The ongoing financial turmoil and financial discussion thread

[SeeGeeWhy]

Originally Posted by Claeren

No offense, but I have already been pretty forthcoming with my own situation -- more so than perhaps anyone else in this thread?

More importantly, this thread is about what the market is doing, why the market is doing what it is doing and what it will do in the future.

Breaking down my (or anyones) financial life goals is beyond that scope IMO.


Further, regardless of what anyone does with any of the information or debates in this thread, how we personally do or do not capitalize on this discussion has little to do with what we predicted the market will do. I would rather hear a very thought out and well formed idea on the market from a poor person than a totally biased and industry centered view from a rich person.

Even if I am not all right -- which I never will be -- and even if I am not some fund manager I think I have a DAMN good record both on real estate and on financial market performance at CPuck? And not just random guesses either, but things based on solid market perspective.



Taking that a step further (and this will be the thing that will most answer your question), I am a big believer in the 'Black Swan Theory' http://en.wikipedia.org/wiki/Black_swan_theory

In short, the important moments where fortunes are made or lost are the big events, the ones few people saw coming but then in hindsight all thought were obvious (and thus convinces them that future events will also be predictable by the majority, even though they too are equally unpredictable, thus allowing them to ignore/dismiss the small number of naysayers.). Following the majority works 90% of the time really well so people assume the really important 10% of the time it can/does wipe them out to follow the majority, that the majority really did see it coming and thus it is still a good strategy in life. Thus it does not matter that the entire financial services sector, along with all of the mindless bank advisors, financial advisors and mutual fund salesman who spew the company lines, make lots of money during the majority of days if it is all wiped out in a much smaller period. Equilibrium is always restored and thus risk mitigation is actually about betting against the majority, not going along with it. (And as I have said numerous times, as much as this bear market has hit people, MOST people I know who are actually invested are STILL saying 'it is just about to bounce and it will go up and now now now is the time to buy buy buy! IT is all on sale! Buy and hold long term, you can't lose! etc etc.' Which indicates to me that the market has still not bottomed out. Equilibrium is truly restored when even these people think equities (or real estate) are not a good investment.)





Lastly, faaaar too many people know who I am here (like from 'real life') and while I have been upfront to a degree I do not feel comfortable telling my entire story anymore so than you would want to tell everyone at your work or gym or whatever your entire story.



Claeren.

None taken. You are promoting a different approach which would lead me to believe that you've got a different starting point than the majority. I was getting the vibe that this thread was/is a general conversation on investment stratigies, thus I thought there might be an opportunity to expand the conversation to include the concepts of risk and the role of goal setting in an investment strategy, but you're right - this is predominantly a thread discussing market theory. Please accept my apology if you found offense in my line of questioning.

At any rate, the black swan reading is interesting. Thanks for posting that.

[MoneyGuy]

Claeren, my housekeeper knows you and says to say hi.

While I disagree with some of what you espouse, you do make some good points. Among them:

Yes, following the majority does work about 90% of the time. I think it's the other 10% of the when people are screaming to buy or sell, that's when it makes sense to go against the grain and go the other direction. When the cab driver is advising you on what stocks to buy because everyone is making money, that's cause for worry, in my view. When everyone is worried and selling, that's likely the time to be looking at buying. The more the fear, the more optimism I have. YOu do make a similar point.

I do have trouble with your criticisms of financial advisors. I will give you this. I think most advisors are lousy. A good friend of mine used to be a fund company wholesaler and has now become an advisor. He used to work with hundreds of advisors and saw how they do business. He told me one, and I agreed, that most of the people in our business are poor, that they tend to do the easy thing and not necessarily the right thing. It's easy to sell a resource fund after a long run up. It's far harder to seel that fund after it's been beaten down a lot, but that's the time when people should be doing that.

I have a problem with your speculation about currencies. With respect, not you, I or anyone else knows where currencies are headed in the short term so speculating on them is futile, I'd argue. The best strategy is and always has been to have a properly diversifed portfolio with appropriate investments and not try to profit from short-term movements because we can't know that and over the long term currencies tend not to matter anyway.

There are good advisors out there. I know Slava and believe him to be one. I know that my interests are for the client's best interest. there are good advisors out there. Unfortunately, lots of investors have had bad experiences with the poor ones and it's tainted their views of our industry.

Good discussion; keep it up.

[Potty]

Originally Posted by MoneyGuy

I have a problem with your speculation about currencies. With respect, not you, I or anyone else knows where currencies are headed in the short term so speculating on them is futile, I'd argue. The best strategy is and always has been to have a properly diversifed portfolio with appropriate investments and not try to profit from short-term movements because we can't know that and over the long term currencies tend not to matter anyway.

http://www.house.gov/htbin/blog_inc?...ngdetail.shtml

According to US Congressman Ron Paul (yes, a long-time gold standard advocate that's pretty far out there, but hear him out here) the US has increased their monetary base by 75% in the past two months.

