Dr Doom says: Bail out now!!!

[wayneL]

http://www.bloomberg.com/apps/news?pid=10001099&sid=aWT3vXShxJjE&refer=energy

Marc Faber, Dr. Gloom, Says Commodities May Fall (Update1)

May 16 (Bloomberg) -- Marc Faber, the money manager who told investors to bail out of U.S. stocks a week before the 1987 Black Monday crash, said commodity prices may fall as much as 30 percent in three to six months.

``Asset markets, in particular commodities and the emerging stock markets, could correct quite substantially on the down side,'' Faber, 60, said in an interview from New York. ``As an investor, you may be better off taking some chips off the table right here.''

Faber, who has a doctorate in economics and publishes a newsletter called The Gloom, Boom & Doom Report, said he holds more than half his own assets in cash or two-year notes. He said he prefers gold over industrial metals including copper and zinc because bullion won't be affected by an economic slowdown.

The Reuters/Jefferies CRB Futures Price Index of 19 commodities, including energy, metals and agricultural products, fell 2.7 percent yesterday, the largest decline since July 1988, as prices fell for oil, copper and zinc. Gold in London had its biggest drop since 1993.

The declines signal an end to the five-year rally in commodities that sent prices to record highs, Faber said. Copper almost tripled in the year before yesterday's decline, zinc had doubled and gold was the highest in 26 years. Oil had risen 48 percent and reached a record high of $75.35 a barrel last month.

More Severe

``A lot of people think it's a buying opportunity because they are conditioned that when the markets go down, you buy, and then they go up and make new highs,'' Faber said. ``I think this is something more severe. Commodity markets and many stock markets could be down 20 percent, 30 percent over the next three to six months.''

Marc Faber, founder and managing director at Hong Kong- based Marc Faber Ltd., has been urging investors to buy commodities since 2001 and holds 10 percent of his personal assets in gold in a bank vault. The holding has earned 65 percent in the past year.

Gold's 5.2 percent drop yesterday below $700 an ounce for the first time in a week was a ``tiny'' decline, Faber said. Investors shouldn't buy gold now because prices may fall further to $550 or $600 before resuming its rally, he said. Gold closed yesterday at $677.40 an ounce.

The U.S. Federal Reserve can raise its benchmark interest rate further as inflation will accelerate. ``I'm a believer that interest rates in the U.S. are far too low,'' he said.

Faber said that that his other holdings include Asian real estate.

 

[wayneL]

Sell shares in London and buy Budweisers in Florida

http://www.telegraph.co.uk/money/ma...nuId=242&sSheet=/money/2006/05/17/ixcoms.html

...because financial markets, here and in America, are probably heading not just for temporary turbulence but prolonged discomfort.

The shake-out, I believe, has only just begun.

Two weeks ago, when the FTSE 100 index was 6082 (today: 5850), this column highlighted "Ten Reasons Why It's all Going To Go Horribly Wrong".

My pessimism generated carping from City professionals, who insisted that I didn't understand "the fundamentals". Lessons of the past weren't valid, they claimed, because this time there were "special factors" to sustain the bull market's charge.

Oh really? When experts start telling us that this time is different, you can be absolutely sure that it isn't. Financial gravity is never abolished, merely deferred. History has much to teach us, including that experts are temporary but common sense is permanent.

This time it's different is what experts said in 1988, when Japan's Nikkei Index was approaching 40,000 and land surrounding Tokyo's Imperial Palace was worth more than all the real estate in California.

Price-earnings ratios, a reliable method for valuing businesses, did not apply to Japanese companies, said pin-striped bankers, because, er, I'm not sure why … but never mind, it was different, those shares were going up.

They went down - and stayed down. Today, 18 years later, the Nikkei is about 16,000 (60pc below its top).

This time, it's different is what the experts said in 1998, when dotcom dizziness created "new paradigms" to explain why hopeless internet businesses were worth hundreds of millions.

Price-earnings ratios were inappropriate as a measure for dotcom companies, chino-clad brokers said, because, er, I'm not sure why… but never mind, it was different, those shares were bound to rise.

They collapsed. New ventures vanished, along with savings and reputations. It was largely an illusion.

So what's different in 2006?

Well, experts say that this time share prices are different because there's "a wall of money, a torrent of liquidity" gushing into stock markets, with nowhere else to go.

Don't believe them. There is always somewhere else to go. It just takes time for capital to make up its mind.

Then there's property. This time, that too really is different, experts say. For sure. No doubt. House prices will continue to rise. Property always goes up......

