# Dr Doom says: Bail out now!!!



## wayneL (18 May 2006)

http://www.bloomberg.com/apps/news?pid=10001099&sid=aWT3vXShxJjE&refer=energy



> Marc Faber, Dr. Gloom, Says Commodities May Fall (Update1)
> 
> May 16 (Bloomberg) -- Marc Faber, the money manager who told investors to bail out of U.S. stocks a week before the 1987 Black Monday crash, said commodity prices may fall as much as 30 percent in three to six months.
> 
> ...


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## wayneL (18 May 2006)

* Sell shares in London and buy Budweisers in Florida*

http://www.telegraph.co.uk/money/ma...nuId=242&sSheet=/money/2006/05/17/ixcoms.html



> ...because financial markets, here and in America, are probably heading not just for temporary turbulence but prolonged discomfort.
> 
> The shake-out, I believe, has only just begun.
> 
> ...


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## wavepicker (18 May 2006)

wayneL said:
			
		

> * Sell shares in London and buy Budweisers in Florida*
> 
> http://www.telegraph.co.uk/money/ma...nuId=242&sSheet=/money/2006/05/17/ixcoms.html





don't you love those bears. this guy sounds like he went to the same school as you and I wayne!!


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## bullmarket (18 May 2006)

Things starting to look a little more ominous now  with XJO's knees definitely wobbly atm 

cheers

bullmarket


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## Happy (18 May 2006)

Sooner or later they had to be right, one day.

But is it correction or raging bear, we will be able to say with certainty much later.


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## Sean K (18 May 2006)

There's no bear in there yet happy. 

Just healthy correction in long term bull. Chindia has only begun developing. It's a 20-30 year story. Like the US in the 1800s and Japan after WWII.


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## mit (18 May 2006)

kennas said:
			
		

> There's no bear in there yet happy.
> 
> Just healthy correction in long term bull. Chindia has only begun developing. It's a 20-30 year story. Like the US in the 1800s and Japan after WWII.




"Chindia" ... I was scratching my head thinking it was a some Technical Analysis term.

I think this depends on how much of Chinas/Indias development is for internal consumption and how much is depended on exports. That is, if America stopped buying would China's and India's growth grind to a halt driving resource prices down or would this be just a mild correction?

MIT


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## Sean K (18 May 2006)

Chinese and Indians are moving from their padi fields into big cities by the crickey bus load so they can chat on the internet. The rate of this move probably depends on the US and world economy in general, but there'd have to be a major recession for it to stop.  

That means: roads, footpaths, houses, furniture, tvs, toasters, hospitals, schools, yada yada yada. The list is endless.

I read somewhere that at the moment 30% of Chindians live in cities and 70% live in the country. This is going to reverse over the next 20 years. That means about 400 million people in each country will be moving into cities and are going to be needing toasters. That's a lot of toasters.


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## wayneL (18 May 2006)

kennas said:
			
		

> There's no bear in there yet happy.
> 
> Just healthy correction in long term bull. Chindia has only begun developing. It's a 20-30 year story. Like the US in the 1800s and Japan after WWII.




Yes I have to agree. We could lose another 500 points and still be above the trendline drawn from may 2003.

But the bear certainly has drawn some blood on this bull, he's not dead, but he's injured.

Will he heal and charge on? Only the almighty knows how this will unfold. The thing with Chindia is that they still rely on USA/Europe to sell their trinkets to.


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## TjamesX (18 May 2006)

IMHO

It aint over....

At least not for resources. If china and india start to become self sustaining growing economies, then they will want a higher standard of living. As a result they will need a larger shares of the worlds resources which the develped world have been paying next to nothing for in the past. 

And until more capacity comes online (for oil, this doesn't look an easy task), everyone pays more. And everyone keeps paying more until it hurts too much.

Developing countries up, Developed countries down

Thats globalisation

Except if you live in the lucky country - we get the best of both worlds


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## Porper (18 May 2006)

wayneL said:
			
		

> Yes I have to agree. We could lose another 500 points and still be above the trendline drawn from may 2003.
> 
> But the bear certainly has drawn some blood on this bull, he's not dead, but he's injured.
> 
> Will he heal and charge on? Only the almighty knows how this will unfold. The thing with Chindia is that they still rely on USA/Europe to sell their trinkets to.




I am leaning towards the Bears now, metals don't plummet like they did the other night for fun (even though the big picture says up).A big one day drop is still significant.Plus big drops in the Dow spells danger to me.I suppose it depends on your time span, but as my trades usually only last a few weeks, I can see me doing my first short trade with CFD'S.

I have been stopped out of everything bar 2 stocks, which I decided to sell (totally against my no. 1 rule of never selling your best performers).Indecision is the order of the day for markets now.

My gut feel is the the next few months will be volatile and the general direction will be down.

Having said that my Elliot wave count says wave 4 can't go below 110.5 !!

Decisions decisions.

I think I will have to go over to the dark side with Wayne and the other Bears.


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## wayneL (18 May 2006)

Porper said:
			
		

> I think I will have to go over to the dark side with Wayne and the other Bears.




Welcome.... we need all the help we can get :


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## markrmau (18 May 2006)

Obviously the big drops recently have been about inflation concerns. Have a read of the nytimes article below.

http://www.nytimes.com/2006/05/18/business/18econ.html?_r=1&oref=slogin
"Inflation Rising, Markets Tumble"




			
				nytimes said:
			
		

> Yesterday's government report was seen as the worst omen yet. The Bureau of Labor Statistics announced a jump of 0.6 percent in the Consumer Price Index for April, mostly because of gasoline prices, but also because, as the government calculates it, the cost of owning a house and renting an apartment was up smartly. The latest increase in consumer prices came on top of a 0.4 percent increase in March.
> 
> Many economists, however, are not as alarmed by the inflation figures as the market reaction suggests. Because of a quirk in the way the C.P.I. is calculated, they explained, the latest reading may actually be signaling a slowing economy and, eventually, less inflation.
> ....
> ...


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## coyotte (18 May 2006)

Would have thought the vast majority of "Loss Stops" would have been well and   truelly triggered by now !

Would not  T/A traders ( short to long term ) now be sitting on 100% cash ?

If all that liquidity has been withdrawn from the "mining sector " -- where are the Buyers now, to drive it back up ?
Imagine the XMJ will at best "range trade " for quite a while before the next move UP

Could be a few lessons to learn from this :

Base metals can not rise at a greater pace than Au
If POG & XAU are diverging then something must wrong
When a housing boom goes bust --- so does everything connected with it




Probably totally wrong
But I can allways buy back in 
( just the insurance premium at worst )

cheers 
Coyotte


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## professor_frink (18 May 2006)

coyotte said:
			
		

> Would have thought the vast majority of "Loss Stops" would have been well and   truelly triggered by now !
> 
> Would not  T/A traders ( short to long term ) now be sitting on 100% cash ?
> 
> ...





you'd think most short term traders would be in cash right now. Or going short. I've been in complete cash for the last week, but that was partly due to going away for my girlfriends birthday last week and I didn't wanna worry bout anything going wrong while I was away, not because I'm the world's greatest timer and knew it would start this week!


