29 replies to this topic

[Tor]

NAV, as much as i would like to agree with you when youy say "they will achieve to unload... etc" fact is that banks have not. as for the euphoria, this was a housing, finance and energy led bull mkt and i can report:
1) housing: crazy euphoria in the US, UK, Spain, Ireland, Greece, the whole of Eastern Europe and plenty more. As we know, everyone and their mum wanted to "get on the ladder".
2) finance: originate & distribute, structured products galore, derivatives derivatives and more derivatives and in the end everyone is "insured" with everyone. this can be called northing else but euphoria. only in germany EUR 200bn of structured products sold to RETAIL!! check on the BIS report and u will see that this is actually still going on. although rumour has it that suddenly banks, of which u wudn't expect it, have stopped making mkts in very much standard first generation vanilla options... we will see who that is about in the future...
3) energy: dunno how many "oil $100" books have been written recently but there are many...

to sum it up, the banks took a larger bite than they cud swallow and they have at this moment, excl the SIV related stuff, around 550bn $ worth of unsold deals in their books. congrats! of course they are still trying to sell the BRIC story, the decoupling story, the commodities story etc...every trick in the book is good enuf in order to lure people in. wasn't it the same in 2000-2001 where a lot of people bought into a falling mkt just to find themselves holding the bag?

I agree with MAx, BUT in the 70's houses just got revalued UP. They did not have to mean revert. It appears that this has happended but just on a bigger/global scale. Thats perfectly acceptable and in fact inprecidented. Should soon see jumps up in wages in coming years IMO.

Edited by Tor, 15 December 2007 - 09:04 AM.

[mmm]

I just read two articles from John Mauldin's site and I think the key to what NAV believes as to what will happen from a fundemental basis was explained in those two articles. I have to agree with John Hussman in that all of the liquidity causing the recent inflation over the last several years was not caused by the Feds. If you go through the numbers of the tempoary vs permanent market injections you will have to conclude that the feds have not put that much money into the system to be the cause of all of this inflation and market bubbles; at least in a direct way. The cause is due to the " shadow banking " that was started around 1990. This was where the printing press was located; not at the Feds. This shadow banking system is now collapsing and causing all the financial problems we have. So where is the Lone Ranger to the rescue? The answer is in the real wealth sources such as China and the Arab oil rich nations. They have true wealth with the natural resources and booming economies. They have all this petro dollar and export dollar wealth and no place to go. With the United States on sale right now all the asset price drop in our stock market and real estate market will be bought with these dollars. Once again; it is another transfer of wealth. This is what will save our stock market and economy over the long run. FWIW. I hope for our own sake this is what the answer is.

[SemiBizz]

Nasdaq is in a bearish upthrust mode in all time frames... we may go higher, but my bet is we are going lower first...Hence, I have no interest in being long. I'm shorting rallies and sitting out the bumps...

[humble1]

what a bull ! (don't look now: but we are ~ 75 spx points BELOW spx 1553 from over 7 1/2 YEARS ago ! yet people still talk about being in a bull market.) ____________________________________________________________________________ mmm: very accurate post about the bubble and how it formed and EXACTLY WHY we are in for a disaster before we can rise from the ashes. posting and understanding that. i don't see how anyone could be bullish now or anything but save-the-bacon-ish and live to play another day.

Edited by humble1, 15 December 2007 - 12:23 PM.

[NAV]

NAV, as much as i would like to agree with you when youy say "they will achieve to unload... etc" fact is that banks have not. as for the euphoria, this was a housing, finance and energy led bull mkt and i can report:
1) housing: crazy euphoria in the US, UK, Spain, Ireland, Greece, the whole of Eastern Europe and plenty more. As we know, everyone and their mum wanted to "get on the ladder".
2) finance: originate & distribute, structured products galore, derivatives derivatives and more derivatives and in the end everyone is "insured" with everyone. this can be called northing else but euphoria. only in germany EUR 200bn of structured products sold to RETAIL!! check on the BIS report and u will see that this is actually still going on. although rumour has it that suddenly banks, of which u wudn't expect it, have stopped making mkts in very much standard first generation vanilla options... we will see who that is about in the future...
3) energy: dunno how many "oil $100" books have been written recently but there are many...

to sum it up, the banks took a larger bite than they cud swallow and they have at this moment, excl the SIV related stuff, around 550bn $ worth of unsold deals in their books. congrats! of course they are still trying to sell the BRIC story, the decoupling story, the commodities story etc...every trick in the book is good enuf in order to lure people in. wasn't it the same in 2000-2001 where a lot of people bought into a falling mkt just to find themselves holding the bag?

