# Correction or crash?



## megla (18 January 2008)

I would be interested to know what other ASF'ers believe we are experiencing - could one of the smart people put up a poll with the options:

Correction
Crash

Thanks


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## mayk (18 January 2008)

correction cum-mini-crash...


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## Timmy (18 January 2008)

If there is going to be a poll the definitions need to be correct first.

A correction is when you lose money.
A crash is when I lose money.


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## white_goodman (18 January 2008)

im crying atm lol it hasnt been a good week or so


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## justjohn (18 January 2008)

All the smart people haven't logged on  and have gone out for the day:


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## Struzball (18 January 2008)

white_goodman said:


> im crying atm lol it hasnt been a good week or so




It's only money


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## white_goodman (18 January 2008)

Struzball said:


> It's only money




yeh but as a full time student all my savings are in shares, tho in truth im in it for long term not short term... just trying to get as much cash atm as posssible for when the market bottoms out and starts rising again


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## Rainmaker2000 (18 January 2008)

For some stocks, it's certainly a crash.......and it is getting very ugly for some very, very good businesses.......heaps of value being created.......Take a business like Just Group.....it is for all purposes firing on all cylinders but consumer descretionary not flavour of the month and boom.......5.40 now below $4.........I thought I made a bird selling last year round 4.9 as I watched it go up, but valuation always finds its level........there are some heavy losses out there, some justified, some not


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## wayneL (18 January 2008)

Timmy said:


> If there is going to be a poll the definitions need to be correct first.
> 
> A correction is when you lose money.
> A crash is when I lose money.



Haha! This is the best definition of a crash I've ever heard.


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## Sean K (18 January 2008)

What is a crash? 20% drop?

Have a few % to go yet. Maybe <5000 is crash. 

Some value emerging you'd maybe consider.

Those who have held some in reserve may find some opportunities in the coming days/weeks/months...


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## Agentm (18 January 2008)

kennas said:


> What is a crash? 20% drop?
> 
> Have a few % to go yet. Maybe <5000 is crash.
> 
> ...





doing exactly that..  plenty of nice prices alright..


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## YOUNG_TRADER (18 January 2008)

Timmy said:


> If there is going to be a poll the definitions need to be correct first.
> 
> A correction is when you lose money.
> A crash is when I lose money.




lol I like that


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## ROE (18 January 2008)

Keep it down.. I don't mind it going down to 5000 
I got cash, I'm a bear market buyer


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## gdaf (18 January 2008)

August was more like a crash - especially on that day where the ASX freaked out and hit something like 5500 for a period. What's happening here is that the markets are pricing in negative world growth... this is completely unjustified IMO as the emerging markets will power ahead this year, China, India and Russia, and Brazil's GDP growth will continue to be profitable to our resource sector, which will have flow on effects to domestic housing, retail, and other markets. The same pattern as in previous years, except that the US will be a dark cloud lingering over us - so perhaps more frequent periods of volatility. Last year we had February and August, this year may be January (that's in the bag!!! , May, August and November (who the hell knows???) . Even if the markets returned to Dec 07 levels, that would represent a nice gain from here.


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## Logique (18 January 2008)

Crash or correction? 

IF we hit XAO 5000 the dividend % payouts on stocks will be enormous, must entice some buying at that point.  If it goes < 5000 yes I would think that's a crash. 

If this is an unwinding of the multi-year bull market, back to long term trend (about 4000 - 4500 - chartists?), then it could be thought of as a correction back to established uptrend.  However I'm not convinced it would completely unwind to that extent.


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## ROE (18 January 2008)

Timmy said:


> If there is going to be a poll the definitions need to be correct first.
> 
> A correction is when you lose money.
> A crash is when I lose money.




Copy quote from President Harry Truman  I'm afraid.

It's a recession when your neighbor loses his job; it's a depression when you lose your own. — Harry Truman

I just happen to read a lot on historic stuff and especially financial market so when history repeat itself I'm there to benefit


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## Gundini (18 January 2008)

It is not easy to answer your question.

Obviously we are seeing a correction, and we are heading for a crash in percentage terms. I would suggest we are watching a gradual crash unfold.

In my opinion we should see some sideways consolidation around the 11000 mark on the Dow. 

The next question should be, are we in a Bear market?

For mine, I think the US may well be entering a Bear market, but I believe we will find a bottom a little sooner. The biggest risk for our market is if the credit crunch starts to drastically bite here. I know it is biting me, and I am aware of plenty of people living off credit cards and massively geared. I seriously think our market will find a bottom around the 5000 mark. Whether it goes sideways or up from there is the gozillion dollar question.


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## Tafisa (18 January 2008)

Hello everybody;

Here in Spain and Europe, were I am from, we saw a beautifull crash. I really never saw something so ugly since 2000.

01:48 AM in Spain looking your market and waiting to see Nikkey.

Good luck there!!!

Eddie in Barcelona


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## Timmy (18 January 2008)

ROE said:


> Copy quote from President Harry Truman  I'm afraid.




Actually not a copy ... and the inspiration came from Mel Brooks..."Tragedy is when I cut my finger. Comedy is when you walk into an open sewer and die."


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## dhukka (18 January 2008)

gdaf said:


> August was more like a crash - especially on that day where the ASX freaked out and hit something like 5500 for a period.




Agreed, there was significantly more panic on August 16th, XAO was down more than 300 pts at one stage. 



> What's happening here is that the markets are pricing in negative world growth... this is completely unjustified IMO as the emerging markets will power ahead this year,




I doubt the market is pricing in negative growth for the BRIC countries. I have not heard, even from the most bearish commentators that anyone is forecasting that China could go from an *11%* growth rate to negative. However keep in mind if China's growth rate were to fall to say *6%* that growth slowdown would be akin to a recession.   



> China, India and Russia, and Brazil's GDP growth will continue to be profitable to our resource sector, which will have flow on effects to domestic housing, retail, and other markets.




What does this actually mean? Quantify profitable. Do you mean more profitable than in previous years, about the same? I've mentioned a number of times on other threads that mining company profits have been falling for several quarters. In a global slowdown (not recession) do the greater risks lie to the upside or the downside for mining company profits?


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## Awesomandy (18 January 2008)

dhukka said:


> Agreed, there was significantly more panic on August 16th, XAO was down more than 300 pts at one stage.