 

[wavepicker]

Sell shares in London and buy Budweisers in Florida

http://www.telegraph.co.uk/money/ma...nuId=242&sSheet=/money/2006/05/17/ixcoms.html

don't you love those bears. this guy sounds like he went to the same school as you and I wayne!!

 

[bullmarket]

Things starting to look a little more ominous now with XJO's knees definitely wobbly atm

cheers

bullmarket

 

[Happy]

Sooner or later they had to be right, one day.

But is it correction or raging bear, we will be able to say with certainty much later.

 

[Sean K]

There's no bear in there yet happy.

Just healthy correction in long term bull. Chindia has only begun developing. It's a 20-30 year story. Like the US in the 1800s and Japan after WWII.

 

[mit]

There's no bear in there yet happy.

Just healthy correction in long term bull. Chindia has only begun developing. It's a 20-30 year story. Like the US in the 1800s and Japan after WWII.

"Chindia" ... I was scratching my head thinking it was a some Technical Analysis term.

I think this depends on how much of Chinas/Indias development is for internal consumption and how much is depended on exports. That is, if America stopped buying would China's and India's growth grind to a halt driving resource prices down or would this be just a mild correction?

MIT

 

[Sean K]

Chinese and Indians are moving from their padi fields into big cities by the crickey bus load so they can chat on the internet. The rate of this move probably depends on the US and world economy in general, but there'd have to be a major recession for it to stop.

That means: roads, footpaths, houses, furniture, tvs, toasters, hospitals, schools, yada yada yada. The list is endless.

I read somewhere that at the moment 30% of Chindians live in cities and 70% live in the country. This is going to reverse over the next 20 years. That means about 400 million people in each country will be moving into cities and are going to be needing toasters. That's a lot of toasters.

 

[wayneL]

There's no bear in there yet happy.

Just healthy correction in long term bull. Chindia has only begun developing. It's a 20-30 year story. Like the US in the 1800s and Japan after WWII.

Yes I have to agree. We could lose another 500 points and still be above the trendline drawn from may 2003.

But the bear certainly has drawn some blood on this bull, he's not dead, but he's injured.

Will he heal and charge on? Only the almighty knows how this will unfold. The thing with Chindia is that they still rely on USA/Europe to sell their trinkets to.

 

[TjamesX]

IMHO

It aint over....

At least not for resources. If china and india start to become self sustaining growing economies, then they will want a higher standard of living. As a result they will need a larger shares of the worlds resources which the develped world have been paying next to nothing for in the past.

And until more capacity comes online (for oil, this doesn't look an easy task), everyone pays more. And everyone keeps paying more until it hurts too much.

Developing countries up, Developed countries down

Thats globalisation

Except if you live in the lucky country - we get the best of both worlds

 

[Porper]

Yes I have to agree. We could lose another 500 points and still be above the trendline drawn from may 2003.

But the bear certainly has drawn some blood on this bull, he's not dead, but he's injured.

Will he heal and charge on? Only the almighty knows how this will unfold. The thing with Chindia is that they still rely on USA/Europe to sell their trinkets to.

I am leaning towards the Bears now, metals don't plummet like they did the other night for fun (even though the big picture says up).A big one day drop is still significant.Plus big drops in the Dow spells danger to me.I suppose it depends on your time span, but as my trades usually only last a few weeks, I can see me doing my first short trade with CFD'S.

I have been stopped out of everything bar 2 stocks, which I decided to sell (totally against my no. 1 rule of never selling your best performers).Indecision is the order of the day for markets now.

My gut feel is the the next few months will be volatile and the general direction will be down.

Having said that my Elliot wave count says wave 4 can't go below 110.5 !!

Decisions decisions.

I think I will have to go over to the dark side with Wayne and the other Bears.

 

[wayneL]

I think I will have to go over to the dark side with Wayne and the other Bears.

Welcome.... we need all the help we can get :

 

[markrmau]

Obviously the big drops recently have been about inflation concerns. Have a read of the nytimes article below.

http://www.nytimes.com/2006/05/18/business/18econ.html?_r=1&oref=slogin
"Inflation Rising, Markets Tumble"

Yesterday's government report was seen as the worst omen yet. The Bureau of Labor Statistics announced a jump of 0.6 percent in the Consumer Price Index for April, mostly because of gasoline prices, but also because, as the government calculates it, the cost of owning a house and renting an apartment was up smartly. The latest increase in consumer prices came on top of a 0.4 percent increase in March.