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## coyotte (18 May 2006)

professor_frink said:
			
		

> you'd think most short term traders would be in cash right now. Or going short. I've been in complete cash for the last week, but that was partly due to going away for my girlfriends birthday last week and I didn't wanna worry bout anything going wrong while I was away, not because I'm the world's greatest timer and knew it would start this week!





Well not only " Short Term "
All the "Position Trades" I was holding (set @ ATR * 3 & using the "closing high"
where all stopped out last Tues on the  Gap Down
Only consilation was that I was able to bail out on Wed  -- with most of them just below the stop --- got caught with SBM though with that trading halt --- had it set @ .64 

But on reflection ( another lesson learnt ) most of these stocks eg: BHP,KZL, OXR where showing strong divergeces to the ADX & Money Flow




Cheers 
Coyotte


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## professor_frink (18 May 2006)

glad you got out without too much pain! It's going to be an interesting few weeks me thinks!

In relation to what you were asking about before in regards to who's going to buying in these conditions, I think there are alot of the investor types out there that are very keen to top up their holdings during these corrections.  
There are alot of them in these forums that have been doing that this week!


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## nizar (18 May 2006)

professor_frink said:
			
		

> glad you got out without too much pain! It's going to be an interesting few weeks me thinks!
> 
> In relation to what you were asking about before in regards to who's going to buying in these conditions, I think there are alot of the investor types out there that are very keen to top up their holdings during these corrections.
> There are alot of them in these forums that have been doing that this week!




YES there are some stocks out there looking prime for a top-up..

But IMO more downside to come in next few days/weeks, maybe asx200 get to about 4800-4900 before next leg up..

Much more less risk in the short term by buying these stocks on the way up, not the way down... so im waiting for them 2 bottom out..


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## nizar (18 May 2006)

> Marc Faber, founder and managing director at Hong Kong- based Marc Faber Ltd., has been urging investors to buy commodities since 2001 and *holds 10 percent of his personal assets in gold in a bank vault*. The holding has earned 65 percent in the past year.




Wow i wonder how much money this would be!
Probably several 10s of millions?


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## coyotte (18 May 2006)

Learnt my lesson well and truelly on that one years ago !

Chased DROORY all the way down from $8 to $1 , sold it a couple of weeks ago for around .95c after around 5 years

NTG from around $4 to the cents

BRY DOWN to near zero

These stocks in their day where the darlings of their sector --- Brokers where saying to hop in now while they are a bargain  -- some bargain !

Cheers :swear:


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## Smurf1976 (18 May 2006)

coyotte said:
			
		

> Could be a few lessons to learn from this :
> 
> Base metals can not rise at a greater pace than Au
> If POG & XAU are diverging then something must wrong
> When a housing boom goes bust --- so does everything connected with it



Another one is that when interest rates are held at extraordinarily low levels for several years, it ends up causing a LOT of inflation. Inflation that we've seen in stocks (dot.com boom) followed by housing, then oil and gold, then other commodities joined in and now there's increasing evidence that it's filtering right through the economy. In due course it reaches the checkout.

The cure is, of course, higher interest rates. But a word of warning. It defies belief that the effects of years of low interest rates will be overcome by simply returning to normal rates. More likely we'll see a period when rates are actually high. IMO that is some years away but it's coming. I think the markets are starting to wake up to this.

In the short term, bank bill yields suggest another rate hike from the RBA is on the cards in the not too distant future.

Of course it is likely that this long term trend of rising interest rates will take the form of moves both up and down, but with an underlying upwards trend, since markets don't usually move in a straight line.

IMO the present US cycle of interest rate rises will end when it is clear that something has "broken". Either some market falls seriously, someone _very_ big goes broke or the economy ends up in recession. That's simply based on my observation that the Fed tends to keep going until something breaks. Given the rather obvious pressure on the US Dollar and inflation I see no reason why they wouldn't do the same this time. In view of that, a decent rally in the US Dollar over the coming months wouldn't be at all surprising to me.


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## professor_frink (18 May 2006)

nizar said:
			
		

> YES there are some stocks out there looking prime for a top-up..
> 
> But IMO more downside to come in next few days/weeks, maybe asx200 get to about 4800-4900 before next leg up..
> 
> Much more less risk in the short term by buying these stocks on the way up, not the way down... so im waiting for them 2 bottom out..




tomorrow is the key for me- XJO has hit it's trendline from the oct lows. If it breaks through there's gunna be some fun to be had on the shortside!!



			
				nizar said:
			
		

> Wow i wonder how much money this would be!
> Probably several 10s of millions?




lets just say ALOT  



			
				coyotte said:
			
		

> Learnt my lesson well and truelly on that one years ago !
> 
> Chased DROORY all the way down from $8 to $1 , sold it a couple of weeks ago for around .95c after around 5 years
> 
> ...




Sounds familiar! There's nothing like watching all your money disappear!
Should try options- I've even managed to lose alot of money at various stages of this bullmarket. now that takes talent!


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## coyotte (18 May 2006)

Could someone please explain ?

If you go to stockcharts & run a $SPX v $UST2Y 
they track each other

going by that , whilst the US continues to raise rates -the SPX will keep rising ?


Cheers


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## michael_selway (18 May 2006)

wavepicker said:
			
		

> don't you love those bears. this guy sounds like he went to the same school as you and I wayne!!




Actually Marc Faber was the guy that said gold was to reach $6000 an ounce, so just wondering why he became so bearish all of a sudden? or is he still bullish?

thx

MS


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## nizar (18 May 2006)

michael_selway said:
			
		

> Actually Marc Faber was the guy that said gold was to reach $6000 an ounce, so just wondering why he became so bearish all of a sudden? or is he still bullish?
> 
> thx
> 
> MS




brother u should read the article first before commenting



> Marc Faber, founder and managing director at Hong Kong- based Marc Faber Ltd., has been urging investors to buy commodities since 2001 and *holds 10 percent of his personal assets in gold in a bank vault*. The holding has earned 65 percent in the past year
> 
> Gold's 5.2 percent drop yesterday below $700 an ounce for the first time in a week was a ``tiny'' decline, Faber said. *Investors shouldn't buy gold now because prices may fall further to $550 or $600 before resuming its rally, he said. * Gold closed yesterday at $677.40 an ounce.




