Thursday, Oct 25, 2007
Its a drop for the FTSE today then!!!!!
Telegraph: Investors warned of slide in shares
BOE warns shares are ready to fall off a cliff!!! nice, just as they warned the banks about property and to protect in case of a 40% decline, the shares look certain to do just that.
Posted by lee @ 02:36 AM (643 views) Add Comment
7 Comments
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1. japanese uncle said...
Has the remit of the BOE included share investment advice to the public? Since when? How kind!?
We had better recognize this as the sign that someone who has enough influence over the Bank has just completed massive short-selling.
2. This comment has been removed as it was found to be in breach of our Blog Policies.
3. tyrellcorporation said...
A very weird statement from the BoE eh?!? especially when the FTSE is up on the day! Why are they even commenting on Shares prices when they are near their all time highs? The forthcoming FED cut next week will no doubt spur the markets and inflation again over the coming weeks. I can't help thinking that no matter how much air is pumped into the deflating tyre of the US economy, more punctures are developing daily.
4. cornishman said...
If you look at the BOE report it lists any number of things that COULD happen. After the event, they will then be able to point out that they warned of whatever has happened. Edmund Conway, who has always seemed very objective in the past, seems to have spun this a little - and Lee has spun it some more with the reference to falling off the cliff!
5. Neil9327 said...
This report came from Sir John Gieve, the deputy govenor of the bank. This guy came across to me as a bit of an idiot when he and King were interviewed by politicians a few weeks ago.
And he is not even a banker - his background is as a civil servant not in banking.
So I don't trust this report.
6. cornishman said...
Stoatgobbler - that comment about JU is well out of order. If you think what JU suggests is not possible, you've led a very sheltered life...
7. drewster said...
Alan Greenspan's remit didn't include the US stock market either, but it was he who coined the phrase "irrational exuberance" when describing the dot-com boom. Sadly for Greenspan he was far too early, making his comment in December 1996. The dot-com crash didn't come until March 2000.
As for whether the market is overvalued, it's difficult to tell. Yields are low (2-3%), but as with property most investors are in it for the capital gains, not the yield. Future capital growth depends on a growing world economy: many of the largest companies derive most of their profits from overseas. For example HSBC only derives 20% of profits from the UK. We're all a bit bearish on the global economy, but companies which are exposed to Asia (e.g. commodities) should continue to perform well. Retailers look gloomier.
There's an interesting analysis in this article in the Guardian dating from summer 2006.
http://money.guardian.co.uk/investments/shares/story/0,,1833186,00.html
The key argument is that all the savings which in the 1980s yuppie culture would have gone into stocks and shares, is currently going into property. As people see the property market turning, they should in theory switch their savings into stocks and shares. Personally I'm not convinced: if the UK property market tanks then so does the wider economy. Make up your own mind on this one.