Just check out last paragraph of my previous post, go on, check it! You will notice that the expected fall has occured today, what's more it was a very volatile trading session again. The British Markets closed down with -4.46% loss of its value. The company that I've been tracking as an example (ANTO.L in the top UK 100 by capitalisation) experienced volatility of up to 10% today...
Wait, let me re-iterate that, the blue chip metal-mining company saw 10% volatility. Only reaction that comes to mind is, wow, because this is not a single case of such volatility, in blue chips these days.
To explain, the Asian markets started daily trading with a horrible nearly 7% drop on NIKKEI 225. Followed by other eastern markets doing rather badly and when western europe opened up the fall continued with now 6:30pm (Greenwich Time) the DowJones is craweling at 8600, meaning -3.65% loss.
A lot of these drops are attributed to some sort of realisation by the investors that eventhought credit markets are improving, everybody else is now going into recession.
See the following articles that will help summarise "events":
http://biz.yahoo.com/ap/081022/world_markets.html
http://biz.yahoo.com/ap/081022/wall_street.html
http://news.bbc.co.uk/1/hi/business/7684216.stm
http://biz.yahoo.com/ap/081022/oil_prices.html
http://ekonomika.sme.sk/c/4135938/svetova-ekonomika-smeruje-do-recesie-euro-pada.html
I think we are now in vain looking for explanations, it is clear markets will be volatile and generally on the down side for big part of near time to come. Traders will still however try to make profits in short term, so we will see upswings and drops as investors take profits (or losses while they are still alive :-).
Wednesday, October 22, 2008
Tuesday, October 21, 2008
Volatility can be great & gloomy
As I wrote on October 14, 2008 it is becoming clear we are close to the bottom of largest market falls, but a recession is what we are just enterying. However as this is happening the worse falls are behind us and markets are now looking to find their bottoms. This means large volatility, and brings plenty of opportunity to make money, but also to loose some.
Caution is hence advised. I recently started day trading, and it was not uncommon to see in stocks that I traded, such as ANTO.L (a large in the top 100 by capitalisation in UK) moves that ranged over 10% during a trading session.
Anyway, a lot, really a lot, of chaotic trading seems to be going on at the moment. These are dangerous times and predicting market direction is hard, lets look at tomorrow. The previous 2 days have seen some growth of market prices again, and today there was slight drop, most of it starting on the Dow Jones after British markets closed at 4:30pm (Greenwich Time), hmm... I'm
thinking now tomorrow might be a negative roller coster as traders sell some of the growth they accumulated over the past up days. Let's just see what will happen tomorrow ;-) !
Caution is hence advised. I recently started day trading, and it was not uncommon to see in stocks that I traded, such as ANTO.L (a large in the top 100 by capitalisation in UK) moves that ranged over 10% during a trading session.
Anyway, a lot, really a lot, of chaotic trading seems to be going on at the moment. These are dangerous times and predicting market direction is hard, lets look at tomorrow. The previous 2 days have seen some growth of market prices again, and today there was slight drop, most of it starting on the Dow Jones after British markets closed at 4:30pm (Greenwich Time), hmm... I'm
thinking now tomorrow might be a negative roller coster as traders sell some of the growth they accumulated over the past up days. Let's just see what will happen tomorrow ;-) !
Tuesday, October 14, 2008
Hedge Fund: StrategyCapital
- Funny :-D - http://www.strategerycapital.com/
- Wall Street Gossip - http://dealbreaker.com/
Close to the bottom??!
As I wrote on Friday 17th October the "Black Friday of 2008" has reached shores of global markets. Looking at past crises what follows after such days is a lot of extremely volatile sideways action and a possibility of market bottom beeing reached. Every individual crisis is handled differently with varying macro variables involved. Hence it is difficult to say whether a natural market bottom is close.
Given the current environment and efforts my bet is that there will be further drops but some sense of stability returning into markets. Maybe the worst panic has been shielded but an economic downturn is not over yet!! At least not for some market regions, let us remind ourselves that recent years have initiated some economies becoming more potent now than ever.
Yesterday (13th October) markets saw their White Monday of 2008. Over the weekend European leaders have finally agreed on coordinated rescue action, over $2 trillion were put on the line as off Monday in guarantees and emergency measures to save banks in Europe.
The current crisis prevention efforts have prevented the worst for now. Monday and today have seen good bullish price bursts. However rescue efforts create a number of deep problems. To name a couple,
Given the current environment and efforts my bet is that there will be further drops but some sense of stability returning into markets. Maybe the worst panic has been shielded but an economic downturn is not over yet!! At least not for some market regions, let us remind ourselves that recent years have initiated some economies becoming more potent now than ever.
