Chinese stocks drop by 9% US stocks down 400 points!
- Thread starter bd popeye
- Start date
SteelBird
Colonel
Hi RPGGUNNER,
Please be gentle with your words. I think you haven't read this thread from the beginning or not even read it at all. Does any part of this thread said that it's about Chinese Military? It's about US and Chinese stocks going down significantly early this week. The thread is started by BD Popeye and is located in the Members' Club Room which is a special room for non military discussion. So, your question sound childish and innocent to me. You can hate or dislike somebody or something, that's your own problem, but don't try to make others think the same as you. But again, please be gentle in your words, I don't hope you'll earn any warning or being kicked out anytime soon...
ffEdit: I've found many recent posts by you... they are really nonsense or useless one liners. You are simply "no herbs to cure"...
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If I'm allowed I'm going to expand that topic a little. It's interesting and many seem to take part in it.
First of, I don't think it's a valid statement that years that end with 7 will generally be years of desaster regarding stocks, trades etc.
The resent drop is IMO, far away from the '97 crisis. It was a timely very restricted singular event and consolidation after a longer time of only rising stocks is not catastrophic or even unusual.
A thing that may come into play is ones again psychology. If the stocks are rising for some time, and all people believe they will crash, they are very likely to sell. The pros know this and are going to sell by themselves. That will lead to falling bears, people think now it's coming and are also selling. Then it's going down. But because the recent drop in China had, to my knowledge, no signs of problems to the development of the chinese economy, it's not something that makes me afraid.
Next is the capital gain tax. We have something like this here.
If you buy and sell shares and make 512+ € profits in under one year, you have to pay a tax for it. The high depends on your overall income per year.
The idea is the following: If you are not taxed for it, this is a very good way to make fast mony. That makes the bears very importand. The management will therefore do everything to achieve succeses in the short term to make their own shares attractive on the market. That leads to decissions looking for short term high profits. Wich in turn my lead to dismissal to increase profits or to strategies wich may make the company bad suited in the long run, what can lead to dismissel as well.
So if the short term bears of the shares are not that importand, because it's not all that profitable to trade daily the management decissions may be forced to have the long run in mind.
And I think it was partly a problem in China. Rumors of the tax were the catalyst, but shares were overvalued anyway.
I think for 2009 there are plans to apply a general 25% tax on gains. (Plus 5,5% solidaritary contribution, these funds are to be used for economic aid of the east german regions.)
Not totally stupid IMO, since making money with money is somewhat strange, especially if you have to pay taxes on your income anyway.
Only problem maybe that more and more people use shares for their old-age provisions. And in these cases, if they are not regularly traded for short term profit, it shouldn't be taxed.
But these are only personal thoughts based on mainly national observations.
First of, I don't think it's a valid statement that years that end with 7 will generally be years of desaster regarding stocks, trades etc.
The resent drop is IMO, far away from the '97 crisis. It was a timely very restricted singular event and consolidation after a longer time of only rising stocks is not catastrophic or even unusual.
A thing that may come into play is ones again psychology. If the stocks are rising for some time, and all people believe they will crash, they are very likely to sell. The pros know this and are going to sell by themselves. That will lead to falling bears, people think now it's coming and are also selling. Then it's going down. But because the recent drop in China had, to my knowledge, no signs of problems to the development of the chinese economy, it's not something that makes me afraid.
Next is the capital gain tax. We have something like this here.
If you buy and sell shares and make 512+ € profits in under one year, you have to pay a tax for it. The high depends on your overall income per year.
The idea is the following: If you are not taxed for it, this is a very good way to make fast mony. That makes the bears very importand. The management will therefore do everything to achieve succeses in the short term to make their own shares attractive on the market. That leads to decissions looking for short term high profits. Wich in turn my lead to dismissal to increase profits or to strategies wich may make the company bad suited in the long run, what can lead to dismissel as well.
So if the short term bears of the shares are not that importand, because it's not all that profitable to trade daily the management decissions may be forced to have the long run in mind.
And I think it was partly a problem in China. Rumors of the tax were the catalyst, but shares were overvalued anyway.
I think for 2009 there are plans to apply a general 25% tax on gains. (Plus 5,5% solidaritary contribution, these funds are to be used for economic aid of the east german regions.)
Not totally stupid IMO, since making money with money is somewhat strange, especially if you have to pay taxes on your income anyway.
Only problem maybe that more and more people use shares for their old-age provisions. And in these cases, if they are not regularly traded for short term profit, it shouldn't be taxed.
But these are only personal thoughts based on mainly national observations.
