Endless world financial crisis - Ferrari Life
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post #1 of 27 Old 09-29-2008, 03:39 PM Thread Starter
 
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Endless world financial crisis

OK, so today once again the stocks went down hard and investors around the world had a horrible day.

Since we have some pretty bright people around here (Boxer, Pete, Magnum6464, etc) plus the specialists (Archie, 212Export, etc), I ask you: is there a way out? If so, what is it?

And most important, WHEN will this end?

I appreciate any inputs, considering my little knowledge when it comes to money.

"When the going gets tough, the tough get going." - J. P. Kennedy
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post #2 of 27 Old 09-30-2008, 12:09 AM
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Originally Posted by stile - alpine View Post
OK, so today once again the stocks went down hard and investors around the world had a horrible day.

Since we have some pretty bright people around here (Boxer, Pete, Magnum6464, etc) plus the specialists (Archie, 212Export, etc), I ask you: is there a way out? If so, what is it?

And most important, WHEN will this end?

I appreciate any inputs, considering my little knowledge when it comes to money.
I'm happy not to be rated in the group of "pretty bright people" since what I'm saying will most likely proof wrong but just this: "When on a ferrari forum people are (fully understandingly) asking about when the market "correction" will probably (hopefully) end, then either somebody is a) terribly leveraged and/or b) the turn may be near !

Just my 2 cents. Good luck !

P.S. You ask abou if there is a way out ? Sell if you want to be out !
(Please excuse my directness)
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post #3 of 27 Old 09-30-2008, 04:09 AM Thread Starter
 
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I'm happy not to be rated in the group of "pretty bright people" since what I'm saying will most likely proof wrong but just this: "When on a ferrari forum people are (fully understandingly) asking about when the market "correction" will probably (hopefully) end, then either somebody is a) terribly leveraged and/or b) the turn may be near !

Just my 2 cents. Good luck !

P.S. You ask abou if there is a way out ? Sell if you want to be out !
(Please excuse my directness)
LOL, a very good answer, but perhaps not what I was expecting to read here!

Well, let's put things in the right place: it is a Ferrari forum, but the guy asking (that would be me) is a nobody, not a Ferrari owner, not anything, just a regular young guy.

Plus, no debts here, the money I have in stocks is very little, but I do want to know if (or when) it is time to go "all in" and make some serious money (in percentage, at least).

And another thing, I never sell unless I make some money out of it hehehehe I'm persistent (or stupid, if you like)

"When the going gets tough, the tough get going." - J. P. Kennedy
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post #4 of 27 Old 09-30-2008, 05:24 AM
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Originally Posted by stile - alpine View Post
LOL, a very good answer, but perhaps not what I was expecting to read here!

Well, let's put things in the right place: it is a Ferrari forum, but the guy asking (that would be me) is a nobody, not a Ferrari owner, not anything, just a regular young guy.

Plus, no debts here, the money I have in stocks is very little, but I do want to know if (or when) it is time to go "all in" and make some serious money (in percentage, at least).

And another thing, I never sell unless I make some money out of it hehehehe I'm persistent (or stupid, if you like)
You are very honest and definitively you are NOT "not anything" (as you write), but somebody obviously learning very hard to get to the point of being able to get what you really want. And this is all which is important.
AND by having NO debt you're probably ahead of most I would assume ! Just go that way further and you will be fine in the long run.
Since you ask when is the time to get "all in" (the stock market as I assume?!) I have the feeling that you have a tendency to be greedy (as we all are from time to time, I guess). This may have the power to put you in trouble in the long term (as I can tell from own experience). In that sense talking about with a psychologist may find the reason for this. Please, this is no joke, but a good thing for a investor or trader to do to try to prevent catastrophic outcomes in difficult market circumstances.

Imagine, after all those price falls within the last 12 months, the S&P 500 Index at roughly 1120, prices would fall another 60% to 500 (S&P Index). And now conclude how many stocks would you like to own THEN percentage wise/allocation wise. If a number comes up, act accordingly !
Should the market grow and go up before (most likely to happen, maybe not ), your present allocation will grow automatically, partially by the stock part outperforming the rest of your money balance.

Hope I was of help.
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post #5 of 27 Old 09-30-2008, 05:49 AM
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It will end when confidence returns. Confidence will return when there is a general agreement that all the garbage and bad news is on the table. We are not there yet.

