Author Topic: The RAWK Investment/Trading Thread  (Read 151052 times)

Offline FlashingBlade

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Re: The RAWK Investment/Trading Thread
« Reply #40 on: October 8, 2008, 10:14:49 pm »
Panic!!!!!!!!!!!!!!!!!   ???      Sell !!!!!!!!!!!!!!!!!!!!!!!  :'(  Buy!!!!!!!!!  :butt

« Last Edit: October 8, 2008, 10:17:28 pm by FlashingBlade »

Offline PeterJM

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Re: The RAWK Investment/Trading Thread
« Reply #41 on: October 9, 2008, 08:20:09 am »
www.bullbearings.co.uk is better.  Let's you do other types of deals
I've just signed up for this game but realised i haven't got a clue what i'm doing.

Don't know what the terminology all means...............................HELP!!!!

Offline Cusamano

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Re: The RAWK Investment/Trading Thread
« Reply #42 on: October 9, 2008, 10:53:32 pm »
I've just signed up for this game but realised i haven't got a clue what i'm doing.

Don't know what the terminology all means...............................HELP!!!!

Explains everything here

http://www.bullbearings.co.uk/help.php
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Offline El Campeador

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Re: The RAWK Investment/Trading Thread
« Reply #43 on: October 10, 2008, 12:35:12 am »
The next level of support is around 8000, then 7500. We've busted through every other level in a hurry.


« Last Edit: October 10, 2008, 12:37:55 am by El Campeador »

Offline ttnbd

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Re: The RAWK Investment/Trading Thread
« Reply #44 on: October 10, 2008, 06:54:09 am »
FTSE-100 could break through 4,000 points today.  If it does it'll be first time since 1 July 2003, while the first time it passed that mark was in 1996.  Bookmakers have the FTSE-100 down around 6.7% at opening.
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Offline dannymc

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Re: The RAWK Investment/Trading Thread
« Reply #45 on: October 10, 2008, 12:05:14 pm »
my god people are shit, just following like sheep all the specualation and panic selling  :D

however i have my healthy stake in spurs still  ::) ::)  :butt
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Offline filopastry

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Re: The RAWK Investment/Trading Thread
« Reply #46 on: October 10, 2008, 12:09:04 pm »
Any feeling from market watchers as to whether we might finally be seeing the capitulation so many have been waiting for?

Offline Dread Breath

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Re: The RAWK Investment/Trading Thread
« Reply #47 on: October 10, 2008, 12:30:48 pm »
Any feeling from market watchers as to whether we might finally be seeing the capitulation so many have been waiting for?

My feeling is that when bank-to-bank lending resumes, we will see a very strong rally in world stock markets in a short period of time - however, we won't see another bull run for many years - the markets will flip flop about for a very long time.
« Last Edit: October 10, 2008, 12:33:02 pm by Dread Breath »
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Offline filopastry

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Re: The RAWK Investment/Trading Thread
« Reply #48 on: October 10, 2008, 12:36:58 pm »
My feeling is that when bank-to-bank lending resumes, we will see a very strong rally in world stock markets in a short period of time - however, we won't see another bull run for many years - the markets will flip flop about for a very long time.

Out of interest, why do you think long term prospects are so mediocre?

Offline Dread Breath

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Re: The RAWK Investment/Trading Thread
« Reply #49 on: October 10, 2008, 02:02:13 pm »
Out of interest, why do you think long term prospects are so mediocre?

The humungous levels of debt - especially the debt in the world's biggest economy, the USA. A great deal of that debt will have to be unwound before we see any new bull market and that will take years, if not decades. It is debt that was powering aggregate demand across the globe, just as it powered the previous bull run - as we are finding out now you can't just raise debt levels to infinity and keep the world economy going that way. At some stage the debt either has to be defaulted on or paid back, and as we have seen recently, that is not a pretty situation to be in when debt levels are in the tens of trillions of dollars.
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Offline blurred

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Re: The RAWK Investment/Trading Thread
« Reply #50 on: October 10, 2008, 02:52:28 pm »
Anyone fancy a bit of a game? Interesting little thing I stumbled across

http://chartgame.com/

Offline Dread Breath

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Re: The RAWK Investment/Trading Thread
« Reply #51 on: October 11, 2008, 01:03:02 am »
Anyone fancy a bit of a game? Interesting little thing I stumbled across

http://chartgame.com/

I'm up for it, even though I'm time poor these days. Is it some sort of competition or do you do it on your lonesome?
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Offline Sinos

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Re: The RAWK Investment/Trading Thread
« Reply #52 on: October 11, 2008, 01:16:26 am »
A little game for anyone who doesn't want to risk any cash

http://chartgame.com/play.cgi?o9ao7d-2,194,2621

Would any of you be interested in some sort of league?

Anyone fancy a bit of a game? Interesting little thing I stumbled across

http://chartgame.com/

Have you found the Lily Cole playboy pictures?

« Last Edit: October 11, 2008, 01:21:49 am by JMACC »
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Offline BazC

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Re: The RAWK Investment/Trading Thread
« Reply #53 on: October 11, 2008, 02:04:05 am »
www.bullbearings.co.uk is better.  Let's you do other types of deals

Was on the FX bit of that a few weeks back. Turned the £100k into £137k in a feww hours, but left a position on overnight by accident, logged in the next day and it had gone down to £27k. At least it wasn't real money  :o :D
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Offline Dread Breath

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Re: The RAWK Investment/Trading Thread
« Reply #54 on: October 11, 2008, 03:11:45 am »
Those stock market ones I can't really play, as I don't know much of anything about UK stocks, and only know a little about US based stocks, and only that in certain sectors (mainly mining).
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Offline GBF

