# Dr Doom - Correction to be 30%



## wayneL (11 August 2007)

Video interview with Dr Marc Faber on Bloomberg Click link in menu on right.

I always like what Dr Faber has to say as it marries up pretty closely with my own thoughts.

Main Points:

* The expansionary policies of CBs are the cause of this crisis. Printing more money will exacerbate the problem.

* We only have a correction of 8% which is only a minor correction. Let the market run its course.

* Investors have become unaccustomed to downside volatility.

* Correction should be in the order of 30%

* We are at the beginning of a bear market.

* Problems are many and there are no easy solutions.

* Not impressed with US productivity.

* CDOs are garbage and a worldwide problem

* Cutting Rates will tank the dollar

* (Laughs at sound economy hypothesis) Ernings always greatest at the top and always a disaster at the bottom.

* Expects earnings disappointments next quarter.

* US economy already in depression… growth just inflation.

* Bailing out banks is a mistake and it won’t work… system will eventually work it out providing the dollar doesn’t tank.

* At the July peak there were poor internals with high number of stocks making yearly lows

* Market leaders (GOOG, AAPL etc) to lose 40%

* Emerging markets are particularly vulnerable in an environment of de-leveraging.

* Real estate to decline

* Bullish on reasonably priced farmland.


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## Agentm (11 August 2007)

*'Clearly, something is amiss in the markets that few in our strategy, if anyone, have experienced before.'*

maybe,,

but is it as big as people make out.. berknanke said 50 - 100 billion, only 1% of US motgages.. tops.. and he should know..

storm in a tea cup until reality checks come into play.. IMHO


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## Sean K (11 August 2007)

Agentm said:


> *but is it as big as people make out.. berknanke said 50 - 100 billion, only 1% of US motgages.. tops.. *



*This is one of the type of figures that has stuck in my mind, which has made me hesitate about jumping completely into the Bear's den.

The US is much, much bigger than even 100 sub prime morgage houses and a couple of investment bank's hedge funds. Are these events another excuse to take money out of the market at a peak? 

Having said that, who's to say that any of the information we are receiving is correct?

Having said that, I think Marc Faber has one of the biggest brains on the planet! 

 *


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## Agentm (11 August 2007)

next week it will be flu,  then it will be korea, then iran..

Fear...

fear drives the market down, and theres always a ton of cash waiting to make it big on the ride up..

if the figures are right i am not in the slightest bit concerned..


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## tech/a (11 August 2007)

There are 2 fighting factions.
Bulls and Bears.
Both are using real bullets/Money.

You can choose a side load up and take the punt that youve picked the strongest most well equiped side.You may even become a double agent,using sniper tactics to pick off players in both sides--dont get caught though neither take prisoners!
You maybe wounded or even killed.

OR

You can take no part and watch.Waiting to see which overcomes which before choosing a side.
Ive been in enough wars to know which I prefer.


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## Sean K (11 August 2007)

tech/a said:


> Ive been in enough wars to know which I prefer.



Double agent?


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## Pager (11 August 2007)

Marc Faber is forever a pessimist, every so often he gets it right and his predictions look good but no more so than any other market commentator/expert.

It does make me laugh though, we may well be at the start of a bear market who knows, maybe another correction, I don’t want to guess but every time there is a bit of weakness, we start to see Mr. Faber on the likes of Bloomberg with his message of doom!, not that long ago since the last shake out and guess who was preaching doom doom doom, how often does he get it right, maybe this time maybe not?.

Cheers

Pager


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## noirua (11 August 2007)

Pager said:


> Marc Faber is forever a pessimist, every so often he gets it right and his predictions look good but no more so than any other market commentator/expert.
> 
> It does make me laugh though, we may well be at the start of a bear market who knows, maybe another correction, I don’t want to guess but every time there is a bit of weakness, we start to see Mr. Faber on the likes of Bloomberg with his message of doom!, not that long ago since the last shake out and guess who was preaching doom doom doom, how often does he get it right, maybe this time maybe not?.
> 
> ...




Hi, All fair comment. I watched an interview with Marc Faber on Bloomberg TV about a Month ago. In it he seemed to be covering himself by saying, that it was all about which sector was invested in and not a particular asian country. He seemed to be saying that he'd invested in certain sectors in Singapore, Hong Kong, Thailand and China. Most of the investments were to do with the buying of land in Thailand, Singapore and Hong Kong. Also highlighted the weak Hong Kong Dollar.


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## Pommiegranite (11 August 2007)

He's not a pessimist:

"* Bullish on reasonably priced farmland"


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## dhukka (11 August 2007)

kennas said:


> This is one of the type of figures that has stuck in my mind, which has made me hesitate about jumping completely into the Bear's den.
> 
> The US is much, much bigger than even 100 sub prime morgage houses and a couple of investment bank's hedge funds. Are these events another excuse to take money out of the market at a peak?






Agentm said:


> *'Clearly, something is amiss in the markets that few in our strategy, if anyone, have experienced before.'*
> 
> maybe,,
> 
> ...




Get ready for a dose of reality boys, that figure will turn out to be well short of the final count. The first estimates are always the kindest. Remember this is from a guy who has consistently said that the sub-prime problem is contained. 

More importantly that figure does not take into account the mortgage baceked securities or CDO markets and the leverage behind them.


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## CanOz (11 August 2007)

dhukka said:


> More importantly that figure does not take into account the mortgage backed securities or CDO markets and the leverage behind them.




This is what i was thinking, its not just the defaults thats killing the MBS holders, its the leveraged effect right.

Cheers,


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## dhukka (11 August 2007)

wayneL said:


> Video interview with Dr Marc Faber on Bloomberg Click link in menu on right.
> 
> I always like what Dr Faber has to say as it marries up pretty closely with my own thoughts.
> 
> ...




Great interview, thanks for posting it Wayne. You have to like Faber -  a straight shooter who knows his stuff.  I think you covered most of the points. I'd add one that Faber noted. 

That is that investors have gotten used to buying the dips of small corrections and then seeing the market rally to new highs. Many of those will be disappointed when the market fails to rally to a new high in the short term exacerbating the fear.


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## noirua (11 August 2007)

To put matters in perspective, Dr Marc Faber only controls funds worth US$300 million which puts him in the minnow class of big hitters.


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## CanOz (11 August 2007)

Thats a great video, particularly the emphasis on this unwinding or deleveraging effect on the markets, thats to me is the key here...Cash is king for me too, save save and save until this thing is worked off. Working this off will be the only solution that will work and not make it worse.



