it have they hit the bottom?


----------



## Thomas22

smurf said:


> strange solution to increase credit to a nation with NINJA'a, inability to payback credit card debt, is this the famous dead cat bounce .... where to next .... any predictions will ECB follow, Irish financial's up is that it have they hit the bottom?




I don't think the ECB will follow the Fed's lead. Rates will stay the same with a very slim probability of an increase and zero probability of a cut IMO.


----------



## barryl

Thomas22 said:


> "Past performance is no guide to the future" and after the longest and most extreme period of house price inflation this country has ever seen i think that statement is very important. To see where we COULD be headed you need to take at the previous property bubbles in Japan and the UK and just at Ireland.


 
I dont believe you can compare what happened in Japan to the property correction we are experiencing at present. The ratios between average income and average house price in Ireland is closing which would suggest that affordability is close  in the ftb market as incomes keep rising.


----------



## z109

barryl said:


> I dont believe you can compare what happened in Japan to the property correction we are experiencing at present. The ratios between average income and average house price in Ireland is closing which would suggest that affordability is close  in the ftb market as incomes keep rising.


Why will incomes keep rising?


----------



## barryl

yoganmahew said:


> Why will incomes keep rising?


 
inflation


----------



## z109

inflation = second-round effects = pay rises = inflation
A rather circular argument?


----------



## barryl

yoganmahew said:


> inflation = second-round effects = pay rises = inflation
> A rather circular argument?


=pay rises,=no argument =fact


----------



## mercman

Best thing to do with your spare cash now is to leave it in the bank. If you are in the market stay - no point in selling but these are scary times. I moved a large chunk of my investments a few months ago out of the UK and the US thinking it was sensible --- until yesterday. Don't mind the pundits - I think the worst  has yet to come.


----------



## markowitzman

> I moved a large chunk of my investments a few months ago out of the UK and the US thinking it was sensible --- until yesterday


agreed timing the market does not work.


----------



## smurf

OK nobody knows, markets are on the way up .... whats they view will they tumble again, is this what they mean by dead cat bounce


----------



## z109

barryl said:


> =pay rises,=no argument =fact


Try it on anyone who lived in England during the nineties. Or in Germany since the unification. Or in Japan since the event. Or in the US since Bush took office.

Or even in Ireland.

Don't mistake an increase in disposable income due to tax cuts with an increase in wages. One may put scarcity pressure on prices, but the other is inflationary as it increases input costs.


----------



## MichaelDes

Markets plummeted due to nerves surrounding bonds markets last week, which came to a head. Think what a mess a $2.3 trillion multi-party bail-out will become compared to the Northern Rock saga going on and on since September, and it was only tens of billions for a single institution. 

http://www.marketwatch.com/news/story/bond...p;dist=hplatest
SAN FRANCISCO (MarketWatch) -- Bond insurers fell Thursday after New York's top insurance regulator sounded a cautious note on any bailout of the ailing $2.3 trillion industry.

Security Capital Assurance (SCA 3.08, -0.71, -18.7%) was the worst hit after the bond insurer lost its AAA rating from Fitch Ratings.

New York Insurance Superintendent Eric Dinallo issued cautious remarks Thursday on the possibility of a bond-insurer bailout, saying that any plan would be complex and take time. "These are complicated issues involving a number of parties, and any effective plan will take some time to finalize," he said in a statement emailed to MarketWatch. 

Rumours too are circulating that

1) they knew SocGen was in trouble and needed a capital infusion
2) the "rogue trader" is just a cover story, to make it appear a problem confined to a single bank

http://www.reuters.com/article/rbssFinanci...lBrandChannel=0
SocGen style fraud could strike again, but bigger
Thu Jan 24, 2008 11:12am EST

ZURICH, Jan 24 (Reuters) - French bank Societe Generale's (SOGN.PA: Quote, Profile, Research) 4.9 billion euro ($7.1 billion) loss, blamed on a single employee, is a stark reminder that rogue traders can elude the most sophisticated security systems until it is too late.

Many other banks could be exposed, no matter how much they have invested in security dragnets and advanced fail-safe procedures, and fraudulent losses are likely to grow in size.

"Banks are making a lot more money and taking much bigger trading positions, so you can expect the size of scandals to get bigger," said Simon Maughan at MF Global. The CEO and Chairman of Lehman, Richard Fuld, told Reuters at the annual gathering of the World Economic Forum in Davos that the loss uncovered at SocGen was "everyone's worst nightmare" -- tacit admission that no bank should consider itself entirely immune from such a calamity.


The mess is getting worse and the spin with it.


----------



## MichaelDes

The biggest derivatives players are 

1 JPMORGAN CHASE BANK NA
2 BANK OF AMERICA NA
3 CITIBANK NATIONAL ASSN
4 WACHOVIA BANK NATIONAL ASSN

All of them are borrowing money heavily from the FED. These four banks alone are on the hook for more than 120 Trillion USD. If the FED monetise a small fraction of that much money, which unfortunately they are doing, inflation will quickly result. My economics is fairly rusty, but if these credit derivatives are used as collateral against the loans and the Fed puts the printing press into overdrive, same as the BoE then that’s major trouble? Or is it relative if all central banks are at the same game? How much money can the system handle before the computer says “No”? Money will be meaningless if too much is pumped? ...and when the credit default instruments default its game over. 

*I strongly urge* any thinking of investing in the markets to go to Page 23, table 1 for a clear picture on the amount of credit derivatives these banks are holding and think what will happen to the markets if these, along with bonds start to go wrong?

http://www.occ.treas.gov/ftp/deriv/dq406.pdf

On the story of Societe Generale

Nobody Believes That Lone "Lone Trader" Brought Down France's Second-Largest Bank

.http://www.larouchepac.com/news/2008/01/24...ces-second.html

January 24, 2008 (LPAC)--Societe Generale, France's No. 2 bank, announced $10 billion in losses today, blaming the bulk of it on one "rogue trader" -- a story which not even the press corps buys.

This morning, the bank's top leadership had to respond to nearly two hours of aggressive questioning from some 100 journalists who attended a press conference called to explain their claim that a lone trader managed to cause the bank to lose 4.9 billion euros ($7.2 bn). Additionally, the bank reported another $3 billion in losses from subprime mortgages and from the U.S. bond insurer Ambac Financial, which had insured all the toxic CDOs held by the bank.

The assembled press was especially eager to hear all about the lone (assassin) trader theory which the bank is pushing. With a straight face, bank officials tried to explain that, on Friday evening, Jan. 18, they had discovered that a small trader had fraudulently taken very high futures trading positions. One of the journalists of a leading economic daily noted that "They take us for real idiots!" It was announced later that prosecutors in Paris had opened an investigation of the trader, identified as Jerome Kerviel.

On Monday, the Societe spokesman said, the bank began to unwind the lone-trader's positions -- which are not only supposed to explain Societe Generale's losses, but also the worldwide stock market collapse at the beginning of this week!

For many months, it was widely rumored that, among French banks, Société Général was probably the worst off. So nobody believes the fairy tale of the loan trader.

Stay away from the markets, IMO the credit derivative fall out is only beginning to unwind.


----------



## Thomas22

barryl said:


> I dont believe you can compare what happened in Japan to the property correction we are experiencing at present. The ratios between average income and average house price in Ireland is closing which would suggest that affordability is close  in the ftb market as incomes keep rising.



I don't get the point you are trying to make.
It is well accepted that there is a bubble in the USA and the average house price/average income is about 6.
The ratio in Ireland is about 9!


----------



## barryl

yoganmahew said:


> Try it on anyone who lived in England during the nineties. Or in Germany since the unification. Or in Japan since the event. Or in the US since Bush took office.
> 
> Or even in Ireland.
> 
> Don't mistake an increase in disposable income due to tax cuts with an increase in wages. One may put scarcity pressure on prices, but the other is inflationary as it increases input costs.


 
try what? are you saying that inflation and wage increases dont exist in these countries


----------



## z109

barryl said:


> try what? are you saying that inflation and wage increases dont exist in these countries


No I'm saying that wage increase over the recent past have not matched consumer price inflation.


----------



## z106

Thomas22 said:


> I don't get the point you are trying to make.
> It is well accepted that there is a bubble in the USA and the average house price/average income is about 6.
> The ratio in Ireland is about 9!


 
Personally I don't think taking  average wages vs average house prices  is a good indicator of whether proices are too high/low.

I don't even think it's useful as a rule of thumb.

The market is made up of many sub-markets.
i.e. lower end,middle,upper end etc.


----------



## MichaelDes

qwertyuiop said:


> Personally I don't think taking average wages vs average house prices is a good indicator


 
Rubbish - ofcourse it's relevant. How else is afforability in its purest form to be measured?

*But lets stay on topic here?* *Please??*

Markets are in the middle of a major bear IMO and once financial reports from banks etc come out in Feburary, then and only then will the fun really begin. Central banks are washing too much money through the system in an attempt to fix something that's badly broken. It's fuel to the fire. Given all the information, other than Gold - I'm sitting tight.


----------



## barryl

Thomas22 said:


> I don't get the point you are trying to make.
> It is well accepted that there is a bubble in the USA and the average house price/average income is about 6.
> The ratio in Ireland is about 9!


check out first active approval in principle, single income of 33000 pa Ltv 92% 2415pm after tax=loan 224,340.    joint app. 30,000 and25,000 Ltv 92% nett 4022 after tax loan 344000


----------



## barryl

qwertyuiop said:


> Personally I don't think taking average wages vs average house prices is a good indicator of whether proices are too high/low.
> 
> I don't even think it's useful as a rule of thumb.
> 
> The market is made up of many sub-markets.
> i.e. lower end,middle,upper end etc.


 
well lets stick to the facts,average house prices/income are an average of these sub markets/incomes


----------



## coola

Calico said:


> rubbish!!!!!!!


 
still rubbish???? money back from US govt to consumers will boost confidence. mortgage rates falling to 4 year low. markets will start to move substantially higher after earnings season.


----------



## barryl

qwertyuiop said:


> Personally I don't think taking average wages vs average house prices is a good indicator of whether proices are too high/low.
> 
> I don't even think it's useful as a rule of thumb.
> 
> The market is made up of many sub-markets.
> i.e. lower end,middle,upper end etc.


 


MichaelDes said:


> Rubbish - ofcourse it's relevant. How else is afforability in its purest form to be measured?
> 
> *But lets stay on topic here?* *Please??*
> 
> Markets are in the middle of a major bear IMO and once financial reports from banks etc come out in Feburary, then and only then will the fun really begin. Central banks are washing too much money through the system in an attempt to fix something that's badly broken. It's fuel to the fire. Given all the information, other than Gold - I'm sitting tight.


do you not see opportunity in this market,ask yourself whats the best/worst thing that could happen and then what is the most likely thing that could happen.


----------



## mercman

MichaelDes. You are 100% correct. Central Banks started approx 10 years ago to throw money at economies to accelerate growth. Now its so badly broken, they are lost, and by throwing money at it this time ain't gonna fix it.  It will take harsh reality over the next six months to waken us all. And to answer the question on the original OP, a hard six months will place us all on the reality track.


----------



## MichaelDes

barryl said:


> do you not see opportunity in this market,ask yourself whats the best/worst thing that could happen and then what is the most likely thing that could happen.


 
The worst thing that could happen is the whole financial system could be in serious jeopardy? What will a 2.3Trillion USD bond market default cause? What affect will that have on markets? Also as mentioned, American banks are sitting on 120Trillion USD of credit derivatives, if any of these default - Can the Fed just keeping printing its way out of trouble, and rollover and rollover on loans? No, it can’t!

Markets have low p/e valuations, that's the only upside. But until these credit derivative issues have washed themselves thoroughly - I'm sticking to safe haven plays of Gold. It keeps rising as America keeps going down the toilet and is a defensive play/position. The downside is utterly compelling, as credit and recession problems are going hand in hand. Study the facts and face reality, long term things aren't going to be pretty.


