The coming crash.

WildBoots

Just wondering if many people here have heard anything about the crash that is supposed to start in July/August? Apparently it could be worse than what was seen in 2008. I know this is all a bit vague, but more and more people are telling me to "get out while I still can". It ain't looking purty, that's for sure!

woodseb

If it was true it would have happened already

Jim2007

WildBoots wrote: »

Just wondering if many people here have heard anything about the crash that is supposed to start in July/August? Apparently it could be worse than what was seen in 2008. I know this is all a bit vague, but more and more people are telling me to "get out while I still can". It ain't looking purty, that's for sure!

Yes they are going to ring a special bell on the 3rd of July so all those speculators who don't know what to do can get out :rolleyes:

josey_whale

Jim2007 wrote: »

Yes they are going to ring a special bell on the 3rd of July so all those speculators who don't know what to do can get out :rolleyes:

Pure Speculation!

Bullish

Jim2007 wrote: »

Yes they are going to ring a special bell on the 3rd of July so all those speculators who don't know what to do can get out :rolleyes:

Whooo hooo Do you have to subscribe to the bell ringing or will we just hear it

strmin

Shorters trying to spread fear around.

Jim2007

Bullish wrote: »

Whooo hooo Do you have to subscribe to the bell ringing or will we just hear it

The site is now up yet, but I believe it will be open from 1st of July:

http://www.swiss-cow-bells.ch/crash :D:D

Speculator

WildBoots wrote: »

Just wondering if many people here have heard anything about the crash that is supposed to start in July/August? Apparently it could be worse than what was seen in 2008. I know this is all a bit vague, but more and more people are telling me to "get out while I still can". It ain't looking purty, that's for sure!

:rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes:

displaced dub

WildBoots wrote: »

Just wondering if many people here have heard anything about the crash that is supposed to start in July/August? Apparently it could be worse than what was seen in 2008. I know this is all a bit vague, but more and more people are telling me to "get out while I still can". It ain't looking purty, that's for sure!

can you ask your mate to look into his crystal ball for me, i need to know who to back in the US Open next month:D:D

WildBoots

displaced dub wrote: »

can you ask your mate to look into his crystal ball for me, i need to know who to back in the US Open next month:D:D

Who needs a crystal ball when it's becoming more and more apparent every day that the "market" is starting to fall apart, it's been running on fumes for months now. Obviously foresight isn't one of your stronger traits, what sane person would sit on BP shares for the last few weeks?

Blackjack

WildBoots wrote: »

Who needs a crystal ball when it's becoming more and more apparent every day that the "market" is starting to fall apart, it's been running on fumes for months now. Obviously foresight isn't one of your stronger traits, what sane person would sit on BP shares for the last few weeks?

Tell us more. What's the cause and effect here.

WildBoots

Blackjack wrote: »

Tell us more. What's the cause and effect here.

http://www.safehaven.com/article/16971/the-looming-financial-holocaust-is-closer-than-we-thought-

Bullish

Hey Wild boots dont forget to subscribe to the bell site for the pre crash warning http://www.swiss-cow-bells.ch/crash

And you talk about foresight LMAO

WildBoots

Bullish wrote: »

Hey Wild boots dont forget to subscribe to the bell site for the pre crash warning http://www.swiss-cow-bells.ch/crash

And you talk about foresight LMAO

Sure.

foxyboxer

At the start of 1995, the doom and gloom merchants were out in force.
One of the top selling books at the time was "Bankruptcy -1995"

What happened next? Only one of the strongest bull markets in history.

I have found that the act of making predictions has a strong tendency to make us look like idiots.

Who knows what's going to happen? It's certainly volatile at the moment that's for sure.

The Pontiac

Speculator wrote: »

:rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes:

:rolleyes:

Great reply! Someone asked a simple question re. A market crash; something many top economists have been warning about for some months now. At least reply with a reason as to why you think there won't be a crash.

Speculator

<Ollie> wrote: »

:rolleyes:

Great reply! Someone asked a simple question re. A market crash; something many top economists have been warning about for some months now. At least reply with a reason as to why you think there won't be a crash.

Ollie, looks as if this flew straight over your head

Read his statement again slowly, then perhaps you will understand why it does not justify a comment.

WildBoots

Speculator wrote: »

Ollie, looks as if this flew straight over your head

Read his statement again slowly, then perhaps you will understand why it does not justify a comment.

I reckon Ollie read it properly the first time, maybe you should read it again yourself :P

displaced dub

WildBoots wrote: »

Just wondering if many people here have heard anything about the crash that is supposed to start in July/August? Apparently it could be worse than what was seen in 2008. I know this is all a bit vague, but more and more people are telling me to "get out while I still can". It ain't looking purty, that's for sure!

