everyday another little snip of the index.
if these falls of the last few months happened in a day or week, there would be no other topic of conversation anywhere.However a gradual downward spiral recieves little attention, i guess we have a taste for the dramatic.
It cxonfuses me these falls becuase the ftse is top heavy with miners and oil companies, both doing pretty good, as are energy companies ect.
how are the other indexes doing?
im tempted now to stick a few pounds into bank shares, if they drop anymore they are going to go bust, many succesfull investors allways say buy when no-one else is, does this hold true for banks at the moment.Are banks actually now worth a punt after having crashed in value?
Full Version: Ftse How Low Can It Go
QUOTE (homeless @ Jul 1 2008, 10:42 AM) 
im tempted now to stick a few pounds into bank shares,
I am thinking this for Lloyds, they are below 300 and they are looking to make a few take overs themselves. What do other HPCers think?
Phoney
QUOTE (homeless @ Jul 1 2008, 10:42 AM)
everyday another little snip of the index.
if these falls of the last few months happened in a day or week, there would be no other topic of conversation anywhere.However a gradual downward spiral recieves little attention, i guess we have a taste for the dramatic.
It cxonfuses me these falls becuase the ftse is top heavy with miners and oil companies, both doing pretty good, as are energy companies ect.
how are the other indexes doing?
im tempted now to stick a few pounds into bank shares, if they drop anymore they are going to go bust, many succesfull investors allways say buy when no-one else is, does this hold true for banks at the moment.Are banks actually now worth a punt after having crashed in value?
if these falls of the last few months happened in a day or week, there would be no other topic of conversation anywhere.However a gradual downward spiral recieves little attention, i guess we have a taste for the dramatic.
It cxonfuses me these falls becuase the ftse is top heavy with miners and oil companies, both doing pretty good, as are energy companies ect.
how are the other indexes doing?
im tempted now to stick a few pounds into bank shares, if they drop anymore they are going to go bust, many succesfull investors allways say buy when no-one else is, does this hold true for banks at the moment.Are banks actually now worth a punt after having crashed in value?
If you want to lose money, buy bank stock now.
FTSE100 could be under 4000 by end of the year.
There is better value in FTSE250 caps.
I am sort of thinking about RBS as well. However at the moment my only shares are in Gold miners. About break even just now after 6 months of a serious rollercoaster.
My gold shares are sort of directly opposite to bank shares. So if I have both then I would be hedging my bets and unlikely to lose big style.
Banks crash, gold rockets.
Banks have hit bottom, gold falls.
Or do I simply not have a clue....
My gold shares are sort of directly opposite to bank shares. So if I have both then I would be hedging my bets and unlikely to lose big style.
Banks crash, gold rockets.
Banks have hit bottom, gold falls.
Or do I simply not have a clue....
QUOTE (homeless @ Jul 1 2008, 10:42 AM)
everyday another little snip of the index.
if these falls of the last few months happened in a day or week, there would be no other topic of conversation anywhere.However a gradual downward spiral recieves little attention, i guess we have a taste for the dramatic.
It cxonfuses me these falls becuase the ftse is top heavy with miners and oil companies, both doing pretty good, as are energy companies ect.
how are the other indexes doing?
im tempted now to stick a few pounds into bank shares, if they drop anymore they are going to go bust, many succesfull investors allways say buy when no-one else is, does this hold true for banks at the moment.Are banks actually now worth a punt after having crashed in value?
if these falls of the last few months happened in a day or week, there would be no other topic of conversation anywhere.However a gradual downward spiral recieves little attention, i guess we have a taste for the dramatic.
It cxonfuses me these falls becuase the ftse is top heavy with miners and oil companies, both doing pretty good, as are energy companies ect.
how are the other indexes doing?
im tempted now to stick a few pounds into bank shares, if they drop anymore they are going to go bust, many succesfull investors allways say buy when no-one else is, does this hold true for banks at the moment.Are banks actually now worth a punt after having crashed in value?
True, but it's also loaded up with banks.
I'm also interested in picking some bank shares up on the cheap. As another poster mentions Lloyds does look good.
However, I don't think the time is right yet. I think the FTSE could crash to well under 5000 before this is done. That will be the time to buy selected stocks, just my opinion of course.
I'm also somewhat surprised that the FTSE is down so far given all its miners and oils.
Indeed, the miners and oils aren't immune - they've been getting hammered the last 2 days. I'm not quite sure why, oil and commodity prices are soaring - oil at an all time record, with considerable upwards pressure. Even my investments in smaller oil exploration/development companies (newly promoted to FTSE 250) are getting a beating.
I suspect it's general sentiment and an unselective general retreat from equities.
I think banks still have a way to go down - HBOS's share price has been hovering just below rights issue price for the last few days. If this rights issue goes down, then it's going to be grim. If there are £4 bn of unsold shares, I'm sure that the underwriters are going to try to cut their losses, and dump a big tranche onto the open market, and the share price will receive severe downward pressure for a long time. Not only that, but it would send a dire warning to other banks, that the market isn't ready to finance them; I can't imagine that would be good for the share price.
In the case of US banks, the situation is even worse. I was staggered the other day, when there was a broker update published - you know how you occasionally get these press releases saying 'we recommend buying XYZ' or we recommend 'holding',... or selling 'ABC'. This one was different it was 'we recommend short selling Citigroup'. Ouch! Fair enough advising to sell, but to advise short selling must mean they think there is a long way yet to fall. Indeed, look at some of the recently disclosed hedge fund positions - one hedge fund is short HBOS to the tune of £380 million. That's one hell of a large wager - they must have a damn good reason to go for that. You don't take that sort of risk based on gut feeling.
The FTSE 250 is down a lot harder than the FTSE 100 over the last few weeks. The 250 is much lighter on natural resources, and is packed with small banks and house builders (and now larger housebuilders, after their recent demotion). Worst of all has been European stocks. The FTSE250 equivalent in the Eurozone, is down something like 14% in the last month.
Indeed, the miners and oils aren't immune - they've been getting hammered the last 2 days. I'm not quite sure why, oil and commodity prices are soaring - oil at an all time record, with considerable upwards pressure. Even my investments in smaller oil exploration/development companies (newly promoted to FTSE 250) are getting a beating.
I suspect it's general sentiment and an unselective general retreat from equities.
I think banks still have a way to go down - HBOS's share price has been hovering just below rights issue price for the last few days. If this rights issue goes down, then it's going to be grim. If there are £4 bn of unsold shares, I'm sure that the underwriters are going to try to cut their losses, and dump a big tranche onto the open market, and the share price will receive severe downward pressure for a long time. Not only that, but it would send a dire warning to other banks, that the market isn't ready to finance them; I can't imagine that would be good for the share price.
In the case of US banks, the situation is even worse. I was staggered the other day, when there was a broker update published - you know how you occasionally get these press releases saying 'we recommend buying XYZ' or we recommend 'holding',... or selling 'ABC'. This one was different it was 'we recommend short selling Citigroup'. Ouch! Fair enough advising to sell, but to advise short selling must mean they think there is a long way yet to fall. Indeed, look at some of the recently disclosed hedge fund positions - one hedge fund is short HBOS to the tune of £380 million. That's one hell of a large wager - they must have a damn good reason to go for that. You don't take that sort of risk based on gut feeling.
The FTSE 250 is down a lot harder than the FTSE 100 over the last few weeks. The 250 is much lighter on natural resources, and is packed with small banks and house builders (and now larger housebuilders, after their recent demotion). Worst of all has been European stocks. The FTSE250 equivalent in the Eurozone, is down something like 14% in the last month.
