Good posts interesting reading but as has been said the rest of the world is not as affected by the US sneeze problem i think especially since the euro has been getting stronger still think it may well be the world currency one day just a thought. 
The Crash of 05
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October is a dog of a month.
Crashes don't happen anymore because we must feed China.
Crashes don't happen anymore because we must feed China.
wayneL
VIVA LA LIBERTAD, CARAJO!
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Snake Pliskin said:
....until the next one.
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wayneL said:
How true!
Walmart's import bill from China is greater than many countries GDP.DTM said:If memory serves me correct, the US accounts for 1/3 of China's exports (don't quote me). A huge part of the market. Any slow down in the US would put an end to a lot of demand, especially when other economies like Europe follow.
That would then leave us with a lot of coal and iron, record indebtedness, and a falling dollar.
:goodnight
Without the US, China's growth would be very uncertain. They do have the option of ramping up domestic consumption but they would need to allow the Yuan to revalue to get their domestic prices reasonable for that to happen.
IMHO, of course.
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A long time ago back in Kiwi land, I did a stint working at a bar. And what a rough old Tavern it was too! Anyway quite often there would be violent outbursts, high emotions and a fight would usually ensue. I would wonder why the bouncers would observe from a distance and not jump in immediately and stop the 'blueing', so I asked and was told, "We just wait until they're tired" When that point was reached they would then calmly walk over and 'cleanup' so to speak. After all they were'nt going to get themselves knocked around too badly by emotional and volatile people.
So you wonder what has that got to do with anything. Well I see a lot of this behaviour right here on the markets. A lot of people think with their heart or emotions and act that way. Then you've got the others who observe with their heads and $ signs just waiting for the hype and the emotion to die down and then step in and 'cleanup'
Cheers
Happytrader
So you wonder what has that got to do with anything. Well I see a lot of this behaviour right here on the markets. A lot of people think with their heart or emotions and act that way. Then you've got the others who observe with their heads and $ signs just waiting for the hype and the emotion to die down and then step in and 'cleanup'
Cheers
Happytrader
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A question for those with the necessary software...
When the ASX recently hit its all time high, what proportion of stocks (out of the ASX-200) were themselves at an all time high around that time?
I don't know the answer to this so it's not a "loaded" question to push either a bullish or bearish argument. But my thinking is that if the market is healthy then the recent strong rally ought to have had fairly broad support. If it was a narrowly based move to the all time high then that would be a bad sign IMO.
Anyone able to answer this?
When the ASX recently hit its all time high, what proportion of stocks (out of the ASX-200) were themselves at an all time high around that time?
I don't know the answer to this so it's not a "loaded" question to push either a bullish or bearish argument. But my thinking is that if the market is healthy then the recent strong rally ought to have had fairly broad support. If it was a narrowly based move to the all time high then that would be a bad sign IMO.
Anyone able to answer this?
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The name of this thread should not be "The Crash of 05" it should be the "Claytons Crash of 05" the crash you have when you are not having a crash, just as claytons was the scotch you have when you are not having a scotch.
wayneL
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The ambush waiting for Bernanke By Stephen S. Roach STEPHEN S. ROACH is the chief economist for Morgan Stanley.
October 26, 2005
MOST FED chairmen are blindsided early on in their tenure.
Alan Greenspan faced a stock market crash two months after he took over in August 1987. Paul Volcker had to cope with a rout in the bond market three months after he became chairman in August 1979. G. William Miller was challenged immediately by a dollar crisis in the spring of 1978. For Arthur Burns, it was the inflation bogie in the early 1970s.
What's more, this indoctrination by fire has tended to take the new Fed chief ”” who is arriving without his predecessor's hard-won credibility ”” well out of his comfort zone.
Burns, the business cycle expert, was ill-equipped to cope with inflation. Miller, the businessman, didn't understand financial markets. Volcker, the expert on international finance, had to deal with a major recession. And Greenspan, the business consultant, was thrust into crisis management.
Ben Bernanke, I suspect, will meet a similar fate. It's true that, on the surface, he seems to be the perfect candidate to deal with the one problem everyone is worried about today ”” inflation. The oil shock of 2005 has taken retail energy prices up 35% over the last year, and there are 1970s-style fears that a spillover to other prices can't be too far behind.
And Bernanke is widely thought to be the perfect central banker to cope with this problem. He is renowned for his skills as an inflation fighter. He has led the charge in the academic debate over "inflation targeting" ”” arguing that a central bank needs to be explicit in aligning its policy instrument (the federal funds rate) with a numerical target of price stability (a 1% to 2% increase in the "core" consumer price index).
