When to re-enter the market?

[dumbass]

Dow printing morning star pattern, a bullish candlestick pattern , if price holds in final hour.

more confirmation bottom in at 10,460 ?

[Dr_Who]

NZ going into recession.

RB expected to cut rates by 50 points in Oct.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5BbMPsVPHsE&refer=home

[Crypto Crude]

Belge,
In the end you were quite right about NZ interest rates and how soon they would start cutting... New Zealand interest rates started coming down much sooner than I had predicted... Ise about 6 months late on where I had it...
Now they are cutting and they will continue to do so... we all know where they are headed from here......
The writing was all on the wall with NZ's inverted Yield Curve for the last 4 years... (which is one very good indicator of a recession)...
In the end I did not care, and I want to remain on the market in a recession...bring on anything apart from 1000 DOW point falls...
Also interesting, Last night I saw the graph for the S and P 500 Financial's and it looked like a double bottom... I hope you are wrong about the bailout running into problems...
cheer cheer...
:cool:
.^sc

[Tok3n]

Looks like Bollard wants to restart the NZ housing bubble. Its the only thing going for this country.

[duncan macgregor]

It looks like the bail out has run into problems. Even some of Bushes own supporters know that its a stupid thing to do throwing good money after bad, to continue on as if nothing was wrong. The crash is almost upon us regardless of the bailout. The best that we can hope for is that our own banks are not to exposed to this mess. Some times its best to pay the piper and suffer the loss rather than turning it ito a catastrophe. Macdunk

[warthog]

It looks like the bail out has run into problems. Even some of Bushes own supporters know that its a stupid thing to do throwing good money after bad, to continue on as if nothing was wrong. The crash is almost upon us regardless of the bailout. The best that we can hope for is that our own banks are not to exposed to this mess. Some times its best to pay the piper and suffer the loss rather than turning it ito a catastrophe. Macdunk

Some important differences between NZ and the USA MacDunk - read about some of them here:

http://crookedtimber.org/2008/01/30/two-million-foreclosures/

So now you know a little more about why NZ (Oz) banks are not as exposed to the property market as US banks are.

[duncan macgregor]

WARTHOG, Dont be to sure about that. I know one bank running competitions for NZ REINZ sales people to book in the most Mortgage loans some of which are now priced well above market valuation. A brand new VW car was the prize. The bank lenders would lend to almost anyone on a 10% deposit. All sorts of tricks were pulled to make the deposit almost an non event. The fallout will hit NZ we are not immune. Macdunk

[warthog]

WARTHOG, Dont be to sure about that. I know one bank running competitions for NZ REINZ sales people to book in the most Mortgage loans some of which are now priced well above market valuation. A brand new VW car was the prize. The bank lenders would lend to almost anyone on a 10% deposit. All sorts of tricks were pulled to make the deposit almost an non event. The fallout will hit NZ we are not immune. Macdunk

You didn't read carefully MacDunk. In many US states, as soon as negative equity territory is reached, people can choose to simply walk and then the negative equity is the bank's problem.

Héll, in the UK during this last property boom, it was possible to get 110% mortgages. Yes, that means if you buy a house for £1m, you receive £100k in cash and the keys to your new home. Also, the whole range of gimmicks was available, including "cashback" for choosing certain mortgages. As if the bank/building society suddenly got generous all of a sudden, and decided to give you a stack of their cash!

[dumbass]

Technically it's not a morning star formation because today didn't open above yesterday's high. But, yeh, it does look bullish.

you have to be a little flexible with candlestick formations in the context of where they occur.

Steve Nison :
"an ideal morning star would have a gap between the second and third real bodies. From my experince, the lack of a gap does not weaken the power of this formation.The decisive factor is the second candle should be a spinning top and the third candle pushes well into the black candle"

Japanese Candlestick Charting Techniques, simply the "bible"

So technically a shooting star given a little more weight as its right on the 61.8 retracement of the rally from the low

[winner69]

AIG up over 20% overnight.

AIG down 45% since you posted that Wed - even ended down on Wed and Thurs was a bad day

At 315 you must be 25% down already ..... spose hanging in there ... couldn't work out what you meant by 'Pearls before swine and all that.' as you reason for buying AIG in the first place

[spook]

"You didn't read carefully MacDunk. In many US states, as soon as negative equity territory is reached, people can choose to simply walk and then the negative equity is the bank's problem."


As opposed to here Warthog, where the negative equity is not the bank's problem.....

Quite a few mortgages were done at close to 100% over the last 5 years, and with a drop in housing values there's a lot of upside-down mortgage holders out there.

Trouble is, the US situation doesn't sound so stupid. Try and work out how our banks are going to get money from upside down mortgage holders. They had no equity to start with and now can't afford their payments. You cannot extract lifeblood from a piece of rock. At best all they can do is wreck their credit ratings.

[warthog]

"You didn't read carefully MacDunk. In many US states, as soon as negative equity territory is reached, people can choose to simply walk and then the negative equity is the bank's problem."


As opposed to here Warthog, where the negative equity is not the bank's problem.....

Absolutely less of a problem here than in the US. Period.


Quite a few mortgages were done at close to 100% over the last 5 years, and with a drop in housing values there's a lot of upside-down mortgage holders out there.

Trouble is, the US situation doesn't sound so stupid.

Er, sounds pretty silly to the hog.


Try and work out how our banks are going to get money from upside down mortgage holders. They had no equity to start with and now can't afford their payments. You cannot extract lifeblood from a piece of rock. At best all they can do is wreck their credit ratings.

When people know that they are going to be in the gun personally they tend to exercise more judgment about getting into the situation in the first place. Also, the Australian Banks that lend to the majority of the NZ market are relatively careful about checking the viability of mortgage arrangements. Further, there is little CDO or equivalent activity here.

When you say "quite a few" do you have any idea wqhat proportion of mortgages in NZ have a L:V of 1.0 or higher? This old hog would venture that it is pretty low. Also, 100% mortgages need not be problem mortgages at all. The hog knows a young couple who are relatively well-paid and took out a $1.xm mortgage (L:V = 1.0) for a house. The equation works for them. And the issue is?

[duncan macgregor]

Absolutely less of a problem here than in the US. Period.



Er, sounds pretty silly to the hog.



When people know that they are going to be in the gun personally they tend to exercise more judgment about getting into the situation in the first place. Also, the Australian Banks that lend to the majority of the NZ market are relatively careful about checking the viability of mortgage arrangements. Further, there is little CDO or equivalent activity here.

When you say "quite a few" do you have any idea wqhat proportion of mortgages in NZ have a L:V of 1.0 or higher? This old hog would venture that it is pretty low. Also, 100% mortgages need not be problem mortgages at all. The hog knows a young couple who are relatively well-paid and took out a $1.xm mortgage (L:V = 1.0) for a house. The equation works for them. And the issue is? Let me give you a real life situation that i had buying a mortgagee house approx nine years ago. An eighteen month old brick%tile inbuilt garage ensuite 3brm house at Randwick park Auckland. One bidder at $100,000 which was not accepted. I thought its got to be a buy so shot out to have a look at it. The house was immaculate clean and tidy worth at least double that figure. I went round to the housing corp asked them if they would rent it from me which they said they would if it passed their inspection. I paid $120,000 for it in the end, rented it to the housing corp, on sold it to my daughter for $140,000, who onsold it two years later for $225,000 without being in it more than once. The bank lost heaps. the people simply paid a low deposit never paid the mortgage then buggered off to Australia. I wonder how many people with those intentions running around in NZ right now?. The banks here are sitting on a time bomb. Macdunk

[ynot]

[QUOTE=duncan macgregor;225362] The banks here are sitting on a time bomb. Macdunk




Absolutely agree. I have noticed with mortgagee auctions to date that they often do not reach reserve and have gone on to be relisted.
This must be due to the highest bid not covering the banks investment in the property.
I believe the must be scratching there heads trying to decide when to bail out on some of these.

[Snapper]

[QUOTE=duncan macgregor;225362] The banks here are sitting on a time bomb. Macdunk




Absolutely agree. I have noticed with mortgagee auctions to date that they often do not reach reserve and have gone on to be relisted.
This must be due to the highest bid not covering the banks investment in the property.
I believe the must be scratching there heads trying to decide when to bail out on some of these.

Quite often you'll find a finance company with a second mortgage which puts a spoke in the works as with any low bid they'll probably lose everything.

[warthog]

Let me give you a real life situation that i had buying a mortgagee house approx nine years ago. An eighteen month old brick%tile inbuilt garage ensuite 3brm house at Randwick park Auckland. One bidder at $100,000 which was not accepted. I thought its got to be a buy so shot out to have a look at it. The house was immaculate clean and tidy worth at least double that figure. I went round to the housing corp asked them if they would rent it from me which they said they would if it passed their inspection. I paid $120,000 for it in the end, rented it to the housing corp, on sold it to my daughter for $140,000, who onsold it two years later for $225,000 without being in it more than once. The bank lost heaps. the people simply paid a low deposit never paid the mortgage then buggered off to Australia. I wonder how many people with those intentions running around in NZ right now?. The banks here are sitting on a time bomb. Macdunk

The hog isn't saying that these situations don't exist in NZ but simply that overall, the situation is much worse in the US. If you don't understand, just yell out and the hog will try a simpler form of explanation.

[duncan macgregor]

Warthog no requirement for simple explanations. just because NZ is not in as bad a situation as septic tank land does not mean we will get off SCOT FREE. Finance companies first then banks thats the order of things. The system we are creating wont work. Perhaps after the demise of the American economy which will come, we might learn from it. Macdunk

[warthog]

Warthog no requirement for simple explanations. just because NZ is not in as bad a situation as septic tank land does not mean we will get off SCOT FREE. Finance companies first then banks thats the order of things. The system we are creating wont work. Perhaps after the demise of the American economy which will come, we might learn from it. Macdunk

You're all over the show as usual McDunk - who here is suggesting that NZ won't be affected?

The hog wrote:

So now you know a little more about why NZ (Oz) banks are not as exposed to the property market as US banks are.

Which part of this do you not understand? Again, let the hog know and you will be enlightened in easier, simpler terms ... (no BRICKS, that's not a cue for you to explain anything) ...

[Toddy]

Warthog no requirement for simple explanations. just because NZ is not in as bad a situation as septic tank land does not mean we will get off SCOT FREE. Finance companies first then banks thats the order of things. The system we are creating wont work. Perhaps after the demise of the American economy which will come, we might learn from it. Macdunk

Macdunk

Are you suggesting that Americans are giving up capitalism and the opportunity to strive for an even better standard of living.

Just because NZ is a small socialist (or more like anti-capitalist) country does not mean that other bigger more powerful countrys that run the world just fall over when the going gets tough.

WRONG, they just get tougher and fight harder.

[STRAT]

Macdunk

Are you suggesting that Americans are giving up capitalism and the opportunity to strive for an even better standard of living.

Just because NZ is a small socialist (or more like anti-capitalist) country does not mean that other bigger more powerful countrys that run the world just fall over when the going gets tough.

WRONG, they just get tougher and fight harder.Hi Toddy,
While I share your sentiment regarding the socialist nanny state of helengrad I can see the Yanks doing just that. More regulation in an attempt to control their out of control monster of an economy. The rich will stay rich but the poor over there are in for some even harder times and will mostly be fighting each other.

[lakedaemonian]

Duncan...What crash?.. my portfolio has gone gang busters this year.

my only stocks i since jan 1 are;
ppp up from about 27 cps to 35cps (30%)
nzo $1.00 to $1.64 (64%)
nzood 7.5 cps to 13 cps. (74%)

ps. all of my remaining stocks are all free carry... i.e capital plus plenty of nzo profit now in the bank

Well done!

But I doubt your results are indicative of average results.

I do think it's quite safe to say that making money in equities over the past year is like swimming against the tide for most if not all.

I've found it far easier to swim with the tide, or stay out of the water until swimming conditions improve.

[Stranger_Danger]

Agree with Lake. I came into this 80% cash - lots of it not NZD - and have stayed that way.

Re the other 20%, my return is less than zero since last August after much frantic swimming. While I'm a hell of a lot mor comfortable with equity valuations than I was, say, July 2007, any "cleverness" I've displayed has been more than matched by the market.

I shudder to think how much real wealth has been lost in the last year. Hell, I'm feeling that things have been tough and thats 80% cash, debt free. God knows how the leverage bunnies have gone!

[duncan macgregor]

IT looks that i timed the market to perfection saying the market would downtrend this year leading up to a crash after the olympics. The crash starts today guys i would hate to be holding stocks hoping for the best on a day looming up like today. Macdunk

[bull....]

NZ market still needs to play catch up with other markets , so a 200 - 300 point fall over the short term wouldnt be out of the question.

[trackers]

IT looks that i timed the market to perfection saying the market would downtrend this year leading up to a crash after the olympics. The crash starts today guys i would hate to be holding stocks hoping for the best on a day looming up like today. Macdunk

You said this would be caused by POO hitting $200 dunk as China ramped up demand, and POO is currently falling below $100....:confused:

Can't have it both ways mate, though I'm sure you'll try

[STRAT]

IT looks that i timed the market to perfection saying the market would downtrend this year leading up to a crash after the olympics. The crash starts today guys i would hate to be holding stocks hoping for the best on a day looming up like today. MacdunkHaha Macca
You may be right. I hate it when that happens :D

So answer me this.

Do you hold any stocks in your investment account?:p

[duncan macgregor]

REminds me when i went oig hunting with a mate of mine. The dogs took off after a pig but one dog kept attacking the other dogs instead of the pig. My mate shot the bloody thing there and then. Hunt in packs if you must attack the message but dont dare attack the messenger. Macdunk

[Dr_Who]

Game over! Dead bodies everywhere!

OUCH!!!!

[trackers]

REminds me when i went oig hunting with a mate of mine. The dogs took off after a pig but one dog kept attacking the other dogs instead of the pig. My mate shot the bloody thing there and then. Hunt in packs if you must attack the message but dont dare attack the messenger. Macdunk

Hey MacDunk,

Reminds me of all the people that said "Within the next month or two the Property market is going to crash".... They said that exact same statement for 3 years before the market did actually begin to correct (and being a cyclic market of around 7 years the chance of it happening were about 50/50 by the end of that), and they still take quite some joy in pointing out that they were right.

Here's my prediction: The market will recover in late 2009 as credit conditions improve and countries around the world come out of recession.

Disc: and by 2009 I mean 2009, 2010, 2011, 2012 - And by credit conditions improve I mean well, pretty much anything that puts a stockmarket index on an uptrend over a period of couple months. Hope I'm right, wish me luck!!!! :)

Cheers, your mate Trackers

Disc: Still up 50% for the year but suspect I might take a decent hit on that over the next month or so.

[STRAT]

Any one want to place bets on the US House of Representatives having a change of heart over the next few days :eek:

[STRAT]

Hey MacDunk,

Reminds me of all the people that said "Within the next month or two the Property market is going to crash".... They said that exact same statement for 3 years before the market did actually begin to correct (and being a cyclic market of around 7 years the chance of it happening were about 50/50 by the end of that), and they still take quite some joy in pointing out that they were right.

Here's my prediction: The market will recover in late 2009 as credit conditions improve and countries around the world come out of recession.

Disc: and by 2009 I mean 2009, 2010, 2011, 2012 - And by credit conditions improve I mean well, pretty much anything that puts a stockmarket index on an uptrend over a period of couple months. Hope I'm right, wish me luck!!!! :)

Cheers, your mate Trackers

Disc: Still up 50% for the year but suspect I might take a decent hit on that over the next month or so.Come on Trackers. Give him his due . Hes been saying after the Olympics since Janurary.

[CAM]

"The time to buy is when blood is running in the streets, even if the blood is your own"....... or something to that effect.

[lakedaemonian]

I think we're looking at 2-3 days of chaos until Congress looks at another vote.

It was suprising to see how poorly Nancy Pelosi spoke representing the Dems...she made Palin sound like Thatcher :)

Dems blaming Republicans.......but it looks like about 40% of Dems voted it down as well........

I thought the Dems were going to fix everything when they gained control of Congress?

I guess the only "fixing" they're doing is blaming................

[lakedaemonian]

Hey MacDunk,

Reminds me of all the people that said "Within the next month or two the Property market is going to crash".... They said that exact same statement for 3 years before the market did actually begin to correct (and being a cyclic market of around 7 years the chance of it happening were about 50/50 by the end of that), and they still take quite some joy in pointing out that they were right.

Here's my prediction: The market will recover in late 2009 as credit conditions improve and countries around the world come out of recession.

Disc: and by 2009 I mean 2009, 2010, 2011, 2012 - And by credit conditions improve I mean well, pretty much anything that puts a stockmarket index on an uptrend over a period of couple months. Hope I'm right, wish me luck!!!! :)

Cheers, your mate Trackers

Disc: Still up 50% for the year but suspect I might take a decent hit on that over the next month or so.

LOL...Yeah, I don't like making predictions with great specificity.

I prefer predictions along the lines of "Sensing Murder".......broad brushstrokes...that can be filled in after the fact........haha

Nah.....more along the lines of Jim Rogers.........focusing on medium to longterm......and staying away from short-term predictions unless glaringly obvious :)

[Snapper]

Quite likely methinks - although in quite a different form to the Paulson initiative. The Presidential election can't come soon enough ...

If they don't get it through quite quickly, though, financial institutions will have to value their assets as mark to market rather than hold to maturity which they could have done if the bailout had proceeded. 30th September was the end of the quarter...