I'm not sure if it's a question or a statement, one line is asking do we know about the crash and the next line is telling us it will be worse than the crash of 08

Think just for one second wild boots, IF the market knew there was a crash coming it would have already happened as pretty much every investor would have jumped ship long before now whatever about July/august.

IF I had known the BP CEO was talking through his hole in early may I wouldn't have sold my holding in early June.

I can only assume that as you know this crash is coming that you have sold every position you hold so that you can buy back in when everything is on the floor.;)

Speculator

WildBoots wrote: »

I reckon Ollie read it properly the first time, maybe you should read it again yourself :P

Nonsense

Blackjack

<Ollie> wrote: »

:rolleyes:

Great reply! Someone asked a simple question re. A market crash; something many top economists have been warning about for some months now. At least reply with a reason as to why you think there won't be a crash.

Any evidence of the many economists?.

Sorry to play the sceptic, but I'm not buying any of this, and the earlier link is a pile of shoite, to take the D4 version of the lingo.

I may as well link someone to an equally bullish blog by various nameless or no-name contributors, and insinuate that it's somewhat of a relevant portent.

Pile of Balls, if you ask me.

WildBoots

displaced dub wrote: »

I'm not sure if it's a question or a statement, one line is asking do we know about the crash and the next line is telling us it will be worse than the crash of 08

Think just for one second wild boots, IF the market knew there was a crash coming it would have already happened as pretty much every investor would have jumped ship long before now whatever about July/august.

IF I had known the BP CEO was talking through his hole in early may I wouldn't have sold my holding in early June.

I can only assume that as you know this crash is coming that you have sold every position you hold so that you can buy back in when everything is on the floor.;)

I'm not saying "the market" knows, obviously it doesn't, that's the point. It's only a rumor, I was just asking if anyone else had heard anything. Also, you might want to note the use of the word "apparently".

WildBoots

Just for fun

https://www.youtube.com/watch?v=NOzR3UAyXao

The Pontiac

Speculator wrote: »

Ollie, looks as if this flew straight over your head

Read his statement again slowly, then perhaps you will understand why it does not justify a comment.

I just read it again and it seems like a perfectly legitimate question to me. Okay, no one can predict the exact time, so maybe the Op shouldn't have stated "the crash that is supposed to start in July/August". Economists are always a lot more vauge than this.

Nouriel Roubini (aka Dr. Doom), stated in 2006; "The United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession". He also foresaw "homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt". Nobody believed him, hence the name Dr. Doom.

Everyone thought the guy was mad, but he got it spot on.

In 2010 he states; "We are just at the next stage. This is where we move from a private to a public debt problem . . . We socialised part of the private losses by bailing out financial institutions and providing fiscal stimulus to avoid the great recession from turning into a depression. But rising public debt is never a free lunch, eventually you have to pay for it.

In late May 2010, markets around the world began dropping due partly to problems in Greece and the Eurozone. "Roubini believes Greece will prove to be just the first of a series of countries standing on the brink," writes the Telegraph. Roubini explains the new issues governments must deal with:"We have to start to worry about the solvency of governments. What is happening today in Greece is the tip of the iceberg of rising sovereign debt problems in the eurozone, in the UK, in Japan and in the US. This... is going to be the next issue in the global financial crisis."

The only difference today is that he's not the only economist warning of this.

I posted this video after the Dow plummeted on 6th May. Listen to this guy. And all the talk of a "human error" that day was very, very suspicious too. Gerald Celente certaintly thinks so anyway.

https://www.youtube.com/watch?v=tdxgWQWqsS4

woodseb

Roubini also predicted the market to continue crashing in 2009 and it rallied 25%......

Idu

Interesting that he offers no insight into what this rigged game entails though. And I don't know who exactly stood to gain from forcing through the May 6th drop especially when the inevitable rebound occurred. If the market had simply capitulated afterwards you could look at it and think there might be foul play but otherwise its all a bit "x-files" for me

Vourney

Does anyone listen to Tom O'Brien?
http://www.tfnn.com/
click on listen live at 4 or 5pm eastern US time
I know he might come across as a small time huckster at first (is that a real word?) but I've been listening to him for a few years now and he seems to know what is going on and he has been calling for this down turn for a while and is saying it will go down again, ie there will be another pullback
I gave up on him a while back but with the recent pullback realized he was right
His approach is based on technicals, price and volume

Jim2007

The biggest factor in the market is human behavior and very little research has been done on that, so to assume that economists or other talking heads can get it right is a road to disaster! No matter what happens you can be sure there will be some talking head around that has been predicting it for ages!