Cheers,


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## numbercruncher (11 August 2007)

Agentm said:


> *'Clearly, something is amiss in the markets that few in our strategy, if anyone, have experienced before.'*
> 
> maybe,,
> 
> ...





Well thats just a big fat lie, well atleast not telling the whole truth anyways ...... more than 100b has already been injected to the system from central banks, if that figure was true it would of been cheaper to pay out all those morgages and say "have a nice day" 


This is what happens in the great rort of modern economics, that so called 100b is probably used as security on a trillion worth of loans .... The home gets bought on borrowed money, Banks turn the mortgage into securitys, people/Hedge funds/companys again borrow to buy these securitys, and inturn they then borrow against those securitys to buy more "investments" ..... Its a big fat debt fueled rort that comes tumbling down as soon as the suckers whom bought the houses they couldnt afford in the first place stop making repayments.

And Billions and billions more of these Subprime and Liar Loans have there rates adjusted upwards each month for years to come, I beleive the peak is October with 50b+ that month alone, Id hate to think just how much is loaned or at stake with these mortgages as the underlying security.

It simply has to get worse before it can get better, Unless the Fed massively slashes interest rates but that would open yet another big drama .......


Talk about caught between a rock and a hard place, Central Banks caused this whole problem by fuelling an asset boom with their low interest money, will be interesting to see how they intent to fix it!


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## CanOz (11 August 2007)

noirua said:


> To put matters in perspective, Dr Marc Faber only controls funds worth US$300 million which puts him in the minnow class of big hitters.




From what i've recently read, thats actually pretty high for an individual trader managing a fund. There are much larger accounts, but most are manager type positions for banks and investment companies. New Market Wizards covers some of these traders.

Cheers,


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## dhukka (11 August 2007)

noirua said:


> To put matters in perspective, Dr Marc Faber only controls funds worth US$300 million which puts him in the minnow class of big hitters.




How does that put anything he said in the interview into perspective?


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## noirua (11 August 2007)

Just for a moment, I'll get away from Dr Doom as I can't hear his video due to a computer problem.

Australian mining stocks should be far better off, those that are producing in Australia, as the US Dollar gets stronger. Receipts in A$ terms are up around 6% from a few weeks ago. DR Doom is usually far too busy discussing his interests and forgets about Australasia.


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## dhukka (11 August 2007)

noirua said:


> Just for a moment, I'll get away from Dr Doom as I can't hear his video due to a computer problem.
> 
> Australian mining stocks should be far better off, those that are producing in Australia, as the US Dollar gets stronger. Receipts in A$ terms are up around 6% from a few weeks ago. DR Doom is usually far too busy discussing his interests and forgets about Australasia.




Well that's nice, but how does the fact that Marc Faber manages a paltry $300 million put anything he says into perspective?

Incidentally how much did Long Term Capital Management manage? How did they end up?


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## nizar (11 August 2007)

Remember what Marc Faber said about the gold price? 

Oh yeh -- he never put a time frame on that -- so i guess he can never be wrong -- just early 

Yeh Marc Faber got the 1987 crash right, he got Asian Crisis right and he picked the Commodities boom correctly, but how many calls between all those were wrong?

But then again no remembers when he got it wrong 

And $300million is nothing.
Read this article
http://www.dailyii.com/article.asp?...040590&stage=True&zonZoneID=156&pagPageID=218

Paul Tudor Jones manages $5.3billion. James Simmons about the same.
Daniel Loeb $3.8billion.
Steve Cohen about $4billion.
Jerry Parker $1billion.


Even local guys like Kerr Nielson manage several billions (is it about $10??).


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## numbercruncher (11 August 2007)

Hmmm, odd, if someone is worth a paltry 300 million they are not worth listening to?

What if they are worth 9b?



> George Soros alarmed an audience in Singapore this week by claiming that 'the soft landing (for the US economy) will turn into a hard landing. That's why I expect the recession to occur in 2007 not 2006.'
> 
> He went on to explain that the slowing US housing market would be the factor that finally tripped the economy into recession, albeit not until 2007. Of the Federal Reserve and interest rates he commented:




http://www.ameinfo.com/75420.html


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## wayneL (11 August 2007)

nizar said:


> Remember what Marc Faber said about the gold price?
> 
> Oh yeh -- he never put a time frame on that -- so i guess he can never be wrong -- just early
> 
> ...



The bulls are all missing the point.

Are the points real? Do they make sense? Are your reactions to it emotional or logical?

Who cares about the petty disparaging nitpicking points. It's not a dick measuring contest. It's all information and a point of view you ignore at your peril. 

It's starting to sound like CNBfreakinC in here!


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## hacheln_mice (11 August 2007)

Bearish propaganda always sounds intelligent during market declines.  It's okay to be cautious in this correction, but I really don't see reason to hide in bomb shelters just yet (...at least until the some major trendlines get broken in the all ords).


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## wayneL (11 August 2007)

hacheln_mice said:


> Bearish propaganda



Another emotional dis... you don't think the bulls make full use of propaganda?

SHEEEESH!!!!!


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## explod (11 August 2007)

wayneL said:


> Another emotional dis... you don't think the bulls make full use of propaganda?
> 
> SHEEEESH!!!!!





Agreed, but are we talking propoganda or financial fundamentals.  The fundamentals say we have been living and trading on too much credit and now we have a very large and growing margin call.

If we are to use the All Ordinaries as a yard stick, we have problems.  To """know""" as Warren Buffet chants, we need to measure all the information we can get our hands on.


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## nomore4s (11 August 2007)

explod said:


> Agreed, but are we talking propoganda or financial fundamentals.  *The fundamentals say we have been living and trading on too much credit and now we have a very large and growing margin call.*
> If we are to use the All Ordinaries as a yard stick, we have problems.  To """know""" as Warren Buffet chants, we need to measure all the information we can get our hands on.




lol, now thats a good analogy.
While I'm generally a bull, I think there are some serious underlying problems based around the use of free and easy credit. It may not fully blow up this time but I think it is a good warning sign to get prepared.

It is becoming apparent the the Central banks are worried about the situation with the way they have made money available to the banks and just how much they have made available. The more I learn about how the banks create credit and how the CBs operate the more concerned I am about what happens when it does all blow up.

How long can it all be swept under the carpet for? 
Surely there will come a time when some of this credit needs to be paid back?


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## dhukka (11 August 2007)

wayneL said:


> The bulls are all missing the point.
> 
> Are the points real? Do they make sense? Are your reactions to it emotional or logical?
> 
> ...




Exactly, no refutations of the arguments presented by Faber just the usual platitudes about how he got it wrong sometimes. 

Since when does how much money someone manage help them to pick major turning points in the market? 