QUOTE (homeless @ Jul 1 2008, 10:42 AM)
everyday another little snip of the index.
if these falls of the last few months happened in a day or week, there would be no other topic of conversation anywhere.However a gradual downward spiral recieves little attention, i guess we have a taste for the dramatic.
It cxonfuses me these falls becuase the ftse is top heavy with miners and oil companies, both doing pretty good, as are energy companies ect.
how are the other indexes doing?
im tempted now to stick a few pounds into bank shares, if they drop anymore they are going to go bust, many succesfull investors allways say buy when no-one else is, does this hold true for banks at the moment.Are banks actually now worth a punt after having crashed in value?
if these falls of the last few months happened in a day or week, there would be no other topic of conversation anywhere.However a gradual downward spiral recieves little attention, i guess we have a taste for the dramatic.
It cxonfuses me these falls becuase the ftse is top heavy with miners and oil companies, both doing pretty good, as are energy companies ect.
how are the other indexes doing?
im tempted now to stick a few pounds into bank shares, if they drop anymore they are going to go bust, many succesfull investors allways say buy when no-one else is, does this hold true for banks at the moment.Are banks actually now worth a punt after having crashed in value?
This question is very much like those that appeared on the forums while NR was unwinding last year. You can go and look at my posts to see what I am going to say.
But just to re-irritate: Many banks have NOTHING - sure they own money and debt but the value is purely perceived. Your "surely they will be alright" argument didn't hold for NR and doesn't hold for the banks' current profits that are disappearing quickly.
Anyway, if you do invest in banks, you are taking a bet. Your money will not be invested in the economy. Take a punt on a banks that actually owns real things or have investments in businesses that do real work (not service-based). Better still, buy shares in some small businesses that can at least turn the money into something useful for the economy.
QUOTE (PhoneyMcRingRing @ Jul 1 2008, 10:46 AM)
I am thinking this for Lloyds, they are below 300 and they are looking to make a few take overs themselves.
I'd be wary of what banks say if I were you. Lloyds looking to make a few take overs sounds to me like the usual banksters pack of lies aimed at hiding the dismal situation they're in.
It's not like it would be the first time.
<Edit: I feel I need to be more forceful: If you don't want to lose too much money then simply don't listen to what the banks say. Use other sources of information>
I notice that the pound is nearly back up to $2 and house prices are falling.
When is this "as goes HPI so goes the pound" mantra going to start working?
When is this "as goes HPI so goes the pound" mantra going to start working?
QUOTE (Minos @ Jul 1 2008, 11:03 AM)
I notice that the pound is nearly back up to $2 and house prices are falling.
When is this "as goes HPI so goes the pound" mantra going to start working?
When is this "as goes HPI so goes the pound" mantra going to start working?
It is working for everything apart from the dollar (which after all is in the same state we are in).
FTSE 100 (FSI:^FTSE)
Index Value: 5,482.00
Trade Time: 10:51AM
Change: 143.90 (2.56%)
Prev Close: 5,625.90
Open: 5,625.90
Day's Range: 5,467.50 - 5,625.90
52wk Range: 5,338.70 - 6,610.90
Index Value: 5,482.00
Trade Time: 10:51AM
Change: 143.90 (2.56%)
Prev Close: 5,625.90
Open: 5,625.90
Day's Range: 5,467.50 - 5,625.90
52wk Range: 5,338.70 - 6,610.90
As the great MSW says,
Any stock can always lose 50% of its value again. And again. you get the idea.
It really depends on whether you consider this a revert to mean scenario or a "total financial collapse" one!
Any stock can always lose 50% of its value again. And again. you get the idea.
It really depends on whether you consider this a revert to mean scenario or a "total financial collapse" one!
QUOTE (dellboy @ Jul 1 2008, 11:00 AM)
This question is very much like those that appeared on the forums while NR was unwinding last year. You can go and look at my posts to see what I am going to say.
But just to re-irritate: Many banks have NOTHING - sure they own money and debt but the value is purely perceived. Your "surely they will be alright" argument didn't hold for NR and doesn't hold for the banks' current profits that are disappearing quickly.
Anyway, if you do invest in banks, you are taking a bet. Your money will not be invested in the economy. Take a punt on a banks that actually owns real things or have investments in businesses that do real work (not service-based). Better still, buy shares in some small businesses that can at least turn the money into something useful for the economy.
But just to re-irritate: Many banks have NOTHING - sure they own money and debt but the value is purely perceived. Your "surely they will be alright" argument didn't hold for NR and doesn't hold for the banks' current profits that are disappearing quickly.
Anyway, if you do invest in banks, you are taking a bet. Your money will not be invested in the economy. Take a punt on a banks that actually owns real things or have investments in businesses that do real work (not service-based). Better still, buy shares in some small businesses that can at least turn the money into something useful for the economy.
Spot on.
It is quite likely that at some point banks will outperform. Providing they are still in business and providing we still have a functioning financial system.
If one wants to buy into banks for the longer-term (and timeframe is always one of the most crucial aspects of investing/speculating) then it may be an idea to consider doing so over a period of time. Say some after the next crash, some 6 months later, then the following 6 months and so on.
I would also not stick it in one bank. Stick it either in the "sector" or spread it around four or five.
Generally speaking, for the longer-term you are likely to increase your chances of success, if you wait until the price of anything is rising over time rather than falling over time. The simplest way of timing this is:-
* Pull up a chart on Yahoo finance or similar.
* Select the "moving averages" options for the 20 week and 50 week averages.
* Only buy when the 20 week average crosses the 50 week average from below, the price is above the 20 week average, and both averages are rising, or turning up.
* You will miss the "lows" by some way, but you are lowering your risks.
* If you are more agressive, use 20/50 day rather than week averages.
* You won't get rich, but you probably won't get broke either.
IMPO the FTSE 100 is heading down down down.
Those of your thinking of buying banking shares need to pop over to Moneyweek and read their articles on why now is not a good time to buy banking shares nor to buy into the UK markets.
There is a lot of pain yet to come for the banks we still do not know how much bad debt they have - and for the shops.
Those of your thinking of buying banking shares need to pop over to Moneyweek and read their articles on why now is not a good time to buy banking shares nor to buy into the UK markets.
There is a lot of pain yet to come for the banks we still do not know how much bad debt they have - and for the shops.
Two and a half percent off by lunchtime? Looks like someone on the trading floor has found a dictionary and looked up the word 'Recession'.
QUOTE (Red Kharma @ Jul 1 2008, 11:32 AM)
Spot on.
It is quite likely that at some point banks will outperform. Providing they are still in business and providing we still have a functioning financial system.
If one wants to buy into banks for the longer-term (and timeframe is always one of the most crucial aspects of investing/speculating) then it may be an idea to consider doing so over a period of time. Say some after the next crash, some 6 months later, then the following 6 months and so on.
I would also not stick it in one bank. Stick it either in the "sector" or spread it around four or five.
Generally speaking, for the longer-term you are likely to increase your chances of success, if you wait until the price of anything is rising over time rather than falling over time. The simplest way of timing this is:-
* Pull up a chart on Yahoo finance or similar.
* Select the "moving averages" options for the 20 week and 50 week averages.
* Only buy when the 20 week average crosses the 50 week average from below, the price is above the 20 week average, and both averages are rising, or turning up.
* You will miss the "lows" by some way, but you are lowering your risks.
* If you are more agressive, use 20/50 day rather than week averages.
* You won't get rich, but you probably won't get broke either.
It is quite likely that at some point banks will outperform. Providing they are still in business and providing we still have a functioning financial system.
If one wants to buy into banks for the longer-term (and timeframe is always one of the most crucial aspects of investing/speculating) then it may be an idea to consider doing so over a period of time. Say some after the next crash, some 6 months later, then the following 6 months and so on.
