Are we in the middle of a financial meltdown?

1,054 posts in this topic

just my 2p worth - some defensive companies are getting oversold at the moment:

 

Halfords up 8% today (was up 13% earlier) as profits are up even though lfl sales down.

 

People still need wiper blades!

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Euro 1 billion offer for Opel according to DW, no offer yet for BASF, oil under $50

 

What is this world coming to? I'm going back to bed :o

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People still need wiper blades!

Tailors and shoe repair places reporting business +20% y-y. Too bad none of them are public ;)

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unfortunately as everything is made cheaply in the Far East now and people have been treating clothes, shoes etc as disposable, very few things are of sufficient quality to be able to repair and continue using them...

 

woe is us.

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It is back to basics: eating drinking and make merry. I have not seen one nurse,doctor,teacher or civil servant out of work and Tim Horton's is as busy as ever; so what is the problem?

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What I do hate about this thread is that folks only seem to post when things are going down.

 

I see the same pattern week after week - stocks forced lower during the week and up on Friday - is this hedge funds taking profits on short selling?

 

Anyhoo so far my best stock is RBS... which is ample proof that I haven't got much of a clue.

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keep the faith parnell!

 

depending on your level of disposable income, but I see a lot of people making money day trading on banking shares right now -

 

they all use barclays share service, then set automatic buy and sell limits on the shares, with say £10,000 thrown at a share, even a rise or fall of a few pence can earn £500 or so a day. not a bad little earner if you're into it

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and are they paying capital gains tax I wonder (which is the big reason I didnt sell out when my portfolio was 40% ahead) ?

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You still come out ahead if you have gains and thus pay the CGT (since you can always jump back in before the end of the year if you want to buy and hold and avoid the Abgeltungssteuer). Most of these investors anyway also have losses that they can offset against the gains. In volatile markets, there are no hard and fast rules, but a lot of investors who are not intending to be day traders use strategies identical to or similar to that described by worm.

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A cut from my morning mail:

"You see, as we mentioned before, these derivative bets are bought on an enormous amount of leverage.

 

For example, any wealthy individual can go to a broker these days and put down $1 million, and then leverage this amount 3 times. The resulting $4 million ($1 million equity, $3 million debt) can be invested in a fund of funds that will in turn leverage this $4 million another 3 or 4 times and invest them in a hedge fund; then the hedge fund will take these funds and leverage them another 3 or 4 times and buy derivatives like subprime CDOs, which are often themselves leveraged 9 or 10 times!

 

At the end of this long credit chain, the initial $1 million of equity can become a $100 million investment, out of which $99 million is debt (leverage) and only $1 million is equity. So we get an overall leverage ratio of 100 to 1.

 

It was this kind of new Super-Leverage which helped create the largest asset and credit bubbles in the history of humanity, including a global real estate bubble, a mortgage bubble, a bond bubble, a credit bubble, a commodity bubble, a private equity bubble, a hedge fund bubble and the mother of all economic bubbles: the global derivatives bubble."

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News from Reykjavik-on-Thames:

 

 

The scale of our problems has still not been understood. In essence the domestic banks are largely bust. The Government’s £500 billion bailout plan is primarily designed not to keep banks lending to small firms and to homebuyers but to prevent an unimaginable financial calamity.

Signs aren't encouraging:

 

 

Richard Pym, executive chairman of Bradford & Bingley, the nationalised bank, told MPs this week that the bank had already stress-tested its mortgage book to see how it would cope with a 25 per cent drop in house prices (answer: £600-800 million of losses). But he no longer regarded this as sufficient and was busy putting much larger house price falls into his equations.
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have to agree with parnell, that article Wheel posted from the Times is just a silly piece of hysterical journalism. What's with some of these business journalists?

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A cut from my morning mail:

"You see, as we mentioned before, these derivative bets are bought on an enormous amount of leverage.

 

For example, any wealthy individual can go to a broker these days and put down $1 million, and then leverage this amount 3 times.

Actually the above is far far worse - who outside of Buffet and the like can go to a bank and leverage their long position in the market 3 to 1 ???

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