I think we should keep in mind that, on that day, the futures exchange was closed for a period of time for, er, "maintanence", so fund managers had to short on the physical exchange to manage their risks. When the exchange opened again, XAO made its way back up to only around 120 points down for the day.


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## adobee (18 January 2008)

I am surprised the banks are doing so well.. 

I think correction.. some dodgy reforms by bush in next week will cause a bounce back.. I would be buying but I am already fully in..


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## megla (18 January 2008)

Well, I've been holding on to some dogs since the last 'correction' (crash for me) watching them painfully crawl back, almost to break even point and then only to watch them dissapear again. 

Good thing I've got more patience than money! Wish I had some spare capital to dive in now - so many bargans !!

Still - swings and roundabouts

Someone should do a poll to find out paper losses again!


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## wildmanchris (18 January 2008)

Today has been a great bargin hunting day - leaving a little more in the cash account just in case..........


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## Fung (18 January 2008)

Suffered huge losses on BHP and ZFX, I am going to prepare more cash and sit still til I find a good time to go back in.


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## radar23 (18 January 2008)

Have we not already passed the third stage of the bull market, and now running into a change of trend?


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## chewy (18 January 2008)

I think that is the more important question - is this a correction within a continuing bull run for Aus or is this the beginning of a bear market? I'd like to think the bull still has legs from a fundamentals point of view anyway - but I guess sentiment is the more important thing and that isnt so good.


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## Nyden (18 January 2008)

chewy said:


> I think that is the more important question - is this a correction within a continuing bull run for Aus or is this the beginning of a bear market? I'd like to think the bull still has legs from a fundamentals point of view anyway - but I guess sentiment is the more important thing and that isnt so good.




Yes, but sentiment is very easily swayed. A week of positive news could set us up for weeks of gains. I'm still undecided as to which path I'm taking in this market though


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## wintermute (18 January 2008)

Personally I don't think we have seen the exhaustion peak that I would anticipate preceding a crash.  I think this is the first major correction we have had in about 6 years though. 

Have a look at the quarterly chart for the XAO attached.  the market had been in oversold territory for about 2 years It's finally let of some steam. whether it is going to continue down or not is anyones guess, and largely depends IMO on how blindly the Australian investment community at large follows the lead of the US. 

Looking instead at the daily XAO chart it is now in very oversold territory so I am expecting at a minimum a dead cat bounce next week. Whether today was the bottom or not I'm not sure... I suspect it will rally then drop somewhat lower than today and then we will see it on it's merry way back up again when the world doesn't end just because of the flushing sound coming from the US...   Of course as with any real correction (I don't consider the other ones earlier this year to have been real ones, the recovery was too quick IMO (unfortunately not the case for some of my holdings) there will probably be a period of high volatility following for a number of months, but if you are a trader with nerves of steel it may be an excellent opportunity to make some money. 

Anyway that's my 2c worth for the moment!


note I would have preffered a log scale on this chart, but bigcharts won't do a candlestick chart with log scale, and IC won't do quarterly's....

Tony.


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## bunyip (18 January 2008)

Agentm said:


> doing exactly that..  plenty of nice prices alright..




Plenty of nice prices? 
Don't be fooled.....the 'nice' prices on offer at present mightn't look too nice a bit further down the track if the market keeps dropping. 

The smart investors will wait for the bear market to end and the next bull market to get underway, before they buy. 
It's a difficult and risky business trying to be a bull in a bear market. Far better to be a bull in a BULL market, particularly if you know something about trend identification and can time your buying early in a new uptrend.

Better still, the really savvy investor will be shorting the hell out of this market at present, then will turn bullish only after the overall market finally turns bullish.

Bunyip


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## jman2007 (18 January 2008)

wintermute said:


> personally I don't think we have seen the exhaustion peak that I would anticipate preceding a crash.  I think this is the first major correction we have had in about 6 years though.
> 
> Have a look at the quarterly chart for the XAO attached.  the market had been in oversold territory for about 2 years It's finally let of some steam. whether it is going to continue down or not is anyones guess, and largely depends IMO on how blindly the Australian investment community at large follows the lead of the US.
> 
> ...




Well said Tony,

Fundamentally, I support most of what you have said.  I believe the ASX's current trend to consistently take its lead from Wall St is starting to wear a bit thin.  The panic selling in the first 15 minutes of this morning, was well...just panic selling!  Investors are looking for any excuse to drop shares at any price and run like hell for the hills.  I don't believe the world is coming to an end, and I also don't believe we will see this irrational behaviour continue forever.

Granted, if we have entered bear market territory, I expect to 2008 to be a somewhat choppy year of trading, with numerous "failed rallies" as investors pour back into stocks, only to desert again in droves at the slightest sign of trouble.

I also agree there are some fantastic bargains out there atm, personally I'd be putting away some cash under my mattress for this purpose.  Look how quickly the market rebounded after the Sept07 selloff to new all-time-highs.  I believe our economy is sufficiently de-coupled from US sub-prime woes to keep investors interested, and in addition China and India will have significant ability to "soak up" the damage done due to sub-prime.

jman


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## krisbarry (18 January 2008)

bunyip said:


> The smart investors will wait for the bear market to end and the next bull market to get underway, before they buy.




A 100 point buy-back this afternoon and a 14% correction from Nov. top till now suggests we have hit the bottom.  The smart investors get in at ground floor, many may have entered today


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## wayneL (18 January 2008)

Stop_the_clock said:


> A 100 point buy-back this afternoon and a 14% correction from Nov. top till now suggests we have hit the bottom.  The smart investors get in at ground floor, many may have entered today



Better hope nobody presses the button for the basement then.


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## Gundini (18 January 2008)

wayneL said:


> Better hope nobody presses the button for the basement then.




I am not falling for it either...


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## ROE (18 January 2008)

wayneL said:


> Better hope nobody presses the button for the basement then.




and many more has face the margin call in the last 10 days


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## dhukka (18 January 2008)

Until today, the XAO had only fallen *10* days in a row, *once* in the last *25* years, so I think the odds are pretty good that we will see at least a couple of green days next week.


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## Gundini (18 January 2008)

dhukka said:


> Until today, the XAO had only fallen *10* days in a row, *once* in the last *25* years, so I think the odds are pretty good that we will see at least a couple of green days next week.




Green days I am sure, but return of the Bull I doubt!

