Will the market experience a big drop again?

CAB SAV said:

Yes. The problem has gone from talking in billions to fix to trillions. Throwing $10-20 trillion at a $1,000 trillion derivative problem has created bottom, no, not for me.

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Yes, 1 or 2 % can't fix this problem.

How do, or can they fix this?

Does Asset re- inflation assist here?

USA Wealth destruction:
R.100 Change in Net Worth of Households and Nonprofit Organizations
Billions of dollars; not seasonally adjusted
2003 2004 2005 2006 2007 2008
Q1 Q2 Q3 Q4/07 Q1 Q2 Q3/08
1 Change in net worth (1) 5938.2 5417.3 5264.2 4206.3 1094.0 917.9 27.1 -1460.3 -2423.7 -392.5 -2813.8 1
2 Net investment 506.0 479.3 56.0 -17.0 203.0 -224.5 236.9 178.1 310.9 286.0 58.6 2
3 Net physical investment 585.8 641.1 666.0 676.5 112.6 151.9 172.2 138.8 73.9 107.3 108.7 3
4 Capital expenditures 1459.0 1581.7 1702.9 1717.2 378.5 420.6 443.9 413.5 343.6 379.8 390.2 4
5 - Consumption of fixed capital 873.2 940.6 1036.8 1040.7 266.0 268.6 271.7 274.7 269.8 272.5 281.5 5
6 Net financial investment -79.8 -161.8 -610.1 -693.5 90.5 -376.5 64.7 39.4 237.1 178.7 -50.1 6
7 Net acquisition of financial assets 944.3 995.8 539.6 578.9 267.5 -68.1 275.3 268.7 342.6 140.3 77.4 7
8 - Net increase in liabilities 1024.1 1157.6 1149.7 1272.5 177.0 308.4 210.6 229.4 105.6 -38.5 127.4 8
Holding gains on assets
9 at market value (2) 5298.9 4877.2 5157.9 4218.9 782.0 1174.7 -190.2 -1495.4 -2734.0 -630.8 -2872.2 9
10 Real estate 1412.7 2194.1 2551.6 299.5 -53.0 -198.5 -495.9 -708.4 -662.4 -217.1 -646.9 10
11 Corporate equities 1709.5 974.8 930.9 1911.4 530.4 632.9 78.2 -377.0 -910.5 -246.5 -921.8 11
12 Mutual fund shares 411.5 296.7 193.8 416.2 84.4 201.5 96.2 -144.9 -297.3 -25.5 -522.6 12
13 Equity in noncorporate business 473.9 775.6 977.4 637.5 127.1 101.0 47.9 -0.6 -31.9 -9.8 -127.6 13
Life insurance and
14 pension fund reserves 1291.3 635.9 504.2 954.3 93.0 437.8 83.4 -264.5 -831.9 -132.0 -653.3 14
Holding gains on assets
15 at current cost (2) -98.2 -22.2 -39.7 -43.3 -13.1 -11.0 -15.4 -10.7 5.0 -9.1 1.8 15
16 Consumer durable goods -98.4 -22.1 -40.0 -44.8 -13.7 -11.4 -15.0 -11.2 5.0 -10.4 -0.2 16
17 Equipment and software 0.2 -0.1 0.2 1.5 0.5 0.3 -0.4 0.5 0.0 1.3 1.9 17
18 Other volume changes (3) 231.4 83.1 90.1 47.8 122.1 -21.3 -4.2 -132.3 -5.6 -38.7 -2.0 18
Memo:
19 Net worth outstanding (4) 46703.3 52120.6 57384.8 61591.2 62685.2 63603.0 63630.2 62169.9 59746.2 59353.7 56539.9 19
20 Disposable personal income 8162.5 8680.9 9062.0 9640.7 10013.5 10088.0 10228.8 10351.5 10425.5 10806.0 10683.3 20
(1) Sum of net investment (line 2), holding gains (lines 9 and 15), and other volume changes (line 18).
(2) Calculated as change in amount outstanding less net purchases during period.
(3) Consists of the difference between series for consumption of fixed capital published by BEA and statistical discontinuities.
(4) Table B.100, line 41.

