Six Months on... Global Collapse Destinations?

[MarkJ]

Originally Posted by keelbolts

I heard the bubble pop weeks ago. Now all I can hear are the talking heads saying we're starting to turn it around and the wind whistling by my window as the plane plummets towards the Earth.

The media trails reality when it comes to investment.
Its a great time to buy when the newspapers say "DON'T buy! You'll go broke!"
Thats the perfect time to plunge in.

The doomsday set here is still off the mark saying the sharemarket will never recover, still go down etc, 1930 isnt here yet but will be...

All that time the smart people are putting money into shares that in 12 months will make them on the road to good recovery. And the nespapwers will be saying then: "Put your money in shares!" But it will be too late, the big profits already in someone elses pocket.
Yes the rich get richer and the poor still wave the placard "The World will end Tomorrow"

[salty_dog_68]

I can give you an example of how the current economic crisis will directly affect cruising...

1. our elected legislators sell out the working man to line their pockets

2. we spend more money than we make

3. wall street et al goes overboard on greed

4. the housing bubble "bursts" and local governments lose property tax revenue

5. governments (local, state,and federal) have to slash millions of dollars from their budgets and look for new ways to generate revenue - boaters

6. local governments out-law anchoring a vessel and force boaters to "rent" time on a municipal mooring field. $

7. state governments increase registration fees and taxes on the purchase and use of boats. $$

8. the federal government declares every boat an environmental hazzard and requires federal licenses and epa permits for each vessel. $$$

[TaoJones]

Originally Posted by MarkJ

The media trails reality when it comes to investment.
Its a great time to buy when the newspapers say "DON'T buy! You'll go broke!"
Thats the perfect time to plunge in.

The doomsday set here is still off the mark saying the sharemarket will never recover, still go down etc, 1930 isnt here yet but will be...

All that time the smart people are putting money into shares that in 12 months will make them on the road to good recovery. And the nespapwers will be saying then: "Put your money in shares!" But it will be too late, the big profits already in someone elses pocket.
Yes the rich get richer and the poor still wave the placard "The World will end Tomorrow"

Only a fool gets his investment advice from a daily, weekly or monthly periodical. The next worst option is to watch the financial channels, then "tips" from friends, closely followed by advice from one's broker. Unless one takes the time to become educated in the workings of the markets, there is little likelihood of a successful outcome.

The chart Mark has posted is of the Australia All Ordinaries, roughly equivalent to the S&P 500 stock index in the US. It dates to 1980, but even at that, it is the oldest share index in Australia. It began with a notional value of 500, so the 3616 of the chart Mark put up indicates that the notional value has increased some seven-fold since the XAO's inception. That, however, is without accounting for inflation.

That's the good news . . . the bad news is that the All Ords reached a record level of almost 6900 in November of 2007. Here's a link to a page that shows the XAO over longer time frames than the six months of Marks's chart:

Netquote - Charts

Clearly, the loss of over 53% from November '07 to November '08 was devastating. In the period since last November, the index has stabilized somewhat, and although it did sink to a new low on 09 March, 2009 at about 3050, it has climbed nicely over the last 14 trading sessions.

However, while the six-month chart shows a healthy rise over the past three weeks, it is now flashing a bright amber caution light, IMO.

RSI is the relative strength indicator, and it has moved up into "overbought" territory (70+ is seriously overbought, 20- is seriously oversold). The MACD, or moving average convergence/divergence, indicates that while the upward move was strong and sustained since the crossover with the histograms increasing, they have ceased to do so over the last four trading sessions. In the area of the "0" line, volatility can be dramatic, so a careful trader should be on alert.

If the histograms begin to diminish, the MACD could be indicating that the overbought market is nearing exhaustion as enthusiastic buyers diminish and sellers grab the hammer. In other words, look out . . . the All Ords could quickly turn down and give back a substantial portion of the recent gains. Worst case is that they will give the entire gain back and move to a new low beneath the 09 March low. If that proves to be the case, then this will have been just another bear market rally, also called (for very good historical reasons) a "sucker's rally."

At some point, obviously, the market will indeed reach a bottom - though we will only know that in retrospect. The likelihood that that bottom was put in on 09 March, 2009 is extremely remote.

