Is the worst over or is it still to come

[Dr_Who]

I do agree with you JB Murc in regards to the high debt level and the fact that most govt have a tendency to print too much money. This will be detrimental in the longer term for hyperinflation follow by a possible bigger crash. But in the meantime, we can enjoy the ride of the recovery thanks to the printing press. Just remember to hold some cash and get out before the party stops. The next crash will be the big one if global debt are not reduced significantly.

I have a different view in regards to China. I think the Chinese are maneuvering their economy perfectly. They have learnt from the trouble economies of Japan and Russia, not to let foreign powers intervene and not give in to pressure. The biggest concern with China right now is too much liquidity creating an internal asset bubble. They are in the process of queezing liquidity out of the system and slowing the engine down a notch. The main concern is that they slow it down too fast. I personally think that is not a concern. Unlike democratic society, the Chinese govt have the powers to make things move or not move very quickly.

[JBmurc]

I think they are wrong, China is making inroads into expanding its export markets. That will see their trade surplus as well as reserves plummet this year and next, followed by their exponential rise unless they can keep investing in third world countries. While the Gurus you follow keep blowing their "The end of world is nigh" horns, global political leaders seem to be working jointly to reflate assets and economy. While their solution may not be ideal, it is working. The US economy and world trade are recovering, and it is those who fail to see that these green shoots are strengthening that have got their "heads in sand" ...

The US economy has recovered because of the biggest increase in free money supply ever by the FED to the failed business models of the west.
An the Gurus I follow have got 90% of the predictions correct over the last 30yrs ---- sounds like your from the camp" it's different this time are world leaders are so much smarter"
I don't think the world is going end neither do any of the gurus I follow, they like myself are worried with the mass of easy money an huge debts that very few western countries seem to at all worry about(only recently had the US paid of all it's debt from Vietnam)
-the Total US Debt per Family is-$690,909 average pa income per US family-$61,968

Now if you take all household, corporate and government Debt to GDP Spain's debt ratio is 336.5% of GDP, a legacy of the credit binge that created the real-estate bubble and bust that is the root cause of the slump.

By comparison, the EU's total debt-to-GDP ratio is 258.2%, while it's 242.2% for the U.S. and 243.8% for Greece, according to ISI. (Greek consumers are relatively frugal, with household debt equal to just 61% of GDP, compared the American household debt of 95.7% of GDP.)

Please beacon explain to me how reflating assets and economy with even more debt is going help credit woes worldwide

worth to watch has the most important chart this century

http://click.icptrack.com/icp/relay....e03232010.html

[Phaedrus]

Is the worst over or is it still to come? Is this really the beginning of a long slow recovery?

Everyone has their own theory, but the reality is that no-one knows. No-one

I started buying shares based on broker recommendations around the market peak.

You are learning the hard way - just as most of us here did. Forget brokers - you are on your own in this and the sooner you realise that the better.

I have trouble selling my losses as I will crystalise them when I sell the shares

A loss is a loss - whether it is crystalised or not. We all make mistakes. The trick is to recognise them as soon as possible and quit them. If you don't take small losses, you WILL take big ones. Let your winners run and cut your losers.

I can't help thinking that there is worse to come.

You would not be alone in this, but look at what is happening right now. Markets are rising. This is a time to be in, not sitting on the sidelines waiting for a bottom that may not eventuate. There are people right here on ST that have missed out on this magnificent rally because they (not unreasonably) think there may be worse to come.

Should I cut my losses and wait for the next bottom on the share market?

Are any of the stocks you are holding not rising with the general market? Sell them and buy something that is.

I understand market timing is difficult at best but it could also be profitable if you get it right.

Aaron, you can't get it "right". Fortunately, you don't have to. All you have to do is be on the right side of major moves. Make sure you are in on the big moves up, and out of the big moves down. This is not complex or difficult to achieve and there are many ST threads devoted to this subject.

[beacon]

The US economy has recovered because of the biggest increase in free money supply ever by the FED to the failed business models of the west.

So you agree that things are getting better. I had the impression these "experts" kept harping about how we need to get into underground bunkers NOW. We were told to expect a W shaped recovery, and that only buying Bullion would be saviour. Maybe I misinterpreted these noble well-meaning 90% success track record Gurus as messengers of doom and gloom.

sounds like your from the camp" it's different this time are world leaders are so much smarter"

I am from the camp "Good to see the movers and shakers working together to tackle a crisis made global as well as worse by media". I hope we have learnt something from our past mistakes

the Total US Debt per Family is-$690,909 average pa income per US family-$61,968 ....

That seems inconsistent with your later statistics "debt-to-GDP ratio is 242.2% for the U.S." and "American household debt is 95.7% of GDP" but I generally agree that the western world is staring at the aftermath of its credit binge. So, what solution would you propose to rectify this situation?

