Anyone taking advantage of the extreme weakness?? Some decent opportunities out there now and in the near future. Looks like most are running scared with the TSX off 600pts today....
and that's when opportunities arise. Investors running scared now are most likely poorly weighted in their portfolios and the volatility is getting to them.
it is not on the bottom yet today maybe easier to invest in short terms like oil and gold, food get 10% flactuation in month this is not an advise just my opinion
I'm not sure that this is the bottom either: I've been a bit concerned lately about the ramifications of some of the nonsense going on south of the border. 1st - the subprime mess will continue to get worse before it gets better. There is still yet about 2/3rds of the bad mortgages to be digested by the market, including over 1 trillion in the next year . This will continue to put downward pressure on an already crappy US housing market for at least the next 2 years. At the same time, I'm wondering if many of the people involved will be forced to liquidate other holdings such as stocks etc., causing the stock markets to fall further still. 2nd - economists can't reliably predict recessions, but the stock markets seem to be able to predict them pretty reliably. On that basis, given the markets' significant declines since Nov., we could be going into a significant recession(or worse), which would/could really exacerbate point #1. 3rd - There is apparently a huge amount(trillions) of garbage like 'credit default swaps' and their ilk, that are buried in the balance sheets of many financial companies etc. Many of these instruments carry unknown liabilities and currently have no market, so a company that has some can't just sell them. From what I've been reading, these 'financial time bombs' could cause several big banks, hedge funds, financial and insurance companies to become insolvent. This would further exacerbate points 1 and 2. It would/could be like dominoes or a house of cards- worldwide. I can't claim to predict how this all will work out, but it has me concerned. As a 'just in case' measure, I've started to move to higher %age of cash and get more conservative in my approach. In the best case scenario, the markets will flop around their current levels for the next few months to a year or until this stuff settles down. In worst case scenario we could see market level cut to half of what they are now - if this mess is as big as it appears. Many institutions and people could be forced to sell no matter how low the price. Given the possibility that there is about 45 trillion of credit derivatives etc. hiding on balance sheets of companies worldwide. If this all unwinds, it, in addition to the mortgage/loan/credit mess, could create a perfect storm scenario for the world markets. If enough people/institutions are forced to sell, security valuations could be easily cut in half of current levels. In 1998 (IIRC) when Long Term Capital collapsed, it almost caused a global crisis. It looks like a speed bump compared to the current situation. We shall see.... BJ
Isn't this the perfect storm for people working in industrial manufacturing. High dollar, and an economic recession.
this creates opportunities, and as aguy that deals in this daily, there are opportunities for investors with the right time horizons. Buying value stocks now will present the least decline and the fastest recovery when the mkts settle down and money flow is back in. Yields on the banks ranging north of 4% to 5.5%. Nobody said bottom, but really nice opps now and near future. The fed and US admin will do everything they can to keep this recession as mild as possible. Mkt will still sell those actions, but those are your tradeble days.
The current Cdn economy is strong, but usually when the U.S. sneezes, we catch the cold. But, recession = buying opportunities!
What do you mean by this? I must be missing something, because 4-5.5% ROI doesn't seem like anything to write home about?
that's just the cash flow the investment will generate based on their net earnings. You will be paid that amount(higher than current GIC rates) to own these investments. You will likely see solid capital growth over mid term horizons also. When bank PE's get down to these levels, and yields get to these levels, you have excellent risk/reward profiles on the investment. pls note, you should speak to your Advisor for more info, if you don't have one, I know a good one :wink:
Brian, you estimate or source for credit based derivative risk is waaaaay to high. The number being used right now is about 100Billion of subprime exposure that needs to come off company balance sheets. However if you factor in the current potential for additional credit card defaults and/or additional RE mkt declines, then things could worsen. I believe the current subprime issues have more than wiped out their equivalent values of the company's mkt caps involved. TSX down 17% from highs, a bit more to go, then bounce, then maybe further failure. Investors that were holding too much equity to begin with will be getting hurt badly in this. Properly diversified portfolios are doing ok as bonds have rallied in anticipation of deep interest rate cuts and an accomodative Fed and BofC.
