FTSE scraping 5000

ad44downey

HBOS the biggest UK mortgage lender is tanking severely. Down 35% at the moment. This is what you get when you lend irresponsibly.

Generali

In my experience, it's moving averages that are used as barriers in stock investments not index levels. 5,000 makes a nice story though.

Two points to make:

1. The FTSE 100 is now yielding more than gilts which historically has been a very good time to buy

2. Equities aren't necessarily a good buy right now. Yields make look high from an historic point of view but if profits collapse (extremely likely I think) then things could change very quickly.

You pays your money and you takes your choice!

carolt

What are moving averages?

(Not that I plan to invest in the stock market, mind. I'm sure it's going downnnn.)

Baz_2

meester wrote: »

It may well be, but you don't want to be catching a falling knife.

If we get further bank failures, then things will fall further.

Of course the DJIA is not too far off 10k either.

It doesn't matter if you are catching falling knife. These banking collapses will eventually stop once the bad debts are written off in full. A few years time banking profits will return to normal and their shares will rise again.

It might be doom and gloom now, like it was in 1987, but it will go back into the 6000's given enough time.

I really love all the amateur economists on this forum trying to come across as though they know the future. It's like your not allowed to have a rosy outlook.
Doom and gloom 4ever! :T

Generali

carolt wrote: »

What are moving averages?

A moving average is an average of the last xx period of time.

For example, you could have a 90 day moving average for a share price which would be the average share price for the last 90 days. The idea of a moving average is that it removes the noise of day-to-day movements and is a better reflection of what the market thinks of a stock.

Today you'd measure the average share price since 18th June (90 days back from today), tomorrow it would be measured since 19th June (90 days back from tomorrow) and so on.

StevieJ

The markets have turned around on possible support for AIG.

WTF?_2

StevieJ wrote: »

The markets have turned around on possible support for AIG.

There was no option but to support AIG - if they fold, tens of billions of dollars worth of deals and trades would have to be unwound because of lack of insurance.

Man U fans can breathe easy.

StevieJ

Baz wrote: »

It doesn't matter if you are catching falling knife. These banking collapses will eventually stop once the bad debts are written off in full. A few years time banking profits will return to normal and their shares will rise again.

It might be doom and gloom now, like it was in 1987, but it will go back into the 6000's given enough time.

I really love all the amateur economists on this forum trying to come across as though they know the future. It's like your not allowed to have a rosy outlook.
Doom and gloom 4ever! :T

The 'doom and gloom for ever' is invariably a positive sign, that is why a high VIX index number is usually a top buy signal for the market.

http://finance.yahoo.com/echarts?s=^VIX#chart2:symbol=^vix;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Sir_Humphrey

I hate to point out to the technical whizzes this rather obvious fact:

In 1987, no major US investment banks folded. The last time that happened was long before VIX, Bollinger bands etc etc were ever dreamt up. Can they be treated as reliable at the current time (if they ever can be - qv Nicholas Taleb)

wolfman

Very true.

The 4th largest US bank folded. Merrill Lynch had to effectively be saved. AIG the largest insurer in the world looks to be in trouble. On our side of the pond HBOS share prices seem to be dropping a fair amount. Other broker/dealers look to be in trouble too such as Goldman, and M/S.

For months, banks will be working out who owes what. It looks like there will be more. "The dominoes fall slowly", can't remember who said that, but I think it'll last until 2010. Sad times, but necessary.