The ongoing financial turmoil and financial discussion thread

[Bob]

The DOW is plummeting quickly; nearing the 8,000 mark. The TSX is now close to 9,000.

I've heard many claims that the bottom was 10,000, then 9,000, then 8,000. Yikes.

[troutman]

Originally Posted by Bob

The DOW is plummeting quickly; nearing the 8,000 mark. The TSX is now close to 9,000.

I've heard many claims that the bottom was 10,000, then 9,000, then 8,000. Yikes.

Buy low.

[missdpuck]

Sell high

[Bobblehead]

Dollar cost averaging...Dollar cost averaging....Dollar cost averaging....Dollar cost averaging

[Slava]

Originally Posted by Bobblehead

Dollar cost averaging...Dollar cost averaging....Dollar cost averaging....Dollar cost averaging

This post might make the most sense of any lately! (That and the buy low!)

[MoneyGuy]

Originally Posted by Slava

This post might make the most sense of any lately! (That and the buy low!)

Now is low.

[Superflyer]

Looks like oil dropped to $79.32 so far

[Claeren]

Originally Posted by MoneyGuy

Now is low.

You (and this is directed at all of the perma-bulls around here who keep on going with the ' now it is time to buy buy buy, oh wait, no, noooow is the time to buy buy buy, oh wait...') might want to mention that you thought it was low a month ago when the iBanks started falling like dominos and the market had lost 15%

And then you thought it was near bottom two Monday's ago when the bailout package was rejected and the DJI fell 777 points and things were about 25% off peak.

THEN you thought it had hit a new low this Monday when the market fell another 7%(?).

And now you are telling people it has finally hit bottom after a 25% loss on the week and 40% (or more?) since peak?


1) Eventually it will hit bottom and if you said it was bottom the entire way down you will eventually be right. (Yeay for you!)

2) If people bought at any of those previous false bottoms you declared (despite tons and tons of evidence it was no where near bottom - it is not like people weren't screaming it was not bottom, like me) they are out 10%-40% PLUS the time it takes for that money to be recovered.

3) Just because it will hit bottom does not mean it will go right back up. Talk about how this is not like Japan all you want (frankly people in power WISH it was more like Japan), what did it take to fully recover from the Great Depression? 54 years? Something like that?

4) Stocks buy you what is of value in a company. If the entire value of a company has been built on cheap debt and all of the vendors of that company have been built on cheap debt and all of the joe schmoe consumers of that company and that companies vendors have been built on cheap debt is it really going to take mere months for the markets to recover and start growing when there is no more cheap debt??



It IS getting closer to bottom, obviously, but your conflict of interest is clouding your judgement and it could be hurting people here at CPuck. I don't know how much your clients have lost but if people listened to you just last week they are out 10%-20% and if they borrowed to invest they could be out even more.

(As I have said though, this crisis should not about finding bottom in the equity market, it is about perserving capital for the long drought in economic growth that is about to hit us like a brick wall. Those with money NOT invested yet will be the ones with real opportunities in a couple years. Trapping people in what have become, practically speaking, illiquid equities will not help them if those stocks are still flat next year and the one after that.)


If you cannot properly value a company you cannot invest in it -- all you can do is gamble. When you are saying 'now is low' what you are saying is "the dealer has been winning all night, how much longer can it go on for, we HAVE to start winning eventually". Anyone who gambles well knows the problems with this line of thinking.... you are always better to simply walk away and keep your money that night and start again tomorrow than to keep throwing money at it until you win -- because you don't HAVE to ever win....

The market WILL see upward volatility at some point, but until you can value a companies worth you cannot be truly buying at bottom. That is the entire reason stocks keep dropping, no one knows which have TRUE value. IF you insist on buying equities though at least buy the ones that sell real products to real people neither of whom need a huge amount of debt/financing to keep up their end of the deal.




Two asides to all of that:

1) OPEC was to defend oil at $80/barrel. Now that it has finally hit that range it will be very very interesting to see what happens. Looks like there is not much support and outside of OPEC turning the taps off completely it will keep dropping. I would be interested to hear someone inthe industries take on this though??

2) The American Dollars rise is pretty commical. People are buying government debt in USD because it is thought of as safe, yet because there is such an insane amount of that debt being sold it is pushing the currency higher and higher. Yet how can a currency with no underlying value other than trillions and trillions in debt have long term stability?? Boggles my mind. That should be a very interesting thing to watch play out.