----------



## z106

MichaelDes said:


> Rubbish - ofcourse it's relevant. How else is afforability in its purest form to be measured?


 
Ok - I know i'm going off topic but i have to respond to teh above.

The point I am making is some people look at the average incomes of a country and compare it to the price of a property they are considering to buy.
They then conclude the multiple is too high.

WHat I am saying is if you were to buy a house worth 500k and compare that to the average income of 35k a person may well decide to back out of the purchase.

However you will not be selling that house onto the guy who is on teh average wage - you will be selling that onto a guy who is in teh higher earning bracket.

So my point is - I wouldn't let the average earnings put me me off buying a property.


----------



## MichaelDes

qwertyuiop said:


> The point I am making is some people look at the average incomes of a country and compare it to the price of a property they are considering to buy. So my point is - I wouldn't let the average earnings put me me off buying a property.


 
I hate this going off thread but when average income to average house price goes over 6+ times - alarm bells sound in my head of "bubble alert". Propensity to afford is fundamental, look at repossessions in the States?


----------



## barryl

qwertyuiop said:


> Ok - I know i'm going off topic but i have to respond to teh above.
> 
> The point I am making is some people look at the average incomes of a country and compare it to the price of a property they are considering to buy.
> They then conclude the multiple is too high.
> 
> WHat I am saying is if you were to buy a house worth 500k and compare that to the average income of 35k a person may well decide to back out of the purchase.
> 
> However you will not be selling that house onto the guy who is on teh average wage - you will be selling that onto a guy who is in teh higher earning bracket.
> 
> So my point is - I wouldn't let the average earnings put me me off buying a property.


this has no relevance in determining what position of affordability the housing market is at


----------



## barryl

MichaelDes said:


> The worst thing that could happen is the whole financial system could be in serious jeopardy? What will a 2.3Trillion USD bond market default cause? What affect will that have on markets? Also as mentioned, American banks are sitting on 120Trillion USD of credit derivatives, if any of these default - Can the Fed just keeping printing its way out of trouble, and rollover and rollover on loans? No, it can’t!
> 
> Markets have low p/e valuations, that's the only upside. But until these credit derivative issues have washed themselves thoroughly - I'm sticking to safe haven plays of Gold. It keeps rising as America keeps going down the toilet and is a defensive play/position. The downside is utterly compelling, as credit and recession problems are going hand in hand. Study the facts and face reality, long term things aren't going to be pretty.


ok,but what is the most likely outcome in say..12 months


----------



## MichaelDes

barryl said:


> ok,but what is the most likely outcome in say..12 months


 
Welcome back to the 2003/2004 FTSE lows etc! I made the mistake some posts back by saying shares, sectors or markets are relatively cheap by comparison of P/E. But is an Irish bank likely to make the same profits in 2008, compared to 2007 and 2006? No and definately no, it will not. Therefore P/E must be judged against future profitability, not past profitability. So on that basis bank shares etc may not look so cheap, and dividend yields in the financials according to Credit Suisse will be cut by 38%. The same is true of all cyclical sectors facing downturns in corporate profitability.

Also,if Bernanke made an unprecedented cut of 75bps in an emergency session, the first time in 23 years then something really bad is coming down the tracks. The cut may save the markets short term but it won't save recession. Consumers have no appetite for debt and companies have no appetite to leverage for expansion. In the last week the Vix Index of all bourses is at an all time high, but irrational market exuberance of the last day or so, could be IMO the biggest sucker’s rally, dead cat bounce ever witnessed. 

One of the few markets that should be off the hook is Japan. Banks and its wider economy have little to no exposure in subprime. It may be worth a look. It can't get any worse, after ten years of harsh treatment, especially by market traders. But its index still dropped 18% Ytd eventhough it has no culpability to America's problems. A school boy blamed for someone elses misdoing's, but nonetheless it's a market still worth watching.

Finally how sublime for the bankers to be awarded recently, the largest bonus allocations ever. Which is ironic because if governments hadn't infused all that cash there would be no money to pay them!! So basically we the tax payers are paying the risks and paying the bonuses too. Worthy of Ricky Gervais sketch on the Office. Need I say more on why to hold, hold, hold.


----------



## MichaelDes

Maybe I'm pessimistic but one of two things that I failed to mention. 

Now that *(i)* *Fed interest rates have fallen below RPI*, is this going to cause other asset priced bubbles or more inventive banking models? Aren't the credit markets in enough of a state presently without compounding the problem further. Is this fuel to the fire?

Point two may have an affect on stock markets after the credit crisis has abated and American recession ends. In about 2 years time, but maybe worthy of another thread

*(ii) Peak oil is now occurring*. 

_This is the point when global consumption is greater than new reserves can be brought on stream. Therefore known stocks start to decline irreversibly. If extraction is not enough to meet demand __then prices must increase. That is until demand is destroyed to meet supply constraints._


It's a global power grab for the last of the resources between the Americans and the hard working Chinese. With Peak oil, all governments should to be trying to facilitate a transition towards an energy constrained future. But too much taxation is involved and politicians and world leaders don’t see it that way, only towards the next election post. Some of the short terms issues

-India has currently four cars for every 1000 adults opposed to say the US which has 1000 cars for every 1000 adults. The Indian govt is actively promoting car ownership and have launched the super cheap Tato Nano Indian sedan at US $ 2500 on the road. It looks like Indian targets will be well and truly exceeded.

-Mexico one of the US biggest suppliers is plagued with bad news. Production fell 8.2% last year and will keep falling at 10% a year.

-In 2008 the world is going to start using oil at a rate of more than 1,000 barrels per second or according to the International Energy Agency (IEA) 87.8 million barrels per day (bpd) 


A significant American recession may led to sub $70 IMO maybe but long term is upwards

Lack of sufficient exploration discovery for the last 30 years. 
Significant depletion in many major fields. 
Increased demand from growing global economy.
Further political instability (i.e. ME wars).
Alternatives are growing at such a miniscule rate as to have almost no effect on the downward curve and all governments know this, and are keeping quiet about it as they don’t want it to happen on their watch. So if Oil is on an upward tend to above $200pb then, there will be no more driving ridiculous SUVs, buying asparagus originating from Venezula and going off to the other side of the world for next to nothing. And the risks to business will be even greater, look at the 1970’s. This time it looks like the real deal and will have a lasting affect. Every business relies on oil whether it’s in plastic production, logistics, or any goods in any shop, 95% involve Oil somehow. See here.


----------



## coola

ok. time for a post here . people are getting ahead of themselves.

bernanke cut by .75 as he is new to the job and does not want to **** anyone off especially the bush family. he is much safer to slash rates now and deal with inflation later as if he didnt cut and economy tanked then he would be regarded as a total failure.

why is everyone so obsessed with p/e's  . most stocks that do well have huge p/e  ratios i.e. google, baidu etc. the stocks that do well in an uptrend are growth stocks, p/e does not come into it

with regard to peak oil, dont even start this conversation. i have had numerous contacts with various petroleum geologists in the US and every one of them say that peak oil is not here and if and when it does arrive, market forces and new technology will get us thru. just the same as it has over the past


----------



## z109

In case you hadn't noticed, Google has lost $150 in the last few weeks. That's 20%.

Really, coola, your posts crack me up. You almost had me started arguing with you there for a minute, you joker.


----------



## coola

yes google has fallen from over 700 dollars to 550. its still at very high p/e ratios. whats so funny about that??? do u not remember the dot com boom and the p/e ratios that existed there for a long period of time????


----------



## z109

coola said:


> yes google has fallen from over 700 dollars to 550. its still at very high p/e ratios. whats so funny about that??? do u not remember the dot com boom and the p/e ratios that existed there for a long period of time????


----------



## coola

ur prob one of these guys that spends their time trying to find a giant of tomorrow . instead of trading on strong stocks during market uptrends


----------



## coola

u should read some stock market books. winning on wall street, how to make money in stocks, the book about jesse livermore. they all say the same thing!! stocks that do best have very high p/e ratios


----------



## Sunny

coola said:


> u should read some stock market books. winning on wall street, how to make money in stocks, the book about jesse livermore. they all say the same thing!! stocks that do best have very high p/e ratios


 
I think any book titled winning on wall street and how to make to make money in stocks or any other book that promises to reveal the market secrets should be put in a big pile and set on fire....

p.s. I am going to show my ignorance now and ask who Jesse Livermore is


----------



## coola

he is a legendary trader that made and lost fortunes serveral times on the markets. its a great read that basically re-enforces the same comments that all the winners make

1. cut your losses quick
2. let your winners run

as far as im concerned the market runs on psychology i.e. the herd mentality. so if investors think that a stock has great growth prospects then they will buy it regardless of p/e ratio. it will continue going up until an earnings report beings them back to the real world i.e. vmware. a lot of money made on this stock while it went thru the roof (on ver high p/e ratio) , then they missed earnings and everyone sold out


----------



## z109

coola said:


> u should read some stock market books. winning on wall street, how to make money in stocks, the book about jesse livermore. they all say the same thing!! stocks that do best have very high p/e ratios


Back it up with some facts. Otherwise you are just blowing hot air.

[broken link removed]
The above chart shows what happens to an index filled with high p/e stocks.

Jesse Livermore
http://en.wikipedia.org/wiki/Jesse_Lauriston_Livermore


> A contrary view of Livermore's life is provided by Paul Sarnoff. Sarnoff says that Livermore was a hype merchant and that many of his brilliant successes were gross exaggerations. He states that Livermore did not in fact make much money during the 1929 crash as he was heavily hedged. He accuses Livermore, at the end of his career as being little better than a tout.


No doubt Livermore would also have been telling us about the new paradigm in new tech stocks, where you don't actually have to make any money for the stock to be worth anything.

As for the other books you mention, timing, momentum and technical analysis have, as a reviewer on Amazon pointed out, elevated the use of chart patterns to astrological significance. I'm not saying they're no use, just that they work well in a market with a direction; I don't believe the market has yet decided what direction it is going in. Volatility and abrupt movements of sentiment can crucify short-term bets.


----------



## z109

coola said:


> he is a legendary trader that made and lost fortunes serveral times on the markets. its a great read that basically re-enforces the same comments that all the winners make
> 
> 1. cut your losses quick
> 2. let your winners run
> 
> as far as im concerned the market runs on psychology i.e. the herd mentality. so if investors think that a stock has great growth prospects then they will buy it regardless of p/e ratio. it will continue going up until an earnings report beings them back to the real world i.e. vmware. a lot of money made on this stock while it went thru the roof (on ver high p/e ratio) , then they missed earnings and everyone sold out


If you let your winners run, is it not inevitable that you will only sell them at a loss?


----------



## ixus

coola said:


> ur prob one of these guys that spends their time trying to find a giant of tomorrow . instead of trading on strong stocks during market uptrends



wat age r u? plz dnt tlk n txt 

it weakens ur argumnt....

gud man


----------



## charttrader

_No doubt Livermore would also have been telling us about the new paradigm in new tech stocks, where you don't actually have to make any money for the stock to be worth anything.

_That's a bit silly and you'd realise that if you read the book. Livermore was a trader, not a cheerleader.  There's little doubt that, were he around at the turn of the century, he'd have been long during the bull market before shorting the life out of the collapsing dotcoms on the way down.

His book has been extremely influential and is widely regarded as being a classic.  It can be freely (and legally) downloaded nowadays.  See

http://bigpicture.typepad.com/comments/2007/01/reminiscences_o.html


----------



## z109

charttrader said:


> _No doubt Livermore would also have been telling us about the new paradigm in new tech stocks, where you don't actually have to make any money for the stock to be worth anything.
> 
> _That's a bit silly and you'd realise that if you read the book. Livermore was a trader, not a cheerleader.  There's little doubt that, were he around at the turn of the century, he'd have been long during the bull market before shorting the life out of the collapsing dotcoms on the way down.


