View Full Version : Financial turmoil - the snagged cardigan starts to unravel??
Oldpinkman
16-10-2014, 10:37
Many many years ago, in a lecture hall at Aston University, the guy we all knew as "Cuddly Duddly" Jackson introduced me to a Russian called Kondratieff.
Not personally you understand - he explained the subject of economic long wave cycles, (don't nod off - it gets better) and I acquired a lifelong interest in economic cycles, chartism and investment forecasting.
My first big success, was the house I live in now, bought for £80000 at the bottom of the 87 house market crash, having sold my 2 up 2 down cottage not too far from the top of that market, and rented for 2 years while the market fell around me. Slightly interested now?
Kondratieff was a Russian economist who in the 1930's studied the US stock market crash and subsequent Great Depression. His brief was to demonstrate it proved the validity of Karl Marx theory and spelt the ultimate collapse of Capitalism. He discovered it showed nothing of the sort, and was a regular 70 year feature of economic boom and bust going back to at least the South Sea Bubble in 1720. (Another book I have can trace the pattern back 1000 years before that - although clearly with less precision). Since this was the wrong answer, he was sent to the salt mines.
However, there is a fair chance it was the right answer, and at the end of the millenium the worlds economy snagged its cardie on the protruding nail of Tech stocks, and looked poised for a Kondratieff downwave. Until first Alan Greenspan gave us the "Greenspan put", then bouncing Ben Bernanke (with his sidekick Merv the swerve King) gave us the most famous Cunard liner, and finally Super Mario (Draghi) stepped in to hold the deck of cards up in the Eu platform game.
Maybe, just maybe (to mix my metaphors) gravity has final caught up. And nobody has any more darning needles left as the cardie unravels. The financial markets look really interesting just now.
And it is a famous Chinese curse "May you live in interesting times" :eek:
Sorry, Richard, I haven’t a scooby-doo what you’re on about :confused: :scratch:
Have you been smoking some whacky-backy?
Marco.
Tighten your seatbelt bud as we are going doooown.... :lol:
The old boy does seem to be ‘off on one of his specials’… :D
I’m a simple guy, who likes things spelling out in black & white, so I was never any good at cryptic puzzles! ;)
Marco.
Wakefield Turntables
16-10-2014, 11:14
He's saying that the stock market is going to go tits up and that it should provide a buying opportunity if your into buying shares. I think we are going into a market correction and yes I will be buying in the dip when it stabilises. KEEP CALM AND SEEK VALUE.;)
PS I prefer SEth kaleman, Benjamin graham and warren buffet.:D
If we did have capitalism there wouldn't be a problem as it would fix itself. Unfortuantely we instead have a global, unregulated casino the outcomes of which are rigged by a small cartel.
What should have happened after 2008 was the banks should have been allowed to go broke and be taken into public ownership, on a worldwide basis since that was the only way to do it. Losses would be written off, deposits guaranteed. That way you eliminate all the debt and you can get rid of the people responsible without paying them a penny. Then set up a new banking system from scratch. Okay a lot of very wealthy people would have gone broke if they did it that way (which is why they didn't do it that way) but for the man in the street like you and me it would be a huge improvement in every respect.
He's saying that the stock market is going to go tits up and that it should provide a buying opportunity if your into buying shares.
Why not just say that then in the first place, minus the ‘froth'?
PS I prefer SEth kaleman, Benjamin graham and warren buffet.:D
Aye, I know them all well!
Marco.
P.S Still waiting for this to “get better”, so wake me up when it does………… ;)
Oldpinkman
16-10-2014, 11:51
I'm with Macca - that government invervention, however well meant was a mistake. Not only did it protect the fat cats and their bonuses at the expense of taxes paid by ordinary folk, but it only delayed the inevitable
That was my other point Marco. A stock market crash (or rather - a return to values related to the earnings of the shares) is inevitable because the market has blown up too far. Its a long term pattern (and there are some short term ones at play too)
For absolute clarity, from my professional paranoia about giving advice, I am NOT saying buy now.
