The ISEQ Thread Part I - March 2008 - October 2008 **LOCKED**

Squire wrote:

EvotingMachine0197 wrote:

Isn't everyone thinking the same thing? Some may cast their lines too early. Plenty of casting going on already by the look of some of the mini spikes.

If everyone is thinking the same you get one almighty spike. Hence a quick in out may be a good strategy initially, as it will rise, people will take profit and it will then fall. You then buy again, but depends at what level the floor is, if very low stay in may be a sensible option.

Squire, the brevity of the rallies we are experiencing suggest to me that they are nothing more than short covering. There is no real confidence supporting them since they turn to dust the day later. Paradoxically, these rallies underline just how weak market sentiment has become.

cactus flower wrote:

Takeover of the Irish banks is not something I would look forward to, no matter the sins of the past. Stiglitz makes the point that local banks lend money to local people, whereas the big international boys only want to lend to global corporations.

I agree, if Banks would get back to the concept of being a local service then the happier we would all be and the more stable the banks would probably be. Generally they treat local businesses like excrement and every 8-10 years go waltzing off and use our money to buy a position in the sub prime market or whatever the fad then is.

cactus flower wrote:

A figure thrown out in the lunch time news is that retail sales are down to the level of 21 years ago (and falling).
Unemployment will follow as sure as night follows day. A lot of people were pushed into taking on mortgages as public building of social housing was at a stand still for the last fifteen years. Defaults seem inevitable.

There will be a good opportunity to buy up property for social housing, would be better use of money than building roads. Has the added advantage of social mix. In UK they seem to build social houses (or did at one time) and then sell them off at a loss. I really cannot comprehend that one.

Ard-Taoiseach wrote:

Squire, the brevity of the rallies we are experiencing suggest to me
that they are nothing more than short covering. There is no real
confidence supporting them since they turn to dust the day later.
Paradoxically, these rallies underline just how weak market sentiment
has become.

I agree, you may be right about the 4th quarter. It has gone through my 4200 line in the sand so time to take serious interest. There is little reason in the market that I can see. Money supply and American Banks are all well and good but this isn't the USA. I was wondering how large was American investment in the ISEQ. Is it a case of funds being pulled out to cover losses back at base? With the falling dollar investing here becomes more expensive though the way the ISEQ is going that is more than compensated by loss of value. There has to be some reason, some rationale or are we all collectively talking ourselves into a vortex? It is a herd mentality.

Someone asked me what they should buy if the market went down as far as the extremes would take. Needless to say I had the answer http://video.google.com/videoplay?docid=-7876026899474355488&q=status+quo+whatever+you+want&ei=Xet8SKGzNaXoqALYycyECw&hl=en

Amazing video, youngdan. So many tone-deaf people all gathered together jumping

You had to be there Cactus. If a DJ had 10 records then SQ had to be one of them

Good bounce so far today

Overall up to 4725 6%

Financials up 11%

Squire wrote:

Good bounce so far today

Overall up to 4725 6%

Financials up 11%

Hmmm. I wonder if this will be continued into tomorrow. Hopefully it marks a turning point so that we can get back in and drive it back to 10,000 in 2011. I still feel youngdan's predictions will come true with the welter of bearish sentiment out there, but I also think it will hit a low around 3600 in the Autumn and rally from there. Hopefully it starts to rally now and help the pension funds.

I think it is a recovery from a decline that was just too fast and will probably start to edge down again. I am not so sure about Dans 1000. He could well be right and I agree there is lots and lots of negativity. I will at least wait until the holidays are near an end, but in truth can't see it going down to half its current value unless something truely dire happens. 60% is a big correction, need to think long and hard about this one.

Interestingly on politics.ie ISEQ thread notice how the posts decline on days the ISEQ goes up! It is the mirror of the sentiment when the market is soaring, so many chirping along in tune. People are strange.

Everyone is afraid of predicting in case they are wrong. Not me. Everyone should have a look at the crash os 1929. Most of the decline happened after the crash.

Some days ago I was talking about the market being caught in a deflationary spiral. Everyone expects inflation but I am not so sure. If the oil continues to drop then a lot of inflationary pressure on necessities is removed. A deflation would be catastrophic and 1000 would be optimistic.

Inflation is currently at 5% in Ireland. India and China are at 7-8% and rising. We may import some inflation but the Euro is strong and whilst all commodities may be high I think there is a lot of speculation at the moment.

I can see inflation increasing to 6% but doubt if it will get to 7%. Oil is dropping, (short term) house prices are falling, I can't see run away wage demands or profligate spending. Credit control is going to be tight. Inflation in Germany is 3.3% and average for Euro zone 4% we can expect another .25% on interest. Where oh where will the inflationary pressure come from unless the Euro heads south which I just don't see. I agree a deflationary spiral is more probable than the converse. The question is just how significant is the US economy? If it falters does Europe sink, I don't think so.

I'm not an economist... but when you say how significant is the US economy. Well it might not be so significant to Germany and France, but I would imagine it is very significant to Ireland. It doesn't matter so much to the average punter in Ireland what the European averages are, what matters is the Irish averages. I would guess that America has a much greater bearing on averages in Ireland than it does on the macro-european figures.

youngdan wrote:

Some days ago I was talking about the market being caught in a deflationary spiral. Everyone expects inflation but I am not so sure. If the oil continues to drop then a lot of inflationary pressure on necessities is removed. A deflation would be catastrophic and 1000 would be optimistic.

Why would deflation be catastrophic? We are being constantly beaten the message that we are the most expensive country in Europe. A bout of deflation could see that sort of thing right. In fact inflation in Ireland is now moving below European norms. Inflation is rising rapidly in Spain, Belgium and even Germany where there's half a dozen words for cheap.