I would also not stick it in one bank. Stick it either in the "sector" or spread it around four or five.
Generally speaking, for the longer-term you are likely to increase your chances of success, if you wait until the price of anything is rising over time rather than falling over time. The simplest way of timing this is:-
* Pull up a chart on Yahoo finance or similar.
* Select the "moving averages" options for the 20 week and 50 week averages.
* Only buy when the 20 week average crosses the 50 week average from below, the price is above the 20 week average, and both averages are rising, or turning up.
* You will miss the "lows" by some way, but you are lowering your risks.
* If you are more agressive, use 20/50 day rather than week averages.
* You won't get rich, but you probably won't get broke either.
"Generally speaking, for the longer-term you are likely to increase your chances of success, if you wait until the price of anything is rising over time rather than falling over time. The simplest way of timing this is:-"
Generally speaking, have you any proof that this works?
QUOTE (ChumpusRex @ Jul 1 2008, 10:59 AM)
I'm also somewhat surprised that the FTSE is down so far given all its miners and oils.
Indeed, the miners and oils aren't immune - they've been getting hammered the last 2 days. I'm not quite sure why, oil and commodity prices are soaring - oil at an all time record, with considerable upwards pressure. Even my investments in smaller oil exploration/development companies (newly promoted to FTSE 250) are getting a beating.
I suspect it's general sentiment and an unselective general retreat from equities.
I think banks still have a way to go down - HBOS's share price has been hovering just below rights issue price for the last few days. If this rights issue goes down, then it's going to be grim. If there are £4 bn of unsold shares, I'm sure that the underwriters are going to try to cut their losses, and dump a big tranche onto the open market, and the share price will receive severe downward pressure for a long time. Not only that, but it would send a dire warning to other banks, that the market isn't ready to finance them; I can't imagine that would be good for the share price.
In the case of US banks, the situation is even worse. I was staggered the other day, when there was a broker update published - you know how you occasionally get these press releases saying 'we recommend buying XYZ' or we recommend 'holding',... or selling 'ABC'. This one was different it was 'we recommend short selling Citigroup'. Ouch! Fair enough advising to sell, but to advise short selling must mean they think there is a long way yet to fall. Indeed, look at some of the recently disclosed hedge fund positions - one hedge fund is short HBOS to the tune of £380 million. That's one hell of a large wager - they must have a damn good reason to go for that. You don't take that sort of risk based on gut feeling.
The FTSE 250 is down a lot harder than the FTSE 100 over the last few weeks. The 250 is much lighter on natural resources, and is packed with small banks and house builders (and now larger housebuilders, after their recent demotion). Worst of all has been European stocks. The FTSE250 equivalent in the Eurozone, is down something like 14% in the last month.
Indeed, the miners and oils aren't immune - they've been getting hammered the last 2 days. I'm not quite sure why, oil and commodity prices are soaring - oil at an all time record, with considerable upwards pressure. Even my investments in smaller oil exploration/development companies (newly promoted to FTSE 250) are getting a beating.
I suspect it's general sentiment and an unselective general retreat from equities.
I think banks still have a way to go down - HBOS's share price has been hovering just below rights issue price for the last few days. If this rights issue goes down, then it's going to be grim. If there are £4 bn of unsold shares, I'm sure that the underwriters are going to try to cut their losses, and dump a big tranche onto the open market, and the share price will receive severe downward pressure for a long time. Not only that, but it would send a dire warning to other banks, that the market isn't ready to finance them; I can't imagine that would be good for the share price.
In the case of US banks, the situation is even worse. I was staggered the other day, when there was a broker update published - you know how you occasionally get these press releases saying 'we recommend buying XYZ' or we recommend 'holding',... or selling 'ABC'. This one was different it was 'we recommend short selling Citigroup'. Ouch! Fair enough advising to sell, but to advise short selling must mean they think there is a long way yet to fall. Indeed, look at some of the recently disclosed hedge fund positions - one hedge fund is short HBOS to the tune of £380 million. That's one hell of a large wager - they must have a damn good reason to go for that. You don't take that sort of risk based on gut feeling.
The FTSE 250 is down a lot harder than the FTSE 100 over the last few weeks. The 250 is much lighter on natural resources, and is packed with small banks and house builders (and now larger housebuilders, after their recent demotion). Worst of all has been European stocks. The FTSE250 equivalent in the Eurozone, is down something like 14% in the last month.
"I was staggered the other day, when there was a broker update published - you know how you occasionally get these press releases saying 'we recommend buying XYZ' or we recommend 'holding',... or selling 'ABC'. This one was different it was 'we recommend short selling Citigroup'. Ouch! Fair enough advising to sell, but to advise short selling must mean they think there is a long way yet to fall. Indeed, look at some of the recently disclosed hedge fund positions - one hedge fund is short HBOS to the tune of £380 million. That's one hell of a large wager - they must have a damn good reason to go for that. You don't take that sort of risk based on gut feeling."
Why do people listen to analysts?
I'm hedging my bets with stocks and commodities. But everything is down today!
Today is the gloomiest I've seen for months - Asia's fallen for 8-9 days in a row now. I'm glad I moved into a safe job and battened down the hatches.
I think I'll bury my money in the back garden
.
If you do want to invest, I like the Liontrust First Income fund which I'm dripfeeding money into on a monthly basis. It's got lots of banks in it, a nice yield and you don't have to worry about rights issues and stuff.
Also keep an eye on IUKD.L - the iShares UK high yielding ETF, its share price has a true reflection of just how bad a shape UK Plc is in .
Today is the gloomiest I've seen for months - Asia's fallen for 8-9 days in a row now. I'm glad I moved into a safe job and battened down the hatches.
I think I'll bury my money in the back garden
.If you do want to invest, I like the Liontrust First Income fund which I'm dripfeeding money into on a monthly basis. It's got lots of banks in it, a nice yield and you don't have to worry about rights issues and stuff.
Also keep an eye on IUKD.L - the iShares UK high yielding ETF, its share price has a true reflection of just how bad a shape UK Plc is in
.
QUOTE (DrGUID @ Jul 1 2008, 12:02 PM)
I'm hedging my bets with stocks and commodities. But everything is down today!
Today is the gloomiest I've seen for months - Asia's fallen for 8-9 days in a row now. I'm glad I moved into a safe job and battened down the hatches.
I think I'll bury my money in the back garden .
If you do want to invest, I like the Liontrust First Income fund which I'm dripfeeding money into on a monthly basis. It's got lots of banks in it, a nice yield and you don't have to worry about rights issues and stuff.
Also keep an eye on IUKD.L - the iShares UK high yielding ETF, its share price has a true reflection of just how bad a shape UK Plc is in .
Today is the gloomiest I've seen for months - Asia's fallen for 8-9 days in a row now. I'm glad I moved into a safe job and battened down the hatches.
I think I'll bury my money in the back garden
.If you do want to invest, I like the Liontrust First Income fund which I'm dripfeeding money into on a monthly basis. It's got lots of banks in it, a nice yield and you don't have to worry about rights issues and stuff.
Also keep an eye on IUKD.L - the iShares UK high yielding ETF, its share price has a true reflection of just how bad a shape UK Plc is in
.You are purchasing the wrong commodity.
I wouldn't touch banks for a good while yet, especially not those weighted towards the consumer sector, they're going to get battered from every-which-way.
The level of debts in default is the thin end of the wedge - at the moment this is largely confined to those who overstretched themselves - mass unemployment will nail them to the floor. Fewer people then ever before have less job security and the banks gave them money in unprecedented amounts.
