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LONDON, England — How long can this go on? We seem to be locked into a terrifying cycle: stocks suffer days of sell-offs, followed by a powerful bounce. But just as we start wondering whether this market slump will follow the same pattern as its ugly predecessors of 1987, 2001 and many others and hit bottom, the same pattern repeats itself.
It’s three steps back, then one step forward - and over the past few months it’s been repeated more times than I care to remember. To make matters worse, there never seems to be that much rhyme or reason to the selling or the buying. One day share markets worry themselves sick about global recession, then the next day all that is outweighed by some random piece of supposedly good news. A few hours later a renewed slide on stocks in another time zone has investors back in panic mode, and we’re off to the races again.
Market insiders point to several underlying factors, notably the aching uncertainty about where the credit crunch and the world’s leading economies are heading. But they say that what is clearly adding to the volatility is a frenzied scramble by hedge funds to move out of stock markets and also to make money for their investors by whatever means they can dream up. The betting is that they are both creating a lot of the volatility and riding it at the same time.
To add to the craziness, we are seeing some violent swings on currencies, with the Japanese yen and to a lesser extent the dollar (given the relative security of US Treasury bonds) now the safe havens of choice amid the carnage of “global deleveraging”.
With previous sell-offs, there seemed to be a clear end to the selling. It may have taken a while to come along, but in the end the bargain-hunters stepped in and there was a gradual return to normality, and then to sustained growth in share values.
So where are we now? When Warren Buffett said a couple of weeks back he thought Wall Street stocks were a buy, he may have been right about their current puny valuations, but not about whether those valuations could get even punier.
Speaking on Business International on Friday, Robert Parker, Deputy Chairman of Credit Suisse Asset Management, was a lot more cautious, predicting the return to a bull market would not come until the middle of 2009.
That would certainly be a few months before the predicted end to the current global slowdown, which most economists I speak to seem to think will only loosen its stranglehold at the far end of 2009.
What do you think? If so illustrious an investor as Warren Buffett thinks we’re close to the bottom, should the rest of us pile into stocks in hopes of rather decent gains within a couple of years? Or has even he got it wrong?
BY Charles Hodson
...
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Financial crisis not over yet, bottom yet to be traced: Expert
Experts in the field of economics are of the opinion that global financial crisis is not over yet.
"The crisis is not over yet. And how long will it last nobody really knows as in the financial sector in US and UK there are many more problems to come out as yet," Emeritus London School of Economics, Professor, Lord Meghnad Desai, said here during a panel discussion session of Confluence-2008.
The real output crisis will exists say for next 9-12 months and real financial crisis for another 24 to 30 months, he added.
Responding to a query, IIM-A Prof. Jayanth Verma, said "In India and Asia we are at the beginning, I think India is where the US was a year ago. And, all it looks as if we were facing liquidity crisis in India and much of Asia, but its lot more than that."
If we look at how the crisis is affecting India and the Asian countries, I see it in three and four different ways its happening, he added.
FII`s are taking out money from the country, and that has happened across Asia, he said.
A few million dollars of currency derivatives have gone bad here, I think the corporate sector has taken that.
"There are reports that we may have few billion dollars more of commodity derivatives that have gone bad, they brought crude at 120 dollar a barrel, I am looking at marked to market losses on that and similarly in metals, but its manageable" Verma said.
...
In reply to:
IGNORE THE STOCK MARKET UNTIL FEBRUARY.......
Posted by :
sambala
By the way, when hedge funds are down for the year, they work practically for free until they make up the loss. We`ll see hedge funds close and stocks liquidated as -- no surprise -- hedge-fund managers like to get paid.
- Margin calls: Whenever stocks go down sharply, you quickly find who owns them with debt. We have seen spectacular margin calls, a requirement for more capital to cover share losses. Chesapeake Energy CEO Aubrey McClendon unloaded 33 million shares to cover losses. Viacom CEO Sumner Redstone had a forced sale of $400 million in Viacom and CBS shares because of a margin call on other stocks. You can bet many not-so-public margin calls are behind many huge price drops. These usually take place in the last 30 minutes of trading.