Well, I think the 9% drop of Chinese stock market happened to trigger a solid correction of all major global stock indexes. Some of those indexes (D Jones, Hang Seng, Shang Hai) are at their all time high, and have never had correction since July, 2006.
The economist and Chairman of IMF have been warning of a possible unwind of carry trade between low interest currencies sush as Yen, S Franc and high interest currencies such as US$, Euro and British Pound. So almost in the same time Dow Jones fell more than 400 points, you can see Yen, S Franc appreciated against US$, Euro, and B Pound. Not only currencies, but also all major commodity products which stay at high price range such as wheat, corn, soybean, coffee, gold, silver and etc. Those position owners wanted to running out for exit. The only exceptions are debt products. So the yield of 30-year T bond touched its lowest level of 3 months. So bd popeye is truly a lucky one.
People in investment industry say prices won't be up to the sky, just like trees will not grow to the sky. Profit taking makes prices trend zigzag up or down within a certain limit.
I looked how Dow Jones reflected for WWI and WWII and always wondered what would happen to world economy especially how those indexes would behave if the military confrontation between China and US accidentally occurred, even for traditional weaponry level. It should never like the experiences before. I hope I can hear your response towards it. Thanks.
The economist and Chairman of IMF have been warning of a possible unwind of carry trade between low interest currencies sush as Yen, S Franc and high interest currencies such as US$, Euro and British Pound. So almost in the same time Dow Jones fell more than 400 points, you can see Yen, S Franc appreciated against US$, Euro, and B Pound. Not only currencies, but also all major commodity products which stay at high price range such as wheat, corn, soybean, coffee, gold, silver and etc. Those position owners wanted to running out for exit. The only exceptions are debt products. So the yield of 30-year T bond touched its lowest level of 3 months. So bd popeye is truly a lucky one.
People in investment industry say prices won't be up to the sky, just like trees will not grow to the sky. Profit taking makes prices trend zigzag up or down within a certain limit.
I looked how Dow Jones reflected for WWI and WWII and always wondered what would happen to world economy especially how those indexes would behave if the military confrontation between China and US accidentally occurred, even for traditional weaponry level. It should never like the experiences before. I hope I can hear your response towards it. Thanks.
I would look more at the Indicies for WW1, as we had boom time economies and global trade until 1914 all of which were caught off guard by the outbreak of war.
WW2 was a very different background, with long periods of recession and deflation, matched to high levels of protectionism.
WW2 was a very different background, with long periods of recession and deflation, matched to high levels of protectionism.
Sounds sensible to me. Wild speculation was what led to the Great Depression, as well as the Dot Com bust in the 90s. Stocks rising and falling are one thing, but when speculation is too high the "real" economy can build itself on demand that isn't there.
The stock markets recover further! Looks like investors have regain some of their confidence.
Regional markets recover further
Kuala Lumpur Composite Index gains 14.5%
By KEITH HIEW
PETALING JAYA: Regional stock markets continued their rebound yesterday, which saw the KL Composite Index (KLCI) rising 14.46 points to 1,203.29.
A pressing question for investors now is: are we seriously seeing a true recovery of the bull market, or are more fluctuations to be expected?
According to Adrian Mowat and Bijay Kumar of JP Morgan’s Asia-Pacific equity strategy research team, the end-February correction was a “temporary adjustment in risk appetite rather than a reflection of weaker emerging market fundamentals”.
“We are surprised that the US equity market reacted to the fall in the Chinese A-share market. This probably reflects a weakening US profit outlook. After the tail initially wagging the dog, Asian markets have been led by a weak US market,” JP Morgan said in a note.
Malaysia is among the markets rated overweight by the international brokerage, which has a year-end forecast of 1,380 points for the KLCI, given the healthy Asian consumption and business investment growth.
“With the exception of India, monetary policy is still pro-growth. Asian currency appreciation, led by the renminbi, is still tracking,” Mowat and Kumar said in the report.
JP Morgan does not expect a meaningful slowdown in China's economy, saying an appreciating yuan is the best way to deal with inflation.
It said the risks of a yen carry-trade should be diminishing and the trend reversing, adding that it expected interest rates to come down in Indonesia, Thailand and the Philippines, which could result in currency volatility.
Hwang-DBS Vickers Research acting head of research Wong Ming Tek said while the markets were recovering, they would probably not appreciate “at the same speed” they did in the first two months of the year.
“We do expect more volatility in global equities throughout the year, owing to a variety of reasons such as a softening US economy to more erratic movements in the Asian markets,” Wong told StarBiz.
