Recovery or Dead Cat Bounce?

drsmith · 16 August 2009

Knobby22 said:
Doc

You could argue that the world changed massively after WW1, the Depression and WW2 and the line of regression should be taking after this period. This would show the line rising more rapidly which would hint that the low point of this recession has probably been reached already.

Equally it could be argued the large recent above trend area is due in part to the credit growth of the period.

That being said the line does not have to be linear but what would it take to change the growth rate on that scale. Is any specific technological advancement enough or does it require something more profound such as the industrial revolution of the ability to efficiently harness the energy derived from nuclear fusion.

As a side note it's interesting that after WW1 the three major above trend periods have been post severe international conflict/competition (WW1, WW2 and the cold war). Could these have been periods where technological advancements from the military/space exploration filtered into the broader US economy ?

Knobby22 · 16 August 2009

drsmith said:
Equally it could be argued the large recent above trend area is due in part to the credit growth of the period.

That being said the line does not have to be linear but what would it take to change the growth rate on that scale. Is any specific technological advancement enough or does it require something more profound such as the industrial revolution of the ability to efficiently harness the energy derived from nuclear fusion.

As a side note it's interesting that after WW1 the three major above trend periods have been post severe international conflict/competition (WW1, WW2 and the cold war). Could these have been periods where technological advancements from the military/space exploration filtered into the broader US economy ?

Very good points, Doc, Also, what has been the effect of the continuing conctration of wealth? That could mean medical research is becoming more important than industrial research.

Donga · 17 August 2009

trainspotter said:
Who mentioned recessions? I pointed out that the dates I posted originally were when the "stockmarket" corrected itself. Interest rates go up as people jump out of the toppling inferno and eventually the rates begin to topple and the masses drop their $$ into property. I seem to be speaking a different language to the converted here and will refrain from asking to look to see if there is any way of "softening" the velvet sledgehammer. We do not learn from the previous corrections is what I am spruiking. The market has cycles. We are currently going through an up phase in stocks. Interest rates are sure to follow. Property will also peak in the future as well and then ALL of it will drop away again.

Calm down TS, sounds like you are a little overwhelmed by the cosmos. You mention 'we' a lot, and I'm not sure whether you are talking about local investors or Australian society or the global community? The plethora of organisations from local council to UN with wildly differing philosophies, economic objectives and common understanding suggests we (everyone globally) will never live in a predictable world of economic and social order. Not sure I would want to see that. We do our best as individuals, societies to improve our immediate and wider community welfare. I don't believe there is a conspiracy of boom and bust the same way I don't expect anyone controls the way social/political mores swing from left to right etc. Glad to hear you were heavy with property though. BTW I think we are over the worst of this bust and the global economy will continue to recover over the next couple of years, while adapting to continuing shifts in the world order. History has a place for context, not because it simply keeps repeating, way too many variables. Just as humans continue to run and swim faster over time, we also learn and do things generally better.

trainspotter · 17 August 2009

Donga said:
Calm down TS, sounds like you are a little overwhelmed by the cosmos. You mention 'we' a lot, and I'm not sure whether you are talking about local investors or Australian society or the global community? (people in general is the answer here)

BTW I think we are over the worst of this bust and the global economy will continue to recover over the next couple of years, while adapting to continuing shifts in the world order. History has a place for context, not because it simply keeps repeating, way too many variables. Just as humans continue to run and swim faster over time, we also learn and do things generally better.

Must be the cosmos overwhelming me/we yet again. I have observed the "corrections" and am asking if there is any way to "soften" the blow. ie try and insulate the impact a little. As in if YOU should be able to recognise by now the signals that occur before, during and after the "corrections" that take place repetitively rather than relying on the media ramming the info down our throats.

Yet again I have failed in my task. Oh well, YOU will find out for yourself soon enough.

Gordon Gekko · 17 August 2009

Donga said:
Calm down TS, sounds like you are a little overwhelmed by the cosmos. You mention 'we' a lot, and I'm not sure whether you are talking about local investors or Australian society or the global community? The plethora of organisations from local council to UN with wildly differing philosophies, economic objectives and common understanding suggests we (everyone globally) will never live in a predictable world of economic and social order. Not sure I would want to see that. We do our best as individuals, societies to improve our immediate and wider community welfare. I don't believe there is a conspiracy of boom and bust the same way I don't expect anyone controls the way social/political mores swing from left to right etc. Glad to hear you were heavy with property though. BTW I think we are over the worst of this bust and the global economy will continue to recover over the next couple of years, while adapting to continuing shifts in the world order. History has a place for context, not because it simply keeps repeating, way too many variables. Just as humans continue to run and swim faster over time, we also learn and do things generally better.

Lets see if the human race can continue to run and swim faster with the most DEBT EVER chained around there necks.

http://www.youtube.com/watch?v=zbt3gnqpO-c&feature=related

Good luck

G

Uncle Festivus · 17 August 2009

At it's most simplist, the problem is that humans will always take the easy option, and, combined with credit which allows the future to be consumed in the present, we have and are still laying the groundwork for more pain, in the future.

Examples

- the FASB in the US watered down the mark to market accounting rules due to pressure from the Fed, so now banks appear to be healthy again - it hasn't gone away, it just doesn't show up anymore - they are still insolvent!

- Cash for clunkers - bringing forward future consumption AND subtracting from current consumption

- ephemeral stimulis will result in improving data but then what? Just a huge debt for somebody else to pay off?