[QOH]

"The time to buy is when blood is running in the streets, even if the blood is your own"....... or something to that effect.

Looks like today is that day.

[STRAT]

Quite likely methinks - although in quite a different form to the Paulson initiative. The Presidential election can't come soon enough ...Hi Belg.
Even if they do I can see it doing little more than buying them another month or so. Which ever way you look at it the Yanks have done them selves in ( I can see that evil grin as I write )
Perhaps decoupling is closer than some think :eek:

[lakedaemonian]

Looks like today is that day.

You are FAR FAR FAR more brave and/or crazy than I. :)

[QOH]

You are FAR FAR FAR more brave and/or crazy than I. :)

No, I'm not buying but my blood is running in the street!!

[upside_umop]

WOW.

This is pretty sweet times...

A pity that the bailout didnt go through. It would have benefited all inlcuding Main street.

The positive/negative externalities will never be known until it had gone through. Oh well, I guess punish the Wall Street bankers a bit more :)

[Tok3n]

Think the republicans just voted themselves out of office lol

[POSSUM THE CAT]

C'mon drop your prices I want some very cheap shares today

[Toddy]

Another week to 10 days before a bailout package comes through may be a good thing.

There is a bottom to the market. Its not natural for humans to just roll over and die, but natural to fight. Everyone is now to scared to predict the bottom as they will look like an idiot if they are wrong.

[winner69]

One notes volumes on the NZX are very, very thin after the mkts been open for 20 minutes. Guess it'll accelerate as the day wears on and the margin calls start coming and the fear permeates through the offices ... All good. Come to papa ... :)

Things will get 'cheaper' eh Belg ..... even AIG

Still haven't worked out what you meant with your cryptic reasons for buying AIG yet .. a real mystery to me

[shane_m]

what an exciting day today.

[bermuda]

Think the republicans just voted themselves out of office lol

During the last eight years Greenspan has played puppet to Bush. Bush has acted outside his presidental powers on a number of occasions. He got past Gore by the narrowest of margins 4 years ago helped by the SEC giving institutions an increase in their lending ratios from 1 to 12 to an extraordinary 1 to 40. Well , I mean, that was Pathetic.

Bush and Greenspan are going to get terribly exposed over this meltdown.

The American people have had enough of this banking bull****. I mean it got to the stage when they were lending 100% and an extra 5% if you wanted some chattels.

On a smaller scale look what the ANZ did to innocent investors re the Opes disaster. Enough is enough.

[warthog]

IT looks that i timed the market to perfection saying the market would downtrend this year leading up to a crash after the olympics. The crash starts today guys i would hate to be holding stocks hoping for the best on a day looming up like today. Macdunk

The hog wonders if Phaedrus is all cashed-up?

[lakedaemonian]

During the last eight years Greenspan has played puppet to Bush. Bush has acted outside his presidental powers on a number of occasions. He got past Gore by the narrowest of margins 4 years ago helped by the SEC giving institutions an increase in their lending ratios from 1 to 12 to an extraordinary 1 to 40. Well , I mean, that was Pathetic.

Bush and Greenspan are going to get terribly exposed over this meltdown.

The American people have had enough of this banking bull****. I mean it got to the stage when they were lending 100% and an extra 5% if you wanted some chattels.

On a smaller scale look what the ANZ did to innocent investors re the Opes disaster. Enough is enough.

Incorrect..........

Attributing the problems soley to Bush/Republicans is oversimplistic and just plain inaccurate.

Surely Bush deserves blame for lots of things...including some of the blame for this mess.

Why did Dem Pelosi PUSH a vote where 40% of her party peers voted it down?

Have a quick google search on who signed off on the deregulation in 99.......and who some of the most ardent supporters of Fannie Mae/Freddie Mac were in government.

There's lots of blame...make sure to spread it around to ALL who richly deserve being put under the spotlight.

Also.......lending didn't just reach 105%........it went up to and over 125% :(

[STRAT]

The hog wonders if Phaedrus is all cashed-up?Cant see him going on holiday with cashing up first.

[duncan macgregor]

The hog wonders if Phaedrus is all cashed-up? Dont be a swine warthog. My mate PHAEDRUS sold his downtrending stocks to the blue eyed brigade months ago. Incidently you said that the septic tank economy was to big to fall over what do you reckon will happen now?.
1, A repreive to fall over later.
2, shovel themselves out of it.
3, Start a new war to blame some other country for the mess.
4, Wreck world financial system.
C-MON my piggy friend give us your view on the latest developments, i retire from telling it as i see it. Macdunk

[STRAT]

One has to wonder about american priorities ...

http://www.alternet.org/workplace/100524/with_all_eyes_on_the_bailout%2C_house_passes_trill ion-dollar_defense_bill/

Oddly - the Iraq war has cost about 700 Billion hasn't it?Same as always by the look of that.

[bermuda]

Incorrect..........

Attributing the problems soley to Bush/Republicans is oversimplistic and just plain inaccurate.

Surely Bush deserves blame for lots of things...including some of the blame for this mess.

Why did Dem Pelosi PUSH a vote where 40% of her party peers voted it down?

Have a quick google search on who signed off on the deregulation in 99.......and who some of the most ardent supporters of Fannie Mae/Freddie Mac were in government.

There's lots of blame...make sure to spread it around to ALL who richly deserve being put under the spotlight.

Also.......lending didn't just reach 105%........it went up to and over 125% :(

Well who was responsible for it going to 125%.? I am not changing my views.

I lay it at the feet of Bush and Greenspan. Bush has presided over this for nearly 8 years. And has bankrupted America.

[warthog]

Dont be a swine warthog. My mate PHAEDRUS sold his downtrending stocks to the blue eyed brigade months ago. Incidently you said that the septic tank economy was to big to fall over

Who? The hog? Where?


what do you reckon will happen now?.

There will be chaos followed by a period of stability. Amidst the chaos there will be some who identify what everybody else will consider to be of value *after* the chaos. These people will do very well.



1, A repreive to fall over later.
2, shovel themselves out of it.
3, Start a new war to blame some other country for the mess.
4, Wreck world financial system.
C-MON my piggy friend give us your view on the latest developments, i retire from telling it as i see it. Macdunk

Life isn't a multi-choice test McDunk - refer above.

By the way, for those who are interested, see what people who think about things carefully before acting work:
http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?em)

The NZ government did this with Air NZ.

[Billy Boy]

"There will be chaos followed by a period of stability. Amidst the chaos there will be some who identify what everybody else will consider to be of value *after* the chaos. These people will do very well."

Here Here !!

BB

[Toddy]

Or they'll look like a sage if they are right? ...

One notes that looking at the DOW trendlines since 1942-1965 and 1982-2000 we've actually fallen too far ... Conversely, between 1965 - 1982 we still have another 8000 points to go :)

The historical charts were thrown away weeks ago. If the DJIA had the biggest one day fall in history, then it would be odds on that 09 29 08 'Monkey Monday' could lead to the new beginning.

[shasta]

Any one want to place bets on the US House of Representatives having a change of heart over the next few days :eek:

I've been saying for a while now that the US economy has been deteriating on life support, & any attempts to "bail it out" will only prolong the pain mid-long term.

As i've said on other threads, once the finance companies/banks/whatever go bankrupt, then & only then will the situation change for the better!

Printing more money in the US & over inflating the economy won't fix anything, & continual short term knee jerk reactions isn't going to change the dodgey practices that got us here in the first place!

We actually need a "hard landing" now, many of so called economic experts warned us of all this, but no one listened (except macdunk of course :rolleyes:), so the soft landing option has IMO gone...

They will debate the bail out plan again, & i hope it doesn't pass.

If it does it will be modified on a smaller scale, & the market won't like it.

The US needs to learn (as we all do) that creating paper wealth & bubbles don't last, & do come crashing back down.

I'm fully expecting the value of Gold & Silver to skyrocket now...

[KiwiBear]

Well here it comes BOHICA

Watch this Yahoo site worth keeping in touch with the latest!
http://finance.yahoo.com/tech-ticker

[lakedaemonian]

Well who was responsible for it going to 125%.? I am not changing my views.

I lay it at the feet of Bush and Greenspan. Bush has presided over this for nearly 8 years. And has bankrupted America.

You can blame whoever you want.....but the facts are that there is a whole lot of blame to be shared amongst a whole lot of people.....both inside and outside the US

[lakedaemonian]

Seconded :)

Meh.......BOLD sometimes leads to profit..........probably a bit less often than leading to catastrophic failure.

It reminds me of a saying in the flight training community:

"The are OLD pilots, and there are BOLD pilots, but there are no old AND bold pilots." :)

While the great unwinding continues unabated...I'll sit here in cash while asset prices continue to drop.

Maybe I'm not looking hard enough, but the only value I see is Silver, Gold, Oil, Uranium.

[Dr_Who]

Well who was responsible for it going to 125%.? I am not changing my views.

I lay it at the feet of Bush and Greenspan. Bush has presided over this for nearly 8 years. And has bankrupted America.

I agree. The money printing press started to work over time after sept 11. Bush needed to hold up the economy and prepare for war. How else can they finance the war and a sagging economy, but of cos but using the printing machine. It is there mess, so they should fix it.

The world is getting sick of bailing out the US economy. Maybe time for us to use the Euro and dump the $US.

[Billy Boy]

.
While the great unwinding continues unabated...I'll sit here in cash while asset prices continue to drop.

Good point
But don't miss the ship(s) !!:)
BB

[KiwiBear]

The price action has moved from crisis to panic in the US markets, a cold has become the flu, and now the whole world is infected with this ongoing financial meltdown.

What do we do as traders in times like this?

“stay the hell away!”

We unanimously agree here in the trading room, that times like this are best left to those that have to trade – those that need to exit positions or hedge exposure.

If you don’t need to be here, take the day off. Do yourself a favour. No longs, no shorts.

The market could easily head back down into major support at 3850 over the next few weeks, and we are not going to rule that out, even if the US has a minor bounce.

And please remember the first rule of trading: “capital preservation, at all costs”.

[JBmurc]

Meh.......BOLD sometimes leads to profit..........probably a bit less often than leading to catastrophic failure.

It reminds me of a saying in the flight training community:

"The are OLD pilots, and there are BOLD pilots, but there are no old AND bold pilots." :)

While the great unwinding continues unabated...I'll sit here in cash while asset prices continue to drop.

Maybe I'm not looking hard enough, but the only value I see is Silver, Gold, Oil, Uranium.

If you see value in the above surely the producers would be a steal atm if your holding min 3yrs

The bailout package of 700bill is the equivalent to 25,000 tonnes of gold or one fifth of all the gold ever produced.

[Tok3n]

The bailout package of 700bill is the equivalent to 25,000 tonnes of gold or one fifth of all the gold ever produced.

Yer but it only takes a couple of trees to print it all =p

Much cheaper then mining for gold.

[Crypto Crude]

This really sucks because Had the FED not got our expectations so high with all the bailout talk, then the big dump today would have never happened...
Im happy to see the markets down, not quite like this though....
eah, it was close but not quite the 1000 pointer that I said would not happen huh!...
Oh well... we survive... didnot do too bad today...
a few hundie off tonight and I will be happy...
:cool:
.^sc

[neopole]

personally, i dont see any problem with this "meltdown"
those that lived to excess, those to silly to think, those that chased a punt, those that speculate, those that lent or borrowed to much, those chasing instant wealth.........
they are the ones hurting now.

those that saved their money, those that lived in their means, those that plan, those that think, and everyone on a benefit will be ok.

this is an overdue clean out of excess and greed.

the ones to gain from this "meltdown" are those that are buying the shares that the herd is dumping at the moment.

i have lived quite conservatively the past ten years, and am now looking to be a bit extravagant in the next little while building a longterm portfolio on cheap shares.

im happy to be a turtle..........

[warthog]

personally, i dont see any problem with this "meltdown"
those that lived to excess, those to silly to think, those that chased a punt, those that speculate, those that lent or borrowed to much, those chasing instant wealth.........
they are the ones hurting now.

those that saved their money, those that lived in their means, those that plan, those that think, and everyone on a benefit will be ok.

this is an overdue clean out of excess and greed.

the ones to gain from this "meltdown" are those that are buying the shares that the herd is dumping at the moment.

i have lived quite conservatively the past ten years, and am now looking to be a bit extravagant in the next little while building a longterm portfolio on cheap shares.

im happy to be a turtle..........

Yes some of the fat cats and dupes will suffer but ultimately, lots of average people and their families will ultimately be paying for this excess for some time to come, including you neopole, directly or indirectly. More volatility, stagnation in the property market, stagnation in equities, not so many people buying NZ export produce, a crazy high balance of payments deficit and similarly crazy foreign debt.

Unless you take pleasure in other peoples' suffering - and most of them will be people who either don't understand what has happened and how we all got into this mess - then you too will be concerned and troubled by these events.

If you do get a kick out of other people hurting (sad characters, but some people do) - families, kids, etc. - then you'll be having a jolly old time.

[digger]

Yes some of the fat cats and dupes will suffer but ultimately, lots of average people and their families will ultimately be paying for this excess for some time to come, including you neopole, directly or indirectly. More volatility, stagnation in the property market, stagnation in equities, not so many people buying NZ export produce, a crazy high balance of payments deficit and similarly crazy foreign debt.

Unless you take pleasure in other peoples' suffering - and most of them will be people who either don't understand what has happened and how we all got into this mess - then you too will be concerned and troubled by these events.

If you do get a kick out of other people hurting (sad characters, but some people do) - families, kids, etc. - then you'll be having a jolly old time.
warthog what you say has a surface appeal but it does nothing to correct the long term direction the economy is heading.If you just reward the fat cat CEO's and the general greed by saying we must bail out Wall Street because if you don't some innocance people will suffer,then the problem is just shifted down the track when it has to be revisited in the future when it will be much bigger. Might as well sort it out and then move on.
reggid=Digger

[duncan macgregor]

Digger its like having a bad tooth to scared to have it pulled out. you can take pain killers for so long which stuffs up other parts of the body, but in the end the sooner you face reality the better. There will be a few wild dead cat bounces before this is over. looks like one coming up today. Macdunk

[JBmurc]

Yer but it only takes a couple of trees to print it all =p

Much cheaper then mining for gold.

yep and thats the main reason why hard currency is the only true currency watch the U-tube link below for the truth behind the FED

[lakedaemonian]

If you see value in the above surely the producers would be a steal atm if your holding min 3yrs

The bailout package of 700bill is the equivalent to 25,000 tonnes of gold or one fifth of all the gold ever produced.

I'm a good bit gunshy on pruducers at the moment....generally prefer the underlying commodity in most cases.

[lakedaemonian]

Yes some of the fat cats and dupes will suffer but ultimately, lots of average people and their families will ultimately be paying for this excess for some time to come, including you neopole, directly or indirectly. More volatility, stagnation in the property market, stagnation in equities, not so many people buying NZ export produce, a crazy high balance of payments deficit and similarly crazy foreign debt.

Unless you take pleasure in other peoples' suffering - and most of them will be people who either don't understand what has happened and how we all got into this mess - then you too will be concerned and troubled by these events.

If you do get a kick out of other people hurting (sad characters, but some people do) - families, kids, etc. - then you'll be having a jolly old time.


And THAT's where my stress is coming from..........

While I feel incredibly fortunate to have both preserved my capital and profited hugely in the past financial year and continue to do well this financial year(mix of mostly private ventures and cash, with a mix of commodities....only equity holding is NZR) it sickens me to see so many people in such dire straights..........and many more likely to get in the poos.

It's not as much fun "winning" when the pool of winners is disappearing.

[Tok3n]

And THAT's where my stress is coming from..........

it sickens me to see so many people in such dire straights..........and many more likely to get in the poos.



Don't worry, most people are fine. Its all media hype about people being in debt problems etc

I bet hardly of any of you guys actually know someone that is in financial "distress" like the media likes to hype up about to sell stories.

[Snapper]

If they don't get it through quite quickly, though, financial institutions will have to value their assets as mark to market rather than hold to maturity which they could have done if the bailout had proceeded. 30th September was the end of the quarter...

Looks like the banks have won themselves a reprieve from the hangman's noose

Reuters

WASHINGTON -- US securities regulators will provide initial guidance on fair value accounting and will remind financial services firms that they don't need to use fire sale prices when evaluating their hard to price assets, according to a document obtained by Reuters.

The Securities and Exchange Commission will issue the guidance as early as on Tuesday, the document indicated. US accounting rule maker, the Financial Accounting Standards Board, will propose additional guidance later this week, the document said.

US accounting rule makers assume that fair value inputs are based on an orderly transaction between willing market participants. The document indicated that the SEC does not believe distressed, or forced liquidation sales are orderly transactions.

[warthog]

Digger its like having a bad tooth to scared to have it pulled out. you can take pain killers for so long which stuffs up other parts of the body, but in the end the sooner you face reality the better. There will be a few wild dead cat bounces before this is over. looks like one coming up today. Macdunk

Hang on MacDunk, where's your back-up to your claim, or don't you read?

[warthog]

warthog what you say has a surface appeal but it does nothing to correct the long term direction the economy is heading.If you just reward the fat cat CEO's and the general greed by saying we must bail out Wall Street because if you don't some innocance people will suffer,then the problem is just shifted down the track when it has to be revisited in the future when it will be much bigger. Might as well sort it out and then move on.
reggid=Digger

Be careful not to read what you are thinking into what the hog writes.

The hog is a fan of the Swedish model, as linked somewhere above. If a central bank or government must step into the market in the interests of stability and confidence, no business should be "bailed out" but rather the owners of such businesses - that would have gone bust without intervention - lose the lot. This is a far cry from bailing out fat-cats.