On page 2:
"Another lesson I learned early is that there is nothing new
in Wall Street. There can't be because speculation is as old as
the hills. Whatever happens in the stock market today has
happened before and will happen again."
So fair enough, I concede your first point entirely. It was a silly thing to say.

Your second point, however, is as silly as mine. Livermore made AND lost fortunes on the stock market. He ended up broke and shooting himself dead. Not a strategy I'm keen to follow myself.

PS thanks for the link to the book - I shall enjoy it for the flavour of the twenties/thirties.


----------



## coola

ixus

"wat age r u? plz dnt tlk n txt 

it weakens ur argumnt...."

that is a patethic comment to make. im at work and its faster to type in short sometimes. grow up and dont waste time making such stupid comments.

"As for the other books you mention, timing, momentum and technical analysis have, as a reviewer on Amazon pointed out, elevated the use of chart patterns to astrological significance. "

oh wow, a reviewer on amazon pointed this out!!!! must be right then

"If you let your winners run, is it not inevitable that you will only sell them at a loss?"

no, not neccessarily. you wont sell them at the top but you will catch the trend in the middle. thats the big gain.


----------



## charttrader

My point wasn't that Livermore was always right, rather, I meant that he tended to bet in the direction of the prevailing trend.  The bear market that followed the dotcom bubble would have been tailor made for a trader like him.  

As for his suicide, the guy did have a lifelong battle with clinical depression.  The wikipedia entry points out that "untouchable trusts and cash assets at his death totalled over $5 million" so he didn't die broke.  However, I'd be the first to say that Livermore was not, as so many have claimed, the greatest trader ever.  He blew up too many times for such an accolade.  Trading is hardly an ideal profession for anyone suffering from major depression.

Regarding the book, it does provide that 1920's flavour but it's also quite a timeless work and is still very widely read today.  I doubt you'll find a trader on Wall Street who hasn't read it.


----------



## coola

i totally agree that he made loads of mistakes. but i felt that his mistakes were the same mistakes that most traders make today. i.e. taking tips from friends etc, one of this quotes " my best money was made from my sitting not from my thinking"


----------



## coola

from wikipedia
"He proceeded to lose 90% of that 1907 fortune on a blown cotton trade. He violated many of his key rules; he listened to another person's advice (he preferred working alone) and added to a losing position."

lots of people add to a position as it goes down in value beliving that its a real bargain as it gets cheaper. this is a big mistake


----------



## MichaelDes

coola said:


> "He proceeded to lose 90% of that 1907 fortune on a blown cotton trade. He violated many of his key rules; he listened to another person's advice (he preferred working alone) and added to a losing position." Lots of people add to a position as it goes down in value beliving that its a real bargain as it gets cheaper. this is a big mistake


 
What’s the cotton trade got to do with the credit derivatives markets in a state of collapse? I would tend to look over my shoulder at what Buffett is doing and thinking, from Globes Online 29.01.2008


_Buffett explained to anyone interested in listening that the derivatives market was a ticking bomb and that it was just a matter of time before it all blew up in our faces. When I looked up Berkshire Hathaway's reports I found out that Buffett said the very same thing in a letter, black-on-white, to investors in 2003, when the company unveiled its results for 2002. "Charlie (Munger) and I are of one mind in how we feel about derivatives and the trading activities that go with them. We view them as time bombs, both for the parties that deal in them and the economic system," he wrote. _


What's no nonsense Buffett at today
http://news.google.ie/news?hl=en&tab=wn&ned=en_ie&q=warren+buffett
_Warren Buffett's Berkshire Hathaway Inc. agreed to expand its new bond insurer nationwide in exchange for faster licensing, a group of U.S. state regulators said today. Berkshire has committed,'' Holeman said in an interview...Berkshire's bond insurer may help stabilize debt markets, which have been roiled by the prospect that MBIA Inc. and Ambac Financial Group Inc., the industry's biggest guarantors, may lose their top credit rankings. A downgrade may affect $2.4 trillion in assets industrywide, and Fitch has already stripped its AAA rating from Ambac after losses tied to subprime loans._

One of Buffetts rivals on Wall Street is John Paulson who made $15bn in the last six months shorting subprime by exploiting the mis-pricing between CDO's and CDS's. I suspect this is where the action is, in arbitrage. If these people are busy making money shorting or exploiting panic, then IMO there is no horizon for any updrafts short term within the markets. 


Again where are the markets in the last day or so/....

http://uk.reuters.com/article/bankingFinan...29?rpc=401&
BofA CEO: Bond Insurer Meltdown a Systemic Risk --Tue Jan 29, 2008 6:02pm GMT

NEW YORK (Reuters) -- _Any meltdown of a large bond insurer would pose a *systemic risk*, Bank of America Corp Chief Executive Ken Lewis said at a conference on Tuesday. __The bond insurers, which guarantee more then $2 trillion of securities and are expected to make big payouts on bonds linked to subprime mortgages, are struggling to raise capital and keep their top credit ratings._

http://www.bloomberg.com/apps/news?pid=206...&refer=home
UBS Reports Record Loss After $14 Billion Writedown

Jan. 30 (Bloomberg) -- _UBS AG, Europe's largest bank by assets, reported a record loss after about $14 billion of writedowns on assets infected by subprime mortgages in the U.S. __*The fourth-quarter net loss of 12.5 billion Swiss francs ($11.4 billion) was almost double what analysts surveyed by Bloomberg were estimating*, and brings the total decline for the year to about 4.4 billion francs, the Zurich-based bank said today in a statement. UBS publishes its official results on Feb. 14.__`*The damage is enormous*,'' said Dominique Biedermann, director of Ethos Foundation in Geneva that holds UBS shares worth about 80 million francs. ``It wipes out profit and shows that an inquiry is needed to make sure it doesn't happen again_

How much will corporate America and corporate Europe lose out or suffer as a result of bank consolidations and lack of leverage lost for M&A's, natural expansions etc. Deals everywhere are falling through left, right and centre. Until this washes its way out of the system, there is IMO little growth to be achieved.

Bloomberg's poll reckons there is an 74*% chance of a 50 bps Fed cut today*, at 7.15GMT. As the dollar devalues, when will its creditors including OPEC, start to tell them to shove the greenback where the sun doesn't shine?


----------



## coola

do ye think the FED will cut 2nite and if so by how much?


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## z106

coola said:


> do ye think the FED will cut 2nite and if so by how much?


 
According to bloomberg there is a 74% chance they will cut by 50.

Yesterday they reckoned there was an 86% chance.


----------



## coola

whats ur opinion.


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## ixus

coola said:


> ixus
> 
> "wat age r u? plz dnt tlk n txt
> 
> it weakens ur argumnt...."
> 
> that is a patethic comment to make. im at work and its faster to type in short sometimes. grow up and dont waste time making such stupid comments.



Hardly. When I read posts here I have to take into account I don't know the posters level of experience, qualifications etc or where they get their information from. 

As soon as you start typing in txt talk I'll assume you're actually a teenager or just lazy and my opinion of your argument becomes weaker. 

I think it's a valid point.


----------



## ixus

coola said:


> whats ur opinion.



IMHO a 0.25 cut to make it a full 1%. Any more and I think it would be bad news.


----------



## z106

ixus said:


> Hardly. When I read posts here I have to take into account I don't know the posters level of experience, qualifications etc or where they get their information from.
> 
> As soon as you start typing in txt talk I'll assume you're actually a teenager or just lazy and my opinion of your argument becomes weaker.
> 
> I think it's a valid point.


 
That's a ridiculous point.

Nobody knows anyone on this forum - but after reading a few posts by someone then it should be pretty obvious to most as to what kind of a punter they're dealing with.

I quite often use bits of 'txt talk' as you call it urself ixus - (Should that not be 'text talk' ? - looks like we're all guilty of it from time to time eh ixus ?)
SO which one are you then ? A teenager ? Or just lazy ?


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## ixus

Lazy.


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## MichaelDes

Fed cut 50bps, as expected. Anybody for more Gold??
\/
.
\/
.
\/
.
\/
Dollar continuing its tanking trend [broken link removed] ! whilst the Dow is spiking initially! Gold $930, but ten year bond rate not reacting. 
.
\/...Sooner or later the Chinnese are going to ditch the greenback and admit enough is enough.


----------



## z106

MichaelDes said:


> Fed cut 50bps, as expected. Anybody for more Gold??
> .
> .
> .
> .
> .
> .
> Dollar tanking [broken link removed] OMG!!


 
Well - im in gold.Won't go for anymore.

Is there a shakeout ahead though ?

A few analysts are murmuring on about it.


----------



## z109

If nobody else slashes their central bank rates and many currencies appreciate against the dollar, then any inflation fallout will be confined to countries using the dollar or which peg against the dollar. Assets priced in dollars are likely to rise in price as they will retain a relative weighting against other currencies. Therefore what the US is doing is a de-facto devaluation of the dollar. As there isn't global inflation, gold is not required as a hedge and a basket of currencies would do the same job.

Where have I gone wrong in the above schoolboy analysis?


----------



## coola

im neither lazy or a teenager. im juse busy.


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## Croesus

I've had a read through this very interesting thread. I have to admit, I'm torn between basing my investment decisions on the optomistic scenario of this being a sharp correction in markets that will recover towards the latter part of this year or the more pessimistic scenario of this being the beginning of a potentially long and painful bear market. 

My guess is that stock markets will continue to decline until at least the Autumn but that recovery should set in then. The extent of the writedowns at investment banks has been simply breathtaking but I can't help but think that these are overdone and that the current market prices of securitised products like RMBS, CDOs etc are out of kilter with their true fair value. Is it really credible that the rates of default on the underlying obligations are going to rise to such an extent that those write-downs will be justified? For example, in the US subprime market, mortgage defaults will surely not be as bad as previously feared given the fiscal stimulus package and the Fed rate cuts. I think this leaves open the possibility of massive write-ups at the investment banks later in 2008 or in early 2009. A re-pricing of risk was long overdue but what is happening now looks too extreme and would not appear to be justified by the economic fundamentals. 

I moved a large portion of my portfolio to cash during the market rally in October 2007 as I could see nothing but negative newsflow in the immediate future. I have been averaging back into the market since then on a modest basis. Later this year, when the true extent of the losses linked to structured credit securities becomes clear and provided the economic downturn does not look irreversible, I plan to move agressively back into equities. I think the upswing could be enormous and as has been pointed out by a previous poster, financials could well lead the way back up.


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## markowitzman

> My guess is that stock markets will continue to decline until at least the Autumn but that recovery should set in then. The extent of the writedowns at investment banks has been simply breathtaking but I can't help but think that these are overdone and that the current market prices of securitised products like RMBS, CDOs etc are out of kilter with their true fair value. Is it really credible that the rates of default on the underlying obligations are going to rise to such an extent that those write-downs will be justified? For example, in the US subprime market, mortgage defaults will surely not be as bad as previously feared given the fiscal stimulus package and the Fed rate cuts. I think this leaves open the possibility of massive write-ups at the investment banks later in 2008 or in early 2009. A re-pricing of risk was long overdue but what is happening now looks too extreme and would not appear to be justified by the economic fundamentals.
> 
> I moved a large portion of my portfolio to cash during the market rally in October 2007 as I could see nothing but negative newsflow in the immediate future. I have been averaging back into the market since then on a modest basis. Later this year, when the true extent of the losses linked to structured credit securities becomes clear and provided the economic downturn does not look irreversible, I plan to move agressively back into equities. I think the upswing could be enormous and as has been pointed out by a previous poster, financials could well lead the way back up.


Be aware you are attempting to market time which rarely if ever beats buy and hold long term.