He reckons next 3-6months could be down. Read the article that started this thread


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## TheAnalyst (19 May 2006)

I aint worried in the slightest.....actually i seen some stuff that was so fundamentally cheap that i spent all today but i can go get some more if i really feel like it.......i dont look at the index overall actually i dont care less about the index at this stage it is more of a concern of what you individually hold...U.S. interest rates well who cares either..cos i dont all it does is reduce the deficit by increasing the U.S. dollar.....and increases the Australian deficit.....at this stage in the economic cycle who really cares....the tax breaks will adjust for the interest rate hike....


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## professor_frink (19 May 2006)

nasdaq has now fallen for 8 consecutive sessions according to news on my brokers website! Kinda reminds me of the freefall it had in 2002!

Wonder if the PPT is going to come in soon and rescue all the perma bulls?


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## noirua (19 May 2006)

Basically, the markets of the World took fright just because inflation in the States rose by 0.6% in one month. Most countries are expecting a rise in inflation for 2006 and forecasting a fall back during 2007/8.

Much of the States problem is due to a weak Dollar, and much of the World wants the Dollar weaker, so commodity prices fall in their own currency terms. Strong Asian markets should gain from a weaker US Dollar, Indonesia and India are among those most at risk in the coming weeks and Hong Kong should not be affected much. China and Taiwan are probably cheering at the events of the past week.


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## TheAnalyst (19 May 2006)

It will be resource stocks from a massive correction that will bring the index down.....professionals have been distributing all year..........like i said the real pain will come from what you hold not the index.


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## wavepicker (19 May 2006)

TheAnalyst said:
			
		

> It will be resource stocks from a massive correction that will bring the index down.....professionals have been distributing all year..........like i said the real pain will come from what you hold not the index.





Totally agree with you analyst, professionals have certainly been distributing of late. Our Index is heavily weighted with resource companies and banks. Any major correction in the resource sector will be heavily reflected in the index but will not necessarily be a reflection of what may be happening in other sectors which are undervalued or oversold at present. I always said this business is just a big merry round!


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## TheAnalyst (19 May 2006)

The bank i find that is most overly priced at the moment is WBC from a fundamental point...even those smaller state ones have high per's its only because at any time the takeover offer will arrive.

Suncorp needs to demerge its insurance arm and consider a merger with its bank and wealth creation segments with the such of St George which i believe would create massive synergy cost savings.


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## Smurf1976 (19 May 2006)

TheAnalyst said:
			
		

> It will be resource stocks from a massive correction that will bring the index down.....professionals have been distributing all year..........like i said the real pain will come from what you hold not the index.



Whenever you buy anything there is someone else selling. 

In short, if the general public are net buyers then some other category of investors are net sellers. IMO buying stock that professionals are dumping whilst Joe Public is rushing to buy is asking for trouble in view of the history of stock markets - the masses don't tend to be the big winners.

Hence I become very wary of any investment or investment strategy which attracts the attention of the general public who aren't usually overly interested in such things. The big flashing warning sign is when it gets a mention on commercial TV (remember just how many were watching _money_ during the last days of the dot.com boom?). That applies whether it be stocks, currencies, real estate or whatever. 

Whilst I'm very much a resources bull in the long term, especially when oil is concerned, IMO the sector has attracted far too much public interest of late to the point that there aren't many people _not_ aware of the increase in commodity prices. 

I'll become interested in resource stocks again when I hear taxi drivers complaining that converting to LPG wasn't worth it because petrol prices have come down or when some high profile economist or politician trots out the idea that the recent rise in commodity prices was just a blip.


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## TheAnalyst (19 May 2006)

Thats is a major fundamental sign Smurf...remember all those renovation shows and house and apartment buying shows just 18 months ago......and the tht was it...we now have commodities.....and once again when you have the born again christian ministers telling their congregations and having visiting born again christian enterprenuars and the likes coming to talk to their congregations and get em in on some good honest christian investments....just like they were doing in the dot com and the real estate boom...they came in at the last minute and blew up there flock...


Commodities correction will bring the falls on the index....


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## Kipp (19 May 2006)

Smurf1976 said:
			
		

> Whenever you buy anything there is someone else selling.
> 
> In short, if the general public are net buyers then some other category of investors are net sellers. IMO buying stock that professionals are dumping whilst Joe Public is rushing to buy is asking for trouble in view of the history of stock markets - the masses don't tend to be the big winners.
> 
> ...



Good point smurf.  I asked my step dad last week what the symptoms of the last resource crash were.  And he said, "it's when the guy at Coles starts giving you stock tips"... should of jumped off last week!  Too much greed...


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## TheAnalyst (21 May 2006)

Mr Heffernan says canny investors should be using this sell-off to top up their holdings in the blue chips such as BHP, Rio, the major banks, Woolworths and Coles.

The word from one of the biggest institutional dealing desks in town is that there has been some rebalancing by the big institutions but no serious selling as yet. "They've been selling stocks with big offshore exposure and high P/Es and buying into the retailers such as Woolworths and a bit into the banks but nothing has fundamentally changed really," says one head dealer. "The domestic stocks are holding up and we've got the tax cuts coming through, so it's just been the shakeout we needed."

http://www.theage.com.au/news/business/is-the-party-over/2006/05/20/1147545564568.html?page=3


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## kgee (21 May 2006)

I was wondering if anybody here had heard the saying "sell in may and go away" ?
Yesterday I heard it for the first time when talking to a friend...he said it comes from the "fact" that in the US this is the typical time that fund managers take there holidays, and closing there positions before they do
Sounded a bit hokey to me...has anybody heard this before???


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## nizar (21 May 2006)

kgee said:
			
		

> I was wondering if anybody here had heard the saying "sell in may and go away" ?
> Yesterday I heard it for the first time when talking to a friend...he said it comes from the "fact" that in the US this is the typical time that fund managers take there holidays, and closing there positions before they do
> Sounded a bit hokey to me...has anybody heard this before???




yes iv heard this before..
believe it? Hmm... now thats a different story/.


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## TheAnalyst (22 May 2006)

The cracks are beggining to appear.....

http://www.theage.com.au/news/busin...ore-price-soars/2006/05/21/1148150124509.html

China baulks as iron ore price soars
By Barry Fitzgerald
May 22, 2006

CHINA is crying poor that its steel industry cannot afford the bumper 19 per cent price increase secured by Australian and Brazilian iron ore producers for shipments of the key steel-making raw material in 2006-07.

The Government-owned China Daily said the US dollar price rise ”” it follows on from last year's 71.5 per cent increase ”” could bust the current boom.