In terms of when to invest, everyone has to answer that question for themselves. Just never invest more in the market than you can afford to lose.
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post #6 of 27 Old 09-30-2008, 05:50 AM
 
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I'm kind of hoping that the entire world's financial system falls apart so we can get a new system that actually works.
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post #7 of 27 Old 09-30-2008, 06:12 AM
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I'm kind of hoping that the entire world's financial system falls apart so we can get a new system that actually works.
After all, and this my sound cynic, the financial system proofed many times over that its working. Do not forget that within 3 weeks a dozend of huge banks have been saved or overtaken with a minority going belly up. In the great depression of the 30's, the US had 24'000 banks, 10'000 went under !

Systems have to adapt over time and adaptation seldom goes linear but rather sudden. I'm sure you do not life the life of your grand parents, you have adapted as well.
The "search" for a system that works is the search for the holy grail. Finally you have to throw the towel. Already the word "system" may be wrong. When group of people wanted to create systems which work (only to their understanding) they normally pushed all others away, remeber the former sowjet union, they found a system which works........

Pleas forgive my cynism !
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post #8 of 27 Old 09-30-2008, 07:52 AM
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Originally Posted by stile - alpine View Post
OK, so today once again the stocks went down hard and investors around the world had a horrible day.

WHEN will this end?

I appreciate any inputs, considering my little knowledge when it comes to money.
Well, my opinion is….

On August 22nd, U.S. and Iraqi negotiators have reached agreement on a proposal calling for a complete U.S. military withdrawal from Iraq by 2012, the head Iraqi negotiator said today. The deal still must be approved by both sides, said Mohammed al-Haj Hamoud, deputy foreign minister and head of the Iraqi negotiating team

The Afghanistan war began on Oct 7th, 2001 and then on March 20th, 2003, the war with Iraq and it will be a 9 long year war….

From March 2003 to Aug 2007, an estimate of 1,220,500 deaths was reported on the Iraqi side.

The cost to the UK up to now is about $9 billion
Cost for the US is $501 billion with a total cost to the US economy estimated at $2 trillion up to now. It is being said that it costs $2 billion per week to $12 billion a month.
It is expected to reach $3 billion with $2.4 billion directly spent on Iraq.

If it were to be compared to what it could be spent on at $1.9 billion…

The US could have built 8 million houses, paid 15 million teachers, paid for the child care of 530 million kids, paid for the scholarship of 43 million students and offered a social safety net during 50 year to Americans. The social safety net is a collection of services provided by the state, such as welfare, unemployment benefits, universal healthcare, homeless shelters, the minimum wage and sometimes subsidized services such as public transport, which prevent individuals from falling into poverty beyond a certain level.

Can you believe the amount money being spent on this???? This basically puts the expense at $25,000 to $32,000 per family of four in the US.

They said the healthcare cost for wounded Iraq veterans could range $250 to $650 billion.

Just plain crazy……and this is what is going wrong. The Gulf war did not last that long….

Anyways, that's just my 2 cents…..


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post #9 of 27 Old 09-30-2008, 08:45 AM
 
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There is so much silliness going on I don't know where to start. With the US in such an economic crises ever since the beginning on the "war on terror" everyone is starting to lose confidence around the world and other markets and falling as a result. As soon as there is more regulation and some of these banks and companies can't just go out and do whatever they please, things will come back up.

Breck
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post #10 of 27 Old 09-30-2008, 09:26 AM
 
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Originally Posted by stile - alpine View Post
And most important, WHEN will this end?
It will end when Chris kills this thread !
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post #11 of 27 Old 09-30-2008, 10:16 AM
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Originally Posted by Basosz View Post
It will end when Chris kills this thread !
Then we are definately in for the long haul, Chris is still trying to kill the other thread



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post #12 of 27 Old 09-30-2008, 10:17 AM
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Originally Posted by Boxer View Post
It will end when confidence returns. Confidence will return when there is a general agreement that all the garbage and bad news is on the table. We are not there yet.

+1


Quote from 'Sneakers'

Cosmo:'Reality, and the perception of reality'

Cosmo: Posit: People think a bank might be financially shaky.
Marty: Consequence: People start to withdraw their money.
Cosmo: Result: Pretty soon it is financially shaky.
Marty: Conclusion: You can make banks fail.
Cosmo: Bzzt. I've already done that. Maybe you've heard about a few? Think bigger.
Marty: Stock market?
Cosmo: Yes.
Marty: Currency market?
Cosmo: Yes.
Marty: Commodities market?
Cosmo: Yes.
Marty: Small countries?