The hog agrees with you diggy that the system is broke.

[duncan macgregor]

Hang on MacDunk, where's your back-up to your claim, or don't you read? Warthog the only claim i ever made was a downtrend leading up to a crash after the olympics. It was right on the button Warty i also said there would be dead cat bounces all the way down. The only thing to eventuate is when China tips America out the boat by manipulating the price of oil. The Yanks can see it coming and are now going to allow offshore drilling on their coast line. The chinese might only need to stand aside America is doing a great job on their own going down the gurgler. Macdunk

come to the AUCKLAND meeting warty we can get on the swill together

[winner69]

Belgie is furious - end of market buy of AIG not executed until this morning and today, as expected, a big rebound of around 30%. But on the plus side ... Yesterdays buys on the NZX were most satisfactory - book some profits or hold? Holding looks better untill we get past Thursday (US) time.


bet that pissed you off big time belg ..... still averaging down I see but you still haven't explained the cryptic message as to why you are buying AIG in the first place ... please

[Scuffer]

He is hoping to get his name on a Man United shirt if he doesn't lose it first ha ha!:eek::eek::eek:

[warthog]

Warthog the only claim i ever made was a downtrend leading up to a crash after the olympics. It was right on the button Warty i also said there would be dead cat bounces all the way down. The only thing to eventuate is when China tips America out the boat by manipulating the price of oil. The Yanks can see it coming and are now going to allow offshore drilling on their coast line. The chinese might only need to stand aside America is doing a great job on their own going down the gurgler. Macdunk

come to the AUCKLAND meeting warty we can get on the swill together

Now MacDunk, you wrote:


Dont be a swine warthog. My mate PHAEDRUS sold his downtrending stocks to the blue eyed brigade months ago. Incidently you said that the septic tank economy was to big to fall over what do you reckon will happen now?.


So again my fine feathered friend, where did the hog say that the septic vessel was too colossal to tank?

You should go into weather forcasting MacDunk ...

Tomorrow there's a chance of rain but should be mostly fine with localised light winds. The outlook for the end of the week is generally good, with the possibility that the weather may not turn out not entirely as expected but there is also a good chance of this too.

Looking back over the week we said the weather would be changeable and mixed, which it has been, and generally a little more unstable than similar periods in the past. Every night it got dark as we predicted and the tide followed a pattern of highs and lows. Excellent conditions for tidal power generators.

[lakedaemonian]

Looks like the banks have won themselves a reprieve from the hangman's noose

Reuters

WASHINGTON -- US securities regulators will provide initial guidance on fair value accounting and will remind financial services firms that they don't need to use fire sale prices when evaluating their hard to price assets, according to a document obtained by Reuters.

The Securities and Exchange Commission will issue the guidance as early as on Tuesday, the document indicated. US accounting rule maker, the Financial Accounting Standards Board, will propose additional guidance later this week, the document said.

US accounting rule makers assume that fair value inputs are based on an orderly transaction between willing market participants. The document indicated that the SEC does not believe distressed, or forced liquidation sales are orderly transactions.

So if I'm reading into this correctly.....it means that balance sheet lies are acceptable, as long as the lies aren't TOO big......too funny

[Footsie]

I bet hardly of any of you guys actually know someone that is in financial "distress" like the media likes to hype up about to sell stories.[/QUOTE]

Tok3n
Most of my friends are experiencing a change in lifestyle. A couple have been made redundant. It's a widee range too, from property developers to plumbers to teachers to retiree's.
It's tough out there. And its not just people who have binged on debt. Everyone is feeling it.
I know a couple of people in "distress" with small businesses on the ropes and others with assets they need to sell ASAP but cant.

If you believe anything else or think that it will get better anytime soon you are in fantasyland with Mr Benrnake and Hank Paulson.

[shane_m]

I think now is the right time to enter the market. I bought BHP.

[AMR]

Don't worry, most people are fine. Its all media hype about people being in debt problems etc

I bet hardly of any of you guys actually know someone that is in financial "distress" like the media likes to hype up about to sell stories.

I know plenty. Layoffs, staff cutbacks, etc. They are all quite unskilled though. A friend of mine bought a section at the peak of the market. 80 hours a week at work and still going backwards. But her greed did that to her.

[Snapper]

So if I'm reading into this correctly.....it means that balance sheet lies are acceptable, as long as the lies aren't TOO big......too funny

Yeah, that's true but there are parallels with how many companies show their accounts. Imagine if KIPT had to liquidate its portfolio quickly, the shareholders might be in for a shock there as well. Another case in point is bank exposure to Centro, if the banks move against Centro they won't get the full value of their loans back but I bet the loans are still valued at par.

Is it fair to value assets in a potential fire sale or is a compromise needed with their hold to maturity value? Good article about it here

http://www.stuff.co.nz/4704024a1865.html

[lakedaemonian]

Don't worry, most people are fine. Its all media hype about people being in debt problems etc

I bet hardly of any of you guys actually know someone that is in financial "distress" like the media likes to hype up about to sell stories.


Nah.....I disagree.

I've done some serious traveling in recent months.

In the US the fear and desperation was palpable...the worst I saw was Las Vegas...Northern California is a residential housing nightmare........I see serious warning signs in Aussie.......friends and family are under some stress and have conveyed some depressing stories.....

Closer to home in NZ I'm seeing a LOT of small business owners in the poo......many are displaying outward signs of everything being fine......but many are sharing a different story in confidence.

We are still NOT seeing the slowdown in my ventures.......we assume we will, 8 years of 35%+ compound growth is not sustainable......so we started making preparations for it 2 years ago....but we're still riding high on the hog.......and still hiring.....but ready to put on the brakes when we start feeling it........

A rising tide lifts all boats, but when the tide goes out you unfortunately see all the drowned victims.

[lakedaemonian]

Yeah, that's true but there are parallels with how many companies show their accounts. Imagine if KIPT had to liquidate its portfolio quickly, the shareholders might be in for a shock there as well. Another case in point is bank exposure to Centro, if the banks move against Centro they won't get the full value of their loans back but I bet the loans are still valued at par.

Is it fair to value assets in a potential fire sale or is a compromise needed with their hold to maturity value? Good article about it here

http://www.stuff.co.nz/4704024a1865.html

Mark to market for illiquid assets will likely see further serious deflation of asset values...which would cascade with another round of things falling over.....etc etc etc.

Kinda feels like an earthquake with a bunch of tremors before the big one and aftershocks after the big one has done it's damage.

Question? Which one is the Big One :)

[Snapper]

A couple of years ago I remember getting emails about property from Dolf de Roos who was going bigtime into Las Vegas residential property development. Anybody heard from him, lately?

[Lizard]

I was remembering back this morning to about this time in 1991 when we'd just returned to NZ, sitting in our falling-apart, just-bought-at-auction Toyota in Cornwall park and listening to talkback radio... there was just a succession of miserable tales of joblessness and people wondering how they were going to keep their homes. NZ businesses were deep in the throes of redundancies, consultants and restructurings, while the commercial construction industry seemed to be a hazy memory.

As it happened, the economy was just beginning to recover - and yet, with the hindsight of charts, the sharemarket had been heading up for over 9 months (well to be correct, it had turned up for about the first 6 months of that and then entered a long period of range trading)

[lakedaemonian]

A couple of years ago I remember getting emails about property from Dolf de Roos who was going bigtime into Las Vegas residential property development. Anybody heard from him, lately?

If not, I would think buried under one of the many half built and abandoned construction sites littering the city would be a start........I have photos on my iPhone from the roof of the Rio hotel/casino I think it was.......it was a business function......it every photos....360 degrees around were cranes by the dozen........sort of like Dubai.......but in Dubai the cranes are actually still moving

[Snapper]

If not, I would think buried under one of the many half built and abandoned construction sites littering the city would be a start........I have photos on my iPhone from the roof of the Rio hotel/casino I think it was.......it was a business function......it every photos....360 degrees around were cranes by the dozen........sort of like Dubai.......but in Dubai the cranes are actually still moving

Well, I haven't had an email for quite a while now...

[trackers]

I have no sympathy for people who borrowed money to buy bigger houses, bigger cars, boats, shares, plasma tvs, overseas holidays ..... They are getting what they deserve - a lesson in cold hard reality.

I saved my money, bought a small house with cash, live within my means, drive a 7 year old car, pay my credit card off every month ....

I could have bought a big house, with a mortgage, lots of new furniture, traded my little car in for a leased porsche, run up a 20,000 credit card bill, and be bitching to everyone how "hard" I'm doing it now.

I wonder how many of those who are in distress own a big screen tv, are a 2 car household, and own a house with one or more spare bedrooms? Downsize people. Learn to live with what you need not what you want. Your eyes should not be bigger than your wallet :-)

Good call KW, I completely agree

[Footsie]

As it happened, the economy was just beginning to recover - and yet, with the hindsight of charts, the sharemarket had been heading up for over 9 months (well to be correct, it had turned up for about the first 6 months of that and then entered a long period of range trading)[/QUOTE]

Liz
I know what you are trying to say here .... and generally I agree with you .
But in this case. There is no way, no way,we can be at the end or turning point...No way things can be improving yet.

Most people have been in denial (me inlcuded - not now) that the train crash is gathering steam.

OK the market might rally this week when the bailout is agreed. maybe it even lasts a few months, but then the economic and company data will start to bite. And bite bloody hard.
Why would this recession, arguably worse than many others, be shorter than almost every other pullback?

This time, IF the market puts in a decent rally, I will liquidate everything, perhaps even my beloved ABA. After that who knows..... assess it at the time.

The big mistake I have made this year is thinking that prices would recover to levels seen earlier. I realise now that was a fantasy.

To date the bear is playing out to script:
1) Waterfall panic sell off driven by bad news
2) Snap back rally as people declare a bottom and its all over.
3) Repeat 1 & 2 until bad news stops or isnt bad anymore.


What is the next round of bad news......profit downgrades from all industries.

[Stranger_Danger]

Footsie,

You say

"The big mistake I have made this year is thinking that prices would recover to levels seen earlier. I realise now that was a fantasy."

but just prior to this, you say

"This time, IF the market puts in a decent rally, I will liquidate everything, perhaps even my beloved ABA. After that who knows..... assess it at the time."

Are you sure your current strategy is different to your strategy to date?

You're basically saying you'll hold until you get back to those "earlier prices".

If you honestly think we're nowhere close to value/the bottom, then sell now!

I read your post as saying things are really bad and you're not convinced X share is worth todays price of, say, $3, because of the news we have coming up. You then say that the minute its $4, you're out.

For the record, I think we're a lot closer to the bottom than the top and I'm a hell of a lot happier and more comfortable than I was 18 months ago.

What gives me some heart is the "capitulation" that is just starting to be hinted at in posts like yours, and in some of the journalism we're getting.

We're not there yet though.

Disc : nibbling at certain things, but thats it.

[Kookaburra]

I flew in over Las Vegas - it looked exactly like the opening credits to the tv show Weeds

"Little boxes on the hillside,
Little boxes made of ticky-tacky,
Little boxes on the hillside,
Little boxes, all the same.
There's a green one and a pink one
And a blue one and a yellow one
And they're all made out of ticky-tacky
And they all look just the same."

Ah! Good old Pete Seeger and Malvina Reynolds. The song "Little boxes" came out in 1963 at the time of his tour of Australia and was one of the first 45s I ever bought. It was about the funny little tacky houses on the hillsides of San Francisco.

[neopole]

warthog.... i dont why you came up with a comment like i get a kick out of people suffering..... regarding my previous post?.. all i can say is your state of mind gave you that thought.
as it is....... i work on the front line with the dead and dying every day, and hear the most tragic stories every day, and consoul and coucell on a dayly basis.
but ........
most folks out there in the big world just spend more than they earn, probably playing the jones game.
those in dire straits and the needy get looked after by the government, always have always will. those that spend beyond there means, are now going to pay for the excesses.
maybe you think that the end of the world is near and all the children will strave?
the world is still strong, and after this mess is sorted out, it will be stronger, and if we are lucky NZ might be like it was in the 1970s when we had to save up for a tv, and we got only one xmas pressy and a bicycle made a kids eyes pop out!!!!

today we live in a disposable society funded by endless credit, and a lot of people have forgotten what "true worth" means.

its a hard lesson to learn, and one that our governments could of saved us from if they had some guts and controlled the situation a decade ago.

i have an old house an old car an old tv and a very lovely lady who's hobby is trawling the op shops.
and without sounding like a mean bugger....... my job is never going to go away.

its about time people learn to look after themselves.

[warthog]

warthog.... i dont why you came up with a comment like i get a kick out of people suffering..... regarding my previous post?.. all i can say is your state of mind gave you that thought.
as it is....... i work on the front line with the dead and dying every day, and hear the most tragic stories every day, and consoul and coucell on a dayly basis.
but ........
most folks out there in the big world just spend more than they earn, probably playing the jones game.
those in dire straits and the needy get looked after by the government, always have always will. those that spend beyond there means, are now going to pay for the excesses.
maybe you think that the end of the world is near and all the children will strave?
the world is still strong, and after this mess is sorted out, it will be stronger, and if we are lucky NZ might be like it was in the 1970s when we had to save up for a tv, and we got only one xmas pressy and a bicycle made a kids eyes pop out!!!!

today we live in a disposable society funded by endless credit, and a lot of people have forgotten what "true worth" means.

its a hard lesson to learn, and one that our governments could of saved us from if they had some guts and controlled the situation a decade ago.

i have an old house an old car an old tv and a very lovely lady who's hobby is trawling the op shops.
and without sounding like a mean bugger....... my job is never going to go away.

its about time people learn to look after themselves.

Go back and read the hog's post again neopole, this time carefully.

The hog doesn't think anybody here is suggesting that people shouldn't live within their means, take a measured amount of responsibility for their actions, put something away for the future, and generally take a bit of care with how they manage their finances. This is, however, not going to happen. Not sure you'd get much agreement in this forum about what "true worth" is, either.

Good on you for living off the smell of an oily rag. Whatever.

The hog is just pointing out that not everybody who suffers in a downturn is a fat-cat or had a leased porsche. There will be some of those, but not as many as you might think.

You're grizzling about the current situation, forgetting that in the past the foundation for today's economy was being soundly laid. In a theoretical sense that is. Your generation's children are those who are now living beyond their means. Where did they get their misguided values from?

You sound like a bit of a mean bugger to the hog.

[Cadmium]

A couple of years ago I remember getting emails about property from Dolf de Roos who was going bigtime into Las Vegas residential property development. Anybody heard from him, lately?

Locally, he has been involved in the failing $2 billion dollar "Five Mile" development in Queenstown (as a director of Property Ventures, along with Dave Henderson see: http://tinyurl.com/4nop85).

[duncan macgregor]

What about your values Warthog give us an insight to a hogs life style. I never got left anything started with nothing, worked to long and to hard. worked as an unpaid budget advisor part time for the down and outs. Taught my kids to budget,supported them paid all their fees etc,made sure they ended up in good jobs. Always much happier driving my builders truck, than a decent car, gave more than i ever got back. Bought a flash house at the beach for the wife and i to retire in, would have been just as happy in a 2brm bach.
Its not how much you have its being happy with what you have got.
I suppose a hog might have similar values. macdunk

[digger]

Go back and read the hog's post again neopole, this time carefully.

The hog doesn't think anybody here is suggesting that people shouldn't live within their means, take a measured amount of responsibility for their actions, put something away for the future, and generally take a bit of care with how they manage their finances. This is, however, not going to happen. Not sure you'd get much agreement in this forum about what "true worth" is, either.

Good on you for living off the smell of an oily rag. Whatever.

The hog is just pointing out that not everybody who suffers in a downturn is a fat-cat or had a leased porsche. There will be some of those, but not as many as you might think

You're grizzling about the current situation, forgetting that in the past the foundation for today's economy was being soundly laid. In a theoretical sense that is. Your generation's children are those who are now living beyond their means. Where did they get their misguided values from?

You sound like a bit of a mean bugger to the hog.


Have to say i agree with neopole as what he says sounds like my life. We have created a culture which in many ways that reward the spender and penalises the saver.This i learned early and stop saving and invested instead.This spendup big time was about 15 years ago accelerated by the banks. Without even asking me if i wanted it a borrowing right started to appear on my bank statments.I remember wanting 50,000 and was in the agreement given the authority to borrow much more without futher ado.I did not take it up but neopole is right most would and do so as if the day never arrives when it has to be payed back.
Well looks like all this is about to change.There is a book i am going to buy dealing with all this.It is called 'The Black Swan'. It deals with how we throughout history think and live one thing that we hold to be true.An event occures that changes everything and suddenly we all have to realise our previous beliefs were incorrect and a new reality sets in.Looks like one is happening in the US currently.
It matter little that the innocence are caught up in this.Name me a war that most victims were not the innocence.The point i take from neopole comments is that unlike war we had some influence on events and even though our culture went charging down the irresponsible path,we as individuals could have chosen a finanically more rewarding one.