----------



## Croesus

I agree that trying to time the market can be foolish but I also think that there's a fair argument to be made for increased buying when fear abounds and valuations look attractive. Look at Warren Buffet - Berkshire Hathaway has been sitting on a $40billion cashpile and is only in recent months putting that cash to work to take advantage of the market sell-off (which has been relatively indiscriminate in the search for safety and liquidity) to buy value. 

The big question is where to find that value. If the Fed's rate cutting (which may be followed by the other big central banks over the course of this year) results in another bubble inflating, the next few months are a great opportunity to position yourself to benefit from the upswing. I think some of the emerging markets may be a fair bet, but I also wouldn't be surprised if some of the European large caps benefit too. If confidence comes back into the market and provided the economic outlook here in Ireland doesn't become too grim, the ISEQ may well have a rebound too. What do you think?


----------



## MichaelDes

Croesus said:


> The big question is where to find that value. If the Fed's rate cutting...


 
The Fed will rate cut again by 50bps in March as a result of unexpected weakness in the labour market. Many analysts believe this rate cut may led to the Chinese and OPEC countries to dump the greenback and switch their weighting of dollar [China has over $1.8trn]. If this happens it will affect the dollars value, dramatically.

Monoline markets are looking bleak too. Again the Fed is trying to fix it with liquidity. But the America dollar can not stand much more printing before it breaks completely. The national debt has risen 66% since Bush came to power and every other lackey apart from Ron Paul has no real plan to control the countries public spending. The Iraq dinar has risen in value against the dollar and in South America it is known as Bernanke peso because of its reputation of being a banana republic monetary policy.

The American monetary system IMO is on the brink, it could go either way. It is like a Ninja continuously trying to borrow its way out of trouble with little or no income. Consumer appetite required to help the economy is non existent. So if America sneezes, Europe and the Far East gets a cold [China, Russia and India are not big enough to decouple]. 

But what if the US has the flu??


----------



## Grus

Hi MichaelDes,

Is a weak dollar really that bad for the U.S.? Will it not allow U.S. products to appear discounted globally, maybe narrowing their trade deficit? And is it really likely that China would dump the dollar? - would this not cause the renminbi to appreciate against the dollar? Since China depends on exports to the States would they not want to keep the dollar strong vs. the renminbi? If China dumped the greenback would they be shooting themselves in the foot?
I really don't know anything about economics so please point out where I'm going wrong with my train of thought.


----------



## MichaelDes

Grus said:


> Is a weak dollar really that bad for the U.S.? Will it not allow U.S. products to appear discounted globally. If China dumped the greenback would they be shooting themselves in the foot...


 
This is a very important point that I have considered too, so you may be right about the case of China. However many OPEC countries have muted about changing their currency weighting but this however may be just a shot across the bough to the Fed. Who knows? America's fiscal policy of trying to print its way out of trouble is something Zimbabwe tried, but failed with 150,000% inflation. Btw not saying America will follow the same path, but their monetary policy will cause inflation through printing extraordinary amounts of money.

America needs to consolidate and face the hangover now, rather than delay and add more juices of liquidity. Certainly their 4.28% yielding treasury bonds over thirty years don't sound appealing to anyone other than OPEC and Chinese.

I would dearly love to hear about the state of American affairs from someone else, maybe more versed or expert in these affairs. Hopefully my impression is wrong.


----------



## badabing

Overlaying a 200 day moving average on the ISEQ for the last number of years suggests that if the decline is anything like that of the 9/11 bear market, we are only getting started;

http://finance.yahoo.com/q/ta?s=^ISEQ&t=my&l=on&z=l&q=l&p=,m200&a=&c=


----------



## badabing

Or Look at the graph on this page;

http://bigpicture.typepad.com/comments/2005/12/100_year_bull_b.html

You will see that the ISEQ has being tracking the DOW albeit with more vloatility

http://finance.yahoo.com/q/ta?s=%5EISEQ&t=my&l=on&z=l&q=l&p=&a=&c=%5EDJI

The Dow looks like it is 10 years into a sideways market, similar to that experienced after all the other bull markets.

If you have big lumps to invest, you had better get your timing right.
If you are regularly investing (dollar cost averaging) a sideways market can be just as good as any to make money.
Personally I'm in my thirties and don't mind another 10 years of sideways markets, as long as the big Kahuna eventually comes before retirement!


----------



## MichaelDes

badabing said:


> If you have big lumps to invest, you had better get your timing right...


 
First time ever in the history of the financial system, the US Banks have deficits in their fractional lending asset base. Is this is quirk or a real black hole emerging as a result of over exhuberance in the Abx and Credit markets from 2006 forward.

So timing, never a more apt word, to get out of positions. Markets can rise as well as fall and these are based primarily on *monetary stability*, something America has in little supply. Their fiscal system could go either way, based on the enclosed [broken link removed] or for those not bothered reading, try out this video link below 

http://ie.youtube.com/watch?v=EBZ81hmZuNk
_Please watch it takes 9 minutes to realise the true facts._

Paper monies should never have been allowed. The consequences of allowing free printing that is politically motivated  would eventually led to major problems and adversity. If this black hole within banks continues to increase then stock markets are going to suffer and big time. Can someone give me a second opinion and confirm my doom monger philosophy, either way. I sincerely would love to be wrong and be bullish, but facts are facts??

Re USA, only one candidate in their elections can smell the roses, the rest are concerned with the status quo of big government. Since the 1980's the lines between the left and right have been completely blurred. For example the conservatives adding 66% to national debt - America is broke and so soon could their banking system.


----------



## ixus

MichaelDes said:


> http://ie.youtube.com/watch?v=EBZ81hmZuNk
> _Please watch it takes 9 minutes to realise the true facts._



A link to the sheet that was being discussed. It's certainly shocking stuff!

http://www.federalreserve.gov/releases/h3/Current/


----------



## z106

i watched the clip.

How are the banks losing so much money though?

I don't understand that.


----------



## MichaelDes

qwertyuiop said:


> i watched the clip.How are the banks losing so much money though? I don't understand that.


 
[broken link removed]

Because after the $500,000,000,000,000 [500 Trillion USD] credit party, the hangover hurts like hell. They weren't able to cope with write offs compared to relative asset base. All good things come to an end...

Btw has a trillion 12 or 15 zero's...I get lost in the magnitude??

To get it in perspective 

(i) nominal purchasing power of the USA was $48trillion in 2007 

(ii) Monoline markets worth $2.3trillion are in default seeking intervention. This is the insurance for the banks should debts go wrong

(iii) Banks are in the red on fractional lending to the tune of -$8350million iiir. First time in history [Excludes auctioned TAF loans]

(iv)The Fed only has $735billion not enough to bail out the banks or monolines, should things deteriorate

(v)America's economy is on empty, it is broke and international countries are switching the greenback.

These events of the last two weeks leds me to believe something bad is in store for all stockmarkets, that maybe unprecendented. 

http://www.bloomberg.com/apps/news?pid=206...r=economy - 8th of Feb 2008 - -The G7 know all this information, wait til it goes mainstream.


----------



## Grus

A trillion usually means 10^12 (one million million) in English, but AFAIK it can mean 10^18 (one million million million) in other languages just to confuse things. 
BTW the "Aggregate Reserves of Depository Institutions and the Monetory Base" stats for this week are out. Non borrowed reserves of depository institutions are now at -$18009million. This sounds like a bad thing to me, but I'm not going to pretend I know what exactly it means - If anyone does have an idea, I'd love to hear it.


----------



## ixus

I was looking at this again and I think that the explanation on that youtube clip was slightly incorrect. My understanding is this:

The presenter is confusing the total in the 1st column as being the amount borrowed. The actual borrowings that the institutions made are in the seventh column and the big changes come during credit auctions in column 6.

Column 2 + 7 = column 1 which is what the bank holds. + column 6 after the auctions.
column 1 - 3 (the required amount) = column 4 the excess above/below the required.

These “injections” of cash were to cover the banks reserve requirements after they had taken such large write downs during this period. Right/wrong?

What happens if the banks don’t meet the requirements? Would they have had to fold?
Is this what has also happened to Northern Rock, but just more publicised? When the ECB were “injecting” cash into the system recently was this for the same reason?

Would appreciate if anyone can help me understand this further.
Link to the fed information:
http://www.federalreserve.gov/releases/h3/Current/


----------



## ixus

http://www.ft.com/cms/s/0/66db756a-de5d-11dc-9de3-0000779fd2ac.html



ixus said:


> US banks borrow $50bn via new Fed facility
> 
> By Gillian Tett in London
> 
> Published: February 18 2008 20:34 | Last updated: February 18 2008 20:34
> 
> US banks have been quietly borrowing massive amounts of money from the Federal Reserve in recent weeks by using a new measure the Fed introduced two months ago to help ease the credit crunch.
> 
> The use of the Fed’s Term Auction Facility, which allows banks to borrow at relatively attractive rates against a wider range of their assets than previously permitted, saw borrowing of nearly $50bn of one-month funds from the Fed by mid-February.
> 
> US officials say the trend shows that financial authorities have become far more adept at channelling liquidity into the banking system to alleviate financial stress, after failing to calm money markets last year.
> 
> However, the move has sparked unease among some analysts about the stress developing in opaque corners of the US banking system and the banks’ growing reliance on indirect forms of government support.
> 
> “The TAF ... allows the banks to borrow money against all sort of dodgy collateral,” says Christopher Wood, analyst at CLSA. “The banks are increasingly giving the Fed the garbage collateral nobody else wants to take ... [this] suggests a perilous condition for America’s banking system.”
> 
> The Fed announced the TAF tool on December 12 as part of a co-ordinated package of measures unveiled by leading western central banks to calm money markets.
> 
> The measure marks a distinct break from past US policy. Before its introduction, banks either had to raise money in the open market or use the so-called “discount window” for emergencies. However, last year many banks refused to use the discount window, even though they found it hard to raise funds in the market, because it was associated with the stigma of bank failure.
> 
> The Fed has not yet indicated how long the TAF will remain in place.
> 
> But the popularity of the scheme is prompting speculation the reform will stay in place as long as the financial stresses last.
> 
> “Some Fed officials have expressed an interest in keeping and possibly expanding the TAF,” says Michael Feroli, economist at JPMorgan.
> 
> Nevertheless, Mr Feroli said banks now appeared to be using the TAF instead of other funding routes, meaning that the overall level of reserves in the system was remaining constant. “The banking system certainly has its problems, however the notion that ... banks have trouble maintaining reserves stems from a superficial reading of the Fed’s statistical reports,” he said.


----------



## ivuernis

ixus said:


> http://www.ft.com/cms/s/0/66db756a-de5d-11dc-9de3-0000779fd2ac.html



Hasn't the upswing in TAF (Term Auction Facility) lending been matched by the reduction in SOMA (System Open Market Account) lending though? Or, more accurately the FED has reduced the money going to the SOMA market and redirected it to the TAF. From my basic understanding it's the big institutions that buy $ on the SOMA whereas the TAF $'s are available to retail banks? Someone correct me if I'm off the mark here. 

http://wallstreetexaminer.com/wp-content/uploads/2008/02/somafed.PNG

Notice how the decrease in SOMA in Sept '07 seems to coincide with the end of the bull market in equity markets last year and again (drastically!) in the last couple months with much of the recent market turmoil. Seems like the FED is trying to get the dollars out there through the path of least resistance by increasing the TAF at the expense of SOMA? 

Strange how the FT article completely omits any mention of SOMA.


----------



## Gautama

Anybody read today's Irish Independent?
Today is the 1st anniversary of the ISEQ hitting its peak of 10,041.
It's down about 35% since then.
Though down 6% so far this year, the Dow Jones Stoxxx is down 13% so we're not doing too bad.

Some stuff about previous ISEQ problems over the last 20 years, including their duration, should anyone want to research when the downward spiral in the stockmarket will end.