The whole penalty charges thing not only means they have to return money they made in the past, but that they can't make that money in the future. This is likely to pale into insignificance once lawyers set their greedy little minds to the misselling of financial products, which has already cost banks billions in one way or another. I've heard a company is offering a service to allow people to legally invalidate existing credit agreements - credit cards, loans, finance agreements etc and even claim compensation for ones that were paid off. Something to do with the invalidity of the consumer credit agreements.
IMHO leave well alone.
I wouldn't go sticking your money in oil or other mineral stocks either - remember there was a 'shortage' of houses a year or two ago as well!
The level of debts in default is the thin end of the wedge - at the moment this is largely confined to those who overstretched themselves - mass unemployment will nail them to the floor. Fewer people then ever before have less job security and the banks gave them money in unprecedented amounts.
The whole penalty charges thing not only means they have to return money they made in the past, but that they can't make that money in the future. This is likely to pale into insignificance once lawyers set their greedy little minds to the misselling of financial products, which has already cost banks billions in one way or another. I've heard a company is offering a service to allow people to legally invalidate existing credit agreements - credit cards, loans, finance agreements etc and even claim compensation for ones that were paid off. Something to do with the invalidity of the consumer credit agreements.
IMHO leave well alone.
I wouldn't go sticking your money in oil or other mineral stocks either - remember there was a 'shortage' of houses a year or two ago as well!
I think the banks have got a fair way to fall yet, we've not even seen them start to take major hits from mortgage defaults (except for B&B) so they've got more value to lose over the next 6 months. HSBC might be a good punt if you want some bank exposure as it has hardly lent mortgages in the UK but had a strong presence in Asia where banks are doing well.
QUOTE (homeless @ Jul 1 2008, 11:42 AM)
im tempted now to stick a few pounds into bank shares, if they drop anymore they are going to go bust, many succesfull investors allways say buy when no-one else is, does this hold true for banks at the moment. Are banks actually now worth a punt after having crashed in value?
Why would they go bust if they drop further? They can drop to 0.0000001 and still be in operation (not likely, agreed, but for the sake of argument).
General rules: don't buy a falling share and don't try to call the bottom of a market.
Personally, I am keeping the (bank) shares I have, but I am not buying any more just yet. I first want to see a change in direction AND I want to wait to hear what next year's dividend (and earnings per share) is going to be. If the trend next year is up and dividend is maintained, I might be tempted to buy again.
Just my thoughts.
QUOTE (Noel @ Jul 1 2008, 11:42 AM)
"Generally speaking, for the longer-term you are likely to increase your chances of success, if you wait until the price of anything is rising over time rather than falling over time. The simplest way of timing this is:-"
Generally speaking, have you any proof that this works?
Generally speaking, have you any proof that this works?
it does work very well with the S&P 500 over decades and relatively well with the ftse 100 index over it's 25 years(but not as good),with stocks,redkharma is right,momentum is a big part of it.stocks rise because they are rising.fundamentals have shrunk in importance in my eyes ,over my ten years actively being involved.
If you'd used this with the ftse 100 over the last ten years then you'd have done very well indeed.
WARNING.any system can stop working at any time
QUOTE (the reaper @ Jul 1 2008, 12:28 PM)
it does work very well with the S&P 500 over decades and relatively well with the ftse 100 index over it's 25 years(but not as good),with stocks,redkharma is right,momentum is a big part of it.stocks rise because they are rising.fundamentals have shrunk in importance in my eyes ,over my ten years actively being involved.
If you'd used this with the ftse 100 over the last ten years then you'd have done very well indeed.
WARNING.any system can stop working at any time
If you'd used this with the ftse 100 over the last ten years then you'd have done very well indeed.
WARNING.any system can stop working at any time
have you a link to some backtested data - would be interested to have a read?
If anyone wants to take a reality check on whether they should buy stocks yet - then I advise they go and have a look at what happened to the UK stock market in the period 1973 - 1974.
A massive collapse precipited by the secondary banking crisis followed by a massive recovery driven by an emergency cut in interest rates and an inflationary boom.
Sounds a lot like the economic circumstances we are now in. I am waiting for an almighty stock market collapse and very possibly another bank fail/bailout before plunging into the top end of the FTSE 250 which will be showing extremely good value if we see another 50 percent fall from here.
A massive collapse precipited by the secondary banking crisis followed by a massive recovery driven by an emergency cut in interest rates and an inflationary boom.
Sounds a lot like the economic circumstances we are now in. I am waiting for an almighty stock market collapse and very possibly another bank fail/bailout before plunging into the top end of the FTSE 250 which will be showing extremely good value if we see another 50 percent fall from here.
QUOTE (Wad @ Jul 1 2008, 01:04 PM)
If anyone wants to take a reality check on whether they should buy stocks yet - then I advise they go and have a look at what happened to the UK stock market in the period 1973 - 1974.
A massive collapse precipited by the secondary banking crisis followed by a massive recovery driven by an emergency cut in interest rates and an inflationary boom.
Sounds a lot like the economic circumstances we are now in. I am waiting for an almighty stock market collapse and very possibly another bank fail/bailout before plunging into the top end of the FTSE 250 which will be showing extremely good value if we see another 50 percent fall from here.
A massive collapse precipited by the secondary banking crisis followed by a massive recovery driven by an emergency cut in interest rates and an inflationary boom.
Sounds a lot like the economic circumstances we are now in. I am waiting for an almighty stock market collapse and very possibly another bank fail/bailout before plunging into the top end of the FTSE 250 which will be showing extremely good value if we see another 50 percent fall from here.
So why not buy some put options as the market doesn't agree with you?
QUOTE (Noel @ Jul 1 2008, 12:33 PM)
have you a link to some backtested data - would be interested to have a read?
noel,if you register with digitallook,you can create the charts yourself.use simple moving averages not exponential or weighted.for 50 week use 250 day for 20 week use 100 day moving average.
if you trade with IG they have an excellent free charting service which will take you back a long time indeed.get in there have a play around and learn another aspect of investing/trading.
karl denninger-does his piece on it here and as well as giving good free advice,he comes across as a nice chap.
http://www.tickerforum.org/cgi-ticker/akcs-www?post=39911
in fact read his ticker every day if you can.he's excellent and just a fine example of a blogger who's ahead of the overpaid Wall St suits.I also like mish shedlock for what it's worth.
Next stop within a couple of weeks should be 4950 - based on the decline from 6800 to 5400 (or 1400 points) being repeated but from the more recent high of 6350. Similar workings on the Dow imply a target of 10500.
Catalyst for this could well be the ECB raising interest rates on thursday. If they do this then I expect oil to put on at least $5 on the day and probably more over the week. My reasoning for this is that the Euro will rise against the dollar. As oil is priced in dollars it would have to rise in order to compensate. The reason I believe that the rise in oil is disproportionate to the fall in the dollar is that you have to factor in the value of the oil nations' sovereign wealth funds which were also earned in dollars.
It is not only the $11bl in oil being extracted per day (85ml barrels x $140), but the trillions in sovereign wealth funds which get devalued by a falling dollar and the way to recover this is through the oil price. Is this fair? Yes, IMO, it serves us right for being so dependant on the stuff AND we are desperate for them to use this cash as a rescue fund for OUR banks - so they are entitled to seek the best price.
Catalyst for this could well be the ECB raising interest rates on thursday. If they do this then I expect oil to put on at least $5 on the day and probably more over the week. My reasoning for this is that the Euro will rise against the dollar. As oil is priced in dollars it would have to rise in order to compensate. The reason I believe that the rise in oil is disproportionate to the fall in the dollar is that you have to factor in the value of the oil nations' sovereign wealth funds which were also earned in dollars.
