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Share Guru Says Stock Market Slide Could Go On For Months

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Interesting article in today's Times about the predictions of Anthony Bolton (Fidelity's star fund manager) about the future prospects for the stock market:

http://business.timesonline.co.uk/article/...2196025,00.html

Share guru says slide could go on for months

By Patrick Hosking and Gary Duncan

BRITAIN’S most successful stockpicker yesterday warned investors to brace themselves for months of falling share prices.

Anthony Bolton, who runs £6.5 billion of funds for Fidelity International, suggested that the jitters of the past two weeks could turn into a more prolonged bear phase as shares plunged again.

In a rare public appearance, Mr Bolton said: “I think it could be the end of the bull market. The correction could be months, not days.”

His comments came as markets on both sides of the Channel suffered another battering that reversed much of Tuesday’s rebound. The FTSE 100 index lost a day-long struggle to cling to its 2005 closing value and finished down 91.6 points, or 1.6 per cent, at 5,587.1.

Mr Bolton pointed to the steep rise in share prices over the past three years and the increasing difficulty in finding value in stocks, adding: “The bull market is old.”

However, a sharp slide could prevent a more protracted downturn he said: “The faster it goes down, the shorter the consolidation phase is likely to be.”

In March Mr Bolton is understood to have taken out a vast insurance policy against falling share prices, buying put options giving him the right to sell around £1.6 billion of blue chip stocks at pre-slide prices.

The options, which expire next month, were bought on behalf of Fidelity’s flagship Special Situations fund and a closely allied investment trust, Fidelity Special Values.

After the speech to the Securities and Investment Institute, Mr Bolton said a number of factors could lead to a protracted bear phase, including inflation fears, bird flu and the fizzling out of US consumption.

He also pointed to the warning from the US billionaire Warren Buffett of the dangers of a blow-up in the credit derivatives market. “When money is virtually free, that’s when people do silly things,” he told The Times.

Hopes that Tuesday’s bounceback in leading markets could end investors’ rush for the exits were dashed by another bout of heavy selling in Europe. In London, the FTSE’s losses were deepened by a continued retreat in shares in mining companies as key commodity prices tumbled again. Copper prices fell by as much as 7 per cent, with gold and silver also dropping sharply. The mid-cap FTSE 250 index also ended down a further 180.3 points, or 1.95 per cent.

In Paris, the CAC 40 dropped 1.3 per cent, while Germany’s DAX closed down 1.6 per cent. On Wall Street, shares gave up early gains to slide back into negative territory by early afternoon, with the Dow Jones industrial average down about 40 points.

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Thanks. I've been hunting around for that article. I have stated before that I think it's too early to call a bear market as we have no real evidence yet. One thing that has struck me is that if the slide contiues it will probably increase the risk of a bear market happening. The Dow and S&P is still in a down trend.

I would be very careful indeed. There's some important data out today and tomorrow, it will make for intersting trading.

Edited by Golden Shower

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Guest wrongmove

I have stated before that I think it's too early to call a bear market as we have no real evidence yet.

The markets never actually reached their previous peaks, so some commentators have said that the last three years may have just been a rally in a contiuing bear market that started in 2000 !! I don't see how 3 years can be called a rally, but what do I know !

Article in Independent about hedge fund worries: Man heightens hedge fund fears

" Flagship fund losses fuel fears for smaller players. Bolton warns correction could take months

Man Group, the world's largest quoted hedge fund manager, fuelled fears yesterday that some of its smaller competitors may be in serious trouble after revealing that some of its futures funds have made substantial losses this month.

The disclosure prompted speculation in the market that some smaller hedge funds may be suffering even greater losses and could be forced to unwind highly leveraged positions, causing share prices to spiral lower....

...Man Group, the world's largest quoted hedge fund manager, fuelled fears yesterday that some of its smaller competitors may be in serious trouble after revealing that some of its futures funds have made substantial losses this month.

The disclosure prompted speculation in the market that some smaller hedge funds may be suffering even greater losses and could be forced to unwind highly leveraged positions, causing share prices to spiral lower...."

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Guest wrongmove

Sold ALL my remaining puts, bought a large number of calls on oil, gold,

and tech stocks. Total value of the underlying stocks shifted was millions.

I am now well-position for a bounce. If we see a drop instead, i will not be

happy. Fingers crossed. Toes too.