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post #13 of 27 Old 09-30-2008, 12:22 PM
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A specialist hehehe, thanks for the vote of confidence Stile I'm afraid I can't answer the question anymore than anyone else can. I would have said that the market had bottomed out over a month ago and we were just going to bump along the bottom for another 6 months, before confidence very slowly returned over an 18 month period. But then we had Lehmans, Merrill, AIG and HBOS a couple of weeks ago, that had to be the bottom didn't it? But no, on Monday this week we had major banks fail/rescued in USA,UK, Iceland, Benelux and Germany. Who knows what else is waiting around the corner, but until everyone reveals what their exposure is, no one knows.

The other problem is that good mortgages go bad too, in an economic downturn people lose their jobs and their good payment record goes into arrears adding more toxins to the toxic dump bank, don't forget that these people also have personal loans and car finance, and their store and credit cards. These were all clean debts 6 months ago, but they've gone toxic too.
The credit card and personal loan debt in the UK is estimated at 1.3 Trillion GBP, add up the rest of the western world unsecured debt and you could be looking at 10-20 Trillion GBP / 20-40 Trillion USD. If a tenth of that goes toxic the western economy as we know it is finished.

Gentlemen, we have fallen off a cliff and we don't know where the bottom is.

If anyone is interested, go to www.bbc.co.uk/business and read Robert Pestons daily blog every day. I'm as hooked on that as I am to here.

Archie
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post #14 of 27 Old 09-30-2008, 01:23 PM
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Gentlemen, Gentlemen...it's a crisis if you bungle it but otherwise a massive opportunity. I just bought a nice little basket full of AIG for 3.00 per share. They just received a loan of 70 billion dollars (already executeed and not part of the "Bailout") and have been virtually guarranteed by the feds. Stock prices for AIG were 25 dollars a mere 2 weeks ago. They have not lost a single customer. You can't get a better deal than that. They may not recover all there worth but expect a modest gain.

JP Morgan, Bank of America, Wells Fargo, and Citicorp all have recently purchased HUGE investment companies for pennies on the dollar causing a near doubling of market capitalization. These stocks also have nothing but upside.

Credit remains an issue but will be resolved. It appears now that societal ownership is nearly off the table. They are going to use things like Guarrantee's, Insurance's, and mark to market changes. Some cash may need to be inserted but knowhere near 700 billion. We are near the bottom and trying to time it exactly is just stupid. Wait a week or so and buy into strength or find those incredibly cheap ones now.

Remember...These clowns are using words like "depression" but are choosing to take the holiday off.


JMO
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post #15 of 27 Old 09-30-2008, 02:02 PM
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Originally Posted by archiegibbs View Post
If a tenth of that goes toxic the western economy as we know it is finished.

Gentlemen, we have fallen off a cliff and we don't know where the bottom is.

They tell me the key to building confidence is to think positively ...



Quote:
Originally Posted by Saint Bastage View Post

JP Morgan, Bank of America, Wells Fargo, and Citicorp all have recently purchased HUGE investment companies for pennies on the dollar causing a near doubling of market capitalization. These stocks also have nothing but upside.
Lane makes an interesting point, several European companies have made purchases that they would have had difficulty making if the market was ripe. LloydsTSBs takeover of HBOS is a case in point, the rumour mill about HBOSs liquidity was running for about 10 days before LloydsTSB stepped in and 'saved the day'. Barclays were interested in saving Lehmans until they realised that they could pick up a bargain the following day, Nomura beat them to it. These guys must have been excercising due diligence for some time. There seems to be a certain opportunism being excercised by some players.

The other interesting thing is that most of the companies have plenty of assets, they just don't have (or are not percieved to have) cash/liquidity to meet their short/medium term obligations. Considering it is basic business sense that 'cashflow is the lifeblood of a business' it makes one wonder

I have to say (terrible that it is) that a little piece of me is hoping that this 'liquidty issue' may well allow one to excercise a certain degree of 'opportunity' to make a strategic acquisition or two - just a bit of positive thinking .



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post #16 of 27 Old 09-30-2008, 02:22 PM
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Originally Posted by t1fosI View Post
they just don't have (or are not percieved to have) cash/liquidity to meet their short/medium term obligations.
.
And there it is...

I'm not saying this is a non issue but AIG is certainly highly liquid right now. I'm betting the aforementioned banks are as well.

If perception is everything, one must consider altered perception as a possibility...Gee...where did those banks get the assets for these buyouts????

In Capitalism, one must only fear government intervention as we are the propriators of the machine.

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post #17 of 27 Old 09-30-2008, 08:42 PM
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Originally Posted by Saint Bastage View Post
And there it is...

I'm not saying this is a non issue but AIG is certainly highly liquid right now. I'm betting the aforementioned banks are as well.

If perception is everything, one must consider altered perception as a possibility...Gee...where did those banks get the assets for these buyouts????