China has fast become the biggest market for Australian iron ore with an annual value of about $4 billion, making the health of the steel-making industry there a key consideration for the leading exporters, the Pilbara operators BHP Billiton and Rio Tinto.

"When over-capacity is looming in China's steel industry, rising ore cost that further bites in to domestic steel makers' profits could turn the current boom in to a bust and no one will benefit," according to an editorial in the China Daily.

China's Iron & Steel Association said that its steel makers and the iron ore producers that supply them, including BHP and Rio, "still differ" on price and that their price talks would continue.

An emergency meeting of 16 Chinese steel makers in Beijing on Friday was held in an effort to ensure a united front in China's opposition to the price increase ”” one now accepted by the rest of the global steel-making industry as the new benchmark. This was underlined by the announcement from Rio Tinto's Hamersley Iron subsidiary on the weekend that it had reached agreement with South Korea's POSCO for a 19 per cent price increase for shipments of its Pilbara lump ore.

The chief executive of Rio's iron ore operations, Sam Walsh, said the agreement with POSCO ”” the world's fourth biggest steel maker ”” confirmed the "tightness of the iron ore market and the very strong demand for Australian iron ore".

China's hopes of securing a price increase of no more than 10 per cent were dashed last week when the world's biggest producer, CVRD, effectively set the new benchmark in a 19 per cent price-increase settlement with Germany's ThyssenKrupp.

The Chinese have argued ever since that the CVRD settlement was not a global benchmark.

The Federal Government's chief commodity forecaster, the Australian Bureau of Agricultural and Resource Economics, predicts that world seaborne trade in ore ore could rise by 7.6 per cent to 706 million tonnes this year, with China's booming economy to account for about 44 per cent of the total ”” up from 28 per cent in 2003.

Expansions by BHP and Rio are expected to underpin a 17 per cent surge in Australian exports this year to 282 million tonnes worth about $14 billion.

Meanwhile, the Australian producers' case for China to pay up for iron ore has been strengthened by moves in India to curb its iron ore exports.

India's Steel Ministry has called on the Ministry of Commerce to curb exports to protect the interests of the domestic steel industry.

Exports from the country are not big but their removal from the global market, to feed the booming domestic industry, would add to the global tightness in iron ore supplies.


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## MARKETWAVES (22 May 2006)

Hi  there  Dr  Doom

  I  like  your  thinking 

  Just  wanted  to  put  a  visual chart  of  the  Nasdaq to  show  probabilty .
-  if  the  USdollar resumes  its  recent downturn  trend , what  do  think  would  be  the  out  come  of  the  Equity markets ?

---------------------------------------------------------------------


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## noirua (13 June 2006)

Following the predictions of Doctor Doom, markets have continued down in Europe today. October is Marc Faber's prediction on when to buy back in, but, where will markets be then?

The Merrill Lynch World Mining IT has just 60 cents to got to register a 33% fall, now down 28%. Major mining stocks see falls from 5% to 12% in London today, as the bears position themselves to feed at the NYSE opening.


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## noirua (27 June 2006)

noirua said:
			
		

> Following the predictions of Doctor Doom, markets have continued down in Europe today. October is Marc Faber's prediction on when to buy back in, but, where will markets be then?
> 
> The Merrill Lynch World Mining IT has just 60 cents to got to register a 33% fall, now down 28%. Major mining stocks see falls from 5% to 12% in London today, as the bears position themselves to feed at the NYSE opening.




We are in the position predicted by Doctor Doom; That stocks will recover, but fail to reach previous highs and then descend once more.


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## noirua (9 January 2007)

Marc Faber has spoken yesterday on his views for the US Economy, US Equities, Gold, Agricultural Commodities, Commodities including oil, Emerging Markets, and Asia including Japan:   

http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vrdrMyG1GzZk.asf


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## TheRage (9 January 2007)

Could you please give a brief summary. I am running Dial-up at work and it drops out way too much.

Cheers
Ryan


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## Sean K (9 January 2007)

TheRage said:
			
		

> Could you please give a brief summary. I am running Dial-up at work and it drops out way too much.
> 
> Cheers
> Ryan



He's predicting a severe US led correction shortly because the US is printing and spending money it does not have and he's recommending you buy PMs.


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## nizar (9 January 2007)

kennas said:
			
		

> He's predicting a severe US led correction shortly because the US is printing and spending money it does not have and he's recommending you buy PMs.




Yeh theres a few economists that have been saying this for ages.
Doug Casey gave an interview about the same sort of thing about 1 year ago.

They say these gurus arent wrong, just early.

In this game though, being early is just as bad as being wrong. Just like how missing out on gains is the same as losing money.


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## Sean K (9 January 2007)

TheRage said:
			
		

> Could you please give a brief summary. I am running Dial-up at work and it drops out way too much.
> 
> Cheers
> Ryan



He's got a brain the size of a small planet! Or, he's just making me seem pea brained.....


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## theasxgorilla (9 January 2007)

Indeed, I could watch/listen to him for hours.


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## Sean K (9 January 2007)

theasxgorilla said:
			
		

> Indeed, I could watch/listen to him for hours.



Does he not have an understanding, or an opinion, on anything! Incredible. He probably knows Warnies bowling average.


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## theasxgorilla (9 January 2007)

I especially like how he converts the appreciation of share markets into another relative currency...eg. DJIA is at new all time highs but is still 38% from the highs of '01 when converted from USD into EUR.


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## sydneysider (9 January 2007)

theasxgorilla said:
			
		

> I especially like how he converts the appreciation of share markets into another relative currency...eg. DJIA is at new all time highs but is still 38% from the highs of '01 when converted from USD into EUR.




So what? all markets and currencies are in constant flux. What is the point of analyzing the Dow in another currency from five years ago? U.S. economy is still very healthy, European economies are also doing well but lagging U.S. 

Prices of raw materials / energy have dropped reducing inflationary effects. There is nothing that is amiss with this picture. Even U.S. housing is doing better than expected. Oil and gold both have taken recent hits to the downside. Dr Doom has a personality that demands negative calls and often.


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## theasxgorilla (9 January 2007)

sydneysider said:
			
		

> So what? all markets and currencies are in constant flux. What is the point of analyzing the Dow in another currency from five years ago? U.S. economy is still very healthy, European economies are also doing well but lagging U.S.




You mean that as a foreign investor if you had your money in the US market and the USD dropped and put you in a net loss situation when converting your money back into your home currency you'd say "so what"?


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## TheRage (9 January 2007)

kennas said:
			
		

> He's got a brain the size of a small planet! Or, he's just making me seem pea brained.....




Thanks for the feedback. I like your description.