Brave call Bubb. The very best of luck. Oil and miners do look ridiculously cheap at the moment. The main worry seems to be that US investors are pulling out of non-US assets, rather than any fundamental justification for the sudden drop in valuations of these companies. Emerging markets, especially Brazil, look cheap to me too, but again, as US cash flows home, they may have further to drop. Couldn't resist ordering a few iShares Brazil this morning. But you probably tip your taxi driver by the size of my "investments" :lol:

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Having said that, the market is very likely to show a healthy bounce from here. Yesterday, I made a massive TURN in my portfolio.

I also reinvested 90% of my share cash yesterday when HUI was

around 4.5% down. Been worrying ever since, but I'm glad

to be in good company at least!

Am hoping the gold double bottom at $640 and silver's increasingly

positive fundamentals will give the shares a push today.

In addition my averaging of canadian miners showed very low

volume on the drops yesterday.

Looking good at time of writing, PMs and base metals pushing

up, $ back below 85, euro markets stable.

Pent

Edited by Pent Vaer

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today I will mostly be ramping...

... rather like Fidelity then. If things don't go the way they want they just shout a little louder. Sounds like they are worried about a rally that would push the put position back underwater.

I also wonder why a stock picker is talking about market strategy. He is their "Special Situations" guy - ie f@ck the wider market and concenrate on companies. As for "rare appearances" the guy has 275,000 google entries. Real shy and retiring! :lol:

Edited by Sledgehead

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The key reason people have given me for turning thier back on traditional equity based investments is that they niether trust them nor understand them.

No wonder the masses just want to invest in no. 1 Accacia Avenue. :P

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today I will mostly be ramping...

debts.co.uk (DETS) ... a new flotation yesterday and up 6% this morning already!

Although it does pain me to make moeny out of other people's misfortune! :( Oh what the Hell ... f@?k 'em and their fuel guzzling 4x4s!!! :D:P:ph34r:

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The key reason people have given me for turning thier back on traditional equity based investments is that they niether trust them nor understand them.

No wonder the masses just want to invest in no. 1 Accacia Avenue. :P

Thats priceless, but true.

The best thing about it is that they admit they don't know about financial markets, but won't admit to themselves that know feck all about investing in property.

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The key reason people have given me for turning thier back on traditional equity based investments is that they niether trust them nor understand them.

No wonder the masses just want to invest in no. 1 Accacia Avenue. :P

... ah but my friend dogb, the key question is, do they understand no.1 Acacia Avenue.

Might it be that some people think unconsciously:

(A x land_sq_ft)

+ (B x number bedrooms)

+ (C x decor)

+ (D x location)

____________________

= Value of no.1 Acacia Avenue

... when in fact they may soon find:

(E x land_sq_ft X F x drought_subsidence_factor x G x flood_factor x H x storm_damage_factor)

+ (I x number bedrooms x J x poll_tax_factor x K x stud_wall_construction_quality x L x room_size)

+ (M x decor x N x age_decor x O x quality_decor x P x wonder_what_that's_hiding_factor)

+ (Q x location x R x ready_credit_brings_chavs_factor x S x rat_run_factor x T x school_catchment_coundary_change_probability_factor x U x next-door_garden_grabbing_factor + V x local_jobs_market_factor)

+ (W x immigration_contol_factor)

+ (X x interest_rate_factor x Z x rental_yield_factor x ..... x PWR(countless_unknowables_ad infinitum)

____________________

= Value of no.1 Acacia Avenue

When shares were cheap we were told dividends were important. When they dwindled in value we were told their value was simply a function of their post tax earnings. As they rose we found we should ignore tax, interest and depreciation. Finally we were told sales was all important (as earnings had vaished). When it all went pear shaped all those complications found their way back into calculations of value. Would it be churlish to suggest the same could happen to property?

Edited by Sledgehead

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Can't imagine a big bounce - recent investors will have been burned and May-Oct is traditionally quiet...

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Guest wrongmove

My emerging market fund is down almost 20% in 2 weeks, not good!

I luckily sold my emerging market shares nearly two weeks ago. Just deciding whether to buy them back again now. Some are down 25% from their peaks, and the PEs looked pretty good even then.

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Steady as she goes for the FTSE.. up 32pts odd points so far this morning, after a bit of yoyo-ing early on. This market is very short - too short to force it down further and break the 3-year trendline, imo. But we'll have to wait and see how far the bounce goes, first. Memories are notoriously short in the stockmarket. If the Fed pauses it's rake hikes next month we could be looking at new highs.

(edited for accuracy)

Edited by Van

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  • 301 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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