Maxter267,

What has all that got to do with the stock market ? Yes, housing reached a mania peak in 2005. It's not news to me. I acknowledged that in my blog in 2006. Housing and housing stocks are in a well entrenched bear market. SIV, Subpime, Housing are a subsector of a sector of a sector. Stock market is way broader than that. If wars could not bring down a stock market, why would you think that the subprime mess which is a product of few incompetent clowns will bring it down ?

[TMN]

the point is that we are looking at multiple bubbles across various asset classes. just a matter of time for them all to pop one by one. in 2000 euphoria about one sector was good enuf to bring everything down. ur mentioning wars.. plenty of times wars have been good for the stock market, in fact most times they are. this bull run from 2003 onwards was ignited by the iraq war. or think of wwII. full employment was reached thru the war effort only. the explanation is a simple one. wars are good for money lenders, they are truly loving it. western economies are built on growth thru debt. the side effect is asset px inflation, consumer px inflation etc... when there is no more credit available, asset px inflation stops. simple stuff! now, why has the stock mkt not come off yet? it partly has, as u mention correctly. but don't u think that it is only logical that the general mkt will follow? there is plenty of interest to keep this bull mkt alive at this stage, or at least until now. u asking why? in summer, as investors all of sudden ran off, the banks found themselves holding the bag. this was not according to plan obviously. the script always says that someone else has to be holding it. therefore we got another 6 months of wall of worry type stuff just to give banks time to pass it on. not everyone was as pragmatic as goldmans (they will get their beating too...) in betting large on a housing downturn. wot u've been witnessing over the last 6 months was a joint effort by various interest groups to keep the illusion alive so some nasty positions can be sold off to limit the damage (citi from 80-90bn siv stuff down to 50-60bn etc). everyone knew that the toxic debt will come back on balance sheets sooner or later, the hope was to limit the damage as much as possible. now, if u think that this is something that does not affect the stock mkt, in my opinion ur not aware of the magnitude of the problem(s). the good news for u is that u will be in the move, no matter which way the stock mkt will go. judging from ur calls, u know wot ur doing. i have plenty of frds that do not work in finance and have not much connection with stock mkts, economics, etc. i can tell u they know ntg, they anticipate ntg, at least ntg of this magnitude!! this is why in ur mall, in ur neighbourhood, in ur street it still all looks the same as last year and the year before. this is about to change... ah, then obviously we go back to the normal script that says that the smart guys who are left with money, once the dead wood is out of the way, will buy everything back at rock bottom prices! u know how this story goes on from here...

Edited by maxter267, 15 December 2007 - 03:21 PM.

[atlasshrugged]

Nav, that momentum price redevergence that you find has a favorable outcome...i am wondering how it looks different compared to 2000? same set up then with momentum rolling down but price holding...I fact i would argue that the armies are leaving the generals!!!

[ed rader]

This time ain't gonna be different. The bull is not going to end without Euphoria.

i think the euphoria was the peak of the housing market two years ago.

as i recall during the last new paradigm they bought the dips and talked of second half recoveries all the way dooown.

actually that's not true....for the last year of the slide everyone lost interest in the market.

were you using different indicators in 2000?

i'm long anyways and i plan to hold. i bought at 52-weeks lows earlier this year after selling multi-year positions near 52-week highs, and i'm up about 20% on the new positions.

ed rader

[IndexTrader]

My FF is welcome to the bear market.

Here's a link to your other thread: http://www.traders-t...?...81091&st=10

IT

[ogm]

There is euphoria, its just not in the place everyone is looking here. Emerging markets and the theory of perpetual global growth.... thats the real euphoria. Parabolic chart of every obscure country that has a stock market. Yes, people may be sceptical on US, but they are absolutely euphoric about "global growth". I think we have absolutely the right sentiment for a LT top. If I'll say that Global Growth is about to stumble and fall on its @ss, majority;s first thought will be that I'm crazy. "Nah, BS, how can that happen. BRIC, etc.. can't stop growing now." People are conditioned to beleive in perpetual global growth.

Edited by ogm, 15 December 2007 - 06:18 PM.