Imminent and severe market correction

[davo8]

http://www.nakedcapitalism.com/2008/06/rbs-publishes-global-stock-and-bond.html

Ah, just when you thought it might be safe to venture into the markets again, RBS sends out a red alert, warning private clients to prepare themselves for a full fledged rout in equities and bond markets in the next three months, with the S&P losing 300 points, or nearly a quarter of its value, by September.

That's a bold and pretty specific call. The technically-minded believe that if the S&P 500 were to breach 1270 (closing, not intraday), the next support level is hundreds of points lower. In addition, the impact of inflation has not been factored into asset prices. The chart below (click to enlarge) illustrates how devastating inflation is to stock valuations. The S&P 500 multiple fell from over 17 to below 8 during the early 1970s, and pretty quickly too. However, then the impetus was the oil embargo, but note that as inflation became embedded, a bear market rally fizzled and the market hit even lower earnings multiples.

August-September is shaping up as crunch time. Any bulls still standing may find some bargains.

 

[davo8]

Leap2020

On the occasion of this 26th – Summer 2008 Special – edition of the Global Europe Anticipation Bulletin, the LEAP/E2020 team has decided to launch an alert on the July-December 2008 period. Indeed, our team is now convinced that this period will consist for the whole world in a major plunge into the heart of the phase of impact of the global systemic crisis. The upcoming six months are in fact the core of the unfolding crisis. The troubles met in the past six months were mere harbingers.

Yes, they're French and yes, they hate Americans but that hasn't stopped them being right so far.

 

[Aussiejeff]

The future doesn't look very bright at all. If only government leaders would pull their heads out of their arses and get to work on replacing the lost oil with another source(s).

Unfortunately, Great Wally Bush's head is permanently stuck in a very dark place..... :hide:


AJ

 

[nioka]

[URL="http://www.nakedcapitalism.com/2008/06/rbs-

August-September is shaping up as crunch time. Any bulls still standing may find some bargains.

The best time to invest is mostly always when the bears are active. These last 6 months have been the ideal time to make money on the market. Remember VALUE doesn't disappear, it just changes hands. The money part isn't real, it is a creation of the banking system.

 

[wayneL]

The best time to invest is mostly always when the bears are active. These last 6 months have been the ideal time to make money on the market. Remember VALUE doesn't disappear, it just changes hands. The money part isn't real, it is a creation of the banking system.

So when the bears were active at 6500 was a good time to buy?

How about when the bears had that fantastic day in Oct 1929?

I prefer it when the bears are exhausted.

 

[nioka]

So when the bears were active at 6500 was a good time to buy?

How about when the bears had that fantastic day in Oct 1929?

I prefer it when the bears are exhausted.

Was it at 6500 because the bears weren't active. There was some bear talk but no action. It was a time when a fundamental analysis showed up the overpriced stocks. Then when the bears came out to play F/A showed up the underpriced ones. You see it is when the bears are in season and roaming around that it is time to go hunting. Value didn't disappear, it became easier to find as the bears turned to lemmings.

 

[wayneL]

Was it at 6500 because the bears weren't active. There was some bear talk but no action. It was a time when a fundamental analysis showed up the overpriced stocks. Then when the bears came out to play F/A showed up the underpriced ones. You see it is when the bears are in season and roaming around that it is time to go hunting. Value didn't disappear, it became easier to find as the bears turned to lemmings.

Interesting view of events.

How about that day in Oct 1929?

 

[nioka]

Interesting view of events.

How about that day in Oct 1929?

I wasn't born untill 1932 so I don't remember much. This is what I suggest happened. Too many had borrowed "money" or had "money" in unsound banks of financial institutions. ( my motto: neither a borrower nor a lender be). There was a gigantic lemming rush.

It is surprising, during property transactions (when you actually held deeds) how you could trace a lot of property transfers to the banks during that time and a transfer back to a private owner during the following years. I suggest that there was a conspiratory between the banks and the government to do away with the old deed system where a docoment handed down with the ownership of a property was in place.

Nothing has changed.

Money is an imaginary item. Property is a factual item. Property comes in many forms from trocus shell, gold, land, or a business. The crash is always in the "money" hardly ever in the "property".

My Grandfather made his money in the great depression by buying a few city houses and a couple of pubs.

 

[CamKawa]

The futures board is glowing red which is good to see.
http://www.bloomberg.com/markets/stocks/futures.html

 

[Whiskers]

The futures board is glowing red which is good to see.
http://www.bloomberg.com/markets/stocks/futures.html

Well the Dow has now come over to the green side... the other two aren't far off.

... not that this means anything come 3.00 pm.

 

[davo8]

I wasn't born untill 1932 so I don't remember much.

But I'll bet you remember 1987. Things were looking good by mid 1988 with the markets up 30%. If you bought then with the All Ords at 1600 you lost 25% over 2 years, and it wasn't until 1993 that you were in front again. 6 years of going nowhere.

There were good stocks then and there are good stocks now, but the banks and finance stocks that have driven the markets for the past 10 years or more are not coming back any time soon. There is plenty more pain to come for that sector, and probably housing and retail too. We'll see soon enough.

 

[nioka]

But I'll bet you remember 1987.

That is a period I would sooner forget but it will get a chapter in my book. I was convinced in a proposition to finance a property development by borrowing Swiss francs. Borrowed $350,000 and ended up owing over $900,000 I did the development for a Singapore branch of the westpac bank. That is why my motto ever since has been "neither a borrower nor a lender be". I still did OK over the period as there were some good buys around.