In my view, the real bottom is a long way off. It's only when buyers give up in utter despair - "capitulate" in the argot of the markets - that a bottom will form. In the meantime, there will be nice little moves such as the All Ords have achieved over the past three weeks, but only impeccable timing will allow a trader to take advantage of them.

A resource-driven economy such as Canada's and Australia's will do very well, relative to those of the US and the UK, as we go forward over the next few years. Between the two, Australia has the advantage over Canada in that Canada is so closely linked to the giant US economy that fall-out from the chaos in American financial markets will affect Canada much more adversely than it will Australia, which is more intimately tied to the economies of Asia - Japan, China, Taiwan, S.Korea and others - which are dependent on resource-rich nations to supply the raw material their export economies require.

TaoJones

PS: Somewhere on that list of bad places to get investment advice - probably pretty close to the top - is from strangers on internet forums. Caveat emptor.

[bobfnbw]

Seems to me that as long as the price to earnings ratio is in the positive range the market is still over priced.
I remember when at pe ratio of 20 was considered good.... now I wouln'd buy unless it was near 0 or in the negative numbers....
But in reality I am finished with the market. I will not put money in it again. I will take a lower but more secure return on my investment than gamble it away on stocks.
My wife money on the other hand.... since she stayed in the market when I advised gettting out.. and her porfollio is down 65% or more, we will leave that in and see.

Pensions are gone, house is worth much less than I thought it would be... social security perhaps not there when I need it...

Guess we will just have to see.

[MarkJ]

Originally Posted by bobfnbw

now I wouln'd buy unless it was near 0 or in the negative numbers.... .

A PE ratio that low won't happen because then a company could be bought, broken up and sold off piecemeal for a profit. Like they did when racing toways the 1986 stock market crash.

many mining companies and those with large infrustructure are nigh on ripe for that sort of thing. And thats really devistating to the econmy!

[cat man do]

Share markets can be a scam for those that arent in the know as in inside info.

Watched this movie yesterday about Enron, the similarities to today were uncanny, especially the comments of "What can we do to ensure this can never happen again"

Nothing apparently

"Independent Lens" Enron: The Smartest Guys in the Room (2005)


Also see Jon Stewart tear Jim Cramer from CNBC's Mad Money a new one here
The Daily Show Full Episode | Thursday Mar 12 2009 | Comedy Central

Totally outrageous
I cant believe people would be that crazy to take any advice from a show like this (mad money) anyway.

Dave

[anotherT34C]

Originally Posted by cat man do

Share markets can be a scam for those that arent in the know as in inside info.

Watched this movie yesterday about Enron, the similarities to today were uncanny, especially the comments of "What can we do to ensure this can never happen again"

Nothing apparently

"Independent Lens" Enron: The Smartest Guys in the Room (2005)

enron the smartest guys in the room - Google Video#

Catch it on google video.

[DPMatty]

It is making me consider closing a small business to go cruising for a year or two. From my perspective a real total collapse would be a good thing cruising wise as it has the potential to keep the people I don't want to be around home. But then I was born about a hundred years too late, maybe two hundred...

[GordMay]

Originally Posted by DPMatty

... But then I was born about a hundred years too late, maybe two hundred...

It sounds as though, in Jimmy Buffet's words*, you may be:
"... an over forty victim of fate
Arriving too late ..."

*"A Pirate looks at forty" (Mother Ocean)

[keelbolts]

Here's a newsflash: the US really doesn't need Wall Street. The stock market is nothing but Las Vegas w/out the nice lights. The Emperor is Buck a$$ed naked! Of course "they" are going to tell us that we must be invested, yadda yadda yadda. For a ponzi scheme to work, you have to keep pulling in new suckers in. It fails when you can't find new suckers. The US is fresh out of suckers and when we run out of suckers worldwide...

It's no more likely that you will live long enough to see the world you've been living in for the last several years return than it is that Antonio in Italy is going to see the return of the Roman Empire. Motivated by greed, we allowed our economic foundation to be turned into a game and the game is over. It could not be otherwise. How many of you think that you can continue spending more than you bring in indefinitely? Even now, our bankrupt government is working in the next multi-billion dollar give away. If you had a jobless friend that was buying stuff left and right and spending money like it grew on a tree in his backyard, you'd know he was headed for financial ruin. What makes you think, just because it does it on a larger scale, that a country can get away with it? It can't.