It is not only the $11bl in oil being extracted per day (85ml barrels x $140), but the trillions in sovereign wealth funds which get devalued by a falling dollar and the way to recover this is through the oil price. Is this fair? Yes, IMO, it serves us right for being so dependant on the stuff AND we are desperate for them to use this cash as a rescue fund for OUR banks - so they are entitled to seek the best price.
QUOTE (the reaper @ Jul 1 2008, 01:14 PM)
noel,if you register with digitallook,you can create the charts yourself.use simple moving averages not exponential or weighted.for 50 week use 250 day for 20 week use 100 day moving average.
if you trade with IG they have an excellent free charting service which will take you back a long time indeed.get in there have a play around and learn another aspect of investing/trading.
karl denninger-does his piece on it here and as well as giving good free advice,he comes across as a nice chap.
http://www.tickerforum.org/cgi-ticker/akcs-www?post=39911
if you trade with IG they have an excellent free charting service which will take you back a long time indeed.get in there have a play around and learn another aspect of investing/trading.
karl denninger-does his piece on it here and as well as giving good free advice,he comes across as a nice chap.
http://www.tickerforum.org/cgi-ticker/akcs-www?post=39911
I am looking for proof that using historical data this gives returns that outperforms (after trading costs) a basic buy and hold strategy.
some bad news coming out from ny before the opening bell
the story of gm being worth less than it was 54 years ago is truly shocking.
So if not quite the time to have a punt on some banks what else?, it seems sometimes there is absolutely no-where to put money just now and even holding money is a disaster.
what about shares in train companies, will the price of oil and running a car push people onto public transport? what about stagecoach?
What does everyone think is the place to have money in at this moment?, considering a decent return and not just a bond or bank account.
edited: worse than even usual spelling and grammer
the story of gm being worth less than it was 54 years ago is truly shocking.
So if not quite the time to have a punt on some banks what else?, it seems sometimes there is absolutely no-where to put money just now and even holding money is a disaster.
what about shares in train companies, will the price of oil and running a car push people onto public transport? what about stagecoach?
What does everyone think is the place to have money in at this moment?, considering a decent return and not just a bond or bank account.
edited: worse than even usual spelling and grammer
GBP has gained strength vs the Euro..??
So what the *** is happening since Pound is gaining strength but house prices are crashing and FTSE is getting humped too.
Just a thought - are they going to raise interest rates next week and nobody has told me yet??
So what the *** is happening since Pound is gaining strength but house prices are crashing and FTSE is getting humped too.
Just a thought - are they going to raise interest rates next week and nobody has told me yet??
QUOTE (Noel @ Jul 1 2008, 01:36 PM)
I am looking for proof that using historical data this gives returns that outperforms (after trading costs) a basic buy and hold strategy.
I see where you're coming from, but I think you're making a philosophical error of judgement (as might others).
You are looking for a single metric that can be used to automate a strategy - and, no matter how great the metric may be, it will suffer something similar to Goodhart's law - i.e. that as soon as you start to use it, it becomes a deprecated strategy.
This doesn't, however, imply that randomised buy-and-hold is the optimal strategy. The trajectories of asset prices are not random - though they likely seem so to people who are looking at the wrong indicators. Identifying the right indicators, therefore, is the challenge. In order to make predictions here, we have to look at real fundamentals - the actual businesses themselves - and try to predict what will be popular sentiment in the near and medium term. These are things that can be estimated. I think that the huge drops in bank share prices indicate a loss of confidence in the sector - and bad news is still arriving day by day. I was shocked at the delay between the decline in confidence in the banks and the decline in confidence of the companies who depend upon the confidence of banks to lend... but the realisation that when banks are in trouble, everyone is in trouble now seems to be taking effect.
I don't think this can be distilled into some universal rule that can be back-tested... it requires me to establish an intuition for the situation the typical person finds themselves in and to gauge popular opinion.
QUOTE (delboypass @ Jul 1 2008, 01:52 PM)
GBP has gained strength vs the Euro..??
So what the *** is happening since Pound is gaining strength but house prices are crashing and FTSE is getting humped too.
Just a thought - are they going to raise interest rates next week and nobody has told me yet??
So what the *** is happening since Pound is gaining strength but house prices are crashing and FTSE is getting humped too.
Just a thought - are they going to raise interest rates next week and nobody has told me yet??
hoping interests rate will rise, if that the case.
QUOTE (A.steve @ Jul 1 2008, 02:10 PM)
I see where you're coming from, but I think you're making a philosophical error of judgement (as might others).
You are looking for a single metric that can be used to automate a strategy - and, no matter how great the metric may be, it will suffer something similar to Goodhart's law - i.e. that as soon as you start to use it, it becomes a deprecated strategy.
This doesn't, however, imply that randomised buy-and-hold is the optimal strategy. The trajectories of asset prices are not random - though they likely seem so to people who are looking at the wrong indicators. Identifying the right indicators, therefore, is the challenge. In order to make predictions here, we have to look at real fundamentals - the actual businesses themselves - and try to predict what will be popular sentiment in the near and medium term. These are things that can be estimated. I think that the huge drops in bank share prices indicate a loss of confidence in the sector - and bad news is still arriving day by day. I was shocked at the delay between the decline in confidence in the banks and the decline in confidence of the companies who depend upon the confidence of banks to lend... but the realisation that when banks are in trouble, everyone is in trouble now seems to be taking effect.
I don't think this can be distilled into some universal rule that can be back-tested... it requires me to establish an intuition for the situation the typical person finds themselves in and to gauge popular opinion.
You are looking for a single metric that can be used to automate a strategy - and, no matter how great the metric may be, it will suffer something similar to Goodhart's law - i.e. that as soon as you start to use it, it becomes a deprecated strategy.
This doesn't, however, imply that randomised buy-and-hold is the optimal strategy. The trajectories of asset prices are not random - though they likely seem so to people who are looking at the wrong indicators. Identifying the right indicators, therefore, is the challenge. In order to make predictions here, we have to look at real fundamentals - the actual businesses themselves - and try to predict what will be popular sentiment in the near and medium term. These are things that can be estimated. I think that the huge drops in bank share prices indicate a loss of confidence in the sector - and bad news is still arriving day by day. I was shocked at the delay between the decline in confidence in the banks and the decline in confidence of the companies who depend upon the confidence of banks to lend... but the realisation that when banks are in trouble, everyone is in trouble now seems to be taking effect.
I don't think this can be distilled into some universal rule that can be back-tested... it requires me to establish an intuition for the situation the typical person finds themselves in and to gauge popular opinion.
"You are looking for a single metric that can be used to automate a strategy - and, no matter how great the metric may be, it will suffer something similar to Goodhart's law - i.e. that as soon as you start to use it, it becomes a deprecated strategy."
You may be right, in that case - what is the point of using these moving averages?
" The trajectories of asset prices are not random - though they likely seem so to people who are looking at the wrong indicators"
Why don't you post this on Wilmott and we can have a discussion there (with the real eggheads)?
"we have to look at real fundamentals - the actual businesses themselves - and try to predict what will be popular sentiment in the near and medium term"
We have discussed this before - analysts do this and don't outperform the market
"I don't think this can be distilled into some universal rule that can be back-tested... it requires me to establish an intuition for the situation the typical person finds themselves in and to gauge popular opinion."
I think it needs to be, as I feel the computer makes better trading decisions than a human
QUOTE (djia977 @ Jul 1 2008, 01:22 PM)
Next stop within a couple of weeks should be 4950 - based on the decline from 6800 to 5400 (or 1400 points) being repeated but from the more recent high of 6350. Similar workings on the Dow imply a target of 10500.