Incidentally if I managed to get just 3 calls right in my life and they were as significant as the 1987 crash, the Asian crisis and the commodities boom I'd not only be very happy but very rich.


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## >Apocalypto< (11 August 2007)

Agentm said:


> *'Clearly, something is amiss in the markets that few in our strategy, if anyone, have experienced before.'*
> 
> maybe,,
> 
> ...




well the US market thinks it's a little more then a storm in a tea cup and that's our direct reality!


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## chops_a_must (11 August 2007)

dhukka said:


> Exactly, no refutations of the arguments presented by Faber just the usual platitudes about how he got it wrong sometimes.
> 
> Since when does how much money someone manage help them to pick major turning points in the market?
> 
> Incidentally if I managed to get just 3 calls right in my life and they were as significant as the 1987 crash, the Asian crisis and the commodities boom I'd not only be very happy but very rich.



Totally agreed.

And since when does the amount someone is worth equate to their success? That's the sort of crap that has our society rooted. I'm pretty sure I'm more successful in life than Paris Hilton for instance. 

But the amount someone is worth; the amount of paper someone has on a wall; the size of a person's cheer squad, has no positive correlation to a person's skill in comparison to a peer, nor does it change the validity of the person's opinion.

I've been a bull since I've been back in the market, but his calls are consistent in comparison to other bears. And in large, I find it very hard to dispute some of his arguments. The simple fact is, what central banks are doing now is incredibly bad for the ordinary person, which is what the strength of the economy hinges on. 

The other thing to take into account is the potential decoupling of the markets between the east and west (as faber points out), and what that means for a market like Australia. Eventually this has to happen, but how long will it take? Who knows? But given materials have fallen further than financials, it gives you some idea of the current rationale...


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## nizar (11 August 2007)

chops_a_must said:


> Totally agreed.
> 
> And since when does the amount someone is worth equate to their success? That's the sort of crap that has our society rooted. I'm pretty sure I'm more successful in life than Paris Hilton for instance.
> 
> ...




Chops.
Maybe its a misunderstanding on my part, but i thought $300million was the size of the fund that Marc Faber manages.
As for his worth, i got no idea.

Those other traders and their billions (in my previous post) were funds UNDER MANAGEMENT, not how much they are worth.

Paris Hilton could in fact be a champion trader that cleans up the markets. Dont let the media fool you


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## insider (11 August 2007)

I hope it falls 30%... That will be a dream


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## wayneL (11 August 2007)

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/11/cnfsa111.xml

As the onion is peeled, it gets more rotten the further you get. As this article implies, there could be some more headline grabbers to come. There are rumours that Goldman Sachs may have some bearish surprises in store. SOURCE



> FSA acts as crisis engulfs banks
> 
> By James Quinn, Business Correspondent
> Last Updated: 12:08am BST 11/08/2007
> ...


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## billhill (11 August 2007)

Just an observation of the financial system and capitalist and free markets as a whole. Correct me if i'm wrong but isn't the theory that these markets are set up so as to correct themselves when imbalances occur (thus the saying that any regulation is negative). Thus isn't the injection of money by central banks counteracting the natural resetting of the finacial system that the credit crunch would in itself solve once it had run its course. Is the interferance by central banks in fact leading to even more imbalance in the system (that is aside from their role in controlling inflation). Just the way i am seeing it at the moment.


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## dhukka (11 August 2007)

billhill said:


> Just an observation of the financial system and capitalist and free markets as a whole. Correct me if i'm wrong but isn't the theory that these markets are set up so as to correct themselves when imbalances occur (thus the saying that any regulation is negative). Thus isn't the injection of money by central banks counteracting the natural resetting of the finacial system that the credit crunch would in itself solve once it had run its course. Is the interferance by central banks in fact leading to even more imbalance in the system (that is aside from their role in controlling inflation). Just the way i am seeing it at the moment.




Bill, 

You are absolutely right of course. You can make exactly the case against the triggers set up in the US stock market designed to kick in and halt trading when they fall too far. 

The idea of 'free markets' is one of the favourite catch-cry's of western elites however you can be sure when free markets don't do what they want them to they will intervene.


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## sassa (11 August 2007)

The size of the correction?Impossible to speculate with the unknown damage that has been done through the sub-prime market worldwide.There is one undeniable fact-the central banks and reserves are injecting liquidity because they know there is a major problem.


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## ZacR (11 August 2007)

There are a lot of theories to support a lot of different arguments, but in the end, what does it matter?
As we watch the 'massive falls' in the market doesn't it seem plain and simple? There are Bargains to be had.
I am certainly not an 'expert' but as far as I'm concerned MBL @ sub $75, RIO @ sub $85 etc etc, there are great value buys everywhere.
After all - if this really is the big 'correction' won't history repeat as it always does and exceed previous highs....?


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## CanOz (11 August 2007)

insider said:


> I hope it falls 30%... That will be a dream




Your in CASH insider! 

Good on ya! I hope you pounce when it bottoms...whatever year that is!

Cheers,


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## CanOz (11 August 2007)

ZacR said:


> There are a lot of theories to support a lot of different arguments, but in the end, what does it matter?
> As we watch the 'massive falls' in the market doesn't it seem plain and simple? There are Bargains to be had.
> I am certainly not an 'expert' but as far as I'm concerned MBL @ sub $75, RIO @ sub $85 etc etc, there are great value buys everywhere.
> After all - if this really is the big 'correction' won't history repeat as it always does and exceed previous highs....?




Stock prices mean nothing if they go out of favour, as they inevitably do in the last phase of the economic cycle. Cash will be king.

Cheers,


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## yonnie (11 August 2007)

there`s a lot of BS here.

what I want to hear from some-one is:

what are the global fundamentals - are they good enough that the subprime stuff will be forgotten in 6 months time?

is anybody capable of giving a reasoned appraisal?

I wonder if you actually have websites that give a generally trustworthy view of the economy?

thanks


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## nizar (11 August 2007)

ZacR said:


> After all - if this really is the big 'correction' won't history repeat as it always does and exceed previous highs....?




True but after 1929 it took 30 years to get back to breakeven in terms of the index 

30 years @ cash rate (risk-free) compunded is a fair bit 

I know which one id prefer


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## springhill (11 August 2007)

nizar said:


> True but after 1929 it took 30 years to get back to breakeven in terms of the index




Surely WW2 which was smack in the middle of that thirty year period, which nearly bankrupted every country that was involved, had some effect in prolonging the downturn nizar? Those were exceptional times, not a shadow of our current global economic climate?