Buy low - yes. But I think the Dow and Footsie are about to start playing limbo - "how low can you go"? If you want to buy something that is undervalued and likely to rise in this crisis buy gold. ;)
That was my other point Marco. A stock market crash (or rather - a return to values related to the earnings of the shares) is inevitable because the market has blown up too far. Its a long term pattern (and there are some short term ones at play too)
Ah, I see. Best just 'spit it out’ in future and get to the point, if you want folk to read your threads all the way through. Unfortunately, by the third paragraph, I’d lost interest, soz... ;)
Anyway, I’ve never dabbled in stocks and shares - too risky, and I know bugger all about it. I prefer much more ‘solid’ investments, such as property, which is where the vast majority of our capital is tied up.
We dabble a little in buying and renting out property, both here and abroad, always by owing it outright (no loans, mortgages, etc). Our current ‘property portfolio’, in that respect, is worth around £550k, which acts essentially as our ‘pension fund’.
Marco.
I'm with Macca - that government invervention, however well meant was a mistake. Not only did it protect the fat cats and their bonuses at the expense of taxes paid by ordinary folk, but it only delayed the inevitable
Just kicking the can down the road - which is fine if it is a long road whch it is but we are starting to approach the end of it.
Re investments I was playing the stock market when I was still in the sixth form, I used to sneak out of class to call the broker. I lost interest when I went to college. I know a few folk who have done well out of it, I also know a few who got badly burned. Property is a much safer bet and almost as lucrative, it's just a bit more labour-intensive. I think gold has had its day for the moment. You should have bought it six or seven years ago.
I think gold has had its day for the moment. You should have bought it six or seven years ago.
Got a wee bit of that too (safely locked away for posterity), from purchases we’ve made in Italy, where the standard is 18 karat.
Marco.
Oldpinkman
16-10-2014, 13:18
Just kicking the can down the road - which is fine if it is a long road whch it is but we are starting to approach the end of it.
Re investments I was playing the stock market when I was still in the sixth form, I used to sneak out of class to call the broker. I lost interest when I went to college. I know a few folk who have done well out of it, I also know a few who got badly burned. Property is a much safer bet and almost as lucrative, it's just a bit more labour-intensive. I think gold has had its day for the moment. You should have bought it six or seven years ago.
Maybe. Property is an old mantra. You always worry that the bubble bursts just when everyone believes it can't. When the man in the pub, the Sun reader with straw in his hair, is lecturing you about how property is the only safe bet you know its time to get out. I speak as one who, whilst frustrated by being unable to sell, is sitting in a house going up in value by the minute. My fear is I won't be able to cash that in before it declines. If not crashes, stagnates. Property prices on the principles of affordability and supply and demand in this country utterly defy any value logic***. They have fallen in the States, Spain, Greece, Australia - they are under clear strain in Hong Kong and China, they are falling in France. I bloody hope the UK can hang on another 6 months.
As for Gold, a bull market has 3 phases. Its not just an inflation and dollar hedge, its an "under the mattress" flight to safety. Look at the Dow in Gold 200 day moving average, and tell me whether that remains your considered opinion.
The US trading this afternoon might give a clue. The US govt are clearly intervening in the market heavily, but can only temporarily deflect sentiment. If the Dow falls further and Gold even nudges up and holds onto its recent gains by Comex close on Friday, then I think a significant corner has turned.
*** we are looking at a 3 bed detached house in just under an acre of land, in the South, close to road rail and shops for £100,000 in perfect condition. Its not our first choice - but its not rough. There are 4 bedroom town houses in good condition for under £40,000 - where you could bring up a family. In this country? Locally - if my kids want to buy somewhere the cheapest studio flats are £145,000. You can't get a house for under £240,000. How does a 21 year old afford that? If the bottom of the market can't afford houses, when you've finished fannying about with govt schemes to distort the market, shared ownership, assisted housing, mortgage subsidies and other distortions how does the market sustain its price?