Catalyst for this could well be the ECB raising interest rates on thursday. If they do this then I expect oil to put on at least $5 on the day and probably more over the week. My reasoning for this is that the Euro will rise against the dollar. As oil is priced in dollars it would have to rise in order to compensate. The reason I believe that the rise in oil is disproportionate to the fall in the dollar is that you have to factor in the value of the oil nations' sovereign wealth funds which were also earned in dollars.
It is not only the $11bl in oil being extracted per day (85ml barrels x $140), but the trillions in sovereign wealth funds which get devalued by a falling dollar and the way to recover this is through the oil price. Is this fair? Yes, IMO, it serves us right for being so dependant on the stuff AND we are desperate for them to use this cash as a rescue fund for OUR banks - so they are entitled to seek the best price.
Catalyst for this could well be the ECB raising interest rates on thursday. If they do this then I expect oil to put on at least $5 on the day and probably more over the week. My reasoning for this is that the Euro will rise against the dollar. As oil is priced in dollars it would have to rise in order to compensate. The reason I believe that the rise in oil is disproportionate to the fall in the dollar is that you have to factor in the value of the oil nations' sovereign wealth funds which were also earned in dollars.
It is not only the $11bl in oil being extracted per day (85ml barrels x $140), but the trillions in sovereign wealth funds which get devalued by a falling dollar and the way to recover this is through the oil price. Is this fair? Yes, IMO, it serves us right for being so dependant on the stuff AND we are desperate for them to use this cash as a rescue fund for OUR banks - so they are entitled to seek the best price.
Surely falling commodity stocks (i.e. energy and mining) are key to a large and sustained drop in the FTSE 100. Just look at the weightings of these companies - there are 7 of them in the top 10.
In the medium term, rising interest rates means lower economic demand (and inflation), which in turn means less demand for commodities. Rates are already rising worldwide.
QUOTE (homeless @ Jul 1 2008, 02:47 PM)
some bad news coming out from ny before the opening bell
the story of gm being worth less than it was 54 years ago is truly shocking.
So if not quite the time to have a punt on some banks what else?, it seems sometimes there is absolutely no-where to put money just now and even holding money is a disaster.
what about shares in train companies, will the price of oil and running a car push people onto public transport? what about stagecoach?
What does everyone think is the place to have money in at this moment?, considering a decent return and not just a bond or bank account.
edited: worse than even usual spelling and grammer
the story of gm being worth less than it was 54 years ago is truly shocking.
So if not quite the time to have a punt on some banks what else?, it seems sometimes there is absolutely no-where to put money just now and even holding money is a disaster.
what about shares in train companies, will the price of oil and running a car push people onto public transport? what about stagecoach?
What does everyone think is the place to have money in at this moment?, considering a decent return and not just a bond or bank account.
edited: worse than even usual spelling and grammer
No one knows, that's the problem.
Perhaps a bog paper manufacturer. The last thing people do in a depression is wipe their a**es with dried grass.
QUOTE (Noel @ Jul 1 2008, 02:31 PM)
"You are looking for a single metric that can be used to automate a strategy - and, no matter how great the metric may be, it will suffer something similar to Goodhart's law - i.e. that as soon as you start to use it, it becomes a deprecated strategy."
You may be right, in that case - what is the point of using these moving averages?
" The trajectories of asset prices are not random - though they likely seem so to people who are looking at the wrong indicators"
Why don't you post this on Wilmott and we can have a discussion there (with the real eggheads)?
"we have to look at real fundamentals - the actual businesses themselves - and try to predict what will be popular sentiment in the near and medium term"
We have discussed this before - analysts do this and don't outperform the market
"I don't think this can be distilled into some universal rule that can be back-tested... it requires me to establish an intuition for the situation the typical person finds themselves in and to gauge popular opinion."
I think it needs to be, as I feel the computer makes better trading decisions than a human
You may be right, in that case - what is the point of using these moving averages?
" The trajectories of asset prices are not random - though they likely seem so to people who are looking at the wrong indicators"
Why don't you post this on Wilmott and we can have a discussion there (with the real eggheads)?
"we have to look at real fundamentals - the actual businesses themselves - and try to predict what will be popular sentiment in the near and medium term"
We have discussed this before - analysts do this and don't outperform the market
"I don't think this can be distilled into some universal rule that can be back-tested... it requires me to establish an intuition for the situation the typical person finds themselves in and to gauge popular opinion."
I think it needs to be, as I feel the computer makes better trading decisions than a human
You will note that it wasn't me who suggested a fixed way of identifying a turn in sentiment -but the moving average trick, to me, sounds like reasonable circumstantial evidence that sentiment may have turned. I don't think it infallible and certainly wouldn't trust that indicator alone - but it does seem relevant to me. We've the phrase "One swallow doesn't make a summer" - but that doesn't stop us using swallow sightings as corroborating evidence for changing seasons. While you argue the position that speculative risk can be eliminated by making entirely random investments, I think that there are broad factors that influence the market... not dissimilar to seasons. I can't predict if it is going to rain on any particular day - but I would far prefer to leave the storm gear behind when walking in summer than winter.
I think I know why analysts do so badly when trying to predict the market - and it is the same as the reason why I won't back my hunch that builders' share prices will fall with a spread-bet: the time-horizon. Pundits need to continuously show that they are 'on the ball' - because, essentially, they are salesmen and their objective is to close deals - not to establish an academic high ground over the long term. The existence of leverage undermines the decision they should be making as the "tortoise" investor tends not to reap large rewards... it is far better to be the "hare" and get regular bonus payments for each sprinted section - even if the customer, ultimately, looses.
You say that you think that the computer makes better trading decisions - but, also that you advocate random selection of investments... which I think to be contradictory. If the investments are really random, you don't need a computer - just a cork board, a copy of the FT and a dart. The only reason I can see for automating the decision process is to roll it out to those who don't understand the reasoning behind it... which, if you can pull it off, will be a coup for the earliest user - and a disaster for everyone else... rather like a ponzi scheme.
I think that the elephant in the room today is credit availability. This is the metric I'd most want to measure and understand - I believe that if such a metric could be established and understood, it would identify a clear investment strategy that would yield significant benefits for investors party to it. I'm not sure it exists - and that's probably why it would be effective in the near future. This metric, however, will not be a tool I can pick up - instead, it will constitute all available information... and, maybe, some less available information too.
I'm standing shy of posting this on Wilmott - for several reasons. For one, I'm not a regular reader - and for another, I get the impression that the forum is concerned with operational issues surrounding quantitative specifics - whereas I'm expressing something closer to a belief or a philosophy. I don't have a mathematical framework - so I don't have a hypothesis to be refuted. I do have an anecdotal that I predicted the collapse of the TMT bubble several months before it collapsed (I had no idea when it would go pop - only that it must) and, more recently, I anticipated the stock market falls of 2008 in 2007. This has been quite different to quantitative analysis or technical appraisal of markets - it has been to do with establishing popular fallacies and anticipating how they are skewing the market... metrics and quantitative techniques, I think, only yield clues - the real skill is in putting these clues together - and that, I don't think, can either be done automatically - or entrusted to another who is likely to have contrary ulterior motives.
QUOTE (A.steve @ Jul 1 2008, 03:47 PM)
Or the prefered "One swallow doesn't make a good girlfriend".
FTSE pulled back a bit, but still over 2% off.
I think it got to be sub 5000 before the end, maybe worse.
FTSE -146 at 5479,-2.6% at close.
HBOS ORD 25P (HBOS) : 269(p) -7(p) -2.54%
QUOTE (homeless @ Jul 1 2008, 01:47 PM)
some bad news coming out from ny before the opening bell
the story of gm being worth less than it was 54 years ago is truly shocking.