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## wayneL (11 August 2007)

springhill said:


> Surely WW2 which was smack in the middle of that thirty year period, which nearly bankrupted every country that was involved, had some effect in prolonging the downturn nizar? Those were exceptional times, not a shadow of our current global economic climate?



WWII was a boon to the US. It pulled it out of depression.


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## wayneL (11 August 2007)

yonnie said:


> there`s a lot of BS here.
> 
> what I want to hear from some-one is:
> 
> ...



The global fundamentals all rely on further expansion of credit.

That does not seem likely.


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## theasxgorilla (11 August 2007)

According to the gents over at CXOAG Faber has a 51% hit-rate for predictions.

Which half of the above points are right???

http://www.cxoadvisory.com/gurus/


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## Garpal Gumnut (11 August 2007)

yonnie said:


> there`s a lot of BS here.
> 
> what I want to hear from some-one is:
> 
> ...




Many tipsters have a one eyed view of the market, bulls or bears. People are dynamic, looking for opportunities when one sector dries up, they go looking for another opportunity. The Homer and Marges of the US will have their house repossessed, sell their cars, but will then rent and continue to make do. They might even get fitter! Some guys who got lucky and rose to the top of the investment pile and got to manage millions or billions will go broke or top themselves. The rest of us will just get on with life. The market will recover, maybe next week, maybe next year, maybe 5 years. Its not a big deal. You just have to be lucky and pick the right moment to pile into the market again. Its luck. no chart or advice or seer or pundit will tell you when is the right time to get back in.

Garpal


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## theasxgorilla (11 August 2007)

springhill said:


> Surely WW2 which was smack in the middle of that thirty year period, which nearly bankrupted every country that was involved, had some effect in prolonging the downturn nizar? Those were exceptional times, not a shadow of our current global economic climate?




I think this is true.  Economic output (GDP) doesnt necessarily correlate highly with market indices and the reason for this, I believe, is that productivity can increase massively during war time (real or perceived, think Cold War), but due factors like government control over production people dont invest their cash into the sharemarket.


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## springhill (11 August 2007)

wayneL said:


> WWII was a boon to the US. It pulled it out of depression.




Are you suggesting that everytime the US experiences financial trouble they should look overseas for someone to bomb the crap out of? :bigun2: :rocketwho  That at least explains Iraq and their intentions towards Iran! Well that and oil


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## numbercruncher (11 August 2007)

yonnie said:


> what are the global fundamentals - are they good enough that the subprime stuff will be forgotten in 6 months time?







The Politicians say the Fundamentals are fantastic, the evidence disagrees with them 

It cant be forgotten in 6 months time because the show has only begun, more and more of these mortgages reset each month adding to the carnage.

Didnt the Russians used to say "nothing is surer to happen than once it has been officially denied" ?

I reckon the US federal reserve will practically be forced to drop Interest rates soon which will in turn open another can of worms i thinks!


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## numbercruncher (12 August 2007)

> We can't see it, but the selling is still going on. It's just slower and it's opaque. If the average hedge fund is geared seven times then a $1 redemption leads to $7 of credit market selling. Redemptions create delayed geared selling and every day the unexecuted potential selling is building - because the redemption mechanisms are so slow.




http://www.smh.com.au/news/business/how-the-crunch-in-credit-bit-wall-street/2007/08/10/1186530616291.html?page=2


That article is a great read.


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## Miner (12 August 2007)

It is an interesting article and so are the threads.
I noticed there are many comparisons of 1930 crash and great depression. Besides other things in 1930 BRIC did not exist and the technology was not advanced, so was the lack of communication. World was dominated by USA, UK, Germany,  Italy and Japan. Russia was a communist country and China / India did not exist in economical map. So let us not panic too much !
IF we see the nearest crash in 1987 it revived in short time. If we see the big crash of 9/11 the market went down and recovered. The golden rule will be watching fundamentals and not to panic. The second will be a fatal mistake by any investor including those  mum and dads who know nothing about shares but invested on their shares. 
I urge to all investing community that we spread the calm ness even we have lost some good money (I did but not panic striken) and watch the market for a week not committing heavily unless the fundamental is strong.

I am a common Joe Blog and do not have knowledge like many experts in this forum. So please do not think I am telling you how to suck eggs. But I have  also seen how experts have failed - because we are all human and even two best economists do not agree with each other.

Regards

Miner


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## vishalt (12 August 2007)

funny how these hack analysts expect disappointing earnings but each quarter most companies beat/smash them


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## theasxgorilla (12 August 2007)

Garpal Gumnut said:


> You just have to be lucky and pick the right moment to pile into the market again. Its luck. no chart or advice or seer or pundit will tell you when is the right time to get back in.




I have been testing random entry/exit systems for kicks (sick I know) and I have come to agree with this.  BUT, I also agree that if you redistribute the wealth among the people and don't change the rules it'll end up back in the hands of the same people again given enough time.  Wealth, like winning, seems to involve a certain state of mind.


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## theasxgorilla (12 August 2007)

vishalt said:


> funny how these hack analysts expect disappointing earnings but each quarter most companies beat/smash them




I suspect that has as much to do with the magical application of "general" accounting principals as it does to do with mis-diagnosis of the situation.  Hack analysists, particularly those with a bearish slant, mis-diagnose so often because they underestimate the capitalists' ability to window dress and the punters' willingness to fall for it.


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## tech/a (12 August 2007)

> they underestimate the capitalists' ability to window dress and the punters' willingness to fall for it.




A solid reason NOT to follow Fundamentals when deciding on a trade.


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## yonnie (12 August 2007)

somebody mentioned that if you follow wyckoff, you are able to determine the top and bottoms of markets, waves and minor stuff.

so was that the top @6,4something of the ordinairies?


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## yonnie (12 August 2007)

tech/a said:


> A solid reason NOT to follow Fundamentals when deciding on a trade.




in another thread you said that you will know when the time is there to be out of the market.

are you still in?


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## Kimosabi (12 August 2007)

yonnie said:


> there`s a lot of BS here.
> 
> what I want to hear from some-one is:
> 
> ...




The sub-prime debacle has only just begun.

There's another 18 months of ARM's to reset.

I reckon the correction could be more than 30%.


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## insider (12 August 2007)

for those who are out... let's hopes so


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## Sean K (12 August 2007)

I'm still calling contained correction. It's always like this in the middle of all the panic and emotion. Sub prime will effect a % of the market, but it's not going to wipe it out for a sustained period. There's too much money floating about. World economies are powering. Interest rates low. Low unemployment. We might be peaking, but that doesn't create a crash. I wait to be proven wrong.