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Re: The RAWK Investment/Trading Thread
« Reply #55 on: October 11, 2008, 10:33:04 pm »
GM trying to get Ford and Chrysler to merge in order to avoid going bust and in order to face Toyota's and other competitions
01111001 01101111 01110101 00100111 01101100 01101100 00100000 01101110 01100101 01110110 01100101 01110010 00100000 01110111 01100001 01101100 01101011 00100000 01100001 01101100 01101111 01101110 01100101

Offline Dread Breath

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Re: The RAWK Investment/Trading Thread
« Reply #56 on: October 13, 2008, 02:24:20 pm »
The Mother Of All Credit Contractions

By Colin Twiggs
October 11, 3:30 a.m. ET (6:30 p.m. AET)

Coordinated government efforts have failed to restore calm to financial markets and we now face the mother of all credit contractions. Yields are falling as investors flee to the safety of short-term treasurys — and NYFR-OIS 1-month spread has reached a record 3.50 percent, signaling that financial markets remain choked. The New York Funds Rate (NYFR) is a new, independently measured, alternative to LIBOR.

Markets are being driven by margin calls and investor withdrawals from investment funds and hedge funds. This is a negative self-reinforcing cycle. In much the same way as an accelerating up-trend inevitably leads to a blow-off, this accelerating down-trend will inevitably reverse. The difficulty is predicting when.

Self-reinforcing cycles, or exponential trends, are often evident in nature — not just the stock market. They all eventually fail when they use up their fuel source. Brushfires will flare from a small flame into a raging inferno within a few hours, especially if fanned by a favourable wind. But they always burn themselves out. Either when they run out of fuel or the wind changes. The same occurs in the stock market. An accelerating up-trend will blow-off when the rising number of profit-takers exceeds the diminishing number of new buyers. Like a giant Ponzi scheme, it eventually has to end. There is never an unlimited number of buyers. In the same way an accelerating down-trend is constrained by the limited number of sellers. As stocks move from weak hands to strong hands selling pressure will exhaust itself. Weak hands are typically leveraged buyers responding to margin calls and Johnny-come-latelys who bought near the top of the cycle. Strong hands are bargain hunters, prepared to buy stocks at fire sale prices and hold them until normality returns. Judging from the unprecedented degree of leverage in the markets, the current sell-off may take longer than usual, but will eventually stabilize.

The role of government and central banks is to limit the long-term damage. They should not try to stem the wave of selling, which would simply overwhelm them, but they must take steps to limit the number of casualties. Back-up and bailout is the order of the day. Provision of preferred share funding to major banks and corporates, such as General Motors, is essential. Terms similar to Warren Buffett's deals with GE and Goldman Sachs, including conversion options, should ensure that taxpayers are rewarded for the risks being taken. Again, actions have to be early and decisive. If regulators wait until the storm threatens, it will be too late.

Guaranteeing bank deposits is essential, but calls to underwrite all bank debt seem unnecessary. The Fed interposing itself as intermediary between lenders and borrowers in the inter-bank market should achieve the same ends.

I was interested to read speculation about who should be the next Treasury Secretary. Candidates proposed were Warren Buffet, John Thain, Paul Volcker, Charles Summers and a host of eminent economists. To me there is only one rational choice: Henry Paulson. Given the circumstances I believe he has done well. And what the markets need now is consistency. You don't change horses mid-stream. I have read members of Congress questioning his integrity and accusations that he is "looking after his mates in Wall Street". While it would be natural to feel some loyalty to GS, the rest of Wall Street were his competitors, not his "mates", and I believe he has demonstrated overriding loyalty to his client: the taxpayer.

The blame game has started. It is human nature to seek a scapegoat when things are going badly. We must have our Jonah to cast overboard in the hope that this will calm the waters. The press are offering up Alan Greenspan and I dare say he shoulders some degree of responsibility. But this crisis is much bigger than a single individual. The entire system is at fault. There are millions of actors who have played their part, most of them unwittingly, including AG. In his defense, he expressed concern over the massive leverage of GSEs Fannie Mae and Freddie Mac in early 2004, but attempts to curb this were blocked by Congress.

Gold & Crude Oil

Spot gold displays a bullish descending broadening wedge formation, but this is countered by Twiggs Money Flow (13-week) which signals continued selling pressure on IAU. In the short term, breakout above $910 (IAU reflects 1/10th of an ounce) would test the upper border, while failure of support at $820 would test the lower border — and long-term support around $700 ($710 to $690).

 
Crude oil broke through the band of support between $90 and $87 per barrel — and is headed for the next band, between $70 and $68. Failure would test the 2007 low of $52/barrel.

 
USA

Concentrate mostly on long term charts. Short-term support and resistance are easily swamped in times of extraordinary volatility.

Dow Jones Industrial Average

Friday's long tail and strong volume signal buying support at 8000. Judging by the market's recent behavior, reacting negatively to news of rescue efforts and sweeping aside support levels, it remains doubtful whether this too will hold.

 
Long Term: Failure of support at 8000, or respect of the new resistance level at 10000, would warn of another down-swing. Expect strong buying support between 7000 and 7200, the low of the 2002 bear market. Fibonacci followers will recognize this as the 50 percent retracement level. Twiggs Money Flow (13-week) is tracking downwards. Be cautious of a bullish TMF divergence if it accompanies a V-bottom on the price chart.

 
Looking further into the past, the point and figure chart below shows the entire history of the Dow since 1929. There have been seven 50 percent retracements in the last 80 years: the first was the crash of 1929; the next four occurred during the Great Depression which followed; the sixth occurred during the great stagflation of the 1960s and 1970s; and we are now experiencing the seventh. We can learn two things from this. Firstly, [1] to [5] shows that busts do not always occur as single events. Secondly, that major busts tend to result from failures of financial/monetary policy. I believe that we should be able to avoid another depression (like [1] to [5]), but can expect a lengthy period of stagflation, or even deflation, during this massive credit contraction.

