FTSE-100 falls to 1998 levels!

ivegotabig1

yeah up past 6000 now...But IMO, the underlying reasons why the market has taken such a bashing have not gone away !!
Not only has the ftse/Dow been overvalued but we are all simply borrowing too much !!....that is the bottom line ...

fimonkey

Ahh booo, for the first time ever yesterday I thought finance was 'exiting', could just see myself on the stock market floor yelling and waving bit of paper..... ah well, .....move along here, nothing to see... ;-)

RayWolfe

missile wrote: »

Can anyone understand / explain why a problem with US sub prime lending results in a small fall on US and a much larger fall in UK? (e.g. 0.1% DOW versus 4.1% FOOTSE yeaterday)

Fear and Greed. :eek: &
The things that control all markets.
However, fundamentals do take over for the long term.

si1503

StevieJ wrote: »

The Fed has cut the discount rate by 0.5%.

Yup, just what the doctor ordered!

influence

That's just a painkiller for a big headache. Doubt it will cure me if I don't know if I have a brain tumor.

Mr_Mumble

missile wrote: »

Can anyone understand / explain why a problem with US sub prime lending results in a small fall on US and a much larger fall in UK? (e.g. 0.1% DOW versus 4.1% FOOTSE yeaterday)

This is due to when the markets close (UK 4:30pm, US 9:00pm). New York fell after London's close on Wednesday, so London fell Thursday morning. Then when New York opened Thursday it fell again, so London fell further. London closed and then New York rallied. Note the footsie rose more than the Dow/S&P on Friday because, again, it was 'catching up' with sentiment.

The FTSE does have a great deal of exposure to US subprime, perhaps more-so than the major US indices. HSBC, RBS and Barclays are directly affected and financials make up a larger proportion of the FTSE.

missile

Thanks Guys,

I do understand fear and greed, but would not have thought those investing in the UK were any greedier than in the US?

I do understand FTSE companies have exposure to US subprime. Maybe those in the US saw the writing on the wall earlier.

It is a global market place, but it just seemed a little strange (to me) and I not heard any of the pundits comment on why footsie should fall so much more than all other indices.

Obviously the cash injected by FED is a factor.

EagerLearner

Started buying into funds 2 months ago, clearly bought at the wrong time, lost a fair bit so far but have not sold yet as right now I would definately lose that money. However, wondering this morning if it's best to cut my losses and lose £250, or wait to see some recovery and then buy more. I know guessing is a fools game, but as an inexperienced investor I don't want to be so badly burned that I never touch investimg again...

agal

EagerLearner wrote: »

Started buying into funds 2 months ago, clearly bought at the wrong time, lost a fair bit so far but have not sold yet as right now I would definately lose that money. However, wondering this morning if it's best to cut my losses and lose £250, or wait to see some recovery and then buy more. I know guessing is a fools game, but as an inexperienced investor I don't want to be so badly burned that I never touch investimg again...

No-one can predict the future. Have a look at this chart http://uk.finance.yahoo.com/q/bc?s=%5EFTSE&t=my&l=on&z=m&q=l&c=
Notice how the market goes up and down all the time but the long-term trend is always up?
Some investors (myself included) look on market falls as buying opportunities.

Ian_W

EagerLearner,
I certainly don't know whether it will get worse before it gets better but I don't think selling after a fall and buying after a rise is the right thing to do.

From Mark Dampier, head of research at H-L:
The flipside of this is that they also provide very good buying opportunities. You might call this a summer sale...
The other point to make is that big stock market falls are often extremely close to big rises. On March 12th 2003 the market fell 4.01% as measured by the All Share Index. On the 13th it rose 5.23% followed by a rise of 3.05% and then after the weekend on the 17th it rose a further 3%. It goes to show how close falls and rises are.
Figures from Fidelity help back this up. A stake of £1,000 invested in the UK stock market in June 1992 would have been worth £4,612 at the end of June 2007 including the reinvestment of dividends if left untouched. Strip out the best 10 days and the investment would be worth £3,041, miss the best 40 days and that stake would now be worth just £1,304. So we can see that time in the stock market can be more important than the actual timing.
For those invested patience is the order of the day.

From your thread on ISA funds, you're investing in the main on a monthly basis and as such price falls help you buy cheaper.
I really do think you ought to re-evaluate your attitude to risk - you said you'd tolerate -30% but are looking to pull out at less than half that fall.
You're investing for the LONG term, if you can't accept that falls [and rises] of this magnitude [and more] can and WILL occur then perhaps it's not for you?