So won`t January be alright once these dislocations weighing on the market are lifted? The January effect is supposed to be positive.
Well, often money managers are fired at the end of disastrous years. A new manager comes in, looks at the existing positions and dumps them all and remakes the portfolio with new stocks that he likes, thus generating more selling. My favorite Wall Street adage suggests that the stock market trades to inflict the maximum amount of pain. Remember, you can only ignore the stock market for so long. Once everyone thinks it can only GO DOWN . . . it might GO UP.
by Andy Kessler
Friday, November 21, 2008
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IF I GET SOME SENSIBLE ACTIVE PEOPLE HERE!
I WILL POST RISK FREE GAINS MARKET STRATERGIES HERE!...
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MMM.STOCKSSTARVIEW.BLOGSPOT.MOC...
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Radhikaji,
Very good point!
Do you use internet trading?
BTW, I have seen HDFC with help of my friend. I did not like it.
Rgds,...
In reply to:
Internet Trading Site
Posted by : radhika_nandlal
My money,
I dont know i have never tried it its the only other bank apart from HDFC and ICICIDIRECT that offers online trading... why dont these people give a free demo site so we can check them during trading... I should write to SEBI chief and ensure that any banking or nonbanking brokerage should offer live demos of their terminals during trading hours so the investors can decide... i dont know what all these top guys are doing.... if i were in some top spot i would have revamped every aspect of running my country.
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Bajaj Capital may be another alternaive.
Although, presently it deals with NSE only......
In reply to:
Internet Trading Site
Posted by : radhika_nandlal
you might like to try IDBI PAISA BUILDER.
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My money,
I dont know i have never tried it its the only other bank apart from HDFC and ICICIDIRECT that offers online trading... why dont these people give a free demo site so we can check them during trading... I should write to SEBI chief and ensure that any banking or nonbanking brokerage should offer live demos of their terminals during trading hours so the investors can decide... i dont know what all these top guys are doing.... if i were in some top spot i would have revamped every aspect of running my country....
In reply to:
Internet Trading Site
Posted by : my_money
Thanks Radhikaji for your response!
Is it good for traders? I mean, i) Time lag to display of stock price should be as minimal as possible, ii) Response time should be good, iii) Different features should be available, iv) Should beUser Friendly too.
Rgds,
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Thanks Radhikaji for your response!
Is it good for traders? I mean, i) Time lag to display of stock price should be as minimal as possible, ii) Response time should be good, iii) Different features should be available, iv) Should beUser Friendly too.
Rgds,...
In reply to:
Internet Trading Site
Posted by : radhika_nandlal
you might like to try IDBI PAISA BUILDER.
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you might like to try IDBI PAISA BUILDER....
In reply to:
Internet Trading Site
Posted by : my_money
Dear All,
I need information on the internet trading website. I have been using ICICIDIRECT, which has become frustratingly bxxxxxxxxxx!
Server does not response!! I would like to switch to another service provider, who provides internet trading facility. I need it for trading purpose too!
Your opinion will help me to take informative decision and is highly appreciated.
Rgds,
Tracked by: 0 Boarder
Dear All,
I need information on the internet trading website. I have been using ICICIDIRECT, which has become frustratingly bxxxxxxxxxx!
Server does not response!! I would like to switch to another service provider, who provides internet trading facility. I need it for trading purpose too!
Your opinion will help me to take informative decision and is highly appreciated.
Rgds,...
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US markets surged in late trade. The S&P 500 index rebounded from an 11-year low, Dow back above the 8,000 mark after President elect Barack Obama has picked Timothy Geithner head of the Federal Reserve Bank of New York, for the post of treasury secretary. At closing bell, the Dow Jones ended up 494 points at 8046.42.
...