Claeren.

[kevman]

The negative impact on investor portfolios is best illustrated through two studies, one by Dalbar Inc. called Quantitative Analysis of Investor Behaviour, and a second by Morningstar. In the 2006 update of the Dalbar study, the firm again found that investors follow the same pattern as they always have, investing most after markets have risen, and selling after markets have fallen. The impact of this behaviour is that over the 20 years ending 2006, the US equity markets rose 11.9%, whereas the average US equity fund investor was up a meagre 3.0%, almost a full percentage point below inflation.

The Morningstar study, though conducted over a decade ago, still provides some interesting facts. For the five-year period ending in 1994, the average return of more than 200 growth funds analyzed was 12.5%, while the average investor in those funds suffered losses of 2.2% due to the timing of their investments. These studies clearly show that the biggest detriment to investor performance is not manager performance or fees, rather investor behaviour including the reaction individuals have to the markets when their portfolio is rising and falling dramatically.

Interesting...

[metal_geek]

Originally Posted by Claeren

2) The American Dollars rise is pretty commical. People are buying government debt in USD because it is thought of as safe, yet because there is such an insane amount of that debt being sold it is pushing the currency higher and higher. Yet how can a currency with no underlying value other than trillions and trillions in debt have long term stability?? Boggles my mind. That should be a very interesting thing to watch play out.


Claeren.

No kidding. How is it possible that this who situation created by debt, is puting upwards pressure on a dollar because people want to buy that debt?.... Is it because people are looking for something to goto, anything to grab onto thats "liquid"...

[Finner]

Originally Posted by Claeren

You (and this is directed at all of the perma-bulls around here who keep on going with the ' now it is time to buy buy buy, oh wait, no, noooow is the time to buy buy buy, oh wait...') might want to mention that you thought it was low a month ago when the iBanks started falling like dominos and the market had lost 15%

And then you thought it was near bottom two Monday's ago when the bailout package was rejected and the DJI fell 777 points and things were about 25% off peak.

THEN you thought it had hit a new low this Monday when the market fell another 7%(?).

And now you are telling people it has finally hit bottom after a 25% loss on the week and 40% (or more?) since peak?


1) Eventually it will hit bottom and if you said it was bottom the entire way down you will eventually be right. (Yeay for you!)

2) If people bought at any of those previous false bottoms you declared (despite tons and tons of evidence it was no where near bottom - it is not like people weren't screaming it was not bottom, like me) they are out 10%-40% PLUS the time it takes for that money to be recovered.

3) Just because it will hit bottom does not mean it will go right back up. Talk about how this is not like Japan all you want (frankly people in power WISH it was more like Japan), what did it take to fully recover from the Great Depression? 54 years? Something like that?

4) Stocks buy you what is of value in a company. If the entire value of a company has been built on cheap debt and all of the vendors of that company have been built on cheap debt and all of the joe schmoe consumers of that company and that companies vendors have been built on cheap debt is it really going to take mere months for the markets to recover and start growing when there is no more cheap debt??



It IS getting closer to bottom, obviously, but your conflict of interest is clouding your judgement and it could be hurting people here at CPuck. I don't know how much your clients have lost but if people listened to you just last week they are out 10%-20% and if they borrowed to invest they could be out even more.

(As I have said though, this crisis should not about finding bottom in the equity market, it is about perserving capital for the long drought in economic growth that is about to hit us like a brick wall. Those with money NOT invested yet will be the ones with real opportunities in a couple years. Trapping people in what have become, practically speaking, illiquid equities will not help them if those stocks are still flat next year and the one after that.)


If you cannot properly value a company you cannot invest in it -- all you can do is gamble. When you are saying 'now is low' what you are saying is "the dealer has been winning all night, how much longer can it go on for, we HAVE to start winning eventually". Anyone who gambles well knows the problems with this line of thinking.... you are always better to simply walk away and keep your money that night and start again tomorrow than to keep throwing money at it until you win -- because you don't HAVE to ever win....

The market WILL see upward volatility at some point, but until you can value a companies worth you cannot be truly buying at bottom. That is the entire reason stocks keep dropping, no one knows which have TRUE value. IF you insist on buying equities though at least buy the ones that sell real products to real people neither of whom need a huge amount of debt/financing to keep up their end of the deal.