----------



## shnaek

I was just reading in the Times that property developers owe the banks €100 Billion! They certainly will want to know when the downturn will end. I'd say we'll see a few of them going under before this downturn ends.


----------



## ixus

ivuernis said:


> Or, more accurately the FED has reduced the money going to the SOMA market and redirected it to the TAF.
> 
> Strange how the FT article completely omits any mention of SOMA.



Yep, you're right. It's still a lot. The FT had another article (i have the text but not the link at present) where they do mention this. 

Latest :http://www.federalreserve.gov/releases/h3/nonborrowedreserves.htm



> Recent Declines in Nonborrowed Reserves
> 
> The H.3 statistical release indicates that nonborrowed reserves of depository institutions have declined substantially since mid-December to a level that is now negative. This development reflects the provision of a large volume of reserves through the Term Auction Facility (TAF) and has no adverse implications for the availability of reserves to the banking system.
> 
> By definition, nonborrowed reserves are equal to total reserves minus borrowed reserves. Borrowed reserves are equal to credit extended through the Federal Reserve's regular discount window programs as well as credit extended through the TAF. To maintain a level of total reserves consistent with the Federal Open Market Committee's target federal funds rate, increases in borrowed reserves must generally be met by a commensurate decrease in nonborrowed reserves, which is accomplished through a reduction in the Federal Reserve's holdings of securities and other assets. The negative level of nonborrowed reserves is an arithmetic result of the fact that TAF borrowings are larger than total reserves.


----------



## joe sod

Croesus said:


> I agree that trying to time the market can be foolish but I also think that there's a fair argument to be made for increased buying when fear abounds and valuations look attractive. Look at Warren Buffet - Berkshire Hathaway has been sitting on a $40billion cashpile and is only in recent months putting that cash to work to take advantage of the market sell-off (which has been relatively indiscriminate in the search for safety and liquidity) to buy value.
> 
> The big question is where to find that value. If the Fed's rate cutting (which may be followed by the other big central banks over the course of this year) results in another bubble inflating, the next few months are a great opportunity to position yourself to benefit from the upswing. I think some of the emerging markets may be a fair bet, but I also wouldn't be surprised if some of the European large caps benefit too. If confidence comes back into the market and provided the economic outlook here in Ireland doesn't become too grim, the ISEQ may well have a rebound too. What do you think?


 
No i think you are wrong the uplift will happen in america because the dollar is so cheap and has been falling for years this is making american assets very cheap, europe including ireland is just too expensive now with the valu of the euro, the people with the most investment money are the arabs and asians, as for buffet he is ploughing his money into american assets like railways, energy and banking, whereas 5 years ago he was doing the opposite, he was investing outside america,


----------



## Grus

Why are the markets rallying (in particular the DowJ)? I just don't understand it. With all this negative info coming out of the U.S. in the last few days (inflation up, consumer confidence down, housing sales down, commodities like oil and wheat sky high, the dollar at an all time low) how can this be out weighed by a share buy back from IBM? Forgive the oxymoron but is everyone a contrarian investor now?! I presume now that the ISEQ & DOWJ are around their 50 day moving averages they will turn tail? Any opinions?


----------



## Calico

Grus said:


> Why are the markets rallying (in particular the DowJ)? I just don't understand it. With all this negative info coming out of the U.S. in the last few days (inflation up, consumer confidence down, housing sales down, commodities like oil and wheat sky high, the dollar at an all time low) how can this be out weighed by a share buy back from IBM? Forgive the oxymoron but is everyone a contrarian investor now?! I presume now that the ISEQ & DOWJ are around their 50 day moving averages they will turn tail? Any opinions?



While it may be counter-intuitive to see a stock market rally after a slew of bad news it is often the market pricing in a greater chance of future interest rate cuts by the Fed.


----------



## mickman

the market rallies when the FED cuts interest rates because the stock market look at the situation 6-9 months from now. if the fed cut then it will stimulate investment and the economy will recover. simple as that


----------



## mickman

from a historical point of view, investing in the stock market when the fed is cutting rates is always the best time to do it. oil wont harm the world economy until it hits 200 dollars, its still really cheap considering the value we get from it. gold will most definitetly hit 1000 an ounce . its human nature to drive things to new records and the speculators will ensure that it hits 1000


----------



## ixus

"In a speech in November 2002, early in his first stint with the Fed, Bernanke approvingly mentioned a Milton Friedman parable about how a "helicopter drop" of cash could push prices upward. It was simply an attempt to reassure then-skittish markets that the Fed had ways to stave off deflation, but the image of a man willing to dump bills out of helicopters stuck. In hard-money circles, Bernanke is still known as "Helicopter Ben.""
Article link.http://money.cnn.com/magazines/fortune/fortune_archive/2006/07/10/8380834/index.htm


----------



## joe sod

*When will the downward spiral in the stockmarket end?*

i presume the irish market you are talking about, dominated by banking shares has a long way to go yet, because banking is out of favour now , here is an article you should read if you think banks are now cheap, remember they only look cheap compared to historical earnings

http://www.moneyweek.com/file/42951/-ignore-the-pundits--stay-out-of-banking-shares.html

as for buffet this is a good article on his investments
[broken link removed]

also remember that the iseq is dominated by foreign funds in terms of ownership, what the irish media says about banks is irrelavant to them, it is how ireland compares to foreign markets is what is most important


----------



## stir crazy

mickman said:


> from a historical point of view, investing in the stock market when the fed is cutting rates is always the best time to do it. oil wont harm the world economy until it hits 200 dollars, its still really cheap considering the value we get from it. gold will most definitetly hit 1000 an ounce . its human nature to drive things to new records and the speculators will ensure that it hits 1000



Where did you get this figure for 200 dollars from ? 


I see the recent price rise of oil as related to the fall in dollars value since oil is priced in dollars. At which price for oil would its dominance as a source of energy be eliminated  and make it more expensive than other sources such as biodiesel, electricity from renewable sources etc ???


----------



## mickman

my own opinion


----------



## MichaelDes

*Rate decision 6th of March 2008 - ECB and BoE - Stick....**Fed - it will likely cut. 0.5%?*

The Euro is rising against our trading partners of sterling and dollar, how worse can it get for Ireland and the larger equity markets. Trichet's decision to hold rates is bad for both Ireland and Europe, the level of the currency against the competition is too high. Trying to control external influences of inflation with interest rates is counterproductive. If rates were 9% the external forces of inflation would still remain with high prices of grains, sugar and oil etc. Is there wage inflation pressure in Europe? Nothing could be worse than possible *stagflation in Ireland*. Has the Euro project been a disater for us and can we pull out?

By Gavin Finch March 6 (Bloomberg) -- Euro Stays Higher Against Dollar as ECB Keeps Key Rate on Hold
_The euro stayed higher against the dollar, trading near a record, after the European Central Bank kept its key rate at more than a six-year high. Policy makers left the main finance rate__ at 4 percent, as forecast by economists surveyed by Bloomberg News. The yield__ on two-year German notes over U.S. Treasuries widened to the most in 15 years as traders bet the Fed will cut rates at least half a percentage point by March. 18. ECB President Jean- Claude Trichet will brief reporters at 2:30 p.m. in Frankfurt.``There's no way the ECB was ever going to raise rates so the focus is going to be on Trichet's press conference,'' said Simon Derrick__, the London-based head of currency strategy at Bank of New York Mellon Corp. ``It's pretty clear the ECB isn't happy with the current strength of the euro.'' *The euro climbed to $1.5347, the highest level since the single currency's debut in 1999*, before trading at $1.5333 by 12:46 p.m. in London, from $1.5265 in New York yesterday. It was at 158.66 yen, from 158.76 yesterday._




stir crazy said:


> Where did you get this figure for 200 dollars from ?


The oil price has reached $106pb and OPEC don't seem that bothered. Combined with Eubor and Libor on another freak run again, things are not looking good for corporate finance. AFAIK the only decent multi million deal to get off the blocks in Ireland during this credit crunch was the hotel group financed by AIB [2008].

Guardian -Ashley Seager -- Wednesday March 5 2008 Re Eubor and Libor
_The global credit crunch appeared to take a fresh turn for the worse today as interbank lending rates, known as Libor, rose to new two-month highs in London and the eurozone.Interbank interest rates are set by the demand and supply of money rather than the Bank of England, and analysts say the latest rates signal a tightening of supply.The sterling three-month *Libor rate rose to 5.77%, more than 50 basis points above the Bank of England's* 5.25% base rate – its highest level for two months.__The *euro three-month Libor rose to its highest level since mid-January, standing at 4.39%*._


The tightening of the credit market is occuring because of Fannie and Freddie bonds, if these trade even at 90% (triple-A tranches of prime mortgage paper are trading at as low as 69%), the mark-to-market losses which would result, would be larger than all the losses in sub-prime to date.

N.YORK, March 6 (Reuters) -- Fannie Mae, Freddie Mac MBS, debt spreads balloon 
_Mortgage-backed and corporate "agency" debt obligations issued by Fannie Mae and Freddie Mac plunged relative to U.S. government securities on Thursday as the credit crisis sent money managers racing to raise cash.Yields on Fannie Mae mortgage-backed securities paying 5.5 percent interest jumped by 10 basis points *to 2.23 percentage points above benchmark Treasuries, the most in more than two decades*, according to Reuters and traders' data._

Even Fool.com. a relatively on the fence website is switching views. Not good news either on future house price values.

By Richard Gibbons March 3, 2008 -- It's So Much Worse Than You Think
_Right now, things look bad. Every day, the economic news looks worse. Unemployment has been creeping up. The service sector is shrinking for the first time in half a decade. Consumer confidence is declining. __The stock market's performance of late reflects this news. The S&P 500 is down nearly 9% year to date, and some stocks have been completely mauled._


The largest hedge fund group according to the bbc Thursday, 6 March 2008, 10:30 GMT Credit crunch hits Carlyle unit - 
_



			Carlyle Capital Corporation, the fund manager backed by the giant private equity firm Carlyle Group, has not been able to meet several payment demands.The company said it received margin calls from seven financing groups that totalled $37m and it was not able to meet four of those requests. A margin call is a payment to guarantee a much larger debt or investment.Carlyle Capital invested in assets backed by US mortgages, which have been hard to value since the credit crunch.
		
Click to expand...

_As the credit crunch default amongst the banks and hedge fund has been revalued at $1trillion [a trillion used to be a term to describe an unimaginable amount of money] the downside in the markets looks inevitable. Good news is elusive, IMO the downplay will continue for a while...

ISEQ looks like the grand old duke of york, that went up the hill to come all the way down the otherside side. 


Market has lost 3% again today, *does no one care*, has everyone sold [looks like it]?? At Q1/2005 values, IMO its heading for Q1/2004 before year end

But when's the market for changing?


----------



## barryl

according to the papers the market should recover in the second half of the year,who knows! stay invested what else can one do?what I would like to know is , is America going into recession or worse into a depression


----------



## CatsCradle

It is amazing how things can turn so fast. I've lost so much money from last June that I don't want to think about it!

I have to say, I have heard the old mantra of 'you can't time the market' here and elsewhere but I am not believing it anymore. 

I have stuck to that principle for years and years now and have not really seen the benefit.  It seems to me the only way to make some money by trading (unless you really don't need it for 10+ years) IS by timing the market.


----------



## CatsCradle

It is amazing how things can turn so fast. I've lost so much money from last June that I don't want to think about it!

I have to say, I have heard the old mantra of 'you can't time the market' here and elsewhere but I am not believing it anymore. 

I have stuck to that principle for years and years now and have not really seen the benefit. It seems to me the only way to make some money by trading (unless you really don't need it for 10+ years) IS by timing the market.


----------



## Markjbloggs

barryl said:


> according to the papers ......




I hope you get your information from sources other than some idiot journalist - if not, you get what you deserve.


----------



## mercman

Well I have just being listening to Jim Power, The Economist, who  is a good guage to the  economy. Well the market follows the Economy  and he reckons these rocky times are due to last for a few years. 