 

S&P 500

The S&P 500 is testing support at 800 (intra-day). This is also effectively a 50 percent retracement from the 2007 peak. Expect strong buying at this level.

 
Transport

Fedex, UPS and the Transport Average show strong primary down-trends, indicating a further slow-down in the broader economy.

 

Technology

The Nasdaq 100 broke through the major band of support between 1400 and 1300 before finding short-term support at 1200 (intra-day). If 1200 fails, or retracement respects the new resistance level at 1300, expect a test of 1000. Twiggs Money Flow (13-week) signals continued selling pressure.

 

Canada: TSX

The TSX Composite is also in melt-down, with Twiggs Money Flow (13-week) reflecting strong selling pressure. The index is currently testing support at 9000. If that fails, the next level is relatively close, at 8000.

 
United Kingdom: FTSE
 
The FTSE 100 went through targeted support at 4300 like a dose of salts. We don't need to look at Twiggs Money Flow (13-week) to confirm there is selling pressure. Unless there is immediate reversal above 4000, we can expect a test of the 50 percent retracement level at 3400 — the 2003 low.

Maintaining Perspective

It is important in these times to maintain perspective and not allow our judgement to be clouded by negative emotions. Rejoice that the sky is still blue, the sun still shines, the birds still sing, the rains still fall, the crops still grow, and our children are healthy. And remember: the sky is always darkest before the dawn.

link
« Last Edit: October 13, 2008, 02:27:19 pm by Dread Breath »
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Offline El Campeador

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Re: The RAWK Investment/Trading Thread
« Reply #57 on: October 13, 2008, 08:53:28 pm »
And in case you blinked, and missed the last 2 days of trading, the Dow has powered up over 900 points today.

What stock market meltdown?
« Last Edit: October 13, 2008, 09:04:31 pm by El Campeador »

Offline ttnbd

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Re: The RAWK Investment/Trading Thread
« Reply #58 on: October 13, 2008, 09:20:51 pm »
And in case you blinked, and missed the last 2 days of trading, the Dow has powered up over 900 points today.

What stock market meltdown?

The question is can the markets sustain it?  FTSE-100 is likely to rise in sympathy early tomorrow but will it continue?  If anyone thinks it will then there is some money to be made.
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Offline Gus 1855

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Re: The RAWK Investment/Trading Thread
« Reply #59 on: October 13, 2008, 09:24:50 pm »


Really interesting to follow what is going on the the markets and comparing it to what is going on in the Wine Investment markets.

Although some of the big boys like the 2005s are having a little slump because everyone is trying to cash in at the bottom end of the market, I am getting a lot of clients looking to put their money into wine at the top end.
It looks to me as if we have signed another 'average' player. I'll hold back my complete opinion until I see the lad play

Offline El Campeador

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Re: The RAWK Investment/Trading Thread
« Reply #60 on: October 13, 2008, 09:36:54 pm »
The question is can the markets sustain it?  FTSE-100 is likely to rise in sympathy early tomorrow but will it continue?  If anyone thinks it will then there is some money to be made.

I think this has been a reaction to the improving situation in the bank to bank lending and credit markets, coupled with the lack of devastating news, which had become almost expected.

However, there is a slew of economic information coming out of the States this week, much of which will remind us that credit thaw or not, there is a real recession coming up.

Offline Manila Kop

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Re: The RAWK Investment/Trading Thread
« Reply #61 on: October 14, 2008, 02:56:57 am »
And in case you blinked, and missed the last 2 days of trading, the Dow has powered up over 900 points today.

What stock market meltdown?

Dead cat bounce.

Having said that, I did manage to buy some stocks last Friday, up 15% today...
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Lolzies. More chance of a wank off the pope than beating United, I'm afraid. It is beyond Benitez, apart from when they were at their lowest ebb, when we knocked them out of the FA Cup. They certainly aren't anywhere near there now.

Offline Fiend

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Re: The RAWK Investment/Trading Thread
« Reply #62 on: October 14, 2008, 03:22:28 am »
The question is can the markets sustain it?  FTSE-100 is likely to rise in sympathy early tomorrow but will it continue?  If anyone thinks it will then there is some money to be made.

Exerpt from Galbraiths 'Great Crash'
“The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune.

The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost.

The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. (Not only were a recorded 12,894,650 shares sold on 24 October; precisely the same number were bought.) The bargains then suffered a ruinous fall.

Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months.

The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable."

Offline kopindian

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Re: The RAWK Investment/Trading Thread
« Reply #63 on: October 14, 2008, 04:31:40 am »
Paul Krugman won nobel economics prize.

Offline Manila Kop

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Re: The RAWK Investment/Trading Thread
« Reply #64 on: October 14, 2008, 05:24:37 am »
October 12, 2008
Those With a Sense of History May Find It’s Time to Invest
By ALEX BERENSON

The four most dangerous words for investors are: This time is different.

In 1999, technology companies with no earnings or sales were valued at billions of dollars. But this time was different, investors told themselves. The Internet could not be missed at any price.

They were wrong. In 2000 and 2001 technology stocks plunged, erasing trillions of dollars in wealth.

Now investors have again convinced themselves that this time is different, that the credit crisis will push economies worldwide into the deepest recession since the Depression. Fear runs even deeper today than greed did a decade ago.

But in their panic, investors are ignoring 60 years of history. Since the Depression, governments have become far more aggressive about intervening when credit markets seize up or economies struggle. And those interventions have generally succeeded. The recessions since World War II, while hardly easy, have been far less painful than the Depression.

Now some veteran investors, including G. Kenneth Heebner, a mutual fund manager who has one of the best long-term track records on Wall Street, say that the sell-off has gone much too far and stocks are poised to rally powerfully if the downturn is less severe than investors fear.

“The fact is, there are a lot of tremendous bargains out there,” said Mr. Heebner, who manages about $10 billion in several mutual funds. Indeed, by many measures stocks are as cheap as they have been in the last 25 years.