Trying to beat the market is a fools game and a sure way to loose money. There is no sure way to make money in investing, but there are some methods that work out better than others.

To have a good chance of coming out on the right side you need to

- Have clear investing objectives and stick to them
- Take the long view, most say 5 years I would say more like 10
- Adapt a value or indexing strategy
- If you want to invest in individual stocks, then adapt a value strategy
- If you want to invest in indexes then do so regularly regardless of market conditions
- Take the time to really understand asset allocation and the fact that it will have a bigger impact on portfolio performance that stock picking ever will!
- Stop listening to the talking heads, it's just noise and will cost you money if you start believing in it

But above all else you need to be honest with yourself and understand the types of risk you can live with. There is no point trying to be a value investor is you are going to sell of a position when it falls 50% rather than doubling up. And there is no point trying index investing if you are going to spend all your efforts on timing the market. Some people will never make investors and the sooner they realize it the sooner they will start to save money - stick it in the company pension fund or on in the bank

I've been through a few downs now and one thing I always do when it hits, is read about earlier crashes (1907, 1929 and so on). It reminds me that we have been here before and that we will be here again! And as soon as people start telling you it is different this time... you can be sure it's not, the root is always greed and fear it just takes different forms!

Good luck in your efforts,

Jim.

woodseb

all sound advice there Jim, but...

Jim2007 wrote: »

The biggest factor in the market is human behavior and very little research has been done on that, so to assume that economists or other talking heads can get it right is a road to disaster! No matter what happens you can be sure there will be some talking head around that has been predicting it for ages!

there's a whole branch of study called behavioural finance in which a great deal of research has been done of how/why investors make decisions

rugbyman

JIM Thank you for your post. I do not know if all of your points are valid but I like the gist of it.
I also like people coming on here with advice. it warms the place up from the cold room it has been.

Rugbyman

Jim2007

woodseb wrote: »

all sound advice there Jim, but...
there's a whole branch of study called behavioural finance in which a great deal of research has been done of how/why investors make decisions

In relative terms it is a very new area and not widely accepted outside the academic community.... In fact in I find it most often presented as a bit of trivia attached to research reports issued by investment houses.

Jim

Jim2007

rugbyman wrote: »

JIM Thank you for your post. I do not know if all of your points are valid but I like the gist of it.
I also like people coming on here with advice. it warms the place up from the cold room it has been.

Over the years I've had a chance to observe several hundred investors... and after a while you begin to realize that what might be called old school advise these days rings true!

Jim

Vourney

Hey Jim, I agree with most everything you have said. And for the most part my Investing strategy is based on a conservative, disciplined and methodical approach. That being said, this is a thread on the possibility of the coming crash, and there's a part of me that is curious about it.
I don't listen to talking heads much. I guess the point I was trying to make in my previous post was that some technical analysts have said that the rally just behind us did not have significant volume, and I have heard technical analysits argue that a rally has to have significantly higher than average volume in order to be sustained and continue higher. And that would be an argument for maybe not a crash -- but a downturn. I am interested in a significant downturn in the market because I'm looking to do a little bottom fishing, as I'm sure others around here are. I guess I have two sides to my investing approach, one side being the methodical disciplined approach, and the other side being the opportunistic bottom fisher. In the long run, I do believe the market will go up.

displaced dub

Jim2007 wrote: »

The biggest factor in the market is human behavior and very little research has been done on that, so to assume that economists or other talking heads can get it right is a road to disaster! No matter what happens you can be sure there will be some talking head around that has been predicting it for ages!

Trying to beat the market is a fools game and a sure way to loose money. There is no sure way to make money in investing, but there are some methods that work out better than others.

To have a good chance of coming out on the right side you need to

- Have clear investing objectives and stick to them
- Take the long view, most say 5 years I would say more like 10
- Adapt a value or indexing strategy
- If you want to invest in individual stocks, then adapt a value strategy
- If you want to invest in indexes then do so regularly regardless of market conditions
- Take the time to really understand asset allocation and the fact that it will have a bigger impact on portfolio performance that stock picking ever will!
- Stop listening to the talking heads, it's just noise and will cost you money if you start believing in it

But above all else you need to be honest with yourself and understand the types of risk you can live with. There is no point trying to be a value investor is you are going to sell of a position when it falls 50% rather than doubling up. And there is no point trying index investing if you are going to spend all your efforts on timing the market. Some people will never make investors and the sooner they realize it the sooner they will start to save money - stick it in the company pension fund or on in the bank

I've been through a few downs now and one thing I always do when it hits, is read about earlier crashes (1907, 1929 and so on). It reminds me that we have been here before and that we will be here again! And as soon as people start telling you it is different this time... you can be sure it's not, the root is always greed and fear it just takes different forms!

