Yeah, things have been a bit out of control in China, with too many people speculating in the stock market. The values of Chinese stocks were out of whack. There is definitely weakness in China, after years of unsustainable growth. But it's not just China, also look for the US economy to slow down. (Even Greenspan said it.)
Kind of figured that we'd get a pull back. I just wasn't expecting 3-4% in one day. My portfolio got hammered. Not pretty.
I have been sitting on a lot of cash waiting for this to happen. Also, I have some bonds that I am hoping to sell if the bond yields drop more.
what little cash i had on the sidelines was put into the market 13 minutes ago. a good buying opportunity. China isn't 'slowing', their gov't is just taking actions against policies that have led to a spike in asset prices. of course their market was going to react to such talk. they are still on track for approx. 10% growth this year. this isn't a beginning to a recession here in the US. we still grew at a 3.3% pace last year and are predicted at 2.75-3% this year by the Fed. Profits, while not likely to be in the double digit growth range, are estimated to grow 8-9% this year. I'm still quite bullish, and am expecting to see the dow close the year around 13900. as for the radom 200 point downward spike on the Dow yesterday, it was caused by the backlog of orders and only showed up when a secondary computer was brought on-line. http://www.cnbc.com/id/17369561
even the bulls saw a pullback coming, and with everything that was said in the last few days, yesterday was the perfect time for it. 3% isn't too large. a 400 pt pull back on a 12500 market isn't that bad. IIRC, as a %, it isn't in the top 10. http://www.cnbc.com/id/17366921
3% isn't really that bad after a period of seemingly endless increase. And I don't think China will slow down significantly - it'll level off, but not go into a tailspin. I'm far more concerned about the failure of sub-prime lenders and what that would do to the debt and structured markets.
with regards to my bank, the risk is quite well spread. we've had so many funds clamoring for the debt, that we have been able to sell off the majority of our 'risky' debt to a wide array of funds. not to say that it won't hurt us if it goes south, but we're much less susceptible to a blowup.
I don't mean the banks so much - they mostly acquire debt to get it off their balance sheets as soon as they can. I'm referring to the markets in general. The funds that hold equity pieces of some pretty risky debt assets are going to be in for a rough ride if there are some defaults in the RMBS market.
there are some funds that would hit rough times, but we see that happen when people make bets on any asset. i'm confident taht the risk is well spread out over the market. yeah, some funds will blowup, but we won't see full scale melt down. nobody is looking at $1.6 trillion in exposure like LT.
Long. Term. Those are the words most of us should keep in mind for sure. I see this dip as a strong buying opprtunity for my overall portfolio. I'm 100% in mutual funds so I'm a bit more diversified than pure stock riders; however, I think I may start to look at diversifying my international piece of the pie. I'm not getting out of international funds all together, but I will look at reallocating a portion of my emerging funds toward more value based international funds or my existing global funds. All of those areas went down, but I still think international markets have a ton of liquidity pointing their direction. Of course, I'm gonna keep on pluggin $$ into US Large Cap, Large Growth and Large Value funds too . . . the money in the market may start moving faster toward the large US companies as some folks jump out of the international funds. Anyway, my 2 cents. Long Term.
I'm assuming that there will be a pullback either in the summer, or during the next earnings season (which is April I believe).
Was he claiming that machines contributed to/added fuel to the sell off, or they caused it? Two different scenarios.
One thing which is interesting is that the Chinese sell off came when someone in the Chinese government floated a proposal to increase capital gains rates. I also note the Shanghai market has been jumping lately.
I'm not sure, it was the usual Cramer yelling. I think it was the first, but he didn't really make it clear.
Oh, I don't think this'll cause a melt-down, but it'll depress the market. The steady pipeline of house market---->mortgages---->RMBS------->CDOs/CLOs-------->hedge funds is likely bound to produce a depressing effect. There's mitigation, to this, of course, in that CLOs are also fuelled by the private equity boom, which seems relatively healthy so far (even if it is overheated) and that the large pension funds are buying the AAA rated RMBS/CDO of RMBS pieces. Still, a slow down would be somewhat nice - I could have relatively normal hours at work!
a slow down would be horrible, a smaller bonus that expected in my first year of banking!! oh the horror!! selling out for $$ and not getting the full amount. DAMN!! yes, it is a depressing effect. but there is enough money free to be made in other assets (there will be some other kind of 'asset bubble' soon enough) that it won't be as hard felt as if the banks were holding the majority of the risk themselves.
good thing you didn't buy short!! the Dow is now past 12,900, yet another new high. with more good earnings next week, we may see Dow 13,000 next week. oh how the bears and the downbeat masses thought one bad day meant the economic might of this great country had come to an end. ONWARD AND UPWARD.
Ha. Yea. Didn't short. Did sell one of my stocks, but that's more of a mechanics thing. You shouldn't be taking investment advice from me anyway