He pointed to Chesapeake Energy, a natural gas producer that he owns in his CGM Focus mutual fund. In July, Chesapeake traded for $63 a share. On Friday, it fell as low as $11.99.

He says that investors with a stomach for risk and a long time horizon should consider following Warren E. Buffett, who in the last three weeks has invested $8 billion in Goldman Sachs and General Electric.

Mr. Heebner expects world economies to contract over the next year. But he said the market plunge in the last week was no longer being driven by rational analysis. Stocks are probably falling because of a combination of panic and forced selling by hedge funds that must meet margin calls from their lenders, he said.

Mr. Heebner’s funds have not avoided the carnage this year. The CGM Focus fund is down about 42 percent so far in 2008. But his long-term track record is impressive. In the decade that ended Dec. 31, 2007, CGM Focus rose 26 percent a year, including reinvested dividends, making it among the best-performing mutual funds.

Mr. Heebner is not alone in his optimism.

“I think in years to come — I wouldn’t say months to come — we will perceive this as being a great value-buying opportunity,” said David P. Stowell, a finance professor at Northwestern and a former managing director at JPMorgan Chase. “Two and three years from now, it will seem very smart.”

Even before their jaw-dropping plunge of the last month, stocks were not expensive by historical standards, based on fundamentals like earnings and cash flow. Now, after falling 30 percent or more since early September, stocks in stalwart, profitable corporations like Nokia, Exxon Mobil and Boeing are trading at nine times their annual profits per share or less. Many smaller companies are even cheaper. Some of those stocks are trading at five times earnings or less.

Those ratios are historically low. Over all, the Standard & Poor’s 500-stock index is trading at about 13 times its expected profits for 2009, its lowest level in decades. In contrast, at the height of the technology bubble in early 2000, the stocks in the S.& P. traded at about 30 times earnings, the highest level ever. At the same time, the 10-year Treasury bond paid about 6 percent interest, compared with less than 4 percent today.

Investors have fled stocks in favor of government bonds, insured bank deposits and other low-risk investments because they are deeply afraid of the worldwide economic crisis, said Stephen Haber, an economic historian and senior fellow at the Hoover Institution. But he said he believed that fear might have gone too far.

“If there is good and wise policy, and government moves effectively, this need not play itself out in ways like the Great Depression, which is the image that is playing itself out in people’s mind,” Mr. Haber said. Government action typically does not work immediately, and banking crises around the world often require multiple interventions, he said.

Still, optimists remain in the minority on Wall Street. Most investors seem to believe that the credit crisis will do substantial damage to stocks and overall economic activity.

“We have never before seen for such sustained periods of time such a sustained turn away from risk taking,” said Steven Wieting, the chief United States economist for Citigroup. “This has broken out of the boundaries we’ve seen.” Economic activity appears to have slowed sharply in September, Mr. Wieting said.

The panic last week took the biggest toll on financial companies, as well as companies that are highly leveraged. But stocks fell 10 to 30 percent even for companies typically thought to be resistant to economic downturns, like the manufacturers of consumer staples.

For example, Newell Rubbermaid fell to $12.82 on Friday from $17.34 on Oct. 1, a 26 percent decline in 10 days. Newell Rubbermaid now trades at its lowest levels since 1990, and just eight times its expected earnings for next year.

Yet Newell Rubbermaid, whose brands include Calphalon, is profitable and insulated from the credit crisis, said William G. Schmitz Jr., who follows household products companies for Deutsche Bank. “There’s really no balance sheet risk,” Mr. Schmitz said. The company also pays a 6 percent dividend.

Newell Rubbermaid said in July that it would earn $1.40 to $1.60 a share for 2008, excluding restructuring charges. For 2009, stock analysts predict it will make $1.53 a share. And while a slowing economy may mean that people will be buying fewer products from Newell Rubbermaid, the recent plunge in oil prices will reduce its costs, Mr. Schmitz said.

“The way the stock’s reacted, you’d think they were going out of business,” he said.

Martin J. Whitman, a professional investor for more than 50 years, said that as long as economies worldwide could avoid an outright depression, stocks were amazingly cheap. Mr. Whitman manages the $6 billion Third Avenue Value fund, which returned 10.2 percent annually for the 15 years that ended Sept. 30, almost two percentage points a year better than the S.& P. 500 index. The fund is down 46 percent this year.

“This is the opportunity of a lifetime,” Mr. Whitman said. “The most important securities are being given away.”

http://www.nytimes.com/2008/10/12/business/12stox.html?em
The infallible wank stain
Lolzies. More chance of a wank off the pope than beating United, I'm afraid. It is beyond Benitez, apart from when they were at their lowest ebb, when we knocked them out of the FA Cup. They certainly aren't anywhere near there now.

Offline Dread Breath

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Re: The RAWK Investment/Trading Thread
« Reply #65 on: October 14, 2008, 01:29:25 pm »
Swiped this from another forum:

"This is a tradeable BEAR MARKET rally.

1929: started with a 50% crash drop, retraced 50%, and then eroded for months on end to much lower levels, took 34 months.

1937: started with a 50% drop over 12 months, with a 40% crash in the middle, retraced 62%, and then eroded for months on end to a double bottom, took 61 months.

1973: started quitely, had a 62% retracement after the first drop, then crashed 33% near the end, and the market lost a total of 47%, took 23 months.

2007: started quietly, is near a 50% drop, with a 34% crash near the end, and this has taken 12 months SO FAR."
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Offline Dread Breath

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Re: The RAWK Investment/Trading Thread
« Reply #66 on: October 16, 2008, 03:35:49 am »
The Dow will have to hold 8300 else it is going much lower from after - if it bounces of that, or from around that another small rally will be in order.
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Re: The RAWK Investment/Trading Thread
« Reply #67 on: October 16, 2008, 12:48:13 pm »

Don't mind me.  Just found this thread and book marking it.
I have always been careful with my money and saved a bit pver the years.  However for the last 12-6 months I have been thinking about investing it in something other than an ISA.  However my lack of knowledge in the subject has led me to stay away.