Good luck in your efforts,

Jim.

Excellent post Jim. Hope to see more of them

Wudyaquit

The OP's posed an entirely valid question imo.
There's a notion in financial theory that all information is immediately relayed into share prices etc. This isn't true. The billions invested in mutual funds aren't pulled out until the retail investors get gittery and look to redeem their positions. Typically this isn't until the slide has already begun; the effect being that prices are buoyed over that period. To assume that "Market knows best" would suggest you should never touch your money, because prices are always immediately at their true level.

Whether there's a crash coming or not should be looked at from a risk/return perspective. If you agree there's a chance that May's correction will be continued, you should only invest if you think there's also a chance of making good gains over the coming months.
imo the best we can possibly hope for from the markets over the next few months would be a 5/6% rise, based on the sentiment that's out there, but there's scope for a substantially bigger drop, particularly if any more bad news hits over the coming weeks.
If what you perceive the possible returns to be don't compensate for what you perceive the risks to be you should stay away too.

Jim2007

Vourney wrote: »

I was trying to make in my previous post was that some technical analysts have said that the rally just behind us did not have significant volume, and I have heard technical analysits argue that a rally has to have significantly higher than average volume in order to be sustained and continue higher. And that would be an argument for maybe not a crash -- but a downturn.

Yes but the objective is to make sure you get the bargain... Once the price hits the level you are willing to pay and you are sure it's the result of mood swing rather than an impairment of the business, you go! If you can pick up more later at an even better price, great! Either way you have bought a good company for a bargain price.

There is no sure way to predict a mood swing so you don't try. By the same token you only need one or two good ideas each year to do well. On average I make about 1 or 2 trades per year and hold between 5 and 7 positions, of which 2 or 3 will have been in my portfolio for more than 5 years.

Jim.

Jim2007

Wudyaquit wrote: »

Whether there's a crash coming or not should be looked at from a risk/return perspective.

But in a way that is exactly what a value investor is doing... he is building into to his price calculation a margin of error to allow for all the things that could go wrong. For instance if after doing all my homework I reach the conclusion that the fair value price of a given share is say €30, then I'm not going to start buying it until it is trading at about €12, by the same token if it should hit about €45 I will sell because it has become way over priced. Last year I purchased BOI at €0.39 and sold it off at around €1.30 using this logic. It was my only trade for the entire year!

Jim.

pog it

Jim2007 wrote: »

By the same token you only need one or two good ideas each year to do well. On average I make about 1 or 2 trades per year and hold between 5 and 7 positions, of which 2 or 3 will have been in my portfolio for more than 5 years.

I agree with this but sadly at the moment the best ideas that are coming to me are that it is still not a good time to be investing, so I am waiting, frustrating as it is. The companies I watch are still not down to good value levels.

Jim2007

pog it wrote: »

I agree with this but sadly at the moment the best ideas that are coming to me are that it is still not a good time to be investing, so I am waiting, frustrating as it is. The companies I watch are still not down to good value levels.

Learning to do nothing is the most difficult part to do, but also the most important.....

If you are looking for new ideas, have a look at some of the European Coca-Cola bottlers. Last time round the South American ones were good for me.

Jim

pocketdooz

Jim2007 wrote: »

But in a way that is exactly what a value investor is doing... he is building into to his price calculation a margin of error to allow for all the things that could go wrong. For instance if after doing all my homework I reach the conclusion that the fair value price of a given share is say €30, then I'm not going to start buying it until it is trading at about €12, by the same token if it should hit about €45 I will sell because it has become way over priced. Last year I purchased BOI at €0.39 and sold it off at around €1.30 using this logic. It was my only trade for the entire year!

Jim.

Jim,

Could you please clearly explain to me how you came to a valuation on Bank of Ireland - how did you come to a fair value calculation on this company?

Thanks

Jim2007

pocketdooz wrote: »

Jim,

Could you please clearly explain to me how you came to a valuation on Bank of Ireland - how did you come to a fair value calculation on this company?

Thanks

Let me start by saying that valuing a bank or an insurance company is very difficult and unless you have a good knowledge of the industry, there are easier industries to look at. But that aside, I ran four models against BOI:

- DCF
- Adjusted book value
- EPS model based on my own projected financial statements
- Sum of the parts model

A google search will provide plenty of tutorial material for this type of work.

In my case I concluded that a price of around €1 would be fair. But there were other factors which also helped, AIB was also under valued and it was clear that the government could not afford to let both fail, so the logical move was to take a large positon in both on the assumption that at least one would do very well, which is what I did!