I'm 100% in equities, but I'm only 31, so not too concerned. It'll come back, it always does. I'm more worried about short term employment prospects. 10 years ago if you told me mechanical engineering wouldn't be the best career choice...
That's it right there "the number being used"..... That # only refers to the amount of stuff that's actually been reported by the Financials to date. They will continue to report more each quarter. Very likely a few of the large US financials will become insolvent over the next couple years. There's tons of freely available data showing how much subprime crap is actually out there, in addition to many 100's of billions of HELOC loans and unsecured credit card debt. In the last 10 years or so, the value of US housing went up ~$4.5 Trillion, all financed by debt. Much of that debt consists of ARM's that are All resetting to higher rates in the next 2 years. As long as everyone stays working, this will clean up in reasonable time. If the US goes into a (worse) recession=higher unemployment= Higher defaults=worse recession=even higher unemployment=even more defaults =....well you get the picture. In many US cities the default rates are growing at triple digit rates year over year. This is all small potatoes compared to the $45 trillion in credit derivatives(worldwide) I mentioned. It ain't over yet..... Dominoes anyone? Hope I'm wrong about all this. BJ
Economics according to Bryan...take it for what is worth :wink: George W wants a war, but he needs money to invade Iraq. Where does the money come from? Same place all money comes from today, debt. When you get a $100,000 mortgage from the bank, the money is "created" right then are there. The value is the promise you give of paying it back. The bank does not have $100,000 that they set aside, it is created. There is now another $100,000 in the currency system. They are allowed, by law, to leverage 9 times the actual amount held as real assets in the bank, so they they have to have $10,000 in gold/cash for your $100,00 they give you. So they lend it out to you at say 5% interest on $100,000, but they are effectively getting 45% interest since they only have $10,000 in the bank for your $100,000 mortgage. Quite the scam eh? This is how banks make money. They pay you 2% on your savings account but collect 45% in interest. This is all good when people pay back the money they borrowed. If one in ten defaults, the bank is even. If two in ten default, big trouble. The bank does not have the money to cover it. They never did. They are bankrupt. How do you generate more debt? Give mortages, to people that shouldn't have mortgages. Thats risky, so cover your ass by making them pay super high interest rates after a period in time. This should be enough to cover the defaults right? Ummm, no. If someone can't pay a low rate, they certainly can't pay a high rate. So George W has effectively financed his war on the backs of the working class and low income people. He has also risked the entire US and world economy in the process since these mortgages where bought and sold on a world market; they are owned by many banks. What is the answer? The US government will have to bail out the banks for 50c on the dollar to the tune of hundreds of billions of dollars to stop the economy from collapsing. Was the whole thing a suprise? No! This was engineered as all recessions are. The Banks and the Fed control the money supply, they control the market.
This sucks! I'm older than most around here, and this latest stupid move by the nervous ninnies has cost me dearly. I was looking at retirement in 5 years. Now that bubble has burst. This really sucks!
Engineered recession? Just curious why somebody would want to do such a thing? Who stands to benefit and why?
It'll all come back, don't worry. 5 years is still plenty of time I think. Heck, just plow more money into it, and you'll do even better in 5 years.
They're not blaming Harris, but the Alberta gov't led by STelmach is already going back to "reexamine" the royalty rates they imposed unexpectedly and unjustifiably in late 2007. Wait and see, Flaherty will take some hits in the near future, most or all deserved for his arrogance. The BofC is still basing their rate decisions on the expectation of a 2.1%GDP growth rate in the States, not gonna happen. They need to cut 50bps tomorrow, not the 25bps that is expected. The Fed will definately cut 50bps at month end, if not sooner. Brian, mid-tier banking failures are likely in the US, the big boys aren't going anywhere. As another poster said, the US gov't would engineer a bailout, either in public view, but more likely private, before they let that happen. You are also assuming that the real estate value increase are solely manufactured by financial manipulation, and not demand. That simply isn't the case. Greed led to the most recent runups, US RE markets have been through upheaval before. There will be opportunities in those markets as well for those with cash. Please don't forget that the weathly US citizens are virtually UNAFFECTED by the subprime issues, and they look at these opportunities to only get richer.