- market manipulation a la Goldman Sachs - dyor - while all the state based banking systems collapse eg Colonial BancGroup has become the biggest US bank to collapse this year.

etc etc etc

We are the credit generations hooked on the easy way out - time for someone to start paying for it instead of postponing payback for the future generations.

Donga · 17 August 2009

TS/Gecko - My "we" was defined as we (everyone global) and expected the reader to work out the consistency throughout. As regards "corrections" and softening the blow, that is a skill with elements of luck - bit like life generally. Again I shudder at too much of an orderly world even though agree we (everyone global) should help the disadvantaged and ensure the priveledged chip in more than their share, e.g no govt handouts for private schools. Gecko - is China in your debt equation? I suggest you look up Ross Gittins' column in Sat week ago SMH for some perspective on Australian debt levels. Debt has certainly worked for me over the years. Meantime guys, pls don't worry about my strategies as I'm doing OK with a balanced property/stock portfolio. Didn't sell at ASX 3100, learned a little along the way, almost back to pre bust highs, and still see great opportunities with our miners especially with chinese growth. Today is looking great for BLY, MMR, BDL, FMS, IMA, maybe even PRW so I getter get back to it, then do the real work that I'm paid for

trainspotter · 17 August 2009

There has to be a time when you have to "pay the piper". The never ending credit card is maxed out. Dead cat bounce IMO.

gfresh · 17 August 2009

From the other thread..

trainspotter said:
I posted that I have placed my hard earned $$$ back into property for an expectant rise in 12 months time. In certain areas (like the ones I have suggested) there is a strong possibilty that a greater than 20% gain is likely with little effort and low risk. IMO.

How does that happen without the pied piper continuing to play his tune?

trainspotter · 17 August 2009

gfresh said:
From the other thread..

How does that happen without the pied piper continuing to play his tune?

NO debt structure. Green titles in safe. No monies borrowed. Cashed in shares to purchase property.

gfresh · 17 August 2009

Yes, but you're not the only mouse in the house .. usually takes a lot of other little mice buying and borrowing like crazy to give those strong gains you are hoping for.

trainspotter · 17 August 2009

gfresh said:
Yes, but you're not the only mouse in the house .. usually takes a lot of other little mice buying and borrowing like crazy to give those strong gains you are hoping for.

Same as the rats in the cage in the stock market no doubt.

Interest rates are being talked up, general sign that property is not far behind. IMO (in certain areas) Interest rates rising is designed to curb inflation. Inflation means house prices are going up. So is the basic wage yadda yadda yadda. But you don't need me to tell you this ... RIGHT?

Donga · 17 August 2009

TS - beware of assumptions pal. Never had credit card debt and always neutrally geared for places I like to kick back (Byron and Port Vila, where I once lived). Super and my play fund are unencumbered. Now I understand why the cosmos has you spooked if you sold out of shares and bought property with no debt. You've restricted your wealth generation to one scenario and IMO there are more ways of living with variables than this, unless you're spinning us a line. As why would you bother haunting these forums l

trainspotter · 17 August 2009

Donga said:
TS - beware of assumptions pal. Never had credit card debt and always neutrally geared for places I like to kick back (Byron and Port Vila, where I once lived). Super and my play fund are unencumbered. Now I understand why the cosmos has you spooked if you sold out of shares and bought property with no debt. You've restricted your wealth generation to one scenario and IMO there are more ways of living with variables than this, unless you're spinning us a line. As why would you bother haunting these forums l

Thanks Donga for the appraisal. I am dogfood? Not that I know what I am doing by the way. Good for you that you have an unencumbered super fund? LOL I was under the impression that to borrow money in super funds a bare trust must be placed before it etc blah blah blah. Never mind.

Yeppers, I have restricted my wealth programme to two channels. Property 70% and cash at 30%. If you notice there is some great information in here in regards to property as well. Check out the thread "house prices to keep rising" LMAO. I joined here to see what the other traders are up to when I was in the funny money game.

Information is everything. Knowledge is power. Apparently it assists you in making informed decisions. IMO. But thanks Donga anyways.

sammy84 · 17 August 2009

The title of this thread should be changed to recovery or bear market rally. The cat got life sometime ago.

trainspotter · 17 August 2009

Market down 1% at 2pm today? Banks and miner sell off. Rio downgrades profit forecast 51% .AUD lower at noon on risk aversion from U.S. Negative

Market risen 11 consecutive days. MMR stock up 66% so far today. Property up (Stocklands) Japan GDP expands 0.9 per cent in the June quarter. Positive

Swings and roundabouts at the moment.

Wysiwyg · 17 August 2009

All that is required to put the markets in a drawn out sideways motion is the Chinese and Indians to curb demand for raw materials. Hope everyone enjoyed the dead cat bounce off the low.

Donga · 17 August 2009

TS - My apologies if I came across superior. Don't think anyone is dog**** unless they crap on other people. I've always liked property, and never been scared to borrow sensibly (used to -ve gear, but not now). Sure Super is not normally leveraged as such, though I could borrow money to plough into wife's super etc. Expect people did this in 2007 to their regret. Best of luck with your property and cash stash, you know you're not going to lose it

tech/a · 17 August 2009

Tommorows going to be ugly!

drsmith · 17 August 2009

tech/a said:
Tommorows going to be ugly!

It's been a little while now since I've seen the US futures take a 2% beating.

Recovery or Dead Cat Bounce?

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