A chat about the markets

srcandas

Was fascinated yesterday to see the markets react strongly to what in the end boils down to very little.

My SIPP at the mo is in Emerging Bonds, China opps, mining and commodity, and Vanguard 20% nice and safe. All responded in a positive direction.

Are the markets showing that they are just browned off with stagnation and even without good reason they will jump up? Is 5400 on the FTSE (and all the equivalents around the globe) the bottom line?

Must admit seeing this behaviour I may be tempted to step up my move into equities over the next three months (although largely emerging markets ).

Anyone else feel a change is brewing and are changing their strategy or am I imagining it? :beer:

bigadaj

I would agree, the fundamentals look positive however at is no guarantee of increases. Dividends and cover are generally very good, though this is in developed markets mainly, though even emerging markets are cottoning onto dividends, just some risk they could pay one year and then cancel the following of things look tough.

Main risk seems to be from sovereign debt, or public debt taken on by sovereigns like Ireland and Spain. This obviously knocks these countries, but the money in the moan is being lent out by emerging market countries, well sort of I'm thinking china, Singapore, middle east etc. If the eurozone starts defaulting this will knock the balance sheet of these countries and cold work it's way though the system.

All we can hope for is selective austerity in Europe and the us, so cutting back on welfare and the like but keeping growth in positive territory, no guarantees though.

I do, of course, know nothing.

Reaper

I believe the markets are ruled by fear. On the one hand is fear of a Eurozone collapse with knock on effects round the globe. On the other hand is fear of being out of the market, worrying that they are depressed and investors might miss out on a leap up if more QE is announced or solutions (even short term ones) are found for troubled European countries.

These strong but opposing fears mean we can expect plenty of volatility for the foreseeable future. I suspect the large movements will average out to nothing much until the Euro problem is finally resolved for better or for worse a few years down the line.

lvader

I believe yesterday was about short sellers closing their positions and the ones that didn't close quick enough got roasted and stopped out. The other pressures on the upside are caused by the bubble in government bonds, people want to lower their positions in these and will look to buy other assets on any sign of good news.

black_taxi_2

germany blinked

markets herd mentality

srcandas

lvader wrote: »

The other pressures on the upside are caused by the bubble in government bonds, people want to lower their positions in these and will look to buy other assets on any sign of good news.

That's me or certainly might be soon . Although I get the feeling interest rates will drop before they rise some years in the future.

I guess I'm in danger of wanting something to happen so am in danger of seeing something that is not real. I'm about to double the size of my SIPP pot due to a transfer from a bond, deposit heavy PP. Perhaps best I don't get adventurous yet and just double up my 54% bond portfolio.

But it would be good to think that it is light at the end of the tunnel and not an oncoming train :eek:

bigadaj

Out of interest what are your emerging Market bonds, are they corporate, government or both?

srcandas

bigadaj wrote: »

Out of interest what are your emerging Market bonds, are they corporate, government or both?

Held mainly within Investec EM Local Currency Debt and Aberdeen EM Bonds the biggest are:

VENEZUELA (REP OF) 12.75% 23/08/22 REGS USD
BRAZIL NOTAS DO TESOURO NACION 10PCT 01JAN14 BRL1000
TURKEY GOVERNMENT BOND BONDS 02/12 10
MEXICO (UNITED MEXICAN STATES) 6.75% 06/02/24 GBP GMTN
TURKEY GOVERNMENT BOND BONDS 02/15 4.5
MEXICO (UNITED MEXICAN STATES) 6.75% 06/02/24 GBP GMTN
CZECH REPUBLIC GOVERNMENT BOND BONDS 05/24 5.7
SOUTH AFRICA (REP OF) 8.25% 15/09/17 R203 ZAR
TURKEY (REP OF) 6.25% 26/09/22 USD
HUNGARY GOVERNMENT BOND BONDS 02/15 8

Company ones are smaller as a percentage. I guess 8% of whole portfolio.

An odd bunch but seen me ok since last October

coastline

Looking at the big picture on this chart we seem to be bang in the middle of an important range...
Break above 6000 and we're off to the moon...but below 5000..

http://www.chartsrus.com/chart.php?image=http://www.sharelynx.com/chartstemp/free/chartind1CRU.php?ticker=^FTSE

srcandas

Coastline that looks scary to me. Looking at it purely as a chartist I'd vote for a fall. I much prefer the Chinese charts. But then being 11% in China and looking to get periphery countries up to an additional 19% I would say that

It does however illustrate how easy life was before 1999

coastline

or maybe we are just in a range from year 2000 as described on here..