When will the downward spiral in the stockmarket end?

[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...

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.........

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]

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]

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]

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]

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]

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]

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]

[broken link removed]

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

 

[MichaelDes]

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]

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]

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]

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!

 

[Markjbloggs]

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.

 

[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

 

[Grus]

Fed just cut by 75bps.

 

[Purple]

Fed just cut by 75bps.

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

 

[Calico]

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.