Black Monday

[twotic]

Twotic probably the wrong choice of words, what I mean by panic driven noise is in the context of continual media driven negativity causing both nervous holders and even the not so nervous to sell stocks.

OK, I see what you mean. What do you think about the medium to long term prospects of the Chinese economy? IMO that is the key question.

[ratkin]

Good that kiwis are so chipper, but seriously why is out market going up? By rights the DOW should have had a decent bounce today. Lets see if the Aussies are little more realistic

[Daytr]

Twotic, Chinese reduced demand greatly impacting commodity prices is completely over stated by the media and banks. Sure its softened/weakened, but the main driver has been over supply. The ego of bigger companies like Rio & BHP having a race to the bottom.
Easier to blame the Chinese than say they actually got it wrong. And when you think about it, its Western demand that has stalled, since 2008.
China's exponential consumption growth could never last and those who banked on it literally, were fools.
China still has a massive amount of building still to go on, but they don't need to do it all now and that's one of the differences between the last 15 years & the next. I was asked in 2011 at client function I was a speaker at, in regards these empty cities in China with a million apartments & if we should be worried. My answer was that they had 99 million more to build, but that doesn't mean it has to happen tomorrow. The Chinese think generationally, not just about the next election (well they don't need to do they!).

Couta, do you seriously believe the recent declines in the market are all "noise"? That seems like a very strange belief given very material events that have unfolded over recent times:
Devaluation of the Yuan
Sharp slowdown in manufacturing activity
GDP growth below governments targets (the slowest in 20+ years)
Private debt to GDP levels >200%
Huge declines in world commodity prices attributed greatly to reduced Chinese demand

I'm sorry mate, I just can't understand how you can possibly put all this down to noise (randomness).

[twotic]

Twotic, Chinese reduced demand reduced greatly affecting commodity prices is completely over stated by the media and banks. Sure its softened/weakened, but the main driver has been over supply. The ego of bigger companies like Rio & BHP having a race to the bottom.
Easier to blame the Chinese than say they actually got it wrong. And when you think about it its Western demand that has stalled, since 2008.
China's exponential consumption growth could never last and those who banked on it literally, were fools.
China still has a massive amount of building still to go on, but they don't need to do it all now and that's one of the differences between the last 15 years & the next. I was asked in 2011 at client function I was a speaker at in regards these empty cities in China with a million apartments & if we should be worried. My answer was that they had 99 million more to build, but that doesn't mean it has to happen tomorrow. The Chinese think generationally, not just about the next election (well they don't need to do they!).

I agree completely that over supply was/is a significant issue. Econ 101 with the old supply and demand graphs right! You are essentially just adding another point to the list I made though as to why none of this should be considered noise.

Not sure I agree with you regarding the implication that reduced western demand is a bigger driver than Chinese. Oil prices are a different kettle of fish and I agree that Chinese demand as been only a small factor driving prices down. On the other hand, agriculture, metals (this is the big one), & coal have been significantly affected via reduced Chinese demand. I believe the world bank recently cited reduced Chinese demand as the main driver for declines in metal prices.

Anyway I think you can go back and forth on the reasons why commodities prices are declining, but the point is a faltering Chinese economy will be damaging to equity markets and it appears as if we are seeing that play out.

[sb9]

Hilarious, only in China

http://www.smh.com.au/business/marke...25-gj7q9m.html

[Bobcat.]

When we think conversely, it can help us be more objective, with less emotional attachment to previous investment decisions:

If after 6 years of decline, equity markets had been gradually climbing in value all of this year, and then we witnessed three days of spiking upward, what would be a prudent observation and response?

Choose either...

A) the massive spikes have just signaled an end to a short-term bullish correction, with the market now pivoting back to its longer term bearish, sad and sorry way; or

B) the massive spikes are a pendulum swing confirming a momentum shift, that began subtly months ago, to a new bull market, meaning its now time, with vigour and optimism, to celebrate and accumulate.

If you think the former more likely, then given today's converse situation, you are likely to be bullish this week, and beyond.

If however you believe that scenario B is more likely, then sell, go short, trade intraday with any deadcat bounce (and there will be a couple), and/or stay sidelined waiting for the market to once again turn bullish...which of course could take many years.

[Hoop]

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.

Couta......... always keep at the back of your mind this......Stock prices are leading not lagging indicators.....Reported fundamentals are historic.

[Nasi Goreng]

I found this quite useful, I particularly like the part at the end which helps you to pick where the bottom of the market will be.

http://seekingalpha.com/article/3463...this-market-go

Its also interesting to see real estate as % of household wealth in US and China 27.9% vs 74.7%. I wonder what it is here?

[xafalcon]

Couta......... always keep at the back of your mind this......Stock prices are leading not lagging indicators.....Reported fundamentals are historic.

I thought stock prices were the markets interpretation of the majority opinion of likely future prospects given the circumstances and knowledge available at the time = average of all forward estimates, based on accepted facts & fallacies = best guess

[Cricketfan]

I thought stock prices were the markets interpretation of the majority opinion of likely future prospects given the circumstances and knowledge available at the time = average of all forward estimates, based on accepted facts & fallacies = best guess

If the market was rational.....