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I talked of level of 7591 for Dowjones and on thursday it closed below that crucial level at 7552 but it managed to bounced back the next day by 494 points to close above 8k level.....if again it closes below the 7591 level then it won`t be considered well enough as it would signal into more huge downside and I hope it maintains above that. These are my personnal assumption.
Going ahead I see India and China decoupling rest of the world in a big way as ultimately someone has to bail out somebody!!!!
Regards,
Manish Bothra,
Kolkata....
In reply to:
US Subprime Vs The Great US Depression
Posted by : mannish
Hi all,
Many market players are coinciding the current turmoil as a replay version of the Great US depression of 1930....its very much leading to the panic selling all over the globe.
In the year 1929 Dowjones was trading at 380 and over a period of 3 yrs it collapsed to 41.27 in the year 1932 which shaved of around 90% of its gain.
Great Depression in the United States, worst and longest economic collapse in the history of the modern industrial world, lasting from the end of 1929 until the early 1940s.
it saw rapid declines in the production and sale of goods and a sudden, severe rise in unemployment. Businesses and banks closed their doors, people lost their jobs, homes, and savings. In 1933, at the worst point in the depression, more than 15 million Americans—one-quarter of the nation’s workforce—were unemployed.Unemployment soared,in the United States it peaked at 24.9% in 1933. It remained above 20% for two more years, reluctantly declining to 14.3% by 1937.Its very much haunting.
There were many causes of it like Unequal distribution of wealth, High Tariffs and war debts, Over production in industry and agriculture,Stock market crash and financial panic.
We may not see see 25% unemployment as in the 1930s, but double digits are not ruled out,currently over 6%.
For Dowjones i see next big major support at 7591 level. We should take a lesson from the Great US depression and should not try to repeat that and should not co-relate it with the current US subprime crisis...though very much look alike but still it can be avoided.
Indian market no doubt is in an oversold position....from 21200 its currently at 8700 level,almost 12500 point(around 60%) corrected in 10 months so far...even the Dowjones has not corrected like that.
Well for sure a large amount of dirt will be out from the system....things will get better for sure.
Regards,
Manish Bothra,
Kolkata.
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By the way, when hedge funds are down for the year, they work practically for free until they make up the loss. We`ll see hedge funds close and stocks liquidated as -- no surprise -- hedge-fund managers like to get paid.
- Margin calls: Whenever stocks go down sharply, you quickly find who owns them with debt. We have seen spectacular margin calls, a requirement for more capital to cover share losses. Chesapeake Energy CEO Aubrey McClendon unloaded 33 million shares to cover losses. Viacom CEO Sumner Redstone had a forced sale of $400 million in Viacom and CBS shares because of a margin call on other stocks. You can bet many not-so-public margin calls are behind many huge price drops. These usually take place in the last 30 minutes of trading.
So won`t January be alright once these dislocations weighing on the market are lifted? The January effect is supposed to be positive.
Well, often money managers are fired at the end of disastrous years. A new manager comes in, looks at the existing positions and dumps them all and remakes the portfolio with new stocks that he likes, thus generating more selling. My favorite Wall Street adage suggests that the stock market trades to inflict the maximum amount of pain. Remember, you can only ignore the stock market for so long. Once everyone thinks it can only GO DOWN . . . it might GO UP.
by Andy Kessler
Friday, November 21, 2008
...
In reply to:
IGNORE THE STOCK MARKET UNTIL FEBRUARY.......
Posted by : sambala
Down in the morning, up in the afternoon. Or is it the other way around? The topsy-turvy stock market is tough to read.
In the last year, the Dow Jones Industrial Average has briefly been over 13,000 and below 8,000. The past month has felt like the Cyclone roller coaster on Brooklyn`s Coney Island -- lots of ups and downs, the whole rickety thing feeling like it`s going to crash at any minute.
Great investors are taught to listen to the market. Each tick of the tape has something to say about expectations for growth, inflation, policy changes and looming recessions. The stock market is like a giant mass of pulsing plasma doing price discovery and a game of hot potato, getting stocks into the correct hands with the right risk profile. It`s way too big for any one person to manipulate, let alone touch directly. Instead, millions of us provide input with our buying and selling decisions.
