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Guest Steve Cook

9:25Am And The Footsie Is Down 2%

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Pretty obvious the next mighty wave of deflation is taking over now. Stocks look like they are going to head down for the next few months.

The next big stimulus packages and QE could be months aways too. In fact a lot of nations are talking about austerity right now.

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any comments folks?

The market seems to be completely dislocated, currency volatility in particular has spooked a number of people. In the last few weeks in particular a greater number of people have been calling for a crash.

Here's a nice summary:

http://www.businessinsider.com/suddenly-everyones-in-the-crash-camp-not-just-the-bear-camp-2010-5

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Guest Steve Cook

The market seems to be completely dislocated, currency volatility in particular has spooked a number of people. In the last few weeks in particular a greater number of people have been calling for a crash.

Here's a nice summary:

http://www.businessi...ear-camp-2010-5

Thank you for this link W. Very informative

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Guest Steve Cook

Still not buying in until it gets below 4000 and then only gradually.

I remember the post-29 stock graphs. Big up, big down, 50% retrace and then capitulation.

VMR.

As a matter of interest, if you were in government and expected a massive crash, would you be inclined to ban naked short selling in anticipation of that crash.

I genuinely don't know about how naked short selling works and so would welcome any explanation.

Edited by Steve Cook

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Still not buying in until it gets below 4000 and then only gradually.

I remember the post-29 stock graphs. Big up, big down, 50% retrace and then capitulation.

VMR.

Ya in great depression terms we are only at early 1931. Still a few years til bottom

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The market seems to be completely dislocated, currency volatility in particular has spooked a number of people. In the last few weeks in particular a greater number of people have been calling for a crash.

Here's a nice summary:

http://www.businessinsider.com/suddenly-everyones-in-the-crash-camp-not-just-the-bear-camp-2010-5

An interesting read, probably needs its own thread. Makes us HPC bears look like cuddly teddies.

"Eddie Elfenbein posted the results of a CNBC poll yesterday in which 40% of respondents predicted a 50% haircut for the Dow. Seriously, almost half the respondents predicted Dow 5000 by the end of this year".

Greed, fear, greed, fear, etc. There are more mood swings this year than a WI convention.

VMR.

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Ya in great depression terms we are only at early 1931. Still a few years til bottom

The main difference this time round being a fast devalution of the currency which will limit the nominal downside.

VMR.

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I genuinely don't know about how naked short selling works and so would welcome any explanation.

Here's an example of naked short selling as far as I understand it:

you agree with a friend that in case the house next door burns down (which you don't own), he pays you a big payout, while you pay a risk premium to him in advance. It's like doing an insurance on something that you don't even own, i.e. where you don't have a direct financial interest in.

If you did it in real life with an insurance company it would be insurance fraud.

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and the pound is testing US$1.43, still it's nice and sunny so we can all starve in the warm.

Starve?

As for Steve's inital post, I just think that it's catharsis time, finally. Policymakers' interventions are getting less effective each time, with a shorter half life per intervention. So

I honestly don't think anything more can be done to stop the deflationary forces that have been apparent all along, but have been slowed/stopped/disrupted by all the interventions. IMPO it's just a case of seeing how it all pans out - no outcome seems too pretty and it's hard to see much past the first stage of any scenario. I'm currently all in on cash and not feeling comfortable at all.

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Starve?

As for Steve's inital post, I just think that it's catharsis time, finally. Policymakers' interventions are getting less effective each time, with a shorter half life per intervention. So

I honestly don't think anything more can be done to stop the deflationary forces that have been apparent all along, but have been slowed/stopped/disrupted by all the interventions. IMPO it's just a case of seeing how it all pans out - no outcome seems too pretty and it's hard to see much past the first stage of any scenario. I'm currently all in on cash and not feeling comfortable at all.

Stop banging on about deflation, it never existed and never will, Inflation is the ONLY way things are going, I bet you reckon petrol costs less than it did 2 years ago right? Or food is cheaper right?

2008 I could buy tins of soup for 42p , now the cheapest cans of soup bar the smart price stuff is 62p, is this deflation? I think not. Replicate this a million times across food,energy, rent etc and it is not deflation.

I bet you reckon Zimbabwe is in a deflationary creash don't you.

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Guest Steve Cook

Here's an example of naked short selling as far as I understand it:

you agree with a friend that in case the house next door burns down (which you don't own), he pays you a big payout, while you pay a risk premium to him in advance. It's like doing an insurance on something that you don't even own, i.e. where you don't have a direct financial interest in.

If you did it in real life with an insurance company it would be insurance fraud.

So, basically, it's just a form of betting on a particular real world outcome? Like betting on whether it will rain or not? In what way, though, does the above have an effect on the actual market it is tracking with its bets?

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Starve?

As for Steve's inital post, I just think that it's catharsis time, finally. Policymakers' interventions are getting less effective each time, with a shorter half life per intervention. So

I honestly don't think anything more can be done to stop the deflationary forces that have been apparent all along, but have been slowed/stopped/disrupted by all the interventions. IMPO it's just a case of seeing how it all pans out - no outcome seems too pretty and it's hard to see much past the first stage of any scenario. I'm currently all in on cash and not feeling comfortable at all.

yeah seems like a poker game!

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So, basically, it's just a form of betting on a particular real world outcome? Like betting on whether it will rain or not? In what way, though, does the above have an effect on the actual market it is tracking with its bets?

Yes it's a bet, as far I know the often mentioned CDS (credit default swaps) are a form of naked short selling.

I don't know how this has an effect on the market (other than psycological like the rating agencies ratings), maybe someone else can chip in here.

Edited by wise_eagle

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Stop banging on about deflation, it never existed and never will, Inflation is the ONLY way things are going, I bet you reckon petrol costs less than it did 2 years ago right? Or food is cheaper right?

2008 I could buy tins of soup for 42p , now the cheapest cans of soup bar the smart price stuff is 62p, is this deflation? I think not. Replicate this a million times across food,energy, rent etc and it is not deflation.

I bet you reckon Zimbabwe is in a deflationary creash don't you.

Asset price deflation, its the only deflation im interested in and thats been in a long term bear market that started in real terms 10 years ago and nominally 3 years ago and im confident its got a loooong way to go nominally. The price of baked beans can go to 100 GBP a tin as far as my personal interest goes, although the human cost of that suggests anyone would hope it doesnt

Edited by Tamara De Lempicka

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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