We'll see
You forget that we are not an island any more and anyone in the Eurozone is able to come and live here just as you are thinking of doing in France. Because there are a lot of good reasons to live here and not on the continent those £240,000 houses have lots of potential buyers. The market does not need the kids at the bottom and hasn't done for some time.
As for gold you may well be right I don't follow things that closely any more. of course you have to remember that investment advice is always subjective in nature ;)
Wakefield Turntables
16-10-2014, 14:56
The only way your really gonna make money from shares & property or any other investment of any worth (presuming its value has bottomed out) is to buy well below the NAV of the investment, paying 50p for 100p worth of assets in other words. If the investment just happens to dividend or a rent then you make money twice. Once when the assett returns to normal book value and secondly the dividend/rent. Simples!!
walpurgis
16-10-2014, 15:15
The economic 'health' of nations and the world has always been cyclic. We are on a balance point at the moment, the 'double dip' of the recent recession threatening to become triple.
All a bit like the weather I suppose. That goes in similar cycles (now what happened to that second Ice Age we were threatened with about thirty years ago? Not as fashionable as Global Warming I suppose).
awkwardbydesign
16-10-2014, 19:09
He's saying that the stock market is going to go tits up and that it should provide a buying opportunity if your into buying shares. I think we are going into a market correction and yes I will be buying in the dip when it stabilises. KEEP CALM AND SEEK VALUE.;)
But won't we have to wait 35 years for the next peak?
Far too many top jobs in S East.....move half of them north and level the field I say http://www.smiley-faces.org/smiley-faces/smiley-face-whistle-2.gif (http://www.smiley-faces.org)
The London bubble is fit to burst, inflated by foreign investors.
My chief concern is that when it does, those of us who've seen none of the benefit will share in the losses. House prices here have only risen by a few percent since 2008. In London they have averaged 15-20% annually. This cannot be sustained.
The London bubble is fit to burst, inflated by foreign investors.
My chief concern is that when it does, those of us who've seen none of the benefit will share in the losses. House prices here have only risen by a few percent since 2008. In London they have averaged 15-20% annually. This cannot be sustained.
A very deceptive term average with lots of definitions especially when used by government departments or the media.
Eagle owl
17-10-2014, 05:55
Sorry, Richard, I haven’t a scooby-doo what you’re on about :confused: :scratch:
Have you been smoking some whacky-backy?
Marco.
I'm glad you said that Marco, I thought it was just me being thick. :lol:
Lol… If I don’t ‘get’ something I’m always happy to hold my hands up and say so! I ain’t ‘proud’ :eyebrows:
TBH though, I didn’t try very hard to understand what Richard was going on about. When faced with a thread that, after having read the title, along with the first three paragraphs, and its exact purpose still remains unclear, then due to time constraints I usually just give up and go onto something else ;)
However, that’s not a criticism of Richard. If he wishes to write in that rather meandering, tangential, style (as is often his trademark), then I won't stifle him, but it’s worth pointing out that most people reading discussions on forums have a finite attention span, so if you want them to read and digest your posts properly, then you have to ‘capture them' early...
Marco.
MikeMusic
17-10-2014, 07:56
I assume we also have a lot of Russian money in the UK right now
When that goes..........
I assume we also have a lot of Russian money in the UK right now
When that goes..........
Not just Russian but Brazilian, American, Chinese, French and plenty others. No reason why it will go anywhere. The super rich see the UK as a bolt hole, it is the most stable of European nations socially and economically. London is also the centre of the financial and cultural (western) world. I know Germany blah blah but they are yoked to an inevitably doomed currency and a host of countries with failing economies and social structures. Over the next ten years I predict more and more foreign money coming in. That's not a property 'bubble' in London that is what it costs to live there on a global rating and it is only going to get more expensive. If I owned property there I wouldn't sell it unless I had to.
