Olsen
Well-known
climbing_vine said:
Ha, ha!
Your thoughts on inflasion is spot on, but to 'make money' is a bit more complicated than you suggest. But then the dollar printing Federal Reserve Banks is a strange construction that could have me discussing for a night or two. Over a beer one day, ha, ha!
xayraa33
rangefinder user and fancier
Eustace Mullins has alot to say about the Federal Reserve System.
somecanuckchick
Tundra Gypsy
To what end? It seems to be a band-aid on an artery kinda thing... and while the cash infusion looks good on paper... it is hardly addressing the real issues... or finding a long term solution. And that is what scares me. Sure, we cycle through these things... but this seems to be a little different to me.einolu said:
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Finder
Veteran
Not only are we moving toward a recession, we are moving away from one as well. These things tend to cycle.
mfogiel
Veteran
I have tried to stay away from this thread as much as possible, but after all, it could be fun to join...
The thing started with jarski's question whether he should sell his risky assets, and took off on a windy road then.
To answer jarski's question:
- you should execute the plan you had when you were buying.
A trading plan consists of:
- a reason (rule) to enter the market
- a reason (rule) to exit with a profit
- a reason (rule) to exit with a loss
since the first two rules are somewhat less troublesome than the third, the real trading plan, in order to succeed can limit itself to the third rule.
If you didn't have any plan, there are 2 things to do:
- exit at once if you are down 30% (or more)
- in the future, make a complete trading plan, or don't trade, and in either case don't buy time waisting assets (options).
Now, looking at the longer picture:
- the world economy is in an unprecedented period of expansion, caused mainly by one simple factor: about half of the world's population abandoned communism roughly at the same time, and they are all trying to catch up
-this is creating major shifts in the way markets are working, there is a repricing of commodities, unprecedented downward pull on finished products' prices due to a collapse in average manufacturing costs (cheap plentiful labour), unseen build up in liquidity on behalf of developing countries, and the resulting pressure of this liquidity on various blue chip investments in the developed world. The property inflation, cheap TV sets and high petrol prices are all a result of the same phenomenon.
- on top of that we have the usual cases of leveraged speculation here and there, and an excessive optimism that several get rich quick schemes will last forever.
- this froth has to subside, and if it does, it will be a good opportunity to buy everything again
- how do we know it is time to buy?
- look at major stock indexes, and wait till they stay below the 200 day moving averages for at least 3 months
Are there any risks to this golden scenario of growth ?
- Yes, the risks are all concentrated in China - China has an unfinished revolution to finish, it has to establish a different form of rule, the Communist party has no longer any ideological excuse to exist, and it is only a matter of time that a power struggle will take place. If China goes into turmoil, Russia will try to extend its influence over the whole of Asia, and we have a ready made 3rd World War scenario brewing...
In the meantime, I suggest jarski to buy on dips and hold on for as long as possible (remember: no time decay bearing options), and to the rest of us:
buy a nice bottle of red wine, enjoy a good meal with your better half, and make some splendid photographs each day...
The thing started with jarski's question whether he should sell his risky assets, and took off on a windy road then.
To answer jarski's question:
- you should execute the plan you had when you were buying.
A trading plan consists of:
- a reason (rule) to enter the market
- a reason (rule) to exit with a profit
- a reason (rule) to exit with a loss
since the first two rules are somewhat less troublesome than the third, the real trading plan, in order to succeed can limit itself to the third rule.
If you didn't have any plan, there are 2 things to do:
- exit at once if you are down 30% (or more)
- in the future, make a complete trading plan, or don't trade, and in either case don't buy time waisting assets (options).
Now, looking at the longer picture:
- the world economy is in an unprecedented period of expansion, caused mainly by one simple factor: about half of the world's population abandoned communism roughly at the same time, and they are all trying to catch up
-this is creating major shifts in the way markets are working, there is a repricing of commodities, unprecedented downward pull on finished products' prices due to a collapse in average manufacturing costs (cheap plentiful labour), unseen build up in liquidity on behalf of developing countries, and the resulting pressure of this liquidity on various blue chip investments in the developed world. The property inflation, cheap TV sets and high petrol prices are all a result of the same phenomenon.
- on top of that we have the usual cases of leveraged speculation here and there, and an excessive optimism that several get rich quick schemes will last forever.
- this froth has to subside, and if it does, it will be a good opportunity to buy everything again
- how do we know it is time to buy?