Whether you believe it or not there are a large nu ber of people who are in complete denial. The Banks wuill squeeze further now and the level of debt that has been ongoing for the past few years will come to an abrupt halt or definite slowdown.

The downward spiral should correct it self after a positive two months of economic trends in the US, which seems some time away yet.


----------



## MichaelDes

mercman said:


> The Banks wuill squeeze further now and the level of debt that has been ongoing for the past few years will come to an abrupt halt or definite slowdown.


 
An EA was telling me a client agreed to buy an local authority house for €165k reduced from €205k. However it was valued by the bank at no more than €130k - the deal was then scuppered.

Banks it seems are only giving sensible loans if the loans make sense. It reminds me prior to the dot.com bust with venture capitalists backing any idea to do with the internet regardless of how stupid, but when a cold breeze blew things changed rapidly.

Certain banks have been caught out with negative equity repossessions, but in future they won't be caught holding any baby. The same rules of "over-sensible" lending must now apply to the corporate world and this lack of leverage will cause future growth to suffer.

Reagarding timing etc, if you invested £100k in a FTSE tracker in 2008 then in real terms the investment would be worth -30% less, so timing IMO is everything. Btw Buffett the world richest man isn't exactly bullish on America or equity at the moment. Even the best get it tough but when there's a floor, he'll be done prior to market sentiment turning.

International Herald Tribune, France - 29 Feb 2008
_Berkshire profit falls 18 pct, hurt by construction; company well prepared to replace Buffett_



ixus said:


> few positive investment opportunities in the near future.


 
I'm thinking of pork belly, beef and cotton per recommend by Moneyweek or will these by slaughtered if the grains and sugar fall from bubbe zones. These PBC sectors have not reacted or risen, and inventories are becoming dangerously low unlike wheat, set to have it's largest crop yield in 2008/9. Any pointers on sectors? It is very difficult and new markets like Russia etc I just do not trust...


----------



## ixus

barryl said:


> what else can one do?what I would like to know is , is America going into recession or worse into a depression



1.You can hedge your investment by shorting or going long on an uncorrelated investment (very few at the moment) to prevent further loss.

2.You can take your losses and put them in a safe, AAA rated, deposit account. 

Be aware your investment can go to zero.


----------



## ixus

CatsCradle said:


> It is amazing how things can turn so fast. I've lost so much money from last June that I don't want to think about it!



Not thinking about it would be pretty foolish, you can lose a lot more in the current climate. There's so much information out there about the current conditions it's possible to see that this is going to be a long run bear cycle, no light at the end of the tunnel and IMHO, few positive investment opportunities in the near future.


----------



## badabing

ixus said:


> Not thinking about it would be pretty foolish, you can lose a lot more in the current climate. There's so much information out there about the current conditions it's possible to see that this is going to be a long run bear cycle, no light at the end of the tunnel and IMHO, few positive investment opportunities in the near future.



I believe we are half way through a 15 year bear / sideways market, after 30 years of super gains. If you want to make money in these 15 years, timing is everything. If on the other hand you are in for another say 20 years, then don't bother, dollar cost averaging through the bear market will see you good


----------



## ixus

badabing said:


> I believe we are half way through a 15 year bear / sideways market,



Hi Badabing, on what grounds do you see this?(not that I disagree)

Are you referring to the end of the tech boom? This period should have seen a significant correction in the markets as it was beginning to (see link) but then 9/11 happened and there were FED/ECB/BOE cuts that pumped up the market somewhat artificially bringing about the latest problems of cheap credit. 

 [broken link removed] 

So, do you see it taking 7/8 years for the global economy to get back on track or start a fresh?

If I was "timing", I would be short US financial stocks & major indices, not sure about present  Eur/US rate and I would be paying a lot of attention to hedge funds at the moment i.e.do they have short positions, but are margin calls making them close these and commodity positions and giving stocks/commodities a false high level?

comments?


----------



## MichaelDes

ixus said:


> So, do you see it taking 7/8 years for the global economy to get back on track or start a fresh?
> 
> If I was "timing", I would be short US financial stocks & major indices, not sure about present Eur/US rate and I would be paying a lot of attention to hedge funds at the moment i.e.do they have short positions, but are margin calls making them close these and commodity positions and giving stocks/commodities a false high level? comments?


I find it difficult to short the s/markets because its natural trend is growth, so unless a person has sophisticated knowledge it's not beneficial and easy to get caught. Why do you think shorting commodities, will gold not balloon again as a safe haven as well as commodity sectors with strong fundamentals? The world may not have as much cheap money sloshing around but nonetheless there is plenty requiring investment. It has to go somewhere.

Btw - how do you post yahoo graphs is it through the


----------



## ixus

Morning MD,

Checkout  for codes for further information on this.

I used the below but with [].
(url=http://www.vbulletin.com ) (img)[broken link removed])
(/url)

To post the graphs, right click on them and copy link location. Should have you sorted.

With regards shorting the markets, I'm referring to the present situation, there's certainly a downward trend & I can't see it picking up in the near short term. We even have Bush using the word recession while the word depression is becoming more common now. I also feel there is a lot more bad news to come from financials/insurers/rating agencies/hedge funds etc in the next 6 months. 

Is it possible commodities have risen too high too fast and we could see a drop off before a more natural rise? Would there be less demand/production if the US did fall into depression? 

It's unlikely that it is the small investors that have driven up commodity prices. Hedge funds would have a large part to play in this and as their margin calls become tighter in the current conditions, these assets are the the most liquid. So, I was just thinking that there might be a slight fall off in prices as these margin calls occur.


----------



## barryl

Markjbloggs said:


> I hope you get your information from sources other than some idiot journalist - if not, you get what you deserve.


 
rubbish, firstly not all journalists are idiots and secondly where the downward spiral in the stockmarket ends is a matter of opinion and not fact! all sources have been wrong in the past.


----------



## ixus

Systemic Margin Call?
http://www.aleablog.com/325-billion-systemic-margin-call-for-banks/


----------



## MichaelDes

ixus said:


> Systemic Margin Call? http://www.aleablog.com/325-billion-systemic-margin-call-for-banks/


 
It seems to me that equity is toast. Hedge funds and large investors have turned the heat towards commodities and its usual suspects of water, oil, weather derivatives , emissions trading etc etc or
*Meats* - Lean Hogs , Feeder Cattle , Live Cattle ,Frozen Pork Bellies
*Grains* - Soybeans Soybean Meal Soybean Oil Corn Oats Wheat Canola
Rough Rice Kansas City Wheat 
*Softs* Coffee Cocoa Cotton Orange Juice Sugar 11 World Lumber
Or the biggie at the moment

[broken link removed] 

Per other forums and journalist pieces that have covered this extensively, it's however just another misallocation of wealth. First dot com boom then housing boom and now we have the commodities boom. As each bubble collapses the central banks pump cheap money into the market to try to prevent a recession. In reality all that happens is that the speculation simply moves to another asset class. Given that US treasuries are now offering interest rates lower than inflation then it is hardly surprising that people are seeking other ways of protecting their wealth and are dumping their cash into commodities. Investors are trying to profit from the mere control of a resource rather than any attempt to add value. 

What is certain is that some time down the road the landscape will change and so will the commodity bubble. Those who think that the massive increase in demand from places like China and India will underpin it for ever, are making exactly the same supply and demand mistake that has so often been made about the housing markets. But how long can the market last 12 months, 36 months, 60 months? Or until valuations within equity markets become so cheap sentiment spins round to recovery stage. 

Or some other asset class will emerge, or a new one like MBO's etc dreamt up...



ixus said:


> Checkout  for codes for further information on this.I used the below but with [].
> (url=http://www.vbulletin.com ) (img)[broken link removed])(/url)
> 
> To post the graphs, right click on them and copy link location. Should have you sorted.


 

Ixus it seems I'm thicker than the average. How do you post this link for instance into a graph format on AAM. 

http://uk.finance.yahoo.com/q/bc?s=^ISEQ&t=2y&l=off&z=m&q=l&c=

Put in three dots... in the URL to stop it working so it'll give me the gist. I don't know how you can disassociate the yahoo graphs from the rest of the page. How's this done. Many thanks and aplogises for the repetition.


----------



## ixus

[broken link removed] 

From http://uk.finance.yahoo.com/q/bc?s=%...=off&z=m&q=l&c= 

You need to right-click on the actual graph and select Copy Image Location. 

Also, I think when you're logged in, you can't see graphs for some reason. Bates me why!

[url....=http://www.vbulletin.com] [img...]........http://uk.ichart.yahoo.com/z?s=%5EISEQ&t=2y&q=l&l=off&z=m&a=v&p=s...[..../img] [.../url]


----------



## MichaelDes

Bear Stearns of the verge of bankruptcy - no kidding.

By Eric Martin see here on Bloomberg 10th March 6.46p.m. --U.S. Stocks Retreat, Led by Financials; Bear Stearns Tumbles 



> "_There's an insolvency rumor and concerns on liquidity, that they just have no cash,'' said __Michael Mainwald__, head of equity trading at Lek Securities Corp. in New York"_.


.
Banks etc are a secretive lot and will rally round with short term spin. Alt A loans are now delinquent with 12%-15% tier 1 capital in the US and Euro destroyed. Expect financials to retreat another -*25%* from todays values, the credit crunch is gathering momentum. The Feds $200bn injection will be the worst example of good money being utterly squandered. Beats Lamonts protection of UK ERM.

DJ does not like the news, another Enron? Libor spreads will increase. Announced on CNN 3.10p.m. so Euro stoxx should have reacted...

[broken link removed]


[broken link removed]

.........

*Credit derivatives turmoil strikes*

By Robert Cookson and Joanna Chung in London and Michael Mackenzie in New York

Published: March 9 2008 18:42 | Last updated: March 9 2008 18:42

Turmoil in the credit derivatives markets is having an increasingly brutal impact on the wider financial system as a vicious cycle of forced selling drives risk premiums on company debt to new highs.

Institutions that lapped up credit risk products in recent years – many financing their purchases through borrowing – are scrambling to reduce their exposure following heavy losses, traders say.But many investors fear conditions could worsen as hedge funds, banks and other financial institutions come under pressure to cut their losses before conditions deteriorate further.

Liquidating structured credit instruments requires buying large amounts of protection using credit default swaps. This, in turn, drives the cost of protection higher, potentially triggering a chain reaction. “There is potential for some wild and possibly inexplicable price movements as the unwinds get bigger,” said Mehernosh Engineer, credit strategist at BNP.

The markets are so illiquid that a few trades can lead to sharp movements, producing violent price swings and knock-on effects. Tim Bond, head of global asset allocation at Barclays Capital, said: “It’s inflicting heavy losses on the banking system, eroding their capital and reducing their ability to lend. The spread widening is so severe, you’re seeing a rise in borrowing rates across the board for everybody except top-quality governments. It’s affecting both the price and availability of credit.”


----------



## Markjbloggs

barryl said:


> rubbish, firstly not all journalists are idiots and secondly where the downward spiral in the stockmarket ends is a matter of opinion and not fact! all sources have been wrong in the past.



Agree that not all journalists are idiots, but how do you distinguish the few from the many in order to make sound decisions?    Secondly, I would have said that the end downward spiral in the stockmarket is a point in time, and not a matter of opinion, journalistic or otherwise. Relying on opinion rather than fact-based analysis to decide when this point in time occurs is making a tough task even tougher.


