The wave is sweeping across Asia as I write this. The NASDAQ will most likely tank in the morning, but I believe more people will flee into large value stocks. The S&P might be saved. Lots of good shorts in the market tommorrow. The signifigance of the Thailand SETI tanking is this. A few months ago after the coup many analysts were upgrading Thailand. Ultimately, there were probably some investors who flocked into the Thai exchange thinking it was now a great buy. There are also a multitude of retail investors in international etfs and mutual funds. As I pointed out before, there is a lot of $$$ in margin. There will be many entities liquidating assets in the morning trying to cover the margin over the Thai exchange fiasco and limiting their exposure to Asia in general. As well, there will be many retail investors redeeming their international based mutual funds and etfs. I certainly will be cashing out my Vanguard international funds first thing in the morning. Im not going to go through this once again like in 1994. **** U.S. Investors Burst Asian Stock Bubble By Lawrence Malkin International Herald Tribune Friday, January 14, 1994 American investors are pulling their money out of the overheated stock markets of Southeast Asia, helping burst the bubble that they themselves created in a headlong drive to diversify abroad. . As markets tumbled in Hong Kong, Malaysia, Thailand and Singapore on Thursday, investors, advisers, brokers, and analysts agreed that they had reached their highs for the time being and that Southeast Asia was being dealt out in this year's annual reshuffling of investment portfolios, no matter how optimistic may be the long-term outlook for the area. . The Asia/Pacific component of the International Herald Tribune World Stock Index tumbled 0.8 percent, to 116.47. . But specialists disagreed on where the money would move next - Japan, other emerging markets, Europe, or back to the United States. The most likely answer may be that Americans will continue to diversify their investments in all these places. . If there was any trigger to the flight aside from the obvious unsustainability of the Southeast Asian markets themselves, it was recommendations from major advisers. None counseled a wholesale repatriation to the United States. . Merrill Lynch's international strategist, Thomas R. Robinson, advised clients Wednesday to shift their emphasis to Latin America and Europe because of short-term volatility in Southeast Asia, and Asian fund managers to shift to Japan. This was short-term advice, Mr. Robinson said, because "we are long-term positive" in Southeast Asia. . Eric Kobren, who runs a newsletter tracking Fidelity Investments, the largest U.S. mutual fund house, advised readers to bail out of Southeast Asia about a month ago and either to come back home and bet on the domestic economy or to try profiting from declines in European interest rates by investing in bond or equity funds there. . Vivian Lewis, editor of Global Investing, an American newsletter devoted to foreign stocks, carries few Southeast Asia recommendations now, except to buy some selected issues on weakness. Bullish long-term, she nevertheless advises subscribers to take profits on some of her best picks, for example by selling half of Thailand's Shinawatra Computer, up a phenomenal 558 percent since she first recommended it at the end of 1991. . Small Asian markets - Biryini Associates calculates that volume in Hong Kong last year was only one-fourteenth of Wall Street's - thus are learning what it is like to sleep in the same bed as Wall Street's thundering herd. The problem for Wall Street is that no one knows precisely what will be the next trend. . "For the present, money is coming home, like all marginal money at the first whiff of trouble, and it has been marginal money that moved these small markets," said William McBride, who follows emerging markets for Lipper Analytical Services, which rates mutual funds. Since the start of the year, he reported, Asian closed- end funds are down 16 percent. . "Managers don't move their money from one country to another," he said. "Most funds will bring their money home, and then they will redeploy it as long as there isn't a sharp fall in the U.S." . But Robert Walberg, stock strategist for MMS International, said there was "still a flood of money going into emerging markets, but it is just going to different places." He predicts it will go to India, New Zealand and South Africa. The latter two are already up more than two-thirds in a year. . Michael Metz, investment strategist of Oppenheimer & Co., is one of the few who believes that much of the foreign money is coming home "because all those markets are overpriced and so is Wall Street, but it is the least overpriced." .
Are the traders in this thread only able to make money on equities in a bull market? By the way..Thank you for this thread... Glooming & dooming aint what this is all about...adaptig, reacting to price is what it is...predicting is a misereable game in my opinion...find a trigger of NOW...
I am as real as you can get. There is a guy on here using prop margin who was trading 20% of the volume of LU every day. 20% do 80% of the volume. How many people were using 10 to 1 back then ? Not everyone could just ignore their job and run to the bucket shop to daytrade where as today many trade from their primary job using a pc. The fact remains, margin levels are higher today than they were back in 1929.
volente_00, i don't believe the trader doing 20% in LU was prop as his account was at retail. but your point is understandable patrick
again, i would dispute that claim about margin on a PER CAPITA basis. but since it is not my claim, feel free to provide evidence to support that, on a per capita basis, individuals are more heavily margined NOW than they were in 1929 i'd love to know one way or the other but that is a claim that would require evidence
Why are you changing the OP's statement ? He said more margin is being used. Where does he say higher leverage is being used ?
Sorry to disagree; 1. Fed can't raise rates without tanking the economy. Why is it necessary to support the dollar? Declining dollar at this point would equal improved competitiveness for the USA and support labor markets, tax revenues, and local prices in housing. Other central banks, however, may not want to lose their pricing advantage. 2. Seems more to me like a protracted period of no change in interest rates on the short end. As far as the back end, who knows.
Here is the link I am using for the margin data: http://www.nysedata.com/nysedata/asp/factbook/viewer_edition.asp?mode=table&key=2970&category=8 As you can see, the margin debt in November is 270 billion. In April, it was at 241 billion. The only time the margin debt has been greater was in March 2000 at 278 billion. I surmise the reason why the margin debt is larger now then in April is because of a heightened investor confidence and lots of dollars was made in the summer-fall period. Therefore, I believe any fall from grace right now will be on the whole WORSE then it was back in May. May was no picnic, that is, if you were on the long side of the coin. That memory is still fresh in everyone's minds and those people who made the long mistake the first time will not repeat it. So my thesis is that the increased margin interest and heightened awareness that was caused by the May correction will cause a much sharper correction then the previous one. The only way to stop the correction and eventual recession is an instant rate cut of 50 basis points. However, that will not happen. A recession and intense correction is in the cards.
no matter what, you need a catalyst. I am calling this PPI # benign, because blamed high energy prices going forward are less of an issue, considering the mild winter we are about to encounter. War with Iran or something like that would do it. Until then, we are in a consolidation phase to the next round up. The market is cheap, and besides a few overpriced sectors (particularly exchanges, some overheated tech with unrealistic growth rates, and housing stocks which are priced to perfection), no reason for a bear market. as far as I'm concerned, the US equities markets need to keep up with inflation, so they have a lot more upside than down.
i am saying that margin debt IRRESPECTIVE of the changes in market capitalization and of the # of people in the country is a useless (at best) and disingenuous at worse statistics it's like saying there are more rapes in City X in 2006 vs 1929 well, if there were twice as many rapes in city X in 2006 vs. 1929, but 10 times as many people live there now vs. 1929, that statistic would be put in its proper light the gross amount of margined money comparable to the past is not meaningful as another example, take market Y capitalization has multiplied by 10 times vs. 1900 there is twice as much margined money in it now vs. 1900 if you just heard there was twice as much margined money, that would sound worrisome if you took it in context, you would not again, the stat is not meaningful