Opportunity to bail with a little less pain more likely...


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## nomore4s (18 January 2008)

Stop_the_clock said:


> A 100 point buy-back this afternoon and a 14% correction from Nov. top till now suggests we have hit the bottom.  The smart investors get in at ground floor, many may have entered today




A bit early to be calling a bottom I would think.

While I think we will get some sort of rally in the next week or so I seriously doubt it will be the bottom or the last time we test the 5500-5700 area at the very least.
The bar from 18.12.07 has a lot of similarities to todays bar and look at the weak rally we had afterwards.


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## Smurf1976 (18 January 2008)

Gundini said:


> It is not easy to answer your question.
> 
> Obviously we are seeing a correction, and we are heading for a crash in percentage terms. I would suggest we are watching a gradual crash unfold.
> 
> ...



IMO we're in a bear market and have been for longer than most acknowledge. If you look at the Dow then, adjusted for inflation, it's been an outright dud investment as a buy and hold for the past *nine years*.

Yep, that's a bear market and we're still in it (talking about the US here). All the recent rally etc is simply the ongoing bear that dates at least as far back as the dot.com crash. A basically sideways market where you lose your money due to inflation.

Either trade in and out or alternatively buy and hold something that isn't in a bear trend.


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## ithatheekret (18 January 2008)

ROE said:


> and many more has face the margin call in the last 10 days




I like the tag R.O.E. must be 20 years since I saw that written anywhere appropriately . I think that's the heading for the next investment boom ROE .


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## Miner (18 January 2008)

nomore4s said:


> A bit early to be calling a bottom I would think.
> 
> While I think we will get some sort of rally in the next week or so I seriously doubt it will be the bottom or the last time we test the 5500-5700 area at the very least.
> The bar from 18.12.07 has a lot of similarities to todays bar and look at the weak rally we had afterwards.




IMO it is a crash. The prices have gone down about 15% in last few weeks. Probably the down fall is worse than 1987 crash. Things are different now so no one is calling a recession but economy fall, constant correction but not crash, not murder but wilful fatal damage- all jargonistics. No one has said so far in intellecutal forums - what are the signs of a crash ? Closure of stock exchange ? If Citi Gold, Centro and similar others are not failed businesses then what need to do more to call a business failed.

Any way a matter of opinion 

Regards


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## Kauri (18 January 2008)

only joking... really...  :couch   


Cheers
..........Kauri


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## cordelia (18 January 2008)

ithatheekret said:


> I like the tag R.O.E. must be 20 years since I saw that written anywhere appropriately . I think that's the heading for the next investment boom ROE .




Personally I think in this market you have to trade in and out over a short term. Its too risky holding stocks over a long period of time. its fine saying they will recover but how long will it take and all the time it takes your money is tied up just waiting to return to levels where you break even. Better to cut your losses and get your cash working for you on another stock. I have changed my trading strategy completely over the last month. In and out over a short time..smaller profits but more of them...same mentality as the $2 shop


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## cordelia (18 January 2008)

Miner said:


> IMO it is a crash. The prices have gone down about 15% in last few weeks. Probably the down fall is worse than 1987 crash. Things are different now so no one is calling a recession but economy fall, constant correction but not crash, not murder but wilful fatal damage- all jargonistics. No one has said so far in intellecutal forums - what are the signs of a crash ? Closure of stock exchange ? If Citi Gold, Centro and similar others are not failed businesses then what need to do more to call a business failed.
> 
> Any way a matter of opinion
> 
> Regards




Interesting you should say that because last night on the news it was mentioned that on the day of the 1987 crash the dow fell 1100 points and that whilst we have had no such sudden fall in our market since then our market has fallen steadily since November 07 a total of 1000 points. same decline but less dramatic.

I think it is important to recognise that our world is very different from 1987. We have the Internet which has completely changed how people trade and the access  to information that is available to the general public.


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## bunyip (19 January 2008)

Miner said:


> IMO it is a crash. The prices have gone down about 15% in last few weeks. Probably the down fall is worse than 1987 crash. Things are different now so no one is calling a recession but economy fall, constant correction but not crash, not murder but wilful fatal damage- all jargonistics. No one has said so far in intellecutal forums - what are the signs of a crash ? Closure of stock exchange ? If Citi Gold, Centro and similar others are not failed businesses then what need to do more to call a business failed.
> 
> Any way a matter of opinion
> 
> Regards




It doesn't even come close to the 87 crash which fell 25% in one day and 50% overall.
Whether or not we call it a crash is irrelevant....it's a bear market and as Wayne pointed out, it's business as usual for technical traders who have tremendous profit opportunities available to them by shorting stocks, or using put options.

Bunyip


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## bunyip (19 January 2008)

cordelia said:


> Interesting you should say that because last night on the news it was mentioned that on the day of the 1987 crash the dow fell 1100 points and that whilst we have had no such sudden fall in our market since then our market has fallen steadily since November 07 a total of 1000 points. same decline but less dramatic.
> 
> I think it is important to recognise that our world is very different from 1987. We have the Internet which has completely changed how people trade and the access  to information that is available to the general public.




If we're going to compare this slump to the 87 slump then we need to look at percentages, not points. In relative terms, a 1000 point drop in the current market is much smaller than a 1000 point drop back in 87.
Nevertheless, the charts clearly show that this is a bear market (progressively lower peaks and troughs, price is well below the 200 day moving average, which is widely regarded by professional and institutional traders as the benchmark for identifying bull and bear markets).

Bunyip


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## Awesomandy (19 January 2008)

Kauri said:


> only joking... really...  :couch




I like that one. 



bunyip said:


> as Wayne pointed out, it's business as usual for technical traders who have tremendous profit opportunities available to them by shorting stocks, or using put options.




I agree. Good traders make money from both sides of the market. As long as it moves, there's money to be made. (-and lost as well, but let's not talk about that one).

I think this is a good time for the long term investors as well. I haven't done much research on this, but it seems to me that, generall, high quality shares that were oversold in past corrections/crashes would recover relatively much quicker than the shares of the companies that had weaker fundamentals. In a strong bull market like the one we had recently, a lot of shares went up, so stock picking didn't really matter too much, as there were still money to be made. Now, I can see that picking good stocks will be much more important, as this will be the difference of making money or losing money in the medium/long term for investors. As I've said earlier, now that the markets have dropped almost 20% from top to bottom, it is almost time to start re-aligning long term portfolios for the next market phase.