Any investment in US dollars needs to be made with thought to the future of the US dollar.

[MoneyGuy]

Originally Posted by Potty

http://www.house.gov/htbin/blog_inc?...ngdetail.shtml

According to US Congressman Ron Paul (yes, a long-time gold standard advocate that's pretty far out there, but hear him out here) the US has increased their monetary base by 75% in the past two months.

Any investment in US dollars needs to be made with thought to the future of the US dollar.

I still contend that no one knows the dollar's short-term direction. No one! So, I guess we'll have to disagree.

[Nancy]

Originally Posted by fotze

I was hoping Claeren would post all his bank account transaction history for the past 5 years, plus list his assets and liabilities. For privacy he can block out the actual account numbers if he wishes.

Meh, I'm not afraid to post mine...

Welcome to Teachers Credit Union Online Banking
=====================================
Transaction History, Account ************

23-Jul-2008 Hookers........ $500.00
23-Jul-2008 Blow......... $500.00
24-Jul-2008 Hookers........ $500.00
24-Jul-2008 Blow......... $500.00
25-Jul-2008 Hookers........ $500.00
25-Jul-2008 Blow......... $500.00

[Bobblehead]

Originally Posted by MoneyGuy

I still contend that no one knows the dollar's short-term direction. No one! So, I guess we'll have to disagree.

Yeah. While the US has done that, so have many of the other G20 nations, so you need to look at changes relative to what everyone else has done, unless you want to start throwing your money into Bolivars (currency pulled from a hat - not a recommendation), or other obscure currencies.

[Slava]

Originally Posted by Nancy

Meh, I'm not afraid to post mine...

Welcome to Teachers Credit Union Online Banking
=====================================
Transaction History, Account ************

23-Jul-2008 Hookers........ $500.00
23-Jul-2008 Blow......... $500.00
24-Jul-2008 Hookers........ $500.00
24-Jul-2008 Blow......... $500.00
25-Jul-2008 Hookers........ $500.00
25-Jul-2008 Blow......... $500.00

You only paid for Hookers three times in the last five years? I'm not sure that I believe this!!

[Nancy]

Originally Posted by Slava

You only paid for Hookers three times in the last five years? I'm not sure that I believe this!!

Oh, those were just the times my credit card was declined and I didn't have cash.

[Clarkey]

Originally Posted by fotze

Told you guys itr was going to happen.

Could be an internet rumor to drive up the price. It sure spiked quick, about 30% in a half an hour. I did hear a similar rumor last week.

[Phanuthier]

So it looks like the Big 3 have upped their request from $25B to $34B

During the hearing, an economist from economy.com (?) was present (I guess as an expert advisor or whatever) and said he estimates if the Big 3 gets bailed out, the Big 3 will need to come back for more as early as Sept 2009. Of coarse, the other side says a failure of any of the Big 3 will put this economy into a depression.

[metal_geek]

70,000 job losses in Canada last month.

http://www.google.com/hostednews/can...OaAcKitw3j3T5g

I still contend it was the job losses in the states, that triggered the financial crisis. I understand that it was created by a different issue but the trigger was the start of job losses.

This is the first month Canada has started to lose jobs.. How many of thoes 70,000 people are completly extended on their credit, mortgage included? How many of thoes people are gonna start missing mortgage payments? How many months do they go before CHMC, (who owns thier mortgage, see "75 Billion canadian bank injection") starts calling in the mortgages?.. Do they let people go longer, sweep it under the carpet hiding the bad news to try and protect the rest of the market? Does it all build up to one horrible crash when it comes tumbeling down or does it work?

4 months after the start of the job losses in the states we see the start of the collapse. Will Canada follow suit?

The US lost a wopping 500,000+ jobs last month... how many of thoes people are gonna be in trouble with mortgages? 4 months from now thoes people are gonna be shown the door. This thing is nowhere near over in the US, and just a few short months away in canada...

But I could be completly out to lunch...

[Slava]

^Well the start of the crisis was in the credit area, and in the US it was specifically a real estate crisis. The job losses are not a good thing to say the very least, but they are a symptom and not a cause at this point.

In Canada in particular there are programs for people that have lost their jobs and cannot find employment elsewhere; I would expect reliance on these systems to increase dramatically of course, but that also helps to stabilize the system and help people make ends meet.

