Correction in progress!

coastline

Audaxer wrote: »

Whether markets fall further or start to rise again soon, I assume markets will eventually get back to and surpass the previous highs, as over the long term markets should continue to rise. Is the reason for the correction just the fact that they had risen so fast over the last couple of years?

The USA the main driver of world markets has risen at a rapid pace in the short term.Look at the steep rise in the last few months compared to previous. Its mentioned that institutions buy up the markets when they hit the 200 day moving average. I've no idea if its certain but it can be an indicator.? In recent days the market was around 15% above its long term average which is a rare event.

http://stockcharts.com/public/1585038/tenpp/1

There hasnt been a correction for a while so the probability of one was high..
I posted these charts early January this year..

https://www.advisorperspectives.com/images/content_image/data/36/36054e6065bfb26049f5b0e8f1278087.png

https://pbs.twimg.com/media/DRhKHGQVQAAYwy-.jpg

We can only wait and see if its all to do with wage growth , inflation and job creation. Theres always an excuse for a sell off anyway and I'm sure one day the markets will be back.

george4064

Just topped up my S&P 500 ETF tracker with some cash I had in my ISA, still plenty more cash on the sidelines if things turn really nasty.

capital0ne

george4064 wrote: »

Just topped up my S&P 500 ETF tracker with some cash I had in my ISA, still plenty more cash on the sidelines if things turn really nasty.

So you're not actually investing any large sums then. It won't make much difference, and you'll miss the turning point not to mention dividends (even with a tracker)

george4064

capital0ne wrote: »

So you're not actually investing any large sums then. It won't make much difference, and you'll miss the turning point not to mention dividends (even with a tracker)

What constitutes as 'large sums'?

Previously I had about 11% cash in my ISA, now its down to 8%. The other cash on the sidelines I was referring to cash in P2P, current accounts etc. which I would be happy to move into ISA if things turn nasty.

Filo25

bostonerimus wrote: »

A 10% fall is generally defined as a correction, so the DOW is there now. There was massive selling by funds at the close yesterday which is being interpreted as 'capitulation'. I don't buy it. Economic fundamentals have to kick in soon and the level of US debt, QE, BREXIT, inflation, rising interest rates etc are going to mean bigger falls...........call me Dr Doom. So maybe that DB pension option is looking a bit more tempting today?

It does feel like an "interesting" time in the markets at present, investors need to come to terms with what are fair valuations with monetary tightening an ongoing factor.

Earnings look healthy though as does the general economy, if the central banks can handle the situation with skill then further impacts may not be immediately visible, could just be a compression of returns going forwards as policy gradually normalises rather than anything too spectacular, of course I know it often doesn't work out like that!

Certainly if policy starts to tighten more quickly valuations are going to look stretched.

economic

I see no reason for rates to go much higher, probably market has priced in more then what should happen. We are still in low wage growth, low inflation and have vasts amount of productivity increases and cost efficiency. There is no reason to suggest inflation will rise meaningfully.

ffacoffipawb

Dow is going t1ts up again, this drop has some way to go I feel, FTSE to 5xxx I suspect. :eek:

Filo25

economic wrote: »

I see no reason for rates to go much higher, probably market has priced in more then what should happen. We are still in low wage growth, low inflation and have vasts amount of productivity increases and cost efficiency. There is no reason to suggest inflation will rise meaningfully.

On the other hand global growth is picking up, and it is difficult to justify continuing to leave monetary policy at what is effectively emergency policy indefinitely.

Ignoring anything else I think some normalisation is desirable to stop asset prices getting further out of hand and to give the central banks some ammunition to loosen policy in future if we do see future slowdowns.

Not looking at massive tightening anyway, for the UK, maybe expectations now about 2% by 2020 now rather than 1.25%.

The central banks will take it gradually in any case, if we start to see significant negative impacts on the real economy, no doubt things will go on hold.

US deficit is likely to be growing which means even more bond issuance as well, also not likely to help equities.

fun4everyone

Deutsche bank share price below it's lows during the GFC. Please go bust.

TBC15

ffacoffipawb wrote: »

Dow is going t1ts up again, this drop has some way to go I feel, FTSE to 5xxx I suspect. :eek:

You naughty profit of doom.:)