Imminent and severe market correction

[wayneL]

There are more and more people. As the population increases so must money supply (unless we all want to be poor. )

Unfortunately the side effect of this is erosion of the value of our currency...

That's not how it works.

 

[Freeballinginawetsuit]

I have a question.

How often is the IMF correct in it's projections? I have no idea of the answer, but the odd time I have taken notice, they are dead wrong. Not to say they mightn't be eventually correct in this instance, just question how much stock can be put in their reports.

That same quote could be applied to many observations by the those making them, especially to the marketplace.

As time passes its enivitable that everyone will get a right call on opposing points in the cycle.

 

[wayneL]

That same quote could be applied to many observations by the those making them, especially to the marketplace.

As time passes its enivitable that everyone will get a right call on opposing points in the cycle.

Of course. But if you don't publish them, you only obliged to recall the correct ones. LOL

 

[Crafty]

Oh come on, of course it works like that...

You can't be serious? How do you think it works?

 

[Uncle Festivus]

There are more and more people. As the population increases so must money supply (unless we all want to be poor. )

Unfortunately the side effect of this is erosion of the value of our currency...

That's correct in it's simplest form. However, a 10% increase in the US money supply (if we could determine that these days as the central bank has stopped publishing M3) is not proportionate with the birth rate the last time I looked. 20% in China = ?200 million??

I think the main culprit is Japan with effectively zero interest rates, trying to pump prime their economy but actually being the worlds supplier of (unproductive) cheap credit feeding speculative booms eg commodities & real estate.

Reuters stories -

"The Australian dollar fell around one percent against both the yen and the U.S. dollar and weakened the high-flying New Zealand currency, bringing the carry trade into question.

Under the trade, investors borrow low-yielding currencies such as the Japanese yen and Swiss franc to buy assets in high yielders such as the Australian dollar.

Soft Australian inflation prompted investors to cut expectations of an interest rate rise and sent the currency lower, dragging the high-yielding New Zealand dollar with it. A possible unwinding of the carry trade has been a key concern among investors because of its implications for other assets. "(This) is a timely reminder of the damage that a sudden swing in interest rate sentiment can inflict," HBOS said"

"Asian markets slipped on Tuesday as surging oil prices and the crisis in US mortgage lending raised fears of a slowdown in the US, the regions' top export market.


Toyota Motors and other Asian automakers slumped after US giant General Motors said a crisis in the subprime mortgage sector hurt auto sales this month. Traders now await US housing data due later in the day"

Everything is connected

 

[wayneL]

Oh come on, of course it works like that...

You can't be serious? How do you think it works?

I'm deadly serious. It is far more complex than that.

The population is not rising 10-14% per year now is it?

Some reading for you

 

[Buffettology]

This money market talk is bringing back memories of ISLM models, god help me!

 

[chops_a_must]

Uncle,

I find that when folks run out of logic, they resort to satire and/or non sequitur, both of which are evident in the post you refer to.

for e.g. Look at what Peter Schiff has to put up with on Bubblevision... same nonsense.

Cheers

Hardly. I plagiarised Mark Douglas.

I asked for an answer to a question about which factor will bring about an imminent and severe correction. Instead, i got this:

The China boom isn't based on a very sound financial system, and it is this that will ultimately bring a correction.

A vague, clearly in depth explanation, and what's more, irrefutable evidence as to what will cause an IMMINENT correction.

So while we are engaging in Sophistic argument that will without doubt be retrofitted to whatever circumstances arrive, I can safely say that it will be my bad gas that inevitably brings down all markets and economies. You know it's true. I can't be wrong. Butterfly wings and all that jazz.

 

[Uncle Festivus]

Chopster,
Chinese macro example - the latest 'fad' is for Chinese solar cell manufacturers to do IPO's to American's. Manufacture of cells has ramped up to the point of oversupply. Transpose this to any other sector you care to name & you then get the idea of what's happening in China - easy credit chasing hot sectors with low profit margins.
That's how the China machine works - high volume, low margins. When you get to the stage of overproduction combined with a reduction in demand eg the US consumer credit cycle turning due to the housing bust then simple economics dictates that the company with the lowest margin is restrained or goes broke. This is happening now. More eg's to follow....

Everything is connected

PS tonight's markets should be interesting

 

[chops_a_must]

I've got to say wayne, that is absolute rubbish.

Why can't perma bears be contrasted with chicken little?

I can't really see how it is a personal insult when your predictions of doom and gloom are on the record here, yet are way off the mark.

Chopster,
Chinese macro example - the latest 'fad' is for Chinese solar cell manufacturers to do IPO's to American's. Manufacture of cells has ramped up to the point of oversupply. Transpose this to any other sector you care to name & you then get the idea of what's happening in China - easy credit chasing hot sectors with low profit margins.
That's how the China machine works - high volume, low margins. When you get to the stage of overproduction combined with a reduction in demand eg the US consumer credit cycle turning due to the housing bust then simple economics dictates that the company with the lowest margin is restrained or goes broke. This is happening now. More eg's to follow....

Everything is connected

PS tonight's markets should be interesting

And uncle, it is once again a long term danger, not IMMINENT.

The US markets have shrugged off bad housing figures thus far, I don't see why today it should be any different this time.

 

[wayneL]

Chops,

Present your arguments, but leave the ad hominem nonsense out.

 

[chops_a_must]

Chops,

Present your arguments, but leave the ad hominem nonsense out.