But I suspect that the current inflation scare will turn out to be a false alarm. As always, energy prices will come down when demand sags ”” some of that may already be occurring ”” and the new and powerful forces of globalization should continue to hold other prices largely in check.
The U.S. economy actually faces far greater threats than inflation ”” threats that an inflation targeter such as Bernanke may be ill-equipped to deal with.
At the top of the list is a record U.S. current account deficit ”” the broadest measure of the nation's trade balance (imbalance, in this case) with the rest of the world. Running at an annual rate of close to $800 billion in the first half of 2005, it requires foreign funding to the tune of $3 billion per business day. To accomplish that without a sharp drop in the dollar and/or a related backup in interest rates requires extraordinary confidence on the part of foreign investors in U.S. assets.
The foreign confidence factor could well be Bernanke's biggest challenge when he takes the reins at the Fed. The nation's current account deficit averaged just -1.5% of gross domestic product at the three most recent Fed transition points ”” the ascendancy of Miller, Volcker and Greenspan.
By contrast, today's deficit is more than four times larger at -6.4%. Moreover, in the face of an energy shock and a post-Katrina fiscal spending binge, there is good reason to look for a further reduction in U.S. saving and a related widening of the current account deficit over the next year.
In short, the U.S. is going to be asking a lot more of the foreign investor at precisely the moment the Fed is transitioning from Greenspan to Bernanke. As the maestro leaves the building, the hard-won aura of foreign confidence that surrounds him could be quick to follow. Bernanke could be faced with a dollar crisis and the related need on the part of foreign investors to seek compensation for taking currency risk. That compensation invariably spells higher interest rates ”” the last thing the nation's housing bubble and overly indebted consumers need.
During the Greenspan era, the U.S. economy pushed the envelope in sustaining an increasingly dangerous strain of unbalanced growth. In doing so, it experienced an equity bubble, a housing bubble, a record current account deficit and a monstrous overhang of household debt. The U.S. has gotten away with these imbalances because of the "kindness of strangers" ”” the willingness of foreigners to keep investing in dollar-based assets.
But the confidence that underpins foreign funding of the U.S. is a very fragile commodity. Fed transition time usually unmasks that fragility. Like the chairmen who preceded him, Bernanke could quickly find himself dealing with a confidence crisis. And suddenly, the inflation targeter will be staring at a far more intractable set of problems than his research and training prepared him for.
History warns us to expect the unexpected when the nation's second-toughest job changes hands.
October 26, 2005
MOST FED chairmen are blindsided early on in their tenure.
Alan Greenspan faced a stock market crash two months after he took over in August 1987. Paul Volcker had to cope with a rout in the bond market three months after he became chairman in August 1979. G. William Miller was challenged immediately by a dollar crisis in the spring of 1978. For Arthur Burns, it was the inflation bogie in the early 1970s.
What's more, this indoctrination by fire has tended to take the new Fed chief ”” who is arriving without his predecessor's hard-won credibility ”” well out of his comfort zone.
Burns, the business cycle expert, was ill-equipped to cope with inflation. Miller, the businessman, didn't understand financial markets. Volcker, the expert on international finance, had to deal with a major recession. And Greenspan, the business consultant, was thrust into crisis management.
Ben Bernanke, I suspect, will meet a similar fate. It's true that, on the surface, he seems to be the perfect candidate to deal with the one problem everyone is worried about today ”” inflation. The oil shock of 2005 has taken retail energy prices up 35% over the last year, and there are 1970s-style fears that a spillover to other prices can't be too far behind.
And Bernanke is widely thought to be the perfect central banker to cope with this problem. He is renowned for his skills as an inflation fighter. He has led the charge in the academic debate over "inflation targeting" ”” arguing that a central bank needs to be explicit in aligning its policy instrument (the federal funds rate) with a numerical target of price stability (a 1% to 2% increase in the "core" consumer price index).
But I suspect that the current inflation scare will turn out to be a false alarm. As always, energy prices will come down when demand sags ”” some of that may already be occurring ”” and the new and powerful forces of globalization should continue to hold other prices largely in check.
The U.S. economy actually faces far greater threats than inflation ”” threats that an inflation targeter such as Bernanke may be ill-equipped to deal with.
At the top of the list is a record U.S. current account deficit ”” the broadest measure of the nation's trade balance (imbalance, in this case) with the rest of the world. Running at an annual rate of close to $800 billion in the first half of 2005, it requires foreign funding to the tune of $3 billion per business day. To accomplish that without a sharp drop in the dollar and/or a related backup in interest rates requires extraordinary confidence on the part of foreign investors in U.S. assets.