I can't help feeling that there has to be some big opportunites to come out of all this downturn.  I just need to be pointed in the right direction  :wave

Invest in what you know best.
There's an earlier poster doing well out of wine, because he knows it, he knows what to buy and when.  How many of us would have known there was the possibility to buy wine before it went on sale?

I have to admit a mate of mine made a tidy sum on Hornby, simply because he knew the market and could see what they were doing.

Lots of people are into property, but I know I could never do that, I have little interest in house prices and even less in the cost of having to do them up. Cars are a similar thing.

If you find something that interests you, you'll be able to do lots of research, bolstered by a head start and be able to figure out the companies that are likely to do well.

( I suppose you could take football as an extreme example, if you asked someone who had no interest in it, to rank the positions of the premier league teams come may , they'd have no chance to start with , and possibly after a day's study have a vaugue idea. If I asked you to do it right now, you'd probably be able to predict which third of the table each of the clubs would end up in).


"All the lads have been talking about is walking out in front of the Kop, with 40,000 singing 'You'll Never Walk Alone'," Collins told BBC Radio Solent. "All the money in the world couldn't buy that feeling," he added.

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Re: The RAWK Investment/Trading Thread
« Reply #68 on: October 19, 2008, 08:53:55 am »
October 12, 2008
Those With a Sense of History May Find It’s Time to Invest
By ALEX BERENSON

The four most dangerous words for investors are: This time is different.

So, is it a bad time to begin investing in mutual funds? (share/property and/or cash) Even if they won't be touched for, say, twenty years?
Absolutely crucial, if we blow this one we're done as a top team, this is an unbelievable chance to return to our perch, we must be patient. 

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Re: The RAWK Investment/Trading Thread
« Reply #69 on: October 22, 2008, 12:14:41 am »
The Dow's coiling up like a spring methinks.

I've still got my deep underwater position on FTO ($20) that expires in January, and I added some VLO at $19, some CSCO at $18, and I've a GTC order in on PBW ($9) a few bucks away.

Meanwhile I've hedged all of those positions with a bit of DXD, which is an ETF that is inversely proportional to the Dow at twice the weight. If I go deep underwater on these longterm positions, I'll make out like a bandit on the hedge.

I don't think we've seen a bottom yet, but I'd hate to miss one, since the market has a way of setting it's lows where it wants to, and not where you want to. Personally I though 7500 would be the bottom, but we bounced off 7800 and change that nasty Friday.

This is a credit driven crisis and there are signs that it's thawing out a bit. Oil's taken a dive (I filled up at $2.50 a gallon - UNHEARD OF in the last few months) which should serve to perk up spending a bit. 

Remember lads - it's either the end of capitalism as we know it, or the buying opportunity of a decade.

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Re: The RAWK Investment/Trading Thread
« Reply #70 on: October 22, 2008, 03:48:23 am »
The Dow's coiling up like a spring methinks.

I've still got my deep underwater position on FTO ($20) that expires in January, and I added some VLO at $19, some CSCO at $18, and I've a GTC order in on PBW ($9) a few bucks away.

Meanwhile I've hedged all of those positions with a bit of DXD, which is an ETF that is inversely proportional to the Dow at twice the weight. If I go deep underwater on these longterm positions, I'll make out like a bandit on the hedge.

I don't think we've seen a bottom yet, but I'd hate to miss one, since the market has a way of setting it's lows where it wants to, and not where you want to. Personally I though 7500 would be the bottom, but we bounced off 7800 and change that nasty Friday.

This is a credit driven crisis and there are signs that it's thawing out a bit. Oil's taken a dive (I filled up at $2.50 a gallon - UNHEARD OF in the last few months) which should serve to perk up spending a bit. 

Remember lads - it's either the end of capitalism as we know it, or the buying opportunity of a decade.

As noted on these threads, Buffett has been buying recently. My own perspective is that Buffett is going to lose a hell of a lot of money out of this, and that 'Buffetology' will be destroyed as an investing 'theory' by the time this bear market is finished.
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Re: The RAWK Investment/Trading Thread
« Reply #71 on: October 23, 2008, 07:31:26 pm »
As noted on these threads, Buffett has been buying recently. My own perspective is that Buffett is going to lose a hell of a lot of money out of this, and that 'Buffetology' will be destroyed as an investing 'theory' by the time this bear market is finished.

Parlez vous Anglaise?
"All the lads have been talking about is walking out in front of the Kop, with 40,000 singing 'You'll Never Walk Alone'," Collins told BBC Radio Solent. "All the money in the world couldn't buy that feeling," he added.

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Re: The RAWK Investment/Trading Thread
« Reply #72 on: October 23, 2008, 07:48:18 pm »
Parlez vous Anglaise?

I think there is a general theory that when Warren Buffett (arguably one of the most successful investors in history) buys stock then there's a good chance the stock will rise.
So all say thanks to the Shanks

He never walked alone

Lets sing our song for all the world

From this his Liverpool home

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Re: The RAWK Investment/Trading Thread
« Reply #73 on: October 24, 2008, 12:05:03 am »
Parlez vous Anglaise?

Apologies for the confusion - ttnbd has summed up Buffettology succinctly.

I believe in market timing - in some ways the opposite of the 'buy and hold' approach of Buffett - though it is true that he buys when 'others are afraid' (ie when markets are being creamed, as has happened in recent months).

