Spectre of 1929 crash looms large

Graham_Devon

The article suggests that record amounts of debt is being taken on to invest in the stock market meaning traders are now more exposed to a fall in share prices than they were in the dot com bubble.

Doesn't sound to good? Though I'm sure everything is awesome.

Nothing has been learnt from the madness of the 1929 stock market crash as once again traders reach for record amounts of debt to pile into rising share prices.

The level of margin debt that traders are using to buy shares in the stock market reached the highest levels on record, according the latest data from the New York stock exchange.

US traders borrowed $460bn from banks and financial institutions to back shares, and once cash and credit balances held in margin accounts of $278bn is subtracted this left net margin debt of $182bn in July

Traders are now more exposed to a fall in share prices than at the height of the dot-com bubble at the turn of the century, and just before the financial crisis during the 2007 peak.

http://www.telegraph.co.uk/finance/markets/11066137/Spectre-of-1929-crash-looms-over-FTSE-100-as-traders-take-on-record-debts.html

carslet

Graham_Devon wrote: »

The article suggests that record amounts of debt is being taken on to invest in the stock market meaning traders are now more exposed to a fall in share prices than they were in the dot com bubble.

Doesn't sound to good? Though I'm sure everything is awesome.

It does not sound very good at all, and i don't think everything is as great as people and the government make out.

But with all the schemes they have and can easily bring back some more QE maybe it will last as long as they want

shortchanged_2

carslet wrote: »

It does not sound very good at all, and i don't think everything is as great as people and the government make out.

But with all the schemes they have and can easily bring back some more QE maybe it will last as long as they want

Yes it's commonly referred to as can kicking, though some on here fail to (or probably don't want to) understand.

Data figures can often only show half a picture and at the moment they are only showing us the positive data and not the foundations of the data.

purch

Graham_Devon wrote: »

Doesn't sound to good?

You're right.

On Saturday this same "Journalist" wrote an article bemoaning the fact that August was the slowest for a decade on the stock markets with the fewest number of shares changing hands since August 2003.

On Monday he writes an article predicting a re-run of the 1929 crash !!!! which followed a 10 year period of frenzied buying where the markets rose 10X.

You should try to be a bit more selective over which drivel you read and believe.

theEnd

A 1929 type crash is almost impossible now.

The powers that be are addicted to printing money, so much more likely to see an inflationary busy.... at some stage.

Graham_Devon

purch wrote: »

On Saturday this same "Journalist" wrote an article bemoaning the fact that August was the slowest for a decade on the stock markets with the fewest number of shares changing hands since August 2003.

Just gone and read the article after taking your advice on which drivel I read and believe.

Can you point out where he is "bemoaning" it? Article you refer to below for reference. He doesn't appear to express any sentiment at all in the article, so a bit confused as to how you have figured out he's having a moan.

http://www.telegraph.co.uk/finance/markets/marketreport/11064902/FTSE-100-trading-lowest-in-a-decade.html

purch

OK....try this then. Now we won't have to play your silly game.

On Saturday this same "Journalist" wrote an article stating the fact that August was the slowest for a decade on the stock markets with the fewest number of shares changing hands since August 2003.

On Monday he writes an article predicting a re-run of the 1929 crash !!!! which followed a 10 year period of frenzied buying where the markets rose 10X.

Do YOU think that a re-run of the 1929 crash is likely following on from such a quiet trading period ?

You should try to be a bit more selective over which drivel you read and believe.

Graham_Devon

purch wrote: »

OK....try this then. Now we won't have to play your silly game.

On Saturday this same "Journalist" wrote an article stating the fact that August was the slowest for a decade on the stock markets with the fewest number of shares changing hands since August 2003.

On Monday he writes an article predicting a re-run of the 1929 crash !!!! which followed a 10 year period of frenzied buying where the markets rose 10X.

Do YOU think that a re-run of the 1929 crash is likely following on from such a quiet trading period ?

You should try to be a bit more selective over which drivel you read and believe.

So he didn't bemoan it then?

Your advice came in very useful, thanks

Listen, I'm just posting an article for discussion. No need to attack me and assume I believe every word written. It's an economy board, this is very much linked to the economy.

I feel that the record debt taken on to invest in shares is something worth discussing. Those record debt levels are fact, not someones theory.

If you want to say it's drivel, feel free. But no need to attack me for posting it and then state I'm playing a "silly game" just because you can't quantify a statement you made.

MFW_ASAP

I've been quietly moving my pension investments into cash (and my wife and daughter's pensions too). I think there will be a major correction as an awful lot of investors have moved into the market because of zero returns from savings are are investing in funds/shares that are way outside their normal risk profiles. Once a small correction occurs, these guys will panic sell.

Long-term members of this board will remember that I moved to cash just before the credit crunch and then correctly called the bottom of the market and re-invested my cash. I therefore made quite a lot of money from the subsequent QE inspired recovery and I want to keep all of it.

shortchanged_2

MFW_ASAP wrote: »

I've been quietly moving my pension investments into cash (and my wife and daughter's pensions too). I think there will be a major correction as an awful lot of investors have moved into the market because of zero returns from savings are are investing in funds/shares that are way outside their normal risk profiles. Once a small correction occurs, these guys will panic sell.

Long-term members of this board will remember that I moved to cash just before the credit crunch and then correctly called the bottom of the market and re-invested my cash. I therefore made quite a lot of money from the subsequent QE inspired recovery and I want to keep all of it.

You're such a genius renoman.

MFW_ASAP

shortchanged wrote: »

You're such a genius renoman.

It's not difficult shortchanged, just common sense really.

When everyone is piling into a market it usually mean it's time to consider selling up. When everyone is selling up it usually means that it's time to consider buying.

I used this approach to great effect just prior to the credit crunch with my pension and added a significant amount to it. During the housing boom, when people were getting 120% mortgages, I 'hunkered' down and repaid the bulk of my mortgage. Once the crash occurred and we had 0.5% BoE rates, I bought a dream house.

Soon we'll have a correction in the stockmarket so I'm back in cash and we'll have interest rate rises so I have fixed my mortgage for 5 years and I'm making large overpayments.

It's called being a contrarian. Do the opposite of what the 'man in the street' (like yourself) is doing and you won't go far wrong.