DJIA @ 12050, -59.67 (-0.49%)
Feels like swimming against the tide (and losing) at the moment as voiced fears of slowdown and Greek tragedies can be heard from every soapbox and hyped up by the media.
Not sure why this pattern continues to reinforce itself over the summer months but it does seem to. Like voices whispering in the dark it can be easy to succumb to the fear and make rash decisions due to a short term influence and in many cases ignorance.
I don't necessarily mean that there isn't a qualified basis for every comment but these are, more often that not, magnified out of all proportion to meet the objectives of media companies i.e. to sell news whether it be headline tasters of the televised evening news (with dramatic bass rhythms) or huge font headlines in the papers.
There is also an element of some commentators or market watchers just feeding the information and answers that people want to hear. Can Greece fail?....Of course it can is the answer.
The difficult task is always to see beyond this horizon. Markets will always take hits and it is never going to be a one way journey.
Not to belittle the situation but do I really think that following default, or austerity measures the Greek people will stop buying Iphones etc.
It would be nice to think that people today are able to take that kind of personal responsibility and abstain from spending what they don't have but I don't see widespread evidence of it. Instead everyone seems to think they are owed something.
It would be nice to think that people today are able to take that kind of personal responsibility and abstain from spending what they don't have but I don't see widespread evidence of it. Instead everyone seems to think they are owed something.
Of course, if Greece does default, there will be a significant (and possibly damaging) impact to creditors, and reputations, as well as the ambitions of the Greek government and its people. I assume that, even if defaulting, it doesn't mean that Greece can avoid the tough decisions on its finances as it will have zero credit worthiness to borrow, which leaves taxes as its limited source of revenue.
The big fear for the Eurozone must be that if Greece does go down the default route will that tempt others to follow?
The big fear for the Eurozone must be that if Greece does go down the default route will that tempt others to follow?
Elsewhere, Ben Bernanke - Chairman of the Federal Reserve has lowered growth forecasts for the US this year. His lack of comments around quantitative easing were also taken as negative.
Again do slowdowns really affect the long term profitability of a company? Only if its finances are weak and overstretched to begin with and it has no control over its cost base. If it has effectively over mortgaged itself against potential future profits then you have to recognise that kind of risk when you invest in it and balance your portfolio accordingly.
Again do slowdowns really affect the long term profitability of a company? Only if its finances are weak and overstretched to begin with and it has no control over its cost base. If it has effectively over mortgaged itself against potential future profits then you have to recognise that kind of risk when you invest in it and balance your portfolio accordingly.
Other than that, strong companies will manage their finances to roll and adjust to this whilst maintaining their competitiveness for better times. Often they can also emerge stronger as weaker competitors fall by the wayside.
My view is that these are the companies that I am looking to invest in and to stay invested in.
And, during turbulent times like this when markets are generally retreating with little forward momentum or clear support from a macro level, all shares are treated with the same finger burning fear.
This being the case there is often an oversold situation on quality companies as they are swept up in a retreating market.
I still think that the market could retreat further, looking back I see that the FTSE retreated something like a 1000 points last summer - a roller coaster that swept from 5800 in April to 4800 in July before touching 6000 at the turn of the year.
Can't think of any specific events in 2010, just general concerns about European sovereign debt (PIIGS), and Australia's attempts to increase taxes on mining company profits. In a similar pattern the Dow Jones Industrial Average fell around 1500 points over the same period.
So other than finding a price that I am happy to pay then the turning points at a macro-economic level would seem to be the finish of the US's stimulus package (easy money), and the outcome of Greece's woes which are likely to see speculators hunt for their next victim.
Bizarrely, if the US doesn't stop its stimulus program and begin to address its own deficit then there are one or two headline seeking credit rating agencies waiting to downgrade the US's credit rating.
There is good news out there but it is just being lost in the retreat. That being the case and looking at the virtual portfolio, I am not intending to do anything specifically in response to the current situation other than to keep a close eye on my watchlist for any likely candidates to add preferably with strong brands, defendable market leading positions, good management and strong cashflows (preferably to pay dividends).
Finally, I have to mention that Wall Streets opening salvo today, a drop of 150 points put the boot into the FTSE, and when I started writing this post less than an hour ago the DJIA was down around 200 points at 11919 ish however, come the close it has recovered 140 points to finish at the 12050 level shown at the top of this post. Just bizarre!
This being the case there is often an oversold situation on quality companies as they are swept up in a retreating market.
I still think that the market could retreat further, looking back I see that the FTSE retreated something like a 1000 points last summer - a roller coaster that swept from 5800 in April to 4800 in July before touching 6000 at the turn of the year.
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| FTSE100 2 year view (Chart courtesy of Digitallook). |
Can't think of any specific events in 2010, just general concerns about European sovereign debt (PIIGS), and Australia's attempts to increase taxes on mining company profits. In a similar pattern the Dow Jones Industrial Average fell around 1500 points over the same period.
So other than finding a price that I am happy to pay then the turning points at a macro-economic level would seem to be the finish of the US's stimulus package (easy money), and the outcome of Greece's woes which are likely to see speculators hunt for their next victim.
Bizarrely, if the US doesn't stop its stimulus program and begin to address its own deficit then there are one or two headline seeking credit rating agencies waiting to downgrade the US's credit rating.
There is good news out there but it is just being lost in the retreat. That being the case and looking at the virtual portfolio, I am not intending to do anything specifically in response to the current situation other than to keep a close eye on my watchlist for any likely candidates to add preferably with strong brands, defendable market leading positions, good management and strong cashflows (preferably to pay dividends).
Finally, I have to mention that Wall Streets opening salvo today, a drop of 150 points put the boot into the FTSE, and when I started writing this post less than an hour ago the DJIA was down around 200 points at 11919 ish however, come the close it has recovered 140 points to finish at the 12050 level shown at the top of this post. Just bizarre!
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