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## Pager (9 January 2007)

Apparently he is most famous for picking the 87 crash a few weeks before it happened, he’s also warned of a few other meltdowns that have occurred since, I suspect the law of averages will eventually work in his favour again and we will get some kind of crash in the various markets and sectors he keeps telling the world are about to take a pasting and he can turn around and say “I told you so”, and will be remembered for his timing and insight!, what wont be mentioned is all the times he has been totally wrong and way off the mark!!!!.

He is very interesting and if the world was an orderly place and the world’s financial markets behaved in a logical, rational and efficient way he may well be spot on most of the time.

Cheers

Pager


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## Smurf1976 (9 January 2007)

sydneysider said:
			
		

> Even U.S. housing is doing better than expected.



Sure is! It's falling faster than even the bears expected.


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## rockingham178 (14 January 2007)

I have watched this since last August and thought we may see a correction in November...nothing happened! But all recent indicators were just too real for a conservative like me, I am now sitting out and cashed up with only EXT left. I got caught in 87' and swore I would wait and watch ready to be able to do (in a smaller way of course) the same as Kerry Packer did in the 87' crash and refer to this as "the good old days". This time I am prepared....are you?

With the DJIA recording 24 new record highs since last October and the ASX just marching on like there is no tomorrow...the warning bells are ringing loudly!

Below is a link to Market Watch news and an excerpt from it, which makes a good read. I also suggest you read the latest daily trading diary by Colin Twiggs of Incredible Charts 13/1/07.

http://www.marketwatch.com/News/Sto...157-993F-C41670B01033}&siteid=mktw&dist=nwhpf 

".... don't be too quick in dismissing Shilling's forecasts just because they make you anxious and your internal gyroscope prefers the roaring optimism of bulls. Listen very closely, this scenario will have a powerful effect on your retirement nest egg. 

Six overriding trends
Shilling says the same six background forces that dominated last year are still driving the investment climate in 2007. Worse yet, they continue inflating our expectations bubble, making the economy and markets increasingly more vulnerable: 
Easy money: The world's awash in liquidity, fueling speculation 
Inflation is low and could even shift into a deflationary cycle
Investment returns are low, disappointing most investors
Rampant speculation, thanks to the Fed, Wall Street and Washington
Investor risks increase, hoping to achieve expected higher returns
Insatiable consumers will spend until borrowing power is exhausted.
OK, so that's the economic landscape surrounding you, me and the rest of America's 94 million investors in 2007. In this challenging environment Shilling eight specific scenarios that will occur this year, plus four "maybes" that may be delayed till later: 
Housing prices will collapse: "The likelihood of house prices falling substantially to bring them into proper balance ... a 25% decline in house prices nationwide is not a wild forecast, and may be optimistic. Indeed, a 38% fall would be needed to get house prices back in line."
The Fed will ease and the yield curve will remain inverted
U.S. stock prices will fall, perhaps below 2002 lows, in the midst of a recession
China will suffer a hard landing, due to internal cooling and a U.S. recession
U.S. and China problems will spread, depressing economies and stocks 
Treasury bonds will rally, with yields falling as low as 3%
The commodity price bubble will soon collapse
U.S. dollar will strengthen after the recession spreads worldwide
Shilling also forecasts four other trends that may not happen in 2007, but could accelerate the collapsing scenario in 2008 or later. They are: Chronic global deflation, a renewed cycle of savings as consumers shift away from 25 years of excessive spending and borrowing and a general decline in speculative ventures. 
So what's missing? The biggest one: War!"


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## 2020hindsight (14 January 2007)

rockingham178 said:
			
		

> 1. But all recent indicators were just too real for a conservative like me, I am now sitting out and cashed up
> 2.with only EXT left.
> 3. I got caught in 87' and swore I would wait and watch ready to be able to do (in a smaller way of course) the same as Kerry Packer did in the 87' crash and refer to this as "the good old days".
> 4. This time I am prepared....are you?
> 5. So what's missing? The biggest one: War!



R,  
1. I was sitting out last year but been sucked in afain  - have about half my money back in the market.  not just commodities, more diversified.
2. Even have some EXT.  Can I ask, do you have have EXT by choice lol? 
3. I think it was Joe Kennedy (JFK's dad) who said that when the bellhops are telling you which shares to buy, then it's time to get out.  
4. not as prepared as I'd like.  If the market goes up this week, I'm out !  Then again, it'll probably go down, and I'll become a long term investor again.
5. Yep, When I think about it, I usually come up with the conclusion (my   ) that anyone predicting boom times ahead -  contunuing into a golden everlasting future - is kidding themselves about the state of world tensions.   Even the decision on whether to increase US troops seems to be tied up in Congress atm. 

- as someone said recently, "if you're not confused, you don't know what's going on".

PS concerning my prediction that things will go bearish..  You'll be pleased to know that about 90% of my "predictions" are wrong.    What else can one expect when "predictions" in my case, are little better than guesses, and / or trying to second-guess directions of China's industry, directions of telecommunications, directions of GWB's next attack plans, etc.


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## rockingham178 (14 January 2007)

Yes I have EXT by choice. Bought in mainly at 6's and 7's and have taken and still have some very nice profits and expect a lot more to come.

I am effectively taking a risk that I can afford to take now with EXT and if all I have researched over the last 12 months comes to fruition it would have been a very profitable move indeed.

I have my cash holding ready to use which IMO will prove to have been a good move when all of this occurs.


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## Uncle Festivus (19 January 2007)

Re-visiting the original post - 

"Gold's 5.2 percent drop yesterday below $700 an ounce for the first time in a week was a "tiny'' decline, Faber said. Investors shouldn't buy gold now because prices may fall further to $550 or $600 before resuming its rally, he said."

That's pretty close to the mark so far you would have to agree. 

A common retort to Faber is that if he keeps saying it long enough he will eventually be proven correct. The problem here is that he is mostly very specific in his comments, sometimes down to a specific currency, country or commodity. It's pretty clear he is a big $US bear, due to the underlying structural problems facing the US financial juggernaut. Helicopter Ben even alluded to this a few days ago.

Maybe people get a bit uneasy when he keeps telling them that the emperor has no clothes.

It's all a matter of timing now.


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## noirua (20 January 2007)

Uncle Festivus said:
			
		

> Re-visiting the original post -
> 
> "Gold's 5.2 percent drop yesterday below $700 an ounce for the first time in a week was a ``tiny'' decline, Faber said. Investors shouldn't buy gold now because prices may fall further to $550 or $600 before resuming its rally, he said."
> 
> ...




Yes, there is that problem of being "eventually correct". An American Guru, Bob Beckman, forecast a collapse in property prices, particularly in the U.K. He started in 1982 and kept on repeating the argument, as prices rose over 100%. Then, in 1988, a slide began and the eventual fall was over 30% by 1992. Was his forecast correct? 
Inflation was high during that period, between 5% per annum and 9% per annum.