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## arminius (19 January 2008)

of course lose comparisons to the past is problematic, simply because of india, china etc driving the global dollar. industrialisation on this scale has simply never happened before. 
buy in gloom, sell in boom. 
gee its gloomy at the mo.


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## Smurf1976 (19 January 2008)

cordelia said:


> I think it is important to recognise that our world is very different from 1987. We have the Internet which has completely changed how people trade and the access  to information that is available to the general public.



Also worth considering who is in the market in 2008 versus 1987.

Most people didn't own shares in 1987. For that matter, most didn't know how they would actually go about buying shares and didn't have a clue what a broker did other than it being "something to do with the share market".

Rich people, institutions and a very small percentage of the general public, many of them no doubt having some sort of formal financial education, owned shares in 1987. Those and proverbial aunt who was left some BHP shares and had in the back of their mind that they'd ask the local bank manager for advice on how to go about selling the shares if they needed the money.

1987 - most people kept their savings in banks.

2008 - people are more likely to own shares in a bank than keep their life savings in one.

IMO that's a rather significant difference overall. A lot more non-financially educated people own shares now. And they know more about how to use the computer to buy/sell than they do about the actual shares or finance in general.

If we do get a real crash then IMO there will be two key features. Firstly, the actual crash. Secondly, the brokers and quite likely the ISP's as well go down (in a technical computer sense) as literally millions of Australians all try to log into their accounts at the same time. Very few will actually get to place their orders. Even fewer will actually sell their shares at _any_ price.

All happened before of course. Last time though in 1929 it was people rushing physically to the stock exchange. Now they've got a fancy communications system to crash as well as the market.

As for the actual martket though, I'm a long term investor based on fundamentals. In the case of oil stocks for example (of which I hold plenty), there hasn't been a major discovery or technological breakthrough to change the long term fundamentals that at potential demand exceeds supply and the gap continues to widen. A recession may slow demand growth but even the Great Depression wasn't anywhere near bad enough to actually send oil demand backwards - indeed it was a period of strong growth bar one or two years. Hence I won't be selling.

Long term, Smurf's prediction is pretty simple. We get a deflation scare of sorts in 2008 - looks like it will at least partly involve the stock markets. Then the central banks step in and do what they do best - inflate, inflate and inflate some more. Cash isn't as safe as many may think IMO for that reason.


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## explod (19 January 2008)

arminius said:


> of course lose comparisons to the past is problematic, simply because of india, china etc driving the global dollar. industrialisation on this scale has simply never happened before.
> buy in gloom, sell in boom.
> gee its gloomy at the mo.




Depends on the outlook, "buy in gloom..." is an adage based on good sense, and there are many angles of course.  My take:-

I was very happy to snap up Oxiana yeserday when in my view it was really oversold.   Over night gold has firmed a bit and copper, in which there is a huge world shortage, went up 3.4% overnight also.   With needs for electric motors in alternative energy and continued high tech developments in the exapansions of India and China, OXR has to be one of the very best on the ASX.  I am sure there are many others that one can find.   

So where is the gloom.  For the attentive I can only see opportunity.

However I do hate the fact that many people will suffer greatly from the overall downturns.


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## Nyden (19 January 2008)

explod said:


> Depends on the outlook, "buy in gloom..." is an adage based on good sense, and there are many angles of course.  My take:-
> 
> I was very happy to snap up Oxiana yeserday when in my view it was really oversold.   Over night gold has firmed a bit and copper, in which there is a huge world shortage, went up 3.4% overnight also.   With needs for electric motors in alternative energy and continued high tech developments in the exapansions of India and China, OXR has to be one of the very best on the ASX.  I am sure there are many others that one can find.
> 
> ...




Sure hope you're right there Explod, the downturn on the OX over the last few days has put a dent in my pocket. Well, my paper-pocket.


This 'crash / correction' just doesn't feel sharp enough to be a crash, it's too spread out. I don't know what exactly this is, but I don't believe it to be a crash.


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## explod (19 January 2008)

Nyden said:


> Sure hope you're right there Explod, the downturn on the OX over the last few days has put a dent in my pocket. Well, my paper-pocket.
> 
> 
> This 'crash / correction' just doesn't feel sharp enough to be a crash, it's too spread out. I don't know what exactly this is, but I don't believe it to be a crash.





I missquoted copper, it rose by 1.74% overnight, it was nikel that went up 3.43%, had that in my head as it supports my following of JRV


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## mfp (19 January 2008)

Stop_the_clock said:


> A 100 point buy-back this afternoon and a 14% correction from Nov. top till now suggests we have hit the bottom.  The smart investors get in at ground floor, many may have entered today




Problem is they pressed the basement button. Instead of getting the 200 point rally on the DOW that they expected, it tanked again.


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## Scuba (19 January 2008)

Being so inexperienced I wouldn't hazard a guess, but doesnt a 100 period SMA crossing down through a 200 period SMA on a one year chart (need to select one year) signify the need for a parachute or abseiling gear?


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## M34N (19 January 2008)

mfp said:


> Problem is they pressed the basement button. Instead of getting the 200 point rally on the DOW that they expected, it tanked again.



Exactly, futures here now show -75, but to be fair, most falls should be limited to the banks/financials who did spectacularly well to recover on Friday, resource side should do better with Rio takeover rumours and higher commodities, and the general consensus they may have been oversold on Friday.

But with the market the way it is, I wouldn't rule out resources going down!


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## Awesomandy (19 January 2008)

M34N said:


> Exactly, futures here now show -75, but to be fair, most falls should be limited to the banks/financials who did spectacularly well to recover on Friday, resource side should do better with Rio takeover rumours and higher commodities, and the general consensus they may have been oversold on Friday.
> 
> But with the market the way it is, I wouldn't rule out resources going down!




I think you are right. Although, a couple of days ago, I told my work mates that, if I could, I would go long on the resources, and short the financials as a hedging strategy. If I did that, I would've gone bankrupt on Thursday, and then bankrupt for the 2nd time yesterday.


