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Lundi Noir-- Black monday for the global markets


Trampa501
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Markets tumbling in Asia and Europe today.

Electors who think they can vote for a better life are completely deluded and being shamefully misled again by politicians. They make promises that can only be met by borrowing and spending but that option is running out fast.

This cannot end well. From time to time somebody actually stops to think about that but not often. Yet in essence it is fairly simple. Any borrower will eventually reach the point when they can borrow no more.

For governments that is a matter for the bond markets. Global central banks have very dangerously suppressed interest rates to allow even more borrowing to permit the madness to continue a while longer.

But eventually bond markets will crash and burn. That will be far more significant than the downturn in equities we are going to see this week that will ironically support bond prices temporarily.

For as bonds slump the cost of borrowing will soar, and those indebted will be unable to pay their interest and go bankrupt. Those banks and institutions that lent the money are then in deep trouble and will go bankrupt themselves.

http://www.arabianmoney.net/us-stocks/2012/05/07/asian-stocks-crash-as-france-and-greece-vote-against-austerity/

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That's entirely plausible: it doesn't mean shares are worth more, it means the £ is worth less. Better to hold real assets than a currency that's being debased as a matter of policy.

The FTSE has foreign earnings but when you sell you still get £'s.

I don't get this sterling is being devalued so buy FTSE shares or a house in the UK, as often said on here. You are buying somethng denominated in same the currency. Surely it should be buy foreign shares or property or it's out of the frying pan ito the fire?

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The FTSE has foreign earnings but when you sell you still get £'s.

I don't get this sterling is being devalued so buy FTSE shares or a house in the UK, as often said on here. You are buying somethng denominated in same the currency. Surely it should be buy foreign shares or property or it's out of the frying pan ito the fire?

But if £ goes to become like toilet paper than the $/RMB/HKD/AUD/EUR earning will worth a lot more in £ and the share price (and dividend) will adjust accordingly...

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The FTSE has foreign earnings but when you sell you still get £'s.

I don't get this sterling is being devalued so buy FTSE shares or a house in the UK, as often said on here. You are buying somethng denominated in same the currency. Surely it should be buy foreign shares or property or it's out of the frying pan ito the fire?

If a FTSE company has foreign earnings then as Sterling falls its nominal earnings rise. It therefore becomes worth more in £ / pays a higher dividend in £ so you're insulated from the £ falling to an extent.

It's true buying foreign shares works too.

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Why not just buy US shares?

US is possibly a bad example :ph34r: but buying foreign shares might be a good strategy. However you still need to pick a good company that can sustain and grow its earnings, and some find it easier to pick those if they're familiar with them i.e UK companies rather than very good Korean ones that you've never heard of.

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US is possibly a bad example :ph34r: but buying foreign shares might be a good strategy. However you still need to pick a good company that can sustain and grow its earnings, and some find it easier to pick those if they're familiar with them i.e UK companies rather than very good Korean ones that you've never heard of.

I only said US because it was the first currency in his list.

A stock picker might have gone for UK banks.

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Why not just buy US shares?

It is underlying earning that matters. If you buy company like Coca Cola which has worldwide earning, your macro exposure will be similar to a UK company (say Diageo) who have similar exposure.

However, it is normally cheaper and more convenient to buy UK shares than US ( as nearly all retail broker will want to cream you on the FX rate and not all brokers do US shares ). On top of that, you have things like withholding taxes to deal with if you buy non UK domiciled companies (yes, free labour to the tax office).

But of course, if you know what you are doing, then buying the *Right* US/European/Asian companies can be more very profitable.

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It is underlying earning that matters. If you buy company like Coca Cola which has worldwide earning, your macro exposure will be similar to a UK company (say Diageo) who have similar exposure.

However, it is normally cheaper and more convenient to buy UK shares than US ( as nearly all retail broker will want to cream you on the FX rate and not all brokers do US shares ). On top of that, you have things like withholding taxes to deal with if you buy non UK domiciled companies (yes, free labour to the tax office).

But of course, if you know what you are doing, then buying the *Right* US/European/Asian companies can be more very profitable.

Funny you should say that I have a complaint in now with the Financial Ombudsman about being creamed on an FX rate :lol:

Sounds like I need to read up on withholding taxes. I've heard of it being 35% for bank interest.

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How many shareholders bought at the 1999 peak and never at any other time?

Sure, every shareholder expects to make some losses. We all hope our gains outweigh our losses. Mine certainly do.

Plenty. Plenty of pension funds struggling with shortfalls. Anyone who bought from Spring 1998 to 2001 and 2006 to 2008 are down and many more when you factor in inflation. What happened about the standard mantra that FTSE doubled every decade and was sure way to make money?

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I watch a extremely boring presentation the other day, which stated that if you had invested your total isa allowance every year (98k), into some asian fund, today it would be worth 245k.

Hindsight is wonderfull of course.

Presumably this was if you started right after the 1997 Asian crash.

If you'd put it into London property from 1997 onwards you could have trebled it, assuming you also got out about 2 months ago. If you'd put it into Facebook in 1997 you'd be one of the richest people in the world.

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Presumably this was if you started right after the 1997 Asian crash.

If you'd put it into London property from 1997 onwards you could have trebled it, assuming you also got out about 2 months ago. If you'd put it into Facebook in 1997 you'd be one of the richest people in the world.

Mark Zuckerberg was 13 in 1997. I doubt offering to buy shares in him woul have been well received by Mr and Mrs Zuckerberg ;)

Apple shares would have been a better example. $4 in 1997, $550+ currently (pending today's US market bash).

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Mark Zuckerberg was 13 in 1997. I doubt offering to buy shares in him woul have been well received by Mr and Mrs Zuckerberg ;)

Apple shares would have been a better example. $4 in 1997, $550+ currently (pending today's US market bash).

Sure - that was a lazy joke, thank you for picking up the slack.

Crazy ride for Apple.

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Spanish bank goes pop (again)

http://www.bbc.co.uk/news/business-17981933

The executive chairman of Spain's Bankia has resigned as it emerged that the government will use public money to clean up bad loans at the bank.

The bank's boss Rodrigo Rato, a former head of the International Monetary Fund, said he had decided "to pass the baton to a new manager to decide what is best for this entity".

Spanish banks are still trying to recover from the property market crash.

Bankia has the industry's largest exposure to the property market.

Spain's fourth biggest, it was only created in 2010 from a merger of seven struggling savings banks.

The current Spanish government, elected in December, has so far insisted that no public money would be used to rescue banks.

But Prime Minister Mariano Rajoy conceded on Monday that "if it were necessary to prompt lending", he would do so "as a last resort".

Later, an official from the economy ministry told the AFP news agency, "We are finalising a plan to clean up the bank," referring to Bankia.

It is believed that it will need about 7bn euros (£5.6bn; $9.1bn) to repair its balance sheet.

The El Mundo newspaper reported that the fact the government was planning on putting money into Bankia was the reason why Mr Rato resigned.

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London is holding up surprisingly well considering all the negative Euro headlines on the TV, Telegraph, Grundian, Mail, etc.

The negative coverage, and the media are as predicted going wall to wall on it,will be great for the HPC though? I closed my FTSE tracker,can`t be bothered with the Panto "It`s QE time........Oh no it isn`t" etc etc.

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