Two asides to all of that:

1) OPEC was to defend oil at $80/barrel. Now that it has finally hit that range it will be very very interesting to see what happens. Looks like there is not much support and outside of OPEC turning the taps off completely it will keep dropping. I would be interested to hear someone inthe industries take on this though??

2) The American Dollars rise is pretty commical. People are buying government debt in USD because it is thought of as safe, yet because there is such an insane amount of that debt being sold it is pushing the currency higher and higher. Yet how can a currency with no underlying value other than trillions and trillions in debt have long term stability?? Boggles my mind. That should be a very interesting thing to watch play out.





Claeren.

Buying is good advice. Most people shouldn't be in the market right now for quick gains, they should be in for years, especially the young ones that frequent this forum. For all the people that are down 40% in there portfolios they SHOULD be buying. Who cares where the bottom is, average down while you can, especially if the company has good fundamentals.

Based on common market fundamentals most stocks on the market right now are fantastically undervalued. Hell, based on technical analysis their should be a rally on tuesday. Yah you're right it might keep going to the bottom, but if you can't handle risk you shouldn't have bought in the first place. Markets correct...

In terms of blaming people on CP for other peoples losses, that is unbelievably stupid. If you are dumb enough to read some opinions on a forum, do absolutely NO research on your own, borrow money, invest it, and expect to make a quick profit then it's your own fault. You should be doing minimum 10-20 hours of research on each stock you intend to buy, unless you're a technical trader.

If you took some money after hearing that the markets are undervalued (maybe not at bottom) and bought some more stock to lower your ACB then thats great...markets go up and down.

Quit fear mongering .

[corporatejay]

Originally Posted by Claeren

You (and this is directed at all of the perma-bulls around here who keep on going with the ' now it is time to buy buy buy, oh wait, no, noooow is the time to buy buy buy, oh wait...') .....



Claeren.

To be fair, there are still a lot of companies out there with valuable assets that have undervalued stock because of market concerns.

I think what you should be saying, more than "don't invest" is, invest wisely, don't just dump money into a stock because "it can't get any lower", evaluate a company based on its assets.

Total, RDS, Exxon, BP, ChevronTexaco have been taking a pounding, but ultimately these companies still have valuable assets, if you can hold out long term, (years, not months) are you suggesting that companies like that would be bad buys?

[Daradon]

Originally Posted by Claeren

2) The American Dollars rise is pretty commical. People are buying government debt in USD because it is thought of as safe, yet because there is such an insane amount of that debt being sold it is pushing the currency higher and higher. Yet how can a currency with no underlying value other than trillions and trillions in debt have long term stability?? Boggles my mind. That should be a very interesting thing to watch play out.

Claeren.

This is exactly what has me puzzled. It's unfair to say it has no other value than debt, but the debt to asset ratio is out of whack and the currency shouldn't be on the rise as it is.

Where does that leave us when the U.S. government can't pay it's debts?

[RougeUnderoos]

Originally Posted by fotze

Italian Prime Minister Berlusconi said political leaders discussing idea of closing world's financial markets while they 'rewrite the rules of international finance'...

Wow if true

Huh. I wonder if one of those rules is "Silvio Berlusconi gets 1% of everything".

The idea that that crook could be making decisions about anything that might affect Canada makes me queasy.

[Wookie]

Originally Posted by RougeUnderoos

Huh. I wonder if one of those rules is "Silvio Berlusconi gets 1% of everything".

The idea that that crook could be making decisions about anything that might affect Canada makes me queasy.

Don't worry

Originally Posted by some-financey-guy

In one reversal earlier today, Italian Prime Minister Silvio Berlusconi said governments may shut financial markets, only to take back the remark later. White House spokesman Tony Fratto said there would be no interference in market openings or closings.

[MoneyGuy]

Originally Posted by Claeren

You (and this is directed at all of the perma-bulls around here who keep on going with the ' now it is time to buy buy buy, oh wait, no, noooow is the time to buy buy buy, oh wait...') might want to mention that you thought it was low a month ago when the iBanks started falling like dominos and the market had lost 15%.

