Stock market is a "fully-fledged epic bubble" and will burst
Discussion
SS9 said:
xeny said:
ATM said:
I'm not a fan of these funds / trackers / etfs. Someone of moderate intelligence should be able to pick individual names or sectors better than just buying everything.
This is clearly true, and why the majority of fund managers outperform a comparable index fund year after year.Edited by Zoon on Monday 7th November 13:12
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hstewie said:
hstewie said: Spotted on Twitter.
What does this mean in terms an idiot (me) can understand please?
Looks like OTC trades on spider will go to fully funded at that broker?What does this mean in terms an idiot (me) can understand please?
Might be because the clients are all long and wrong and not closing but holding the positions which is eating up the broker's limited balance sheet so they are incentivising those clients to close out?
Edited by DonkeyApple on Monday 7th November 11:42
bhstewie said:
hstewie said: Spotted on Twitter.
What does this mean in terms an idiot (me) can understand please?
Interactive Brokers will no longer let clients borrow money against a position in that security.What does this mean in terms an idiot (me) can understand please?
This is (or can be) the trouble with using margin loans...the broker decides to change a security's eligibility as collateral at the drop of a hat, so you have to put up more collateral or become a forced seller.
bhstewie said:
hstewie said: Thank you so given SPXD looks to be a S&P 500 tracker any ideas what the reasoning and implication of that is?
I'm a very simple investor who just uses my own money.
I've known it to happen before due to volatility or lack of liquidity. And looking at SPXD briefly it does seem to be less liquid than similar stuff (e.g. ~4bps spread vs 1bp for CSP1). But ultimately can be whatever reason they like, it's their money.I'm a very simple investor who just uses my own money.
NowWatchThisDrive said:
I've known it to happen before due to volatility or lack of liquidity. And looking at SPXD briefly it does seem to be less liquid than similar stuff (e.g. ~4bps spread vs 1bp for CSP1). But ultimately can be whatever reason they like, it's their money.
OK so more around the specific ETF than anything general around the S&P 500 you'd guess?Curiosity more than anything as like you say it's their money but I didn't know if there was likely to be any significance to it.
DonkeyApple said:
mike74 said:
There can't be many companies had such a dramatic fall in value in such a short space of time, especially without any particularly extraordinary circumstances actually causing it.
Arguably, it wasn't the fall that killed it but the rise on the back of extraordinary circumstances, one could argue?It was a business that was slammed upwards by free furlough capital and then came all the way back down when that free money came to an end.
Without those free money coupons that no one seemed to want so tried to get rid of as quickly as possible, it would probably have just been a business that hoped to get profitable but probably would have died some time around now anyway.
Very sad but I fear just one of many.
PS: Funny,if you were looking at their ownership profile after IPO (inst.), there is not any significant player there, mostly generic names who also got out immediately.
bhstewie said:
hstewie said: Thank you so given SPXD looks to be a S&P 500 tracker any ideas what the reasoning and implication of that is?
I'm a very simple investor who just uses my own money.
If it is broker originated, which I'm assuming it is, then it's of no relevance. I'm a very simple investor who just uses my own money.
What it usually means is that the broker has a load of retail clients sitting on losses on short term leveraged trades that have become long term leveraged investments because retail clients tend to sit on losses. In the case of U.K. and European retail clients the broker will be fronting the margin off their own balance sheet. That makes it junk business when it happens so you up the margins so the clients will bugger off and take their investment business to an investment broker.
DonkeyApple said:
bhstewie said:
hstewie said: Thank you so given SPXD looks to be a S&P 500 tracker any ideas what the reasoning and implication of that is?
I'm a very simple investor who just uses my own money.
If it is broker originated, which I'm assuming it is, then it's of no relevance. I'm a very simple investor who just uses my own money.
What it usually means is that the broker has a load of retail clients sitting on losses on short term leveraged trades that have become long term leveraged investments because retail clients tend to sit on losses. In the case of U.K. and European retail clients the broker will be fronting the margin off their own balance sheet. That makes it junk business when it happens so you up the margins so the clients will bugger off and take their investment business to an investment broker.