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## ithatheekret (19 January 2008)

cordelia said:


> Personally I think in this market you have to trade in and out over a short term. Its too risky holding stocks over a long period of time. its fine saying they will recover but how long will it take and all the time it takes your money is tied up just waiting to return to levels where you break even. Better to cut your losses and get your cash working for you on another stock. I have changed my trading strategy completely over the last month. In and out over a short time..smaller profits but more of them...same mentality as the $2 shop






Oh yes I agree Cordelia , the ROE mention was directed at banks , but it has been decades since I last saw it mentioned anywhere , to see it as a username , sparked my funny bone off . 

On the other hand I have been buying certain stocks at certain levels and they have kept the faith and stayed within an impressive range during the downturn . I mentiomed yesterday that at the end of the day we would see which blue chips are for real and not hiding behind a blue rinse .

I stand by that , and have put my money where my mouth is , so to speak , after all it's no use having an idea without acting on it . It all depends on your plan I suppose . Just don't let anything other than fact or logic interfere with your game plan .


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## blablabla (19 January 2008)

Is this a correction or a bear market or a crash? 

Can't be a crash, because the Chinese economy hasn't shown any sign at all of shutting down. 

Definitely a correction of some sort. Possibly the reason this correction is rolling differently from previous recent corrections is that the market has changed from bull to bear. In other words, this is a downwards correction at the start of a bear market.

Electronic trading has the potential to cause great volatility as traders react to news, sentiment and market movements. Add the potentially volatile ingredients of the new generation of online traders to the uncertainties of a bull/bear changeover correction and the result is uncharted waters.

Whatever the cause, Friday's market action was weird. The market tanked but the big banks soared. The only predictable thing in this market is unpredictability. Gotta agree with Cordelia, short term is the way to go.


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## Real1ty (19 January 2008)

blablabla said:


> Is this a correction or a bear market or a crash?
> 
> Can't be a crash, because the Chinese economy hasn't shown any sign at all of shutting down.






> China is starting to gain control of its turbocharged economy, just as a U.S. slowdown raises the risks of doing so.
> 
> A narrowing trade surplus and declining money-supply growth are among the first signs that the world's fourth-largest economy is pulling back from its fastest expansion in 13 years. The government has raised interest rates six times in a year, restricted credit, frozen some prices and let the currency appreciate to damp growth and inflation.
> 
> ...






> China's trade surplus narrowed in December and money-supply growth dwindled, signaling that the fastest economic expansion in 13 years may have peaked.
> 
> The trade surplus shrank to $22.7 billion from $26.2 billion in November, the Chinese customs bureau said in Beijing today. M2, the broadest measure of money supply, rose 16.7 percent to 40.3 trillion yuan ($5.55 trillion) from a year earlier, the smallest increase in seven months, the central bank said.
> 
> ...




While China isn't going to shut down, as you call it, a slowing U.S is going to have an effect on it, which of course will have flow on effects.

Just how big it is going to be, well time will tell, but there are some early signs starting to appear.

Watch this space.....


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## Mofra (19 January 2008)

Logique said:


> IF we hit XAO 5000 the dividend % payouts on stocks will be enormous, must entice some buying at that point.



Only if the assumption is made that dividend levels would be maintaned, which so far in the US reporting, it appears they aren't.

I think, if anything, people are starting to understand that in the shorter term sentiment is as important to shareprice as the fundamentals.


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## Julia (19 January 2008)

Mofra said:


> ....... sentiment is as important to shareprice as the fundamentals.



Yes.  And right now the prevailing sentiment is fear and panic.


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## Buffettology (19 January 2008)

Julia said:


> Yes.  And right now the prevailing sentiment is fear and panic.




And long-term fundamentals are just as important as sentiment.  One is short-term, one is long-term.


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## bunyip (20 January 2008)

Fung said:


> Suffered huge losses on BHP and ZFX, I am going to prepare more cash and sit still til I find a good time to go back in.




Fung

Can you explain why you took huge losses on BHP and ZFX? I mean, if your stock is heading downhill in a big way, more than just the usual up and down gyrations that every stock makes, nobody is holding a gun to your head and forcing you to hang on to it. You can always sell out while your losses are within reasonable limits, rather than hang in there until you lose your shirt.
I see that you have 'beginner' under your name.....maybe that goes some way towards explaining your actions. But hell, I see experienced investors doing the same thing, folks who've been in the game for many years - a stock starts plunging and they wait until their loss is huge, then sell out. 
I know one bloke who lost more than 150 grand in Pasminco by doing exactly that.
It just doesn't make any sense at all to me.

Not trying to have a go at you here mate, but really, unless you learn to keep losses under control then you're stacking the odds against yourself of ever reaping the full potential of the market.

As Donald Trump says..."Look after the downside - the upside will look after itself".

Bunyip


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## dhukka (20 January 2008)

Julia said:


> Yes.  And right now the prevailing sentiment is fear and panic.




Julia,

There is definitely fear around, however we are yet to see outright panic selling. The decline has been fairly orderly IMO. The VIX in the US was still under 30 last week (hit 35 in August 07).


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## josjes (21 January 2008)

Kauri said:


> only joking... really...  :couch
> 
> 
> Cheers
> ..........Kauri




Kauri, joking though is your comments, I think your chart prediction has 90% chance of fulfilling, esp. the timing. Are you still holding that prediction ?


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## ithatheekret (21 January 2008)

Crash , correction .......... looks more like to soon to be Collection .


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## Kauri (21 January 2008)

josjes said:


> Kauri, joking though is your comments, I think your chart prediction has 90% chance of fulfilling, esp. the timing. Are you still holding that prediction ?




I just drew lines on the chart where I could firt them in..    no real prediction price or timewise... *but...* that won't stop me claiming it if she co-incidentally happens to follow my lines.   
Cheers
.........Kauri


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## stock_man (21 January 2008)

Using a simple moving average line on the XAO chart to define golden and death crosses (50 and 200 day moving averages), it looks like we are approaching a death cross for sure. This is not including today's current 2.1% drop.

The last time the chart reflected a cross of the moving averages was back in 2003...


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## Ken (21 January 2008)

This appears more than a correction.

The selling is constant, and smells of fear

BHP dropping 50 cents in the last 10 minutes.

The Dow is going to get whacked tonight....

Capitulation of markets not far away.


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## Gundini (21 January 2008)

Ken said:


> This appears more than a correction.
> 
> The selling is constant, and smells of fear
> 
> ...




No, the DOW is going to get whacked tomorrow night... Closed tonight.


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## shaunm (21 January 2008)

Gundini said:


> No, the DOW is going to get whacked tomorrow night... Closed tonight.




