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FTSE down 3% today and China suspending trading again.
Thoughts?
Conspiracy theories?
My bet is the markets want more stimulus (free money) and are staging a meltdown in order to get jacked up again.
China is going through a decades long transition from communist state to socialist state.
The West is emerging out of a 8 year 'great recession' the likes the world has never seen before with unbalanced economies only possible due to huge amounts of artificial stimulus to keep markets alive that left to self-regulate would be dead, or at least a lot different.
There will be a lot of bumps in the road, a 3% drop is just the short-term speculators getting jittery, yeah it could crash us all into financial armageddon - almost anything could, but it doesn't seem likely.
This is just a lot of market rebalancing played out over years instead of hours.
The 'market' isn't a single entity and is very unlikely to work together to do anything, let along cause a small meltdown - it's a chaotic dog eat dog world with hundreds of thousands of people 'playing' it. - after all you can't magic up money with a market, for someone to win, someone has to lose - if people started any sort of plan, others would take advantage of it for themselves.
Follow the currency and the economic (not GDP though) data in China more than the market. To follow the latter you need to believe that is not distorted and that it gives fair indication of future cash flows and their value.....!!
[s]QE[/s] competitive devaluations may be of more concern. Short € v $ ??
Markets are a complete mess at the moment. But that is what [s]stealing[/s] QE is designed to do. Misprice the Rf to make people take on more risk. In the context of continued over-leverage, the wisdom of such an approach continues to be tested!!!
Pushing on string anyone?!?
Long term returns will be poor over the next few years, so timing buying and selling becomes more important if you are going to enhance returns - a notoriously difficult exercise.
FWIW, there are many anomalies in Europe that could open up if this weakness is prolonged.
It's a market.
It moves.
Take the long term view and all will be fine.
Ride your bike and think happy thoughts
thm: like what? I need to know quickly!!!
It's a market.
But is it? Does the global stock market actually confirm to basic economic principles anymore, given how much manipulation there has been over the last 20 or so years, especially by central banks.
Anyhow, I second your advice re riding, life's too short.
Take the long term view and all will be fine.
If you plan to live a long time. Check out the Nikkai since 89
meanwhile all the developed world increase their debts---osbourne and co have doubled the uk , yet they get a free ride to trumpet on about austerity--fiddling while rome burns for me.....
Oil price drooping below $30 a barrel is good for some companies (anything energy intensive), and absolute disaster for others (anything that supplies energy). At the moment oil industry companies shares are going +/-10% every day with no apparent logic.
Chinese economy isn't looking great, but market is only back around levels seen last year. Worryingly for China a lot of 'normal' people have money in the market and are going to get burned. China's version of the 1929 Wall Street Crash?
Some amazing numbers floating around e.g. China burned through $108b of FX reserves in December to prop up yuan.
see the coke head was talking down the market this morning a bit of short and distort for some mates.
Looking good from where i stand.
Looks to me like it's being run down ATM on purpose, expect huge gains in March.
As for oil, expect that to stay under $40 for another year at least
Austerity?????????
KB - I no longer work directly in the field, but have always had a policy of not making specific recommendations to individuals especially friends. So excuse me if I avoid a direct answer. Don't mean to be rude!
But things are gradually improving in Europe despite significant headwinds. So that is where I am looking for bombed out valuations and possible turning points. Some interesting macro developments suggesting some upside.
But as above. Markets (sic) are currently rigged but the forces searching for returns remain strong so it's a combination between attractive yields in some markets and some recovery stories where growth is re-emerging IMO.
FX risk remains high in a world of competitive devaluations though!
China is the concern no doubt. It was Chinese stimulus which pulled the world economy out of recession/depression in 2008. Consequently they've ended up with a massive real estate and stock market bubble.
Other than more QE and negative interest rates, the central banks have used every trick in the book.
More QE coming in Europe so hard to see why you would not be long $ v € for the foreseeable future.
No sign of inflation nearing Cbk targets so they will keep pushing on string in the meantime. Plus ca change...
As for oil, expect that to stay under $40 for another year at least
But likethe crash, I'd expect a "blink and you'll miss it" speed of recovery from that. We're only over supplied by about the same as we were under supplied at $150 and demand is increasing by about the differential every year, so in 12 months supply = demand, and for the next few years after that expect under supply as there has been little investment in infrastructure since the financial crash. I'd not be surprised to see $200+ within 5 years.
Willing to put your money where your mouth is on that?
Willing to put your money where your mouth is on that?
Yep, and the shares dropped 40% almost as soon as I did 🙁 but that was mostly for other reasons like dividends being cut rather than underlying industry wide issues.
In it for the long haul...............
im with tinas.......
dont know much about markets and funds but i see all the budget cuts being done on current assets , minimal exposure to exploration by most players, most not all ready funded projects being cut.....
those that are producing currently wont produce like this for ever - and currently prices/budgets dont allow to keep exploration and completion carrying on as it was - and many dont want to produce new wells at current prices as its money on the bank if its sitting in the ground and not costing them. The assets with topside infrestructre in place will be kept producing as there are reasonable fixed costs to have them there even if they are not producing....
then there are the market influences such as saudi and other opec nations being crippled by the low price atm........ Tax hikes directly related to the low oil price over there are not going down well
As above, the mantra for most large oil companies is RRR, Reserves Replacement Ratio which basically put is replacing/finding what your producing. Typically that is normally expected to be 100%+ however now (for some) it's bumping around 60-80% so in the longer term that is not sustainable. Most exploration/wells not already in the process of being 'executed' are shelved for the time being and companies are focusing on well work/interventions. This is a much lower cost way of trying to enhance/optimize what you already have as opposed to exploring to find more.
Add all of these things together then once we start to see even a gradual improvement in emerging markets or a ME conflict or a change of tack by OPEC then things could very easily spiral to $200+ in the next 2-3 years when due to the lack of investment now means supply can't keep up with demand.
Well, that's the way I see it!
Gold miners are looking very attractive. Underpriced and gold is set for a breakout given the global market turmoil.