Imminent and severe market correction

[Muschu]

I admit to wondering where some of the DOW predictions in this thread come from. 10 000; 7500; 5000? Why not 4000; 2500; 10?
Personally I'd like to see some analysis, rather than a brief overview on what has occurred at some other time, as I currently get the impression that some posts are largely sentiment-driven.
I suggest stronger evidence, analysis or back-up data would be a welcome attachment to such opinions or predictions.

 

[Junior]

No. First off, by my reading pure speculative players are less than 30%. With the oil market in contango, there is obviously no incentive to pump oil. The main players manipulating the market (if any) are producers restricting supply. Now that the market has returned to backwardation, I expect prices to stabilise on the "real" figure, which should means a modest drop. Until the next time.

Second, this is not the cause and the credit crunch is nowhere near over. Round 2 is just getting started, with a bunch of bank failures soon. Take your pick: DOW 5,000, Gold $5,000, Inflation 20%, all on the cards. This is going to get really nasty, but slowly.

When will you finally admit you were wrong?

The situation is much worse than this! I reckon DOW 300, Gold $100,000, Inflation 2000%. We're all in big trouble, oh, and property will be worthless.

 

[gfresh]

Here is plenty of evidence...

http://www.financialsense.com/Market/cpuplava/2008/0709.html

The state of the financials:

http://www.financialsense.com/Market/barbera/2008/0701.html

Government Sponsored Enterprises (GSE's):

http://www.financialsense.com/Market/barbera/2008/0708.html

Sorry for quoting from the same source, there are others out there - but I think Barbara and Puplava seem to lay out the magnitude very well, giving information based on charting and real data, not just imaginary figures.

If the crisis is of greater magnitude than anything that has gone on in the last 30 years, then the results on the sharemarket (a reflection of the overall economy) should also be equal to the worst that has been seen in that time, or even before. Surely anybody must see this clear as day?

I think many DOW target figures are plucked out of the air, true, but at the current moment in time even if you're taking current levels and discounting for risk, there is a load of risk out there, which could lead to targets that seem extraordinary now. It's an extraordinary event afterall.

 

[explod]

I admit to wondering where some of the DOW predictions in this thread come from. 10 000; 7500; 5000? Why not 4000; 2500; 10?
Personally I'd like to see some analysis, rather than a brief overview on what has occurred at some other time, as I currently get the impression that some posts are largely sentiment-driven.
I suggest stronger evidence, analysis or back-up data would be a welcome attachment to such opinions or predictions.

Back up statements for the Dow are many. A book "Finanacial Armegeddon" has it all. Published 2006, has been spot on and there are many others. My analyses if you look at the Dow chart are in line with support points going back 10 years. I am unable to post my chart. If someone would oblige I will be only to willing to explain further.

Is it not enough to realise that the US since 2002 have lived on credit and cheap money, and what is happenning now is that "its pay day" No one will lend the money anymore. That is very well explained on this thread.

I cannot believe that visitors to this thread do not read the lead up.

This market slide has been well anticipated by those who have done a bit of reading and checking. T/A is one thing which I practice but good old fundemantal understanding of the markets is also required for survival. And success comes from a lot of research which is hard sustained work. In fact one of the problems for the US is that they have hand fed the people from the TV and they have become lazy and complacent.

 

[Muschu]

...A book "Finanacial Armegeddon" has it all. Published 2006, ......

Interesting title. I wonder if there is a contrary argument in another book?

[Quote - gfresh] - I think many DOW target figures are plucked out of the air, true, but at the current moment in time even if you're taking current levels and discounting for risk, there is a load of risk out there, which could lead to targets that seem extraordinary now. It's an extraordinary event afterall. [/Quote]

Agreed.

 

[gfresh]

I was actually going to post that explod, a quick and dirty 10 year chart of the Dow on a yearly scale...

 

[kotim]

Are we in for rough times, yes but not that bad. Money is based on credit, and I don't care who you are, when some of the funds who are not broke decide to start investing then the marekt will turn around, people are greedy and when they think they will make some money they will try.

Something to be mindful of though is value, if you go back to 1987-89 bank stocks such as wbc and ANZ had "pullbacks" for those who are brokers, crash for those who owned them in the order of magnitued of 50-60% from their all time highs. So bearing in mind that history repeats we could say that th emost the main bank stocks could go down are 50-60%.

Now for those who remember it was said that wbc etc may have gone down the tubes at those levels. True or not who knows as it never happened, but at the moment we are down on bank stocks generally speaking of the order of 40% so another 10-20% is certainly possible, historically speaking.

The direction of the stock market in Australia is CONTROLLED y the big banks, if they are going down the market will go down, if they go up, then the market will go up.

