Panic and fear are horrible things when seen in the raw. Ugly, basic human emotions and when overlain by money and greed, it’s even uglier, as we saw on Wall Street this morning where short sellers had a field day in the last hour of trading, and here and in Asia where markets took their lead from the US and sold, sold, sold.
But it must be said that for every punter and supposedly long term investor selling and heading for the exist, there’s someone buying, and so it was on Wall Street, though in many cases it was the short covering themselves to complete the profitable deal.
With shorting banned, it didn’t matter.
The lemmings assembled at 10am and proceeded to run right over the cliff. The market here fell by almost 8% (around 336 points), taking the value of the ASX 200 stocks below $A1 trillion and the amount wiped off the overall market to around $A600 billion this year (all off our super and the fortunes of the likes of James Packer, twiggy Forest and Frank Lowy!)
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It was bloody as the market saw the steepest falls in what is already a rotten year. Just after Midday the selling pressure has eased a touch and the market was trading just under 6% or around 250 points.
In Tokyo it was a more miserable story: a 9.9% plunge in early trading on top of that 9.8% drop on Wednesday.
Our market might be off 14% for the week by midday today. Tokyo’s is off closer to 20% (which is a correction and a new bear market in itself).
The previous biggest fall was on January 22 when the market dropped by 7.1%. We were under that just after noon, but there’s four hours of trading to go and Hong Kong, China and other Asian markets to start trading.
The dollar was back well under 70 US cents at the devil’s number 66.66 cents at 12.15pm, oil was down to $US84, copper was off a sharp 7% at $US2.23 a pound and gold was up $US43 an ounce at $US929 an ounce in Asian trading.
And the Reserve Bank is maintaining to keep markets well cashed up. It added $2.63 billion into the system this morning in its daily operations.
That was well above the system deficit estimated at $1.84 billion. The banks maintained cash balances at the RBA overnight Wednesday of $8.4 billion, down around $1 billion on the level a few nights earlier in the week.
But apart from the gains by gold, the only other gainer around the world seems to be a special prayer for these times from the Church of England in the UK.
London media reports said that the Church of England’s website is carrying a “Prayer for the Current Financial Situation” which has been been viewed nearly 8000 times since it was published online in September, that lifted traffic to the “prayers for today” section of the website by 28% — Is Gold long or short today?.
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I drew my super out four years ago and put it into a cash account, convinced even then that the market was overblown and about to fall. I missed out on the following huge increase in share values but eventually the market went south as expected and I was vindicated. I’ve never used financial advisers.
Needless to say, I have no sympathy for those who’ve been burned through speculation. I reserve that for those poor buggers who were locked into a superfund, about to retire, and caught by the sudden collapse. They must be wondering what’s hit them.
if anyone would like a refreshing perspective on the financial meltdown folow the below link to a free documentary called “The Money Masters”, its from the US – however as we have seen this hardly renders it irrelevant 😉
http://video.google.com.au/videoplay?docid=-515319560256183936&ei=cfvxSO3xGafYqAOntdD4Dw&q=money+masters&hl=en
I have actually been offline for the past few days, so its a bit of a shock re-emerging from my monkish isolation to find the world in big greenback smelling flames. I actually saw none of this coming, except as a general outcome of all bubbles, but I did sell all but one of my shares in December because it seemed that risk premium had just dissappeared. Once you could get 7 ish percent for cash, could it make a lot of sense to buy something offering a 2-4% return unless you thought it was also going to increase in value forever? So risk averse person that I am, I lemminged all by myself. I have no idea whether my rationale was economically sound, but it seems to have saved me from losing a lot of money when out of contact for the wrong few days.
What gets me in all this is why we pay enormous fees to financial advisors and super fund managers. I am an ordinary employee, with no financial background, but moved all of my super into cash just over a year ago based on the ‘greed theory’ or ‘what goes up must come down’. That is, after a few years of double digit returns from property and the markets, the greedy would take more and more risks to make even more money. The ‘experts’ always say to leave it in the market when it’s rising and leave it there when it’s falling on the grounds that it will eventually recover. In other words do nothing. I don’t need to shell out thousands of dollars to hear that! People need to take charge of their own situation and stop being so greedy – 6% interest (cash rate) for a few years isn’t so bad for security and peace of mind.
Pleas don’t do that to me again, Glenn ! ,I am old & have just spent 15 mins on Wiki, trying to find out what a AMRKET is !!!!!!! Take care or I will come & pull your nsoe XX