All that is required to maintain that momentum is that we do not get a radical government. The past 4 years have been very stable in that respect since with no majority they can't do anything drastic. That is the best environment for business, stable and unchanging. It is why the economy did so well during the John Major regime. Obviously extricating ourselves fully from the European disaster would be an exception to that. The surge in support for UKIP very encouraging in that regard.
Oldpinkman
17-10-2014, 09:59
You can't have a city populated entirely by the super rich. You need nurses and postmen. They have to live somewhere. Property is not outside the normal rules for an asset value. They include supply and demand. But demand is a function of affordability. Ultimately property only has value if people occupy it. The maximum they can spend on property is 100% of their after tax income, and pretty obviously the real maximum is somewhere below that. That sets an absolute cap on property values at some point. Trouble is, in a bubble, the "market mentality" is that the market can ONLY go up - for ever, into the indefinite future.
Wanna buy a tulip bulb off me? 1637 prices? ;)
The stock market (crooked casino) has pumped itself up not only with funding via quantative easing but in its later stages with guys using borrowed money to buy shares.
The rich have been getting richer especially those who are allowed into the money world of the city and it fiendishly complex systems devised to extract vast sums of money from many and distribute it to a few!
It has no bearing on reality with the real world but sooner or later the two may collide.
In my opinion the past few years have constantly papered over the cracks of reality and we have been convinced that we are moving to a brighter future. However the massive debts are still there, personal and business and have been extended by the live now pay later mentality of modern times.
MikeMusic
17-10-2014, 14:42
Not just Russian but Brazilian, American, Chinese, French and plenty others. No reason why it will .
It's pouring out of Russia at the moment.
If and when that settles it could go back rather quickly
I spotted Buffett unloaded a lot of Tesco shares......
It's pouring out of Russia at the moment.
If and when that settles it could go back rather quickly
I spotted Buffett unloaded a lot of Tesco shares......
Yeah well I have started buying my whisky from aldi now so that'll be it:eyebrows:
prestonchipfryer
17-10-2014, 15:55
Wanna buy a tulip bulb off me? 1637 prices? ;)
Tulipomania it was called or tulip mania, when a single bulb would be ''worth'' an excessive amount of Guilders. That was until the bulb market collapsed. Must be a lesson to be learnt there. Or maybe not. Human greed knows no bounds.;)
Oldpinkman
17-10-2014, 16:11
Tulipomania it was called or tulip mania, when a single bulb would be ''worth'' an excessive amount of Guilders. That was until the bulb market collapsed. Must be a lesson to be learnt there. Or maybe not. Human greed knows no bounds.;)
It was indeed. It was a great example of how "bubble mentality" takes over and manifestly ridiculous prices are justified by "those in the market" with a straight face, unable to see the absurdity the market has grown to. I quote from the great web
By the peak of tulipmania in February of 1637, a single tulip bulb was worth about ten times a craftsman’s annual income and a single Viceroy tulip bulb was allegedly exchanged for the following goods (The Tulipomania, n.d):
Two lasts of wheat
Four lasts of rye
Four fat oxen
Eight fat swine
Twelve fat sheep
Two hogsheads of wine
Four tuns of beer
Two tons of butter
1,000 lb. of cheese
A complete bed
A suit of clothes
A silver drinking cup
But the buyers at that price believed themselves rational and informed investors...:(
walpurgis
17-10-2014, 17:53
I spotted Buffett unloaded a lot of Tesco shares......
I've come to the opinion Tesco don't have a clue. They've just reported a big profit shortfall and booted out numerous senior staff and what do they do? Seems they've disposed of most of their cheaper 'Value' labelled products, which were definitely one of the main reasons people went there. Me definitely! Talk about shooting yourself in the foot. I'm going to Sainsbury and LIDL now.
prestonchipfryer
18-10-2014, 07:26
I've come to the opinion Tesco don't have a clue.