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## tech/a (20 January 2007)

Ive been on here and Reefcap since inception---pretty well.

*EVERY year * without exception the market is about to crash.
One year they will be right but for all the others------


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## wayneL (20 January 2007)

tech/a said:
			
		

> Ive been on here and Reefcap since inception---pretty well.
> 
> *EVERY year * without exception the market is about to crash.
> One year they will be right but for all the others------




This time is different though


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## Gundini (20 January 2007)

wayneL said:
			
		

> This time is different though




Uh oh, there's the warning I've been waiting for, hehehe.....

but on a serious note, I'm a little concerned. So much so I am holding nothing overnight. Got smashed in May, bashed in Oil last couple of weeks, and spending my time day trading. I can't afford not to be patient!

How frustrating, waiting for something that may not happen!


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## chicken (20 January 2007)

wayneL said:
			
		

> This time is different though



Waynel...he also said Gold will go to $50000 an ozs of Gold...he sometimes gets it right...is not allways on the mark..and yes its different now...there is a fight for the commodities...like Nickel etc...also hes been saying this for the last 4 years...so how clever is the man...US$ will be devalued...yes but a complete crash..maybe one day..WHEN ,everyone likes to know..its like predicting the next 3 worldwar...one day perhaps


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## Gundini (20 January 2007)

tech/a said:
			
		

> Ive been on here and Reefcap since inception---pretty well.
> 
> *EVERY year * without exception the market is about to crash.
> One year they will be right but for all the others------




True, as they say, "Even a broken clock is right twice a day"


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## noirua (20 January 2007)

chicken said:
			
		

> Waynel...he also said Gold will go to $50000 an ozs of Gold...he sometimes gets it right...is not allways on the mark..and yes its different now...there is a fight for the commodities...like Nickel etc...also hes been saying this for the last 4 years...so how clever is the man...US$ will be devalued...yes but a complete crash..maybe one day..WHEN ,everyone likes to know..its like predicting the next 3 worldwar...one day perhaps




???????????? $50,000 an ounce ?????????????


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## Uncle Festivus (20 January 2007)

No, I recall his words were that it will keep parity with the Dow Jones due to fiat money creation. So, if the dow should go to 50k (due to continued money creation) then maybe gold could go to 50k also. It's all relative. He's saying that as a currency that intrinsically cannot be created at will then it should appreciate in proportion to the amout of excess  fiat liquidity created. For eg, the real inflation rate in the UK is supposedly around 10%, so the gold price in pounds should reflect this diminition in purchasing power by going up, which it has. I'm no expert and someone else may be able to put it a better way, but basically the gold price (when it's got it's currency hat on) reflects the inflation rate of money supply. 

As long as they (central banks) keep creating excess money, gold will always appreciate I guess?.

Gold’s price reflects the true devaluation of fiat currencies and remains our best guardian against the ravages of fiat money inflation.


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## Smurf1976 (20 January 2007)

noirua said:
			
		

> An American Guru, Bob Beckman, forecast a collapse in property prices, particularly in the U.K. He started in 1982 and kept on repeating the argument, as prices rose over 100%. Then, in 1988, a slide began and the eventual fall was over 30% by 1992. Was his forecast correct?
> Inflation was high during that period, between 5% per annum and 9% per annum.



At least he was more correct than the "property always goes up" types.

Just as well "it's different this time" and the global real estate bubble won't turn into a global house price crash. Well, at least not outside of the US, Sydney, outer suburbs of Melbourne, Hobart or anywhere else that's already seen falls.


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## Uncle Festivus (20 January 2007)

Smurf1976 said:
			
		

> At least he was more correct than the "property always goes up" types.
> 
> Just as well "it's different this time" and the global real estate bubble won't turn into a global house price crash. Well, at least not outside of the US, Sydney, outer suburbs of Melbourne, Hobart or anywhere else that's already seen falls.




Smurf, how do you know this? Personally I don't think property in the above markets has not seen any sort of bottom yet, with rumblings of a further interest rate hike to come. Combine that with a rent squeeze & the poor old consumer will be doing it hard, going forward, as they say.

As for Faber, he's a bit different from the rest, and I'm sure he wouldn't like being compared to some of the other commentators mentioned here, ie each to their own. He actually invests his & other peoples money according to his research & beliefs, and he's still around and has done very well for all concerned.


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## wayneL (20 January 2007)

Uncle Festivus said:
			
		

> Smurf, how do you know this? Personally I don't think property in the above markets has not seen any sort of bottom yet, with rumblings of a further interest rate hike to come. Combine that with a rent squeeze & the poor old consumer will be doing it hard, going forward, as they say.
> 
> As for Faber, he's a bit different from the rest, and I'm sure he wouldn't like being compared to some of the other commentators mentioned here, ie each to their own. He actually invests his & other peoples money according to his research & beliefs, and he's still around and has done very well for all concerned.




Hey Uncle,

You have to watch out for tongues in cheeks around here.


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## BSD (20 January 2007)

The 'doomed fiat currency' bull case for gold is one of the most overstated and consistently wrong forecasts of the last thirty years. Why do all the fiat fear mongers get so down on the USD and not the Euro or GBP?

In my view, with the extremely limited 'real' or 'industrial' uses for gold - it is also only a valuable commodity for its 'percieved' value; very similar to a US dollar or Euro note. 

Outside of the perception of value - gold is just a pretty rock.

Fiat currencies will prevail. If you want a global depression, moving back to backing all currency with pretty rocks would be a good way to start. 

I hold gold and have a relative bullish view on it due to a moderately bearish view on USD - but i prefer copper, oil, nickel, corn etc because they have actual uses for necessity. 

I just don't see the USD imploding. 

Remember that unlike most countries, the US borrows in its own currency. 

When the USD tanks, their debts fall in relative value too. The US still has a manufacturing and technology export base of massive size that earns heaps of JPY/AUD/EUR/GBP able to maintain the debt in devalued USD.

The USD is already weak enough to have a reasonably low purchasing power parity compared to other currencies - particularly those of Europe. Even the Aussie battler buys twice as much against the USD as it did five years ago. 

I personally believe one of the most overvalued currencies to be the UK pound. Particularly when focussing on PPP

Can anyone explain to me the reason for the incredibly expensive nature of the pound?

The UK is not exactly an economic powerhouse anymore and the London property market has recently deflated from a huge bubble without disaster.

JPY and RMB would be my preferred currencies to hold.


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## Smurf1976 (20 January 2007)

wayneL said:
			
		

> Hey Uncle,
> 
> You have to watch out for tongues in cheeks around here.