Perhaps that may be a small mercy given the finish today.
The futures were down from what I saw so perhaps we might move sideways tomorrow (I hope.)


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## shaunm (21 January 2008)

bunyip said:


> Fung
> 
> Can you explain why you took huge losses on BHP and ZFX? I mean, if your stock is heading downhill in a big way, more than just the usual up and down gyrations that every stock makes, nobody is holding a gun to your head and forcing you to hang on to it. You can always sell out while your losses are within reasonable limits, rather than hang in there until you lose your shirt.
> I see that you have 'beginner' under your name.....maybe that goes some way towards explaining your actions. But hell, I see experienced investors doing the same thing, folks who've been in the game for many years - a stock starts plunging and they wait until their loss is huge, then sell out.
> ...




Would you say 30% is a big loss or is that level still reasonable enough to cut out?


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## surfingman (21 January 2008)

shaunm said:


> Would you say 30% is a big loss or is that level still reasonable enough to cut out?




All depends on your outlook long term or short, it may come back some time in the future then again it may not? You can always buy back in if you sell.

If the support is broken tomorrow and closes below...... personally I will be staying out for quite a while longer (thats just my opinion though).


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## Plugger (21 January 2008)

Down 1242.3 points. Yesterday I would've said big correction. Today I say crash. It's only because it's been gradual that it doesn't seem extremely bad, but it is. 
I call for the mercy rule!


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## nomore4s (21 January 2008)

Stop_the_clock said:


> A 100 point buy-back this afternoon and a 14% correction from Nov. top till now suggests we have hit the bottom.  The smart investors get in at ground floor, many may have entered today






nomore4s said:


> A bit early to be calling a bottom I would think.
> 
> While I think we will get some sort of rally in the next week or so I seriously doubt it will be the bottom or the last time we test the 5500-5700 area at the very least.
> The bar from 18.12.07 has a lot of similarities to todays bar and look at the weak rally we had afterwards.




As soon as STC started calling for the bottom I should have known the a*** would fall out of the market :


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## MS+Tradesim (21 January 2008)

Average bear market decline is 33%. It fell about 22% in 01-02. But then that was largely contained to the tech wreck. This is a crisis of solvency across the US (and spreading to global) financial sector, including a meltdown in the US housing market, with fallout in the retail sector and if the bond insurers fail then we can expect this leg down to look less significant than the next.  

We may see a rally but I'm calling @4800 for interim bottom (within the next few weeks or month) based on previous long-term support; maybe a pause at @5500 which was August exhaustion and is a previous support also . Too lazy to post a chart as I previously posted them in the XAO thread.


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## wavepicker (21 January 2008)

MS+Tradesim said:


> We may see a rally but I'm calling @4800




Would have to agree. If one assumes the whole advance from the crash of 87 to 2007 high, then a 38.2% correction(a typical wave 4 correction), then we should look for approx 4700-4800 for a low. Typically this would be a zigzag type pattern so then this move down now might be a wave A.

On the other hand if it's a 5 wave structure at last year peak(alternate count) then the correction would be yet further


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## chops_a_must (21 January 2008)

MS+Tradesim said:


> Average bear market decline is 33%. It fell about 22% in 01-02. But then that was largely contained to the tech wreck. This is a crisis of solvency across the US (and spreading to global) financial sector, including a meltdown in the US housing market, with fallout in the retail sector and if the bond insurers fail then we can expect this leg down to look less significant than the next.
> 
> We may see a rally but I'm calling @4800 for interim bottom (within the next few weeks or month) based on previous long-term support; maybe a pause at @5500 which was August exhaustion and is a previous support also . Too lazy to post a chart as I previously posted them in the XAO thread.




Wow... I had a 4200-4400 H&S target on the XAO ready to put up on the forums. But that was my eventual bottom target for the bear market!

Now it seems within in reach if things get really nasty.


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## MS+Tradesim (21 January 2008)

chops_a_must said:


> Wow... I had a 4200-4400 H&S target on the XAO ready to put up on the forums. But that was my eventual bottom target for the bear market!
> 
> Now it seems within in reach if things get really nasty.




Wouldn't surprise me Chops. I'm only thinking 4800 interim. If USA does turn nasty, well....splutch!

BTW, we didn't have that bad a day relatively speaking. India are about 7% down now and about two minutes ago they were down 8.88%. China down 5%. Hong Kong down 5.5%  

EDIT: India currently *-10.85%* today!


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## chops_a_must (21 January 2008)

MS+Tradesim said:


> Wouldn't surprise me Chops. I'm only thinking 4800 interim. If USA does turn nasty, well....splutch!
> 
> BTW, we didn't have that bad a day relatively speaking. India are about 7% down now and about two minutes ago they were down 8.88%. China down 5%. Hong Kong down 5.5%
> 
> EDIT: India currently *-10.85%* today!




Was looking at all these Asian charts over the weekend. I thought... hmmm... they all look like stereotypical C wave correctives... (if you know anything about waves). Should perhaps have paid more attention to it. Ah well... lol!


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## bunyip (21 January 2008)

shaunm said:


> Would you say 30% is a big loss or is that level still reasonable enough to cut out?





A 30% loss would horrify me, but then I probably have a shorter term horizon, and therefore a lower loss tolerance, than most people on this forum. 

For anyone who wants to invest from a longer term perspective but isn't willing to hang on to stocks while they plunge south and lose most of their value, you could do worse than study Stan Weinstein's 'SECRETS FOR PROFITING IN BULL AND BEAR MARKETS'.
Stan has an approach that gets you into strongly trending stocks shortly after they begin trending and keeps you in them as long as their trend continues, which could be years in some cases. But the real strength of his strategy is that it steers you clear of a situation where you make big gains but then end up giving it all back to the market. Or worse still, watching your big gain turn into a big loss.
Even if you don't have a big gain, the damage control component of his system ensures that you'll never suffer account-crippling losses.

Bunyip


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## Gundini (21 January 2008)

I know, a little off topic, but here are a couple of comments made by astute contributors IMO. Maybe stock market traders, but experience none the less.