- look at major stock indexes, and wait till they stay below the 200 day moving averages for at least 3 months
Are there any risks to this golden scenario of growth ?
- Yes, the risks are all concentrated in China - China has an unfinished revolution to finish, it has to establish a different form of rule, the Communist party has no longer any ideological excuse to exist, and it is only a matter of time that a power struggle will take place. If China goes into turmoil, Russia will try to extend its influence over the whole of Asia, and we have a ready made 3rd World War scenario brewing...
In the meantime, I suggest jarski to buy on dips and hold on for as long as possible (remember: no time decay bearing options), and to the rest of us:
buy a nice bottle of red wine, enjoy a good meal with your better half, and make some splendid photographs each day...
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Al Patterson
Ferroequinologist
mfogiel said:
Excellent post. I would offer that a down limit should be set lower than 30%, as I usually set my limits at 15-20%, but that is a minor quibble. Thanks for a well-reasoned post.
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erikhaugsby
killer of threads
This is easily the most eloquent post in the entire thread. Thanks for not staying out too long.mfogiel said:
Olsen
Well-known
mfogiel said:
Well written.
My advice for those 'in' the market is 'hold'. For those outside; 'look up possible good buys'. The market will turn up because the world economy generally is good.
The fall of communism and a larger free market makes also things quite a bit more volatile. As we see. Don't underestimate the share force of population growth of the world. By 15 years we will be 9 billion people on this planet, up from today's 6 billion. This push commodity prices up on just everything from oil to aluminium. Next will be food.
What has created today's turmoil is the lack of democracy in the USA. So, don't underestimate the need for a democratic reform in USA too; an unfinnished revolution, if you like. The lack of growth in purchasing power for large parts of the US population now comes to forth. How is that going to be solved? I think that things will become much worse before we will see improvements in USA. That's what I say to young americans; get out of there.
China? First of all; here lies the seed to 'the largest banking crisis the world have ever seen'. And it will be when this bill is presented to the chinese people that could turn China into a yugoslavian-like battlefield as a worst scenario. But not very soon and not very likely. Many young chinese see the dangers and are on the move. Out!
Still, I think it is the wealthy european future pensionairs that finance the world economy and has pushed share prices to reckord levels. By lending money to the two poor beggars that will not pay up very soon; USA and China. It is when my generation turns pensionairs that we want our money back - or don't have any more money to lend away, that the markets will really drop and the real crisis will start.
Xmas
Veteran
The interglacial is meta stable condition. Global warming only works for a while, and in our life times we could see change. Dont worry about brokers...
Noel
Noel
SCOTFORTHLAD
Slow learner,but keen!
As I understand it the financial world is now relying on sold and resold house purchase mortgages in the US and probably Europe.Sold--on on the basis that property prices would continue to rise by the unsustainable annual percentages of recent years.Obviously everything and anything is tradeable these days.Seems daft to me ,if not somewhat 'fishy'.
Now the bubble has burst and the financial whizz kids are being caught with their snouts in a trough that is quickly emptying.Serves them right I say,but unfortunately it will probably affect ordinary people like the rest of us.
Just my simplistic view---apologies if this has already been said .
Brian.
Now the bubble has burst and the financial whizz kids are being caught with their snouts in a trough that is quickly emptying.Serves them right I say,but unfortunately it will probably affect ordinary people like the rest of us.
Just my simplistic view---apologies if this has already been said .
Brian.
Olsen
Well-known
One more comment to mfogiel:
Russia is in no possition to 'extend their influence all over Asia'. It is the China that already is doing this. China will grow more and more powerful in the future with it's fast growing population (it is nations in growth that represents threats) and will challange Russia on boarder issues. Which China already does. This is a conflict out of attention, but will be all the more accute in the future. I think we will see the russians having to back off and 'sell' land to growing China.
Russia is in no possition to 'extend their influence all over Asia'. It is the China that already is doing this. China will grow more and more powerful in the future with it's fast growing population (it is nations in growth that represents threats) and will challange Russia on boarder issues. Which China already does. This is a conflict out of attention, but will be all the more accute in the future. I think we will see the russians having to back off and 'sell' land to growing China.
Olsen
Well-known
SCOTFORTHLAD said:As I understand it the financial world is now relying on sold and resold house purchase mortgages in the US and probably Europe.Sold--on on the basis that property prices would continue to rise by the unsustainable annual percentages of recent years.Obviously everything and anything is tradeable these days.Seems daft to me ,if not somewhat 'fishy'.
