Market Trading - Life's Ups and Downs

[neonlyte]

Turbulent day on world markets.

I'm tracking one share in particular, HBOS, my UK mortgage bank. Down 80% from 12 months ago, down 25% today with volatility almost by the minute. It's trading in a range 180p - 220p with evident heavy buying-in at the bottom price and heavy selling once it's risen 20% to around 215p.

Expect 'handprints' is too busy, but I'd love his/her take on whether this clear speculator activity. If I had the odd £100m to play with, I'd love to be churning it twice an hour at 20%.

 

[rgraham666]

It's the inevitable result of a financial system unregulated by either law or tradition.

I'm glad I'm already poor.

On the plus side I'm betting I can find a nice house to use as a squat in the near future.

 

[neonlyte]

It's the inevitable result of a financial system unregulated by either law or tradition.

I'm glad I'm already poor.

On the plus side I'm betting I can find a nice house to use as a squat in the near future.

There is always a bright side

Friends of ours in London managed to buy the 'squat' they'd lived in for more than twenty years - it was blighted by the City as lying on the route of a never built highway. They rent it out, it covers the low mortgage, and live in Spain for 'free'.

 

[JAMESBJOHNSON]

Alan Greenspan sez we're in a Once In A Century economic crisis.

Can you say 'Depression'? I thought you could!

 

[trysail]

Alan Greenspan created this mess. He will be remembered as the worst Chairman in the history of the Federal Reserve (with Arthur F. Burns* as the only other possible contender). Those of us who knew him prior to his appointment thought of him as a mediocrity, at best; his tenure confirmed that opinion. The Federal Reserve's 2002-2005 policy of reducing interest rates below the rate of (CPI) inflation was akin to providing alcohol to a drunk. Individuals, banks and Wall Street (and the City and Bay Street) are not blameless; they behaved like drunken sailors casting all prudence to the wind.

"It's only when the tide goes out that we find out who's been swimming naked."
-Warren Edward Buffett

Business cycles are a normal part of economics and investing. Never, never, never, ever confuse a quotation with "intrinsic value." If you don't know the difference, you're not an investor— you're a patsy.

Based on the long-term (1960-2007) growth rate of corporation profits which has run at a rough "real" rate of 2-3% (a nominal rate of ~6-odd percent) and a "normal" price-earnings ratio, the S&P 500 would be "fairly valued" at around 1100. Knowing, as we do, that in periods of extreme emotions market prices overshoot "intrinsic value" (in both directions), no one should be surprised by a period of above average volatility and misvaluation. The 1968-1982 period in American capital markets is a case in point. For fourteen years, the American stock market went absolutely nowhere as it adjusted for rampant inflation arising from irresponsible government monetary and fiscal policies. By the end of that period, the stock market was discounting the extraordinarily high returns that subsequently obtained for the next eighteen years.

"Economists extrapolate the past while markets discount the future."
-Paul McCulley

*See:
http://en.wikipedia.org/wiki/Arthur_F._Burns

 

[neonlyte]

Alternative energy companies are taking the brunt of the beating shortly after NASDAQ opened. Presumably there is a trading note in circulation forecasting a big drop in oil prices as a result of the deepening credit crisis.

Nice quotes, Trysail

 

[JAMESBJOHNSON]

I think its an ominous sign that the price of oil is falling as major banks are failing.

Locally, the newspaper is screaming about commercial property taxes soaring while the commerce itself is falling. They say state/local government refuses to discipline itself.

Things are looking bad.

 

[neonlyte]

I feel sorry for the guy interviewed on the BBC who turned up at Lehman Bros in London for his first day at work. He was fired on the door step. He'd travelled from Fance, taken a six month lease on an apartment in London and rented his own home in Paris. 'No job and no where to live since I won't have money to pay the apartment rent.'

 

[Safe_Bet]

The Dow is down less than 3% I don't understand why the media is blowing this so out of proportion.

 

[rgraham666]

Over the course of a single day that's a big change.

Especially if it keeps on going.

 

[epiphany65]

Down over 500 pts. by the end of the day. It's bound to scare some, then others will start shopping for bargains and it'll rebound in time.

 

[trysail]

The Dow is down less than 3% I don't understand why the media is blowing this so out of proportion.

They blow it out of proportion intentionally— just like they blow weather out of all proportion. The reason? It sells newpapers, attracts ears and eyeballs.

Never, ever forget that the media's primary job is to attract eyeballs and sell newspapers.**.

Daily journalism, by its nature, is concerned with the ephemeral.

______________________________
**To that end: "If it bleeds, it leads." The media is, most assuredly, not interested in "Dog bites man" stories; the precise opposite is the case— they are drawn like flies to the scene of accidents, spilt blood and "Man bites dog" stories.

Over the course of a single day that's a big change.
Especially if it keeps on going.

Yup, at a rate of 4.71% per day (by the S&P 500), it'll all be gone in twenty-one days.

Down over 500 pts. by the end of the day. It's bound to scare some, then others will start shopping for bargains and it'll rebound in time.

Nobody knows these things with certainty. Proceed accordingly. People have forgotten that from 1968-1982 the U.S. stock market, as measured by the S&P 500, went precisely nowhere. That doesn't mean it'll happen again but it also doesn't mean it can't. For the moment, the U.S. stock market (as measured by the S&P) has gone essentially nowhere for roughly ten years. Your main point is, however, well taken; the question is how long it'll take for a rebound to occur. It is possible (though not provable) that we are only in the middle innings. Values have emerged and may continue to do so; shop wisely.

 

[JAMESBJOHNSON]

TRYSAIL

I give you points for your optimism, but Greenspan said the magic phrase himself, "economic crisis."

Everyone wears a big smile, and there's lotsa back-slapping right now, but it seems to me Greenspan is right. I sense it because Florida's real estate market is deflating badly; home values are down 33% to 45% in my county, and people who paid deposits for expensive condos are learning that the market price for their condo is much less than what they owe on the balance, and their condo isnt built yet. Sooner than later the deflated real estate is gonna sodomize local/state property tax collections, and then the teachers, cops, and fire-rescue people are gonna howl.

 

[trysail]

TRYSAIL
I give you points for your optimism...

ROTFLMFAO
Optimism? You call that optimism?

Damn, I hadn't had a good laugh all day until I ran across that characterization!



"Murphy was an optimist."


ETA:
I don't pay much attention to Greenspan. He is a buffoon; every now and then he might be right— just as a stopped clock is right twice a day. He is a professional entrail reader who well knows the first rule of forecasting: "If you're ever right, NEVER let anybody forget it."