----------



## barryl

Markjbloggs said:


> Agree that not all journalists are idiots, but how do you distinguish the few from the many in order to make sound decisions? Secondly, I would have said that the end downward spiral in the stockmarket is a point in time, and not a matter of opinion, journalistic or otherwise. Relying on opinion rather than fact-based analysis to decide when this point in time occurs is making a tough task even tougher.


 
there is no fact based analysis to decide when this point in time occurs,if there was we would all be multi millionaires


----------



## Markjbloggs

barryl said:


> there is no fact based analysis to decide when this point in time occurs,if there was we would all be multi millionaires



Agree that it is difficult to predict, but what is important is to know what constitutes a market bottom so you can identify the event when it occurs.  A combination of events  (news, technical factors, interventions) can signal the end of a stock market downturn.  Some of these can be seen a day or 2 in advance of a major move off the bottom, so the prudent trader can postion himself accordingly and wait for confirmation of the bottom.  

Remember too that it is much easier identify a bottom than a top.

We may even be at one of these events today, based on the action of the US markets overnight!!!


----------



## barryl

Markjbloggs said:


> Agree that it is difficult to predict, but what is important is to know what constitutes a market bottom so you can identify the event when it occurs. A combination of events (news, technical factors, interventions) can signal the end of a stock market downturn. Some of these can be seen a day or 2 in advance of a major move off the bottom, so the prudent trader can postion himself accordingly and wait for confirmation of the bottom.
> 
> Remember too that it is much easier identify a bottom than a top.
> 
> We may even be at one of these events today, based on the action of the US markets overnight!!!


 
confirmation of the bottom? who confirms?


----------



## Darealdeal

Janman07
"Financial advise" is probably not even worth the paper it is written on. That is if you could get a financial advisor to put it in writing.
If the person or advisor is not putting their own money into the deals they are telling you to put your money into, this speaks volumes.
Are they making their money from selling you advise or from investing money themselves?
You will find a remarkably low amount of people even on this forum making money from investing in anything what-so-ever, be loathe to heed too much "advise".

Continue your education, and read up on Warren Buffet, and some of his simple, but yet long term investments & strategies, that reap fair rewards and beat the S&P & most money markets, consistently. (Value Investing). Log into Berkshire Hathaway, the company Buffet owns. They list their investments, and their annual reports are available online, an easy and entertaining read.

All the best........D


----------



## Sunny

Darealdeal said:


> Janman07
> You will find a remarkably low amount of people even on this forum making money from investing in anything what-so-ever, be loathe to heed too much "advise".


 
How do you know what others make on their investments?


----------



## joe sod

Darealdeal said:


> Janman07
> "Financial advise" is probably not even worth the paper it is written on. That is if you could get a financial advisor to put it in writing.
> If the person or advisor is not putting their own money into the deals they are telling you to put your money into, this speaks volumes.
> Are they making their money from selling you advise or from investing money themselves?
> You will find a remarkably low amount of people even on this forum making money from investing in anything what-so-ever, be loathe to heed too much "advise".
> 
> Continue your education, and read up on Warren Buffet, and some of his simple, but yet long term investments & strategies, that reap fair rewards and beat the S&P & most money markets, consistently. (Value Investing). Log into Berkshire Hathaway, the company Buffet owns. They list their investments, and their annual reports are available online, an easy and entertaining read.
> 
> All the best........D


 
good points, the thing about buffet is he only hits the popular press when we have a big market sell off like now, then we have endless quotations from him trotted out, this also happened after the dot com collapse , everyone was talking about buffets investing, if you search back on postings on this site, 2004, 2005, 2006, there were virtually no one discussing buffet, it was all about housing, banks, c&c, etc, i wonder how many people even now have put their money where their mouth is and bought berkshire or stocks berkshire owns, they will probably stay away because of "dollar exposure", even though this is a short term phenomenon, and buffets investments will outlive dollar weakness, General Electric is still a fantastic long term buy, its like buying siemens in the late nineties when american stocks were all the go and the euro was very weak


----------



## joe sod

by the way thats not a stock tip , its just illustrating a point about great american stocks being ignored because of "dollar weakness"


----------



## Nermal

MichaelDes said:


> [broken link removed]




This is a new one on me. 'Possible' graphs? Gibberish.


----------



## MichaelDes

Nermal said:


> This is a new one on me. 'Possible' graphs? Gibberish.


 
Maybe not if the American system starts to crack...



> Bear Stearns Agrees to Secured Loan Facility with JPMorgan Chas
> 2008-03-14 09:21 (New York)
> 
> NEW YORK--(BUSINESS WIRE)--March 14, 2008
> The Bear Stearns Companies Inc. announced today it reached an
> agreement with JPMorgan Chase & Co. (JPMC) to provide a secured loan
> facility for an initial period of up to 28 days allowing Bear Stearns
> to access liquidity as needed. Bear Stearns also announced that it is
> talking with JPMorgan Chase & Co. regarding permanent financing or
> other alternatives.
> 
> Alan Schwartz, president and chief executive officer of The Bear
> Stearns Companies Inc., said, "Bear Stearns has been the subject of a
> multitude of market rumors regarding our liquidity. We have tried to
> confront and dispel these rumors and parse fact from fiction.
> Nevertheless, amidst this market chatter, our liquidity position in
> the last 24 hours had significantly deteriorated. We took this
> important step to restore confidence in us in the marketplace,
> strengthen our liquidity and allow us to continue normal operations."
> 
> The company can make no assurance that any strategic alternatives
> will be successfully completed.


 
That's over $300 bn from the Fed in only two weeks. JPMC having intervention from FED too. JPMC will takeover Bear Stearns. The disaster movie continues and gold will survive during this onslaught.


----------



## Thomas22

ISEQ down 6.2% so far this morning.
Anglo down 22%


----------



## z109

Markjbloggs said:


> Remember too that it is much easier identify a bottom than a top.
> 
> We may even be at one of these events today, based on the action of the US markets overnight!!!


Says who?

Looks like you were wrong.

IMO a bottom is as difficult as a top. In fact, it is probably more difficult as you can take your profits any time on the way up, but you are always in danger if you try to time a bottom at 10% off, 15% off 20% off. The last major S&P correction was 49% from peak to trough. Others have differed. See a history of the S&P:
http://money.cnn.com/magazines/fortune/storysupplement/investor_special/2008/index.html


----------



## Markjbloggs

yoganmahew said:


> Says who?
> 
> Looks like you were wrong.
> 
> IMO a bottom is as difficult as a top. In fact, it is probably more difficult as you can take your profits any time on the way up, but you are always in danger if you try to time a bottom at 10% off, 15% off 20% off. The last major S&P correction was 49% from peak to trough. Others have differed. See a history of the S&P:
> http://money.cnn.com/magazines/fortune/storysupplement/investor_special/2008/index.html



Wrong, eh?  Using the S&P 500 as an example, the lowest close around the time of my message was 1273, on the 10th - yesterdays' close was 1276.  Granted intraday low was 1257, but that it recovered hints at some strength at this level.  The NYSE (which is heavy in financial stocks) did set a lower low close yesterday but also closed substantially off it's lows.

So - wrong ??  Too soon to tell for definite, but I would say not wrong YET is a reasonable statement.


----------



## z109

Markjbloggs said:


> Wrong, eh?  Using the S&P 500 as an example, the lowest close around the time of my message was 1273, on the 10th - yesterdays' close was 1276.  Granted intraday low was 1257, but that it recovered hints at some strength at this level.  The NYSE (which is heavy in financial stocks) did set a lower low close yesterday but also closed substantially off it's lows.
> 
> So - wrong ??  Too soon to tell for definite, but I would say not wrong YET is a reasonable statement.


Have you taken account of FX?

However, I do agree that not wrong YET is correct. The problem, as I see it, with using technical analysis is that it only reliable works after the event. Mind you, there is much chatter of a bear market rally from some of the bullish commentators, so if they are going to stuff some cash in then that will be self-fulfilling!


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## Markjbloggs

yoganmahew said:


> Have you taken account of FX?
> 
> However, I do agree that not wrong YET is correct. The problem, as I see it, with using technical analysis is that it only reliable works after the event. Mind you, there is much chatter of a bear market rally from some of the bullish commentators, so if they are going to stuff some cash in then that will be self-fulfilling!



No, I was just looking at the US markets in isolation.  And I agree that technical analysis is only useful when it backs up other, more important market barometers, such as the chatter you alluded to above.

But if the technicals point to a bottom, and if some of the more astute market commentators are calling for a bounce, and if there has been a deluge of bad news - then I think we may get a bottom, even if it is only temporary.


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## joe sod

interesting about alan greenspan saying this is the worst crisis since world war 2, why would he say this on a day of so much turmoil, especially since he was chairman of the fed up to recently, if it is the worst crisis then he must accept alot of the blame, but why would someone of his standing make such a statement (even if is true) knowing that his comments alone would cause the markets to fall further than they otherwise would, its like as if he is trying to distance himself from the turmoil


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## Grus

Fed just cut by 75bps.


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## Purple

Grus said:


> Fed just cut by 75bps.


Any opinions on when the ECB will find the pressure too much to bare?


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## Calico

Purple said:


> Any opinions on when the ECB will find the pressure too much to bare?



I heard on the news that if the dollar falls lower than €1.60 President Bush is going to call Trichet and tell him to lower european interest rates! How true that is I don't know.


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## askalot

Calico said:


> I heard on the news that if the dollar falls lower than €1.60 President Bush is going to call Trichet and tell him to lower european interest rates! How true that is I don't know.



So Bush could get the ECB rate reduction that the French politicians have been looking for.... strange bed fellows indeed!

Personally I reckon a call from Bush to Trichet is the one thing guaranteed to keep rates where they are.


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## Markjbloggs

Markjbloggs said:


> Wrong, eh?  Using the S&P 500 as an example, the lowest close around the time of my message was 1273, on the 10th - yesterdays' close was 1276.  Granted intraday low was 1257, but that it recovered hints at some strength at this level.  The NYSE (which is heavy in financial stocks) did set a lower low close yesterday but also closed substantially off it's lows.
> 
> So - wrong ??  Too soon to tell for definite, but I would say not wrong YET is a reasonable statement.



Was the 10th March the market lows ?

Any thoughts?  Commodities are getting it in the neck, strength in financials and tech.


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## ixus

There's now way this has bottomed out!

http://www.nakedcapitalism.com/2008/04/ubs-1q-losses-to-equal-13-of-equity.html

http://www.nytimes.com/2008/03/27/b...=2&pagewanted=1&fta=y&oref=slogin&oref=slogin

[broken link removed]

http://news.bbc.co.uk/2/hi/business/7324981.stm

There is so much more to come....


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## Markjbloggs

ixus said:


> There's now way this has bottomed out!
> 
> http://www.nakedcapitalism.com/2008/04/ubs-1q-losses-to-equal-13-of-equity.html
> 
> http://www.nytimes.com/2008/03/27/b...=2&pagewanted=1&fta=y&oref=slogin&oref=slogin
> 
> [broken link removed]
> 
> http://news.bbc.co.uk/2/hi/business/7324981.stm
> 
> There is so much more to come....



You have shown a list of negative articles written by journalists - what has that got to do with anything?  There will ALWAYS be negativity, often justified, but it alone proves nothing.


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## eileen alana

*USA 2008: The Great Depression*

This article is food for thought on the present state of the American economy.

http://www.independent.co.uk/news/world/americas/usa-2008-the-great-depression-803095.html


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## ixus

It's not about the negative journalism, it's about the US financial system being in meltdown. 

The US financials have yet to mark to market the true value of their subprime, then there's the 80/20 mortgages, then the HELOC's, then there's the rating corrections, then there's the monolines, then there's the continuous negative economic data....etc

When the above is cleaned out and positive data starts to be produced, it is probable the S&P will have hit a bottom. 

If you really want to talk TA, you should try www.tickerforum.org A lot of the guys there could offer a much better argument than I could on the TA front.

Sure, there will always be negativity, but has it all ever added up so clearly? 

I can honestly not see what will keep the S&P above 1250 much longer. A short-term resistance maybe.