Now the bubble has burst and the financial whizz kids are being caught with their snouts in a trough that is quickly emptying.Serves them right I say,but unfortunately it will probably affect ordinary people like the rest of us.
Just my simplistic view---apologies if this has already been said .
Brian.
You are absolutely right. But here in scandinavia the bubble has yet to burst. Prices are still rizing. I saw on CNN, those guys don't exagerate anything bad in the US, showing all communities of empty houses falling apart. Nobody can pay the morgages.
But other things are happening too that are frightening. China, a 3.world nation with a GNP of 250 US$ per capita invests in Olympic games, skyscrapers and other things that they don't need or that don't give them a reasonable pay back. Their banks are just heeps of defaulted loans. Their customers, often sons of powerful politicians, have taken the money and have driven off. In their Ferrari's. Don't expect them to come back and leave a payment. So, the banks borrows more to cover old loans...
jarski
Veteran
heh, thanks mfogiel (and all others too, ofcourse) for word of reasoning. its been a while when I read some "trading for dummies" book from Alexander Elder, and since then ignored most of the principles, like million other "loosers" that he writes aboutmfogiel said:
:bang:
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Thardy
Veteran
For a bunch of old people (as you all have been called many many times here), I am surprised that you fail to see the cyclic nature of all that you are observing. It has happened many times before. Do your failing memories not let you remember, or is the idea worldwide news coverage so new that these things are new to you.
There is nothing new under the sun.
There is nothing new under the sun.
jarski
Veteran
Thardy said:
no. "youth, disease that heals day by day".
cmedin
Well-known
mfogiel made some great points. However, you'd be amazed (or perhaps not) at just how hard it is to execute that plan of yours. People get emotionally attached to stocks and don't sell when they should, and often take profits too early (a bird in the hand...). The end result is they let their losses run and cut their profits, the very opposite of what you need to be doing to win in the long run!
As for when to sell/buy, there are a million approaches. I tend to stay in the market most all the time either on the long or the short side (though I don't actually short stock, there are nicer ways of getting the same results), and in my experience (only having actively traded for a little over a decade, but studying history), the real key is the masses' opinion. When your coworker and your shoeshine guy start raving about the great market, it's time to step to the side and look for options on the soon-to-come downside; the opposite obviously applies as well.
Also, I like to look at how the Dow is doing compared to the buy/sell signals on individual equities. Before the drop from 14k, you could see the Dow climbing higher while the majority of individual stocks were signalling 'get out!' -- that was sufficient for me to step aside until the market decided to turn so I could find some nice short plays.
If you bet on both the ups and downs, there is no 'down market' for you...
Finally, everyone ever thinking about speculating should read Mackay's Extraordinary Popular Delusions and the Madness of Crowds. It's freely available online at
http://www.econlib.org/library/mackay/macExContents.html
As for when to sell/buy, there are a million approaches. I tend to stay in the market most all the time either on the long or the short side (though I don't actually short stock, there are nicer ways of getting the same results), and in my experience (only having actively traded for a little over a decade, but studying history), the real key is the masses' opinion. When your coworker and your shoeshine guy start raving about the great market, it's time to step to the side and look for options on the soon-to-come downside; the opposite obviously applies as well.
Also, I like to look at how the Dow is doing compared to the buy/sell signals on individual equities. Before the drop from 14k, you could see the Dow climbing higher while the majority of individual stocks were signalling 'get out!' -- that was sufficient for me to step aside until the market decided to turn so I could find some nice short plays.
If you bet on both the ups and downs, there is no 'down market' for you...
Finally, everyone ever thinking about speculating should read Mackay's Extraordinary Popular Delusions and the Madness of Crowds. It's freely available online at
http://www.econlib.org/library/mackay/macExContents.html
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Olsen
Well-known
Indeed we are aware of the (Kondatriev's) cycles, but haven't you noticed; the market is way 'out of cycle' and should have crashed long ago! So, what is keeping it up?Thardy said:
It must be high liquidity. Here in Norway it is good results from good prices from our major industries; oil (so big that the government keeps much of the money out of the internal economy), record high prices of aluminium (we are the 2. or the 3. largest producer in the world), fish - best prices in decades (we have 2/3 of the fish resorces of Europe) and so on. All this money drive up real estate prices. When ordinary people like myself inherit relative's once simple properties we inherit huge fortunes, suddenly. Our salaries are about the best in the world, - even after taxes.
