White Friday As F T S E Closes In On 6000

[Realistbear]

FTSE 100 5,935.36 +43.75 +0.74%

1. Consumer sentiment on the brink of collapse

2. Mortgage lending hits 10 year low

3. Retail tanking and prospects of 20% VAT are daunting

4. Unemployment on the rise

5. Soveriegn debt crisis re-emerging in power

Stocks move on the prospect of future earnings, or at least that is the way it used to be.

But add all the bad news up and its a clear:

BUY BUY BUY signal!

Edited December 21, 2010 by Realistbear

[neil324]

It's like it never happened, someone's in for shock.

[Killer Bunny]

Its all about Ben Bernanke's printing. Shame on him and all his collaborators.

The S&P should be in the 400s and we csn get the economy moving again. Instead inflation in stocks.

The bust will again be spectacular.

[neil324]

Anyone seen UK public sector net borrowing this month Is that a typo?

[fadeaway]

Yup, I'm running at about 65% 'interest' rate on my stocks this year. Mucho profit.

Always remember : The market can stay abnormal longer than you can stay solvent. The trend is your friend.

I've also got a long bet on the FTSE for the Christmas period. Over the past two decades it has risen over Christmas pretty much every time.

[Fawkandles]

ppffff who cares about the FTSE? AIM is where the actions at!

Oh and FTSE does not equal "the economy". Its an index - google it

[Realistbear]

FX is the BIG market and where the real action is. Todays bleak news has hardly moved Sterling which demonstrates that the market still believes we are going to avoid a HPC which we all know will bring the entire edifice of UK Plc down with it:

Currencies

Currency Pair Price Change

GBP to USD 1.5499 -0.0006

GBP to EUR 1.1794 -0.0016

GBP to JPY 129.7258 -0.217

GBP to TRY 2.4076 -0.0106

GBP to THB 46.7524 -0.0614

Edited December 21, 2010 by Realistbear

[Guest_ringledman_*]

Worst post ever.

Do you know anything about the markets?

Why do 95% of posters here talk such rubbish about stocks being in some sort of bubble?

Incase you hadn't realised the stock market popped a decade ago.

The only current bubble that hasn't popped is government bonds and cash, but they will.

I suggest you read a copy of 'The Great Reflation'. To have another 50% crash after 2 in the past decade is emperically highly unlikely.

The FTSE is recovering from a lost decade. 65% of its earnings are foreign, for which global growth is on the up.

Ubers, you lot will always live in a bearish world and be happy to see your cash and bonds lose 50% of their value through negative interest rates this next decade.

The fact that the market is still below its 2000 peak should be a bullish sign if you ever though contrary to popular opinion.

Edited December 21, 2010 by ringledman

[Fawkandles]

Worst post ever.

Do you know anything about the markets?

Why do 95% of posters here talk such rubbish about stocks being in some sort of bubble?

Incase you hadn't realised the stock market popped a decade ago.

The only current bubble that hasn't popped is government bonds and cash, but they will.

I suggest you read a copy of 'The Great Reflation'. To have another 50% crash after 2 in the past decade is emperically highly unlikely.

The FTSE is recovering from a lost decade. 65% of its earnings are foreign, for which global growth is on the up.

Ubers, you lot will always live in a bearish world and be happy to see your cash and bonds lose 50% of their value through negative interest rates this next decade.

The fact that the market is still below its 2000 peak should be a bullish sign if you ever though contrary to popular opinion.

Well said. The economic ignorance of many on this forum irks me, so I tend not to open these threads usually!

"all indicators must come down!!, even the negatively related ones"

[Bloo Loo]

I thought the week before Christmas is no indication of trends or anything, as the market effectively closed to volume trades last week...so we can expect volatilty and it means little.

[Prescience]

Before offering any prescriptives of forward performance of the Footsie, it is as well to analyse the 100 (or accurately, 102 companies) of which it is comprised.

And their target markets.

And, the underlying economic performance and relative stability of those markets.

Additionally, it must be realised that the US as well as the UK and now the ECB have all mounted QE programmes. As have, for example, Japan, however Japan's attempts at Economic Stimulus have taken a somewhat different form.

A clear and undisputed net result of QE has meant that rafts of government securities have been retired from the market: which has added immense extra liquidity.

And institutional investors, seeking both value and performance, have fled to equities: which has driven up their price.

Ergo, the rapid upticks have been promoted by QE, as against absolute value and performance: and therefore, the resulting present value of bourse indices has not been driven by economic growth and booming economies.

[Guest_ringledman_*]

And institutional investors, seeking both value and performance, have fled to equities: which has driven up their price.

Not sure of this. Equities are still seeing outflows on 2000. Bonds seeing huge inflows.