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## gearoidmm

Mish today was making the very good point that mortgage resets are not the horror story that they were a year ago in the states because short term interest rates are falling so fast that a lot of these mortgages will actually reset lower than their original rates.  He is normally a perma-bear so it was interesting hearing this point of view.  However, he does qualify it by saying that a lot of the teaser rates were interest-only and they will reset to a higher payment no matter what interest rates are doing


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## Markjbloggs

gearoidmm said:


> Mish today was making the very good point that mortgage resets are not the horror story that they were a year ago in the states because short term interest rates are falling so fast that a lot of these mortgages will actually reset lower than their original rates.  He is normally a perma-bear so it was interesting hearing this point of view.  However, he does qualify it by saying that a lot of the teaser rates were interest-only and they will reset to a higher payment no matter what interest rates are doing



I also heard that, in order to justify the sub-prime write downs to date, something like 85% of sub-prime mortgages will have to default.  The "pennies-on-the-dollar" writedowns so far may have been excessive, especially if the US avoids a major recession.


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## Markjbloggs

ixus said:


> It's not about the negative journalism, it's about the US financial system being in meltdown.
> 
> The US financials have yet to mark to market the true value of their subprime, then there's the 80/20 mortgages, then the HELOC's, then there's the rating corrections, then there's the monolines, then there's the continuous negative economic data....etc
> 
> When the above is cleaned out and positive data starts to be produced, it is probable the S&P will have hit a bottom.
> 
> If you really want to talk TA, you should try www.tickerforum.org A lot of the guys there could offer a much better argument than I could on the TA front.
> 
> Sure, there will always be negativity, but has it all ever added up so clearly?
> 
> I can honestly not see what will keep the S&P above 1250 much longer. A short-term resistance maybe.



I think the use of the word "meltdown" is not appropriate here, there is some commentary that suggests that the write-downs due to subprime have been excessive and that the net effect will be no worse than the Savings & Loan scandal of the late '80's and probably not as bad as the Dotcom collapse in 2000.

Remember, we are talking about the US here.  Most of the negative articles in the press fail to take account of the American character - for the most part, they are intelligent, inventive, cunning, determined and they will not allow a "meltdown" to happen.  It is very dangerous to under-estimate them.  Remember too, that they will soon be getting rid of the worst thing to happen to them in a long while (the moron in the White House) and that this change could be hugely stimulative.

Anyway, back to my orignal question - do people think we have seen the worst of the stock market woes or are we in proctologist territory (we are going to see a lot more bottoms.. ) ??


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## mickman

yes i think we have seen the worst of the stock market woes. market bottoms historically have been seen when there is capitulation etc. the monday the bear collapsed there was capitulation, the fed came to the rescue and we are 1000 points higher on the dow as we speak. there were two rallies since then where the number of advancing stocks outpaced declining ones by 9-1. this is an extremely bullish sign. one that historically had lead to big gains in the 3, 6 and 12 month periods after.

there was a 9-1 down day between the up days so this takes a little lustre off it but the 9-1 up days have a lot more power than the 9-1 down days. i feel we are on the way back up , just look at today, jobless claims were very bad and the market was down 0.25%. the volatility is way way down, when UBS said they had a 19 billion writedown we had a huge rally. these are all signs of market bottoms. i am back in the market and am up already. if the down breaks above 12750 on good volume soon then i will be doubling my positions.


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## trader69

mickman said:


> yes i think we have seen the worst of the stock market woes. market bottoms historically have been seen when there is capitulation etc. the monday the bear collapsed there was capitulation, the fed came to the rescue and we are 1000 points higher on the dow as we speak. there were two rallies since then where the number of advancing stocks outpaced declining ones by 9-1. this is an extremely bullish sign. one that historically had lead to big gains in the 3, 6 and 12 month periods after.
> 
> there was a 9-1 down day between the up days so this takes a little lustre off it but the 9-1 up days have a lot more power than the 9-1 down days. i feel we are on the way back up , just look at today, jobless claims were very bad and the market was down 0.25%. the volatility is way way down, when UBS said they had a 19 billion writedown we had a huge rally. these are all signs of market bottoms. i am back in the market and am up already. if the down breaks above 12750 on good volume soon then i will be doubling my positions.


 Which of the us stoks have you made gains?


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## badabing

http://finance.yahoo.com/q/bc?s=^ISEQ&t=2y&l=off&z=m&q=l&c=

There have been 2 good rallies in the last number of months on the way down to here

One thing for sure with the ISEQ, the rate of decline is slowing since the beginning of the new year

http://finance.yahoo.com/q/ta?s=^ISEQ&t=1y&l=off&z=m&q=l&p=e50&a=&c=


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## mickman

not allowed to mention stock names but they specialise in potash and fertilizers. more evidence recently of the turnaround is lots of bad news in the US and the market is not selling off. if a bit of good news comes out it goes up. it definetely has bottomed. oil and gas stocks are going to be very stron


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## ixus

Markjbloggs said:


> I also heard that, in order to justify the sub-prime write downs to date, something like 85% of sub-prime mortgages will have to default.  The "pennies-on-the-dollar" writedowns so far may have been excessive, especially if the US avoids a major recession.



http://business.timesonline.co.uk/t...ectors/banking_and_finance/article3671568.ece

We should have some interesting reports for the last quarter.


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## Maine

"Excessive writedowns to date". 

Wachovia (massive US bank) have just admitted they spent $25 billion on a west coast bank in 2005 or 2006 that probably would be worth max 10% of that today.

The managment also admitted that default rates have surged as equity in the properties have gone to zero. Thats why they have had to go and get rescued by new investors. 

Does anyone really think these banks are going to get more exposure to the mortgage markets in the next couple of years

The main support for the Dow is the fact that the Fed has devalued the dollar Latin America style so much so that the international US companies will be making massive profits in US$ terms.


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## Calico

Just my 2 cents worth, but I don't think we've seen the end this slide at all. It seems to me that a lot of factors are now coming together to create the 'perfect storm' for the economy. Rising inflation, falling house prices, rising unemployment. Throw in this awful credit crunch and it would seem that everything is in place for a protracted slowdown. I feel we may be in for a good many years (3+) of, if not recession, stagnation.  Hope I'm wrong...


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## mickman

u are indeed wrong. the US inflation rate is not that high at all. oil will continue rising but we can absorb much more higher oil prices easily enough. the dow broke through 12750 today, a big resistance point. we are in for a big rally - watch this space


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## shnaek

Looks like the rally isn't going to happen for a while! At the start of this downturn I thought it would be mid/late 2009 before we saw any reasonable upturn in the market. Then a few months ago I became a bit more optimistic. But now I am back to my origional belief - late 2009. It seems the heads of a few more high profile banks/developers will be on the chopping block before this downturn is over.


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## tribal

the nasdaq is doing quite well, which is the sign for a new market bull run. financials are still holding the markets back. we are in a correction at present and its quite mild


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## MichaelDes

MichaelDes said:


> Market has lost 3% again today, *does no one care*, has everyone sold [looks like it]?? At Q1/2005 values, *IMO its heading for Q1/2004 before year end *


 
Oops looks like my prediction in March came earlier than expected! Interesting piece in yesterdays Indo by Anatole Kaletsky entitled "Forget credit crunch, oil is a greater threat". If oil stays above $140per barrel then in the medium term [6 months] not only will Irish equity get more severely toasted but the same for all major bourses. So continue for the time being shorting stoxxs, with the immense choice.

_But_ on the good news side in Kaletsky's opinion and IMO oil will sub$100 before year end.  With wheat futures recently taking an overdue nose bleed, should oil soon follow? If it does then this is good for equity markets? Opinions...


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## Sunny

mickman said:


> u are indeed wrong. the US inflation rate is not that high at all. oil will continue rising but we can absorb much more higher oil prices easily enough. the dow broke through 12750 today, a big resistance point. we are in for a big rally - watch this space


 
Shame Mickman got himself banned. Would have liked to have got his views now.


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## jimbob1234

if oil nose dives then its very good for equity markets . but with this downward spiral at present we need a catalyst to snap back i.e. hike rates, support dollar etc. we could be heading for a major down day today if ECB rise rates more than expected or announce that they are to continue increasing and US payroll numbers come in worse than expected. the euro will break 1.60 then and oil will go beserk


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## MichaelDes

jimbob1234 said:


> if oil nose dives then it’s very good for equity markets . but with this downward spiral at present we need a catalyst to snap back i.e. hike rates, support dollar etc.


Now with the US diminishing in economic stature should oil be priced in dollars? There are fewer dollars in circulation and also less dollars in global bond markets than the Euro. Would Euro pricing make any difference? But yes - America started the problem and still holds the key to the problem, i.e. stop sending the currency down the toilet.




jimbob1234 said:


> we could be heading for a major down day today if ECB rise rates more than expected or announce that they are to continue increasing and US payroll numbers come in worse than expected. The Euro will break 1.60 then and oil will go berserk


If oil does go berserk and your analogy IMO makes sense then not only will equity markets be toasted but any mild Euro recession will become more protracted and longer in duration. My hope is the oil will subside; there are fewer supply issues than 2004 so the economics of its price do not make any sense.

Moneyweek mentioned that if oil hit $200 mark then there will be about 10million bpd excess compared to daily output. Is there 1 million bpd in excess daily at the moment, or is demand versus supply being equally satisfied? Also anyone can buy futures contract of oil per barrel [158 litres] and speculate with as little as 77cents down. That is wrong and is causing all this smoke and mirror hype. Once the tide turns then the pariah of hedge funds will be shorting IMO like Billyo.


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## jimbob1234

yeah your right but it could take a while yet for fund managers to start shorting oil. when it does break it will be swift and violent and people will be broke after it. but at the moment its 145, equites are in bits. people wont return to equities until oil turns back.

oil should be priced in euro really shouldnt it, cant see this happening though ,can you?


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## MichaelDes

So the US banks were exposed on here back in Feburary with their pants down and no assets. The US banks were not unique, all banks were doing the same at the credit binge and lending recklessly. The ISEQ is beyond sub 2000 values. What's next? IMO the US bailout is wrong and ultimately won't repair the damage. Interest rates in the UK and US will probably will be cut next week but Libor is now totally disconnected from base rates.

Congress approved another $600bn for Iraq without a squeak and this new bailout will cost $billions. It's like trying to change the tide by peeing in the sea. The credit deleveraging catastrophe not even halfway through a US housing downturn means the efforts to contain this will be futile and printing so many dollars with no one willing for the IOU's will ultimately led to rapid inflation or hyperinflation. Any sort of knock on inflationary effect will be the real consequence that affects daily life here and everywhere. 

As an example of runaway inflation - Weimar 1923 when banks notes were cheaper to burn than firewood.


[broken link removed]

Seeking Alpha, NY - 26 Sep 2008 
http://seekingalpha.com/article/97527-the-700-billion-cram-down-no-doc-proposal



> Doesn’t Bernanke understand the consequences if he pushes the model too hard? It would not be unintended consequences, if he does. It is a logical consequence of pushing the Keynesian model of government intervention way too far, way farther than Keynes himself ever intended.
> If Ben is afraid of how demoralizing a Depression is, he should also consider how demoralizing hyperinflation was on the Weimar Republic in the 1920’s. The demoralization of 1920’s Germany is what produced a monster like Hitler. As Senator Bunning put it Wednesday, “We haven’t even passed this bill yet and already Americans are paying for it because of the fall of the dollar as a result of all the new debt we will be taking on.”


. 
Where next for wealth protection. Opinions??


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## ixus

Hope it's ok bringing up this old thread, haven't been on this forum in a long time. 

Very interesting looking back at this thread four years later. 

The S&P has only just returned to January 2008 levels after collapsing more than 50%.
The ISEQ, well, it continues to languish at lows. 
The euro strengthened and was then smoked with the eurozone debt crisis. 

A fair few posters were banned in "the purge". 

The events preceeding and leading to 2007/08 inspired me to become a trader.


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