Absolutely tongue in cheek there. Might have to be a little more careful posting...   

I certainly don't think the US market is anywhere near a bottom judging by informed comments on the subject. As for Australia, the middle suburbs of Hobart seem to be very slowly falling for the SAME TYPE of house even though median prices of houses actually selling are rising (since poorer quality simply isn't selling, thus masking the fall in the statistics). It's hard to believe that the market would be doing much better elsewhere whilst interest rates continue their rising trend and wage inflation is low.


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## wayneL (20 January 2007)

BSD said:
			
		

> The 'doomed fiat currency' bull case for gold is one of the most overstated and consistently wrong forecasts of the last thirty years. Why do all the fiat fear mongers get so down on the USD and not the Euro or GBP?
> 
> In my view, with the extremely limited 'real' or 'industrial' uses for gold - it is also only a valuable commodity for its 'percieved' value; very similar to a US dollar or Euro note.
> 
> ...



 I think I agree with most of this. Particularly the stratospheric value of the pound.

If the USD is in trouble, so is the AUD, GBP (particularly) and the Euro etc.

Net result = 0 ( apart from normal fluctuations)

I can see all western economies imploding however... There are several routes and time frames, but ultimately a cleansing depression is inevitable. (not necessarily 1929 scale though)


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## wayneL (20 January 2007)

Smurf1976 said:
			
		

> Absolutely tongue in cheek there. Might have to be a little more careful posting...
> 
> I certainly don't think the US market is anywhere near a bottom judging by informed comments on the subject. As for Australia, the middle suburbs of Hobart seem to be very slowly falling for the SAME TYPE of house even though median prices of houses actually selling are rising (since poorer quality simply isn't selling, thus masking the fall in the statistics). It's hard to believe that the market would be doing much better elsewhere whilst interest rates continue their rising trend and wage inflation is low.




Agree, this is only the beginning of the beginning of RE problems.


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## Dukey (20 January 2007)

G'day folks
Have been studying this thread and the articles linked earlier, and other bearish threads on ASF (ie Commodies tipped to crash thread).

Certainly the bears are starting to growl louder recently. If we buy the 'crash just around the corner' theory, or just wanna be prepared for the eventuality, what's the best strategy to adopt?

Withdraw from market and park funds in what?? Cash or Bonds or Gold Bullion?

How much to withdraw from market?? - 50%? 80%?.  All down to personal taste/choice and how heavy the bear on your back is I guess? 

Are there any listed funds/stocks that might be useful as insurance against a crash??

Any ideas about these important ?? folks.  Whats your safety strategy look like?

(Sorry - so many questions and no answers from me as usual... but I hope they are useful questions?)

-dukey


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## reece55 (20 January 2007)

Dukey
If a great bear market comes, I won't be looking to park my money - I will aggressively be going short. Markets in a bear trend can create terrific gains for the short seller. Obviously, this is a strategy that must be used with caution - but if the chart reads right, you can make just as much money down as up.

Cheers


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## Dukey (20 January 2007)

Must admit - I dunno much about shorting. 
& I Guess I consider myself an investor, rather than a trader. Don't have the time or inclination to devote myself.
How much 'work' / 'time' would go into your average 'short' trade? (as opposed to a regular trade).


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## kerosam (21 January 2007)

i think there are listed companies that go short ... one is PMC & CDM... the former is priced at a premium at the moment and the other is more or less to its NTA. 

i don;t hold any of these two but might buy into them very soon


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## clowboy (21 January 2007)

kerosam said:
			
		

> i think there are listed companies that go short ... one is PMC & CDM... the former is priced at a premium at the moment and the other is more or less to its NTA.
> 
> i don;t hold any of these two but might buy into them very soon




PMC is also an unlisted managed fund (mirrored to the listed one, actually it's the other way round).  The unlisted obviously is in line with the NTA, but it is 25k min investment (prob why the listed one is at a premium).

Good track record too.


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## fleathedog (21 January 2007)

Dukey.

With the market at record highs you have two basic options:

1, if your investments are giving you too much stress you should sell/take profits now and just sit back and reassess everything without the stress of having money on the line. 

2, if you're happy with your inivestments for the long term, hold on and buy more IF a downturn comes. If you do no 2, you MUST be disciplined enough to actually not panic during any bear market and sell, and buy more shares when everyone else is selling.

The my 2 cents. Hope that helps!!


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## Uncle Festivus (21 January 2007)

Sorry bout that smurf, maybe need a   . (So you're walkin beside me then   ).

My experience regarding investing when there is a 'crash imminent' (any time in the last 3 years?). Go with the herd, follow the trend, take profits.
Maybe re-invest a smaller amount each time ie commit lesser amounts to any particular trade, keep a very close eye on stop loss levels.

Not too sure about averaging down though, each downturn/correction from these levels to be viewed as a possible end to the 'bull' market?. For AUS, employment is the key here, so may have a bit of life left in the stock market from super billions?.

Going short - best instrument to do so for me is CFD's, best instrument to loose lot's of money = CFD's. Pick a CFD (casino?) provider with GSL's, money well spent.

My outlook = commodities are on the nose a bit, hot money has to go somewhere, maybe to banks and staples eg WOW, Coles. Uranium = tech bubble repeat, get in, make money, get out. The trouble is not many stocks that show potential sp appreciation these days?. 

The risk reward ratio not in our favour I don't think.

----------------
Gold - yep, just nice, shiny bits of metal, but when the fiat system eventually plays it's final hurrah then gold will initially be THE only currency/game in town, followed by food. In his own words, The Calm Before The Storm - Bernakes' speech here 

----------------
British pound - Paul van Eedens view here , for the real story.


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## BSD (21 January 2007)

Uncle - thanks for the links. 


The parlous state of the forecasts of US finances are a disgrace and a reflection on the ineptitude of the administration from the last six years.

But there is plenty of time for a decent government to raise some taxes and even stop spending the GDP of Australia on blowing up other countries.


The GBP story is interesting too. The interest rate chasing funds have been the major force in moving currencies for a long time now and many reserves do not even publish a M1,2,3,4 number. 

Look at the strength of the NZD - totally related to interest rate chasing money. 

Despite whether it is correct based on what we all learnt from 1970s text books about money supply, inflation and currency movements - the current reality is that currencies move with interest rates as a major factor. 

I still think the GBP is hugely overpriced despite the interest rate position when compared with the AUD. 
_____________________

The state of the US finances still does not explain why fiat currency is worse value than gold - which derives a massive majority of its value from fiat. 

What about the AUD Gold rate - which is more important to most on this forum?

The Australian government has NO DEBT and pays 6% - surely the AUD is a better bet than gold which pays no income. 