In Capitalism, one must only fear government intervention as we are the propriators of the machine.
Agree ! Thanks for your well done comments. Opportunities are all around. the strong banks prove it. Again, and this is the only strong point to make comparisons to the 30's, debt overload it the issue. On the institutional side and on private persons side.
Honestly, why are people on house debt, credit card debt, car finance debt, vacation debt and then wonder if things break lose they will be affected. I understand that there are or have been many banks that were runed lousy by missmanagement and went under or overtaken.
AND there is a western society with that need of having everything NOW, no question how.
The rrot starts at the bottom.
I know many well educated, very polite and friendly human beings. They are financing their vacations with 12% loans (in Swiss Francs, normal interest rate between 1-2% currently) because they just need to fly for 1 week to Thailand ! Why that ?
Talking with Ferrari s.p.a. because of the "Schumacher-Scuderia" driving course, they told me that 50% of the new sold Ferraris in Switzerland are on lease ! Why that ?

I believe the main cause of the problem are we, ourself. The bank in their (understandable) way of searching profit opportunities are creating the "fitting" finance products for our never ending hunger for debt loads
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post #18 of 27 Old 10-01-2008, 06:13 AM
 
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I understand very little of the economic crisis out there, so I'm still blaming Chris for not killing this thread and thus saving the world's economy. Seems fair
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post #19 of 27 Old 10-01-2008, 09:17 AM
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I can go along with that...

Damn you Chris

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post #20 of 27 Old 10-01-2008, 11:59 AM
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Agree ! Thanks for your well done comments. Opportunities are all around. the strong banks prove it. Again, and this is the only strong point to make comparisons to the 30's, debt overload it the issue. On the institutional side and on private persons side.
Honestly, why are people on house debt, credit card debt, car finance debt, vacation debt and then wonder if things break lose they will be affected. I understand that there are or have been many banks that were runed lousy by missmanagement and went under or overtaken.
AND there is a western society with that need of having everything NOW, no question how.
The rrot starts at the bottom.
I know many well educated, very polite and friendly human beings. They are financing their vacations with 12% loans (in Swiss Francs, normal interest rate between 1-2% currently) because they just need to fly for 1 week to Thailand ! Why that ?
Talking with Ferrari s.p.a. because of the "Schumacher-Scuderia" driving course, they told me that 50% of the new sold Ferraris in Switzerland are on lease ! Why that ?

I believe the main cause of the problem are we, ourself. The bank in their (understandable) way of searching profit opportunities are creating the "fitting" finance products for our never ending hunger for debt loads
That is so true of the western lifestyle. The banks encouraged people to borrow more and more money, with slick adverts and promotions for low rate loans, credit cards, store cards, low rate introductory offers, 2% minimum payments, 0% balance transfers, release the equity in your home to clear your debts, then go and buy more things on credit and build your debts back up again. Maybe this isn't too much of a problem if you lend to people with good incomes, job security and goo credit ratings. But it goes bad when you encourage people with no income, or no proof of a regular income and a history of non payments to borrow beyond their means. The investment banks were greedy and brought about their own downfall.
I run a mortgage broking business in the UK, our customer base is primarily clean low risk clients. At the end of the last century/turn of the new century Lehmans, Merrill, Investec, Citi ...etc launched their sub prime arms in the UK with brands like Kensington, Future, SPML, Preferred ...etc. Interest rates were low and coming down, property prices were rising, the reps would come and see us and encourage us to find them clients, it didn't matter how dirty they were, or even if they couldn't afford it, they told us to just make up their incomes Fortunately, we have an ultra strict compliance department who insisted that we provided proof of affordability on our office file (just in case). Therefore, we never really capitalised on this booming market. The old fashioned conervative approach was our business model. In hindsight, that was a smart move, because I still have a job and the reps from the afforementioned companies were made redundant many months ago.
The global credit crisis has crippled the clean mortgage market too, and our business is effected by the downturn, but at least we are still in business, although I have had to let a good proportion of good long serving friends/colleagues go through no fault of their own.
The investment bankers brought about their own downfall, and are going to bring financial hardship for 10's of millions of ordinary honest hardworking people in the US/EU. The reps from these lenders encouraged brokers and clients to lie. The bosses of these banks should be prosecuted and thrown into jail. The regulators have failed in their responsibility to protect consumers, but then again, they are all ex bankers and they have tried to protect their mates in the city. They should be prosecuted too.
Going forwards, the best policy is to save up for your dreams, if you haven't got the cash to buy it outright, you can't afford it and shouldn't have it, the exception being a mortgage for a property.
JMO

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