ATM said:
Doddler said:
With regards to the OP and wether this is in fact an epic bubble, how do we feel the current BOE statement of a 2 yr recession will affect UK and Global markets? Is it a good time to go into more cash, say 50% as markets are likely to tumble 20-30% over the coming months/year?
The time to get more or fully into cash was a few months ago when the FED started talking about tightening. Now it depends where you are deployed.Some people thinks Bonds or Treasuries are a good buy now if you believe the FED will go back to QE in the next 3 to 24 months and you will hold for longer.
Some people think value businesses are a good buy right now especially businesses which sell stuff people need rather than stuff people want.
Some people think energy is a good buy now as it will only go higher.
Some people think miners are a good buy now as metals - precious and / or copper etc - will only go higher.
Some people think fertiliser companies are a good buy now as food is only going higher and therefore fertiliser will be in higher demand.
But to be clear, I’m not sophisticated enough to want to rotate into other sectors and so on.
All I knew was my equity positions were far riskier vs cash and the prevailing inflation.
Over the last 18 months many will have made out like bandits doing the right trades (in leveraged) as the money moved from sector to sector.
As I noted in this thread last year, energy and farming would be good bets no matter what happens as we all need heat and food… and this far that’s played out.
BUT, what if Ukraine becomes a non-issue again?
Germany already wanting to use China as a proxy to access Russian energy.
As this recession bites we might see energy crash and the attendant farm pricing (input costs) crash as demand drops away, combined with a ‘deal’ with Russia.
I wouldn’t position in energy now as a safe haven. I’d be taking profits now had I made them.
An unexpected welcome surprise this morning, when I opened a letter.
Using a long-term strategy, with valuations only at the end of each week and involving a smaller business not getting media attention, I knew nothing about this takeover.
The business jogs along for years paying a reasonable percentage dividend, but with steady and unexciting growth, then suddenly this week - boom.
You can never anticipate, but it happens occasionally.
Mostly cash, but unfortunately part shares, by a company with a 5 year record of share price and fundamentals in the wrong direction.
Sometimes you get the wrong vibes, about accepting a stake in a business.
loafer123 said:
Hi, D_A
What’s your view on where U.K. base rates will peak…had an interesting conversation earlier, but might be my confirmation bias…!
Hi. Hope all is well. What’s your view on where U.K. base rates will peak…had an interesting conversation earlier, but might be my confirmation bias…!
The impossible Q!!!
The yield curve has come back but my gut feeling is that we have a walking disaster at the helm of the BoE. His track record at the FCA as an abject disaster and he displayed no core ability other than to respond to external instructions. My feeling is that the BoE is just aligned to the FED and will map the actions in the US regardless of any data regarding the U.K. but I don't know the other people and their collective ability to wake him up and get him to say what they want versus just copying an overseas entity. He is not a man who leads or takes any responsibility and if he doesn't screw this up it will down to luck or the aggressive action of subordinates.
That's my bias. The man is an idiot and an incompetent.
. My view is that the people who put him there to do their bidding are no longer in their positions which presents an additional issue of a puppet with no master. The U.K. economy? On some levels it is totally f
ked. The stuff that went into Covid as zombies and could have been killed off back then are still zombies waiting to die but are now going to have to do their dying without the Covid printing presses to help clear the mess up. Other parts of the economy are going great guns but I have no idea which side is going to win. Housing, I genuinely feel we at at a proper risk point where all the things we know have been building for years could get released all at the same time. I hope not and I suspect we'll just have modest and selective declines for a while.
Stock market, probably fine. It's liquid, the components will come and go as sectors win or lose etc. This year it has all been very orderly and looks the healthiest it has done for a very long time in terms of rational behaviour and stock selection.
Most of the inflation is supply driven. Demand must already be dropping as cash is absorbed by utility costs.
My personal view is that rather than using interest rates for a blunt internal demand tool we have the opportunity today to use lending regulation as a surgical means to move spending and behaviour around but don't yet seem to be doing so.
Where will interest rates go?
I don't recall a time they've ever gone up to just the right level done their job and then sensibly come back down? I don't think it's ever happened or would be possible. They always overshoot and cause damage on the other side.
So I guess the question is whether the recent rises are the overshooting or just the start with the overshoot yet to come?
My view is plan for the latter and got and get royally hammered if it weirdly transpires to be the former.
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