The all ords should be around 5,200. On average over the past 20+years it grows at 7%, and when it deviates from this, it always comes back. It went 30% too high. Anyone not expecting this correction was in fantasy land. The Australian economy is still strong, and as long as the government doesn't upset things, we may see strength return to the market. I pulled out a few months ago at the peak, but may go back in now. 
Posted by: RJ of Sydney 4:20pm today 
Comment 13 of 13


About time the market became cheaper, my patience was worn through nearly waiting for some discounts. But it seems there may be some bear trap stocks out there to be weary of. Not all things are cheap for nothing. Also one finds the best bargins when the market psychology is most fearful, and the cause of this is the potential recession in the USA (according to data and yeild curve differentials) .The recession wont cause a downfall in prices, fear of the recession will. One may find acual news about the recession, will make way for a relief rally, once people know how bad things actually are. 
Posted by: jason of Brissy 3:35pm today 
Comment 12 of 1

More comments here:

http://www.news.com.au/comments/0,23600,23083242-462,00.html


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## wayneL (21 January 2008)

Holy F#$%!!!

A lot of action on the Indicies for a US holiday monday.

SYCOM been as low as 5452

SP futs down 50 POINTS

Dow down ~400 POINTS


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## wayneL (21 January 2008)

Eurostoxx down > 5%


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## korrupt_1 (21 January 2008)

This is it people!!! The END IS HERE!!!!!!!!!!

Ok, serriously... SPI Future is bouncing around 5450's.... on a Technicals, where is the next major support????


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## nioka (21 January 2008)

korrupt_1 said:


> This is it people!!! The END IS HERE!!!!!!!!!!
> 
> Ok, serriously... SPI Future is bouncing around 5450's.... on a Technicals, where is the next major support????



The support will not be major. The fall has been gradual and is being kept alive by the usual lemming run and prodded by margin calls. The recovery will be steady helped along by the superfund money needing to find a home and prodded along by day traders. I intend to put in some orders tomorrow as I can see some bargains. In a very minor way the market will get some support from me now, how many there are like me I don't know but I believe a lot of little people will make the turnaround happen. To me the technicals are clouded by the fact that this time things are different. Booming trade, possibly the end of the drought, China and India plus a steady stream of super funds will help to stabilise things quicker than in the past.


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## nizar (21 January 2008)

Gundini said:


> I pulled out a few months ago at the peak, but may go back in now.
> Posted by: RJ of Sydney 4:20pm today




Sold the top..! What an absolute champion!!
Now watch him pick the bottom


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## numbercruncher (21 January 2008)

Finish below 5462 tomorrow which seems certain and we fit the official definition of being in a bear market  20pc off the Nov 1 High of 6828.


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## Gundini (21 January 2008)

nizar said:


> Sold the top..! What an absolute champion!!
> Now watch him pick the bottom




Roflmao...

Really though, we shouldn't be laughing in times like this. I feel for those caught up in this mess. I know.... I remember a time when I couldn't sleep.


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## numbercruncher (21 January 2008)

I truly feel for those who listened to the vocal, bleeting, uninformed perma-bulls and borrowed (or "leveraged" as they like to call it) long into this mess


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## BentRod (21 January 2008)

Geez almost time to get long with all the bears around here...lol



> SYCOM been as low as 5452
> 
> SP futs down 50 POINTS
> 
> Dow down ~400 POINTS




Wow, lucky it's a holiday over there!


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## Gundini (21 January 2008)

Looking to take a breather the index futures, maybe not the "big one"


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## Awesomandy (21 January 2008)

Now, that looks kinda bounced. It's back up to where it was around 90 mins ago. Hopefully, I haven't jinxed it. I've had completely rotten luck trying to pick anything in the past few days (and it's not just the stock markets I'm talking about).


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## lesm (21 January 2008)

wayneL said:


> Eurostoxx down > 5%




The DAX isn't fairing any better.

Fair amount of red on FX tonight as well.


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## Bushman (21 January 2008)

numbercruncher said:


> I truly feel for those who listened to the vocal, bleeting, uninformed perma-bulls and borrowed (or "leveraged" as they like to call it) long into this mess




No need to feel sorry for anyone. You now have a new generation of investors who understand the word 'risk', 'gearing' and 'leverage'. Also everyone will also understand that it takes time to undwind the mess and that the information flow will be poor. Good lessons for the future. 

I do take some umbrage at the word 'uninformed'. A shift in the balance of economic power from the first world to the emerging economies will be a longer trend than the unwinding of sub prime. What the bulls did (myself included) was take their eye off the ball on the domestic front!


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## lesm (22 January 2008)

Bushman said:


> No need to feel sorry for anyone. You now have a new generation of investors who understand the word 'risk', 'gearing' and 'leverage'. Also everyone will also understand that it takes time to undwind the mess and that the information flow will be poor. Good lessons for the future.
> 
> I do take some umbrage at the word 'uninformed'. A shift in the balance of economic power from the first world to the emerging economies will be a longer trend than the unwinding of sub prime. What the bulls did (myself included) was take their eye off the ball on the domestic front!




Would further suggest that some players took their eyes off macro-economics and events unfolding at that level, as they were probably too busy focussing on aspects, such as chindia and the resource boom. Failing to consider that the prevailing bull market of the time may eventually complete its natural cycle.

A number will have only experienced the recent bull market and have never experienced a real crash or bear market or even choppy markets.

Indeed, there are many lessons to be learned from the current situation. A number may now have risk and money management principles reinforced, especially those using leveraging or margin accounts.

The markets are not for the foolhardy and they will tame the greedy, one way or another.

Cheers.


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## CanOz (22 January 2008)

Hi Everybody!

Its very difficult for me to reply, since this site is banned here, but i got a good proxy server tonite. I just thought i would drop in and say hi and hope everyone is in cash, short, hedged, or all three!

Been busy writing and testing new trading plans and so i've been too lucky to be in cash for the last 2 months....thats the only good luck i've had the past 12 months! 

Thats quite a bloodbath tonite, perhaps made a little worse by illiquid US futures. One thing i noticed though is that almost all Asian currencies are up, well up. Could be that assets overseas are being sold and the funds being changed back into the local Asian markers by really risk averse Asians...is this something to worry about?

Anyone want to say hello please do at CanOz@gmail.com

I really miss you guys, WayneL, Lesm, Nizar, TechA, Kauri, Nick, Prof and all the rest of you...you all taught me so much over the last two years.

Take care, and stop by to say helloooo!

Cheers,


CanOz.