So if not quite the time to have a punt on some banks what else?, it seems sometimes there is absolutely no-where to put money just now and even holding money is a disaster.
what about shares in train companies, will the price of oil and running a car push people onto public transport? what about stagecoach?
What does everyone think is the place to have money in at this moment?, considering a decent return and not just a bond or bank account.
Private debt collection and consolidation companies, commercial debt collection and consolidation companies?
edited: worse than even usual spelling and grammer
the story of gm being worth less than it was 54 years ago is truly shocking.
So if not quite the time to have a punt on some banks what else?, it seems sometimes there is absolutely no-where to put money just now and even holding money is a disaster.
what about shares in train companies, will the price of oil and running a car push people onto public transport? what about stagecoach?
What does everyone think is the place to have money in at this moment?, considering a decent return and not just a bond or bank account.
Private debt collection and consolidation companies, commercial debt collection and consolidation companies?
edited: worse than even usual spelling and grammer
What about the DOW.... if it keeps falling at this rate it's through 11200.....sped right through!
Is this the proper start?
Is this the proper start?
i feel now is the time to purchase , there is so much bad news now factored into shares that if it all happens in the future we may all pack everything up and call it a day, i am not sure what more bad news can come out.
I like lloyds at £3 the dividend yield is over 11% , so who cares what happens to the share price in the meantime, Bt is an excellent buy and actually went up today, fair yield as well and i reckon good chance of 25% growth over a year or two. I also like this one - Albemarle & Bond Holdings PLC, an aim share, but they are the biggest pawn brokers in the UK !
I like lloyds at £3 the dividend yield is over 11% , so who cares what happens to the share price in the meantime, Bt is an excellent buy and actually went up today, fair yield as well and i reckon good chance of 25% growth over a year or two. I also like this one - Albemarle & Bond Holdings PLC, an aim share, but they are the biggest pawn brokers in the UK !
QUOTE (ccc @ Jul 1 2008, 10:49 AM)
I am sort of thinking about RBS as well. However at the moment my only shares are in Gold miners. About break even just now after 6 months of a serious rollercoaster.
My gold shares are sort of directly opposite to bank shares. So if I have both then I would be hedging my bets and unlikely to lose big style.
Banks crash, gold rockets.
Banks have hit bottom, gold falls.
Or do I simply not have a clue....
My gold shares are sort of directly opposite to bank shares. So if I have both then I would be hedging my bets and unlikely to lose big style.
Banks crash, gold rockets.
Banks have hit bottom, gold falls.
Or do I simply not have a clue....
Having avoided the housing "Bull Trap", why would you want to walk headfirst into this one?
QUOTE (A.steve @ Jul 1 2008, 02:10 PM)
I see where you're coming from, but I think you're making a philosophical error of judgement (as might others).
You are looking for a single metric that can be used to automate a strategy - and, no matter how great the metric may be, it will suffer something similar to Goodhart's law - i.e. that as soon as you start to use it, it becomes a deprecated strategy.
This doesn't, however, imply that randomised buy-and-hold is the optimal strategy. The trajectories of asset prices are not random - though they likely seem so to people who are looking at the wrong indicators. Identifying the right indicators, therefore, is the challenge. In order to make predictions here, we have to look at real fundamentals - the actual businesses themselves - and try to predict what will be popular sentiment in the near and medium term. These are things that can be estimated. I think that the huge drops in bank share prices indicate a loss of confidence in the sector - and bad news is still arriving day by day. I was shocked at the delay between the decline in confidence in the banks and the decline in confidence of the companies who depend upon the confidence of banks to lend... but the realisation that when banks are in trouble, everyone is in trouble now seems to be taking effect.
I don't think this can be distilled into some universal rule that can be back-tested... it requires me to establish an intuition for the situation the typical person finds themselves in and to gauge popular opinion.
You are looking for a single metric that can be used to automate a strategy - and, no matter how great the metric may be, it will suffer something similar to Goodhart's law - i.e. that as soon as you start to use it, it becomes a deprecated strategy.
This doesn't, however, imply that randomised buy-and-hold is the optimal strategy. The trajectories of asset prices are not random - though they likely seem so to people who are looking at the wrong indicators. Identifying the right indicators, therefore, is the challenge. In order to make predictions here, we have to look at real fundamentals - the actual businesses themselves - and try to predict what will be popular sentiment in the near and medium term. These are things that can be estimated. I think that the huge drops in bank share prices indicate a loss of confidence in the sector - and bad news is still arriving day by day. I was shocked at the delay between the decline in confidence in the banks and the decline in confidence of the companies who depend upon the confidence of banks to lend... but the realisation that when banks are in trouble, everyone is in trouble now seems to be taking effect.
I don't think this can be distilled into some universal rule that can be back-tested... it requires me to establish an intuition for the situation the typical person finds themselves in and to gauge popular opinion.
Greed and fear Rodney, greed and fear.
You're over-thinking.
QUOTE (A.steve @ Jul 1 2008, 03:47 PM)
You will note that it wasn't me who suggested a fixed way of identifying a turn in sentiment -but the moving average trick, to me, sounds like reasonable circumstantial evidence that sentiment may have turned. I don't think it infallible and certainly wouldn't trust that indicator alone - but it does seem relevant to me. We've the phrase "One swallow doesn't make a summer" - but that doesn't stop us using swallow sightings as corroborating evidence for changing seasons. While you argue the position that speculative risk can be eliminated by making entirely random investments, I think that there are broad factors that influence the market... not dissimilar to seasons. I can't predict if it is going to rain on any particular day - but I would far prefer to leave the storm gear behind when walking in summer than winter.
I think I know why analysts do so badly when trying to predict the market - and it is the same as the reason why I won't back my hunch that builders' share prices will fall with a spread-bet: the time-horizon. Pundits need to continuously show that they are 'on the ball' - because, essentially, they are salesmen and their objective is to close deals - not to establish an academic high ground over the long term. The existence of leverage undermines the decision they should be making as the "tortoise" investor tends not to reap large rewards... it is far better to be the "hare" and get regular bonus payments for each sprinted section - even if the customer, ultimately, looses.
You say that you think that the computer makes better trading decisions - but, also that you advocate random selection of investments... which I think to be contradictory. If the investments are really random, you don't need a computer - just a cork board, a copy of the FT and a dart. The only reason I can see for automating the decision process is to roll it out to those who don't understand the reasoning behind it... which, if you can pull it off, will be a coup for the earliest user - and a disaster for everyone else... rather like a ponzi scheme.
I think that the elephant in the room today is credit availability. This is the metric I'd most want to measure and understand - I believe that if such a metric could be established and understood, it would identify a clear investment strategy that would yield significant benefits for investors party to it. I'm not sure it exists - and that's probably why it would be effective in the near future. This metric, however, will not be a tool I can pick up - instead, it will constitute all available information... and, maybe, some less available information too.
I'm standing shy of posting this on Wilmott - for several reasons. For one, I'm not a regular reader - and for another, I get the impression that the forum is concerned with operational issues surrounding quantitative specifics - whereas I'm expressing something closer to a belief or a philosophy. I don't have a mathematical framework - so I don't have a hypothesis to be refuted. I do have an anecdotal that I predicted the collapse of the TMT bubble several months before it collapsed (I had no idea when it would go pop - only that it must) and, more recently, I anticipated the stock market falls of 2008 in 2007. This has been quite different to quantitative analysis or technical appraisal of markets - it has been to do with establishing popular fallacies and anticipating how they are skewing the market... metrics and quantitative techniques, I think, only yield clues - the real skill is in putting these clues together - and that, I don't think, can either be done automatically - or entrusted to another who is likely to have contrary ulterior motives.
