Global financial system implosion begins

[Idaho]

True. But the allure of doubling through by timing the market is too much for me. The big numbers crunch us little people. They don't care whether you retire at a lucky or unlucky point of the cycle -- but I do! We are all racing against inflation, but us suckers forced to gamble on the market for a pension are playing a secondary game. That of not getting swallowed by the vagueries of the long curve.

 

[kabbes]

True. But the allure of doubling through by timing the market is too much for me. The big numbers crunch us little people. They don't care whether you retire at a lucky or unlucky point of the cycle -- but I do! We are all racing against inflation, but us suckers forced to gamble on the market for a pension are playing a secondary game. That of not getting swallowed by the vagueries of the long curve.

Well, you have two choices on that front.

First choice: 10 years out from retirement, start selling off pieces of your equities whenever the market is favourable and invest in bonds, which tend to go up and down in value in line with the ups and downs of annuity prices. Try to sell off about 10% per year until you hit retirement.

Second choice: draw down from your pension instead of buying an annuity at retirement. Then there is no specific point at which you hope that the market happens to be favourable as you sell up in one go. Switch to income stocks in the last 10 years rather than capital growth stocks to help with the cash flow of the drawdown.

If you can time the buying and selling right, of course you’ll do better than lettting it ride. But timing these things is notoriously difficult, particularly if you don’t have access to privileged information, and it will swallow your money in fees if you buy and sell too often. It’s almost always better for most people to buy into an equity fund and just let it ride until they get to 10 years out from retirement.

 

[Idaho]

Annuities are a perfect way of turning a large nest egg into a small, non inheritable, inflexible income. I'll not be bothering with those.

Timing the market is really difficult. But so is picking the investments. All my pension is in two different schemes that allow trading around without any noticeable fees. If i can sit out a 10-20% drop by moving to cash for a year, that will be the long term equivalent of a 20-40% boost to my money. The risk of that I miss out on gains by sitting on the sidelines.

- Potential upside for me of 20-40%
- Potential risk of losing 7% gains if the markets go back to 2017 business as usual

So far I've dodged a 2% drop.

 

[mauvais]

One of my pensions made about 20% last year, not for the first time either. I don't know what on earth they've invested it in, but fair play to em.

 

[kabbes]

So far I've dodged a 2% drop.

In the short term the dividend yield is rather more important than the index price. The index has to drop about 4% in a year before you would have been better off waiting out the year before investing, after all. I’ll be impressed if your timing is so spot on to make up for the lost income in the long term.

 

[Idaho]

In the end, there is no substitute for luck

 

[Idaho]

One of my pensions made about 20% last year, not for the first time either. I don't know what on earth they've invested it in, but fair play to em.

Standard index funds probably. They all went nuts at the end of the year. Which is one of the reasons I think they are ripe for gravitational equalisation.

 

[Idaho]

Melt up is looking a bit more melt down today. Another good day to be out of equities. When the FTSE is under 6500 and the Dow is under 2200, I'll go back into the usual passive funds.

 

[Mrs D]

The problem with moving from equities to cash to “wait for a crash” is that the whole point of owning equities at all is founded on the notion that they go up more than they go down.

If you subscribe to that notion you’ll want as much of your cash in equities as you can spare, bearing in mind the lengthy time needed to ride out the ups and downs.

If you don’t subscribe to that notion why are even interested in equities at all?

 

[Mrs D]

Melt up is looking a bit more melt down today. Another good day to be out of equities. When the FTSE is under 6500 and the Dow is under 2200, I'll go back into the usual passive funds.

What if the FTSE never falls below 6500 ever again? What if it does, but only when you’re close to detriment and then keeps falling and takes ten years to rise above that level?

 

[Idaho]

The problem with moving from equities to cash to “wait for a crash” is that the whole point of owning equities at all is founded on the notion that they go up more than they go down.

If you subscribe to that notion you’ll want as much of your cash in equities as you can spare, bearing in mind the lengthy time needed to ride out the ups and downs.

If you don’t subscribe to that notion why are even interested in equities at all?

If you can even out losses and are riding broad long term trends, then you don't try and time the market. But if you are reasonably sure that you can time the market... Or at least see it as no more of a daft speculative gamble as the whole game is anyhow.. Then why not?

I have no interest in equities at all. They are just tokens of speculation.