Many economists, however, are not as alarmed by the inflation figures as the market reaction suggests. Because of a quirk in the way the C.P.I. is calculated, they explained, the latest reading may actually be signaling a slowing economy and, eventually, less inflation.
....
If there was an overreaction, it may be because many traders do not take into account how the Consumer Price Index measures the cost of housing, which gets more weight than any other item.

The bureau, relying on data that is relatively easy to compile monthly, uses the cost of renting as a proxy for the cost of owning a house or an apartment as well as the cost of renting one.

Now that home sales are leveling off, the demand for rental properties has risen and so have rents.

 

[coyotte]

Would have thought the vast majority of "Loss Stops" would have been well and truelly triggered by now !

Would not T/A traders ( short to long term ) now be sitting on 100% cash ?

If all that liquidity has been withdrawn from the "mining sector " -- where are the Buyers now, to drive it back up ?
Imagine the XMJ will at best "range trade " for quite a while before the next move UP

Could be a few lessons to learn from this :

Base metals can not rise at a greater pace than Au
If POG & XAU are diverging then something must wrong
When a housing boom goes bust --- so does everything connected with it




Probably totally wrong
But I can allways buy back in
( just the insurance premium at worst )

cheers
Coyotte

 

[professor_frink]

Would have thought the vast majority of "Loss Stops" would have been well and truelly triggered by now !

Would not T/A traders ( short to long term ) now be sitting on 100% cash ?

If all that liquidity has been withdrawn from the "mining sector " -- where are the Buyers now, to drive it back up ?
Imagine the XMJ will at best "range trade " for quite a while before the next move UP

Could be a few lessons to learn from this :

Base metals can not rise at a greater pace than Au
If POG & XAU are diverging then something must wrong
When a housing boom goes bust --- so does everything connected with it




Probably totally wrong
But I can allways buy back in
( just the insurance premium at worst )

cheers
Coyotte

you'd think most short term traders would be in cash right now. Or going short. I've been in complete cash for the last week, but that was partly due to going away for my girlfriends birthday last week and I didn't wanna worry bout anything going wrong while I was away, not because I'm the world's greatest timer and knew it would start this week!

 

[coyotte]

you'd think most short term traders would be in cash right now. Or going short. I've been in complete cash for the last week, but that was partly due to going away for my girlfriends birthday last week and I didn't wanna worry bout anything going wrong while I was away, not because I'm the world's greatest timer and knew it would start this week!

Well not only " Short Term "
All the "Position Trades" I was holding (set @ ATR * 3 & using the "closing high"
where all stopped out last Tues on the Gap Down
Only consilation was that I was able to bail out on Wed -- with most of them just below the stop --- got caught with SBM though with that trading halt --- had it set @ .64

But on reflection ( another lesson learnt ) most of these stocks eg: BHP,KZL, OXR where showing strong divergeces to the ADX & Money Flow




Cheers
Coyotte

 

[professor_frink]

glad you got out without too much pain! It's going to be an interesting few weeks me thinks!

In relation to what you were asking about before in regards to who's going to buying in these conditions, I think there are alot of the investor types out there that are very keen to top up their holdings during these corrections.
There are alot of them in these forums that have been doing that this week!

 

[nizar]

glad you got out without too much pain! It's going to be an interesting few weeks me thinks!

In relation to what you were asking about before in regards to who's going to buying in these conditions, I think there are alot of the investor types out there that are very keen to top up their holdings during these corrections.
There are alot of them in these forums that have been doing that this week!

YES there are some stocks out there looking prime for a top-up..

But IMO more downside to come in next few days/weeks, maybe asx200 get to about 4800-4900 before next leg up..

Much more less risk in the short term by buying these stocks on the way up, not the way down... so im waiting for them 2 bottom out..

 

[nizar]

Marc Faber, founder and managing director at Hong Kong- based Marc Faber Ltd., has been urging investors to buy commodities since 2001 and holds 10 percent of his personal assets in gold in a bank vault. The holding has earned 65 percent in the past year.

Wow i wonder how much money this would be!
Probably several 10s of millions?

 

[coyotte]

Learnt my lesson well and truelly on that one years ago !

Chased DROORY all the way down from $8 to $1 , sold it a couple of weeks ago for around .95c after around 5 years

NTG from around $4 to the cents

BRY DOWN to near zero

These stocks in their day where the darlings of their sector --- Brokers where saying to hop in now while they are a bargain -- some bargain !

Cheers :swear: