[freeier]

middle east. interesting. but not dubai.
anyway i'm more into vietnam these days. 10 times gain in 10 years ?

[sp1key]

seems like HSI and many other stocks are hitting all time high... whats your take on this?

I'm still keen on investing in some chinese oil, banking stocks but seeing it as hovering the all time high is a put off for me

still undecided... keen to listen to any advice/tips here
cheers

[philippe]

Originally Posted by sp1key

seems like HSI and many other stocks are hitting all time high... whats your take on this?

I'm still keen on investing in some chinese oil, banking stocks but seeing it as hovering the all time high is a put off for me

still undecided... keen to listen to any advice/tips here
cheers

I would advise to be very cautious at this point of time.

In the last 10 days my portfolio went up 5%.
It may not look like it but to me this is "big money".

I like to keep an eye on the big picture. Once an a while I take a look at the DJIA just to get a feel of the market.

In 2000 the DJIA was at the all time high around 12000 points. It dropped sharply after that and it took around three years for it to recover and pass the 10000 points level (that's what I was waiting to throw mony in the market). Since mid 2003, the DJIA did rise nearly 40% at a pace of 1000 points (or 10%) every 6 months. After the February correction we were at the 12000 level, 20% up from mid 2003. Since then we gained almost 20% more in about 4 months. On top of that the small bull/bear cycle is about 3 years long so we are already a year late for the cycle to reverse. One of the reason why the market is still going up is because institutions and pushing the market higher and higher at any cost. Nobody dares to talk about a bear market, nobody would say that he market is too hot and that it must go down because it always does.

I bid that the DJIA will fall 20-30% before the end of this year. Either in Summer if Q2 results are bad or in October (the historical crash month) if Q3 results are bad. As the domino effect will take place, NASDAQ will follow and DAX, CAC, NIKKEI, HSI, SENSEX...

If the institutions are able to to contain the heat, we may have another year to go until the US presidential elections. Still expect a lot of volatility in the coming 24 months.

[BananaIvan]

20-30% drop? That would rival (and if above 25% outdo) 1929 and 1987...

I seriously doubt we'll see that much of a drop barring any external factors such as war, a terrorism spectacular (bigger than 9-11), SARS redux etc...

As for cycles, the cycles these days are longer and have been getting longer. This is mostly because year over year, the brilliant financial engineers find ways of spreading (or hiding?) risk in ever more places thus somewhat reducing volatility. Of course, the eventual correction just feels that much harder afterwards!

As for where to invest... well, one thing I'm really looking at is. WWCFMD (What would a Chinese Fund Manager do?) With qualified domestic investors now able to invest overseas, and a $200 billion investment fund being set up to use some of China's foreign reserves (combining for a total of somewhere approaching half a trillion dollas waiting to be invested somewhere) getting in before that money gets into stocks you think it might be going into might be a great game to play.

[philippe]

Originally Posted by BananaIvan

20-30% drop? That would rival (and if above 25% outdo) 1929 and 1987...

Not really:
- in 2001 the DJIA dropped from 11000 to 8000
- in 2002 the DJIA dropped from 10500 to 7500 or so
- in late 2002 the DJIA was at 9000 and dropped to 7500 or so in early 2003

So a drop from 14000 or so to 10000-11000 seems realistic to me at least from a chartist standpoint.

I seriously doubt we'll see that much of a drop barring any external factors such as war, a terrorism spectacular (bigger than 9-11), SARS redux etc...

As for cycles, the cycles these days are longer and have been getting longer. This is mostly because year over year, the brilliant financial engineers find ways of spreading (or hiding?) risk in ever more places thus somewhat reducing volatility. Of course, the eventual correction just feels that much harder afterwards!

External facors do not need to be that dramatic to have some significant effects on the market. Remember the financial crisis? It was started by a few guys (including G. Soros) who decided to move their money out of Thailand IIRC.

You agree with me to some extend here but perhaps you think that the correction will come later (when?) and that it will be not be such a hard landing (why?).

Well, if anyone dare to guess when the bear will be back (short cycle), for how long (3 years?) and how deep the market will plundge, please enlight us. I doubt that we will get many opinions (from the pros) because this is somehow a sensitive (if not taboo) matter.

[BananaIvan]

I'll just say that 14 to 10 represents a drop on the higher end of the events you listed (about 28+%). I don't see it happening frankly...

The Asian Contagion's 'straw' was the attack on the Baht by Soros, but poor governance prior to the event, overly rapid liberalization of capital controls, events in the US (rising interest rates), stubborn insistence on pegging to the USD all played a part. It was a perfect storm of events that doesn't come along all that often.

And no one knows when the bear will be back. I've been speaking to a lot of IB and fund management types lately... and if they knew when it was coming they'd be battening down the hatches. But no one agrees when it will happen. I've heard anything from this winter to 2009. Their guess is as good as yours and mine.

One thing everyone I've talked to is watching though, is all that credit risk that's been created through easy liquidity... as long as the risk has been parceled out fairly evenly then the financial engineers and sales types have done their jobs, the eventual come down won't be as hard (I subscribe to this theory). One can only hope so given how easily credit has been thrown around in the past few years.

But there's always the possibility that some huge non public entity/fund that matters has a disproportionate amount of it on their books. Then we'll all in for a really good time.

[sp1key]

Originally Posted by BananaIvan

As for where to invest... well, one thing I'm really looking at is. WWCFMD (What would a Chinese Fund Manager do?) With qualified domestic investors now able to invest overseas, and a $200 billion investment fund being set up to use some of China's foreign reserves (combining for a total of somewhere approaching half a trillion dollas waiting to be invested somewhere) getting in before that money gets into stocks you think it might be going into might be a great game to play.

this is rather interesting as I've been trying to read up on this as well but its still quite vague to me

[HK_Newbie100]

It must be said again, the credit noose is tightening once more, making stocks an extremely risky game of diminishing returns. Rates have gone up in UK again with further rises to come. US rates should also be going up to counter inflation but sub prime woes and fears of meltdown in mortgage market and recession is putting a hold to that, but won’t for long. The dollar is being pounded once more and being dangerously close to breaking the critical level of 80 on the dollar index, which if it sustains a break could open the floodgates to a dollar meltdown which would wreak havoc in the markets. With recent bond auctions going down lead a lead balloon and failing to shift, the appetite for dollars is shrivelling and liquidity is drying up, without which the US economy will ultimately implode under its debt burden. Bond markets in general are under enormous pressure and starting to buckle. It looks like the party is well and truly coming to an end. And stocks are still close to all time highs, and people are still piling into the market? Hmmm!!!

There’s a report called the Commitment of Traders (COT) which basically lists holdings of traders in the commodity markets, or put another way, “smart money”. After a pretty much year of consolidation across the board, many commodity markets are flipping to bullish signals. Gold, for example, flipped bullish only a few weeks ago. We are most probably in the second leg of a major commodity bull market, and commodity markets have historically moved inversely to stock markets. For your average investor, a gold ETF like Street Tracks Gold Shares is a good place to invest for outright returns and to hedge against upcoming uncertainty (more like turmoil) in the markets. And to answer the What Would A Chinese Fund Manager do question above, for certain, a large portion of it will find its way to buying gold.

[freeier]

actually, at the end of last year, alot of the IB guys and colleagues i knew cleaned out their portfolio and stayed cash. but i guess many of them/us went back into the market after feb/march..

and now, people are saying bullish days are to come and last forever ?!

i think the less ppl thinking that the market will correct, the bigger the shock will be... that's how the 97/98 financial crisis started.. all rosy and one big bang!

[sp1key]

yes all those and the all time high here and there is still keeping me out of it as much as i wish to get involved still...
but wouldn't some of you more experience comrads think that chinese based companies are still safe to go for since they're still young in the market and has a long way to go?