[Slava]

An interesting take from the Globe and Mail that we are not even in a financial crisis (which is hard to argue with given the raw numbers!):

http://www.globeinvestor.com/servlet...n1205/GIStory/

[I-Hate-Hulse]

Oil at 41.86 as I type... I hear Merrill has price of $25 for oil next year. If it does sink to the low $30's or $20's... Alberta's going to have a body blow like no other. No, body blow doesn't quite cut it - more like a steel toe kick to the scrotum by Miyagi himself.

I firmly suspect that in a year's time, you're just going to be happy if you have a job. I'd expect large publicized layoffs in February. The days of hopping from job to job for an extra 20% more are going to be long gone.

Yeah, I'm pretty bearish lately.

[photon]

Originally Posted by I-Hate-Hulse

Oil at 41.86 as I type... I hear Merril has price of $25 for oil next year.

Those the same guys who predicted $200bbl oil for this year?

[FLAMESRULE]

Originally Posted by I-Hate-Hulse

In other news, CNRL just cancelled flex days. I firmly suspect that in a year's time, you're just going to be happy if you have a job. I'd expect large publicized layoffs in February. The days of hopping from job to job for an extra 20% more are going to be long gone.

Yeah, I'm pretty bearish lately.

I'm getting that way too. Had a buddy just leave Bantrel to another EPC and heard that Bantrel just laid off about 30% of their staff. E+P's are getting very tight with our money. I'm at a heavy oil junior and its very scary the stuff I'm hearing around here. No one is going to be making any moves any time soon.

[FLAMESRULE]

Originally Posted by fotze

Just insane, wells are going to be shut in and they won't just come back, projects getting cancelled, this has to mean that supply will plunge in the next year.

Wells are being shut-in...we can all thank Eddy the Clown for having a hand in this...idiot...

[Thunderball]

Originally Posted by photon

Those the same guys who predicted $200bbl oil for this year?

Yep!

I don't think any of these guys have any idea what's going to happen in a month, let alone a year.

Will Oil drop more? probably.

Will it stay down? No.

Should it be dropping like this? God No.

Will we regret this fearmongering when there's a supply shock? Oh yeah.

[metal_geek]

Originally Posted by Slava

^Well the start of the crisis was in the credit area, and in the US it was specifically a real estate crisis. The job losses are not a good thing to say the very least, but they are a symptom and not a cause at this point.

In Canada in particular there are programs for people that have lost their jobs and cannot find employment elsewhere; I would expect reliance on these systems to increase dramatically of course, but that also helps to stabilize the system and help people make ends meet.

I see what you are saying here slava, but I argue that the Financial crisis was created by the banks, using mortgages as the primary credit facility to create the mess they did. If you look at the numbers, the acutually "Collapes" if you wanna call it that was triggerd the seer number of people defaulting on thoes mortgages. There is a corelation between the time the jobs losses started, and when the "Crisis" was exposed.

People were content to live fully extended until, they lost their job and had no other choice but to sell for as low as they could or default. It got worse and worse with more downward pressure on house prices each month making more mortgages negative, and the whole thing more sensitive to job losses.

The majotiry of people are EXTENDED, they have no money to spend to "Boost" the economy, and are putting even more pressure on jobs and making further losses. The large US announcement today is just further evidence of the trend and a sign that this thing is nowhere near over.

I contend that the job losses caused by the lack of disposable income after years of easy credit, Triggered the collaps as people could no longer pay mortgages, exposing what the banks had created. Canada has "Employment insurance"... but for extended people, EI, barely covers food, utilities, let alone 1800.00 mortgage payments and 600.00 credit card bills.. Something has to give, and the job losses here in canada are looking alot like the initial job losses in the US and their relation to the "Crash"..

Best case senerio, we hear no bad news in the next year, EI covers everyone mortgage payments and we bottom out the downward cycle. Start a new.. but SLOW upward cycle in 18-24 months... Worst case senerio, we see further job losses, triggering the canadian version of a US style houseing dibacle that is nowhere near bad yet..

Truth is prolly somewhere in the middle, but if anyone is considering selling thier house in the next 2 years, best case senario is that 2 years from today your house is worth what it is now, but in the mean time it'll be lower then is today.

[Nancy]

Originally Posted by metal_geek

Best case senerio, we hear no bad news in the next year, EI covers everyone mortgage payments and we bottom out the downward cycle. Start a new.. but SLOW upward cycle in 18-24 months... Worst case senerio, we see further job losses, triggering the canadian version of a US style houseing dibacle that is nowhere near bad yet..

Truth is prolly somewhere in the middle, but if anyone is considering selling thier house in the next 2 years, best case senario is that 2 years from today your house is worth what it is now, but in the mean time it'll be lower then is today.

Not a very good best case, given that EI pays like $1600 a month or something like that. That may cover your mortgage and utilities, so long as you don't spend any money on gas or food.