The ISEQ Thread Part II - Trading below 2000

The role of "hot" international money in the longer term roller coaster that drove the ISEQ up to 10,000 is worth thinking about. I've turned back to reading "Globalism and its Discontents", and am finding it a lot more exciting to read now that the IMF wolf is hovering around the door.

Zhou_Enlai wrote:

Anglo was up 50% today. It is hard to make sense of all this.

It's at the bottom of the cycle and it has been sharply reduced in size meaning smaller quantities of cash are required for big changes in share prices. It's also easier to tack 50% onto a €1 share than a tenner share.

It is up because it is down so much. What I mean by that is that there are lads like Anorak who are very sharp, and have money, and has the balls to gamble. Having all 3 makes him a very small percentage. I do not know what the high in Anglo was but if hehad shorted at 15 he would be increasing his stake allthe way down. When it got to pennies a lot of lads would cover their shorts because being greedy was the last bit of profit if it goes to zero is very dangerous. They would buy the shares, close their positions and pocket a lot of money and move on. After this sort of game over event you will see the resultant drop in volumn of shares traded.

For those short sellers who might have forgotten the dangers they would have had a nasty reminder with what happened with VW. That has lifted markets worldwide

http://www.ise.ie/app/popup_graph.asp?INDEX_TYPE=

Over 3,000 for the first time in I don't know how long.

cactus flower wrote:

http://www.ise.ie/app/popup_graph.asp?INDEX_TYPE=

Over 3,000 for the first time in I don't know how long.

How about the last few weeks?

Ard-Taoiseach wrote:

cactus flower wrote:

http://www.ise.ie/app/popup_graph.asp?INDEX_TYPE=

Over 3,000 for the first time in I don't know how long.

How about the last few weeks?

I have a very short attention span, Ard Taoiseach.

cactus flower wrote:

Ard-Taoiseach wrote:

cactus flower wrote:

http://www.ise.ie/app/popup_graph.asp?INDEX_TYPE=

Over 3,000 for the first time in I don't know how long.

How about the last few weeks?

I have a very short attention span, Ard Taoiseach.

Righteo cactus.

Somebody made the point that the amounts being traded on the ISEQ are so small now and prices are so low that any minor twitch can give rise to a feeling of panic.

Perhaps we should club our back of the sofa money together and see if we can make it bounce?

It makes sense. There are alot of normal middle class, mainly self employed, people who invested heavily in the stock market for personal pensions based on the best advice available to them from trusted professionals that their money was safe invested in banks, because it always was. Of course this advice has been shown to be completely false and the consequence is alot of normal people having their life savings wiped out.

If you think that people losing 15 grand in a potential bank collapse is bad, try losing half a million of your life savings which brings your private pension down to not that much in comparison to similar public servant jobs. These people are scared out of their wits to buy, to sell or whatever. They are just holding in the hope that the thing will recover. Of course it can't while that continues. Vicious circle.

Some creepy posts by Anorakphobia on p.ie

Quote :

Well the mood in Dawson St and the IFSC is good tonight.
Word is that the Pension Reserve is about to be tapped for 12 billion and the three banks are getting 3 billion each.
The Government will get about a 200m preference share in each for their 3 billion. The shares will only have to increase 15 fold for the taxpayer to get his money back.
What a deal!

And of course the lingering stench of suspicion that every Tom, Dick and Harry probably got wind of it by their lacky friends in FF in advance to make a killing on the share price.

link

Quote :

Anglo are due to kick off earnings season in a few weeks and will be followed after Xmas by the others, the shorting ban will probably be lifted in January.

The Government have been told via PWC that the banks must be recapitilised before these events.

The banks are going to get 12 billion and then write down their commercial books by almost 80% and hey presto we start from scratch again.
Developers hand in the keys and the taxpayer takes the hit.

Irish Nationwide's entire loan book is rumoured to be as low as 6 giant developers.
If true, what unearthly purpose would a bail out serve?

link

To one of which Catalpa rightly replied that he hoped it was a piss take. Would you invest in banks that are rumoured to have this sort of thing going on behind the scenes ?

I love the description. Trusted Professionals

youngdan wrote:

I love the description. Trusted Professionals

It is what they were considered until several weeks ago.

youngdan wrote:

I love the description. Trusted Professionals

If the professional makes a commission off your investment transactions, they are trusted to make a personal profit.

Quote from a blog I read recently regarding invesment advisors: The job of an investment advisor is to make the client's wealth their own.

If many wealthy business people, who are supposed to be the cream of our economic society, can not make correct and risk adjusted sound investments based on their own analytical abilities, it is not the job of society to pay for their mistakes.

rockyracoon wrote:

If many wealthy business people, who are supposed to be the cream of our economic society, can not make correct and risk adjusted sound investments based on their own analytical abilities, it is not the job of society to pay for their mistakes.