[neopole]

""The hog is just pointing out that not everybody who suffers in a downturn is a fat-cat or had a leased porsche. There will be some of those, but not as many as you might think""

so which part of society are you worried about?

obviously not the fat cats..... so we agree there.
not those who load up credit cards........ so we agree there too.
what about the 20-30year olds who spend faster than a 5 year old in a candy shop?

the poor, disabled, and lost citizen are always looked after by society.
yes..... there will be hard working family men and women who will struggle or may lose their jobs, but this happens all the time, whether good times or bad, i grew up in south auckland and i know my imagrant father struggled big time, but time goes forward and things work out.
this melt down will affect those who borrow too much or spend too much, more than it will affect people who live in their means.
this is a money and lifestyle issue more than it is a standard of living issue for normal folks.
people will still turn on the power, use the phone, buy food, and consume goods and services.......... just within there means.


where did our children get their misguided values? peer preasure and consumerism, for a start, and then the state for letting it happen.

when homes quadtrupil in value in ten years, and wages dont, there is only one outcome.

surely the state should be aware of this fact.

then there is all those tv reality property shows that showed people making milions from property speculation, and very one got rich.........

the simple fact is, the situation is what it is, and it wasnt forced onto anyone.

[shasta]

""The hog is just pointing out that not everybody who suffers in a downturn is a fat-cat or had a leased porsche. There will be some of those, but not as many as you might think""

so which part of society are you worried about?

obviously not the fat cats..... so we agree there.
not those who load up credit cards........ so we agree there too.
what about the 20-30year olds who spend faster than a 5 year old in a candy shop?

the poor, disabled, and lost citizen are always looked after by society.
yes..... there will be hard working family men and women who will struggle or may lose their jobs, but this happens all the time, whether good times or bad, i grew up in south auckland and i know my imagrant father struggled big time, but time goes forward and things work out.
this melt down will affect those who borrow too much or spend too much, more than it will affect people who live in their means.
this is a money and lifestyle issue more than it is a standard of living issue for normal folks.
people will still turn on the power, use the phone, buy food, and consume goods and services.......... just within there means.


where did our children get their misguided values? peer preasure and consumerism, for a start, and then the state for letting it happen.

when homes quadtrupil in value in ten years, and wages dont, there is only one outcome.

surely the state should be aware of this fact.

then there is all those tv reality property shows that showed people making milions from property speculation, and very one got rich.........

the simple fact is, the situation is what it is, and it wasnt forced onto anyone.

Neopole

The people of NZ over the last 9 years (especially thru the school system) have been "socially engineered" by our dictator Helengrad & her counterparts.

The "state" knows whats going on because it controls it!

Just think of the direction NZ has gone over the last 9 years...

[ratkin]

It has become obvious that the free market isnt capable of working on its own. Maybe Helen not so bad after all.

This country seems a much better place than it was in 1992 when i first arrived here. Seemed to improve around the time Helen came to power.

[Placebo]

Neopole I think you are a little harsh. It's also abdicating your own role by saying it is society's fault that our children don't share our values. As far as I am concerned parents are a fundamental influence on their children - whether the children know it or not. The problem is, parents themselves are subject to the whims/values of others and society in general.

Whose fault is this? The other week our iron burned out. Rather than send it to the shop to fix it, it was off to Farmers to buy a new one. Cheaper and easier. The price of production is lower than the price of repair. Why has this happened? Mainly, it is because consumers have sought and largely achieved lower prices for better quality goods. As they have done this, producers have sought and achieved lower production costs and greater efficiencies. Globalisation has occurred. So the answer is, the fault is ours, you and me, old son ;)

Blaming the current government is plain silly too. This is a global problem, in which NZ is not alone.

The people who you are pointing the finger out are people just like you. If you were a young couple, saving to put together a $20,000 deposit on a house, would you not jump at the chance to borrow 95% of value from the bank, so you could achieve `the Kiwi dream'. Yes it's a big jump, but the debt is structured in a way you can afford it, and you have an appreciating asset. This is a good thing and something our parents did, and theirs before them. A bit harsh to now turn round and blame these people for the credit crunch.

Might be a good time to buy a wide-screen TV at receivers' auctions in not-too-distant future ;)

[minimoke]

where did our children get their misguided values? peer preasure and consumerism, for a start, and then the state for letting it happen.

Only one answer to that – and its: “the parents”.

Parents can sit back and take the easy route and let the education be a child care service or they can be actively involved in early education. Parents influence the child and the teacher but only if they take the responsibility. Who is it that is buying the flash kids clothes, the cell phones for 8 year olds and dropping them off to school because the neighbourhood is full of paedophiles. Its not the kids - and its not the state.!

[Footsie]

Stranger danger

I knew there would be one!
ohhh footsie is giving up.. another example of capitulation bottom

What I am saying is that if the market rallies I wont be thinking... Woohoo another bull market has began. I will be using it to competely liquidate.

Do i think the market goes lower. Absoultely, but not now, the market is oversold and a bounce is highly likely. In fact if its a decent rally I might try and buy into a few stocks for the short term ride.

If i was as naive as you claim, I wouldnt have made all the money i have from the market and would easily give what I have made back.
My aim here is not to give back years of gains to the market.

Please recall that in Dec 07, I was the only person in the competition who wanted to hold CASH and ABA

In hindsight I shuld have sold my ABA back in January for 5.15.

[Stranger_Danger]

Footsie,

I'm not knocking you - it seems like we had similar mindsets coming in, both holding significant cash and minimal equities. It sounds like we've both taken small hits on the equities we've held and bought during this process, but, far less than average. Ego pain but not the end of the world.

The only real difference I see is I feel pretty close to getting bullish (not quite yet!) whereas you seem to be getting belatedly more bearish.

Of course, neither of us has a crystal ball, so its anyones bet what happens next!

All I know for sure is this. Forgetting market sentiment, newspaper reports, whats happening in the senate etc etc, one question I've always asked myself is this

"On all available research, what is the price at which you would honestly and 100% commit to buy this whole business, delist it, and run it as your only asset for the next 20 years?"

During the bull market, this became a frustrating question - I'd often relax my standards to buy little shares in a business, but if someone had tried to land me with the whole thing at that price? No way! I was quite openly playing (with misgivings) bigger fool, thus the reason I was cautious and underinvested.

Now, in this market, I'm starting to see a future when the constant "no" 's to my question turns into the odd "yes".

Once quite a few "yes" companies are staring you in the face, after years of waiting for a no to turn to a yes, and with the familiarity and knowledge that hopefully comes from years of following a company, the next step is to compare the "yes" companies and select a small number of the ones that most scream "yes" and then hold for 5 years minimum.

I believe we are approaching (now -18 months, perfect time impossible to know) the time where dream portfolios can be constructed. Of course, it won't *feel* like that at the time - it'll feel like madness because everyones sentiment will be shocking.

The question I ask - if I'm for real about it and honest with my answer - helps me with sentiment, to some extent anyway.

[Hoop]

A great post SD. Much appreciated

[warthog]

What about your values Warthog give us an insight to a hogs life style. I never got left anything started with nothing, worked to long and to hard. worked as an unpaid budget advisor part time for the down and outs. Taught my kids to budget,supported them paid all their fees etc,made sure they ended up in good jobs. Always much happier driving my builders truck, than a decent car, gave more than i ever got back. Bought a flash house at the beach for the wife and i to retire in, would have been just as happy in a 2brm bach.
Its not how much you have its being happy with what you have got.
I suppose a hog might have similar values. macdunk

In this hog's case, McDunk, you'd be more or less right about the values. For the hog, "flash" doesn't make the cut unless it can do a good job - functionally - and have some inherent aesthetic value that pleases the hog, as opposed to other hogs or whatever.

[warthog]

What about your values Warthog give us an insight to a hogs life style. I never got left anything started with nothing, worked to long and to hard. worked as an unpaid budget advisor part time for the down and outs. Taught my kids to budget,supported them paid all their fees etc,made sure they ended up in good jobs. Always much happier driving my builders truck, than a decent car, gave more than i ever got back. Bought a flash house at the beach for the wife and i to retire in, would have been just as happy in a 2brm bach.
Its not how much you have its being happy with what you have got.
I suppose a hog might have similar values. macdunk

By the way McDunk, don't think your scattergun criticism approach without backup doesn't go unnoticed. A few posts back you accused the hog of claiming something the hog doesn't recall ever saying, so how about eating the dogfood and backing yourself?

[Billy Boy]

A great post SD. Much appreciated
I second that :)

[warthog]

Have to say i agree with neopole as what he says sounds like my life. We have created a culture which in many ways that reward the spender and penalises the saver.This i learned early and stop saving and invested instead.This spendup big time was about 15 years ago accelerated by the banks. Without even asking me if i wanted it a borrowing right started to appear on my bank statments.I remember wanting 50,000 and was in the agreement given the authority to borrow much more without futher ado.I did not take it up but neopole is right most would and do so as if the day never arrives when it has to be payed back.
Well looks like all this is about to change.There is a book i am going to buy dealing with all this.It is called 'The Black Swan'. It deals with how we throughout history think and live one thing that we hold to be true.An event occures that changes everything and suddenly we all have to realise our previous beliefs were incorrect and a new reality sets in.Looks like one is happening in the US currently.
It matter little that the innocence are caught up in this.Name me a war that most victims were not the innocence.The point i take from neopole comments is that unlike war we had some influence on events and even though our culture went charging down the irresponsible path,we as individuals could have chosen a finanically more rewarding one.

reggid however much you intellectualise this is not a war and if you were in an unfortunate position for whatever reason you'd be hoping that somebody would show you some compassion rather than just seeing you as a casualty.

As the hog has written before, yes society is far from perfect and a significant measure of personal responsibility as opposed to reckless irresponsibility is desirable - the hog thinks you would be hard-pressed to find somebody here who would disagree with that.

We are exiting a credit bubble and we will see in the coming months and years is what happens after credit bubbles burst (this is a big one). Read some history. People don't change. Systems change. The environment changes. But human nature doesn't change that much and when it does it changes very slowly.

[warthog]

so which part of society are you worried about?

The hog is concerned with people who do take responsibility for themselves and through no fault of their own are exposed to violent, dishonest and indifferent attitudes of others.

[warthog]

Neopole

The people of NZ over the last 9 years (especially thru the school system) have been "socially engineered" by our dictator Helengrad & her counterparts.

The "state" knows whats going on because it controls it!

Just think of the direction NZ has gone over the last 9 years...

"Education is a system of imposed ignorance."

The issues to which you refer, Shasta, had their seeds sown many many years ago.

[Billy Boy]

Warthog
John Paul Sartre
Have a read, If you hav'ent, then I think you will like :)
Cheers BB:)

[trackers]

Senate's agreed to modified bailout (still a way to go yet, but interesting nonetheless):

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10535374

[lakedaemonian]

In a nutshell SD ... My basic reason for investing in ANY company. And perhaps explains the weird plays I've made to some who are less 'opportunistic'.

Fair comment...and I would agree......BUT for now I think I'll remain on the sidelines.

I think there is still FAR too much unknown, rather than known....yet to unravel

If I miss out on a bit of upside in the long-term in exchange for some protection against very real continued downside risk potential....oh well.....POSSIBLY a future lesson learned....POSSIBLY good prudence.

I think of investing a bit like sailing a boat.

I'm happy to sail and sail quite aggressively at times.....but I need to see decent weather data.......and what I see visually is continued storm clouds combined with very confusing and conflicting meteorological data.

So I'll stay in the harbour.......admiring HMNZS CASH from the Yacht club bar until we see a better weather picture

[Stranger_Danger]

Lakedaemonian - I totally understand where you're coming from.

I'm still nearly 80% in HMNZS CASH. Next step 60%. Slowly. Etc.

However, I like sailing. I want to keep sailing. Keeping a toe in the water - playing in shallow water - gives me a far better chance of sensing when "peak sailing time" in coming around, I reckon.

If I'm miles from the water on dry land, when peak sailing times come, there is a good chance I'll be afraid to go sailing because the water stepping in will feel very cold - both because of the visual impact of a whole lot of shivering people that were in the water the whole time, deep, and because I've been out of the water completely too long.

Your strategy is both rational and safe. I'll choose to just take a high percentage of it, and see the remainder as a tax payable for keeping my feet used to the water.

[warthog]

Warthog
John Paul Sartre
Have a read, If you hav'ent, then I think you will like :)
Cheers BB:)


Replied to this earlier but somehow it got removed.

The hog's favourite quote from J-P S: "Héll is other people" :)

[warthog]

There is a book i am going to buy dealing with all this.It is called 'The Black Swan'.

A good read. Taleb has been writing more recently as well ...

http://www.edge.org/3rd_culture/taleb08/taleb08_index.html

[warthog]

Boston Globe, October 1, 2008:

What about austerity?
By Juan Enriquez and Jorge Dominguez

WITHIN THE billions of sentences about the financial bailout there is one word notably absent, austerity. All talk is of payments, supports, subsidies, incurring more debt, stimulus packages. The thesis seems to be: If only we spend more the party can go on. True, only if the financial meltdown is a temporary mismatch and dislocation in housing and credit markets. But suppose there is something fundamentally wrong with the US economy. Then spending more will not fix it. Getting the diagnosis right means getting the treatment right. It may save us a trillion or two.

The subprime collapse is one symptom of years of little regulation, under-taxing, overspending, and massive debt. One way to understand what is happening in the United States is to look at what occurred time and again in Latin America and Asia, hotbeds of financial and banking crises. What we are living through happened time and again in Brazil, Argentina, and Mexico, as well as Korea and Thailand.

If there is too much debt, people lose confidence in the banks, then credit markets, currency, and government.

For more than a decade, the international financial cop, the International Monetary Fund, forecast a hurricane was heading toward US shores. As did many heads of the treasury and the Fed. It is, to paraphrase a great writer, a chronicle of an agony foretold. There are five basic drivers of these crises, all based on excess: high income concentration, too much debt, too much reliance on foreign money, not enough tax revenue, and reckless government spending. Time after time governments believe they are different. They are bombarded by warnings but ignore, postpone, spend even more, and crash.

Over past decades, most US wages have fared poorly. Despite stagnant wages, consumer spending and debt increased, fueled by cheap credit. Companies also went on a debt binge. Careless deregulation allowed financial cowboys to run the system. Responsible CEOs who kept some cash, maintained moderate debt, invested for the long term, got pink slips. Financial chop shops did leveraged buyouts using a company's own cash and credit. To survive, companies piled on debt.

Many politicians decided reelection depended on cutting taxes and offering more benefits. Increase Medicare, postpone Social Security reform, hire more bureaucrats, and pay for a two-front war. Debt grew to pay for this party. These were not true tax cuts, just postponed debt; now we owe more and the bill has come due with interest.

Complicating this crisis is US economic hegemony. There were few places to park a lot of money. Despite the euro, European policies on debts and deficits are not much to brag about. So foreigners have gorged on US debt. The United States continues importing more than it exports. Middle Easterners and Asians who save and invest bought dollars for decades, but some of this money is now fleeing. The dollar has dropped sharply. Gold and oil have skyrocketed. In financial crises, huge pools of capital cross borders very quickly; a few can make a great deal of money shorting the country's currency.

The United States requires a massive restructuring to address its debt, cutting back on its borrowing, spending, and wars. The bailout package is essential to keep the credit markets open. But absent sentences that include the word austerity all the bailout will accomplish is a temporary postponement. Bailout and stimulus are a stopgap.

A solution requires the country to begin to spend what it earns, reduce its mountainous debt, and address massive liabilities, restructure Social Security, pension deficits, military, and Medicare. No wonder politicians would rather spend more of your money now rather than address these problems. Because we have been spending 5 to 7 percent more each year than we earn, a forced restructuring, triggered by a currency collapse, would have the same effect on wages and purchasing power that the housing collapse had on housing prices. So let's learn from our Latin and Asian friends and act before it is too late.

Juan Enriquez, managing director of Excel Medical Ventures, is author of "The Untied States of America: Polarization, Fracturing, and Our Future." Jorge Dominguez is vice provost for international affairs and a professor of Mexican and Latin American Politics and Economics at Harvard University.

[Placebo]

Am so pleased this sort of comment is starting to come through. To me the current market situation is akin to what I have seen with friends and friends' kids in recent years.

Kid leaves school and gets a job. Opens a bank account. Bank notices they have a bit of income, offers the kid a credit card. Kid takes up the offer, notices how easy a credit card is to use. Racks up modest amount of debt, easily meets the minimum payments.

Bank notices kid using the card and offers bigger credit limit. Kid loves it, racks up more debt. A second credit card company approaches them and offers another card with sweeteners attached. Kid says yes. Now has debt on 2 cards. Finds they can switch debt from one to the other to keep on top of things. Opens a third card account to give greater flexibility.

Card companies notice this increased activity and start offering even higher debt ceilings. Kid now has racked up over $20k in debt. Because they have kept on top of payments, they have also managed to sign up to an interest-free offer at Harvey Norman and have their own widescreen TV, top-end stereo system, iPod and phone. They also have a good solid car that impresses their mates and is reliable, and only cost $10,000 with "$1 deposit and easy monthly payments".

A year or two go by and all is sweet. Then things start to unravel. The delayed payment on the Harvey Norman deal ends and GE Money come calling. There's too much on the credit cards to service from cashflows so the repo man comes calling. But the goods have depreciated so much that the kid still owes on them. Car payments have also fallen short but the car's only worth $5k now.

Kid goes to their parents, seeking $25,000 to get themselves out of the crap they are in. What should the parents do?

a: The kid was naive and got sucked in - pay off the money in one hit and trust they will learn their lesson and won't do it again.
b: Read them the riot act, offer them a loan to pay back the debt which they can then repay to the parents when they can.
c: Cut up the credit cards, set out a debt repayment plan, give the kid budgeting advice. Insist future purchases are financed from savings not debt. Instil good life habits.

What's the best solution?*

*Clue: US Govt is going with option (a).