Quote:
Originally Posted by basilio View Post
Well actually most people from analysts to the simple punters on this forum are seeing things like :

... [snip]

Have I left anything out? Probably but hell its Christmas and we don't want to spoil the festive spirit.
Does look like I really hit a nerve with him doesn't it? A little sarcasm goes a long way on this forum.

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Sorry if that sounded sarcastic. To be honest I think l was scaring myself as I started to outline the issues that are facing the economy and of course us.

And I would like to enjoy Christmas !! Have a Merry Christmas.

Cheers

While there is still some significant day to day volatility stock markets appear to have stabalised somewhat in terms of a general trend since the falls of October and November.

The $64k question now is whether at present levels there is too much gloom factored in or not enough.

In a sane world we would not have seen the bottom for all the reasons mentioned above, but the US Fed (followed by other CBs) still have a few rabbits to pull out of the hat. eg "quantitative easing" AKA the infamous helicopter drop of cash.

My point is to not have a set "view", because we are about to go in unchartered economic waters. We "should" go down further, but the rule book has been tossed in the bin.

Be prepared for ANYTHING!

Isn't the only way they can get through this situation, and pass it on down the track to later generations:

Create Asset Inflation? Wayne...

Gundini said:

Isn't the only way they can get through this situation, and pass it on down the track to later generations:

Create Asset Inflation? Wayne...

Click to expand...

It's asset inflation that has got us into trouble... malinvestment, to use the Austrian term.

A decent, proper recession/depression is the best way to reset the economy for future health. The problem is that it is politically and sociologically very unpalatable. Very bitter medicine, if you will.

The world's response so far has been to support and perpetuate malinvestment. This cannot be healthy and we will pay dearly someway down the track. Can it be fobbed off to some poor unfortunate future generation?

I do not believe so. Look at the problems we are having now as a result of the same philosophy expedited immediately after 911; less than a decade later.

No, we need to take the medicine now, even if it hurts.

But we won't.

wayneL said:

It's asset inflation that has got us into trouble... malinvestment, to use the Austrian term.

A decent, proper recession/depression is the best way to reset the economy for future health. The problem is that it is politically and sociologically very unpalatable. Very bitter medicine, if you will.

The world's response so far has been to support and perpetuate malinvestment. This cannot be healthy and we will pay dearly someway down the track. Can it be fobbed off to some poor unfortunate future generation?

I do not believe so. Look at the problems we are having now as a result of the same philosophy expedited immediately after 911; less than a decade later.

No, we need to take the medicine now, even if it hurts.

But we won't.

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Agreed. Due to government and CBs intervention are you of the thought that the bottom of the market will come as a compression form that gradually rises rather than the typical massive fall and speedy rise?

akamitso said:

Agreed. Due to government and CBs intervention are you of the thought that the bottom of the market will come as a compression form that gradually rises rather than the typical massive fall and speedy rise?

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The question becomes - what do people do with cash?

Government Bonds for safety but negative real returns?
Cash deposits for insulting negative real interest and palpable risk?
Stocks for better (and probably declining) yields, possibly great upside, but great risk?
Real estate in an obviously crashing market?
Precious metals for no yield and an argument as to whether they are a store of wealth or just another commodity?

I really don't know.

My opinion is that earnings won't support strong gains for some time, but we're in wonderland, who the hell knows?

wayneL said:

The question becomes - what do people do with cash?

Government Bonds for safety but negative real returns?
Cash deposits for insulting negative real interest and palpable risk?
Stocks for better (and probably declining) yields, possibly great upside, but great risk?
Real estate in an obviously crashing market?
Precious metals for no yield and an argument as to whether they are a store of wealth or just another commodity?

I really don't know.

My opinion is that earnings won't support strong gains for some time, but we're in wonderland, who the hell knows?

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Merry Xmas, Santa! :santa: :santa:

May your pettypounds turn into supereuros in 2009.

Chiz,

Mr Pufft

Aussiejeff said:

Merry Xmas, Santa! :santa: :santa:

May your pettypounds turn into supereuros in 2009.