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## insider (12 August 2007)

Of course Kennas... I think whoever is on the bulls side or the bears side in the end it's all just wishful thinking


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## dhukka (12 August 2007)

Interesting interview with Gary Shilling. Click on the link just under the main stories at the top of the page.


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## insider (12 August 2007)

I can't watch... it doesn't seem to work... what does he say?


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## Pommiegranite (12 August 2007)

Dr Doom isn't telling us anything that hasn't been said before.
Here is the original bear of them all


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## wayneL (12 August 2007)

dhukka said:


> Interesting interview with Gary Shilling. Click on the link just under the main stories at the top of the page.



LOL

* "It might blow up before it blows over"
* Problems spreading to prime
* People have unrealistic expectations of returns as a result of dot com boom and credit expansion
* Recession before the end of the year. "inevitable" 
* Spending supported by HPI, that's now gone
* CBs very worried
* Recession to be deflationary
* Liquidity all based on debt
* Remarks on ABX index Crash
* Short term cash injection (repos) useless and won't work.
* Consumers have been spending beyond their income.


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## Porper (12 August 2007)

wayneL said:


> LOL
> 
> * "It might blow up before it blows over"
> * Problems spreading to prime
> ...




So nothing we all don't know already then.

Don't lets all forget that the market is more than capable of reacting irrationally on any type of news or event.

If the press is reporting more on the bearish side of things, probably time to buy.

Anyway however complex we try and make it by discussing how the credit bubble may swing us into world recession the simple fact is the market is driven by supply and demand.If the Dow reaches 13000 and the illusion of value is believed by the masses, we will be up to new highs in no time, recession or not.

personally I am 2/3rds cash, but I am a scaredy cat


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## wayneL (12 August 2007)

Porper said:


> So nothing we all don't know already then.
> 
> Don't lets all forget that the market is more than capable of reacting irrationally on any type of news or event.
> 
> ...



Depends on availability of credit. A bona fide crunch will sap cash out of asset markets quicker than you can say Jack Robinson... positive sentiment or not.


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## rederob (12 August 2007)

Whatever happens, there are some certainties.
First, the US, by virtue of its "repo" bailouts, will accelerate the rate of decline of US dollars.
Second, the demand for energy will continue to increase, although a global depression might decelerate that rate for a very brief period.
Third, global populations will continue to incease, and the need for infrastructure at an exponentially increasing basis until third world economies catch up, will ensure that product and service demand will turn around any bear market more quickly than in the past.
Finally, the response of Central Banks to the present prime-crisis is unprecedented.  Only time will tell, but the likelood of a soft landing being doctored by the money merchants is not something we can readily overlook.


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## dhukka (12 August 2007)

One theme that is not new but keeps recurring is that US households have been spending beyond their means for years. When  households change their spending habits and start to save more, which hasn't happened for a while it can be a good leading  indicator of a recession. 

This article contains some interesting charts that point out some recent multi-year and in some instances multi - decade trend breaks. The most illustrative of these is the one below which shows the increase in household liabilities as a percentage of the increase in disposable personal income.  The red dots mark prior US recessions. The following comes directly from the article: 



> Each one of these recessionary periods is characterized as having happened with a decline in this ratio.  Of course absolutely nothing over the last half century even comes close to what has occurred over the last five+ years in terms of the magnitude of expansion and contraction.


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## yonnie (12 August 2007)

I think kennas is the first one to really look at the fundamentals.

the 2 important economic variables according to Richard Farleigh are inflation and economic growth, which should be checked every 3 months.

checklist for inflation with a score of -3 to +3 compared to 3 months ago concerning:
wages, unemployment, exchange rate, commodity prices,
 input prices, capacity realisation

checklist for economic growth concerning:
retail sales, employment, housing, consumer confidence, business confidence, industrial production, government surplus/deficit, gross national product.

I think that this is a far better way of keeping a finger on the pulse than argueing who can do forecasting the best.

Just my opinion.


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## dhukka (12 August 2007)

yonnie said:


> *I think kennas is the first one to really look at the fundamentals.
> *




I think your dreadfully wrong. Kennas recently admitted on a another thread that he is 'no economist' (they were his exact words I think) and his lack of knowledge on 'the fundamentals' is obvious. I'm not having a go at kennas here just stating that I don't believe kennas is one to consult on fundamentals.



> the 2 important economic variables according to Richard Farleigh are inflation and economic growth, which should be checked every 3 months.




Who the hell is Richard Farleigh?



> checklist for inflation with a score of -3 to +3 compared to 3 months ago concerning:
> wages, unemployment, exchange rate, commodity prices,
> input prices, capacity realisation
> 
> ...




So what scores are we at now? What do they tell us? What are Richard Farleigh's forecasts for the next 3,6,12 months? 



> I think that this is a far better way of keeping a finger on the pulse than argueing who can do forecasting the best.




The original post contains an interview with Marc Faber who gives numerous fundamental reasons why he sees a correction due in the markets. Those who have no arguments to counter Faber's are the ones who started the pissing contest over the accuracy of forecasters.


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## chops_a_must (12 August 2007)

rederob said:


> Whatever happens, there are some certainties.
> First, the US, by virtue of its "repo" bailouts, will accelerate the rate of decline of US dollars.
> Second, the demand for energy will continue to increase, although a global depression might decelerate that rate for a very brief period.
> Third, global populations will continue to incease, and the need for infrastructure at an exponentially increasing basis until third world economies catch up, will ensure that product and service demand will turn around any bear market more quickly than in the past.
> Finally, the response of Central Banks to the present prime-crisis is unprecedented.  Only time will tell, but the likelood of a soft landing being doctored by the money merchants is not something we can readily overlook.



I disagree with the first statement, agree with the rest.

If everyone goes to cash, that is bullish for the dollar. I think CB's will eventually realise they can't put fingers in the holes of all these leaks, and asset prices will tank, as they have been pumped up through credit, eventually having a deflationary impact. A reduction on debt in a currency in my view is bullish for that currency. And as people reduce debt, cash levels increase.

There has to be at some point a decoupling of the markets of developed nations and those of the developing world. I am of the belief the commodities boom is the result of civil construction and development in the developing nations. I don't think all of these commodities are being used to produce retail goods like clothes and things.

But if this is a prolonged correction, commodities will go down with the ship, but I think that is aside from the longer term picture. Watch for the chinese to sure up long term supply contracts... That is going to be my cue...


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## dhukka (12 August 2007)

Here's one for the bulls.



> "I fully expect the markets to recover and in particular international markets to rally in the fourth quarter and to close at record highs by the end of the year".




Onward and upward!


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## nizar (12 August 2007)

dhukka said:


> Who the hell is Richard Farleigh?





