Is wall street turning into a bear market


You can watch it here. US mortgage lender implode-o-meter.

http://ml-implode.com/
 
I think its 2001 again, I think overall the market will drift lower over the next year at least, its not may 2006, its october 2001, the consensus is that the markets will be turbulent over the next while, which means the big money will stay out, there is no rule that says your money must be always invested in the market, after such big gains over the last year , investors should take a holiday. The chances of a big fall in prices are much higher than more big gains.
 
Looking at the Irish stock market during the correction, its volatility was close to matching the worse performers in the more extreme markets such as Brazil and Turkey.

Other emerging markets such as the Czech Republic, Poland and Hungary weathered the storm much better. Even Middle Eastern and African stock markets suffered - but showed more stability than the ISEQ.

I suspect this might be related to the distortions in our own economy but has anyone come across or willing to offer any insights into this extreme behaviour ?
 
Duplex said:
You can watch it here. US mortgage lender implode-o-meter.

http://ml-implode.com/
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This is fascinating to watch. Commentators have been crying out about this disaster waiting to happen for the last 2 years. The meltdown in the subprime market has taken everyone by surprise particularly given the speed of the collapse. now it turns out that even some of the biggest subprime lenders are going to go to the wall and soem very large investment banks are going to be burned quite badly by this.

Until this has run its course, you couldn't say for sure that this correction is over despite the bounce in share prices today.
 

Given the dubious repackaging of some MBS tranches and the fact that any crap sold by Fannie Mae or Freddie Mac seemed to attract AAA credit rating because of an implicit (but supposedly non-existant) government backed guarantee, I tend to agree.

Not only is this mess far from over (indeed it has only just begun - as an avalanche of recently launched lawsuits will attest) it is far from limited to the subprime arena. Watch as it infest Alt-A and above credit securities.
 
On ISEQ valuation to Dow,Iseq has a heavy weighing towards financial stocks-ie AIB,BOI,Irish Permanent etc whilst Dow has a more balanced focus.
This is same in Australia where correction was only in order of 6%.

Correction was more severe in Ireland due to this weighing as well as some negative data on Irish housing market which of course will have material impact on Irish financial institutions profitability down the road.
 

This is nonsense. No new housing information emerged that day. If the sell-off was sparked by a downturn in the Shanghai markets (also nonsense but seems to be the consensus) then why would existing information on Irish housing suddenly become relevant?

If the ISEQ sold off dispropotionately it is probably because there was more speculative and leveraged money in the market.
 
room305 said:
If the ISEQ sold off dispropotionately it is probably because there was more speculative and leveraged money in the market.
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This rings true to me . I would say that it could be distorted by speculative and leveraged money I would even venture further to say that I think the economy as a whole may be distorted by similiar factors.

Therefore my question. A prudent investor when deciding how to allocate his or her money should be aware of the proportion of their money they're placing in higher risk allocations.

Should holdings in irish assets be considered part of the higher-risk/higher-volatility component of one's wealth/portfolio ?

(My own opinion is that is probably should - and I've adjusted by own portfolio / pension fund accordingly).
 
The disproportionate sell off of the ISEQ might simply reflect the fact that, compared to some of the US indices, it has risen disproportionately between last June and last week - during this period the ISEQ has risen around 40% with the DOW and the S%P 500 up around 19%. In that context I don't think the sell of in Ireland was that unusual.
 

I would agree with this. The longer and stronger the run without a significant correction, the more speculative momentum chasing money that will be attracted. That is why corrections are healthy for markets, they shake out the weak hands.
 

What you seem to be saying is that it was volatile downwards because it was volatile upwards. In other words, it is a volatile market. I agree. Recent events have made that quite clear.

Thats how I see it: Higher Volatility. Possibility of disproportionate gains or losses & therefore higher risk.

There is usually some room in every portfolio for this type of investment. The key I think is recognising it as such and understanding the extent of your exposure.
 
Remix said:
What you seem to be saying is that it was volatile downwards because it was volatile upwards. In other words, it is a volatile market.
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TBH I don't follow the ISEQ closely enough to comment on its short term volatility - I am simply saying that, because the ISEQ has experienced a strong run over the past six or seven months or so, I wasn't surprised at the strong sell off when markets took a dive last week because I suspect that there were many people out there who were happy to have made a very decent return in a fairly short period of time.
 
i agree...one knows that when they see the chart of whatever going exponential, that a correction is due. My mining stock charts had turned like this. I thought the prices were becoming a bit silly.
What we had was a good healthy correction, which flushed some of the speculators out of the system.

Ive had enough of the high risk shares..miners (kept some gold though), emerging markets and the like for now. Have been buying good defensive companies who have cash in on their balance sheet. At least if there is a global slow down etc they are less likely to go bust.
 

Greed turning to fear there, if you don't mind my saying so smiley.

Personally, I think you're ahead of the curve on this one, but how much longer before the rest of the market has the same idea? How long can they ignore the risks?
 
conor_mc said:
Greed turning to fear there, if you don't mind my saying so smiley.

Personally, I think you're ahead of the curve on this one, but how much longer before the rest of the market has the same idea? How long can they ignore the risks?
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Ah come on, give me a break. Greed? what a joke!....who said i am not entitled to take some profits? I just had a little too much money in very high risk stocks. I wanted to reduce my exposure.

conor_mc said:
Personally, I think you're ahead of the curve on this one, but how much longer before the rest of the market has the same idea? How long can they ignore the risks?
Click to expand...

How long is a piece of string??
 
smiley said:
Ah come on, give me a break. Greed? what a joke!....who said i am not entitled to take some profits? I just had a little too much money in very high risk stocks. I wanted to reduce my exposure.
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Sorry smiley, wasn't meant as a dig at you at all. Was just commenting on it in terms of market psychology and the associated vernacular. Didn't mean it to come across as accusing you of being greedy.
 
Is the Iseq turning into a bear market, again it falls triggered by wall street, falling almost twice as much as other european markets. I wonder was the peak reached on the 28 of february the tipping point of the iseq index, the markets do not want to revisit it again. Its looking like the downward pressure is now growing, its looking more and more like october 2001.
 
Lower highs and lower lows. Don't really follow the ISEQ but I doubt we're in a bear market yet. The recent correction seemed a bit light and I reckon there will be more pain ahead before we can actually declare it over.

The media coverage finally turning fretful and panicky is a good sign.

Caution is the watchword though.
 
Its' easy to see why the Iseq was hit hard compared to other markets.

Iseq market cap is primarily made up of financial institutions and construction companies which are fundamentally linked consumer credit/ health of housing economy(ie housing market crash increase risk of bad debts as per US etc) both in Ireland and 4 those that diversified in other economies as well(AIB-US/Poland)

These companies are AIB,BOI,IRISH LIFE,CRH,KINGSPAN etc and these make up majority of market cap in Iseq and have taken biggest hit yesterday l.
These companies have had a massive upside over the last couple of years on credit boom fuelled by housing bubble in Irish/US economy over the last couple of years but this now looks to be over.

Other international markets are more balanced in industry make up, hence less volatility when negative financial institution data such as from US hits the newswire.
 
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