Yesterday (13th October) markets saw their White Monday of 2008. Over the weekend European leaders have finally agreed on coordinated rescue action, over $2 trillion were put on the line as off Monday in guarantees and emergency measures to save banks in Europe.
The current crisis prevention efforts have prevented the worst for now. Monday and today have seen good bullish price bursts. However rescue efforts create a number of deep problems. To name a couple,
- huge budget deficits, this will put a lot of strain on population and take time to heal.
- due to the current scare it is also clear markets will become over-regulated, this will criple free trade mechanics and it is difficult to say to what extent will negatively affect markets.
- even thought we are in a recession inflation risks are still very real, in the UK today reached 5.2% as opposed to government's target of 2%.
Friday, October 10, 2008
10th October 2008 - the Black Friday of 2008
We have see large losses on world markets for the past two weeks. You may wonder why then did I pick today.
Well it's pretty simple actually, and has to do more with psychology than with real economy. This week served to confirm that feelings are now taking the larger part of healthy judgement.
Last week 29th Sept - 3rd Sept, was full of expectations. Monday the House of Representatives voted against the $700b bail out plan, hopes were still high thought after wednesday senate voted in favour of a slightly tweaked $700b rescue plan and finally friday the rescue bill did pass the House. It was thought that this should ease the crisis, some even hoped for a miracle. To most traders thought it was always clear the question is not UP or DOWN but the severety of the market DOWN.
The $700b rescue bill didn't do the trick ;-)! Monday 6th Sept was a complete let down, as we saw FTSE go down by nearly 8% and other world markets following this trend. In fact this was a clear sign that the $700b came too late. Whats more, on wednesday 8th Sept UK government anounced its rescue plan worth dozen billion pounds the markets still fell. Thursday saw coordinated efforts of 7 central banks lowering interest rates, to no avail. Well and today came the cherry of the week, Nikkei dropped nearly 10% eventhought the government anounced that they'll pump several billion dollars into its markets.
I could carry on mentioning a plethoria of rescue efforts by governments and regulators, let me just say that the UK markets have lost nearly 20% of its value this week, so have the US and Nikkei has lost twice as much as during the 1987 crisi. We are way past the fundamentals now, this is a full on crisis, comparable to 1987, 1970s, 1929.
We have reached a point where economics stops making sense and investor psychology takes over. Let me rephrase, economical incentives in form of regulation and rescue efforts should logically help, however panic has spread and nobody wants to own anything in the markets anymore, investor trust is gone!! This is just panic.....
Rebuilding trust takes time, which is the only thing we never have enough off.
Wednesday, October 8, 2008
another 100 year move, woohooo!
so here we go again a 9.4% drop on Nikkei this wednesday 8th Oct 2008, triggered by previous days drop of Dow by more than 5.1%, and now the European markets responded with multiple percent drops in the first trading hours :-)
I think it's obvious that we are now in a panic more than in just an economic crisis. All the drops on world markets propagate like a chain reaction with moves that are theoretically extremely unlikely (given standard capital market theory), and all this is still happening even with the various government rescue plans beeing anounced.
Today UK government unveiled their rescue plan, which compared to the US is tiny but clearly better. Even then the FTSE-100 fell with more than 90 constituents showing a drop in price!!
I think it's obvious that we are now in a panic more than in just an economic crisis. All the drops on world markets propagate like a chain reaction with moves that are theoretically extremely unlikely (given standard capital market theory), and all this is still happening even with the various government rescue plans beeing anounced.
Today UK government unveiled their rescue plan, which compared to the US is tiny but clearly better. Even then the FTSE-100 fell with more than 90 constituents showing a drop in price!!
Monday, October 6, 2008
7.85% - the market's going down baby!
So what's up with that, a hundred year move is occuring a couple of times every two week these days. I mean given the current volatility, we can pretty much throw most of EMH out of the window. It ought to be understood that moves like this certainly violate any sense of Normal density distribution of returns.
Lets face it EMH is a crappy, oops, sorry lets use other words here... mhmm, incomplete model of financial markets. Maybe we should give a chance to FMH, AMH, or George Soros' Reflexivity Theory!!
Lets face it EMH is a crappy, oops, sorry lets use other words here... mhmm, incomplete model of financial markets. Maybe we should give a chance to FMH, AMH, or George Soros' Reflexivity Theory!!
Saturday, October 4, 2008
George Soros
I wanted to mention this gentleman for a while. He's best well known as the man who broke the Bank of England. His Quantum fund was behind the huge short selling of British Pound on the 16th September 1992, that brought it onto its knees.