[minimoke]

a: The kid was naive and got sucked in - pay off the money in one hit and trust they will learn their lesson and won't do it again.
b: Read them the riot act, offer them a loan to pay back the debt which they can then repay to the parents when they can.
c: Cut up the credit cards, set out a debt repayment plan, give the kid budgeting advice. Insist future purchases are financed from savings not debt. Instil good life habits.

Where has the kid learnt their financial literacy – probably from the parents. So not sure any of your solutions work. What about D: Declare bankruptcy and use skills to create a new life.

[Hoop]

Quote:
Originally Posted by Placebo http://www.sharetrader.co.nz/images/buttons/viewpost.gif (http://www.sharetrader.co.nz/showthread.php?p=226255#post226255)

a: The kid was naive and got sucked in - pay off the money in one hit and trust they will learn their lesson and won't do it again.
b: Read them the riot act, offer them a loan to pay back the debt which they can then repay to the parents when they can.
c: Cut up the credit cards, set out a debt repayment plan, give the kid budgeting advice. Insist future purchases are financed from savings not debt. Instil good life habits.



Where has the kid learnt their financial literacy – probably from the parents. So not sure any of your solutions work. What about D: Declare bankruptcy and use skills to create a new life.

E:- Parents sue the school system for the debt amount, claiming unsatisfactory teaching of their kids the necessary skills and knowledge needed to successfully participate in society...Oh what the hell!!.. put in a double law suit ..parents + kids

[Placebo]

The difficulty in this scenario is that there may be no right answer, but there are plenty of wrong ones. I think that, in any case, the US Govt response simply reinforces poor behaviour and demonstrates there are no consequences for irresponsible actions. That's bad parenting in my book.

As any psychologist worth their salt will tell you, any behaviour that is reinforced is likely to be repeated, so like Pavlov's Dog these banks and merchant banks will simply take us down this road again in the not too distant future... And pay themselves mightily for doing it

[STRAT]

Option F
with a Kiwi flavour
Tell kid to quit job. Even better get the kid fired.
Take them to working for families where they can present their current outgoings and get a big fat dole cheque.
Set them on a path where they let others work for their money .
assist the kid to set up a tax free business on the side.
Stealing cars and growing dope are popular.
Make sure they vote Labour

[Mick100]

Just a snipet from a newsletter I recieved today

Well, a Bear Market evolves in 3 stages…..

1) When just a few prudent investors recognise that, despite the prevailing bullishness, things won't always be rosy.

2) When most investors recognise that things are deteriorating.

3) When everyone's convinced things can only get worse.


It's fairly obvious where we are at now isn't it
Macmick is going to make a prediction - markets will be higher at the end of the year than they are today - I pick today as the bottom
.

[Jess9]

Mick is that call backed by bucks? You all in, today on then?

[Stranger_Danger]

Mick,

I think you're right about us being at (3), but I reckon we're closer to the beginning of (3) than we are to the end of it.

And to the poster above, yes I'm backing this view by buying shares every day - small, diversified, nudging buys of things with decent near-debt free balance sheets. I don't think today is "bet the farm" day.

[Footsie]

yes stocks are historically cheap, yes there is great value

but why cant they get cheaper?

There is a grab for cash going on like only seen once or twice before in history.

The party is over... Get used to the Bear that lasts for years.
(albeit with rally's along the way. some of which might go up around 20%)

But as I said... dont expect the index to be posting new highs next year.
That is fantasy.

The best way to trade for the next few years is "in and out" taking quick profits.
Dont just blindly "buy and hold"

take a look at a chart for 1973-74 or 1929-32 for the squeeze and then 1929-1940 and 1973-1982
Then you get some idea.

Good luck

[Mick100]

Mick is that call backed by bucks? You all in, today on then?

Hi jess

No , I'm not putting money into the market today - I havn't got anything to put into the market at the moment - I sold some of my penny stocks about a month ago but didn't get much for them - I'm just sitting tight at the moment (fully invested)
,

[Stranger_Danger]

Stocks can get cheaper. That isn't the point. The point is assessing the point at which they are cheap enough - in your view - to provide a margin of safety and significant upside, then acting at that stage.

"They can always get cheaper" is equivalent to dying a virgin because there is always a better looking girl than the one you're on a date with.

I've enjoyed coming into this crash holding cash, and it'll take a fair while from here to invest it all. I have no desire to be earning 5% gross on a depreciating currency in a years time.

Cash was king at the height of the debt fuelled bubble. Cash has been king for the last 12 months. Cash will not be king at the time everybody thinks cash is king, and that process has started.

[Mick100]

Cash was king at the height of the debt fuelled bubble. Cash has been king for the last 12 months. Cash will not be king at the time everybody thinks cash is king, and that process has started.

Yes, i agree SD
By the time everybody is cashed up, cash will be the last place you would want to be. Those people who cashed up at the end of last yr should be congradulated but I think those people who are cashing up at the moment are going to find they have made a mistake, shortly

Look at what WB is doing - he's made some huge investments (even by his standards) over the past month or so
When you find yourself doing what everybody else is doing (at the moment thats hoarding cash) you should know that your on the wrong track

[duncan macgregor]

It all depends MICK where you place this cash. If cash is going to crash then whats left?.
GOLD,Silver LAND, even material property will all be worth the value in monetry terms when its all over. Money is only a promise on a bit of paper that can blow away in the wind. Its only as good as the promise to pay so in a real crunch promises count for nothing.
The share market is not the place to be in a downtrend, all companies with very few exceptions follow the general trend. The time to buy is not in trying to pick the bottom, the time is when the market shows a general confirmed uptrend.
The American system of ever increasing credit in the end must self destruct. We now have a generation that thinks money comes out a hole in the wall with no idea on how to restrict their spending. Macdunk

[Mick100]

It all depends MICK where you place this cash. If cash is going to crash then whats left?.
GOLD,Silver LAND, even material property will all be worth the value in monetry terms when its all over.

Today cash is king - I'm guessing it's not going to stay that way for long
If there was a rush for gold the price would be $5000/oz in no time - there's not enough gold to go round. I don't know where the money is going to flow to next - land? ,gold?, alternative energy?(depends on the oil price of course)

One thing I do know is that these bailouts are going to eventually lead to inflation. The central banks around the world are pumping hundreds of billions into the financial system - the only way they can save the financial system is to inflate the money supply. This has got to be good for hard assets

[Mick100]

- I pick today as the bottom
.

DOW down 200
That prediction got blown away in a hurry
.

[Lizard]

Lol Mick. Let's keep picking and one day we'll be right :cool:

I'm going for next Tues-Thurs.... every extreme low we've seen this year has occurred when I've been on holiday and away from the internet for a few days.

After that, you can all relax until December :p

[Grand Uber]

Im gonna go wtih Yogi's celestial predictions that the worst is still to come this month

[Jess9]

Me too, but think that post a good % final plunge (shortly), this will mark the lowest low.

[Hoop]

A Question

Which side of the near bottom do you re-enter the market?

Assumption : no one unless you fluke it can predict and invest in at the complete bottom.

Assumption : Advisers say that in the long term if one holds shares and don't sell they are ahead eventually. (note:- Modern research says this is not true during long secular bear cycle periods if one buys in at the top of a bull market phase)

The reason I ask is...

1 The impulsive first in investor... After the bottom a steep rise commences, and there is a scramble..often resulting in an impulsive knee jerk type of buy without fully researching that company because the "gotta be in" attitude takes over... or the shares you desire are unavailable at the price you want to pay, so you buy alternative less desirable shares.

2 For the rest of us more rational investors... Large Volatility happens at ends of market cycles..many investors fail to realise this, so thinking that, a huge rise (5+%) on day 1 is "I seen it all before attitude".. the next day another 5+% Hmmmm it will drop tomorrow.. Day 3 it does drops but not as much they hoped (1-2%) then day 4 it regathers that 1-2% fall....damm you say... so... what do you do before day 5 ???? You keep reminding yourself that bear has beaten your poliofolio around and you are now risk adverse weary and gloomy, so you don't enter on Day 5 ...this is human behaviour and what happens in real life...easy to see on a chart after the event...but this is the very near/now (next week/month?) future where some of you (the cash ready investor waiting for the bottom to happen with an itchy trigger finger has to now make a huge decision... create some mental steel fortification grow some balls and take the plunge and hope it is not another sucker rally. By the time the bold investor decides there is a good chance the market will be 15-20% off it bottoms.

3 The "10-15% of the bottom" investor buys in on the established very short term uptrend spike..(all at once!) a strategy many of you have heard and now brainwashed into believing it will never fail...it can fail because it is a spike and even at the end of the bear market cycle... At the middle of a severe economic event (recession) the bear dies in the equity market, however much money has since evaporated and the V shaped upward momentum equity price pressure can not be sustained for very long and a fall back to near old bear market lows have been known to occur but not lower therefore not a bear market rally but a laggard young bull correction...many investor will listen to media noise and will be disillusioned, misinformed especially the 10-15% investor, who may mistake it for another sucker rally and sell out for a loss.

This scenario Hoop has mentioned can't happen or slim chance only of happening you might say????

AA posted an excellent chart (http://www.sharetrader.co.nz/showthread.php?t=6382) 20 year All Ords/Williams Indicator...OK!... this doesn't show much history but its enough to prove my point...most market cycle bottoms end in a steep V shape..Less evident in AA chart is the times that the downturn has been severe and/or of a long duration and/or much money has disappeared from the system after the V shape recovery, a fall off occurs after the V shape rally, and a lack lustre trading range bound event may occur where share prices just meander around as investors lose interest again..Sometimes there isn't much fun being had at the beginning of Bull market (1)

So what is happening now??
Mostly Doom/Gloom don't enter the market a fool if you do!!! Attitude (This is the Dow Theory investors buy signal trigger)

Hoop is in!!! well my toe is:cool: may be up to my knees.... already mooching around the NZX carnage picking up bits and pieces of FA value. Not many investors around.. as expected.
Not spending too much at once but getting in the market slowly when TA buy signals start firing and small bits at a time and in no hurry at the moment as ongoing research and "ear to the ground" strategy is necessary...the ailing old bear wacked one of my shares so sold out (stopped out) of that one (MHI).
Hoop was averaging 90% cash from November - August, but that is now history...my short/medium attitude is cautiously optimistic because I am seeing many end of cycle signals now, but wise enough to expect possible more downside volatility before it gets better. Have the opportunity to bail out ( stops in place) if the world + equities go totally pear shaped.

At this moment my new shares are together -3% having bought them before/during the capitulation (C) wave ..not badly off considering.

Longer term is unfortunately cloudy... expect local events to be added in the mix to shock the NZX one way or the other next year, remember no NZ Govt is going to inflect pain late in the election year..so 2009 pain is guaranteed.

[shane_m]

cash is not the king, auzi dollar 0.74 now.

[winner69]

cash is not the king, auzi dollar 0.74 now.


70 cents now mate

[lakedaemonian]

Worldwide markets tumble again. Almost no market (bar ours) was satisified with anything less than a 5% plunge - Brazil wanted a full 15%! Terrifying stuff - even for someone as risk tolerant (foolish?) as myself. While it would be tempting to hunker down with the rest - I intend to stick with my game plan and just keep buying a bit here and a bit there ...

... What has me very cynical is that everyone is saying the banks are all close to collapse and yet each banker I talk too, or their published data, paints a different story. Indeed some banks, e.g. Wells Fargo and Citi, are being very aggressive in sucking up assets. The bottom feels very close ... but then this is a situation that I've never seen before, nor is there one historically close.

... being contrarian has served me well in the past ... But I confess to feeling just little unsure of the eventual outcome.

I applaud your candor as well as sharing with us your recent buys....seriously

In regards to Citi...I'm thinking they are thinking/knowing they cannot be allowed to fail and acting accordingly with abandon.....Wells Fargo to a lesser extent but backstopped somewhat by Buffett.

I would agree that I feel the bottom could be close(some of the P/E's you have bought are crazy low), but I'm concerned about a cascade of profit warnings over the next coupleof quarters that will possibly negate what looks like value today.

I'm thinking that even if we see another 10-20% drop from here I will be cautious until the new year to see how silly shopping season goes.

I think we still have lots of cascading problems to be announced and absorbed yet.......US pensions aren't even on the radar yet.

[Stranger_Danger]

Wow, wild ride overnight, will definitely be doing a little shopping today.

Easy does it though, will be looking at situations in stocks I'm long familiar with, decent balance sheets, where there are few/no buyers in this situation.

Today isn't the day to go nuts with either the greed OR the fear.

All I know is that on a daily basis I'm a hell of a lot happier than, say, June 2007 when every idiot and their dog thought that the key to wealth was to buy an asset - any asset -with as little of their own money as possible.

One by one asset markets are waving bye bye to these idiots.

The key - in my view - is to (a) don't get scared and (b) don't fire all your guns too early.

[Toddy]

P man

I have never seen such big falls on international markets on such low volumes. This may well suggest that there is a bottom fast approaching. Can you give us a chart update.

Also, its about time that NZ participants stopped comparing percentage falls. Offshore markets have a greater number of business sectors that are more exposed than others. Banking and commodity stocks are the current main drivers on offshore markets. So a 3-4 percent fall on the Dow should not directly translate to the same on the NZX, and even more so with the ASX packed with commodity stocks.


As Cullens failings come through then the NZD will tank and NZ interest rates fall back which is all good for our small farming based Island, and sharemarket.

[lakedaemonian]

Wow, wild ride overnight, will definitely be doing a little shopping today.

Easy does it though, will be looking at situations in stocks I'm long familiar with, decent balance sheets, where there are few/no buyers in this situation.

Today isn't the day to go nuts with either the greed OR the fear.

All I know is that on a daily basis I'm a hell of a lot happier than, say, June 2007 when every idiot and their dog thought that the key to wealth was to buy an asset - any asset -with as little of their own money as possible.

One by one asset markets are waving bye bye to these idiots.

The key - in my view - is to (a) don't get scared and (b) don't fire all your guns too early.


Well said......

I like Warren Buffett's analogy(if not the man so much anymore) where an investor is like a kid in an amusement park with a limited number of ride tickets.

If you only had 10 tickets to go for a ride with your capital, you would probably use the tickets sparingly.

But I'm thinking lots of small bites of each "ticket" will be more appropriate in this market.

We live in interesting times.......many have lost and will continue to lose........but the disciplined and patient investor will thrive.

[Dr_Who]

Maybe it is time for Doc to do some bargain hunting. This is like a big fire sale, all going out cheap! Scary, but yet can be very profitable for the brave.

[shane_m]

it doesn't make sense for the US dollar to go off the roof like this. I suspect this is due to Americans switching in to cash from their investment like MD.

[Dr_Who]

it doesn't make sense for the US dollar to go off the roof like this. I suspect this is due to Americans switching in to cash from their investment like MD.

Nothing makes any sense in this market of FEAR.

I have some cash parked aside, but even I am too scared to buy anything. Once interest rates drop, where else can one park their money? Everything else is falling like a dead weight.

[STRAT]

Lol Mick. Let's keep picking and one day we'll be right :cool:

I'm going for next Tues-Thurs.... every extreme low we've seen this year has occurred when I've been on holiday and away from the internet for a few days.

After that, you can all relax until December :pmmm,
Still going with that call Liz? :p

[Crypto Crude]

I think we might be on that door steps of a rally tonight, or within a day or two...
there was heavy buying in the last 90minutes of trading last night on the DOW... and Aussie did well today...have not seen asia open yet...
we are due a rally, followed a few months later/month later by big falls...
:cool:
.^sc

[Dr_Who]

The real question is will our RB follow and cut our rates by 75 to 100 points or will they stuff this one up also like they did in the past. Lets hope our RB have some sense and cut our rates by 100 points and not piss around the bush. :confused::confused:

[warthog]

The real question is will our RB follow and cut our rates by 75 to 100 points or will they stuff this one up also like they did in the past. Lets hope our RB have some sense and cut our rates by 100 points and not piss around the bush. :confused::confused:

If Bollard thought that was necessary, don't you think he would have moved by now by 50 points and then another 50 at the next review?

The hog is picking 50 points at the next review.

[Toddy]

If Bollard thought that was necessary, don't you think he would have moved by now by 50 points and then another 50 at the next review?

The hog is picking 50 points at the next review.

The decision has already been taken out of Bollards hands by the actions of offshore Reserve banks.

100 points, followed soon after by another 50 points.

[Jay]

However, as I heard this morning on the business news, something like 60-70% of Aussies have their mtge on a floating rate compared to around 20-30% here.
Therefore the impact would be alot less in the short term.
Most Fixed rate lending if funded by the banks from offshore.

[warthog]

Most Fixed rate lending if funded by the banks from offshore.

About a third AFATHK.

[Placebo]

50 point reduction last time and critics said that was too much. 100 points would be outrageous. The economy is slowing (has been in recession last 2 quarters) and Bollard's job is to keep inflation within 0-3%. Big leaps in interest rates were part of the reason for the sudden slowdown, now exacerbated by global credit issues.

I expect a conservative approach. We'd already jumped down ahead of the Aussies, no need to blindly copy.

[dumbass]

inflation is yesterdays news , very unlikely that an agressive cut will bring about speculative excess in current enviroment.
big cuts the order of the day and they will come,its all about stability and growth at all cost.

[Dr_Who]

Aussie has cut rates by 1.25% in the last couple of months. I would expect the NZ RB to cut at least 1% if not more. Therefore I would say the NZ RB should cut rates between 50-75 points. Our economy is just as weak if not weaker than the Aussie economy. Lets hope the RB listens this time round and not create further hardship for the people.

