Straits Times Index   

STI to cross 3000 boosted by long-term investors

HarryP... :)

This is rather typical of many 'long-term investors' ...

I mean to say the "cutting loss" part, (of course) ...  

 

Nowonder most of our investor lost money as well as so call high class investor ( fund mgr ) ! this is because we (human ) kiasi & more si !! I believe if we ask terrorist come to invest , this market will up all the way as they bokiasi !!!

 

The time has come for me to seal the script of my holdings in a watertight bottle and burry it in my back yard. Will dig it out 3 years from this day. If it is still red, will cut loss immediately thereafter without regret....  

 

Aiyoh... what happen now? In a span of 60 mins, STI went from positive 20 to negative 20....

 

Joseph Stiglitz is a noble prize winning economists. He was chief economists at the World Bank during the late 1990s and had chaired Bill Clinton's council of economic advisers. Here are a summary of his views on the latest hot potato topic - the US sub-prime mortgage woes.

 1. Is the problem more serious than officially

   acknowledged and will it spread beyond the

   sub-prime segment? Yes and yes, says Dr

   Stiglitz.

 

2. What we have now is a "mortgage

   originator". He originates the mortgage and

   gets a fee for that but he

   does not bear the consequences of a bad   

   loan.

 

3. The nature of the sub-prime market was to  

   take  advantage of people who did not

   understand finance.

 

4. There were loans called teasers where for   

   the first three years the rates are very low

   so people take the mortgage thinking they 
  

   will refinance it in 3 years,

   believing the market will go up. Then people

   are  asked to take another new loan at

   another teaser rate. But they were wrong

   and prices could not continue to go up.

   Interest rates could not continue

   to remain low. Former Fed chief Allan

   Greenspan actually encouraged people to take

   out these variable rate mortgages.

 

5. Now credit conditions have changed and

   people cannot refinance. The sub-prime mess

   affects people who took out 100% mortgages.

   But the more important knock-on effect of

   the US mortgage bust will be on the broader

   economy as macroeconomic consequences goes

   back to the role of the housing sector and

   these mortgages have

   played in sustaining US economic grwith via

   consumption.

 

6. The US has had negative savings. People took

   money out of their mortgages. If they cannot

   do that anymore, the US cannot continue to

   have negative savings. So if we go from a

   minus savings rate of 1.5% to plus 1.5%,

   that is a big change in consumption. It has

   to slow down economic grwoth. If we go from

   minus 1.5 to plus 3 on savings , which would

   be a return to normal by American standards

   and we do this over a 4 year

   period, what you will see is a protracted

   period of slow growth but not a recession.

   But if credit markets seize and it all

   happens quickly, then we could have a

   stalled economy

 

Mani.. my pal... :)

You must be referring to Bull Frogs....WB is one! 

He said that there is no good or bad time to buy or sell stocks, only good or bad stocks to buy or sell, ie...no matter what are the signs one encounters in reality...

 

Can't remember where I read an article in the walls street journal or biz times a few days ago on the flip side of sub-prime. One of Morgan's associates (backed financially by Morgan) is currently happily lapping up almost US $300m worth of sub-prime refinance loans from clients whose loans they got from several smaller firms without the financial muscle. 

Pretty clear that the sub-prime industry is in the throes of aggressive consolidattion & those with the financial strength will also make tons of money even in times of adversity. It'll be quite funny when the US housing market turns up in a few years time..... we may just go into our own slump when all these huge housing supply comes on stream in the next 4years.

There was also an observation reported in the Sunday times today that in a mega bull, the harder the correction, the harder the next rally leg hence the volatility is necessary. Any wagers cos I'm of that opinion???

 

Sorry for the error  about India


Aroon indicator for all major stock markets are in a downtrend including Bombay sensex .

Only Shanghai has defied the downturn .

The bear has made up his mind and so has the bull after reading through the postings.May they both be right(equivalent to a draw in EPL. )

 

Right now the analogy of the waterfall suits the world stock markets(ex China , India}


Whether it is the bird park waterfall or the Niagra falls is still unknown. 

Those who chase the scorching China market based on manic buying will also be burnt .