I continued to revise my evaluations as more information became available and as a result I felt that it was very over priced at 1.70 so I got out...

Looking back at by broker transactions I bought BOI at 0.36 and 0.39 and sold at 1.72. At the same time I bought AIB at 0.60 and sold off at 1.70 based on the fact that I was also getting out of BOI.

In the end this was a play on the entire Irish banking sector.

Jim.

pocketdooz

Jim2007 wrote: »

Let me start by saying that valuing a bank or an insurance company is very difficult and unless you have a good knowledge of the industry, there are easier industries to look at. But that aside, I ran four models against BOI:

- DCF
- Adjusted book value
- EPS model based on my own projected financial statements
- Sum of the parts model

A google search will provide plenty of tutorial material for this type of work.

In my case I concluded that a price of around €1 would be fair. But there were other factors which also helped, AIB was also under valued and it was clear that the government could not afford to let both fail, so the logical move was to take a large positon in both on the assumption that at least one would do very well, which is what I did!

I continued to revise my evaluations as more information became available and as a result I felt that it was very over priced at 1.70 so I got out...

Looking back at by broker transactions I bought BOI at 0.36 and 0.39 and sold at 1.72. At the same time I bought AIB at 0.60 and sold off at 1.70 based on the fact that I was also getting out of BOI.

In the end this was a play on the entire Irish banking sector.

Jim.

Great - thanks for that Jim. Also, next time you find a stock trading at a 60% discount to fair value, could you send me a quick PM please - haha !

Good to have you on this forum.

.

Jim2007

pocketdooz wrote: »

Great - thanks for that Jim. Also, next time you find a stock trading at a 60% discount to fair value, could you send me a quick PM please - haha !

Good to have you on this forum.

.

I've already mentioned an area worth taking a look at - Bottlers! Last time around "Coca-Cola FEMSA S.A.B de CV" was worth it...

Jim

hmmm

Maybe it's a shoeshine boy type comparison, but every time I see the clueless talking about market crashes I feel a strong urge to buy. And vice versa of course. It's strange how people talk about "upcoming crashes" when the market is down 20% in a few weeks. After going up 40% last year (no-one seems to mention that). Many investors seem to wait around for something to happen, not noticing that most large market rises and declines happen slowly.

The past few weeks have been great for long term investors, if it dropped further I'd be even more pleased.

hmmm

Jim2007 wrote: »

AIB was also under valued and it was clear that the government could not afford to let both fail, so the logical move was to take a large positon in both on the assumption that at least one would do very well, which is what I did!

Congratulations on your success, but I don't agree that this was a logical hedge. The government choice was never going to be to save either of AIB or BOI, it was going to be save the entire banking sector or not.

Vourney

Jim2007 wrote: »

Let me start by saying that valuing a bank or an insurance company is very difficult and unless you have a good knowledge of the industry, there are easier industries to look at. But that aside, I ran four models against BOI:

- DCF
- Adjusted book value
- EPS model based on my own projected financial statements
- Sum of the parts model

A google search will provide plenty of tutorial material for this type of work.

In my case I concluded that a price of around €1 would be fair. But there were other factors which also helped, AIB was also under valued and it was clear that the government could not afford to let both fail, so the logical move was to take a large positon in both on the assumption that at least one would do very well, which is what I did!

I continued to revise my evaluations as more information became available and as a result I felt that it was very over priced at 1.70 so I got out...

Looking back at by broker transactions I bought BOI at 0.36 and 0.39 and sold at 1.72. At the same time I bought AIB at 0.60 and sold off at 1.70 based on the fact that I was also getting out of BOI.

In the end this was a play on the entire Irish banking sector.

Jim.

Jim, Those were great trades. You should be managing other people's money for a fee. I'll have to check out tutorials on those models when I get a chance.

If the market gives me the opportunity, I am looking at ETFs DIA (Dow Jones) PGJ (China) and XLF (US Financials). We still have 30 days or so until Q2 earnings come out.

Jim2007

Vourney wrote: »

You should be managing other people's money for a fee.

In a past life.... these days just my own...;)

Jim

Jim2007

hmmm wrote: »

Congratulations on your success, but I don't agree that this was a logical hedge. The government choice was never going to be to save either of AIB or BOI, it was going to be save the entire banking sector or not.

Badly worded perhaps, but I was not expecting the government to bail them out. I was expecting that one of them would be around to pick up the business when the dust settles and thus have a very nice little business.

At the time the talk here (Switzerland) was a forced merger of the "good parts" and the rest falling away.... this has been the case here on more that one occasion.

Jim.