[POSSUM THE CAT]

DR Who what use are lower interest rates if nobody will lend money at those rates or is the goverment going to provide the money out of taxes. Please explain where all this credit is going to come from. I am removing money from NZ banking system as fast as practical

[Dr_Who]

I am removing money from NZ banking system as fast as practical

Where are you gonna put your money if you remove it from the NZ banking system???

I may move some of my investment property mortgage to Kiwibank. :)

Did you guys know that the mortgage rate topped 20% in 1987? :eek: So 10% is not too bad. :p

[Jay]

As I mentioned on another thread, with the majority of NZers loans fixed any reduction in the OCR will not have an immediate effect on us working types for awhile.
Up to 80% of loans are fixed I think is the figure that has been mentioned, whereas in Australia it is close to the opposite.

[Footsie]

Phaedrus has gone suspiciously quiet...... what are you thoughts MR P?

Short term players must be getting close to re-entering the market.
We are in a very oversold position.

but there is nothing to say we cant become more oversold.
Nothing to stop the DOW going to 7,500 in this current move.

This is a once in a lifetime crash so folks anything is possible.

However, I think for the average punter its probably cheaper to just do nothing.

[Stranger_Danger]

The average punter doesn't have any money TO do anything with. That, ummm, is essentially the point - and the reason for the fear.

If the average punter had any money it is probably in a finance company or as the sliver of equity they have in their overpriced home.

The only advice I have for the average punter is retrospective - the stuff they *should* have been spent the last ten years doing instead of "enjoying" the credit fuelled instant gratification orgy of sloth and consumption and entitlement that has been most of this decade.

If you're one of the ones who spent the last decade clipping the ticket and living well below your means, if you ensured you came into this unleveraged and with firepower, now is the time for the strong to take assets away from the weak at reasonable (or better yet, soon, unreasonable) prices.

[trackers]

The average punter doesn't have any money TO do anything with. That, ummm, is essentially the point - and the reason for the fear.

If the average punter had any money it is probably in a finance company or as the sliver of equity they have in their overpriced home.

The only advice I have for the average punter is retrospective - the stuff they *should* have been spent the last ten years doing instead of "enjoying" the credit fuelled instant gratification orgy of sloth and consumption and entitlement that has been most of this decade.

If you're one of the ones who spent the last decade clipping the ticket and living well below your means, if you ensured you came into this unleveraged and with firepower, now is the time for the strong to take assets away from the weak at reasonable (or better yet, soon, unreasonable) prices.

Unless you're one of the poor young pups who have recently finished their education and are entering (or just have entered) the workforce in the last couple of years:

1. Overinflated house prices
2. Crap interest rates for savings in the bank (then less 30% tax)
3. Long term savings unreliable
4. Crashing sharemarket

Now we've got to spend the next decade or two suffering from the effects of this crap. Luckily I've been doing this for a couple of years now and have only given away some profit, so I'm not hurting....

Disc: On the sidelines, waiting for the bottom

[CAM]

Phaedrus is on holiday....(mentioned on some other thread)....but he would have had his stop losses in place before he went

[Major von Tempsky]

Alan Bollard has just displayed his native genius for stuffing things up.
He should have taken action hours after the RBA rather than days or not at all.

Inflation is no longer the biggest factor - economic collapse is.
Unless he takes action to follow the RBA nZ really will be in crisis that will take months if not years to get out of.
Any remaining NZX stocks will need to relist on the ASX.

Alan, snap out of it boy.

NZ is not a siege economy in isolation from the rest of the world. We can't afford to do another Iceland.
I know you were appointed by Labour but this is ridiculous!
Look what you've done already just today to the NZX!

[macduffy]

The preservation of any particular level of the NZX indices is not a responsibility of the Governor of the RBNZ.
I'm afraid we'll have to look for other scapegoats!

:cool:

[Jess9]

Started buying in small bites today - good advice above.

[duncan macgregor]

The time to buy is after the dead cat bounces are over, and the market gets into a confirmed uptrend. The novice investors think the market has bottomed all the way down and jump in to quick. Keep buying guys you are about to be taught a lesson. The markets are at this moment in crisis heading down. Macdunk

[Dr_Who]

The NZ market has done very well with only a small drop compare to the other markets. Surprising indeed.

[AJ]

I don't think theres too many people out there predicting the bottom is today.

You can see by the continued efforts by governments worldwide to stop the rot that there is still rot to be gotten rid of.

Everyday in the news is another horror story about not even one bank but multiple. And more and more stories across all industries of the hard time in the last year. Well the effect hasn't been felt yet, it's set to get harder

[Dr_Who]

Time for Bollard to front up and be proactive. Why is he so quiet? We want at least 1% cut!

[macduffy]

Time for Bollard to front up and be proactive. Why is he so quiet? We want at least 1% cut!

C'mon doc. Let him have his shower and breakfast first!

;)

[warthog]

The time to buy is after the dead cat bounces are over, and the market gets into a confirmed uptrend. The novice investors think the market has bottomed all the way down and jump in to quick. Keep buying guys you are about to be taught a lesson. The markets are at this moment in crisis heading down. Macdunk

Have you been on the phone to Phaedrus on holiday McDunk? You're sounding very much like him these days ...

[Billy Boy]

:D
BANKS TO LEND YOU YOUR OWN MONEY

THE government is to invest £50bn of your money in British banks so they can lend it back to you with interest.
The historic move is being hailed as a lifeline for the financial system as long as nobody asks too many questions.
Julian Cook, chief economist at Corbett and Barker, said: "The government will give your money to the banks so the banks can start lending you that money, probably at around 7% APR.
"Thanks to all the interest you're paying on your own money, the banks will make billions of pounds again and normality will be restored.
"After a few years of this the government will cash in the banks shares it bought with your money and use the profits to build a huge ****ing dome somewhere."
He added: "In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot."
Chancellor Alistair Darling said the decision had been taken in tandem with the banking industry, adding: "They used a lot of dirty words I'd never heard before and one of them had an angry looking dog."
Meanwhile, Emma Bradford, a sales manager from Bath, said: "Why doesn't the government just give my money to me so I can buy stuff from businesses who will then make a profit and put it in a bank?"
But Mr Darling insisted: "Shut up."

[macduffy]

Have you been on the phone to Phaedrus on holiday McDunk? You're sounding very much like him
these days. Quote.


Sounds like common sense to me - except for those skilled in catching falling knives!

;)

[Dr_Who]

In a normal market with is the percentage difference between OCR and the floating mortgage rate?

[peat]

I think its generally been between 2 - 3% and more recently close to 3
RBNZ raised rates to 8.25 July 2007 and my Westpac floating rate went up to 10.95 sometime after that and only now that the RB has gone down to 7.5 will they be taking it down to 10.45 (next week but not yet haha bastards)
But of course Kiwibank is currently offering 9.7 floating for those with 20% equity

[KiwiBear]

The time to buy is after the dead cat bounces are over, and the market gets into a confirmed uptrend. The novice investors think the market has bottomed all the way down and jump in to quick. Keep buying guys you are about to be taught a lesson. The markets are at this moment in crisis heading down. Macdunk

McDunk I concurr whole-heartedly after first buying in on the beginning of the 1st 2nd & 3rd 87 crashbounces. Only to watch in dismay the prices tumble further and some go under.
Bob Jones still leaves a bad taste in my mouth amongst others who got Knighted!!!

Wait until there is a range trading pattern consolidation at least before strepping in and getting your feet wet. My pick is not for at least another 9 - 10 months.
We may be getting close to the bottom on the financials, but energy raw materials and industrials have a way to go yet with demand slowly decreasing.
This Market has way more fear overseas than in 87, coupled with more than one event and country in strife makes me wary of re-entring!


Limit your losses let profits run! Never catch a falling Knife! Set a absolute stop loss on paper
not in your head, and act on it decisively!

[Halebop]

Another good day on the NZX - good volumes and the NZ50 only down 0.1%.

...a continuation of a year long -31% downwards trend is not my definition of "good day".

[macduffy]

Another good day on the NZX - good volumes and the NZ50 only down 0.1%.

Is anyone seeing foreign flight? ... I.e. offshore sellers bailing - driving the NZX down and lowering the NZD as they trade them in for other currencies? ... I.e. is some of the selling driven by need for offshore holders to be back in their own currencies?

I'm pretty sure I heard Mark Weldon make some comment recently to this effect. In any case it's to be expected - we've seen it on previous, less extreme, occasions.

[warthog]

The decision has already been taken out of Bollards hands by the actions of offshore Reserve banks.

100 points, followed soon after by another 50 points.

Don't believe half of what you see and none of what you hear.

[STRAT]

Don't believe half of what you see and none of what you hear.Wize words Mr Hog and not just in relation to the topic at hand.

[Corporate]

dow down another 5% or 475 pts to 8782!

[Footsie]

dont you mean 678 pts to 7.33%

Another 2 weeks and there will be no market!!

I had thought the process would be more drawn out and more like water toture.

The bigger this crater becomes, ironically the great the chance it is of actually being an 87 style bottom. (fall down into the crater and climb back up)

EG ... if we all went out and bought stocks when the DOW was at say 5,000 and didnt make money over 12 months then.... there aint much hope for keeping your job

This is a full scale Panic folks.
There are opportunities amongst this if you keep your head screwed on.

[Snapper]

The restrictions on short selling were lifted last night which has contributed to the carnage. Good article on it below

Robert Gottliebsen
This crisis outranks 1987



The Spectators
Gottliebsen: This crisis outranks 1987

By itself the fact that General Motors and Ford are in deep trouble should not have caused last night's late session Wall Street falls. The only way those companies could get out of their problems was to go into official administration and rid themselves of their past employee health guarantees. Their operations would then have a chance to be restored to health and play a role in the global society. It should have happened years ago.

As Alan Kohler explains (Hedge-fund panic erupts, October 10) the problems at GM and Ford exposed a so far hidden problem – that the US hedge funds have a deep leveraged exposure to Wall Street and they are facing unprecedented redemptions and borrowing reductions. They must raise cash, and raise it quickly.

At the same time there is still heavy leveraged investment on Wall Street both by private individuals and the big firms. Both groups were desperately looking for a rally on the back of the rescue package to get out. Last night in the last hour of trade on Wall Street it was clear that the rally was not going to happen. So one or two key players began to sell. And as those big names started to sell, it was like the starting gun at Sydney’s City to Surf race or the Melbourne Marathon – there was a massive surge to get out, especially in the final 15 minutes.

But the hedge fund exodus and the deleveraging of Wall Street will have lasting effects through the entire US economy. And it will spread around the world and to Australia. However it does not mean that the global rescue package is going fall over.

Unfortunately most commentators are linking the Wall Street fall with the rescue package, when in fact it is more about the hedge funds and a reduction in borrowing to hold shares.

In some ways the timing of the latest collapse is good because it means that global politicians will be driven into coordinated action at their next round of meetings. Steep falls in any share market affect the entire economy so the US recession will be much deeper that forecasters are currently discussing. And profits will fall much more sharply that the younger analysts are predicting. Most of the youngsters on Wall Street have not even experienced the 1987 crash and they have much to learn. This one is now bigger.

Here in Australia those US hedge funds that are exposed to the local market will accelerate their selling of our top miners and others stocks. And like the US, it will lock in a severe economic downturn.

As I pointed out yesterday, we must bank on China to cushion the US and European blows (Hope from China, October 9). China will need to really stimulate its economy to offset the decline in their exports. They have the money to do it. Part of that stimulation will be in infrastructure which will require commodities.

It's important that all Australians understand that we are going to see a fall in asset values across the board because we are watching a deleveraging of the global economy as the excesses of the past are wound back. Globally it will be severe and nasty.

[Stranger_Danger]

Ok, people are scared now.

Anyone elses mother calling to make sure their bank deposits are safe?

[QOH]

Surely capitulation day must be close. Sitting on my fingers here trying not to buy or sell. Wouldn't have believed AIR can go much lower than 88 cents.

[Placebo]

Ha ha.

Just stuff it in the matress, Nana!! ;)

[QOH]

Personally I'm thinking of burying mine in the garden. At least it would be safe from fire.

[Hoop]

Surely capitulation day must be close. Sitting on my fingers here trying not to buy or sell. Wouldn't have believed AIR can go much lower than 88 cents.

??????? capitulation day close??? its happening now in some places

do you mean for the NZX. If you do mean NZX... we are capitulating but it is masked somewhat by the NZ$ drop...If you convert our NZX prices to US$ or pound or Euro then you wouldn't be asking:):(.
There is good news in the bad news.. Aussi is worse off than us in this recent capitulating stakes :D

[Lizard]

Ok, people are scared now.

Anyone elses mother calling to make sure their bank deposits are safe?

Yes! :eek:

[ratkin]

There fear everywhere now , not just with equities.

Had a term deposit mature yesterday , had to make a hard call , put back in for another year at a lower rate ie 7% with rabo bank or transfer it to my ASB securities account.

Decided that doing what felt hardest would be best. It will be in ASB on monday ready for some buying.

[peat]

yeh I had this lol

NAB it was. So could've told her CBA Westpac were better but didnt want to instil fear.


Ok, people are scared now.

Anyone elses mother calling to make sure their bank deposits are safe?

[QOH]

There fear everywhere now , not just with equities.

Had a term deposit mature yesterday , had to make a hard call , put back in for another year at a lower rate ie 7% with rabo bank or transfer it to my ASB securities account.

Decided that doing what felt hardest would be best. It will be in ASB on monday ready for some buying.

I had an odd call yesterday from a major bank, suggesting I had quite a lot in my online savings account, and did I want to switch it to "their great? term deposit rates."
I wouldn't consider the less than $20,000 in my account worth a phone call.

[ratkin]

Better off looking for some steady high paying dividend stocks with no debt.

name some please

[Nitaa]

I had an odd call yesterday from a major bank, suggesting I had quite a lot in my online savings account, and did I want to switch it to "their great? term deposit rates."
I wouldn't consider the less than $20,000 in my account worth a phone call.hmm.. did you ask them how their cash flow was like. If it was fine then they would need to call you to lock in your cash. which bank by the way?

Anyone with thoughts of where we will be in 12 months?

[foodee]

I had an odd call yesterday from a major bank, suggesting I had quite a lot in my online savings account, and did I want to switch it to "their great? term deposit rates."
I wouldn't consider the less than $20,000 in my account worth a phone call.

Interesting to note that ANZ has been offering 8.00% compounding quarterly for 18 months. That is significantly higher than other banks. I wonder.....

[QOH]

It was the ANZ who rang me. I'm curious to know where Bonus Bonds rank in the scale of ANZ's liabilities. I suspect a lot of people still think they are government guaranteed. From hearsay I gather a lot of older people have bonus bonds to hide income.

[Placebo]

Interesting commentary in today's New York Times

Seven Days in October
Every year, when Oct. 19 approaches, people speak darkly of the crash. On that day in 1987, the Standard & Poor’s 500-stock index fell 20.5 percent. This is the crash of 2008.

After the 1987 crash, the New York Stock Exchange put in circuit breakers to assure that there could never be another day like that. The market will close before prices fall that far.

But so far in October — after only seven trading days — the S.&P. is down 22 percent. The only other time since the Depression that there was that large a fall within seven days was in 1987.

The market has been down every day this month, but it has not been a straight road down. The intra-day volatility has been extraordinary, a signal of the total uncertainty that has gripped investors as they ponder whether the latest government move will stem the credit crisis.

Another way this is different is that the 1987 crash brought prices down from levels that were not very far from their record highs, set in the previous August. Investors were stunned, but they had not felt badly before prices plunged. At the close Oct. 19, the S.&P., was down just 7.2 percent since the end of the previous year. By the end of December, the index was up 2 percent for the year. There was no recession.

This time, we were in a bear market before the October plunge began. Since the peak last Oct. 9 — a year ago today — the index is down 42 percent.

This year, there was a recession under way for the entire year — I believe — and by the time the crash began there was no doubt that the economy was in decline both in the United States and overseas.

Directly after the 1987 crash, the Fed slashed rates and made cash available to the banks. That helped to stem the panic. This year, the Fed had done all that and much more before the crash came.

This is also coming in an election year, which does not help, and it comes after the presidential debate this week in which the candidates blamed each other for the problems but had little new or relevant to say about how they would deal with it. Perhaps next week’s debate will have more substance.

George Will, writing in The Washington Post today, observed that “the Obama campaign is benefiting from a mass mailing it is not paying for. Many millions of American households are gingerly opening envelopes containing reports of the third-quarter losses in their 401(k) and other retirement accounts — telling each household its portion of the nearly $2 trillion that Americans’ accounts have recently shed.”

What will Americans think when they realize that since the end of September, they have lost $1 of every $5 they have left? Or that of the 500 stocks in the S.&P. index, 498 are down this month? The exceptions are two banks that had lost the bulk of their value before this — National City and Wachovia.

Here is how the performance of the S.&P. 500 over the past 12 months — and since the end of September — breaks out by sector.

Consumer staples, down 14.7% in October, down 16.2% for the 12 months.

Health Care, down 17.5%, down 30.6%.

Utilities, down 18.6%, down 35.0%.

Telecommunications, down 19.3%, down 48.1%.

Information Technology, down 19.9%, down 40.9%.

Materials, down 21.8%, down 41.7%.

Industrials, down 21.9%, down 43.7%.

Consumer discretionary, down 23.2%, down 43.2%.