How is comparing a perma bear to chicken little ad hominem? And more to the point, how can an analogy be regarded as a personal insult? It's apt.

I believe I gave a very good response and presented an argument that is along the lines of what Mark Douglas teaches.

It was you that decided that my post was illogical, and an ad hominem statement followed. It's there if you want to read it again.

 

[wayneL]

How is comparing a perma bear to chicken little ad hominem? And more to the point, how can an analogy be regarded as a personal insult? It's apt.

I believe I gave a very good response and presented an argument that is along the lines of what Mark Douglas teaches.

It was you that decided that my post was illogical, and an ad hominem statement followed. It's there if you want to read it again.

1/ I am not a perma-bear. I am bearish at the moment. I will readily become a bull when I think the time is right. By the way my portfolio consists of longs at the moment, so I consider myself as a pragmatist with an eye on risks in the economy.

2/ Chicken little premise that the sky was falling was based upon being hit on the head with a piece of fruit. This allegory implies bearishness based upon false data. I reject that.

3/ Satire is offensive.

Now get over it on move on.

Cheers

 

[chops_a_must]

3/ Satire is offensive.

Oh.. is that why Full Frontal got axed?

 

[Uncle Festivus]

How is comparing a perma bear to chicken little ad hominem? And more to the point, how can an analogy be regarded as a personal insult? It's apt.

I believe I gave a very good response and presented an argument that is along the lines of what Mark Douglas teaches.

It was you that decided that my post was illogical, and an ad hominem statement followed. It's there if you want to read it again.

I call the shots as I see them and as the facts present themselves, I don't regard myself as a 'permabear' either; I trade on the facts present and possible outcomes are postulated on the facts.
It's becoming obvious that you get too caught up in the semantics of the discussion rather than presenting a credible alternative.
And please try to not resort to personal degradation when you have nothing to contribute.

 

[Buffettology]

lol, come on guys, your both smart dudes. No need for the flirtation

I personally, have split my risk by holding about 45% of my portfolio in cash, waiting for a correction to buy cheap, and the rest encase the bull continues until the years end.

Each to their own.

Uncle, your an economist I gather? Where did you study? Or are you a self taught economist?

BTW, do you have a round about time when you think a correction might take place? I said in the last quarter of the year, but since these latest inflation figures, Im not so sure now. I think a small correction of say 5% may happen again in the next few months, but that we may push into next year before experiencing a 20% correction. Im not overly knowledgable on the Chinese economy, but one thing I worry about, is the quality of data and indicators coming out of China.

 

[chops_a_must]

It's becoming obvious that you get too caught up in the semantics of the discussion rather than presenting a credible alternative.

Once again, hardly.

I asked what would be the factor, or as to how our markets would correct. And all I have been given is grandiose and non-specific statements of things that will undoubtedly cause problems in the mid to long term. Yet, the title suggests an IMMINENT and SEVERE correction. None has been forthcoming in the better part of a month. I presented reasons why I didn't think the market would correct, yet no counter claim was forthcoming.

So, what does "imminent" mean? How "severe" is severe? As the frontman of this thread, I would say that the onus is on you to sure up your case, and the meanings of the words put forward. That's what I am asking, because it is just the same old stuff that hasn't made the slightest difference...

 

[wayneL]

Chops,

Your taking this all a bit too seriously mate. It's just banter. The market will do what it will do and people will say what they say about it.

Relax.

 

[Freeballinginawetsuit]

I call the shots as I see them and as the facts present themselves, I don't regard myself as a 'permabear' either; I trade on the facts present and possible outcomes are postulated on the facts.
It's becoming obvious that you get too caught up in the semantics of the discussion rather than presenting a credible alternative.
And please try to not resort to personal degradation when you have nothing to contribute.

Speculation aside,

I would suggest let the market determine your exits/entries wether trading or investing, not the noise.

Fundamentally nothing has changed for the main, at least in what I trade/invest. Market/business or otherwise it comes down to the basics.........and that trend is still intact.

You however are speculating and your guess is as good as anyones, as has been proven .

I agree the cracks are thier and have been for some time, but the market has proved resilient....suprisingly so!.

 

[Uncle Festivus]

lol, come on guys, your both smart dudes. No need for the flirtation

I personally, have split my risk by holding about 45% of my portfolio in cash, waiting for a correction to buy cheap, and the rest encase the bull continues until the years end.

Each to their own.

Uncle, your an economist I gather? Where did you study? Or are you a self taught economist?

BTW, do you have a round about time when you think a correction might take place? I said in the last quarter of the year, but since these latest inflation figures, Im not so sure now. I think a small correction of say 5% may happen again in the next few months, but that we may push into next year before experiencing a 20% correction. Im not overly knowledgable on the Chinese economy, but one thing I worry about, is the quality of data and indicators coming out of China.

No, I just try to make sense of why things happen & the consequences. There is plenty of material to be found on the internet for research.
I think that the bottom line is that an unrestrained fiat (capitalist?) system needs periodic purges (recession/depressions?) to 'reset' the ledger every so often, and as Waynes sig intimates that the longer the excesses are allowed to go unchecked then the severity of the correction will be proportional to the excesses.
Perhaps the word 'imminent' might not be the best word (as it was attributed to the company in the first post), but the way things are shaping up in the US I wouldn't be surprised that things started happening "soon" .
Lot's of market affecting data out in the US this week - housing and CPI to focus on.
Unless there is a remarkable turnaround in US housing and we get deluged with rain here, there are tough times ahead.

Frontman? No, just presenting views for discussion.