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Financial Markets

The Atheist

The Grammar Tyrant
The Atheist
Joined
Jul 3, 2006
Messages
36,374
Hello, fellow businessmen & women.

If you're in business, I imagine you'll be watching at least one of the world's financial markets and I thought I'd have a try at having a markets thread. This kind of thing works really well in sports.

Come on in, pour yourself an Earl Grey tea [coffee, if you must], take a seat at the boardroom table and put your feet up.

I have an interest in the majority of markets - shares, FX, commodities and finance and have strong contacts in all of them, so should be able to answer, or find the answer, to any technical questions.

This has certainly all come online at an appropriate time - the world's markets are in more than just a little turmoil!

I see the Dow testing the 13,000 level today, but supported above that after the first half-hour which went as low as 12,970. 13,000 is really important psychological barrier and the market bounced off it twice this morning.

Anyone have details of how much the Fed's spent to date on liquidity?
 
Wow!

That 13,000 support has gone, gone, gone.

Market down 172 to 12,856.
 
Tokorona said:
I actually do have a question, but this is out of curosity. When the mortage bubble burst, did it affect other loan sources, such as educational loans?
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I suspect it will affect all credit, not just mortgages. The markets are becoming very credit wary, and many of the lenders are pulling back or even out. Those that remain will likely increase their rates due to perceived higher risk.

In other words, borrowing money will be more expensive for everyone.
 
Tokorona said:
I actually do have a question, but this is out of curosity. When the mortage bubble burst, did it affect other loan sources, such as educational loans?
Click to expand...

As Grimoire has noted, the crash is starting to affect all areas of finance and business. The situation at the moment is highly complex and I don't think there's an easy answer as to what happens next. We won't really know until the rout is over, but at the moment, the debt crisis has spread like wildfire and is being a bit self-fulfilling with every market dragging down all the others.

Interesting days ahead.

Borrowing may not necessarily be more expensive - the Fed may have to ease rates to attempt stimulating the economy - but you can guarantee that credit will be harder to obtain.

To give you an idea of the scope of what's going on, these are the latest headlines on Bloomberg:


U.S. Stocks Drop, Erasing S&P Index's Gain This Year on Debt-Market Rout

That's a highly euphemistic way of putting the scenario that S&P is at a low for the year.

Countrywide Shares Fall as Merrill Analysts Say Lender May Face Bankruptcy

Bankruptcy? Won't be the last.

Three-Month Treasury Yield Drops Most Since 1989 as Investors Avoid Risk

Remember the recession and bond crash of the late '80s? I certainly do! That flight to safety shows that the sub-prime crash is already a bigger financial crisis than both 9/11 and the Asian market "flu" of the 1990s.

U.S. Home Sales Drop to Four-Year Low, Prices Fall in Third of U.S. Cities

Tropical Storm Erin Forms Over Gulf of Mexico, Bears Down on South Texas

The housing market is self-explanatory, while a tropical storm - if it causes widespread damage - will put further squeezes on the money supply.

Watch this space!
 
Thank you for your response. I have to admit I am not really up on finance, but as I am currently applying for a federal (unsubsudized) loan, I was curious if it to was affected as well (And, uh.. we just got a loan to buy a house, because the loan was before the crash and the company agreed to honor their agreements) But!

I suppose now is a good time to look up how it works beyond what I know (And I was barely old enough to know the Asian market "Flu", but hey, the internet is a wonderful thing.)
 
Just count yourself lucky to be in USA, where the ride so far has only been bumpy, the NZ dollar's in free-fall and the sharemarket is off another couple of % today. The current track looks like it fell off the north face of Mt Everest!
 
boloboffin said:
Boy, did I pick the wrong year to open a 403(b). :yikes:
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It ain't over yet, either!

Asia; open 2% down, Dow futs showing -125 on opening tomorrow, The Mighty Kiwi, worst one-day loss in 21 years, worst two-day tumble in Asia for over a year, MCSI world down 11% off its highs.