I find it strange that Buffett, as a value investor, was buying around 8300 on the Dow, but stopped buying a mere 300 pips later at 8600. What happened, Warren? All of that value you saw in the market suddenly died off after a 300 pip rise? Or did you instead see the value of your other investments plummeting rapidly and decide to announce your purchasing, using your credentials as the Sage of Omaha, in the hope that it might spark buying by other investors?

I think the success of Buffettology is a result of the previous secular bull market - the over-arching history of which you can trace back the end of the last true full bear market in the 1930's. Namely I think Buffett's success is the result of the bull run we've had in that time - my view is that Buffett will find a whole lot less success in the bear market/flat conditions we will experience for a very long time into the future as it relies on bull market conditions to sustain it as an investing philosophy.
« Last Edit: October 24, 2008, 12:42:17 am by Dread Breath »
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Re: The RAWK Investment/Trading Thread
« Reply #74 on: October 24, 2008, 01:50:51 pm »
More blood on the floor today - carnage in European markets - the VIX in the US has reached levels never seen before. These are days you will be talking to your grandchildren about decades hence.

Forget the baseless optimism of the spent bulls it is empty talk until the world is fully deleveraged, and we are a long way from that right now.
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Re: The RAWK Investment/Trading Thread
« Reply #75 on: November 1, 2008, 04:47:51 pm »
Once upon a time in a village, a man appeared and announced to the villagers
that he would buy monkeys for $10 each.

The villagers seeing that there were many monkeys around, went out to the
forest, and started catching them.

The man bought thousands at $10 and as supply started to diminish, the
villagers stopped their effort. He further announced that he would now buy
at $20.

This renewed the efforts of the villagers and they started catching monkeys
again.

Soon the supply diminished even further and people started going back to
their farms.

The offer increased to $25 each and the supply of monkeys became so little
that it was an effort to even see a monkey, let alone catch it!

The man now announced that he would buy monkeys at $50!

However, since he had to go to the city on some business, his assistant
would now buy on his behalf.

In the absence of the man, the assistant told the villagers. 'Look at all
these monkeys in the big cage that the man has collected. I will sell them
to you at $35 and when the man returns from the city, you can sell them to
him for $50 each.'

The villagers rounded up with all their savings and bought all the monkeys.

Then they never saw the man nor his assistant ever again, only monkeys
everywhere!

Now you have a better understanding of how the finance markets work
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Re: The RAWK Investment/Trading Thread
« Reply #76 on: November 4, 2008, 11:32:04 pm »
Is the P/E Ratio a Good Market-Timing Indicator?
 
by Matt Blackman

Analysts have argued for years about the merits of price/earnings (P/E) ratios. When P/Es are high, as they were in the late 1920s and 1990s, raging bulls would proclaim that the ratios are irrelevant. When P/Es are low, as they were in the 1930s and 1980s, marauding bears would argue that the worst is still ahead. Each time, both were wrong. Here we test a newly designed indicator to determine if P/Es can be effectively used to generate buy and sell signals. To get a complete picture of its effectiveness, we'll look at whether this indicator would have helped the trader beat the returns rendered by a buy-and-hold strategy over the period from 1920 through to 2003.


Trading Tools - Building the P/E SMA Indicator
 
Simple moving averages (SMAs) are one of the most basic tools for building a trading system but they have remained popular among technicians for one simple reason: they work. A moving average (MA) reduces the noise by smoothing the data, allowing the trader to see the bigger picture more clearly. (For more on moving averages see Basics of Simple Moving Averages.)

Another useful charting metric for analyzing data is a linear regression line. It is very useful in showing a trend and providing insight into potential future price movement. A number of popular charting programs include a function for the linear regression line.

Using annual historic S&P P/E ratio data by Robert Shiller, Yale Professor and author of the best-selling book "Irrational Exuberance" (2000), we constructed charts and a simple moving average crossover system using a shorter-term MA trigger, or fast line, and the long-term MA base, or slow line. The signals generated by changes in S&P Index P/Es, which are charted in figure 1, were used to buy and sell the market as represented by the Dow Jones Industrial Average, which is charted in figure 2.

The best combination of moving averages is somewhat of a juggling act. Longer-term MA periods reduce the number of signals and add delays, which often result in lower returns. Shorter MA periods often increase some individual trade returns at the expense of adding more losing trades, thanks to whipsaws.

Figure 1, as already mentioned, is a chart showing annual S&P 500 Index (and earlier precursors) price/earnings ratios from 1920 through 2003. The chart displays also the two-year (blue line) and five-year (magenta line) simple moving averages. Buy signals occur when the two-year SMA crosses above the five-year, and a sell signal when the two-year crosses below the five-year. The median P/E over the period was 15, but note that the linear regression channel midline (dashed diagonal line) shows that the trend moved from a PE of 12 at the left hand side of the chart to 21 on the right side.

In figure 2, showing the monthly chart of the Dow Jones Industrial Average (DJI) from 1920 through 2003, the green arrows indicate buy signals generated by the two-year S&P P/E SMA crossing above the five-year SMA, and the red arrows show sell signals when the reverse occurs in figure 1. A total of six buy and six sell signals were generated for a total gain of 9439.25 DJIA points.

For the sake of our test, a two-year moving average signal line was found to remove much of the noise without adding excessive delay. The baseline consisting of a five-year moving average was determined to be a good fit. A one-year signal line instead of a two-year was tested and found to provide the same number of trades but with slightly lower returns.

How Did the P/E SMA Indicator Do?

In a total of 12 trades (six buys and six sells), the system returned 9,440 points (see figure 2). A buy-and-hold over the same period would have returned 10,382, so our indicator lead the trader to capture nearly 91% of the gains the Dow made during the 83-year period.

But the real benefit of using the P/E SMA indicator is that it told the investor when to leave the market, thereby protecting investments from losses. Using the P/E indicator, our trader would have been in the market a total of 48 of the 83 years, or 58% of the time, which means he or she would have had money invested elsewhere 42% of the time (25 years) where returns were better.