Regional markets recover further
Kuala Lumpur Composite Index gains 14.5%
By KEITH HIEW
PETALING JAYA: Regional stock markets continued their rebound yesterday, which saw the KL Composite Index (KLCI) rising 14.46 points to 1,203.29.
A pressing question for investors now is: are we seriously seeing a true recovery of the bull market, or are more fluctuations to be expected?
According to Adrian Mowat and Bijay Kumar of JP Morgan’s Asia-Pacific equity strategy research team, the end-February correction was a “temporary adjustment in risk appetite rather than a reflection of weaker emerging market fundamentals”.
“We are surprised that the US equity market reacted to the fall in the Chinese A-share market. This probably reflects a weakening US profit outlook. After the tail initially wagging the dog, Asian markets have been led by a weak US market,” JP Morgan said in a note.
Malaysia is among the markets rated overweight by the international brokerage, which has a year-end forecast of 1,380 points for the KLCI, given the healthy Asian consumption and business investment growth.
“With the exception of India, monetary policy is still pro-growth. Asian currency appreciation, led by the renminbi, is still tracking,” Mowat and Kumar said in the report.
JP Morgan does not expect a meaningful slowdown in China's economy, saying an appreciating yuan is the best way to deal with inflation.
It said the risks of a yen carry-trade should be diminishing and the trend reversing, adding that it expected interest rates to come down in Indonesia, Thailand and the Philippines, which could result in currency volatility.
Hwang-DBS Vickers Research acting head of research Wong Ming Tek said while the markets were recovering, they would probably not appreciate “at the same speed” they did in the first two months of the year.
“We do expect more volatility in global equities throughout the year, owing to a variety of reasons such as a softening US economy to more erratic movements in the Asian markets,” Wong told StarBiz.
Mr. SampanViking, thank you for your response to my question. My above question was inspired by the legendary Rothschild family, who accumulated huge wealth during the Napoleonic Wars. And my interest in Dow Jones history was because of Jesse Livermore, another legendary figure and a great speculator. After having read through some more materials, I found my previous question was such a broad topic that there were already tons of related materials on it. I highlighted some points and included some links for reference of those who are interested in financial history.
1. After 1905 San Francisco Earthquake and 1907 Panic, which drove DJ down from around 100 to 50, DJ was basically upward and fluctuated from 100 to 75. As you mentioned, the world economy was booming before WWI. IMHO, after the second industrial revolution in 19th century, social circumstances encouraged innovation and entrepreneurship. Besides, the adopting of economic imperialism and arms races increased trade activities at that time.
2. DJ was slightly above 75 when market shut down in July 1914 for 4 and half months because of the World War I. The sudden disruption created perplexity and fear among investors when market resumed DJ was at around 50, a 30% slump. US didn’t declared war against the German Empire until April 1917. DJ was well above its low of 50 through WWI.
3. DJ was at around 130 when World War II broke out. It was up and down between 150 and 100 during the war time; from 1939 to the mid 1942, Dow was basically at its down trend, and reverse to its up afterwards.
4. War has substantial influence on financial markets. In 19th century, world financial center switched from Paris to London because of the French Revolution and the Napoleonic War. During World War II most famous European bourses were either strongly interfered or closed. The closure of those bourses broke centuries old exchange mechanism in business information, idea and capital. And most of all, the expenses of the war, shifted wealth from the old continental Europe to the US. All those finally resulted in the change of global financial center from London to New York.
1. After 1905 San Francisco Earthquake and 1907 Panic, which drove DJ down from around 100 to 50, DJ was basically upward and fluctuated from 100 to 75. As you mentioned, the world economy was booming before WWI. IMHO, after the second industrial revolution in 19th century, social circumstances encouraged innovation and entrepreneurship. Besides, the adopting of economic imperialism and arms races increased trade activities at that time.
2. DJ was slightly above 75 when market shut down in July 1914 for 4 and half months because of the World War I. The sudden disruption created perplexity and fear among investors when market resumed DJ was at around 50, a 30% slump. US didn’t declared war against the German Empire until April 1917. DJ was well above its low of 50 through WWI.
3. DJ was at around 130 when World War II broke out. It was up and down between 150 and 100 during the war time; from 1939 to the mid 1942, Dow was basically at its down trend, and reverse to its up afterwards.
4. War has substantial influence on financial markets. In 19th century, world financial center switched from Paris to London because of the French Revolution and the Napoleonic War. During World War II most famous European bourses were either strongly interfered or closed. The closure of those bourses broke centuries old exchange mechanism in business information, idea and capital. And most of all, the expenses of the war, shifted wealth from the old continental Europe to the US. All those finally resulted in the change of global financial center from London to New York.