Richard Farleigh used to run a hedge fund in Bermuda. Now he lives in Monte Carlo. Worth about $160million. Knows a fair bit about trading.
He also wrote the book Taming the Lion.

More info here:
http://en.wikipedia.org/wiki/Richard_Farleigh


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## yonnie (13 August 2007)

a tad aggressive dhukka


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## TjamesX (13 August 2007)

From http://en.wikipedia.org/wiki/Great_Depression

The present???...



> Macroeconomists, including the current chairman of the U.S. Federal Reserve Bank System Ben Bernanke, have revived the debt-deflation view of the Great Depression originated by Arthur Cecil Pigou and Irving Fisher. In the 1920s, *in the U.S. the widespread use of purchases of businesses and factories on credit and the use of home mortgages and credit purchases of automobiles, furniture and even some stocks boosted spending but created consumer and commercial debt.* People and businesses who were deeply in debt when a price deflation occurred or demand for their product decreased were often in serious trouble””even if they kept their jobs, they risked default. *Many drastically cut current spending to keep up time payments, thus lowering demand for new products*. Businesses began to fail as construction work and factory orders plunged.




And the future....



> Monetarists, including Milton Friedman and *Benjamin Bernanke*, argue that the Great Depression was caused by monetary contraction, which was the consequence of poor policy making by the American Federal Reserve System and continuous crisis in the banking system.[4] By not acting, the Federal Reserve allowed the money supply to shrink by one-third from 1930 to 1931. Friedman argued[5] the downward turn in the economy starting with the stock market crash would have been just another recession. The problem was that some large, public bank failures, particularly the Huntly New York Bank of the United States, produced panic and widespread runs on local banks, and that the Federal Reserve sat idly by while banks fell. *He claimed if the Fed had provided emergency lending to these key banks, or simply bought government bonds on the open market to provide liquidity and increase the quantity of money* after the key banks fell, all the rest of the banks would not have fallen after the large ones did and the money supply would not have fallen to the extent and at the speed that it did.[6] With significantly less money to go around, businessmen could not get new loans and could not even get their old loans renewed, forcing many to stop investing. This interpretation blames the Federal Reserve for inaction, especially the New York branch, which was owned and controlled by Wall Street bankers. The Federal Reserve, by design, is not controlled by the President or the U.S. Treasury; it is primarily controlled by member banks and the chairman of the Federal Reserve.[7]




So the solution to excess borrowing (and with it the risk of asset price led deflation) is to provide more liquidity (ie borrow more)...

While at the same time central banks around the world pat themselves on the back and claim to have contained inflation.....

You can have it one way or the other - but not both... I think the path of least resisitance is to go for the inflation route. Inflate away the debt and the future pension obligations (lenders lose), but this will rely on consumers not losing confidence in taking on debt... if they do then I think debt induced deflation is the more likely (lenders win)


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## rederob (13 August 2007)

chops_a_must said:


> I disagree with the first statement, agree with the rest.
> 
> If everyone goes to cash, that is bullish for the dollar. I think CB's will eventually realise they can't put fingers in the holes of all these leaks, and asset prices will tank, as they have been pumped up through credit, eventually having a deflationary impact. A reduction on debt in a currency in my view is bullish for that currency. And as people reduce debt, cash levels increase.
> ......



It really doesn't work like that.
Value should be asset-backed, not debt riddled.
As the US is in the latter camp, the greenback must decline further, and further.
Inflating money supply decreases asset value and therefore the currency's value is set on a downward path hereonin.
Your implication that the Fed has reduced debt on a currency, and that therefore is bullish, foresakes the origin of the capacity to reduce debt.
I had reckoned the Oz dollar would hit parity with the greenback 3 years or so down the track.  I will now bring that forward a year, and anticipate parity will be an established theme in 2010.


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## numbercruncher (13 August 2007)




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## MS+Tradesim (13 August 2007)

Any of you economist types have any idea of how forced investing via super will play out here? And second, how could/will this be offset via babyboomers retiring and ripping money out of super to protect it in a falling market?

With the tax effectiveness of super in Australia, I'm wondering if that will have much of a cushioning effect on any fall here. Not much of an economist
so I don't know.


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## bvbfan (14 August 2007)

TjamesX said:


> From http://en.wikipedia.org/wiki/Great_Depression
> 
> The present???...
> 
> ...





The limitation in the 1920's right upto 1972 was that the US Dollar was actually worth something tangible. That is, it was convertable into gold so the convertability limited the ability to pump liquidity as people would demand the gold instead of US dollars.
Which is what started to happen leading into 1972 which forced Nixon to close the gold window.


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## dhukka (14 August 2007)

Another interview with Marc Faber. Click on the link below the main stories.

"Overall I think we are already headed into recession and it will manifest itself say within the next 3 - 6 months"


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## Knobby22 (14 August 2007)

We are suffering a short term liquidity crisis.
The central banks are providing money for overnight loans. 
The loans are slowly clearing.
This is a blip only.

One thing for sure. The state of our financial reporting is woeful.


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## dhukka (14 August 2007)

Knobby22 said:


> We are suffering a short term liquidity crisis.
> The central banks are providing money for overnight loans.
> *The loans are slowly clearing.*
> This is a blip only.
> ...




What loans are clearing?


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## theasxgorilla (14 August 2007)

MS+Tradesim said:


> Any of you economist types have any idea of how forced investing via super will play out here? And second, how could/will this be offset via babyboomers retiring and ripping money out of super to protect it in a falling market?
> 
> With the tax effectiveness of super in Australia, I'm wondering if that will have much of a cushioning effect on any fall here. Not much of an economist
> so I don't know.




Anecdotally the many baby boomers I know still think this is just a correction and they're prepared to continue to let their super ride for several more years.  As a general group, in my experience, baby boomers are not traders, they're buy-and-holders and they're optimists...and why shouldn't they be?  They're the most prosperous generation the world has ever seen.  So, just like they were prepared to leave their money in real estate and never paniced, or perhaps even bought more when prices were flat in many parts of the country, so they'll leave their money in the share market for several more years.

Many scaremongers have neglected to consider the human effect of these last few years.  Baby boomers who saw their mutual funds lose 30% between '00 and '02 (and HELD, 'cos thats what their financial planner told them to do) are now projecting gains from the last 5 years a further 5 years into the future and seeing a retirement of wealth and prosperity which 5 years ago was completely unimaginable.  

This sentiment is in addition to many 'boomers anticipating another 5 years of work, at least some of it full-time, at their life's peak earning capacity.