 

[Idaho]

What if the FTSE never falls below 6500 ever again? What if it does, but only when you’re close to detriment and then keeps falling and takes ten years to rise above that level?

In answer to the first question - I will review if there are significant reasons to think we are past the point of an imminent crash.

If it crashes further after dropping below 6500, then I will still be over 20 % better off than if I'd stayed in during the initial drop.

 

[kabbes]

Melt up is looking a bit more melt down today. Another good day to be out of equities. When the FTSE is under 6500 and the Dow is under 2200, I'll go back into the usual passive funds.

My equity funds are still worth more than they were three months ago, though, is the issue with that. Helped by the 0.3% per month dividend yield that keeps on coming in regardless.

Not saying you can’t time the markets, of course, but I’ve never managed it successfully. Every other bugger is trying to do it too, you see.

 

[Idaho]

Pretty sure if I'd kept my money in the funds I held in early January, I'd be a few percent down. I'm not saying it's not a gamble. Indeed it's always a gamble, even if you play long term it's a gamble. If you don't have any pension in the markets but are relying on a government of the future honouring your defined benefits scheme, it's a gamble.

 

[kabbes]

Well, good luck to you! Hope you time it right.

 

[Idaho]

BBC seems to be on a glass half full mission. The sizeable market dumps over the week were included as sub notes in other company specific stories. But today "wall street regains ground" gets its own headline for a 0.3% dead cat bounce.

 

[yield]

Bernanke, Geithner & Paulson on the 2008 financial crisis
March 22, 2018

The three men who helped shepherd the U.S. through the 2008 Great Recession are worried that the country and Congress have not learned the right lessons from the last financial crisis — and may not have the tools to weather the next one.

In a joint interview with Marketplace on March 13, former Treasury Secretary Henry Paulson, former president of the New York Federal Reserve and former Treasury Secretary Timothy Geithner, and former Federal Reserve Chair Ben Bernanke stressed that while the financial system is stronger now than it was before the 2008 financial crisis, that could change if certain regulations are rolled back.

"The statistical recovery is a human recession."

 

[ringo]

Massive drops in Amazon share price over the last two days, looking like 10%, because Trump has said how little he likes the company, despite its positive results. No doubt he's under pressure from retailers losing out.

The volatility of the markets seems unbelievable, share values dropped and rising over rumours and opinion, it does look like some of it is manipulated. Would be very Trump to do this and bet on the share price falling and then recovering.

 

[Idaho]

Personally I think this volatility is just a down trend in close up.

 

[ringo]

Personally I think this volatility is just a down trend in close up.

When does the bear market start? Not convinced it's imminent. I hope not.

 

[pocketscience]

I cant say I've seen any other robust macro economic reasoning as to why there's so much volitity other than it being caused by what Trump twitters on a whim.
Bonkers when you think how much he could be profiting from it.

 

[kabbes]

The volatility in the index is in no small part due to its dominance by some tech companies that have had a bad week, such as Facebook. Not every company has taken a similar battering, although the lowering tide does strand all ships to some degree.

It’s also worth noting that the Nasdaq, Dow and Nikkei 225 are all still well, well up on their positions 12 months ago, let alone longer, and that anything less than three years in equity terms is pretty much noise. UK markets have found it tougher going in the last 12 months but are still up over 24 months. Recent losses are more a case of letting out the excess pressure than a retreat to a bear market.

5-year trends, for context:

 

[pocketscience]

The volatility in the index is in no small part due to its dominance by some tech companies that have had a bad week, such as Facebook. Not every company has taken a similar battering, although the lowering tide does strand all ships to some degree.

It’s also worth noting that the Nasdaq, Dow and Nikkei 225 are all still well, well up on their positions 12 months ago, let alone longer, and that anything less than three years in equity terms is pretty much noise. UK markets have found it tougher going in the last 12 months but are still up over 24 months. Recent losses are more a case of letting out the excess pressure than a retreat to a bear market.

5-year trends, for context:

View attachment 131347 View attachment 131348 View attachment 131349 View attachment 131350

What are the grey vertical bars along the bottom below the graph*?
and whatever they are, why did they increase so much and remain stable on the 1st graph (dow jones) just after Trump was voted in?
and why didn't they change in the other index's?