A buy-and-hold investment in the market for the whole 83-year period earned 10,382 by the end of 2003, which works out to 125 points/year. The trader using our P/E indicator, gaining 9,440 points in 48 investing years, would have made 197 points per year. That is a 58% better return than the buy-and-hold investor!

Given these results using annual data, we can ask whether the use of monthly data would have improved overall results. The best-fitting set of moving averages for our monthly indicator was found to be five- and 21-month SMAs. This system (not shown in a chart here) generated a total of 22 buy and 21 sell signals. The last buy signal was given in Nov 2003 and the system was still long when our test was concluded at the end of Jan 2004.

Trades using the monthly system would have earned 90% of the total Dow gains in 57% of the time (47 years). So, even though this test generated more than three times the number of trades, results were quite similar. The difference was that although trades were entered more quickly, often resulting in bigger gains, the increased number of signals resulted in more exposure to volatility and a greater percentage of losing trades.


Using the P/E SMA Indicator to Short

The next question we can tackle is whether the indicator would have performed if both long and short trades were taken. Entering a short trade of equal size each time a long position was sold would have given losses of 510 points in five short trades for an average loss of 102 points per trade. Based on the chart in figure 1, this makes sense: the linear regression channel shows that the market was in an overall uptrend from 1920, and as all good traders know, it is a bad idea to trade against the trend.

The P/E SMA indicator benefited the trader not so much by offering a straight trading system to generate both long and short trades, but by guiding the trader out of the market during periods of low or negative returns. As a simple long trade timing tool, it worked extremely well.

Taming the Market Beast

It is far easier to make money in a secular than cyclical bull market. A buy-and-hold strategy works well in the former but does not in the latter. It takes more skill and effort to make money when stocks are stuck in a trading range in which the price at the end and the beginning of the investment period are roughly equal.

For example, those who bought Dow stocks at the peak of the secular bull market in 1929 (and held them) did not begin to see profits until nearly 25 years later, in the latter part of 1954. Those buying at the secular bull peak in 1966 had to wait until 1983. It is imperative in these trading range markets that you avoid them altogether, unless you have developed an effective short-term trading system.

Conclusion

You know the well-known market adage: timing is everything. The P/E SMA indicator proves this point. It also demonstrates that the real worth of P/E ratios from a trading perspective is not so much in their absolute values. Those who exited the market in 1996 (at Dow 644, when the P/E surpassed the prior 1966 bull market peak of 24, would have missed more than 5,000 points in profit in the subsequent three and a half years. Other than at rare extremes, absolute P/E values do not provide accurate entry and exit signals. A relative system combined with a method of detecting rapid change in direction does. But the major benefit of the P/E SMA indicator was found to be in keeping the trader out of the market when it was less profitable.

The next time someone tells you that P/E ratios don't matter, you'll have your answer ready. From a historical standpoint, they certainly do matter, especially if you know how to use them.
 

Matt Blackman, the host of TradeSystemGuru.com, is a technical trader, author, keynote speaker and regular contributor to a number of trading publications and investment/trading websites in North America and Europe. He also writes a weekly market letter.

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Re: The RAWK Investment/Trading Thread
« Reply #77 on: November 11, 2008, 05:54:52 am »

Manic Depression To Normalization


Martin T. Sosnoff, Atalanta Sosnoff Capital 11.06.08, 6:00 AM ET

On Black Monday in 1987, I remember a conversation with Mike Milken. We were talking about where the money would come from to shore up the market. Milken said, "I can identify at least 500 individual money pools with $500 million available for the market. The money's in the country."

I feel the same way today. Kirk Kerkorian is a good example, but he was early and chose the wrong stocks, first General Motors (nyse: GM - news - people ) and then Ford (nyse: F - news - people ). Kerkorian got burnt fingers trying to relive his felicitous experience with Chrysler decades ago. There are dozens upon dozens of billionaires waiting to step into his shoes and become players. Just you wait and see.

Good riddance to October. I stopped my valium Sunday nights because every day turned into Sunday. When the animals came out of their cages at 9:30 a.m., you didn't know whether to expect the lady or the tiger.

During October, daily fluctuations of 5% to 10% prevailed. Specific sectors like the financials showed weekly ranges of 30% and much higher even among sizable properties like Goldman Sachs (nyse: GS - news - people ), MetLife (nyse: MET - news - people ), Bank of America (nyse: BAC - news - people ) and Morgan Stanley (nyse: MS - news - people ). An efficient market, anybody?

There's no precedent for such market instability, down 10% on Monday and up 11% on Tuesday. The market is just another commodity like gold, oil, copper or soybeans, whose daily volatility is less than that of individual stocks.

Securities analysis only works when you can model a company in a normalized setting of 3% gross domestic product growth, moderate inflation and interest rates fluctuating in a narrow channel. If the economy is about to walk the plank and sink in the roiling waters, analysis is irrelevant, even counterproductive. Your model self destructs.

The downside (tiger scenario) is the horrendous 1981-1982 recession invoked by Paul Volcker who then headed the Federal Reserve Board. Volcker rightly fretted over the country turning uncompetitive as the UAW and Teamsters pounded on the table for 8% to 10% wage increases, largely for unskilled or semi-skilled labor.

With Treasury bills yielding 15% in the summer of 1982, the S&P 500 had shriveled to near notational book value. The Index sold at 100, yielded 6% and touched down at eight times earnings.

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Personal consumption expenditures declined 2% and I remember one quarter when they dropped almost 7%, an unprecedented statistic. Only the equally deep recession of 1973-1974 showed a comparable negative 2% PCE number. We are likely to show at least a 2% decline this quarter.

For 2009, it's easy to project negative numbers for GDP of 2%-3% because the consumer overspent so much these past five years. There's no sighting yet for housing's bottom in either sales activity or pricing. Unemployment rises, maybe to 9%, even as a sizable stimulus package comes out of the new Congress.