Come what may in the US in the short term due to credit liquidity issues, here in Australia thanks to Keating we have what has in effect become a minimum 9% national share market contribution.  And thanks to Howard we have irresistable tax incentives for the people who in aggregate earn the most money in this country...practically ensuring that the national share market contribution is going to be something well above 9% for years to come.

ASX.G


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## Knobby22 (14 August 2007)

dhukka said:


> What loans are clearing?




Sorry, they are getting rearranged. The problem is that the banks don't trust one another and want a higher interest rate to lend short term. The central banks are supplying the money to cover the shortfall and keep interest rates down. It is their job and it stops the financial markets freezing up.


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## dhukka (14 August 2007)

Knobby22 said:


> Sorry, *they are getting rearranged*. The problem is that the banks don't trust one another and want a higher interest rate to lend short term. The central banks are supplying the money to cover the shortfall and keep interest rates down. It is their job and it stops the financial markets freezing up.




What loans are getting rearranged and how are they being rearranged?


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## Knobby22 (14 August 2007)

It is about derivatives dhukka.
Short term money (less than 270 days) does not have the same controls as long term money. This money is used for derivatives and short term deals.

As the money unwinds the people obtaining the loans need to make new arrangements or pay up and go broke. The banks are saying we don't want to lend you money anymore and as times are interesting have little trust in other banks. 

It is a health clearing out of the system. It will probably cause a mild recession in the US but generally it means fast money will be less forthcoming for a while.


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## Boggo (14 August 2007)

Interesting Commentary


No One Has Learned Anything
Monday August 13, 10:41 am ET 
By TradingMarkets Research 

I am an optimistic person. I am a positive person. I am a jubilant person...with everything but Wall Street...and as an aside, with the Mets' bullpen. As you know, I have been and am always suspicious of the goings on...on Wall Street. It is still clear in my mind that Wall Street brought a bunch of "no revenue internet companies" public even though they knew it was all crap. Why? Because they knew they could make money. They did not care about you...the investing public. I remember when many mutual funds changed their name to include the words "internet" or "net" in their name. I remember when the internet went out of style, those monikers were taken off. I remember how Wall Street watched the accounting industry turn into nothing more than attorneys for the companies they covered...instead of monitors of the companies they covered. I remember every famed strategist on Wall Street telling you to buy every dip while the market went into its worst bear market in 70 years. I have marveled at how Wall Street parades these same people out 7 years later telling you what to do. I remember how we were told the analyst community would change but continue to see the buy-hold ratio at 9-1...and that's being nice. I remember AOL insiders saying the poor economy was not affecting their business...while their business was heading south and the insiders sold en masse. I remember how not one of them paid the piper on it. I remember the absolute scam that was Global Crossing and not until years later did anyone pay any price. The list goes on and on. I remember it all. Frankly, I may have to write a book.

No one learned any lessons from the past.

I start with the rating's services. They are basically acting like many accountants did in the late 90s. Instead of being the defenders of the investor, they are becoming, if not already, the attorneys for the companies they follow. I do not need to name names. You know who I am talking about. I found the timing amazing last week when Bear Stearns had to defend themselves...and no more than 5 minutes later did a rating's service come out to tell everyone everything is A-OK in the brokerage industry. Who do these rating's services care about more...and who exactly are they working for?

Next...I must mention Bernanke and Wall Street. All I heard over the weekend was how Bernanke has performed so admirably...and that the Fed has been terrific the past few years. Yes...and Pacman Jones should get the Man of the Year award. What am I missing? The same people who gave you subprime lending...who enabled subprime lending...who enabled trillions in derivatives...who told you they were good for the economy...who told you there wasn't a problem...who have been calling a housing bottom every 2 weeks...who waited and waited to the problem bubbled over...are now being complimented by Wall Street...and for what? Spending a crapload of money to save the day? Who are they now bailing out? Yup...all the mutthounds that leveraged themselves into oblivion. Oh yeah...and for those calling for a housing bottom, why am I finding insider selling in a couple of homebuilding names AFTER a monstrous drop?

How about mentioning Paulson and Wall Street? How can the man who is the poster child for leverage...continue to tell us the system is fine? Is everyone missing the major conflict of interest with this man and where he came from? Does everyone believe the ties have been cut? Am I the only skeptic? Only on Wall Street is it custom to have a blind eye.

How about Beazer Homes telling everyone that the rumor of a bankruptcy was untrue? No way...can't happen...and a week later...whoops...accounting irregularities. The point...they were so sure there were no problems...a week later...yonk!

How about Goldman? Yes the almighty Goldman...everything is fine...everything is ok...when rumors came up that one of Goldman's funds was having big losses...Goldman came out to say that rumors of big losses at their funds were unfounded. Initially, when the rumor surfaced, the stock market, which was up 180 points...swooned 190 points. When Goldman came out to deny, the market rallied 150 points in minutes. Fast forward to this weekend...WHOOPS!...Goldman just announced a 26% loss in a huge fund. No way...no one at the almighty Goldman would lie...would they? Nah! So...what penalty did Goldman pay for this? What does Wall Street do? Is Wall Street investigating? Nope! Goldman just announced another $3 billion investment into that fund. Only on Wall Street! I am out of business if my accounts drop 26%.

Now...finally, the SEC is moving to investigate the books of a number of Wall Street Brokerage firms...duh! Where have they been? Yes...I am sure they do their normal investigations...but are you telling me the SEC has been fine with the leverage we are now hearing about? Are you telling me the SEC never checked the arbitrary pricing of some of the investment vehicles that were out there? Gee...now let's investigate. Now let's investigate margin that I am now hearing was 15-1 in some cases. Now let's decide it is time to get to work.

I would have thought my rant would stop there. It doesn't...because Wall Street did it again this weekend and Monday morning. It was almost like all of Wall Street got together on a conference call to tell everyone to use the same talking points...and I mean everyone.

Here is what we received on Monday.

Upgrades outnumbering downgrades approximately 10-1...this is approximate and on the low side. 2 of the fabulous downgrades were on DHI and TMA...2 stocks that were already blasted...hey thanks! Good timing!

A slew of target raises...on stocks that were hit last week...hmmm! RIMM down $9 on Friday...hey...we already have a STRONG BUY on it...what can we do? Yup...let's just raise the target to get the stock moving. Good timing!

One big brokerage is telling you to raise the stock portion of your portfolio. Good timing!

Several sectors being upgraded. Good timing!

More buyback announcements! Good timing. Please keep in mind, most of the buybacks we have recently seen came with the announcement that the buybacks would be funded with debt. I wonder how many of those will get done. Also keep in mind that most buybacks come with the wording: in the future, at our discretion and just because we announced a buyback, does not mean we have to do one.