You see this becomes very interesting. How about the person in their late twenties who bought an overvalued house in the last couple of years? Absolutely their was pressure on them to do so from all around them, but equally there were many in the mainstream media who were saying that this was a path fraught with peril. Whilst I may not be a huge fan of David McWilliams he had an incredibly high profile series on RTE dealing with the dangers of the property boom. Consequently, why should we have any sympathy for these people either? They were buying as grown adults.

Markets are a two edged sword by their very nature. One the one hand they give profits and on the other hand they take profits. I don't believe our market mechanisms are so perfect whereby one person gains while another loses, but on the aggregate those 20 somethings who bought at peak prices paid off the builders, banks and EA's on the asset property punt.

I could recount neumerous occassions where all common sense was ignored by the 20 somethings. They wouldn't take advice from old-timers (parents) and bought the media hype. They've learnt a valuable although costly lesson. I wonder will they apply the lesson to future investments?

The terms and condtions of the Guarantee were never made public prior to presentation to the Dail. Government was obliged to make amendments by the ECB and by their friends in the banks, but opposition T.D.s (or even their own T.D.s) and the public were not given a look in.

http://www.ise.ie/app/popup_graph.asp?INDEX_TYPE=

The ISEQ looks as though it was O.K. until it turned around and saw the rest of the globe crashing.

Really what we need to be asking is what sort of world trading patterns will emerge in the next 10 years. The USA and borrowing cannot be the driving force for the future global economy. I can see a greater regionalism of trade as countries like China and India put more emphasis in developing their own countries.

Whilst the cost of oil has dropped recently I am utterly convinced that energy production will become more critical and problematic in the very near future.

The world economy is in recession, but we also have an increasing world population. So initially we will run into a period where falling demand predominates but the underlying need for resources is increasing. Some of the major countries have become importers of staple crops and are securing their supply of various essential resources.

We are entering a period of fundamental change. In this environment where should investment be encouraged? Where are the opportunities?

The problem has been solved Squire. Canabis is legal here now and both me and my rabbit are wildly optimistic

I'm just listening to Dr. Craig Roberts on the alex jones show and he's saying the budget and trade deficits are the big problems for the states because money flowing in will dry up (like a big Iceland where there are nasty queues outside the petrol stations now). In relation to Squire's question about what the patterns of trading will be - the first thing you'd imagine is the rumour of Obama pressuring American offshore companies - will he force them back home or levy more tax from them ?

Roberts at about 6 mins into that believes the next financial summit will reveal that the rest of the world will rally 'against' America - this is not paranoia by Roberts but Justice; they've used up their credit and no one will lend to them anymore and America is going to have to face up to diminishing credit lines and high oil prices.

And with reference to Squire again, the world consumes 90 million barrels of oil per day, the Americans use 20 million of that - this is the first credit that will have to cease to flow for them. Perhaps then they will be forced into developing technology to drive their lifestyles and the world will get the next revolution in the process.

YoungDan

Glad to hear that you and your rabbit can now enjoy a wider range of salad ingredients and herbal teas. Could do with some myself. Spent much of the last 3 weeks on a horse and am painfully away that the human - horse relationship has not been going long enough for us to be properly genetically adopted to that mode of travel, but come the energy crisis I am now well in front of the pack. However trotting around a wind swept, semi arid wilderness where windbreaks struggle and with mutton and beef the only real crop makes you wonder about the future trade patterns.

Back in time to see the chosen anointed and Labour losing in New Zealand.

Audi

Obama will be about tokenism, a Blair Mark 2 strong on rhetoric and very low on real initiative or upsetting commercial interests. Consider all the Private Finance initiatives of New Labour! The change will be in the dressing. If it suits the commercial interests of the likes of Microsoft then the businesses will leave. Legislation will follow the inevitable. The sequence will be that way round.

What Ireland needs to ask is what were the conditions that led Belfast to become an economic power house in Victorian times. It is an interesting one because unlike places like Bristol wealth creation had nothing to do with the slave trade. Better than that there is no large deposits of coal, or iron ore in Ireland; yet massive shipbuilding, and engineering industries flourished. Strikes me it was based on local power production, affordable Labour, limited red tape, and people willing to take risk and being rewarded for it. The government played its part by limiting its negative interference.

Oil will definitely cost more in future. Energy production and diversification should be a national priority. It is of the utmost urgency. When we eventually come out of this recession there will be a monumental cost increase. There are similar problems building up with crops, but likely transport costs make it difficult to weigh up production viability by region. I expect food prices to increase. This will be good for the rural economy in Europe and the small town US economy.

If we are lucky the new economic challenges will encourage rapid innovation. If we are unfortunate it will end in war.

Squire I think you're spot on with the energy focus. We should let this recession happen without trying to force air back into it - it'll only deflate again with worse consequences, possibly If we have to do anything we need to provide for ourselves and that means the basics. We seem to be fairweather policymakers around the place. I've been listening a good bit to Peter Schiff like here and he calls the Recession the "medicine we [the U.S.] need". But it's being staved off with bailouts and lowering interest rates in an attempt to blow it up again. We should be delighting that oil is fallen in demand and other critical environmental and resource indicators are probably equally going in the right direction - no doubt CO2 is heading south too but the Peak Oil spectre is as bad.