When it`s at its most efficient, with buyers and sellers neatly matched up at the right price, it`s a pretty good predictor. The Crash of 1929 announced a recession, and the wake-up call unheeded might have caused many of the bad policies leading to the Great Depression. The Crash of 1987? Not so much.
You see, the market is a great manipulator. In September, the Dow dropped 700 points intraday after the House of Representatives voted down the Treasury`s TARP bank-rescue bill. Spooked, the House passed the bill the next week. Or how about this? The Dow was up 300 points on Election Day applauding an Obama victory and then down 1,600 points since.
The market can also be a bold-faced liar. On Jan. 22, the Fed announced an emergency 75-basis-point rate cut in response to huge drops in European markets. A few days later, it came out that a rogue trader at Société Générale lost them $7 billion and the bank was unwinding his positions. Oops.
So which is it now: an efficient mechanism or a manipulating liar? Should you listen to it warning of doom or anticipating renewal? I`d say stick wax in your ears and don`t listen to the market until February.
Don`t get me wrong. The freezing of the credit markets is wreaking havoc on the world economy. Corporate profits are dropping. Central banks are fighting off deflation and may not turn off the spigots fast enough -- which could ignite runaway inflation. But because of the credit mess, I am convinced the stock market is at its least efficient today. Don`t read too much into any move. Here are the five biggest dislocations taking place:
- Tax-loss selling: Whenever you have a loss in a stock -- and who doesn`t -- it`s always tax smart to sell it, take a tax loss and either buy something similar or wait 30 days and buy the original one back. December can be an ugly month of indiscriminate selling. The December effect will be huge this year.
- Mutual-fund redemptions: Mutual funds are also dumped for tax losses. When the stock market is down in the morning, it`s usually because of mutual-fund redemptions.
Fidelity`s giant Magellan fund, down 56%, is one of many in the $6 trillion stock-fund business having an awful year. As investors call or click to get out of these funds, Fidelity and the others have to unload shares the next morning to raise cash. This forced-selling overwhelms the system. New York Stock Exchange specialists, who are supposed to maintain an orderly market, stop buying and back away. You get huge drops, which can unnerve even more investors and cause them to redeem.
- Mutual fund cap-gain distributions: To make matters worse, in December mutual funds do capital-gains distributions. In a down year like 2008, you would think there are no taxes to pay. Think again. Legg Mason`s Value Trust, run by Bill Miller, outperformed the market for 15 years by buying many "unvalue" names like Amazon. As investors redeem, he is forced to sell many of these stocks originally purchased at very low prices, triggering huge capital gains in a year his fund is down 62%. You can almost guarantee investors also will sell more of these funds to pay their unexpected tax bill.
- Hedge-fund redemptions: Instead of overnight selling like mutual funds, hedge funds typically require 45 days` notice for investors to get out of a fund. They`ve been furiously selling since September to raise cash to pay investors. This usually shows up as a set of stocks that just go down and down and down with no obvious explanation.
Rubbing salt in hedge-fund wounds is the fact that Lehman Brothers was a prime broker to many hedge funds, holding their shares. While Lehman`s bankruptcy was not a problem in the U.S., in England the policy is to freeze accounts until the mess can be sorted out. There are billions in assets locked in this bankruptcy, and hedge funds are forced to sell positions in the U.S. and elsewhere to raise cash, exacerbating the downside here.
Cont.....
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Down in the morning, up in the afternoon. Or is it the other way around? The topsy-turvy stock market is tough to read.
In the last year, the Dow Jones Industrial Average has briefly been over 13,000 and below 8,000. The past month has felt like the Cyclone roller coaster on Brooklyn`s Coney Island -- lots of ups and downs, the whole rickety thing feeling like it`s going to crash at any minute.