 

[wayneL]

But I'll bet you remember 1987. Things were looking good by mid 1988 with the markets up 30%. If you bought then with the All Ords at 1600 you lost 25% over 2 years, and it wasn't until 1993 that you were in front again. 6 years of going nowhere.

There were good stocks then and there are good stocks now, but the banks and finance stocks that have driven the markets for the past 10 years or more are not coming back any time soon. There is plenty more pain to come for that sector, and probably housing and retail too. We'll see soon enough.

Exactly the point Nokia is missing.

The time to buy is when bears are exhausted, not when they are active.

 

[Sean K]

Exactly the point Nokia is missing.

The time to buy is when bears are exhausted, not when they are active.

Yeah but still depends a lot on individual stocks and your investing/trading plan. The selected end of the the spec side of town is showing some exceptional returns. You can still invest in stocks right now with clear targets and stops and be making good money. However, buy and hold (or hope) investors in the broader market might be struggling for a while yet, which is probably what you're talking about.

 

[ithatheekret]

Yeah but still depends a lot on individual stocks and your investing/trading plan. The selected end of the the spec side of town is showing some exceptional returns. You can still invest in stocks right now with clear targets and stops and be making good money. However, buy and hold (or hope) investors in the broader market might be struggling for a while yet, which is probably what you're talking about.

I agree , but ............. it takes time to make a decision on a purchase , the research involved is an arduous task . It sometimes takes me months to finally get around to buying in , but that's part of the job description and goes with the territory . What a lot forget is that we are all competing against each other in the markets .

Wayne is correct too , but that applies to the entire market and not to selective stocks , one side is technically based , with a usual fundamental area of disbelief , the other is straight out maths and then onto the charts for entries , so it's a chalk and cheese debate . Not often you get a win win .


PS.. We've had the bad news , or all the bad news is out there as they say , probably is too , so it must be time for the ugly news ........ after that it's normally the news that gets em puking enmasse that sends a good buy everything signal .

 

[2020hindsight]

after that it's normally the news ... that sends a good buy everything signal .

let's hope it doesn't get to that m8.

PS I'm thinking of getting into 100% cash for the end of financial year -
makes the SMSF bookkeeping easier - gotta pick the right day in the next two weeks (after which there will probably be a week of big rises for the Dow lol)

PS only money

Incidentally, does anyone know if the market typically follows a pattern at "new financial year"? up? down? Obviously only a small blip compared to the other factors at play here, talk of recession, chance of democrat victory (they couldn't do worse that the other guys)

 

[nioka]

Exactly the point Nokia is missing.

The time to buy is when bears are exhausted, not when they are active.

There are always undervalued stocks and there are stocks allready deserted by an exhausted bear. Some are exhausted while others are still active. You sell one stock to a bear still running and buy from one of the exhausted ones. I love bears, they encourage activity in lemmings.

 

[sassa]

Lies,lies and more damned lies????

LONDON (Reuters) - A sharp rise in British retail sales pierced the global economic gloom like a rare shaft of sunlight on Thursda

http://www.reuters.com/article/ousiv/idUSL1921293720080619

Office of National Statistics spending claims are bizarre, says Sir Philip Green


By David Litterick and Richard Fletcher


Leading retailers and economists have slammed the Office for National Statistics after it published sales figures that suggested Britons were spending at the fastest rate for 30 years.


Despite rising inflation, higher fuel bills, lower consumer confidence and a slowing economy, the ONS said sales volumes grew by 3.5pc last month - the largest jump since 1979 - taking the annual increase in sales to a staggering 8.1pc.

The upbeat figures have increased the chances of an interest rate rise, said economists, who warned that the figures should be taken with a "pinch of salt".

Sir Philip Green, owner of retail chains BHS and Arcadia, said the figures were bizarre, given the economic situation. "These figures in no way reflect the current trend. They are totally misleading. I have no idea where they collect this information from. I'd love to know. Can I join the club that is seven points up in May?"

He admitted that the month had seen an improvement, but cautioned against seeing it as a consumer recovery. "May was better. But we had the first week of sunshine following weeks of rain, sleet and even snow, which released a huge amount of pent-up demand. For anyone to read anything else into these numbers would be wrong and dangerous."
Justin King was equally dismissive. "The ONS doesn't appear to understand how people shop," the Sainsbury chief executive said. "These figures are based on a small basket and exclude promotional activity." The figures sit in stark contrast to other surveys of the retail sector. The British Retail Consortium, for instance, said sales values rose by just 4.6pc in May, or an even smaller 1.9pc on a like-for-like basis

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/20/cngreen120.xml

 

[Whiskers]

Lies,lies and more damned lies????

Is the ONS related to the OGC?



https://www.aussiestockforums.com/forums/showthread.php?p=291892#post291892

 

[davo8]

We've had the bad news ... so it must be time for the ugly news ........ after that it's normally the news that gets em puking enmasse that sends a good buy everything signal .

That's my point. I'm an optimistic bear. The lower it goes, the more chance there is that the stocks I like to own will be available cheap. There's plenty more bad news coming for financial stocks, and every chance we're going to get a downturn in the housing market here, or even a recession. Great! I'm a value investor and I love bargains!

My guess is the bottom will be around the end of the year, and before then we'll get some bad news that everyone said could never happen. Meanwhile, there's no harm in cash and a spot of gold.