Since this shot was directed at me.... I have no idea where the market is going next. I never said I did. Yes I said it was low a month ago, and I was right. It was low. Lowest? I never said that. I never said it wouldn't go lower. In fact, as "low" as it is now (and is low), I still think it could drop more. The reason I'm advising people to buy now (not all at once, but with a DCA strategy) is because no one knows the bottom. When I say it's low, I'm comparing it to where I'm certain these investments will be 10, 20 and 30 years down the road. Let me guess that the average age on this site is 30s or so. I've said it before and I'll say it again: You guys should be all over this market like germs on a rat. I never said a month ago it was lowest. I said low, and there is a big difference. If you want to stay on the sidelines, go ahead. This is a marathon, not a sprint, and I know I'll win it. Most of those who stay on the sidelines will miss approx three quarters of the recovery. They'll buy in once most of the money's been made, buy near the peak, sell again in the depths, going back to GICs and missing their financial goals. Once we reach the low point, you'll never see those prices again. If I knew the low, that's when I'd be buying. I don't so I'll keep buying through the depths, and am advising my clients to do the same. BTW, so is Warren Buffett.

This guy gets it.

Originally Posted by Finner

Buying is good advice. Most people shouldn't be in the market right now for quick gains, they should be in for years, especially the young ones that frequent this forum. For all the people that are down 40% in there portfolios they SHOULD be buying. Who cares where the bottom is, average down while you can, especially if the company has good fundamentals.

Based on common market fundamentals most stocks on the market right now are fantastically undervalued. Hell, based on technical analysis their should be a rally on tuesday. Yah you're right it might keep going to the bottom, but if you can't handle risk you shouldn't have bought in the first place. Markets correct...

In terms of blaming people on CP for other peoples losses, that is unbelievably stupid. If you are dumb enough to read some opinions on a forum, do absolutely NO research on your own, borrow money, invest it, and expect to make a quick profit then it's your own fault. You should be doing minimum 10-20 hours of research on each stock you intend to buy, unless you're a technical trader.

If you took some money after hearing that the markets are undervalued (maybe not at bottom) and bought some more stock to lower your ACB then thats great...markets go up and down.

Quit fear mongering .

[missdpuck]

July 1933 is last time things were this bad according to Fast Money on CNBC...but this is worst week for Dow ever.

[FlamesAddiction]

The fear that I have is that maybe todays low is the new high water mark.

People talk about normal market fluctuation and I think everyone understands that, but is what is happening now within normal market fluctuation, or is the system re-setting itself? Buying low and selling high is a simple enough concept, and so is the concept of peaks and valleys with longterm growth... but when everything settles out, will the market behave like it used to, or now that the weakenesses are exposed, will the bottom be constantly falling out?

A lot of this stuff just seems fake to me I guess

[missdpuck]

I'm trying to understand what Wayne Angell ,former Fed gov ,is saying. It all does seem manufactured sometimes. It doesnt seem like the Fast Money guys understand him either. Makes me feel better...

[I-Hate-Hulse]

So - has the current crash changed plans or lifestyle for anyone? I know for myself, I'm keeping a close eye on available cash and cashflow. Unfortunately its been an expensive year for me so cash is thinner than usual, and I'm getting married next year so it'll get worse. It's a precautionary thing for me, but I'm putting together a much more detailed cash forecast for next year. Never really had to do something to this extent as I've been fortunate, but I figure it's a very prudent measure... Depending on this forecast I may adjust wedding and vacation plans....

While my day to day isn't going to change, I think I will scale back on the discretionary spending. Not a bad thing to do regardless I guess.

A friend of mine just took possession of a house today. I hope to Jeebus he assembled his downpayment before the crash - waiting an extra week could have left him scrambing for 40% more. I cringe at the thought.

I've also applied for one of those 0% for 15 months credit cards. I'll balance transfer the cash off of it to a high interest account just for liquid access to cash. A hell of a lot less than my line of credit (0%!), only for emergency use, and a reminder to pay in 14th months time. The key of course, is not to touch this cash unless absolutely needed. Paranoid - maybe, but I'm pretty sure personal credit will have it's taps shut off next so better safe than sorry. Especially when it doesn't cost anything.

I make routine contributions to savings and while I'd love to DCA some of my existing investments... I think it's best to hold cash right now, especially with immediate needs for it coming up. I need to look into a TFSA for this year anyways, might as well just squirrel it up into one of those, otherwise the after tax return on a high interest account won't even make inflation...