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## wayneL (22 January 2008)

CanOz said:


> Hi Everybody!
> 
> Its very difficult for me to reply, *since this site is banned here*, but i got a good proxy server tonite.




I was wondering where you'd got to CanOz. Banned you say? Why would that be?


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## lesm (22 January 2008)

Hi Can,

Banned...now understand why you have been scarce of late, only popping up every now and then.

Will send an email over the next couple of days.

Will send you a link or two that may help with your interest is FX related stats.

Mainly trading indices and FX nowadays.

Cheers.


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## CanOz (22 January 2008)

Hi Guys, i'm guessing that because this site is a public forum, and i frequently accessed it. I can post on other forums but i've only recently started this. Blogs are definatly out of the question unless a proxy is used.

Now is a great time to be trading FOREX, so i've been testing a new system based on the book Bird Watching in Lion Country. Low leverage, reversion to mean, simple with a bit of fundementals. What a fantastic time to be in the markets, soaking this up!

Keen to add more edges with seasonals and or stats....thanks Les!

Also, Wayne you would be proud to know that i'm currently studying options too with a view to developing a commodity futures option trading plan. I'm finding this very challenging. 

And as Nizar knows i'm still dabbling in mechanical systems too...although i have little time left for this right now.

Good trading everyone.

Going on Holidays soon for Chinese New Year, take care Y'All!

CanOz


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## Fool (22 January 2008)

check this poor guy out,

http://www.youtube.com/watch?v=rCtQL5b_rCM


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## wayneL (22 January 2008)

Fool said:


> check this poor guy out,
> 
> http://www.youtube.com/watch?v=rCtQL5b_rCM




Ouch. No stop eh?


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## numbercruncher (22 January 2008)

I followed a link from that flick and found this feedback, made me giggle ..



> THE DOLLAR FINISH, BYE BYE ; NASDAQ NYSE FTSE CAC DAX HANG SENG BOVESPA MERVAL etc... REMEMBER CRASH 1929 , THANKS TO ; MERRILL LYNCH JP.MORGAN LEHMAN WARBURG ROTHSCHILD CITYGROUP . USA BROKEN NOW ,


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## wayneL (22 January 2008)

Fool said:


> check this poor guy out,
> 
> http://www.youtube.com/watch?v=rCtQL5b_rCM




Same guy earlier to that video.

http://www.youtube.com/watch?v=87OnSTN3SHk

Sheesh


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## Sean K (22 January 2008)

So, officially crash, or large correction, or semantics? Whatever the case, 20% off is pretty significant. Question may be how long to recover as many have pointed out could take some time, although the markets do eventually make new highs. Eventually. Can I possibly wait 10 years? 

Some value investors with some cash must be looking at some quality stocks, like Buffett.



> Warren Buffett's Burlington Northern Stake Tops 18% As Daily Buying Spree Rolls On
> Posted By:Alex Crippen
> Topics:Recession | Economy (U.S.) | Railroads | Warren Buffett
> Companies:Burlington Northern Santa Fe Corp | Berkshire Hathaway Inc.
> ...




And why the others saying the US will actually end up this year? Just perma bulls with their head in the sand?



> Treasury Rally to End as Stocks Gain, Citi, BNP Say (Update1)
> 
> By Wes Goodman
> 
> ...




Just a couple more alternate opinions to really confuse the amateur investor.


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## Sean K (22 January 2008)

This is what seems more logical perhaps.



> *Will the cure be worse than the disease?*
> 
> Politicians are scrambling to offer a stimulus package, and Fed Chairman Ben Bernanke is slashing interest rates. But they may be paving the way for a bigger calamity down the road.
> 
> ...




What the bears have been saying for some time.


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## chops_a_must (22 January 2008)

Another down day in the world, and I think the DOW will open on support around 11,000. Which would officially get papers calling a crash in my opinion. US futures almost limit down as far as my understanding goes, with them off the charts. Quite literally.


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## wayneL (22 January 2008)

The state of play at the moment:

Holiday in the US but futures traded till 11:30 EST. SYCOM closed all day. European indexes still open at the time of this screen shot.

CHECK OUT DAX AND EUROSTOXX 

FUGLY


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## explod (22 January 2008)

kennas said:


> So, officially crash, or large correction, or semantics? Whatever the case, 20% off is pretty significant. Question may be how long to recover as many have pointed out could take some time, although the markets do eventually make new highs. Eventually. Can I possibly wait 10 years?
> 
> Some value investors with some cash must be looking at some quality stocks, like Buffett.




Yeh, railways, oil through the roof, truck companies to the floor and rail freight takes off.

We played trains as youngters, Buffet understand em.

Toll holdings perhaps?  I understand food, the girth says so WOW


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## AnDy62 (22 January 2008)

a depressing crash, just a guess. :bricks1:


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## bunyip (23 January 2008)

Stop_the_clock said:


> A 100 point buy-back this afternoon and a 14% correction from Nov. top till now suggests we have hit the bottom.  The smart investors get in at ground floor, many may have entered today




Anyone who thinks he or she knows where 'ground floor' is when the market is plunging, is delusional.

Guess those 'smart investors' will just have to get a whole lot smarter next time.

Bunyip


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## Miner (23 January 2008)

bunyip said:


> Anyone who thinks he or she knows where 'ground floor' is when the market is plunging, is delusional.
> 
> Guess those 'smart investors' will just have to get a whole lot smarter next time.
> 
> Bunyip




I wish your guess would have been true. 
People just do not learn lessons from burning house fire.
It has happened before, now happening and will happen.

Good luck to all and Me as well.


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## Wysiwyg (12 July 2008)

Still more pessimism unfolding in the u.s. of America.They want to continue exercising control over external affairs while the house burns.Next stop 10000 for the DOW.Ah it`s all for the good of mankind, isn`t it ... isn`t it ????

Now where is that dead cat when you really need it. 
	

	
	
		
		

		
			




.


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## Wysiwyg (1 December 2014)

1/12/2014

Things are going crazy with a lot of fear being acted upon. Desperation to exit at loss like there is some huge tidal wave about to hit the coast. Like there is no tomorrow or more unintelligent, no next week/month/year. 

Are you with me ROE.


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## qldfrog (13 May 2021)

Is it time to reopen that thread?


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## Miner (13 May 2021)

qldfrog said:


> Is it time to reopen that thread?



ditto that before market crashes.


----------

