FTSE scraping 5000

StevieJ

Sir_Humphrey wrote: »

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)

The VIX index went over 42 yesterday any reading over 40 is highly significant in identifying (at least a temporary) market bottom. The VIX identifies fear, fear makes the authorities take extreme measures (e.g. short selling restrictions).

Generali

neverdespairgirl wrote: »

What about if you are leveraged on the stock market and have a margin call?

That was what killed the stock market in 1929 and it's also doing hedge funds in now.

A bit of volatility is great for making money. Too much and you can forget it. The market soars and all the 'stop losses' get hit on your shorts so the positions get closed out. Then it plummets and you get hit for margin calls on you long positions.

And when you report to the investors at the end of the month you look like an idiot if you say, "Well we ended up the month 4% down but on the 16th we were 10% up".

WTF?_2

chucky wrote: »

FTSE through the roof at the moment... may go down again but also may go up even more.

Why wouldn't it go up, up, up?

Short selling has been stopped, it looks like the US is going to abolish debt.

You have credit and debt and it looks like the debt side has been banished (or is about to be). What could possibly go wrong now, eh?

I can't believe they didn't do this years, decades, centuries ago - just think about all the uninterupted prosperity the human race could have enjoyed if debt and losing money wasn't possible.

All hail the financial geniuses running the Western economies.

WTF?_2

chucky wrote: »

lol - another typical !!!!!! post where you tell us all that they should have done this already.

saying these things in retrospect is too easy.

That whooshing sound is my point going over your head.

Unless you're trying to annoy me by being deliberately obtuse of course.

mewbie_2

chucky wrote: »

from your post your saying that the debt side will be banished - that implys all debt - are you saying all debt that banks have will be banished (or about to be)?

your words not mine...

Hello 'Chucky'. Do YOU know anything about the way recession will hit the Felixstowe docks?

Baz_2

neverdespairgirl wrote: »

What about if you are leveraged on the stock market and have a margin call?

Then pay up back to the margin. Surely part of the risk when you bought the securities.

Otherwise you are forced to sell and your back to my point.

slipthru

!!!!!!? wrote: »

As for other stuff, well making it in China will remain massively cheaper than making it ourselves so they may well figure that they can raise their prices and we'll still buy it.

I read in the papers on sunday that the cost of importing goods from china has risen dramtically recently, so business' are now looking to other countries for the same good at a far cheaper price, so i'm guessing china won't be doing so well in the future.

neverdespairgirl

Baz wrote: »

Then pay up back to the margin. Surely part of the risk when you bought the securities.

Otherwise you are forced to sell and your back to my point.

You said, "Like house prices, it doesn't matter unless you need to sell. It doesn't matter what the FTSE is doing unless you need to sell your investments." If you are leveraged, then the price really does matter!

wolfman

chucky wrote: »

from your post your saying that the debt side will be banished - that implys all debt - are you saying all debt that banks have will be banished (or about to be)?

I think you missed the point of his post. He was being sarcastic and mocking the solution the governments have adopted.

A sort of, why don't be just abolish debt, then there wouldn't be a problem, comment.


The FTSE did jump hugely today, although I think that shows the market is a little bit fickle at the moment.

Let's not forget it wasn't long ago the 4th largest investment bank in the US filed for bankruptcy. Fannie, Freddie, AIG and Merill Lynch had to be rescued, as did HBOS. A lot of businesses will be effected by this.

They won't topple in a matter of days or weeks. It'll maybe be another month or two another bank or broker/dealer will most likely be filing for bankruptcy too.

More money is being injected into the market to help kick start lending, but you have to remember for every action there is a reaction.

The dollar and sterling will most likely devalue. Inflation will rise because of the cost of imports (such as oil, food etc...). Taxes go up, the cost of living goes up, more people can't afford the tight mortgages they're on, repossessions increase. Public spending goes down. Which for the retail economy usually results in job cuts.

And so on. And all the above doesn't happen over night. It takes months for each action to affect all areas of the market. Much like a pond ripple. It will take a while before the tremors are felt by the wider economy.

I think the market will correct itself. For the governments it's damage limitation. 2009 will be a depression.