Energy, down 24.5%, down 36.9%

Financials, down 31.9%, down 61.7%

[trackers]

Wow, really good read Placebo thanks... Interesting times (fighting the urge to buy back in atm)

[Yossarian]

Or that of the 500 stocks in the S.&P. index, 498 are down this month? The exceptions are two banks that had lost the bulk of their value before this — National City and Wachovia.


just unreal, innit?

[winner69]

Can't be too bad of a day ..... CHA and TUA are up

[Crypto Crude]

Us at the spec end survive... great stocks will rebound quickly...
CVN is quickly becoming my favourite stock...
:cool:
.^sc

[Nitaa]

P. How are the charts looking. Im wondering if it has broken the trend line and the buy signals are kicking in.

On a more serious note, it scary to think about the consequneces. However, we will all regroup and start the cycle all over again in due course.

[warthog]

Come on all you wowsers, joing the hog and put your money where your snout is: get into it at http://www.ipredict.co.nz

Disc: hog has shorted John Key and Co. for their utter stupidity and inability to fight their way out of a political paper bag. Even Winston sidesteps them at least once each day. Also, Key and Co. haven't realised that their meddling with the financial system - especially in respect of government bureaucracy - will have precisely the opposite affect than they contend. Anyway, even your most basic punter is beginning to realise that Key & Co. are the political equivalent of a punter in bull market whose stocks are rising who somehow thinks it is something that *they* are doing right to make their stocks appreciate. Trouble is, when the bear comes out, these people need to go back to the drawing-board.

Prove the hog wrong!

p.s. while the hog is about it, what's all this hogwash grizzling about the announced moves to limit shower water output? Of course this sort of thing needs some guidance - with a bit of stick about it - as our bogs and showers are amongst the most wasteful on the planet. The market isn't going to do anything about it - producers have had too much time to do this, so heads in chaps, Helen's here to clip your wings! Hog is looking at going long on all things Green.

[macduffy]

Sure looks like Citi tried to get something on the cheap! Except that they are hardly acting collectively if Wells Fargo are prepared to enter a bidding war with them for Wachovia's assets. Sounds more like active competition to me.

;)

[lakedaemonian]

Lots of activity by Buffett:

Direct investment by Berkshire Hathaway in Goldman Sachs

"" "" in GE

By proxy via Wells Fargo whose largest single shareholder is Berkshire Hathaway



I still think he's a bit early to the party....but trying to see things from his perspective:

Goldman, GE, and to a much lesser extent Wells Fargo would never be allowed to fail because of financial, IP, and strategic security issues.

So Warren gets a "get out of financial jail" free card, PLUS 10% special dividend, PLUS rights to purchase more shares(albeit underwater at the moment).

Berkshire Hathaway is sitting on so much cash they need to start deploying it faster than the average Joe Bloggs IF Buffett sees things becoming bottom-ish and/or the inflation rocket has commenced countdown :)

[shane_m]

time to re enter the market will be when everyone figure out that the US dollar is toxic waste and US dollar start dropping.

[shane_m]

Americans are trying to do a total manipulation of the market.

By instilling confidence in the dollar, increase the value of bonds by strengthening the dollar and by lowering rates, thereby improving balance sheets of financial institutions which own such bonds.

simultaneously suppress precious metals by virtue of the strengthening of the dollar and the liquidations of metals and other commodities positions to cover margins generated by crashing stock values.

By falsely suppressing precious metals and boosting the dollar, the Illuminist hope is that the real damage that has been done to our economy and to our dollar by inflation of the money supply by the Fed, and by free trade, globalization

The strategy then, is to use the stock markets and the oil and commodity markets as the sacrificial lambs for the bond and derivative markets, and as support for the dollar.

To accomplish this, the US stock markets are allowed to crash by the bush and feds which withdraws its support, allowing the stocks to fall based on horrendous negative fundamentals and de-leveraging.

Everyone runs for treasuries, pushing bond prices up and rates of return down. The US stock markets then usually cause a sympathetic explosion in the Japanese markets, and everyone in the Japanese and Asian stock markets start to sell their stock and run for the cover of Japanese bonds in much the same way as we run (stupidly) for US treasury paper in the event of a crisis.

The non-yen currencies, which are obtained via these stock liquidations are then converted to yen and used to purchase Japanese bonds and treasuries.

This process strengthens the yen, thus starting the cascade of losses as carry traders run to cover their margins. As the carry traders bail out of foreign stock holdings, they convert the proceeds, which are in foreign currencies, into dollars, so that they can purchase US treasuries, where the money is then temporarily and (they think) safely parked.

[AJ]

Looks like the world has turned the corner today in the markets.

Every european index is up. Asian indicies up. US is up.

UK Goverment is offering to buy every bank under the sun.

End of the irrational selling for the moment? Time for everyone to lump in on the under valued stocks for a quick rally in the next couple of days.

Will the declining NZ$ impact the speed and size of the kickback?

[AJ]

hehe. I think most people have been expecting a kick back everyday for the 8 down days. The selling has been relentless though. The indexes have never managed more than a couple of hours of gains before getting battered back down.

Today was good news across board for almost everyone. And whats more the board remained green all day. No large patches of selling which have been evident everyday for the last couple of weeks.

Even with the relatively bad news this weekend of 3+ more major banks needing a large amount of new funds to survive.

[craic]

The Answer - last friday

[peat]

...answer to the thread title perhaps?

this is probably just a relief rally.... unlikely that the bear market is over... growth rates are still forecast to shrink etc.....

ABN Amro also said this morning


I think these measures will help to quell the market panic, but I'm doubtful they
have come in time to avert a significant economic downturn. The jolt to confidence
coupled with a dramatic spike in the cost of capital is likely to tip most of the G7
economies into recession. Over the next six to nine months, activity could contract in
the US and the major European economies.

[Toddy]

...answer to the thread title perhaps?

this is probably just a relief rally.... unlikely that the bear market is over... growth rates are still forecast to shrink etc.....

ABN Amro also said this morning


I think these measures will help to quell the market panic, but I'm doubtful they
have come in time to avert a significant economic downturn. The jolt to confidence
coupled with a dramatic spike in the cost of capital is likely to tip most of the G7
economies into recession. Over the next six to nine months, activity could contract in
the US and the major European economies.



Relief rally. I think that the market had priced in a 10 year recession, now they are saying that the sky may not fall in and that the markets should only price in a 5 year recession.

[Stranger_Danger]

Everyone seems to be reckon we're at the bottom.

Therefore, we ain't.

Good for a nice bounce though.

[lakedaemonian]

Everyone seems to be reckon we're at the bottom.

Therefore, we ain't.

Good for a nice bounce though.

Yup....dead cats can bounce fairly high if they fall far enough.

I do think enough inflation could possibly reanimate a cat into a semi-living zombie state for a time.

[Lizard]

An economic slowdown seems to be a good thing at this point to avoid stagflation. The main thing is that we slow down, shake out the weak businesses/investments and re-focus productivity where it is needed yet try to avoid entering a deteriorating spiral of deflation.

Yes, there will be a follow on period of economic slowdown - but that could be anywhere from 6-18 months away before the sharemarket sags on that - and then only if it's bounced substantially higher first.

[Toddy]

Yup....dead cats can bounce fairly high if they fall far enough.

I do think enough inflation could possibly reanimate a cat into a semi-living zombie state for a time.

Fantastic, on the most positive day in the history of the financial markets you come up with a negative statement.

Right now, I not thinking the cat is the zombie.

[Stranger_Danger]

Toddy,

On Friday I bought some ASX:TWO.

They closed at 79 cents on Friday. They peaked today at $1.20, 52% higher, 2 days later.

There is every chance they could be 79 cents in a fortnight.

How is that madness possibly "good" and how is today one of the best days ever? I see today was the best day on the Dow since 1933 - funny that!!!

We just had the day that most resembled a day during the worst period in modern economic history, and I'm supposed to be doing cartwheels?

Keep in mind, I'm an optimist. I'm buying (slowly, on the bad days, of which I know nothing about how many there will be or which will be the baddest) shares.

Now, I'm buying shares as opposed to holding "govt guaranteed cash". That isn't a gold bug, a permabear or a bunker theorist.

While I accept that the last week can be good for very sharp traders and for investors with a certain steel that buy on the down days with some confidence they have a margin of safety (rightly or wrongly, my valuation of ASX:TWO is north of $1.50) I can't for the life of my see how today is a "good" day.

Good to see the market get a little relief? I suppose. Cartwheels? No.

[lakedaemonian]

Fantastic, on the most positive day in the history of the financial markets you come up with a negative statement.

Right now, I not thinking the cat is the zombie.


Sorry for pooping on the party.

While this could be a truly amazing trading opportunity.....I"m not a trader.....

I'm still patiently sitting in cash or cash like.......

I do have to admit a number of things are looking more appealing.

I particularly like the Aussie at .90c to the dollar

Silver looks great, especially with older US dollars

Gold a bit less so, but quite appealing

Oil looks very appealing, but I'm biting off less than I can chew since it fell a good bit harder than I expected.

Uranium is positively glowing...pun intended

As I start feeling waves of inflation induced nausea coming on I plan on buying more into these commodities until I get down to about 25% cash set aside for the very rare equity, other opportunities(funding small business on favourable and short terms), and unforeseen opportunities.

[Stranger_Danger]

the hell you say....

If guaranteeing deposits and pumping money into every piece of crap that moves (or doesn't) won't calm the masses, what will?

Nothing.

We're gonna get a panic.

Then a bottom.

[Dr_Who]

HOLY CRAP! Jap market down over 10%! :eek:

[lakedaemonian]

Fantastic, on the most positive day in the history of the financial markets you come up with a negative statement.

Right now, I not thinking the cat is the zombie.

I think you're right...I think it's still dead......

It still needs to be defibrilated with a couple trillion more "volts" before it joins the undead

[beacon]

Sorry for pooping on the party.

No, good call lake ...

[Stranger_Danger]

The jap market is a good pointer as to where we are at. Their market is arguably the most fundamentally undervalued. Their people are savers. Their banks are in ok shape. They are not just coming off a bubble - they've been in long term decline. It should be a contrarian place to hide - the currency sure has been.

I don't believe fundamentals can explain why their market is falling harder than, say, US, or Australia, or NZ.

It is all about fear, fear and fear - and after what they've been through the last decade, they probably "get" fear a little better than we do. The idea of long term declines isn't as foreign to them.

Have a read of Kerr Neilsens latest quarterly (PMC) released today - note also the simultaneous cash raising. The japanese company he discusses is not an unusual example - fundamental value exists in the market, but for now, nobody is going to care much about that.

[Xerof]

Hedge fund forced liquidation.....still.......

[Dr_Who]

I fear this week will be like last week. The RB around the world has used up most of the instruments and only one left is interest rate cuts. RBs will have to cut rates hard to stop this market from sliding. I am staying on the sideline and not buying anything yet.

[duncan macgregor]

When to buy back into a crashing market is very easy to work out.
1, never try to bottom pick.
2,avoid company or commodoty sentiment be ruthless.
3,Understand that its the market will tell you when and what to buy.
4,the market commodoty price is the indicator taking your company with it.
5,Take a look at commodoty charts, your company share price will follow behind.
6, Oil, Metals, minerals,farm produce, public spending, etc etc,
7, Do your home work on the best two companies in each sector.
8, buy when the commodoty chart in one particular sector shows a confirmed uptrend and not before.
9, run a tight 5% stop loss until in profit then ease back to up to 15% but no more.
10, Have a good look at what you did wrong in the latest crash then in hindesight look at that simple system above that might have saved you from yourself. Macdunk

[brettdale]

Great advice, thanks for the tips.

[biker]

This today in the New York Times....



By WARREN E. BUFFETT
Published: October 16, 2008
Omaha

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Brad Holland

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Times Topics: Warren E. BuffettTHE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

[shulink]

its hard to say if you are a long term investor, as no one knows when the finanical crisis will end. I still trade short term.

[macduffy]

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts. - Quote. Warren Buffett 17 October 2008.

Here's one man's opinion on whether or not it's a good time to re-enter the market.

;)

[duncan macgregor]

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts. - Quote. Warren Buffett 17 October 2008.

Here's one man's opinion on whether or not it's a good time to re-enter the market.

;) MACDUFFY I hold cash but never look on it as a long term asset. When i buy back into shares i buy back with the view that if they dont perform they get dumpted. I dumpted my shares when they hit my various time line and stop loss levels.
Unlike most people, i invest to preserve my capital first, capital gain second and will dump any company or sector in the market that under performs at the drop of a hat. The mistake most investors make is that they make excuses for under performance i dont i expect any company that i invest in to have a capital gain of 20% plus dividends if any per annum.
I had a great ride up last year dropped a few pc getting out, and could buy half as many again with a similar ammount of money right now. The company as long as it runs at a profit means nothing. Its the rise and fall in the sector that counts, study that if you want to make money. All the market sectors are right down at the moment its a fools market cash in the bank might not gain very much, but right now, nothing beats it.
Macdunk

[Stranger_Danger]

Belgarian - I share your general enthusiasm but we're moving at seriously different paces. I plan to be 100% equities (no leverage) by roughly March and am buying shares every week now.

Where do you see the market in March? You're clearly betting we're pretty much done on the downside?

[Grand Uber]

Dont really buy into it, but no the less an interesting thought!



Central banks failing to solve crisis
Depression on the way
by Christopher Laird, PrudentSquirrel.com | October 16, 2008


A few weeks ago, I mentioned that the central banks had put up collectively $3 trillion worth of stimulus/backing to financial markets. I also noticed that the big bailouts had about only a one day boost to the financial markets till they did a thumbs down.

Now, as of Monday Oct 13, the Europeans came up with a mammoth 1.3 trillion Euro bailout package (close to $ 2 trillion worth). The markets rallied for ONE day. Then, add another unlimited Fed dollar swap package to anyone (they trade dollars to central banks who need them for their currency because those central banks need dollars for people leaving foreign markets). So using my rough math, since August 07, the central banks have now put out over an astonishing $5 trillion plus worth of what is mostly short term liquidity (loans to financial institutions).

And, with all that money, the markets are down Wednesday across the world again? Only two days after the Europeans add almost $2 trillion worth of backing to their financial system? And the Fed had just added unlimited dollar swaps?

What the heck is going on?

Relentless deleveraging

What is going on is relentless deleveraging of over $1000 trillion of financial leverage (it’s more than that but the figure gets the idea across. So, over a period of a year, the US and ECB /Europe alone have added $5 trillion worth of financial backing to the world, but that is against $1000 trillion deleveraging – the bailout efforts are simply miniscule compared to what is driving markets down – at a ratio of 1000 to 5 so far. The bailouts and liquidity injections simply cannot work.

And, the markets relentlessly tail down, even within a day or two of major new bailout announcements. I think this kind of makes the point. Which is that $5 trillion is not near enough to stop $1000 trillion from deleveraging worldwide.

Gold, USD, and oil here

And then, we see gold and silver and precious metals selling off big at times, but gold kind of holds its own. But basically, gold is being tugged between big selling for money for margin calls on big investors like hedge funds. Then gold comes back a week later. Gold is reacting most strongly to the credit crisis worldwide, as big investors flee into the most secure ‘money’ they can find.

And even though the initial epicenter of the real estate collapse and the banking crisis is in the US, the USD is strengthening too. One reason is that people are selling emerging/foreign markets and repatriating that back to the US in dollars. Another is that the USD is still regarded as a safer haven than most. Just take a look at the Ruble and Russian markets – way way down, but last year regarded as a possible resource currency financial haven. Well, that sure proved wrong.

Resource sector

And then, the resource sector is just getting killed. And so are the resource nations stocks. And, get this, China is slowing markedly. Not to mention the China stock markets are WAY down from their highs, like 70% or so down from a year or two ago. But, didn’t we hear that China and the emerging economies would carry the world economy if the US/West slowed? Well, I think that theory has been definitively debunked.

And, with this slowing in the West, and now about a year later in developing economies like China and Russia and South America, the resource sectors are getting creamed. Miners and also oil/energy stocks are getting creamed. But didn’t we hear that these sectors were the new future and in the middle of a ten year plus bull market only a year ago?

I think a lot of this is simpler than that. Frankly, a year ago, we stated over and over that the imminent slowing of US and world economies would lead to a China slowdown, and a resource correction. But it was worse than that even. The collapsing credit markets (imploding is a better characterization, frankly) have put a choke hold on every imaginable economic activity.

And guess what, the next shoes to drop in the US, EU, Asia will be huge layoffs, as the economic stats will start to show big economic declines in consumer and business activity in coming months. In fact, those bad data are now showing up now.

Realization

And, when markets finally wake up to the fact that, despite new gigantic bailouts by governments, it’s not working, it’s definitely not working, and financial institutions are still afraid to loan money out. The realization is that it’s basically over, the cake is baked.

Or, to be more clear, the markets are not going to recover, and are going down far more.

Now, after the totally unprecedented actions in the last two weeks, particularly the announcements Monday by the Europeans and the Fed, with another what $2 to 3 trillion thrown at the problem, the markets this week are just crashing.

And now we get back to the original point, that every time a new huge bailout is announced, all that money appears to be good for a mere one day rally in financial markets.

Of course, to be fair, the Fed and others say it takes time to get all that money out and working in the system. But, do we have the time now? And frankly, can the huge bailouts even work in the end?

It’s already being stated that, even with the huge infusions to all these world banks and financial institutions, the financial institutions still won’t lend but are merely holding on desperately to the money- Lest they be the next Lehman or whatever.