Please beacon explain to me how reflating assets and economy with even more debt is going help credit woes worldwide

Rather than providing explanations, which are easily dismissed as speculation and theories, I'll point you to a factual observation. The sharemarkets across the globe rallied in the last 12 months. What do you think a rallying capital market does to ease credit flows? If you must still have an explanation, here's one you offered in the same post you posed this question "US economy has recovered because of the biggest increase in free money supply ever by the FED"

[Aaron]

Which are the threads that discuss whether the next major moves are up or down.
I guess I am tending to believe the next swing is down due to private sector debt problems in the US & UK (western world) causing the last big drop and the solution to this problem being governments taking over this debt and creating more debt and running deficits and printing money to prop things up. It doesn't sound like a long term solution to over consumption based on an increasing spiral of asset price inflation pushed up by increasing debt resulting in increasing asset prices etc.
I would have thought asset deflation and debt reduction would be the answer but I guess the US needs inflation to make their debts relatively smaller over time.
I have to admit I have no clue as to how the global economy and money supply work but I will stick to reading a lot of different opinions and try and make up my own mind.

[Phaedrus]

Which are the threads that discuss whether the next major moves are up or down?

Wrong question. Any such threads must of course be no more than pure speculation. What you need is threads that discuss what the market is doing right now. Apart from the fact that it is impossible to predict the future, there is no need to even attempt it. All you have to do is make sure that you are positioned appropriately within the current market.

[Aaron]

How can you position yourself within the current market if you aren't looking to the future. No-one can see the future but you can form an opinion based on what you read and hear. Wouldn't I be appropriately placed sitting on the fence waiting for the next possible/likely fall within the next 12 months. I am guessing you trade and follow shares regularly so would be in or out quickly if there are any big swings up or down. I don't follow the markets daily and am hoping to be a long term investor buying good companies at the right price. Although the stockbrokers providing me that advice would appear to have been a little too optimistic two years ago. If I thought some sort of crisis might trigger an overall market fall like we have seen i could be buying in 10-50% cheaper in twelve months than now. I could be wrong and the recovery is well under way. probably in twelve months time I will lose patience or panick and buy at the next peak but I can't help thinking if the GFC was the worst financial event since the great depression it won't play out in the exact same way due to governments actions but those actions as I understand it were radical and large its quite possible no one really knows what ongoing changes it will create but theres a good chance it will spook everyone and send prices down in the near future.

[Phaedrus]

How can you position yourself within the current market if you aren't looking to the future?

By making sure that you are in the market when it is rising and out when it is falling. You don't know what the future holds, and you don't need to. Your actions simply need to be in synch with the market. The only certainty is that uptrends (and downtrends) do not last for ever.

No-one can see the future but you can form an opinion based on what you read and hear.

Sure you can - but it is not necessary to have such an opinion in order to invest profitably. What I am describing here is a reactive approach rather than a predictive one.

Wouldn't I be appropriately placed sitting on the fence waiting for the next possible/likely fall within the next 12 months?

There are times when sitting on the fence really is the best place to be - when the market is falling, for example. There are also advantages in fence-sitting if the market has no clear trend..

I am guessing you trade and follow shares regularly so would be in or out quickly if there are any big swings up or down.

In NZ, my activities would be best described as those of an "active investor". I buy NZ stocks for their high dividend yields and hold them for periods ranging from months to many years. I trade other markets more actively.

I don't follow the markets daily and am hoping to be a long term investor buying good companies at the right price.

Buying at the "right price" is not enough. You want to be buying at the right time too. That would be when the stock has fallen and then started to rise again.You don't have to follow the market daily to identify the best time to buy. A quick look once every week or so should be quite sufficient.

The stockbrokers providing me that advice would appear to have been a little too optimistic two years ago.

This is an example of badly mistimed entries. There may well have been nothing fundamentally wrong with the recommendations you were getting - what was wrong was the abysmal timing. Two years ago the NZSX50 was in a very clear well defined downtrend - no time to be buying anything.

The attached NZSX50 chart shows how simply a market can be monitored. It features 3 indicators - trendlines, a moving average and an oscillator. You can see that these all kept you in the market for 5 years when it was rising and got you out as soon as the uptrend weakened and before the market had fallen very far. Similarly, they signalled when to re-enter the market. These are by way of illustration only and are only a very small selection from many indicators that did esssentially the same thing. There are entire threads are devoted to this topic, such as this one.

[Aaron]

Thanks for the information. About the chart. The NZSX50 Index chart is the value of the 50 largest companies on the NZ exchange. I guess this is number of shares times market price of shares somehow weighted to form the NZSX50. The top graph I am not sure about what is this. Is it the volume of shares being traded with 100 being the average daily transactions.

I would have thought volume would increase as the decline increases as everyone tries to sell out but I guess if its the value of the trades rather than the quantity of shares it would decline as prices plummet.

Where would you get charts like this from. Do you rely solely on technical analysis for your trading or do you also use fundamental analysis when choosing a company to invest in.

[Phaedrus]

The top graph - I am not sure about what is this. Is it the volume of shares being traded with 100 being the average daily transactions?

It is the Momentum Oscillator. The momentum of a security is the ratio of today's price compared to the price x-time periods ago.

Where would you get charts like this from?

Mine are prepared using MetaStock software, but most any charting package can produce charts like these.

Do you rely solely on technical analysis for your trading or do you also use fundamental analysis when choosing a company to invest in?

In NZ I generally use fundamental analysis to select companies to invest in, using TA to time all entries and exits.