I think I know why analysts do so badly when trying to predict the market - and it is the same as the reason why I won't back my hunch that builders' share prices will fall with a spread-bet: the time-horizon. Pundits need to continuously show that they are 'on the ball' - because, essentially, they are salesmen and their objective is to close deals - not to establish an academic high ground over the long term. The existence of leverage undermines the decision they should be making as the "tortoise" investor tends not to reap large rewards... it is far better to be the "hare" and get regular bonus payments for each sprinted section - even if the customer, ultimately, looses.
You say that you think that the computer makes better trading decisions - but, also that you advocate random selection of investments... which I think to be contradictory. If the investments are really random, you don't need a computer - just a cork board, a copy of the FT and a dart. The only reason I can see for automating the decision process is to roll it out to those who don't understand the reasoning behind it... which, if you can pull it off, will be a coup for the earliest user - and a disaster for everyone else... rather like a ponzi scheme.
I think that the elephant in the room today is credit availability. This is the metric I'd most want to measure and understand - I believe that if such a metric could be established and understood, it would identify a clear investment strategy that would yield significant benefits for investors party to it. I'm not sure it exists - and that's probably why it would be effective in the near future. This metric, however, will not be a tool I can pick up - instead, it will constitute all available information... and, maybe, some less available information too.
I'm standing shy of posting this on Wilmott - for several reasons. For one, I'm not a regular reader - and for another, I get the impression that the forum is concerned with operational issues surrounding quantitative specifics - whereas I'm expressing something closer to a belief or a philosophy. I don't have a mathematical framework - so I don't have a hypothesis to be refuted. I do have an anecdotal that I predicted the collapse of the TMT bubble several months before it collapsed (I had no idea when it would go pop - only that it must) and, more recently, I anticipated the stock market falls of 2008 in 2007. This has been quite different to quantitative analysis or technical appraisal of markets - it has been to do with establishing popular fallacies and anticipating how they are skewing the market... metrics and quantitative techniques, I think, only yield clues - the real skill is in putting these clues together - and that, I don't think, can either be done automatically - or entrusted to another who is likely to have contrary ulterior motives.
"I think I know why analysts do so badly when trying to predict the market"
Let me give you a clue - it's because you/they/I can't!
"You say that you think that the computer makes better trading decisions - but, also that you advocate random selection of investments... which I think to be contradictory"
What I say is this. I buy a portfolio of diversified shares (high yield) that I buy and hold forever. I don't try and second guess the market and trade those shares because I can't.
I haven't thought about actively trading for a few years but all this talk about beating the market has got me interested in mechanical investing again. My point about using a computer is that it cannot be swayed by emotions - you and I have discussed the fact that the tech boom occured as as indicator that the market is not efficient and humans are allowing their emotions to get in the way. A computer wouldn't suffer from this.
I think if we are to propose market beating strategies (risk adjusted), we at least need to show some evidence that it is indeed just that (net of trading costs). For example, I think Validea's price/sales investor
http://www.validea.com/home/home.asp
outperforms the S&P. But this example doesn't take into account costs ans doesn't show me risk adjustd returns. I will see if they can give me that.
"If the investments are really random, you don't need a computer - just a cork board, a copy of the FT and a dart."
Or buy the index
"I think that the elephant in the room today is credit availability"
The elephant is happily chatting with the 700lb gorilla
"I'm standing shy of posting this on Wilmott - for several reasons. For one, I'm not a regular reader - and for another, I get the impression that the forum is concerned with operational issues surrounding quantitative specifics - whereas I'm expressing something closer to a belief or a philosophy"
There are all sorts of people there (including authors of books) happy to discuss anything.
"I do have an anecdotal that I predicted the collapse of the TMT bubble several months before it collapsed (I had no idea when it would go pop - only that it must"
But this is the biggest problem. You don't know when the bubble will pop. I thought housing was overvalued in 2002 - look how wrong I was
[quote name='A.steve' date='Jul 1 2008, 02:10 PM' post='1190058']
I see where you're coming from, but I think you're making a philosophical error of judgement (as might others).
You are looking for a single metric that can be used to automate a strategy - and, no matter how great the metric may be, it will suffer something similar to Goodhart's law - i.e. that as soon as you start to use it, it becomes a deprecated strategy.
This doesn't, however, imply that randomised buy-and-hold is the optimal strategy. The trajectories of asset prices are not random - though they likely seem so to people who are looking at the wrong indicators. Identifying the right indicators, therefore, is the challenge. In order to make predictions here, we have to look at real fundamentals - the actual businesses themselves - and try to predict what will be popular sentiment in the near and medium term. These are things that can be estimated. I think that the huge drops in bank share prices indicate a loss of confidence in the sector - and bad news is still arriving day by day. I was shocked at the delay between the decline in confidence in the banks and the decline in confidence of the companies who depend upon the confidence of banks to lend... but the realisation that when banks are in trouble, everyone is in trouble now seems to be taking effect.
I don't think this can be distilled into some universal rule that can be back-tested... it requires me to establish an intuition for the situation the typical person finds themselves in and to gauge popular opinion.
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Are you having a laugh?
I see where you're coming from, but I think you're making a philosophical error of judgement (as might others).
You are looking for a single metric that can be used to automate a strategy - and, no matter how great the metric may be, it will suffer something similar to Goodhart's law - i.e. that as soon as you start to use it, it becomes a deprecated strategy.
This doesn't, however, imply that randomised buy-and-hold is the optimal strategy. The trajectories of asset prices are not random - though they likely seem so to people who are looking at the wrong indicators. Identifying the right indicators, therefore, is the challenge. In order to make predictions here, we have to look at real fundamentals - the actual businesses themselves - and try to predict what will be popular sentiment in the near and medium term. These are things that can be estimated. I think that the huge drops in bank share prices indicate a loss of confidence in the sector - and bad news is still arriving day by day. I was shocked at the delay between the decline in confidence in the banks and the decline in confidence of the companies who depend upon the confidence of banks to lend... but the realisation that when banks are in trouble, everyone is in trouble now seems to be taking effect.
I don't think this can be distilled into some universal rule that can be back-tested... it requires me to establish an intuition for the situation the typical person finds themselves in and to gauge popular opinion.
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Are you having a laugh?
QUOTE (homeless @ Jul 1 2008, 01:47 PM)
What does everyone think is the place to have money in at this moment?, considering a decent return and not just a bond or bank account.
So I take it that about 6.2% pa tax free on an ISA is not sufficient? OK. But people are now talking depression. That makes me think of the depression of the thirties, when many people lost everything almost overnight and people were jumping out of windows as a result. So you would prefer to invest in stocks and shares at this time!Well, to quote Bernard Shaw on his advice to couples about to marry, 'Don't!'. Just my advice, I'm not an expert or anything of the sort.
Good luck, anyway.
QUOTE (Fly by Night @ Jul 1 2008, 10:01 PM)
So I take it that about 6.2% pa tax free on an ISA is not sufficient? OK. But people are now talking depression. That makes me think of the depression of the thirties, when many people lost everything almost overnight and people were jumping out of windows as a result. So you would prefer to invest in stocks and shares at this time!
Well, to quote Bernard Shaw on his advice to couples about to marry, 'Don't!'. Just my advice, I'm not an expert or anything of the sort.
Good luck, anyway.
Well, to quote Bernard Shaw on his advice to couples about to marry, 'Don't!'. Just my advice, I'm not an expert or anything of the sort.
Good luck, anyway.
I know people on here would like to think so but the world is not coming to an end, we are going through a recession, some people will loose there jobs, the value of housing will fall and some companies will go to the wall, but life will go on.
I think this site is getting a bit extreme, stocks in my view will be the next bubble, just spread investments around different areas, so all your eggs are not in one basket.
imho
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