The irony is that China sells cheap real goods(some contaminated) through harsh labour conditions to the USA  in return for paper dollars of doubtful value. I wonder if the Chinese will continue this charade or dump the US dollars if trade barriers are passed by congress,The Chinese can endure hardship better than their counterparts in the west- they are used to a bowl of rice and bitter tea.The Chinese can wait for a long long time  as evidenced by their past histories and still survive.National pride is more important than the economy if they think they have been conned.

 

Here. We have easy credit w/o earn income, starting with 500/-, pay only 28% interest per year.

 

It all started in US 6 -7 years ago, when fromer FED chief kept rising interest rate by 50 basic point and housing prices kept falling. Thus mortgagers will have to pay more knowingly they are high risk in their payment when due. thus more will be at default or late in payment leading to this meltdown.

 

Especially judging from the 'fierce' manner in which many, many stocks fell in the course of the past month...

Stocks falling like this is not auspicious and obviously ominous to say the least.. .

 

 

Well guess what George Soros said when he came to Singapore 2 years ago?  He commented that there will be a global recession due to US housing market slump.

 

What's going to happen tommorow??!


 

Mortgage meltdown contagion

A grim forecast has economists more pessimistic over how far the collapse will spread to the rest of the economy.

NEW YORK (CNNMoney.com) -- The outlook for the housing market looks even bleaker than it did a week ago. Last Friday we reported that foreclosures were skyrocketing, home prices falling and recovery forecasts were being scaled back.

And now this week, the mortgage meltdown spread to the financial markets with ebola-like speed, sparking fears that tighter credit will have a broader impact on consumers, markets and the economy.

 

 

 

teeth53,

cash is defintely prefered during these times of uncertainty & there is indeed truth in what RT is saying.... in these times, even good sound stocks get hit.... but to qualify, as long as the price to book is more than 2X, it will freefall regardless of its profitability simply cos there's  a price premium over its book value so selling is indiscriminate hence I prefer to stick to a current strategy of staying close to stocks in my portfolio with discount or slight premium to NTA, good cashflow & pays me a dividend. Price effects are not so significant from an absolute standpoint.....though, be prepare to hold to ride out the storm.

Newmoon, It's funny that historically, Warren Buffet's portfolio of stocks start to do well in these times esp in bear reversal times...... let's hope he's not laughing cos that would mean bear reversal in place & he'll start laughing himself to the bank.

 

 

Lausk22.. wo de hao peng you... :)

You are right about the frogs...

It should have been "heated frogs" and not "boiled frogs"...

"slowly heated frogs" are extremely bullish no matter what signs they encounter in reality...

 

When more funds are being "injected", i thought this will oreadi had the effect of "lowering" interest rates?

Market sentiment now quite bad that why "range / channel trading" was almost "everywhere".. for some counters, one would had saw lots of marriage deals at opening, during trading or closing.. 

Now garment will step in when needed, i think this will make the market to "test" the new lows in the coming weeks.. i will anticipate more volatility and downside.. nw "shortists" in US are "targetting" those companies that have low cash flow and / or limited access to financial supporting means.. in my own opinions, DOW did a "recovering" u-turn on fri was the result of the injection of the funds.. bt how long can this sustain?

How good a company perform is like a assurance to investors now, but whether market sentiments "allowed" this performance to reflects its "rightful" px is another issue altogether.. Take SCI for example, results quite good oso kena "channel / range traded"... No matter how good a counter is, if there no "support or buying pressure" from BBs or from many people, there no way a counter can goes up by leads & bounds.. in the current market now, just by playing "range/channel" methods is oreadi enough for contra/margin players to stay out of the market le.. 

 

The above is only my current sentiments/opinions.. Please do not do any buy/sell actions basing on the above assumptions/thinkings, thanks.

 

Hi Victorian2,

Thanks for your post, very informative !!

 

newmoon,

But that depends what is the truth in the first place. don't u think so?

mani....my pal...;)

I lost u - boiled frogs are not dead frogs? when we boil something alived, it gets cooked. when it is cooked, it is dead. unless u mean we boil water w/o the frogs inside. when water is boiled, we can drink it more safely. water cannot get cooked or die. water can also cools down or freezes into ice....;)