When will the downward spiral in the stockmarket end?

[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]

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.

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.

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]

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]

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

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]

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]

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]

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]

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]

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]

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]

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...

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]