The foreign confidence factor could well be Bernanke's biggest challenge when he takes the reins at the Fed. The nation's current account deficit averaged just -1.5% of gross domestic product at the three most recent Fed transition points ”” the ascendancy of Miller, Volcker and Greenspan.
By contrast, today's deficit is more than four times larger at -6.4%. Moreover, in the face of an energy shock and a post-Katrina fiscal spending binge, there is good reason to look for a further reduction in U.S. saving and a related widening of the current account deficit over the next year.
In short, the U.S. is going to be asking a lot more of the foreign investor at precisely the moment the Fed is transitioning from Greenspan to Bernanke. As the maestro leaves the building, the hard-won aura of foreign confidence that surrounds him could be quick to follow. Bernanke could be faced with a dollar crisis and the related need on the part of foreign investors to seek compensation for taking currency risk. That compensation invariably spells higher interest rates ”” the last thing the nation's housing bubble and overly indebted consumers need.
During the Greenspan era, the U.S. economy pushed the envelope in sustaining an increasingly dangerous strain of unbalanced growth. In doing so, it experienced an equity bubble, a housing bubble, a record current account deficit and a monstrous overhang of household debt. The U.S. has gotten away with these imbalances because of the "kindness of strangers" ”” the willingness of foreigners to keep investing in dollar-based assets.
But the confidence that underpins foreign funding of the U.S. is a very fragile commodity. Fed transition time usually unmasks that fragility. Like the chairmen who preceded him, Bernanke could quickly find himself dealing with a confidence crisis. And suddenly, the inflation targeter will be staring at a far more intractable set of problems than his research and training prepared him for.
History warns us to expect the unexpected when the nation's second-toughest job changes hands.
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TheAnalyst said:
The average financial planner sends you from one disaster to another. In february of 2002 the average financial planner was super bullish the ASX200. The results: A 23% loss for their clients in the stock market for the next 2 years.
There are WAY too many bulls in this market at present, that is not what bull markets are built on
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wavepicker said:
Hi Wavepicker
I agree with your comment about the average financial planner. As in everything in life you only get what you pay for. There above average performers with the results, take some searching for but are heads and shoulders above everyone else and are worth every dollar.
Cheers
Happytrader
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wavepicker said:
Tell that to the planners at Westpac who put their clients money into a balanced fund and their clients will tell you the opposite to what you are quoting.
tech/a
No Ordinary Duck
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wavepicker said:
The average Financial Planner is not what he appears.
He is simply a Superannuation Salesman under the umbrella of his authorities licience.
He has limited authority and as such limited "Planning" capability.
I have 3 friends who are "Planners" and invested a couple of K in 2 seperate evaluations (from independant "Planners"). To look at my own situation from their veiw and recommend direction/s.
There was nothing out of the square.
One advised $52,000 a year into super
Their 5 yr return 7% my own return way way over that infact most here would be way over 7%---so Anyway my veiw is that if you dont take control of your own financial future no one else will.
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Who's ready for a put play today?
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Hi everyone
Wanted to share some of the great video interviews with Market Wizard Linda Bradford Raschke. They can be accessed free at her website www.lbrgroup.com. Some of them were from the bear market in 2002.
I remember Renee Rifkin saying something along the lines that 'when taxi drivers start giving you tips its time to get out'
When Linda was asked by a cash hog if he should now start buying stocks (2002) 'she says .....'wait till your next door neighbour is totally depressed and feels like the market will never rally again that might be your cue'
Hope you enjoy them.
Cheers
Happytrader
Wanted to share some of the great video interviews with Market Wizard Linda Bradford Raschke. They can be accessed free at her website www.lbrgroup.com. Some of them were from the bear market in 2002.
I remember Renee Rifkin saying something along the lines that 'when taxi drivers start giving you tips its time to get out'
When Linda was asked by a cash hog if he should now start buying stocks (2002) 'she says .....'wait till your next door neighbour is totally depressed and feels like the market will never rally again that might be your cue'
Hope you enjoy them.
Cheers
Happytrader
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happytrader said:
Hi Happytrader,
Where is it on her site. Finding lots of other interesting things though.
MIT
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TheAnalyst said:
That's great for the planners at Westpac, they are probably advising the same thing right now. Try averaging out the returns of those balanced funds for the last 5 years and again for the next 5 years and those balance sheets may not look so flash. That's because planners like most people like keeping to the status quo.
If 90% of planners or anyone for the matter was very bullish or bearish then to me that shows complacency on their part, and is a sign that a particular trend is at risk of ending.
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Hi Mitmit said:
Look down the left hand side of her home page close to the bottom
Its inbetween the Street Smarts ad and above Proton trader ad. It says Linda's Interviews. Enjoy
Cheers
Happytrader