*I'm guessing it's volume of trade, but cant work out why on the other index's a) something similar didn't happen, or b) there wasn't a corresponding dip?

 

[kabbes]

What are the grey vertical bars along the bottom below the graph*?
and whatever they are, why did they increase so much and remain stable on the 1st graph (dow jones) just after Trump was voted in?
and why didn't they change in the other index's?

*I'm guessing it's volume of trade, but cant work out why on the other index's a) something similar didn't happen, or b) there wasn't a corresponding dip?

You guess rightly. As to why: I can only guess too (or I could google it, but where would be the fun in that?) -- I would guess it is because the Dow is a bit of a crap index that only comprises 30 companies, so there must have been an increase in volume in those 30 companies specifically, which was a blip that barely registered elsewhere (i.e. there wasn't a proportional trade in wider markets). The S&P500 is a much better index that I would have put up instead but my phone only shows its graph for up to 1 month, for some reason.

 

[pocketscience]

You guess rightly. As to why: I can only guess too (or I could google it, but where would be the fun in that?) -- I would guess it is because the Dow is a bit of a crap index that only comprises 30 companies, so there must have been an increase in volume in those 30 companies specifically, which was a blip that barely registered elsewhere (i.e. there wasn't a proportional trade in wider markets). The S&P500 is a much better index that I would have put up instead but my phone only shows its graph for up to 1 month, for some reason.

Ah OK makes sense. I didn't know there were only 30 companies on it
So being the US blue chip companies, I can see why a lot of capital would have made it way there on Trumps arrival (what with him making america great again etc).
Boeing prices for example have almost risen 3 fold in that period, which for such a sluggish sector is fucking mental.

 

[kabbes]

Volatility: a game of two halves.

The Dow in the last six months. Before late Jan: smooth as silk. But look at it go nuts since then.

 

[not-bono-ever]

Aluminium has had its best one dayer since last century on then back of RUSAL being sanctioned and their de facto removal from the supply chain - Glencore have declared force majeur on many of their supply contracts on the basis of this action. the London metal Exchange warehouses are loaded to the gunnels with existing RUSAL stocks that literally no one wants on their books at all, even though they ingots pre-empt the sanction imposition. Lots of long term financing deals on RUSAL stocks in place around the globe (interest rates are low) - the banks are sitting on this stuff that may suit uneasily with their compliance departments. last time this happened was IRALCO ( iran ) metals and their output was pretty insignificant really, but it shit the markets up badly.

The US import about 85/90% of its Ali and only has a handful of working smelters- the rest are mothballed and will take a few months to kick start, assuming the pots are not fucked due to lack of maintenance. The sanctions on RUSAL and China are a truly crude instrument to give the impression that the moribund US industries that are affected by imports are at the daybreak of a bright new future, but they are not obvs.

lolz

 

[not-bono-ever]

The $105 Billion ‘Ghost Stock' Blunder Rocking Markets in Korea

this is quite funny I suppose - 1000 won payment to employees fat fingered into 1000 shares - employees dumping them before the mistake was realised - value of shares distributed was £105 Bn

 

[kabbes]

My equity funds are still worth more than they were three months ago, though, is the issue with that. Helped by the 0.3% per month dividend yield that keeps on coming in regardless.

Not saying you can’t time the markets, of course, but I’ve never managed it successfully. Every other bugger is trying to do it too, you see.

It’s about a month since we’ve discussed this, and in this time the FTSE 100 has recovered from its position at about 6900 back to just below 7500 — a rise of about 8% and with the result that this index is now only about 3.5% off its record high in January. I think it demonstrates that the strategy of waiting for the FTSE to drop to 6500 just seems a bit extreme. Even playing a 10% margin (eg selling at 7600 and rebuying at 6900) I can see paying off from time to time, but I think even this is difficult to call and that 10% profit is potentially eaten up by opportunity cost and buying/selling costs in the meantime.

 

[Idaho]

True, from the perspective of:

a) this point in time when sterling has its annual April bump
b) if you only consider ftse (if you are going for a passive tracker strategy then you should spread across bourses).

Sterling is about to dive, economic growth in the UK has tanked, and there are plenty of big firms with profit warnings out there. Yes ideally buying up at 6900 and selling now would recoup 8% - but then where do you buy? If the FTSE 100 wasn't a good buy at 6900, it certainly isn't now.