Companies added to focus lists...did not see any deleted. Good timing!

Positive comments on lenders...yippee! Let's buy some lenders. Good timing!

FINANCIALS upgraded by another outfit...yup...let's buy FINANCIALS...! Good timing!

That leads me to the last part of this rant. Did you read the overall commentary by Wall Street over the weekend and Monday? Yes...there was an occasional bear...but once again, Wall Street sees no problems. It is all "contained"..."overdone"..."overreaction"..."hiccup"..."short-term blip"..."won't affect the economy"..."value"..."cheap"..."the Fed is doing the job"...in other words, everything is fine. Get back to business. The DOW is headed for 16,000...housing is bottoming...the economy is great...the consumer is in force...no downside risk here...and life is good.

Please understand I have no blood in this game. If you have ever listened to my radio show "THE INVESTOR'S EDGE"...which you can listen to at www.garyk.com, you know I have a deep desire for level playing fields, fair play and everything else that goes along with it. I am not a dummy. I am not naive'. I do recognize that Wall Street has only one goal in mind...and that is to keep markets going up...and when markets should go down...to keep them from going down. Some of the things I am now seeing scare the heck out of me...and I only need to use the goings on of the past week to show you what I am talking about. The good news for Wall Street is that they have history on their side. The bad news for you, the investor, is that when we do hit a rough patch, you will get absolutely no help...and if this market ever goes into a bear market again, a real bear market, you are on your own. So far, we have seen a nominal correction in the major indices...but have seen some serious bear markets in many sectors.

I expect more hedge fund losses and more mortgage problems to bubble to the surface. Whether or not they affect markets...well, we will just have to see. As an optimist, I am now sitting back, continuing to keep my list of leading stocks that have held their ground during the recent deluge. In my past studies, I have found that stocks that have held up best during market drops, usually lead when the ugly ends. Most of these companies I follow have strong earnings and strong revenue growth. Currently, I am eyeing names like ANAD, BIDU, WYNN, AMZN, ISRG, RIMM, VSEA, GRMN, CSCO, NOK, SPWR, UA, FAST, PCLN, CMG, MR, CROX, ILMN, NVT, SIGM, CMI, HPQ, BIIB, CY, MOS, MBT, VIP, FMC, POT, APPL and GLDN. I am also watching the OILS like a hawk as they have led both up and down. I would love to see the market calm down here. I would love to see the market just sit a little here. Right now, most charts look like a 3 year old who scribbled on a sheet of paper. Near-term, markets are way oversold. Near-term, while opinions are only bullish, a lot of news has been all bad. I gather we can bounce from here. I will know a lot more by the tone of the bounce.

Gary Kaltbaum


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## dhukka (14 August 2007)

Knobby22 said:


> It is about derivatives dhukka.
> Short term money (less than 270 days) does not have the same controls as long term money. This money is used for derivatives and short term deals.
> 
> As the money unwinds the people obtaining the loans need to make new arrangements or pay up and go broke. The banks are saying we don't want to lend you money anymore and as times are interesting have little trust in other banks.
> ...




Thanks for the clarification. I agree a clean-out out of the system is long overdue. I think you have oversimplified somewhat. Impaired mortgage backed securities and CDO's aren't being cleared away. The mark to market write-downs have yet to happen on a major scale. Central banks are acting as pawnbrokers not offering bailouts. 

This is what I wrote on the subject, let me know what you think.


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## Uncle Festivus (14 August 2007)

MS+Tradesim said:


> Any of you economist types have any idea of how forced investing via super will play out here? And second, how could/will this be offset via babyboomers retiring and ripping money out of super to protect it in a falling market?
> 
> With the tax effectiveness of super in Australia, I'm wondering if that will have much of a cushioning effect on any fall here. Not much of an economist
> so I don't know.




There is the chance that the attractiveness of tax free super withdrawals will be just too tempting for even those 'optimistic' baby boomers in the event of a sustained negative period in equities, as we may be seeing the start of now. This time it may be different?


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## wbooo (14 August 2007)

Hi

Have you read any of the interviews with Sir John Templeton and other value investors who have been forecasting a recession for the last few years, they had originally predicied this for 2006, oh well timing is always tricky, looks like 2008 may be closer to the mark.  Lets not forget there are always outliers on the bell curve and that quality companies with minimal competiotion can still buck the trend and have significant increases even in a bear market. As an investor it is important to find good stocks even ina falling market, when you have no other income.

You can always short sell in a falling market but this requires a strong stomach I am yet to come across anyone who has done this successfully, other than Buffet, who was selling the USD a couple of years back.


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## KIWIKARLOS (14 August 2007)

Australia just invested 20 billion of the future fund into blackstone which I assume is currently in the process of being invested (hopefully not in the sub prime sector)

But even if all the oldies pull out their cash from super what do you think they will do with it? Isn't the idea these days to spend the kids inhheritance. My point is even if you pull the cash out of the market it just flows back in through company revenues.

There still seem to be alot of jobs in the US and alot more are been generated by the big defence industries and private companies in iraq etc. When you think about it the US spends billions every week in Iraq and on what. Bombs made in the US which blow up Iraqi stuff then US contractors come through and build dodgy replacements and keep huge profits. They are basically feeding themselves and while the wars on the war economy will go strong.

As for the cash injections by CB the majority of the injected money has come from countries other than the US wouldn't this essentially weaken their currency more with respect to the US currency essentially giving it a leg up?

My point is even if the US is screwed there are so many opportunities in the global economy for expansion.

PS can someone please post a current ASX200 chart to see what the current correction is doing. I'm not much of an analyst


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## chops_a_must (14 August 2007)

KIWIKARLOS said:


> Australia just invested 20 billion of the future fund into blackstone which I assume is currently in the process of being invested (hopefully not in the sub prime sector)



Bahahahahahahahaha!

Where did you find that out?

Another fantastic Liberal Party legacy by the looks...


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## insider (14 August 2007)

KIWIKARLOS said:


> Isn't the idea these days to spend the kids inhheritance.




If their plan is to end up in a retirement home! sure (not that my parents are like that)


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## CanOz (14 August 2007)

KIWIKARLOS said:


> Australia just invested 20 billion of the future fund into blackstone which I assume is currently in the process of being invested (hopefully not in the sub prime sector)
> 
> But even if all the oldies pull out their cash from super what do you think they will do with it? Isn't the idea these days to spend the kids inhheritance. My point is even if you pull the cash out of the market it just flows back in through company revenues.
> 
> ...




Heres a 4 hour chart KIWI


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