I have hopefully learnt lessons form the past and I now know that we cannot have a market going up unless the financials like the banks are going up, so they have to turn first before we can see a general broad based turn around in the market for whatever period of time. Easiest way to do it is whack on a moving average and YES choose the setting that best curvefits the historical happenings and then use that as a basic guide, or whatever other thing you want.

When the money starts flowing back into bank shares then money can start flowng back into the other shares.

Thats why the sub prime was and is so bad. The whole financial system is based on the valuation of the value of the banks and its banking activities

The whole monetary system is a debt based liability system that relies on the extension of credit, effectively our currency is made up of promissory notes.

These notes, or our currency is only valued on the basis of what some one else things we are worth, so if that perception changes then we are worth more or less as the case may be.

When you go to a bank and apply for a home loan they obtain power of attorney via your bank agreement/loan and do up a promissory note, that is the 'cash' that forms the deposit in their books which allows them to lend multiples of the loan they extended to you, to other people.

Banks do not lend money, they extend credit, for those who don't understand, go and investigate and you will find that if you added up all the money that a bank has on 'deposit' you will find that it is way short of the money they actually lend.

As I have said elsewhere, the current finacial system operates as an inverted pyramid, meaning there are lots more in the top layers than the bottom layers, so when you start peeling away at the top level and removed a layer, a single layer removed does not sould like much but that single layer has more debtors than the layer below it, so it takes a while before people see the layers coming undone, however because it is top heavy, by the time they see it coming undone, most of the people who it is coming undone for are allready caught and can't escape.

Anyway, we can guess and think all we like, but lets hope too many people do not get too hurt financially.

 

[Whiskers]

That is probably a bit harsh. Like most people stubble has had faith in...

Stubble!... who ya callin stubble!

and believed the jawboning press who exist by and for the multinational banking interests who's task it is to drag every last cent out of the sheeple.

Hey... if you believe my biggest critic on this forum, I'm my own 'press'.

And for us fundamentalists

I'm a FA (predomanently) too.

But seriously, the trick is not necessairly in the data or the headlines but the perception that people have... not you or I, but those who are in a position to make decisions to change the ground rules and/or flow of the tide.

I'm not sure exactly how it will all pan out, but what is clear is that since coming back from a week recess in their electorates and a week with their constituents, it seems the no 1 issue on US peoples and politicans minds is to 'fix' the oil price problem.

It also seems they have quite a bilateral commitment to do it ASAP.

All, I'm warning of is keep the size and proportions of the industry sectors and effect of regulatory and sentiment changes in context.

Fundamental regulatory changes are coming to the oil industry on top of already in motion changes in the financial and mortgage sectors in the US.

These are reputidly going to be the biggest changes to the dynamics of those industries in about 50 years... the net effect designed to stamp out fraud, corruption and systemic manipulation of these previously poorly regulated industries.

 

[professor_frink]

.................

Yes a 5,000 Dow by Janauary is now a real possibility. And further weakness is every possibility after that. Remember the crash of 1929 played out for years after and stayed down for 20 years following......

holy crap! That's a pretty bold statement to make

 

[wayneL]

...because we do not teach economics from 1st grade in our schools a lot of honest hardworking ordinary people are going to suffer a very great deal in the years ahead.

I don't think it would do them much good to be honest.

What they teach in universities these days is perverted Keynesian rubbish and the sort of thinking that got us into the trouble we are in.

Only the Austrian school has any hope of helping folks work out what is happening, and unfortunately, it is passed over by they who control the curriculum.

 

[explod]

I don't think it would do them much good to be honest.

What they teach in universities these days is perverted Keynesian rubbish and the sort of thinking that got us into the trouble we are in.

Only the Austrian school has any hope of helping folks work out what is happening, and unfortunately, it is passed over by they who control the curriculum.

My Grandchildren are now 18 to 22 years. A few years ago I gave them all a copy of Robert Kyosakis, Rich Dad Poor Dad for teenagers. It is fairly basic but has done wonders for them. Not 100% strike of course but they are so switched on compared to peers that I am very pleased with the focus I mentor.

 

[wayneL]

My Grandchildren are now 18 to 22 years. A few years ago I gave them all a copy of Robert Kyosakis, Rich Dad Poor Dad for teenagers. It is fairly basic but has done wonders for them. Not 100% strike of course but they are so switched on compared to peers that I am very pleased with the focus I mentor.

Yes family should help. But most are as deluded (because of their education) about economics as Bubblevision.

Here is the very best intro to economics I've seen. http://sigmaoptions.blogspot.com/2007/09/lessons-in-economics.html

I've posted it before, and it is excellent.