Chiz,

Mr Pufft

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Oh jeez!!! That sort of talk could get you killed around my area.

As for me, I don't care, I just want to know where Merv's helicopter is going to start dropping all that cash...

wayneL said:

Oh jeez!!! That sort of talk could get you killed around my area.

As for me, I don't care, I just want to know where Merv's helicopter is going to start dropping all that cash...

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Unfortunately, that fluttering cash will most likely be worthless by the time it reaches the ground

Good luck scrounging...

Aussiejeff said:

Unfortunately, that fluttering cash will most likely be worthless by the time it reaches the ground

Good luck scrounging...

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ROFL!

Very true, at least I'll be able to stoke up the fire with it and keep warm.

wayneL said:

The question becomes - what do people do with cash?

Government Bonds for safety but negative real returns?
?

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Don't forget corporate bonds currently at historical spreads to treasuries. Problem is lingering default risk but without a doubt bonds lead securities and property down this garden path and they will also lead us out.

Also how do you invest in the schweinehunds if you are a retail investor? Managed funds is probably the easiest and then you risk redemption freezes and the like. Answer is a pina colada and a beach in the sun.

Merde, putana, kak and other swear words in foreign languages.

PS: GE is showing some sign of distress and good old Johhny Come Too Late S&P have downgraded them. It is RELENTLESS... also what for the market if GE goes?

Bushman said:

PS: GE is showing some sign of distress and good old Johhny Come Too Late S&P have downgraded them. It is RELENTLESS... also what for the market if GE goes?

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Perhaps the question should be:

What is worth more, the wheelbarrow, or the cash?

basilio said:

Sorry if that sounded sarcastic. To be honest I think l was scaring myself as I started to outline the issues that are facing the economy and of course us.

And I would like to enjoy Christmas !! Have a Merry Christmas.

Cheers

Click to expand...

Ah, no, sorry mate, I was saying the conversation between myself and the other guy got very quickly sarcastic. I quoted you as you correctly pointed out the writing is on the wall for shares, but he still had to question whether I was just sticking a finger up in the wind to see which way shares are going.

Down... In my opinion, I agree mostly with Basilio.

1) We are indeed staring at a resource market that's bubble has burst and is starting to tumble..gathering speed might I add...

2) From this we have seen, and will see further Job losses.. Leading up to christmas, in the engineering consulting industry, I have seen 500 jobs go in a 6 week period, all based in the Brisbane CBD. Mines have closed in W.A. century and cannington have both put off large numbers of staff. All these are key indicators.

Of most concern is the engineering side, if jobs are going at that level, that means projects are been scrapped, which can only mean a flow on to the blue collar industry.

3) Once this hits home, we will begin to see a fall in housing, especially in the hugely over inflated mining towns. Which inturn will lead to further problems for the finance sector.

4) As australia becomes a less attractive option, foriegn investors are moving offshore, just look at America, money is flooding into the realestate sector from offshore investors due to the record lows in prices.

So, with that, and a few other points not mentioned, I am sure we will be heading further down..

Trying to pick bottoms (or tops) is financial suicide. I would not recommend going long on anything medium or long term, just yet. This s**t fight is far from over and the vast majority of weekly stock trends are still heading south.

wayneL said:

In a sane world we would not have seen the bottom for all the reasons mentioned above, but the US Fed (followed by other CBs) still have a few rabbits to pull out of the hat. eg "quantitative easing" AKA the infamous helicopter drop of cash.

My point is to not have a set "view", because we are about to go in unchartered economic waters. We "should" go down further, but the rule book has been tossed in the bin.

Be prepared for ANYTHING!

Click to expand...

Missed this post.

But I have just been thinking the same the last couple days.

Used to be able to put some boundries on things, now you just think WTF. Oil to 150 and back.

AUD to near parity then back.

Aussie market over halved, how far can it now bounce? Or how low can it go?

Worst unemployment figures out in like 3 decades in the US and the market rallies.

To tell you the honest truth, nobody has the slightest freakin clue anymore! Truly the case now to trade what you see. Anybody who tries to apply logic lately, gets burnt. Very short-term trading is the way to go in these times.

Will the market experience a big drop again? yes