This is 2000 all over, except the bubble is in the bond market-

http://www.tradersnarrative.com/wp-content/uploads/2010/10/equity%20bond%20fund%20flows%20Sept%202010.png

There is a similar graph going back to 2000 on the net somewhere. Bonds are a seriously crowded asset class.

Why I'm bullish on stocks and bearish on bonds.

Bonds are fully priced for a crash. Equities quite the opposite.

Bond sentiment is sky high. Equities sentiment is awful. Hence why bonds are a bubble.

[RufflesTheGuineaPig]

The FTSE isn't UP. The £ is down.

[nohpc]

FTSE 100 5,935.36 +43.75 +0.74%

1. Consumer sentiment on the brink of collapse

2. Mortgage lending hits 10 year low

3. Retail tanking and prospects of 20% VAT are daunting

4. Unemployment on the rise

5. Soveriegn debt crisis re-emerging in power

Stocks move on the prospect of future earnings, or at least that is the way it used to be.

But add all the bad news up and its a clear:

BUY BUY BUY signal!

much better to buy when the news is bad than when it's good. The more bad news there is the more I want to buy whatever the bad news is about.

Worst post ever.

Do you know anything about the markets?

Why do 95% of posters here talk such rubbish about stocks being in some sort of bubble?

Incase you hadn't realised the stock market popped a decade ago.

The only current bubble that hasn't popped is government bonds and cash, but they will.

I suggest you read a copy of 'The Great Reflation'. To have another 50% crash after 2 in the past decade is emperically highly unlikely.

The FTSE is recovering from a lost decade. 65% of its earnings are foreign, for which global growth is on the up.

Ubers, you lot will always live in a bearish world and be happy to see your cash and bonds lose 50% of their value through negative interest rates this next decade.

The fact that the market is still below its 2000 peak should be a bullish sign if you ever though contrary to popular opinion.

I'd love to see the market crash 50% but I agree it won't happen. Similar to houses I own shares but would rather they crashed so I can pick up more on the cheap.

[nohpc]

The FTSE isn't UP. The £ is down.

lol it's not down anywhere near as much as my share investments are up.

[Prescience]

Not sure of this. Equities are still seeing outflows on 2000. Bonds seeing huge inflows.

Quality Bonds (i.e. "Core" Sovereign Risk), yes.

It's been a function of markets for many years, that when base rates are low, then new funds income flies to equities, since dividend income tends to be higher than money market rates.

Personally, I believe most indices are overheated and due for correction: when considered in the light of the underpinning relative lead economies: i.e. USA, Japan, Europe and UK.

I did forecast early in 2010 (January), that we were in for firstly a Sovereign Risk debacle, driven by the Eurozone's weakest and second, later, a Sterling Crisis.

Which, considering the record PSBR stats just released for November, is very much on the cards: mainly since I believe the Sovereign Risk market's view of all of the sick men of Europe (Which includes GB) and seeing how CDS premiums are hardening against France, means Sovereign Risk bond yields will drive LIBOR upwards ever upwards and its dysfunctional disconnect from Base Rate will become increasingly apparent.

All of which means a capital market flight to value: however, which asset class represents both value and security?

Gold?

Probably.

And, unfortunately, commodity futures once more; a reprise of 2007-8.

Which then prices most commodities out of affordability, when they become physicals.

It's all a mess!

[singlemalt]

ppffff who cares about the FTSE? AIM is where the actions at!

Oh and FTSE does not equal "the economy". Its an index - google it

AIM - "The riskier the road, the greater the profit"

[Realistbear]

FTSE 100 5,952.43 +60.82 +1.03%

Way-haaaaaaaaaaaaaaaaaaaay!

Ability of companies to make large profits in the future locked in.

[scottbeard]

Worst post ever.

Do you know anything about the markets?

Why do 95% of posters here talk such rubbish about stocks being in some sort of bubble?

Incase you hadn't realised the stock market popped a decade ago.

The only current bubble that hasn't popped is government bonds and cash, but they will.

I suggest you read a copy of 'The Great Reflation'. To have another 50% crash after 2 in the past decade is emperically highly unlikely.

The FTSE is recovering from a lost decade. 65% of its earnings are foreign, for which global growth is on the up.

Ubers, you lot will always live in a bearish world and be happy to see your cash and bonds lose 50% of their value through negative interest rates this next decade.

The fact that the market is still below its 2000 peak should be a bullish sign if you ever though contrary to popular opinion.

Maybe because with crippling debt, zero interest rates and deflating asset prices we are reminded of Japan, where stocks are still nowhere near their highs, and may not see them again in our lifetimes.

Being below a peak after 10 years is not in and of itself a buy signal!

[nohpc]

Maybe because with crippling debt, zero interest rates and deflating asset prices we are reminded of Japan, where stocks are still nowhere near their highs, and may not see them again in our lifetimes.

