Shares: Are All The Suckers Aboard?

[A.steve]

Crudely - GBPUSD...... vs FTSE100...

Interesting... crude or otherwise.

Roughly that suggests weaker sterling implies higher stock prices and stronger sterling implies lower stock prices.

Plausible - I guess - if we assume that FTSE100 companies export to US$ denominated customers. I'd have thought, however, that more of our customers would be Euro denominated... perhaps that chart would work similarly?

Conversely, maybe what we're seeing is foreign direct (dis)investment - with this influencing stock prices when exchange rates tempt/dissuade.

Perhaps, even, it is re-adjustment of portfolios that are affecting both stock prices and exchange rates.

I presume this is only a fairly recent phenomena?

[ParticleMan]

Perhaps, even, it is re-adjustment of portfolios that are affecting both stock prices and exchange rates.

If you overlay a chart for Gilts you'll note that they've been selling off over roughly the same time-frame.

The meaning I have construed is that the last thing investors want to hold at present is cash; for some investors this means buying equities, for investors selling equities this means repatriating their capital (buying some foreign currency).

If this is true it will show in the FDI stats (as an embarrassingly large spike in capital outflows); if the meme turns sentiment it will be the end of the rally (and could quite well become Brown's ERM moment to boot, if it is widely accepted to be a vote of no confidence in this Cabinet).

edit: I have not back tested the concepts (I cannot attest to normalcy or otherwise of this phenomenon); nor have I looked any further afield - this may well be happening in tandem - although inverted - in Japan, which shares some of this dynamic at present - or indeed elsewhere on the planet.

Edited May 11, 2009 by ParticleMan

[A.steve]

If you overlay a chart for Gilts you'll note that they've been selling off over roughly the same time-frame.

The meaning I have construed is that the last thing investors want to hold at present is cash; for some investors this means buying equities, for investors selling equities this means repatriating their capital (buying some foreign currency).

If this is true it will show in the FDI stats (as an embarrassingly large spike in capital outflows); if the meme turns sentiment it will be the end of the rally (and could quite well become Brown's ERM moment to boot, if it is widely accepted to be a vote of no confidence in this Cabinet).

I'm afraid that went a bit over my head... you seem to have taken several steps that I'd never have considered... which, of course, doesn't mean they're not right... just that they're news to me.

What are these "FDI stats" of which you speak? I'm guessing that this might relate to my questions about Forex etc. that I've been asking about whenever I can find an excuse... Is this sort of information public?

[Spark]

Interesting... crude or otherwise.

Roughly that suggests weaker sterling implies higher stock prices and stronger sterling implies lower stock prices.

Plausible - I guess - if we assume that FTSE100 companies export to US$ denominated customers. I'd have thought, however, that more of our customers would be Euro denominated... perhaps that chart would work similarly?

Conversely, maybe what we're seeing is foreign direct (dis)investment - with this influencing stock prices when exchange rates tempt/dissuade.

Perhaps, even, it is re-adjustment of portfolios that are affecting both stock prices and exchange rates.

I presume this is only a fairly recent phenomena?

I read the exact opposite from the USD/GBP chart. It is showing the amount of pounds that a dollar buys. The amount of pounds you get is going down because the pound is getting stronger against the dollar! If you plot the value of dollar you get per pound then it will track the other chart better.

[lowrentyieldmakessense(honest!)]

Keep waiting for -89%. Let me know when we get there.

comparing apples with apples

about -80% so far - only a bit left to go

Edited May 11, 2009 by lowrentyieldmakessense(honest!)

[ParticleMan]

What are these "FDI stats" of which you speak? I'm guessing that this might relate to my questions about Forex etc. that I've been asking about whenever I can find an excuse... Is this sort of information public?

I was referring to foreign direct investment; as is frequently the case I find myself sinking in a world which is conceptually easy and semantically impossible.

The balance of payments/ international investment position is at least accessible as a quarterly data series...

http://www.statistics.gov.uk/STATBASE/tsda...t.asp?vlnk=1550

... although you will have to correct \'s to / in the URI it hands you back.

What I'm looking for is total liabilities (HBOB if I'm interpreting this the right way around) to shrink (in absolute terms); this would confirm what I already suspect to be true from price behaviour in the three markets already referenced (gilts, equities, and currency) - that the FTSE is being bought by local investors (who are selling gilts to do so) and sold by foreign investors (who are then buying foreign currency with the proceeds).

edit: it's always possible that I've got this exactly **** about and that foreign investors are liquidating gilts and buying the FTSE, and that it is local investors who are selling the FTSE and buying currency; in the totality it really does not matter - profit taking is occurring and the profit is being invested outside the UK in either scenario (which will tend to both depress earnings further as well as leave the UK drowning in an inappropriate level of BOE-supplied liquidity)

Edited May 11, 2009 by ParticleMan

[General Melchett]

Sell them then?

I wish I could.

But your pension fund (and several other similar assets) are out of your control. I certainly moved my entire accessible UK portfolio into defensive stocks late last year, although I was too late not to take the first 2000 odd points of the hit.....

[Van]

comparing apples with apples

about -80% so far - only a bit left to go

But the Dow is measured in points, not in gold bars.

BTW what are you concluding? That we're near a bottom in the Gold:Dow ratio? Doesn't that mean it's time to dump gold and buy shares?

I'm not disregarding the Gold:Dow ratio, but like you said, it's comparing apples to oranges and needs to be taken in context.

[whyohwhy]

I wish I could.

But your pension fund (and several other similar assets) are out of your control. I certainly moved my entire accessible UK portfolio into defensive stocks late last year, although I was too late not to take the first 2000 odd points of the hit.....

Could you have put it into an inflation protected fund (Gilt linkers?)

[R K]

But the Dow is measured in points, not in gold bars.

BTW what are you concluding? That we're near a bottom in the Gold:Dow ratio? Doesn't that mean it's time to dump gold and buy shares?

I'm not disregarding the Gold:Dow ratio, but like you said, it's comparing apples to oranges and needs to be taken in context.

In $.

[DrGUID]

I wish I could.

But your pension fund (and several other similar assets) are out of your control. I certainly moved my entire accessible UK portfolio into defensive stocks late last year, although I was too late not to take the first 2000 odd points of the hit.....

I don't know why more people don't open SIPPs, then their destiny is in their own hands.

[R K]

http://www.kitco.com/ind/maund/may252009.html

This link was on the main page of hpc but they get lost quickly.

Not sure about kitco's independence. But spouting a common view forcefully here.

Can't argue with his analysis, although I'm not too keen on his turquoise background. The only thing that concerns me is that the OBV and both fast and slow stochs are now at variance with price. Bearish divergence as he points out, but it means if this 875/80 continues to hold and money comes back in again it will look like a good buying opportunity in the rear view mirror.

Edit: In fact, FP is suggesting that is what will happen in the other thread.

Edited May 26, 2009 by Red Kharma

[R K]

I ignore volumes around bank holidays.

As you know they tend to drop off in the lead up to a bank holiday weekend and remain subdued after it before building back up as people take extended breaks by adding annual holidays to the BH.

And if vols are affected, then so is OBV of course.

Just a thought.

Er, so OBV would fall less on a down day with lower volume. Selling volumes last week looked fairly reasonable I think. We can see what today's volume looks like, but I'm not a big fan of daily volumes - I'm sure the big players know how to hide their selling (or buying).

[Si1]

bounce

[levoleurdefruits]

Cheap? ha ha

Guess shares were cheap in May 2009, funny how things are looking back