Great investors are taught to listen to the market. Each tick of the tape has something to say about expectations for growth, inflation, policy changes and looming recessions. The stock market is like a giant mass of pulsing plasma doing price discovery and a game of hot potato, getting stocks into the correct hands with the right risk profile. It`s way too big for any one person to manipulate, let alone touch directly. Instead, millions of us provide input with our buying and selling decisions.
When it`s at its most efficient, with buyers and sellers neatly matched up at the right price, it`s a pretty good predictor. The Crash of 1929 announced a recession, and the wake-up call unheeded might have caused many of the bad policies leading to the Great Depression. The Crash of 1987? Not so much.
You see, the market is a great manipulator. In September, the Dow dropped 700 points intraday after the House of Representatives voted down the Treasury`s TARP bank-rescue bill. Spooked, the House passed the bill the next week. Or how about this? The Dow was up 300 points on Election Day applauding an Obama victory and then down 1,600 points since.
The market can also be a bold-faced liar. On Jan. 22, the Fed announced an emergency 75-basis-point rate cut in response to huge drops in European markets. A few days later, it came out that a rogue trader at Société Générale lost them $7 billion and the bank was unwinding his positions. Oops.
So which is it now: an efficient mechanism or a manipulating liar? Should you listen to it warning of doom or anticipating renewal? I`d say stick wax in your ears and don`t listen to the market until February.
Don`t get me wrong. The freezing of the credit markets is wreaking havoc on the world economy. Corporate profits are dropping. Central banks are fighting off deflation and may not turn off the spigots fast enough -- which could ignite runaway inflation. But because of the credit mess, I am convinced the stock market is at its least efficient today. Don`t read too much into any move. Here are the five biggest dislocations taking place:
- Tax-loss selling: Whenever you have a loss in a stock -- and who doesn`t -- it`s always tax smart to sell it, take a tax loss and either buy something similar or wait 30 days and buy the original one back. December can be an ugly month of indiscriminate selling. The December effect will be huge this year.
- Mutual-fund redemptions: Mutual funds are also dumped for tax losses. When the stock market is down in the morning, it`s usually because of mutual-fund redemptions.
Fidelity`s giant Magellan fund, down 56%, is one of many in the $6 trillion stock-fund business having an awful year. As investors call or click to get out of these funds, Fidelity and the others have to unload shares the next morning to raise cash. This forced-selling overwhelms the system. New York Stock Exchange specialists, who are supposed to maintain an orderly market, stop buying and back away. You get huge drops, which can unnerve even more investors and cause them to redeem.
- Mutual fund cap-gain distributions: To make matters worse, in December mutual funds do capital-gains distributions. In a down year like 2008, you would think there are no taxes to pay. Think again. Legg Mason`s Value Trust, run by Bill Miller, outperformed the market for 15 years by buying many "unvalue" names like Amazon. As investors redeem, he is forced to sell many of these stocks originally purchased at very low prices, triggering huge capital gains in a year his fund is down 62%. You can almost guarantee investors also will sell more of these funds to pay their unexpected tax bill.
- Hedge-fund redemptions: Instead of overnight selling like mutual funds, hedge funds typically require 45 days` notice for investors to get out of a fund. They`ve been furiously selling since September to raise cash to pay investors. This usually shows up as a set of stocks that just go down and down and down with no obvious explanation.
Rubbing salt in hedge-fund wounds is the fact that Lehman Brothers was a prime broker to many hedge funds, holding their shares. While Lehman`s bankruptcy was not a problem in the U.S., in England the policy is to freeze accounts until the mess can be sorted out. There are billions in assets locked in this bankruptcy, and hedge funds are forced to sell positions in the U.S. and elsewhere to raise cash, exacerbating the downside here.
Cont........
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crude will come down to usd 30/bbl...
In reply to:
Crude trading at USD 50/bbl
Posted by : MMB Messenger
Crude trading at USD 48.25/bbl of a low in the earlier Asian markets today have just regained that USD 50/bbl at this point in time. Gold gained 2% yesterday and is up 2% at this point in time. Silver prices are nearly 3% on the higher side.