At my local Tesco Metro (it's where I fill my vehicles) they have installed a sort of island with the notice on it reading: ''This customer service point has been put here for the benefit of our customers.'' And with the usual blurb ''Every Little helps'' on it as well. Yesterday morning at around 8 o'clock I was waiting in the queue there behind ten other customers, with only one person actually serving at the till. There was a Tesco employee on said podium so I said to her: ''Why don't you help out on the tills?'' Her reply was: I am a customer service assistant and I don't have the authority to be on the tills.'' ''Every Little Helps'' what a load of bollocks!
At my local Tesco Metro (it's where I fill my vehicles) they have installed a sort of island with the notice on it reading: ''This customer service point has been put here for the benefit of our customers.'' And with the usual blurb ''Every Little helps'' on it as well. Yesterday morning at around 8 o'clock I was waiting in the queue there behind ten other customers, with only one person actually serving at the till. There was a Tesco employee on said podium so I said to her: ''Why don't you help out on the tills?'' Her reply was: I am a customer service assistant and I don't have the authority to be on the tills.'' ''Every Little Helps'' what a load of bollocks!
That's big companies in a nutshell. They assume that every employee below management grade is a cretin so they create procedures for everything and set them in stone. As a consequence common sense and flexibility go out the window. My limited experience of retail was that by and large the management were far more cretinous than the staff.
walpurgis
18-10-2014, 09:31
My impression of Tesco in the last few years is not good. Prices are high and product quality has declined. Till service is not great (although LIDL is the worst), stores often have a scruffy look, with unswept floors and I've been finding quite a few food items well past 'sell by' dates (often in the frozen section). On the present showing they'll just keep losing customers. I only go there now if I have to.
I have to admit I shop mostly at said Tesco. Mainly as I live on their finest ready meal selection. My ones just been refurbed so is in good nick. Staff are ok certainly no worse than others. I do go to asda and Morrison's too. Also aldi and lidl. Well stocked with supermarkets within a couple of miles. Tesco also give me 20p a litre off my petrol.
Wakefield Turntables
19-10-2014, 09:09
Just to get the thread slightly back on topic. I think we have had a correction of sorts to the market. Buying at these levels in good quality companies makes sense. I have a simple investing rule. I invest in addictions and necessities. I dont buy AIM or high risk, I avoid small cap mineral resource companies and IT next big things. I think the market will probably have a mini recovery. I'm not selling just yet and I intend to keep an eye on my investments till January then I think I'll probably top slice a few things.... I dont like the increase in IPO's and mega mergers, too much optimism for my liking. I think the shit will hit the fan in the next 6 to 12 months and I'll be there to pick up the bargains with the funds I top sliced. :D
Oldpinkman
20-10-2014, 12:02
I think my intention with this post was to state my opinion that this is not a "correction". That is the prevailing market view, but that is always the view - wishful thinking that any downward movement in stock values is minor and temporary. The signs are this could be far more significant - and accordingly present even better value buying opportunities - eventually. But not right now. Not for me.
Maybe this is just another blip. Maybe empty promises from Central banks can shore up confidence a bit longer. But sometime before the end of 2018, and quite possibly over the next 6 months, I expect stock values to fall significantly - like by 50% or more. Maybe the can will be successfully kicked down the road for another year or 2. But at some point it all needs to unravel.
Can't fault the principle of selling at the top, and buying at the bottom. Trouble is, both the Top, and the Bottom tend to be easier to see with hindsight, after the event. The clever bit, is to be able to see it in advance. And I for one, am usually lousy at short term predictions - so I play a longer game.
Wakefield Turntables
20-10-2014, 20:35
I try to buy on dips. I dont claim to being able to see into the future. I ultimately hold shares for decades to hopefully overcome meltdowns. ;)
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