Black Monday

[trader_jackson]

Well it will be interesting to see how markets in Australasia react today, mainly Australia (NZ is to small and being mostly pessimists, and very good at talking ourselves into a recession, will probably open lower)

Selling in the US was probably as a result of traders getting nervous about how Chinese market (and Japan etc) will go... seems like people are selling shares because they're worried other people are selling shares (not necessarily because the fundamentals are dramatically worse than a month ago)

[couta1]

That makes it even worse than it appears. If indeed this is the first leg down of a bear market cycle, which it is looking likely, then you are in for a rude awakening and some serious capital destruction.

All will be revealed overnight tonight to see if this pattern continues or not. PS- Paper loss capital destruction is only therhetical unless you sell.

[winner69]

A lot of noise ....by the minute, by the hour, by the day

The real question is where will we be at, say, end of September

Today's noise either might have meant nothing or the big warning that the crash that has to happen sometime is started.

[PSE]

All will be revealed overnight tonight to see if this pattern continues or not. PS- Paper loss capital destruction is only therhetical unless you sell.

Can be a real loss if you pay too much or the company suffers a permanent unexpected decline.
No point waiting for newspaper stock to rebound.
Absolutely winner its all noise, wait 6 months then turn up as the ambulance at the bottom of the cliff. Hopefully the panic continues and provides some real bargains.

[NZSilver]

If the U.S. market increase followed by a late sell off to end lower + the last 2 consecutive days of large drops and the last 2 or so months of a slow decline dosnt ring alarm bells then I hope you are prepared to hold paper losses for a long time. You can never know what the future will bring but I think there is a high probability we are seeing the bear market taking hold resulting in a sustained downturn in capital markets. Don't put your head in the sand! Preserve at least a portion of your capital and reduce exposure to the current risk.

[Daytr]

I think there is a giant mis-read of the Chinese economy.
It has been changing gear now for about two years from an all out buy & build everything and anything economy to a more service based economy.
China has been the only economy that has kept the world financially afloat since 2008 and that is why it would be concerning if it too had a melt down.
I would suggest after wiping out most of the gains for the year, Chinese stocks are probably now a bargain.
But how to value them? Its murky at best.
There is a massive shift on what the 20th century was built on, oil and coal.
These wont be the fuels of the future, that is obvious, but there are companies, countries and people that are refusing to adapt and that will cause chaos. I remember seeing Peabody pay huge amounts for a coal company in Australia in 2011. It was so apparent to me that they were not only paying over the top price for pretty average assets, that instead of being a coal business, they needed to adapt into an energy business that included green energy, to diversify. Peabody are/were the largest listed coal miner in the world.
In 2011 their share price was USD72.70 at a peak, about the time they made the acquisition.
Their share price now is around $1.65 & was $1.05 only a few days ago.
This is the sort of destruction of wealth that will be associated with fossil fuels.
The debt associated with oil and coal is huge & the commercial banks have massive exposure.
I would suggest over a trillion dollars of debt (not all bank debt), let alone share holder value.
This rout has very little to do with China & a lot more to do with oil & the associated caused deflation.

[couta1]

Can be a real loss if you pay too much or the company suffers a permanent unexpected decline.
No point waiting for newspaper stock to rebound.
Absolutely winner its all noise, wait 6 months then turn up as the ambulance at the bottom of the cliff. Hopefully the panic continues and provides some real bargains.

I hear what your saying but companies with those sort of declines normally occur due to fundamental changes rather than panic driven noise like we are currently experiencing.

[Beagle]

If the U.S. market increase followed by a late sell off to end lower + the last 2 consecutive days of large drops and the last 2 or so months of a slow decline dosnt ring alarm bells then I hope you are prepared to hold paper losses for a long time. You can never know what the future will bring but I think there is a high probability we are seeing the bear market taking hold resulting in a sustained downturn in capital markets. Don't put your head in the sand! Preserve at least a portion of your capital and reduce exposure to the current risk.

Agreed. I called the small bounce in some markets yesterday a dead cat bounce and stand by that. If the cat isn't dead its very, very sick. Since the GFC world growth has ostensibly been built to a large extent on China's growth and surrounding growth in that region. Emerging markets are down ~25%. The bear is with us like it or not. Beware the bear...this one has claws and teeth IMO.

[Nasi Goreng]

Couta, I think there is a bit of sense in all strategies and they can all work.

I remember you saying that you owned TTK and SLI. I actually don't know anything about these companies or what they do but I did take a moment to look at their charts and they are dreadful. If it was my portfolio, these are exactly the sort of stocks I would now dump. I would hold on to the companies who are going to be bullet proof and stock price valuations may swing with the market. The market is trying to tell you something with these type of stock and the warning signs were there before any big sell off. I wouldn't be comfortable with a paper loss on these type of companies at all.

[NZSilver]

Daytr you posts have been great, thanks for sharing your thoughts. I agree coal has had a hard time over the last few years and is slowly getting pushed aside - partly by fossil fuels such as gas. Yep it will take a fair bit to see oil and its related products go though, it's immersed in every aspect of our lives as you would know - not just the the fuel to run cars but all our food we buy at the supermarkets literally contains molecules that were once molecules in fossil fuels - thanks to nitrogen fertilisers. Actually most of the nitrogen/carbon/hydrogen in everyone's body (making up mainly all your proteins) was once fossil fuels!