A gem:

Bloomberg said:
We're in the eye of the cyclone,'' said Salah Seddik, who helps oversee about $5 billion at Richelieu Finance in Paris.
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Well Salah Seddik is wrong. We're at the outer edge of the cyclone and there's truckloads of increasingly bumpy weather before the illusiory calm of the eye before heading back into the full blow again. Stuffing the mattress is looking like a smart investment strategy.
 
The Atheist said:
It ain't over yet, either!

Asia; open 2% down, Dow futs showing -125 on opening tomorrow, The Mighty Kiwi, worst one-day loss in 21 years, worst two-day tumble in Asia for over a year, MCSI world down 11% off its highs.
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Did anyone here read Jurassic Park? It's times like these that remind me of the Malcolm Effect.

(Actually, if the notion of investment success is to buy low and sell high, this is the perfect time to open a 403(b), right? Right?

Hooboy.)
 
Buying at the bottom is indeed the answer. It's picking the bottom that's the hard part!

;)
 
No one can predict the bottom (I assert). I can't think of anyone who makes serious money in the market (by serious I don't mean a few hundred million) that even makes the attempt. Most buy before the bottom is reached, and sell before the top is found. All that is required is to find value. Suppose I offered to sell you a dollar for 50cents. You'd buy every one you could, wouldn't you. Now suppose I offer to sell my dollars for 35 cents to the next person. While it sure would have been great to get that offer, you still made out like a bandit. Since you can't read my mind, you would have been crazy to try to predict what my next offer would have been, and refused the 50 cent offer. After all, my next offer might have been 5cents, 80cents, or 5 dollars. You have no way of knowing, but you recognize a bargain, and scoop it up.

Now, if somebody can counter my assertion that we can't time bottoms, I'd sure like to hear the emperical evidence. I haven't run across it yet.

Personally, I love the market like ths. Almost everything I've bought recently is in the red. So I just keep buying more. I'd be an idiot to complain about a sale. I don't get scared when the safeway puts milk on sale. So long as I don't need this money for the duration of a market cycle (which could be as long as 10 years or so, maybe longer if things go truly bad), I don't care. I can't predict the future, so I'm not going to act like I can.
 
roger said:
No one can predict the bottom (I assert).
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I agree.

What I'm saying is that you need to time the entry. if the market's going down, that's all well and good, but you don't want to buy when it's only 25% of the way down.

At the moment, there could be a lot further to go, or all the bargains may be gone. The sharemarket's been way overheated on fundamentals for years anyway.

Pretty happy with yesterday, though. I sold short across the board and they all came down! ;)

No selling today - if there's gonna be a dead cat about, today's the day. Buy small early & get ready for another big sell on Monday. The rally on Wall St at the end of the day had a smack of a desperate attempt by the banks to shore the market up. This is a very dangerous game they're playing - if the market beats them, it will only add to the spiral.

Another interesting couple of days in prospect.
 
Okay.

How do you know the market is 25% down, as opposed to 80% down?
 
roger said:
Okay.

How do you know the market is 25% down, as opposed to 80% down?
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Well, obviously, you don't!

That's where the reading of fundamentals comes in - a company with heavy market investment is obviously going to see its own assets eroded, while a sound manufacturer will retain similar profitability and therefore become more attractive when the price drops.

For instance - anyone even remotely connected to the housing market at the moment is going to get hammered, while debt collectors are a great buy!
 
The Atheist said:
Well, obviously, you don't!
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Right. So what does "What I'm saying is that you need to time the entry. if the market's going down, that's all well and good, but you don't want to buy when it's only 25% of the way down." How can anyone follow that advice?

My contention - you can't. So, like you said, look at the fundamentals. Buy a dollar for 50cents.
 
And there it went; again, in a move unprecedented since 9/11, the Fed has cut mid-way through its schedule.

Seems to be working. Dow back up over 13k, Europe up.

If this stops the rot, we'll look back at just another blip. If, on the other hand, the markets turn to slush next week, then we are in for some extended pain - a prospect I'd see as unlikely now, given the selling pressure which has come on the US$.

Latest market update shows the Dow supported at 13k, with a dip back under the line to 12,997 on what looks to be some solid profit-taking by those who had the cojones to buy earlier in the week. Five minutes later, buyers coming back at 13k.
 
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