Other than that instead of me repeating information that is already out there, definitely check out wikipedia article or much better the numerous books he wrote. In short, Soros is a philantroper, phylosopher and a successfull fund investor.
What I like about this guy are his thoughtfull insides into current issues. He's also a man who is not scared to stand up for the right thing he believes into. Soros also acknowledges that he can be wrong and doesn't make an issue of it but accepts the world as it is, that it is full of biased opinions.
Check out some of his interviews available online:
Other than that instead of me repeating information that is already out there, definitely check out wikipedia article or much better the numerous books he wrote. In short, Soros is a philantroper, phylosopher and a successfull fund investor.
What I like about this guy are his thoughtfull insides into current issues. He's also a man who is not scared to stand up for the right thing he believes into. Soros also acknowledges that he can be wrong and doesn't make an issue of it but accepts the world as it is, that it is full of biased opinions.
Check out some of his interviews available online:
Friday, October 3, 2008
Rescue Bill passed!
I was just reading an article about Alternative solutions to the currently discussed $700 rescue bill when I checked the news to find the House has passed it. http://biz.yahoo.com/ap/081003/financial_meltdown.html
As I was reading I started to be more convinced that the bill isn't a fair solution and may have many implementation problems. I think Nouriel Roubini's quote summs up nicely, the feelings of so many people who opposed this bill:
It is pathetic that Congress did not consult any of the many professional economists that have presented – many on the Monitor Finance blog forum – alternative plans that were more fair and efficient. This is again a case of privatising the gains and socialising the losses; a bail-out and socialism for the rich, the well-connected and Wall Street. And it is a scandal that even Congressional Democrats have fallen for this treasury scam that does little to help millions of distressed, debt-saddled home-owners."
As I was reading I started to be more convinced that the bill isn't a fair solution and may have many implementation problems. I think Nouriel Roubini's quote summs up nicely, the feelings of so many people who opposed this bill:
It is pathetic that Congress did not consult any of the many professional economists that have presented – many on the Monitor Finance blog forum – alternative plans that were more fair and efficient. This is again a case of privatising the gains and socialising the losses; a bail-out and socialism for the rich, the well-connected and Wall Street. And it is a scandal that even Congressional Democrats have fallen for this treasury scam that does little to help millions of distressed, debt-saddled home-owners."
or maybe "yes" after all???
Friday 3rd October 2008 - the House of Representatives of United States Congress is to vote on an ammended version of the $700bn rescue package.
The ammended version still consists of a $700bn made available to the Secretary of Treasury for buying out the troubled Mortgage backed Securities, however the package now also includes $100bn worth of tax breaks and increased government's guarantee on savings from $100,000 to $250,000.
Only on monday the initial version of the rescue package has been declined by the House however later this week a slightly changed version of it has passed the Senate and now needs final approval by the House. Check out how the Senate and House of Representatives work - http://en.wikipedia.org/wiki/Concurrent_majority
It is now 6:30 Greenwich time and the House should be voting soon on the "Emergency Economic Stabilization Act of 2008", the expectations are very high and markets have been extremely volatile this week. FTSE-100 incrased by over 2% in the last trading hours and the Dow Jones is up by 2.80%
An open letter to the congressed endorsed by over 200 economists pointed out the pitfalls of the current rescue plans [see: http://freakonomics.blogs.nytimes.com/2008/09/23/economists-on-the-bailout/]
I am doubtfull the rescue package will pass, however there is a lot at stake for some high-profile characters and only a couple votes are needed to shift the cards around...
The ammended version still consists of a $700bn made available to the Secretary of Treasury for buying out the troubled Mortgage backed Securities, however the package now also includes $100bn worth of tax breaks and increased government's guarantee on savings from $100,000 to $250,000.
- http://biz.yahoo.com/ap/081003/wall_street.html
- http://news.bbc.co.uk/1/hi/world/americas/7649822.stm
Only on monday the initial version of the rescue package has been declined by the House however later this week a slightly changed version of it has passed the Senate and now needs final approval by the House. Check out how the Senate and House of Representatives work - http://en.wikipedia.org/wiki/Concurrent_majority
It is now 6:30 Greenwich time and the House should be voting soon on the "Emergency Economic Stabilization Act of 2008", the expectations are very high and markets have been extremely volatile this week. FTSE-100 incrased by over 2% in the last trading hours and the Dow Jones is up by 2.80%
An open letter to the congressed endorsed by over 200 economists pointed out the pitfalls of the current rescue plans [see: http://freakonomics.blogs.nytimes.com/2008/09/23/economists-on-the-bailout/]
I am doubtfull the rescue package will pass, however there is a lot at stake for some high-profile characters and only a couple votes are needed to shift the cards around...
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