Sunday, April 15, 2007

Watch how this contagion pans out……..

Profit warnings surge

"The last time there were 100 warnings in the first three months of a year was back in 2001."
What was happening in 2001? Oh yes, the Technology, Media and Telecoms (TMT) meltdown.

Posted by lvmreader @ 03:44 PM (479 views)
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2 thoughts on “Watch how this contagion pans out……..

  • Interesting article – you could be right!

    Some key moments in FTSE history:

    30th Dec 1999 = Highest Peak @ 6,930

    30th Mar 2001 = 10% Loss in 1 day on FTSE / 26% for NASDAQ / 12% for DOW

    11 Mar 2003 = FTSE bottoms out at 3,436

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  • The article seems to suggest that these companies are still making profits, just not as much as they “forecast”.

    Could ths be because they were forecasting on the basis that things would keep improving at the same rate, much like the “house prices will just keep going up at the same rate” claims from the VIs, perhaps?

    So, because of their original forecasts being too high, things now look bad even though profits are still being made. Which in turn could hit sentiment sufficiently to slow things down further? Good news can be bad news if you foolishly predicted things would be even better still, and people bet on you on that basis!

    I think this highlights that we don’t necessarily need some big trigger for house prices to go down – if prices simply stop rising as quickly as the VIs have said they will, this may shake confidence in the same way.

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