Ireland's inflation rate is now about 3.5-4% on the HICP which is just below the EU averages.

As far as I know US trade accounts for less than 1/9 of our imports and less than 1/5 of our exports. Europe accounts for about 60% of our exports but as you say in many other European countries it is probably less.

IMO the USA is rapidly declining in importance. Certainly any decline will hurt us but not to the same extent as would have been the case 20 years ago. The global economy is now much more diverse.

Ard-Taoiseach wrote:

Ireland's inflation rate is now about 3.5-4% on the HICP which is just below the EU averages.

I thought the CSO showed average prices increased by 0.5% in June, pushing the annual rate of inflation up from 4.7% to 5%?

Obviously different methodology. As a matter of interest do you know, of hand, what the difference in data is between these and the ECB's harmonised index?

The inflation rate in the Baltic States seems to be very high and some quite sharp increases in the major economies. Looks like more interest rate increases.

Squire wrote:

Ard-Taoiseach wrote:

Ireland's inflation rate is now about 3.5-4% on the HICP which is just below the EU averages.

I thought the CSO showed average prices increased by 0.5% in June, pushing the annual rate of inflation up from 4.7% to 5%?

Obviously different methodology. As a matter of interest do you know, of hand, what the difference in data is between these and the ECB's harmonised index?

The inflation rate in the Baltic States seems to be very high and some quite sharp increases in the major economies. Looks like more interest rate increases.

I can take one more quarter% from JC, then I'm getting into an uncomfortable zone with some of my mortgages. I certainly expect 0,25 in August, but after that I'm praying for a cessation on rate increases..

Fantastic stuff from the ISEQ. We're up more than 200 points today after yesterday's surge. This is the first back-to-back surge in the index I've seen for months! If it goes up by this magnitude on Monday, we could plausibly say we've turned the corner! This, might be, the....bottom!!!

Good stuff indeed. I have yet bad feelings in me bones. Hope I'm wrong.

This is why it is so easy to make money in a bear market. Hope springs eternal.

youngdan wrote:

This is why it is so easy to make money in a bear market. Hope springs eternal.

I don't understand that YD. Do you mean you can cash in on a volatile short lived price surge. In and out , before it bombs again ?

I suspect it will bomb again. Thakfully I don't have a penny in stocks. My money is in property which is no better. Jaysus, I'm in two minds, sell or buy more...

The worst thing you could do is buy more. It is called averaging down. If a stock reverts and goes up it is great but in the majority of cases the stock goes to zero. The smart thing is buy more of a stock that has risen since you bought the first batch. This goes against human nature. Take the Irish market. Many will have bought at much higher levels. Each day as it has grinded lower they will have been hoping that it will turn and rise. When the see cause for hope the cling to it. This is fatal if they convince themselves the bottom is end because they will buy to make up some losses.

The property market is more difficult to exit as it is not a liquid market. You must ride out the storm and hopefully you bought a good while back. What you must do is pick out your best tenents. Figure out the lowest rent that you can charge them. Go to them with this low price and offer to give them a 5 year lease at this bargain rate. Say you are thinking of selling but it would be better to sit tight. They could be thinkinking of buying themselves and now they can say to themselves that they will save for 5 years in a cheap pad and buy much cheaper late. What you must avoid is empty apartments

On the stock markets you need to be an hour ahead of the pack in property you need to be at least a year ahead. The reason is even in a buoyant market it can take an age from firm offer to actual sale and when the mood changes it happens virtually overnight. Also when you are selling the property in a bull market there are all sorts of scam artists.

Say you own a house and I think big garden may get 8 apartments in there. I make you an offer which appears generous, (for a house) meanwhile I tell solicitor to take his time and get an architect to do a few sketches and off to the planners. If it all looks good then happy days. If it all looks like turning pear shaped 8 months later you find you still have a property unsold.

I may also be one of those pass the donkey experts, make offer as before, few sketches and try to agree to sell on at a profit before purchase. If this does not work 8 month later yes you guessed.

Then we have the optimists who thing property will make them rich, they see everyone else in there and most have a go. The fact they have no money and can't get a loan means 8 months later ......

On buy to let, I often wonder, have many really thought of the type of tenants they can end up with? Young guy neatly dressed could turn out to be a pimp and prostitutes can be real fun with other tenants. Not to mention considerations like immoral earnings? But perhaps you prefer the go getting Executive whose business turns out to be cocaine. We haven't even started to enter the realms of wife beating, abusive drunks, throwing furniture out the windows, aggressive tenants and arsonists. Yes residential buy to let is so easy. I prefer the challenges of commercial lets.

Anyone with several properties and with mortgages, depending on how much paid off, and the difference between buying and selling prices, might think of selling part of the portfolio cheap to create a bit of a cash buffer. This fact in itself means that prices will continue to go down.

So long as Germany fears inflation interest rate will not come down.

Most people who own a property but didn't buy in the last 5 years still have an asset that has real value. From what I hear the letting market (for good property) is strong. The way I read this is more people are delaying purchase in the hope of a fall or more people cannot raise a mortgage. So there is a growing number of people who at some future date may buy and who will enter the market.

I must stress I am not suggesting a bounce but you can start to see how the price falls will falter.

Back above 5000 and rising.

EvotingMachine0197 wrote:

Back above 5000 and rising.

Indeed. It's at 5084 now and is up over 190 points so far. Here's hoping it goes above 5100 so we have a real belter of a day. This is the strongest rally I've seen for weeks, hopefully this isn't a dead cat bounce. The fact that its continued from last week suggests that this is the real thing.