What are driving commodity prices? The world population expansion which is now accelerating. As Al Gore said; 'when I was born we were 2 billion people on the earth, now we are 6 billion and in 15 years we will be 9 billion...'
Our governmental budgets (equal to the Federal Budget in the US) has had a surplus of 5 - 10% every year for the last 10 years or so. '(It is just because of the oil, some here will say; but look at Denmark and Sweden; the same). This is thanks to responsible politicians. This means that the governments of many european nations stack away billions of € in pension funds etc. Take this together with the liquidity of ordinary people (Norway's got the highest part of $ millionairs in the world); this drive 'the markets' of the world.
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Olsen
Well-known
And the winner is..?
It is important to look for who the winners are in this maze. One is obvious: Ex.US code breaker & mathmatician, James Simons and 'the most expesive hedge fund manager in the world'. He was among the best payed hedge fund managers in 2005 and 2006. He has taken out a billion US$ from his Renesance Technologies (he didn't major in history, this much we can see), and now the Federal Resevere are pumping out dollars to save his and other hedge funds. (- Why not bale out the poor home owners?)
Another: Steven Swartzman netted 600 million $ when his Blackstone Capitals went public in June. How smart that it was in June. Now the value of the hedge fund is plummeting.
Not only that; the Democrats just backed down from closing one of the largest US tax loopholes. The hedge fund manager's pay, some of them making a billion dollars a year, are to be taxed as 'financial income' (15%) instead of ordinary income (35%).
While the financial arrangements of hedge funds are arcane, the tax loophole is elementary. Hedge fund managers receive two income streams, typically 2 percent of the fund’s total value and 20 percent of the profits. The 2 percent is taxed as income, but the 20 percent of the profits, called 'carried interest', is taxed at the rate of capital gains/windfall, although it is return on the investors’ capital, not on the capital of the hedge fund managers. A bill introduced in the House would define carried interest as income, not capital gains, effectively raising the rate from 15 percent to 35 percent.
The Republicans voted against, as they always do when it comes to taxation of the very rich. But that the Democrats did is dissapointing. Who is fore the people in US politics? Isn't this society of bandit economy and millions of homeless ready for an 'unfinnished revolution'?
It is important to look for who the winners are in this maze. One is obvious: Ex.US code breaker & mathmatician, James Simons and 'the most expesive hedge fund manager in the world'. He was among the best payed hedge fund managers in 2005 and 2006. He has taken out a billion US$ from his Renesance Technologies (he didn't major in history, this much we can see), and now the Federal Resevere are pumping out dollars to save his and other hedge funds. (- Why not bale out the poor home owners?)
Another: Steven Swartzman netted 600 million $ when his Blackstone Capitals went public in June. How smart that it was in June. Now the value of the hedge fund is plummeting.
Not only that; the Democrats just backed down from closing one of the largest US tax loopholes. The hedge fund manager's pay, some of them making a billion dollars a year, are to be taxed as 'financial income' (15%) instead of ordinary income (35%).
While the financial arrangements of hedge funds are arcane, the tax loophole is elementary. Hedge fund managers receive two income streams, typically 2 percent of the fund’s total value and 20 percent of the profits. The 2 percent is taxed as income, but the 20 percent of the profits, called 'carried interest', is taxed at the rate of capital gains/windfall, although it is return on the investors’ capital, not on the capital of the hedge fund managers. A bill introduced in the House would define carried interest as income, not capital gains, effectively raising the rate from 15 percent to 35 percent.
The Republicans voted against, as they always do when it comes to taxation of the very rich. But that the Democrats did is dissapointing. Who is fore the people in US politics? Isn't this society of bandit economy and millions of homeless ready for an 'unfinnished revolution'?
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kevin m
Veteran
Certainly not the Democrats. They took control of Congress in 2006 with a clear mandate: Stop the war in Iraq and control this President. That they have done neither demonstrates that they are beholden to the same interests the Republicans are.
Yes, but that won't happen until what remains of our middle class loses its Visa cards.
xayraa33
rangefinder user and fancier
this man had alot to say about the subprime mortgage meltdown in the U.S. many months ago.
http://www.theinternationalforecaster.com/trainwreck.php?Offset=17
http://www.theinternationalforecaster.com/trainwreck.php?Offset=17