While this production deflation is on - which some commentators on Bloomberg believe will be V-shaped and up again in 4 or 5 months ! while it's on there could be some real focusing in on the energy business now but I fear you are right about obama being like Tony Blair. Hopefully you'll be wrong though and he'll push big style for green or oil independence.

Squire wrote:

What Ireland needs to ask is what were the conditions that led Belfast to become an economic power house in Victorian times. It is an interesting one because unlike places like Bristol wealth creation had nothing to do with the slave trade. Better than that there is no large deposits of coal, or iron ore in Ireland; yet massive shipbuilding, and engineering industries flourished. Strikes me it was based on local power production, affordable Labour, limited red tape, and people willing to take risk and being rewarded for it. The government played its part by limiting its negative interference.

Exactly Squire, if we can replicate the circumstances you list there, there should be no reason why we cannot recover from the current economic trough and enjoy a long and substantial run of economic growth. And Auditor is right on the point of letting the recession play out. That is quite correct since it allows for markets, governments, investment flows and so on to all recapture equilibrium and enter the inevitable recovery in an orderly and even fashion. If the government attempts to distort or frustrate this process with excessive(and inflationary) tax cuts, spending increases and bail-outs, then the long-term health of all our economies is imperilled.

Audi

I think economics is basically very simple. You need to balance the budget now how you get to that point is the problem. Government spending in a balanced system is redistribution, in a deficit situation it is increasing future liabilities and reducing competitiveness or it is devaluing the currency.

The problem with redistribution is what taxation types hurt the future primary wealth producing economy and which taxation reduces undesirable expenditure. I do believe that taxation should be used to discourage inappropriate spending patterns and that they can be more effective than the use of interest rates. If the cost of consumer goods (which Ireland does not produce) became more expensive less would be imported.

The difficult part is how to have low tax on primary wealth creating sectors. Clever people will abuse the intent.

IMO we need to get back to a position of minimum government. What percentage of our economy should be government related? I am of the opinion that it should deliver only things that are truely necessary, like ensuring the elderly do not freeze or the sick do not die because they can't afford treatment. That is where Ron Paul and I would be at odds. I think it is cheaper if we insure ourselves collectively. Ensuring efficient delivery is the problem.

Similarly you can't have a civilised country if there is famine among the unemployed, but equally you need to ensure that largess is not abused. Unfortunately it has to be rigorous in the same way that you have to rigorously pursue white collar crime, bribes cronyism etc. You need a brutally rigorous, ethical system because of human nature.

Another area that needs consideration is pointless legislation. The cost of this in the UK building industry has got to be between 5%-10% of the cost of building and there are in addition a proliferation of government and council employees as a consequence. Crazy waste of wealth.

To me gold only has value if someone wants to buy it. The gold investment gamble is for a partial economic collapse or the reintroduction of the gold standard. A Gold or Silver based currencies would fundamentally change the balance of world power and few will want to throw the dice. If there is a serious economic collapse commodities that people actually need are the ones that will have real value. We will end up trading cigarettes and turnips not gold! Gold requires a degree of order to have value beyond that of a trinket.

Argentina (in fact most of S. America) is an interesting country. Variety of climates and crops, fair amount of resources, but would you invest in the country? I think the problem lies with government. On a wider front the weakness of Democracy is our propensity to vote for our individual economic self interest. On a cynical day I would say that that was a consequence of human nature, but perhaps it is also the consequence of a debased political system where we accept lies and deceit as standard fare.

Anyway lots of green in the markets today, probably fall back a bit in the afternoon.

I missed that post earlier Squire. Big stuff - resource managment, the politics of the marginalised, capping abuse .. Is there a magic bullet you'd ask ? I keep going back to the subject of energy as you do yourself because after food this is what holds true universal value and use, not gold. It's the old mantra from back here in Clare - food, cave, fire, woomaan. Perhaps gold represents science or something ? I don't understand the fascination with it anyway I'd rather buy copper. At 1.84 a pound it's for nothing given that the future will entail more and more electricity use surely. You could double your money in twenty years I'd say - there's no shortage of it though really is there ?

Still, the Big Picture - what could be in any way a silver bullet ? I'm inclined to think it's a Green/Tech solution as that ideology simply seems most best equipped to deal with all the limits we're reaching in resources plus it's a very humanist philosophy and package. Quick technofixes often don't tend to be sustainable either (I'm thinking of nuclear) but anyway I do believe human ingenuity will win out but there has to be a climate of what Zhou Enlai here referred to recently - to paraphrase - "wartime urgency and efficiency without the war".

The Dow finished down to 8870, the Nikkei is matching that presently down 270 and I think I saw earlier today that the Russian currency is weakening. The euphoria of the Chinese stimulus lasted all of a few hours - and that's half a trillion.