 

[ithatheekret]

This last Hindenberg Omen noted here on ASF was a month after that article came out . Nov 07 If I recall correctly .

I ponder whether the latest HO in June will push the boundaries further .

Earnings time , remember the last round .... ?? , this is where they say oops and then promise the moon again .......................

 

[dhukka]

My Grandchildren are now 18 to 22 years. A few years ago I gave them all a copy of Robert Kyosakis, Rich Dad Poor Dad for teenagers. It is fairly basic but has done wonders for them. Not 100% strike of course but they are so switched on compared to peers that I am very pleased with the focus I mentor.

There is considerable evidence, a lot of it on this website, that Robert Kiyosaki is a fraud. I only read his book recently and it really is a poor read. I think the success of that book is testament to the level of financial illiteracy in the world.

As someone who did economics in High School and then as an undergraduate degree I agree totally with wayne that most of it is a waste of time. I learnt far more on the job and through my own investigation. Thankfully I found the Austrian school of economics years ago as well.

I do agree that financial education is seriously lacking. But hey, we don't want people to get too clued up do we? How else can we maintain an edge?

 

[explod]

There is considerable evidence, a lot of it on this website, that Robert Kiyosaki is a fraud. I only read his book recently and it really is a poor read. I think the success of that book is testament to the level of financial illiteracy in the world.

As someone who did economics in High School and then as an undergraduate degree I agree totally with wayne that most of it is a waste of time. I learnt far more on the job and through my own investigation. Thankfully I found the Austrian school of economics years ago as well.

I do agree that financial education is seriously lacking. But hey, we don't want people to get too clued up do we? How else can we maintain an edge?

Robert Kiyosaki is basically a writer and seller of information. W D GANN et. al. are of similar vien. But they did a lot of research and thier information is a very good starting point. To call him a fraud is a bit rough in my view. As a successful investor over many years I can say that his basic books for teenagers is very useful, what other easily acquired information is available . Not everyone can go and do economics.

Each to his own but to write someone off as a fraud without some backing up is bad. I have noted comments on this site against Kiyosaki by others also, and they too generalised without facts.

If you have been to Uni as you say I'd have thought it automatic for you to substantiate your assertions.

 

[Whiskers]

If you have been to Uni as you say I'd have thought it automatic for you to substantiate your assertions.

Here, here.

 

[dhukka]

Robert Kiyosaki is basically a writer and seller of information.

Agreed, however Kiyosaki claims he is much more than just a bookseller and the vast majority of his claims about his investing forays are dubious at best. There is very good evidence that rich dad never existed.

Each to his own but to write someone off as a fraud without some backing up is bad. I have noted comments on this site against Kiyosaki by others also, and they too generalised without facts.

If you have been to Uni as you say I'd have thought it automatic for you to substantiate your assertions.

Mate, read the website I linked. There is overwhelming evidence to back up what I said. Anyone with experience of financial matters would find Kiyosaki's book very thin. It starts out allright talking about investing in income producing assets which is fine. But it never gets any further than that. His stuff on investing in the stockmarket is puerile at best.

 

[Muschu]

My Grandchildren are now 18 to 22 years. A few years ago I gave them all a copy of Robert Kyosakis, Rich Dad Poor Dad for teenagers. It is fairly basic but has done wonders for them. Not 100% strike of course but they are so switched on compared to peers that I am very pleased with the focus I mentor.

Does anyone recollect an ABC progam [4 Corners?] of RK's relationship to "Money and You"? To my memory it was not good! And that is being nice. Might be worth researching.

 

[dhukka]

Here, here.

Oh good, the peanut gallery has arrived.

 

[davo8]

I admit to wondering where some of the DOW predictions in this thread come from. 10 000; 7500; 5000? Why not 4000; 2500; 10?
Personally I'd like to see some analysis, rather than a brief overview on what has occurred at some other time, as I currently get the impression that some posts are largely sentiment-driven.
I suggest stronger evidence, analysis or back-up data would be a welcome attachment to such opinions or predictions.

Glad you asked. I have no idea what the final figure will be, but here are some possible ideas.

First, a typical severe bear market drops around 40% (1939, 1970, 2000). That sets a target of 8,400. A monster bear (1929) drops over 80%. That's under 3,000. As well, a severe bear market has often left the DOW below the price of gold. Maybe they'll meet in the middle at 5,000.

There is no chart that can tell you what will happen. Read the blogs and the experts, but NEVER the main stream media. Try rgemonitor.com, leap2020.eu and dollarcollapse.com, but there are plenty more. This is a once in a lifetime event, and it's really, really bad. Think about return OF your capital, not return ON your capital.

October could be fun. Not.