Central banks cannot replace the economy

Now, Sarkozy and others in the EU are talking about a new Bretton Woods agreement. So now they want to replace /reform the entire world monetary system too? Do you think that will solve the problem? So, now after committing what is rapidly going to be $10 trillion and counting of public backing, which is not working, they will think up anything to try to stop what they fear, a total world financial collapse.

But, no matter what they try, no matter how big, nothing works. The reason is that the Central Banks cannot replace the economy. They can try to stimulate it, but they cannot even come close to replacing millions of people working, borrowing and lending.

And the way things are going, with every bigger bailouts (that European $2 trillion move Monday was amazing) it would seem they are going to bankrupt their own government finances along with their collapsing economic sectors. They will stop at nothing to avoid what they fear, a total economic collapse. And after that, comes the currency collapses? With the way they are handling this, that appears to be in the cards.

It’s already being stated that the US fiscal situation has been severely degraded by all these bailouts. The USD is still holding, but till when?

Effects on the Euro

Then, consider the effect of all this on the Euro. First, when it became clear that there would be no EU wide consensus on a fix, the Euro fell. Then some of the big nations did come up with a $2 trillion backing Monday. But, the fact is, there is no real coordinated EU wide policy on this situation. Even if the Fed is acting wildly, it at least has a unified policy for the USD. But the EU is not so.

And this definitely calls the Euro in question. So then, we get calls for a new Bretton Woods agreement. (The Bretton Woods agreement was where the USD was used to back the collapsing European currencies during WW2. It stayed in effect after WW2 till the US went off the gold standard in 1971).

New world currency?

But, this time, the USD is not really able to back the world’s currencies. Some new form will be invented. The trouble is, what currency is able to step into that gap? None that I can see.
So, will this relentless bailout mentality lead us all ultimately to a new world currency? A single new world currency, or one that the major economies subscribe to?

That may sound preposterous but I don’t think it’s quite that unlikely.

What really concerns me

What really concerns me is another Great Depression. And, we are actually closely following the script of that time. First, economic and financial crashes. Then big public bailouts. Then economic activity collapses. Then we have a grinding depression.

And, in a depression, we get huge unemployment, and even food shortages. In fact, I wonder if we will see something like what happened in Iceland this week, where the stores are running out of food and everything because there is no foreign exchange. They won’t accept the Iceland Krona. So, Iceland can’t import food.

Lest you think that problem is isolated to that island nation, in the Great Depression millions starved in the US and Europe and elsewhere, even in big food producing countries. One reason is that big food producers sell their food for foreign currency – ie export it. The natives be damned. That’s what happened in Argentina in the early 2000’s.

And, god forbid, there can be a big war after the depression. This is exactly what happened in the 1930’s/40’s.

So, batten down the hatches, and be super cautious. Don’t believe the financial TV that seems to be always saying the bottom is here. I don’t believe that for a minute. The credit crisis is just grinding away at the world economies like a big wood chipper. The next quarter or two, we will see big declines in economic activity, and also big layoffs all over the world.

[Lizard]

Grand Uber - here is a link to a related article from the September RBNZ Bulletin:
Financial Turmoil and Global Imbalances; the end of Bretton Woods II? (http://www.rbnz.govt.nz/research/bulletin/2007_2011/2008sep71_3hunt.pdf)

A fairly inconclusive article which labels the recent broader global economic and monetary arrangements "Bretton Woods II" and describes the current crisis as representing imbalances within that arrangement reaching their outer limits. Unfortunately, the article can't be anything but vague as to how the period of adjustment is likely to play out.

Here's an interesting chart from the article:
http://www.sharetrader.co.nz/picture.php?albumid=2&pictureid=63

[winner69]

March? I honestly have no clue. If I were to guess - I'd say above this point and probably around the long-run decline point that we've been seeing over the last year or so. It'll be a slow cautious rally with some heart rendering moments where people like me who focus on 7-year cycles will be asking if the information age is going to dramatically alter the cycle.

I came back heavily this week (like the naughty teenager spending the next few weeks allowance) due to the huge falls (basically on no new information) on monday and thursday that seemed to be blind panic and nothing else. There's going to be a bounce-back from the current position albeit probably a small/muted one.

For the macro-reasons I posted above, I feel this is likely to be the bottom or thereabouts between here and christmas but after that who knows. If Barak and his team focusses on the severe structural problems facing the US economy (and americans idiotic view of their place in the world) we may be entering a new age of american proposerity as Barak creates a vision to halt the bush-term declines. (i.e. I don't subscibe to any of the foolishness associated with 10 year plus stagnacy!)

The US economy is the bacterial infection that started this mess and the media have had a field day pointing at the pus oozing from the sores. However, by focussing on the acne all over the american face (and few outbreaks in other places), the media has missed that fact that the rest of the adoloesent body that is the 'new' world economy continues to grow and pack on muscle and become a more attractive shape. Barak's ability to deliver vision and make people feel better about themselves while making tougher longer-term adjustments may just be the pill that the US requires to mend its un-balanced nature. ;)

Amazing post belg

[Hoop]

Must admit (naughty I know but) the temptation is too great and I have been dabbling a little bit on down days last week picking up bits out of the rubble.

The question remains however as the thread says.. When to re-enter the market?

To be able to pick the bottom is a fluke, however not knowing the future one has to rely on the past happenings as reference and to wait for signals that occurred from previous bottoms to appear this time around.

There are many signals identified and many have been showing last week.

However it was a pure chance I turned on the TV this morning to see what the weather forecast was for.. (Ch98 sky) but it showed up CNBC sky ch95 and the topic was how long has this bear market got to go. This author chap Russell Napier thinks we are close to the bottom if this is a recession with a little inflation... but a word of caution a very small possibility that it is nowhere near the bottom if there is an outbreak of deflation which is the precursor to a depression.

So it seems we keep an eye on CPI's enter in on the bottom signals and if any deflation signs appear we should cash up and head for the hills.

Also Russell Napier's book Anatomy of the Bear is suddenly been noticed. From what I have been told, He has studied all the past bears and have noticed that they all have similar behaviours and give out signals at various stages of the cycle. At the moment his book is attracting interest because of the question "where is the bottom, are we close?"


I have yet to read the book but from a reviewer quote from the book (one bear bottom signals)

* Commodities Count. The end of commodity price declines also marked all 4 major equity lows, with copper playing a prominent role as it preceded or coincided with every equity rebound.


I have placed the full book review on the investing strategies and secular bear markets thread (http://www.sharetrader.co.nz/showthread.php?t=5171&page=10)

Has anyone read this book?

[Mick100]

Has anyone read this book?

Yes , I read it a couple of years ago

Certainly the most in depth study of bear markets I'V seen
He's done some serious research on the subject
Just wish I had taken it more seriously myself at the time of reading
Plan to re-read when I get time - I bet I understand the significance if his research next time I read it.

PS , hoop, Copper is showing no signs of reversing downtrend as yet
All metals are looking weak at the moment.
But if anyone has the qualifications to call an end to the bear It would be Russel Napier
One thing I remember from the book is that volumes were low when the bear ended
Share prices did not go down on more bad news

(marc Faber reccommended reading this book)
.

[Footsie]

Hoop
I watch your posts carefully as your accurately predicted this bear.

From listening to Russell Napier, the most likey scenario is that the coming 5-7 years will not be a period of "buy and hold"

however there will be significant rally opportunities within the overall secular bear market

I see that he says assuming we dont have delfaltion he actually beleives the market is close to bottom.

which would mean rally from this low, then a further collapse perhaps in 2-3 years and another recession.

before finally perhaps in 5 years, valuations have naturally drifted lower and the average investor hates stocks.

I suppose this means that the very cautious investor should probably continue to avoid equities for a few more years, perhaps longer, but the nimble could consider buying over the next few months knowing that just as the economy recovers they will have to look to exit

[Major von Tempsky]

I think you guys should give thanks first that we're even here - let alone considering "When to re-enter the market?"

It was a very near run thing weekend before last that we avoided, by the skin of our teeth, a worldwide 1930's Great Depression meltdown.
Equivalent to Britain's escape at the beginning of WW2 and the survival of civilisation in Europe under the invasion of the barbarians.

So, Hallelujah! Praise the Lord! first, before we get down to nitpicking and dealing with maybe the biggest recession since the Great Depression.

And I re-iterate, the king stocks are utilities that keep trading anywhere near normal levels and paying dividends, even if reduced ones.

[Placebo]

Unbelievable this. Here we have governments round the world rallying to underwrite banks. You would think banks, in return, would recognise the commitment and show some restraint. But what do we see? More of the irresponsible recklessness that got us in this mess in the first place:

$1.3b loss sparks bank probe

PARIS - French bank Caisse d'Epargne says it lost ¬600 million ($1.3 billion) trading derivatives amid last week's worldwide stock market collapse, prompting France's finance minister to order a probe of all French banks.

The mutual bank said the loss occurred in equity derivatives trading for its own account and was triggered by the "extreme market volatility" and the market crash during the week of October 6.

The Paris bank said the loss would not affect its financial solidity because it had capital of more than ¬20 billion and significant liquidity.

The bank said it had sanctioned those responsible and notified regulators.

"A team of five or six people went beyond management orders," a spokesman for Caisse d'Epargne said. A financial director had been suspended, while the other employees involved were "not currently working", he said.

The bank had decided in June to gradually shut down trading for its own account by February 2009 because the risks were considered too great. This process would now be speeded up and should be completed within days, the spokesman added.

President Nicolas Sarkozy, speaking in Quebec City where he was meeting Canadian Prime Minister Stephen Harper, said the loss showed banks were still taking risk too lightly.

"My feeling is that it is not acceptable, but all this merely shows is the lack of consequence, the lack of responsibility-taking."

Finance Minister Christine Lagarde has asked the banking regulator to investigate Caisse d'Epargne's trading operations and to verify that all banks are complying with rules on overseeing their market operations.

"I want the banking police, the Banking Commission, to check that all the surveillance systems are in place and that everyone is wide awake, that no one is falling asleep at the wheel. It's just too serious right now," she told France 2 television.

The loss comes at a delicate moment for the banks and the Government, which last week put in place a ¬360 billion rescue plan aimed at unblocking credit markets and ensuring the nation's banks do not collapse.

Caisse d'Epargne and another French mutual bank, Banque Populaire, have announced plans to merge. The tie-up would result in one of France's biggest banking groups, with ¬480 billion in deposits and more than 6 million customers.

- AP

[Hoop]

Hoop
I watch your posts carefully as your accurately predicted this bear.

From listening to Russell Napier, the most likey scenario is that the coming 5-7 years will not be a period of "buy and hold"

however there will be significant rally opportunities within the overall secular bear market

I see that he says assuming we dont have delfaltion he actually beleives the market is close to bottom.

which would mean rally from this low, then a further collapse perhaps in 2-3 years and another recession.

before finally perhaps in 5 years, valuations have naturally drifted lower and the average investor hates stocks.

I suppose this means that the very cautious investor should probably continue to avoid equities for a few more years, perhaps longer, but the nimble could consider buying over the next few months knowing that just as the economy recovers they will have to look to exit

Basically agree with your post.
Some reading between the Russell Napiers lines suggests he doesn't expect this bear to be the big one ala 1929..because the secular bear cycle which started in 2000- Russell expects to end in year 2014 (similar to the Crestmont Research figures) Has to be remembered that a secular Bear/bull cycle is not time related it has to do with rising PE Ratio trend (E= present day data not past data) from below 10. At the moment some researchers expect PE Ratio (real time ) of 10 to occur with S&P500 index reaching 600

So in theory..the secular bear dies today if S&P500 falls to approx 600 today.

So Russell expects a bottom to be near....and is covering his arrse if something catatrophic unexpected event happened.. which ironically nearly did a couple of weeks ago. I don't think many of the general public realised that their comfortable lifestyle was hanging by a thread back 2 weeks ago.

MVT was spot on with his wording...It was a very near run thing weekend before last that we avoided, by the skin of our teeth, a worldwide 1930's Great Depression meltdown.
Equivalent to Britain's escape at the beginning of WW2 and the survival of civilisation in Europe under the invasion of the barbarians.


We have to remember that we are talking America and not Asia + NZ as we weren't (until this crash?) in a secular bear cycle but a secular Bull cycle..so although America may not see their indices increasing above their previous highs by much until their Secular bear dies Est2014 ..it may be a different story down under in Asia. We will have to wait and see for earning figures to confirm if a secular cycle has changed down under, it may well have.



From listening to Russell Napier, the most likey scenario is that the coming 5-7 years will not be a period of "buy and hold"
True, in Americas equity market situation at least... .. that's because over the very long term in a secular Bear Cycle indexed investments such as superannuation funds etc remain static overall.
All the long term index gains are achieved during secular Bull market cycles.
Therefore a worker would be at a disadvantage if their working years fall within secular bear cycles. Different story for shorter term investors however, as some of the biggest gains occur in a small duration Bull Market happening within a secular bear cycle..but those gains are usually eroded again in the next bear downturn.


***I think at this moment...the best strategy we the investors, should be concentrating on, is finding good well managed companies that will survive..have good market share for its goods, little to no debt, had their shareprice trashed unjustifiably.. then wait (or commence trickle buying) for these near bottom signals (mentioned throught these posts) to emerge so to manage a re-entry as close as to the predicted bottom as possible....all the rest of this theorical secular stuff can be discussed about at a later date.. best to use the brainpower for researching companies (as FA is becoming more important) and re-entry timing :)***

[scamper]

is there a short answer to 'what is a "secular" bear?'
i have visions of it being the naughty cousin to a 'sacred bear'...

[peat]

scamper
I understand a secular bear to be one that shows itself only in real terms not necessarily nominal terms.... eg the Dow may hit new highs but if the currencly is a lot lower against other currencies or for instance gold then purchasing power could be considered lower and even if your shares are worth more you're not necessarily richer.

but Wiki says this (which isnt very illumnating to me)
A secular market trend is a long-term trend that usually lasts 5 to 25 years (but whose distribution is more or less bell shaped around 17 years, in the stock market), and consists of sequential 'primary' trends.
In a secular bull market the 'primary' bear markets have in the past almost always been shorter and less punishing than the 'primary' bull markets were rewarding. Each bear market has rarely (if ever) wiped out the real (inflation adjusted) gains of the previous bull markets, and the succeeding bull markets have usually made up for the real losses of any previous bear markets. This is one of the reasons why a secular market trend may be said to encompass the primary trends within it. The United States was described as being in a secular bull market from about 1983 to late 2007, with brief upsets including the crash of 1987 (http://en.wikipedia.org/wiki/Crash_of_1987) and the dot-com bust (http://en.wikipedia.org/wiki/Dot-com_bust) of 2000–2002.
In a secular bear market, the 'primary' bull markets are sometimes shorter than the 'primary' bear markets and rarely compensate for the real losses of the 'primary' bear markets occurring during this extended cycle. For example, in the 1966–82 secular bear market in stocks, there was hardly any nominal loss. But in real terms (http://home.earthlink.net/~intelligentbear/com-dj-infl.htm) the loss was devastating. (In the past most 'housing recessions' were of a slow nature, thereby allowing inflation to keep housing prices steady.) Another example of a secular bear market was seen in gold (http://en.wikipedia.org/wiki/Gold) during the period between January 1980 to June 1999. During this period the nominal gold price fell from a high of $850/oz ($30/g) to a low of $253/oz ($9/g),[4] (http://en.wikipedia.org/wiki/Bear_market#cite_note-3) and became part of the Great Commodities Depression (http://en.wikipedia.org/wiki/Great_Commodities_Depression). The S&P 500 (http://en.wikipedia.org/wiki/S%26P_500) experienced a secular bull market over a similar time period (~1982–2000).

[Hoop]

is there a short answer to 'what is a "secular" bear?'
i have visions of it being the naughty cousin to a 'sacred bear'...

Scamper ...answer : It all has to do with Index based Average PE Ratios.... Secular bear falling PE Ratios...... Secular Bull rising PE ratios

A picture is worth a thousand words (Note the 1987 crash) Also note chart up to 2006.. PE Ratio is now probably around 15 (present time E)

[skinny]

It is a given that GDP growth in 2008q4 will be terrible in most OECD countries - probably we'll see the worst figures since the 1st oil shock. Most forecasters are picking that 2009 will also be pretty tough and that we won't see meaningful recovery until 2010 or 2011 - consistent with Krugman's view. That said, it is still possible to paint a more upside scenario. Credit markets are starting to normalise (EURIBOR and LIBOR rates are grinding down while CDS rates for key financial institutions are a fraction of their peak levels). If this normalisation is accompanied by a resumption in lending - even if at much lower levels than prior to the crunch - a significant bounce in economic activity in 2009 will occur at some point. The issue is whether this will just be a technical bounce from the artificially depressed conditions caused by the credit crunch, or will it spark something more enduring....

That is the issue at any rate I have been grappling with in figuring out when to get in. On Shiller's trailing p/e measures markets are at the cheapest entry point since 1974 for the S&P, the DAX, the FTSE100 and the Topix! Then again, markets are only just over a year into their decline from peak levels in Sep 2007 whereas in history typically corrections last much longer and recovery does not begin until economic recovery occurs. Like many I suppose, my strategy is to ease in slowly. Certainly this is a terrific outcome for my kids kiwisaver plans if nothing else!!

[skinny]

Well shucks Belgarion, thanks. The day job I had until quite recently prevented me from commenting on just about anything to do with the NZ economy, plus equities were not particularly compelling. Needless to say, I'm feeling much more greedy now :-)