Gold bugs are gold bugs I guess - interesting they mainly term their argument relative to the USD though. 
_______________

As an aside, I just looked into Paul's "Track Record":

_ Paul van Eeden joined Global Resource Investments in California as a stockbroker and analyst in mid 1996. Within three years his clients had more than six million dollars invested with him. 

As a result of his analysis of the gold market, Paul's clients were well positioned when the gold price turned around. By 2002 his clients' assets had increased by well over five hundred percent, to over forty two million dollars.  _ 

I can see why he went to writing newsletters. 

A private client adviser who only managed to raise $6m of funds under management in three years and $42m in six would get sacked by any firm as an incredible underperformer. 


HOOCHY MAMA


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## wayneL (21 January 2007)

fleathedog said:
			
		

> 2, if you're happy with your inivestments for the long term, hold on and buy more IF a downturn comes. If you do no 2, you MUST be disciplined enough to actually not panic during any bear market and sell, and buy more shares when everyone else is selling.




flea,

Any opportunity to trot out one of my stock of cartoons:


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## Uncle Festivus (21 January 2007)

Hi BSD,

Plenty of time...... running out fast......must get re-elected........do not raise taxes...... let the next turkey deal with it........  never gonna happen! Congress keeps raising the budget ceiling to record levels....

Australia's problem is with private debt, currently per capita one of the highest in the western world. 

All central banks are inflating their money supply, reducing the value of the dollar in your pocket every day.  Gold as a currency has been a better hedge against this for the last 6 years, and will continue to be as long as money supply is continually inflated because of weak politicians. It's a case of which can be created faster, gold or paper dollars.

Pauls track record speaks for itself, by my calcs turning $6m into $42m in 6 years is pretty darn good?. Sounds like you agree with him regards the pound overvaluation?.

UF


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## noirua (2 March 2007)

Dr Marc Faber talking on Bloomberg today, has forecast a drop of 30% to 40% in the Chinese and Indian stock markets.


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## noirua (2 March 2007)

Marc Faber speaks:  http://www.newsmax.com/money/archives/st/2007/2/27/112341.cfm?MN=1&promo_code=2E51-1&S=AL


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## the barry (2 March 2007)

noirua said:
			
		

> Dr Marc Faber talking on Bloomberg today, has forecast a drop of 30% to 40% in the Chinese and Indian stock markets.




Can you please quote from that article where he states that he has forecast a drop of 30 - 40 percent in those two markets??? I can't find that quote anywhere.


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## KIWIKARLOS (2 March 2007)

So if they drop 30% that will be equivalent to the 3% drop we had recently, they grew at approx 130% in 6 months didn't they? So realistically that drop is not that bad if it does happen and i do mean IF.


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## nizar (2 March 2007)

noirua said:
			
		

> Dr Marc Faber talking on Bloomberg today, has forecast a drop of 30% to 40% in the Chinese and Indian stock markets.




Didnt India already have a sizeable drop during last year?
And then it ran again?


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## noirua (2 March 2007)

the barry said:
			
		

> Can you please quote from that article where he states that he has forecast a drop of 30 - 40 percent in those two markets??? I can't find that quote anywhere.




Hi, You will be able to listen to Marc Faber being interviewed today on Bloomberg TV. Will be repeated many times as it has been on the Bernard Lo Programme already.

Live Link to Bloomberg TV:  http://www.bloomberg.com/avp/avp.htm?clipSRC=LiveBTV#


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## GreatPig (2 March 2007)

the barry said:
			
		

> Can you please quote from that article where he states that he has forecast a drop of 30 - 40 percent in those two markets???



It was in another article linked to from the posted one.

GP


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## Dr Doom (15 March 2007)

Latest from Dr Marc Faber - 

As a keen observer of economic, social and financial trends, I think we are moving toward one of the most fascinating period in economic history. It will also be a time during which most investors will end up with huge losses.

Let me explain. The shares of most sub-prime lenders already peaked out in late 2004. Throughout 2006, it became increasingly evident that conditions in the housing market were deteriorating. But investors kept on buying these stocks because the P/Es were low and analysts continued to recommend them, and because the Fed kept on telling investors that the worst in the housing market was over!

But consider the following. The news is always favorable near market tops or when a sector is about to peak out. Most analysts will also be most bullish about the prospect of a sector right at the very top of the market - remember high tech stocks in 2000?

Also, near stock market tops the price-to-earnings ratio is frequently low because the problem lies less with the 'price' than with the 'earnings'. In 1929, the US stock market sold for less than 14-times earnings. But then earnings collapsed and stocks plunged by 90%.

Avoiding losses
So, how should an investor navigate in these difficult times? In the future, avoiding losses will be more important than making huge gains. Because of a weaker housing market and problems in the sub-prime industry one source of 'excess liquidity' has dried up.

And while it may be premature to conclude that credit problems in the sub-prime lending market will spread, the risks that tighter credit conditions will spread throughout the capital market have increased. And the first casualties of less international liquidity would be emerging markets.

The Indian stock market has had a huge run since 2003 - admittedly from a very depressed level. In 2007, the Sensex increased until February 9th by 6.9% but then suddenly dropped by 7.4% leaving the market down 1.2% year-to-date. Similarly, the Chinese stock market has also all the symptoms of a stock mania and exiting would be prudent.

Gold to outperform
With very few exceptions, equity markets are over-bought, fully valued and vulnerable to some disappointments. For asset inflation aficionados, gold and silver should under any scenario (tight or easy money) continue to out-perform US financial assets.

Still, whereas I believe that in the long term the Fed will have no other option than to print money and embark again on a string of aggressive interest rate cuts, weakness in one market - housing - could now spread to other asset markets - including industrial commodities and precious metals. But at the same time, there is little doubt that Mr. Bernanke is precious metals' best friend.

After a disappointing 2006, Japanese equities could surprise in 2007 on a relative basis. Compared to the US households Japanese investors have only a very small percentage of their financial assets in equities. Also, the Japanese Yen has become inexpensive for exporters.


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## noirua (22 November 2007)

Dr Marc Faber, Mr Doom and Gloom, advises caution but its GO! GO! GO! - FOR GOLD: http://www.aireview.com.au/index.php?act=view&catid=8&id=7332&setSub=1


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## noirua (6 March 2008)

A 15 minute MUST SEE interview with Mr Marc Faber, on Bloomberg TV:  http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/v5g.9Aykh2hA.asf


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## dhukka (6 March 2008)

noirua said:


> A 15 minute MUST SEE interview with Mr Marc Faber, on Bloomberg TV:  http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/v5g.9Aykh2hA.asf




Thanks for that little boat, gotta love Marc Faber, just tells it like it is. Absolutely priceless stuff about Bernanke.


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