Stock market correction or bear market/crash? Either way I bailed.

Discussion in 'Investments' started by landlord, Sep 21, 2015.

  1. joe sod

    joe sod Frequent Poster

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    Sarenco would you agree that investors today will have to deal with much more volatility and turbulence than before. I know the last few years were relatively calm. But we have had 2 big crashes in the last 15 years and now maybe a third one. With all the information people have access to its much more tempting to react to it especially when markets now frequently have above 3 percent daily moves which was a rarity before electronic trading.
     
  2. Sarenco

    Sarenco Frequent Poster

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    I really can't predict the future Joe but, if history is any guide, I would be surprised if global stock markets were not more volatile over the next 5 years than has been the case over the most recent 5 years. But I don't believe that should be a reason for anybody to change their investment plans.

    If you are really worried about a sharp and prolonged drop in share prices then you shouldn't invest in equities in the first place.
     
  3. TonyTT

    TonyTT New Member

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    The Gillen Markets Models have proven solid over time especially the model of investing in Low Price to Earnings equities on the FTSE 100 and his stock picks have proven very reliable except in the past two years where losses would likely have been incurred except fro the fall in the Euro against sterling. The question really is whether this is the time to take advantage of low prices and pile into the stocks he has picked or is value investing a useful model at all going forward?
     
  4. joe sod

    joe sod Frequent Poster

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    Japan, now negative interest rates, will the ECB be next to bring it in if they can't lift the euro economy. Where will people put their money now, it will cost you to hold cash.
     
  5. galway_blow_in

    galway_blow_in Frequent Poster

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    maybe they will invest in equities ( after equities have a very significant correction ) , the european financial index is now not far above where it was in the depths of the financial crisis , stocks in europe have not done much with QE or low interest rates , maybe pepople still think they are too expensive

    a repricing of assets might be on the cards , would tie in with this enviroment of deflation
     
  6. joe sod

    joe sod Frequent Poster

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    So after all the money printing european equities are still overvalued after doing nothing for 10 years!! Surely the risky asset in that scenario is cash and not equities since cash has been consistently devalued but yet people still wish to hold onto cash. If equities are overvalued then what are they overvalued against hardly cash. Even the bond market has doubled in the last 10 years yet total equity capitalization has not changed in 10 years. If there is another sell off is it not ridiculous to dump equities for an asset that is being consistently devalued.
     
  7. Sunny

    Sunny Frequent Poster

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    The BOJ move is simply a copy of what the ECB has already done. The ECB already charges banks to deposit funds.
     
  8. galway_blow_in

    galway_blow_in Frequent Poster

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    Cash doesn't devalue in an era of deflation
     
  9. joe sod

    joe sod Frequent Poster

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    Now the US dollar reverses and weakens 4 percent in just 2 days. It doesn't look like they are going to raise interest rates after all. So now the US dollar is correcting , so where is the "next safe haven". If everything is correcting then maybe nothing is.
     
  10. landlord

    landlord Frequent Poster

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    Last edited: Feb 5, 2016
    Yesterday's results.....
    RGLD up 12.84%
    SLW up 4.68%
    FNV up 3.09%
    These are precious metal royalty companies. However they are extremely volatile.
    and today's results...(5th Feb 2015)
    RGLD up 9.13%
    SLW up 5.29%
    FNV up 2.67%
     
    Last edited: Feb 5, 2016
  11. Agent 47

    Agent 47 Frequent Poster

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    looks like you bailed at the right time Landlord, Gold at 1263$ yesterday dropping back slightly today
     
  12. landlord

    landlord Frequent Poster

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  13. joe sod

    joe sod Frequent Poster

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    Does golds rise mean the dollar bull market is over for now and no interest rate rises, maybe relief for emerging markets and commodities. The world is really mixed up everyone talking about deflation yet a rush back into gold the traditional inflation hedge. Yet no real inflation as oil and commodities on the floor.
     
  14. landlord

    landlord Frequent Poster

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    I believe the value of the dollar may strengthen slightly in the short term but will fall significantly in the medium to long-term. Strength of the US economy relative to other economies is being greatly overstated at the moment. I have been closely following US fundamentals and apart from the labour market they do not look good at all. The most bullish US economists are talking about three more rate rises, most however believe one and done. I believe ONE AND DOWN ! Negative rates and QE 4 will follow massively devaluing the dollar and the confidence in it.
    Inflation is often described as an expansion of the money supply. I believe QE 4 could potentially lead to serious inflation or hyperinflation. Great for gold!!

    The trouble is as the US dollar collapses so does the value of my gold investments when converted back to euros. I am continuing my gold investments however as a percentage of my complete portfolio of property and cash it is still fairly small.
    At the moment it is fear that is driving gold upwards.
     
  15. joe sod

    joe sod Frequent Poster

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    Dont know why there has been such a big rise in stock markets the last few days on little news. It just shows you how ridiculous it is to try and put reason to it. Maybe things might calm down for a while now that they have got the hissy fit out of the way.
     
  16. WorstPigeon

    WorstPigeon Frequent Poster

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    That's monetary inflation. If people are talking about it, they usually say "monetary inflation". Inflation as generally discussed is price inflation. Monetary inflation can cause price inflation (which is, when it comes to it, the usual purpose behind quantitive easing; central banks are trying to increase inflation to target levels), but it's not the only cause.

    Well, the Federal Reserve will no doubt be very happy if it causes some inflation; that's what they would be doing it for... No particular reason to think it would cause hyperinflation; previous rounds certainly didn't (US inflation has on average been below target rates since 2012).
     
  17. galway_blow_in

    galway_blow_in Frequent Poster

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    two reasons

    1. market was very over sold , especially banks

    2. likelihood of an oil production cut from saudi , russia and iran , markets were in lockstep with oil since the start of the year
     
  18. landlord

    landlord Frequent Poster

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    Last edited: Mar 4, 2016
    I lost about 11 grand on my original portfolio after I sold. (11% loss)
    I reinvested only 40% of that original investment in gold mining stocks and am now up 11 grand (25% gain). Myself and a colleague subscribe to a professional website for help on picking the right gold stocks. I intend to keep making regular monthly payments in this asset class.
    Although I fundamentally believe in the potential strength of gold I have to admit I do find it interesting if not a little surprising in that gold has maintained its shine despite the stock market rebounding in the last few weeks. There must be still an element of fear out there? In fact it seems very unusual that recently most asset classes would all rise together, for example, equities, bonds, commodities and gold. What exactly is money coming out of ?...... Bank accounts (cash)?
     
    Last edited: Mar 4, 2016
  19. joe sod

    joe sod Frequent Poster

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    maybe commodities have finally bottomed, which is good for gold. Every central bank is printing money and devaluing their currency so why would any right minded person hold cash for any length of time, so thats good for gold and assets. They know the US cant raise interest rates very much very good for gold i suppose. And then there is negative interest rates so deflation will simply not be allowed. Everyone thought it was 2008 again so there was panic selling, so once the market got its technical sell off out of the way then things could go back to normal.
     
  20. joe sod

    joe sod Frequent Poster

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    you have had a good run with gold the last few months, but its tempting to stick with a winner but maybe you should be diversifying into other assets also. You did well to pick gold at a bottom but say you had bought gold 2 years ago you would be just getting back some of your losses now, but would you have been prepared to watch your investment drop during those two years. Also your philosophy for investing in gold was it not true two years ago also but you would have been losing money, thats the hardest thing are you correct or is the market correct.