Being below a peak after 10 years is not in and of itself a buy signal!

Check out how overvalued japanese stocks were at their peak. It took 90% crash just to get back to normal values. Completely different to our stock market or most other stock markets today,

[Mikhail Liebenstein]

Worst post ever.

Do you know anything about the markets?

Why do 95% of posters here talk such rubbish about stocks being in some sort of bubble?

Incase you hadn't realised the stock market popped a decade ago.

The only current bubble that hasn't popped is government bonds and cash, but they will.

I suggest you read a copy of 'The Great Reflation'. To have another 50% crash after 2 in the past decade is emperically highly unlikely.

The FTSE is recovering from a lost decade. 65% of its earnings are foreign, for which global growth is on the up.

Ubers, you lot will always live in a bearish world and be happy to see your cash and bonds lose 50% of their value through negative interest rates this next decade.

The fact that the market is still below its 2000 peak should be a bullish sign if you ever though contrary to popular opinion.

I tend to agree.

Certainly I am mainly in equities and gold, apart from the house.

[Guest_ringledman_*]

Quality Bonds (i.e. "Core" Sovereign Risk), yes.

It's been a function of markets for many years, that when base rates are low, then new funds income flies to equities, since dividend income tends to be higher than money market rates.

Personally, I believe most indices are overheated and due for correction: when considered in the light of the underpinning relative lead economies: i.e. USA, Japan, Europe and UK.

I did forecast early in 2010 (January), that we were in for firstly a Sovereign Risk debacle, driven by the Eurozone's weakest and second, later, a Sterling Crisis.

Which, considering the record PSBR stats just released for November, is very much on the cards: mainly since I believe the Sovereign Risk market's view of all of the sick men of Europe (Which includes GB) and seeing how CDS premiums are hardening against France, means Sovereign Risk bond yields will drive LIBOR upwards ever upwards and its dysfunctional disconnect from Base Rate will become increasingly apparent.

All of which means a capital market flight to value: however, which asset class represents both value and security?

Gold?

Probably.

And, unfortunately, commodity futures once more; a reprise of 2007-8.

Which then prices most commodities out of affordability, when they become physicals.

It's all a mess!

Quality and Western government bonds! How you have to laugh at the spin governments give to their money printing machine.

'Bonds are certificates of guaranteed confiscation'.

Ludwig Von Mises.

A sterling crises will be good for the stockmarket over the longer term. There would be short term issues but people would eventually realise that equities are a better (not ideal) asset of capital protection v worthless confetti bonds and cash.

The current best asset for value and security (ie best risk reward profile) are high dividend FTSE100 defensive mega caps IMO.

Can't be out of commodities either with such muppets in charge of Europe and the US.

Edited December 21, 2010 by ringledman

[scottbeard]

Check out how overvalued japanese stocks were at their peak. It took 90% crash just to get back to normal values. Completely different to our stock market or most other stock markets today,

Devil's advocat says how can you be so sure that the FTSE isn't just as overvalued right now? Or do you genuinely believe that the top 100 companies are worth 70% more today than they were in March 2009?

[Guest_ringledman_*]

Devil's advocat says how can you be so sure that the FTSE isn't just as overvalued right now? Or do you genuinely believe that the top 100 companies are worth 70% more today than they were in March 2009?

You dont value stocks on the share price.

You value on the ratio between share price and earnings.

You value on the ratio between share price and dividend yield.

Currently the FTSE is fair value to cheap on these bases v the historical. With rising earnings valuation is getting better or prices are rising to reflect that improvement.

The 2009 low was merely the market participants acting irrationally to take the price way below fundamentals or technicals (ie went well below its 200 dma).

Japan was on a P/E of 50-100 at its peak in 1990.

The FTSE was on a P/E of 25-40 at its peak in 2000.

Work out the rest. One had a 20 year bear market. The other a 10 year bear market.

Whilst SECULAR bear markets do last longer than 10 years on average, there is nothing stoping the current bear market from grinding sideways or slowly marching back to its 2000 peak over the next 3-7 years.

The market doesnt have to fall to end the secular bear.

There is some s@ite in the FTSE, namely the banks and certain retailers, but the defensives look awesome IMO.

Even if the defensives go nowhere over the next decade I will still pick up 62% - 96% (assuming a typical yield of 5%-7% and no rise in the dividend. dividend growth will likely be 7%+ a year so dividend return alone of some 70-120% or so over the decade).

Try that risk reward with fixed income confetti bonds, especially with real term inflation of 3-5%.

Edited December 21, 2010 by ringledman

[Ash4781]

Yeah it's anyone's guess what the MPC will do with interest rates (see cbi this week). 0.5% in perpetuity?