Global financial system implosion begins
- Thread starter Falcon
- Start date
Just because I was curious as to where we currently sit with respect to economic ups and downs, I decided to take the FTSE All-Share and:
1) First adjust it for inflation, so that its history represents values on today's terms
2) Apply a trend, so that historic "as-if" numbers reflect the growth in value of its constituents' retained profits. If Astra Zeneca has a fundamental value that is 50% more now than 10 year's ago in real terms, that needs to be reflected in the figures.
The trend to use is not obvious, but because I am interested in where we are in historic value terms, I picked one that levelled out the trendline.
I went back to the beginning of 1989 mostly because there was an easy inflation index from the ONS that started in 1989.
Results below:
You can see the dot-com bubble and credit bubble clearly in this graph.
Couple of points of note:
Firstly, the long term trended average is 4319. We're currently at just under 4200 (although the last point on this curve is from 2 Dec, which was just under 4100). So from an historical point of view, we're currently about 3% below average. Or, to put it another way, we're as close to the long-term average point as makes no odds.
Secondly, the index actually spends most of its life below the long-term average, because of the way the average reflects some massive bubbles. I think from eye, you'd put the long-term bubble-free trend at more like 4100, meaning even more that we're currently at about the typical expected level.
Thirdly we've been pretty consistently at that long term level for the last 10 years. The ups and downs in that time are small compared with the periods of 1989 to 1994, 1995 to 2003 and 2003 to 2009. I find this particular surprising because my perception has been of things going all over the place since the Brexit vote. But apparently my perception is wrong.
What does this mean in terms of whether the global financial implosion is underway or not? Not much, but it does suggest that the UK market as a whole isn't too spooked right now.
1) First adjust it for inflation, so that its history represents values on today's terms
2) Apply a trend, so that historic "as-if" numbers reflect the growth in value of its constituents' retained profits. If Astra Zeneca has a fundamental value that is 50% more now than 10 year's ago in real terms, that needs to be reflected in the figures.
The trend to use is not obvious, but because I am interested in where we are in historic value terms, I picked one that levelled out the trendline.
I went back to the beginning of 1989 mostly because there was an easy inflation index from the ONS that started in 1989.
Results below:
You can see the dot-com bubble and credit bubble clearly in this graph.
Couple of points of note:
Firstly, the long term trended average is 4319. We're currently at just under 4200 (although the last point on this curve is from 2 Dec, which was just under 4100). So from an historical point of view, we're currently about 3% below average. Or, to put it another way, we're as close to the long-term average point as makes no odds.
Secondly, the index actually spends most of its life below the long-term average, because of the way the average reflects some massive bubbles. I think from eye, you'd put the long-term bubble-free trend at more like 4100, meaning even more that we're currently at about the typical expected level.
Thirdly we've been pretty consistently at that long term level for the last 10 years. The ups and downs in that time are small compared with the periods of 1989 to 1994, 1995 to 2003 and 2003 to 2009. I find this particular surprising because my perception has been of things going all over the place since the Brexit vote. But apparently my perception is wrong.
What does this mean in terms of whether the global financial implosion is underway or not? Not much, but it does suggest that the UK market as a whole isn't too spooked right now.
Ming
I shot a man in Reno...
To pump up demand without increasing real wages innit? Same play book as the eighties (actually it’s been the same since the eighties). Plus it’s more likely to put people in financial jeopardy so the cunts can get their hands on assets like property. Which then pumps up the landlords holdings.
gosub
~#
Dimon says the only financial market bubble out there right now is in sovereign debt
"Right now people think central banks around the world can do whatever they want. They can't," J.P. Morgan Chase CEO Jamie Dimon said.
Turnaround costs push Deutsche Bank to $6 billion loss
anuary 30, 2020
anuary 30, 2020
Turnaround? I thought banks could just print money? <facetious smiley>
Ahmed, Nafeez. 2020. "Government Agency Warns Global Oil Industry Is on the Brink of a Meltdown", Vice. 4 Feb
Excellent article by Nafeez and report by the Geological Survey of Finland and well worth your time to read, in my view.
ska invita
back on the other side
Not that i care but curious to read FTSE 100 lowest since 2016 at 6495 points.
yet even the graph they use to illustrate it shows it went to 5707 in 2016?
yet even the graph they use to illustrate it shows it went to 5707 in 2016?
not-bono-ever
meh
the VIX is more telling and representative of sentiments I feel
elbows
Well-Known Member
Whats wrong with that? They are saying its at lowest point since that low, not equal to or lower than that low!
not-bono-ever
meh
Former Barclays executives cleared of fraud charges
Roger Jenkins, Tom Kalaris and Richard Boath are found not guilty on all charges in under six hours.
www.bbc.co.uk
And that’s that. It’s taken near a decade and a half but no one in this sceptred isle is going down for the crash.
ska invita
back on the other side
Its not the lowest point since that point. There are many other days that closede higher than 5707 but lower than 6495
elbows
Well-Known Member
But are any of them after the 2016 low recovered? I think they will lump all the subsequent low points that are a knock on consequence of the lowest point of 2016 together. ie they are telling a story of dips as a whole.
ie the whole period I have marked in red (roughly/badly) is counted as the previous low.
extra dry
Happy to be here
ska invita
back on the other side
Basically above the law.And that’s that. It’s taken near a decade and a half but no one in this sceptred isle is going down for the crash.Former Barclays executives cleared of fraud charges
Roger Jenkins, Tom Kalaris and Richard Boath are found not guilty on all charges in under six hours.www.bbc.co.uk
Supposedly this ruling is yet another failure of the Serious Fraud Office's ability to prosecute anyone on a scale
"The SFO’s director, Lisa Osofsky, last year dropped two high-profile probes into Rolls-Royce and GlaxoSmithKline, and faces mounting pressure over its falling conviction rate — of just 53 per cent of defendants in 2018-19 — a three-year low."
Sfo are blaming outdated laws (from the early 1800s) hindering their ability to prosecute. Is the government involved in reforming laws?
gosub
~#
Declaring it cannot pay debts, Lebanon sets stage for default By Reuters
Declaring it cannot pay debts, Lebanon sets stage for default
m.investing.com
ska invita
back on the other side
FTSE 100 sub 5000 by end of the week I reckon
Kilgore Trout
Active Member
BP down 20% and it hasn't done anything, as in pollute an ocean, announce bad results etc
That’s because the oil price has collapsed as a result of the breaking of the OPEC agreement between Russia and Saudi Arabia
Yuwipi Woman
Whack-A-Mole Queen
I'm trying to look at this a good news. The lower the Dow goes, the less chance of Trump being reelected. Its going to hurt a lot of people in the short run.
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Idaho
blah blah blah
I think that's pretty unlikely. I've been sitting my pension out of the market for almost 2 years after switching to gilts when the ftse 100 was 7400, my target re-entry was 6200*. I'm seeing anything under 6000 as good long term value and makes waiting out this while, worth it. I'm in the middle of transferring one old pension into my new one and that money is unavailable for 2 weeks... Bit annoying.
*I really have no fundamental interest in financial markets. I have a private DC pension which means I either remain ignorant of the markets and pay a high price for other people's crap decisions on my behalf, or I roll up my sleeves and play the casino myself. Personally I think it's a stupid way to manage retirement income.
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