If you want to worry, retail sales, less gasoline stations, declined 3% in September, the largest drop since January 1991. Total retail sales declined 1% in September, which is near the lows of previous recessions. Anyone who thinks these numbers will turn around tomorrow has a lot of explaining to do to convince me.

It is almost too easy to project a market experience similar to 1981-1982. You've plenty of ammunition to shoot off. Put today's market at book value and you're talking 600 on the S&P 500. If you agree that my relatively conservative projection of $70 in earnings for the index is realistic, the market is worth minimum 700.

Drawing a trend line through the S&P 500 Index stock yield, you come up with at least 3%, slightly more than we're selling for today at the 950 reading. We got as low as a 1% yield in 2000's Internet bubble.

The daily industrial price index rests 40% below its mid-year peak. I discount any inflationary bias for the country over the next year or two, particularly labor. The Federal Reserve Board's cut in the target federal funds rate to 1% suggests they fear deflation, not stagflation, the worst scenario of all--what we had during 1982.

The dividend yield for the market is a function of its price-earnings ratio more than the dividend payout ratio on earnings. I assume dividend cuts in the industrial sector and possibly financials. What price-earnings ratio to put on the market is more of a function of the going inflation rate and the confidence level of the recession's depth and duration.

Margin debt, a seldom-referenced indicator of confidence and speculation has contracted on a yearly percentage change as much as in the bear markets of '74, '82, '87 and '01. Mutual funds now find themselves in a redemption phase as do hedge funds and insurance underwriters who are major players in variable annuities, guaranteed investment contracts and mutual funds. Even state and municipalities need to rethink their commitment to equities in their pension funds.

All this suggests that forced liquidation was a factor in the market's demise but that the worst may be over sooner rather than later. So take your head out of the oven. The market may sell as low as 10 times earnings for a while but when inflation is low and 10-year Treasuries yield approximately 4%, the market normally sells at a mid-teens price-earnings valuation.

Twelve months ago, Wall Street's pundits projected S&P 500 earnings in the nineties, a 15% return on equity, consistent with normalized GDP growth of 3%. This rationalized the market at 1350, an elusive number today, but historically consistent rather than pie in the sky.

Messrs Paulson and Bernanke so far have saved us from a panic scenario, a 700 market that yields at least 4% and sells at 10 times earnings. In '74 and '82 the market multiple plunged as low as eight times earnings. If you want to think bearish, there's a case for a 600 market if earnings decline as low as $60, even lower if forced selling snowballs out of control.

I'll take the other side. Obama comes out running his first 100 days in office, pushing through a $300 billion stimulus package. It contains enough infrastructure spending to shorten the recession by a couple of quarters. The market smells blood and begins to discount the next recovery by at least six months.

Last week, it felt as if this scenario was beginning to be tested as investors seemed to begin to value stocks not on recession earnings, but rather on normalized earning power over the next recovery cycle.

I'm seeing too many major companies with positions on the board selling today at 10 times earning power or less. Leave aside most banks and brokers as too difficult to model with much confidence.

My list is long: It includes IBM (nyse: IBM - news - people ), Hewlett Packard (nyse: HPQ - news - people ), Boeing (nyse: BA - news - people ), United Technology (nyse: UTX - news - people ), General Dynamics (nyse: GD - news - people ), Occidental Petroleum (nyse: OXY - news - people ), Transocean (nyse: RIG - news - people ), Aetna (nyse: AET - news - people ), American Telephone, DuPont (nyse: DD - news - people ), Dow Chemical (nyse: DOW - news - people ), General Electric (nyse: GE - news - people ), Caterpillar (nyse: CAT - news - people ), Union Pacific (nyse: UNP - news - people ), Goodrich (nyse: GR - news - people ), Disney (nyse: DIS - news - people ), Philip Morris International, Merck (nyse: MRK - news - people ), Chubb (nyse: CB - news - people ), MetLife (nyse: MET - news - people ) and Microsoft (nasdaq: MSFT - news - people ).

This is just the first cut. If I go to 12 to 15 times 2009 earnings, the list is even longer, so just a few names: Apple (nasdaq: AAPL - news - people ), Qualcomm (nasdaq: QCOM - news - people ). Cisco (nasdaq: CSCO - news - people ), Wal-Mart (nyse: WMT - news - people ), Abbott, Genzyme (nasdaq: GENZ - news - people ), Johnson and Johnson (nyse: JNJ - news - people ), PepsiCo (nyse: PEP - news - people ), P&G (nyse: PG - news - people ), Medco, CVS Caremark, Target (nyse: TGT - news - people ), Lowes (nyse: LOW - news - people ), McNasty's (nyse: MCD - news - people ), Schlumberger (nyse: SLB - news - people ) and Monsanto (nyse: MON - news - people ).

Throw a dart and you'll come up with a sizable rate of return over two years.

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Re: The RAWK Investment/Trading Thread
« Reply #78 on: November 13, 2008, 01:50:16 pm »
Question...what happen when the share of a company falls below its face value?
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Offline Dread Breath

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Re: The RAWK Investment/Trading Thread
« Reply #79 on: November 13, 2008, 02:52:11 pm »
Question...what happen when the share of a company falls below its face value?

According to traditional ways of assessing these things that stock is now a screaming buy - I know of quite a number of stocks that are in that situation right now.

Problem is the 'traditional perspective' did not predict where we are now and it sure as hell will not predict what is coming next.

I'm expecting some form of economic Armageddon not too far down the track - expect to throw all the rules out the window. Would not be at all surprised if we hit 20 - 25% unemployment across much of the occidental Earth in years to come. I would not be touching any stock at the moment in terms of going long, even those whose valuations are less than the amount of cash they have in their coffers, for example.
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