Stock Market values are dropping fast!

kluivert

I am a member of the fantasy trading game on Bullbearings as highlighted on the sticky above.

All Irish and UK markets and stocks are dropping badly.

Has anyone an idea what is causing this as I just cant see what it is.

daveirl

This post has been deleted.

Sonnenblumen

kluivert wrote:

I am a member of the fantasy trading game on Bullbearings as highlighted on the sticky above.

All Irish and UK markets and stocks are dropping badly.

Has anyone an idea what is causing this as I just cant see what it is.

Why not try your luck in the Recreation area or the Fantasy Room, this is afterall the Investment Forum.

A Random Walk

kluivert wrote:

All Irish and UK markets and stocks are dropping badly.

Has anyone an idea what is causing this as I just cant see what it is.

Are you really an accountant? The finance pages of the newspaper will tell you all about the state of the property market in Ireland and what's going on in subprime in the US.

My bullbearings account was up 25% from August last year, and then, in light of recent events, dropped back to 6%

for the craic I liquidised and formed a new, long term, portfolio

ITV: 30%
VOD: 30%
TSCO: 60%
10% in cash

will be interseting to see where it goes from there

Kehoejck

I see The Bulmers are doing badly because of weather etc.. Shares are down a lot. Ye guys think its possibly a good investment as Id say theyll go up some stage soon again?

Time Magazine

Quite a bit of debate on C&C at the moment Kehoejck. The consensus: maybe.

dunkamania

"Stock Market values are dropping fast! "

Consider that its stock market prices and not values that are dropping.

Not correct (I think)

On that day, the markets took a tumble, and so all of the markets were in the red, and falling quite sharply. He was not referring to the indivdual stocks, but the market value on the whole

ircoha

Anyone like to call when this will bottom out?

In passing

dunkamania wrote:

"Stock Market values are dropping fast! "

Consider that its stock market prices and not values that are dropping.

Please Oh Wise One, explain to us mere mortals what the difference is between prices and value in the context of stock markets

daveirl

This post has been deleted.

ircoha

ircoha wrote:

explain to us mere mortals what the difference is between prices and value in the context of stock markets

The difference is pedantic but a stocks price is what it is currently trading at - its the quoted price.

A stocks value is what it should be trading - ie its true price (if you believe in EMH; price = value)

Finding a large spread between a securitys current price and what you percieve to be its value forms the basis of fundamental analysis.

I think thats what he was on about

justfortherecor

People with poor credit histories and inadequate levels of income were given access to funds from lenders at high levels of interest.

Many Investment Houses on Wall Street and Europe collected these mortgages, securitised them into Collateralised Debt Obligations (CDOs) and sold them onto investors.

Unsurprisingly, last year the people with poor credit histories and income levels began to default. Banks were left with high levels of these CDOs on their balance sheets and the market has increasingly become more illiquid - especially the credit 'crisis' of the past few weeks.

Bear Stearns closed 2 funds with a 3rd in serious trouble
BNP Paribas froze access to 3 of its funds related to the US subprime market last week.
Goldman Sachs' flagship Alpha fund is also rumoured to be in serious trouble.

...But, most importantly, the Hedge Funds are seriously struggling. They were heavily involved in these high-risk CDOs and most of them have posted serious losses for the month of August. (Jim Simon's Renaissance Fund was down 8%).
These hedge funds account for crazy amounts of share volume movements on the equity markets, and now that they are starting to suffer from a lack of funds, the major indices are beginning to fall.

Banks are also ending their lending to Private Equity houses, which have been involved in a lot of M&A transactions over recent times. If there is no longer opportunities of companies being purchased by these PE houses, some of the inflated share prices of potential target firms will begin to fall heavily.

This is all combining to make the equity markets a very volatile place recently and hence the exodus of investors to Treasury markets. Its going to be a rough few weeks but how serious it becomes still remains to be seen.

Remember though, when LTCM collapsed in 1998, the equity markets went on to rally for a further 2 years. Its too hard to call!

Sonnenblumen

Overhyped and Overbaked, one big buying opportunity, unless you are the sleepless type.

Sony

Subprime mortgages is the cause of the downturn in the markets recently but what you must understand is that subprime only accounts for 13% of the US mortgage market--This is what is causing all the volatility in the markets as a whole so in this context its not really a major issue is it?!

This kind of volatility is nothing new to the markets - In fact its inevitable - we WILL see them come back around, very shortly in my own opinion!:).....Good time to buy eh!!

Arthurdaly

Markets are getting a hammering again today! Certainly would'nt buy now, will be an oppertunity at some point but definately not at the moment.

silverharp

Sony wrote:

Subprime mortgages is the cause of the downturn in the markets recently but what you must understand is that subprime only accounts for 13% of the US mortgage market--This is what is causing all the volatility in the markets as a whole so in this context its not really a major issue is it?!

but it represents a large % of the mortgages issued in the past 3 years. Add to that the leverage that the hedge funds were using and there is a potential for alot of doo doo to hit the fan, future lending could be curtailed even to good borrowers because institution don't want to lend then you end up with a cascade of falling house prices and rising defaults.

There is a 4 year cycle in the market and the analysts I follow say it hasn't bottomed yet maybe go shopping in late Oct if the markets have dropped 15-20%

dunkamania

Sony wrote:

Subprime mortgages is the cause of the downturn in the markets recently but what you must understand is that subprime only accounts for 13% of the US mortgage market--This is what is causing all the volatility in the markets as a whole so in this context its not really a major issue is it?!

This kind of volatility is nothing new to the markets - In fact its inevitable - we WILL see them come back around, very shortly in my own opinion!:).....Good time to buy eh!!

Subprime is just the spark.The issue is that risk has been priced too cheaply for a number of years.The markets will take time to find support,but it may take a fair bit of time

is_that_so

Fear and greed is what drives markets. Henry Paulson, the US Treasury Secretary, had some comments on what's happening at the moment, summarised here and in video form on the the Wall Street Journal site.

Incidentally the BBC blog also has an angle on the ECB and the fact that they seem to be throwing money at the markets like confetti.

Overall though the conclusion seems to be that while the blip may continue for a bit we are in a much stronger position to ride out the effects of it. Just stay out of any shares that might be exposed.

Sonnenblumen

is_that_so wrote:

Fear and greed is what drives markets. Just stay out of any shares that might be exposed.

.......for example?

Colonel Sanders

European mkts have rallied this afternoon on the back of this:

http://www.rte.ie/business/2007/0817/markets.html

is_that_so

Sonnenblumen wrote:

.......for example?

As we speak it looks like a mini-recovery although considering the US are responsible for the original mess anyway it's only right that they should try and fix it.

In the main I would say financials and then anything that involves either raw materials or companies with exposure to the US markets. After that, well I think it's hard to figure out unless you're an expert in the area. After all markets follow each other up and down and shares you would expect to be unaffected end up following market sentiments and going down. Good summary on the BBC site on all of this.

Overall the thinking seems to be that there is enough scope to get out of this thing without too much damage apart from those lenders who were exposed in the first place.

Sony

Ok well the point that should be realised is that the markets WILL recover ... need I set out some examples of "disasters" in the past that have caused downturns in the markets only for them to receover?

What I mean is that whats happening at the moment in context of previous volatile periods is not that big. Also for someone that said that this is just a spark...speculation