If all of this seems hard to believe, it's probably that you've been drinking the Kool-Aid for too long. For several of you, it sounds like it worked well for you. Great. I have no problem with that. To some extent or another it worked for most of us. If you were smart enough to play the game and win - more power to you. While it lasted, it was quite a ride, but it's over.

Don't waste your time asking when what you knew will return. If you would use your time more wisely, ask yourself these two questions: 1) What comes next? 2) What do we have to go thru to get there?

[DPMatty]

Originally Posted by GordMay

It sounds as though, in Jimmy Buffet's words*, you may be:
"... an over forty victim of fate
Arriving too late ..."

*"A Pirate looks at forty" (Mother Ocean)

Ha! I'm forty one!

But it's more about having things easy, especially when it comes to sailing. That means lots of people who should be on land take to the water because they can with minimal effort or commitment. Or better yet, they clog the harbors with boats they rarely use on mooring that should never exist there in the first place. I have no patience for that anymore. The last thing I ever want is to be anchored amont some upwardly mobile scum that I'd just as soon gut like a fish as talk to, but it happens. I'm seriously considering outfitting a steel boat and sailing the high latitudes to get away from that.

[SCCatSailor]

All the doom and gloom on this thread, and all the anger; I thought sailors were generally positive, optimistic people, trying to find the silver lining, looking for the positive apsects of things.

How about this perspective: recessions, while painful are good for the economy. They wring out the weak companies, remove the excesses. Those that survive are stronger for it. Sure, it may be better if government would stay out of it (or not), but it seems pretty certain that, for exapmle, GM, if it survives, will be in a better competitive position. Sure, it would be better for governments to show some fiscal responsibility, but maybe this creates an opportunity for some true fiscal conservatives to get elected down the road. Yes, consumers took on too much debt over the last several years, but maybe this will spark a new era of responsibility in personal budgeting.

Remember, 92% of Americans are still employed (sorry, I don't have figures for other countries), and 92% are paying their mortgages and other bills on time. Might it get worse? Maybe, but it will also eventually get better. People still need to eat and clothe themselves. The population of the world continues to grow, increasing the demand for housing and leading to new construction, once the excess inventory is worked off. The world still has plentiful natural resources and lots of bright, inventive people making new things and figuring out new processes to make life easier and/or better. It doesn't matter how bad it seems - there's always opportunity out there.

I'm sure some will say I have on rose colored glasses, but to those I say two things: 1. don't call me Pollyanna and I won't call you Chicken Little, and 2. I'm pretty sure I'll enjoy today (and tomorrow) more than you do.

[Amgine]

92% of US people are not applying for or on unemployment benefits. (Since rather less than 50% are even eligible for unemployment, that's a rather useless figure.)

[Sandero]

It appears to me that the financial sector has gamed capitalism and will rue the day.

Our economy has become an increasingly complex system with many checks and balances. Like your body, if you suffer an injury you usually survive as it is not system and your body heals.

What seems to be happening is that the financial sector is like a cancer or symbiotic agent with society as it's host. We need it to some extent, it's needs society even more. But like cancer, it will eventually consume its host and both will die.

The discussions about why this happened and if we can put humpty dumpty back together again is going on in many many places throughout the country and the world.

But some observations ring true. The financial sector used leverage and literally created money from "thin air" called it debt, booked it as an asset, sold it at a discount and did this without control or limit. But we have found that these "debts" or assets don't have their claimed value. So they can be sold to another sucker even for their face value. The sum total of these "instruments" is in the 10s of trillions.

But the concept of using debt is a American as apple pie and most Americans owe more than they have because they are expecting to earn enough to pay off that debt over time. This seems OK if their debt IS payable over time... and if they don't lose their source of income to service the debt. That turns out to be not the case.

This has been reverberating through the system and destroying the "value" of all sorts of things - real estate - labor and especially shares in corporation.

Don't know that we can fix this or that we want to fix THIS. If we restore the economy it needs to be run differently I would think.

[keelbolts]

I ignored politics for years, but I'm paying a little attention to it lately. I believe we are at a historical turning point & I don't want to miss it. SCCatsailor is right when he says he's having more fun. Watching something you love die isn't fun. The only real justification is if you're preparing for what comes next. Let's say you're half way to Bermuda & you look off to the starboard horizon to see a line of black clouds coming your way. Chances are you're going to survive the coming storm, but there's a lot to be said for preparing yourself & your boat for its arrival.