If this thing drags on for months I can't see what will stop the market falling? What will make it bottom out given the ongoing hysteria?
Markets always look forward and discount the future. There is obviously considerable uncertainty about the ultimate course of this infection (mainly around the timing and the height of the peak) but regardless of how bad things get, I think it's generally agreed that the effects by definition will be time limited. Given that the most obviously impacted sectors (eg airlines, cruise lines) have already seen their share prices cut 30-50% then arguably they are already discounting a very bad scenario which may or may not transpire. Some of these sectors will obviously experience true demand destruction (albeit with scope for a subsequent sharp snapback) but others will only experience some degree of deferred demand at worst.
Even at a broad equity index level (which includes many sectors where the impact should be somewhat limited eg utilities, defence), from a technical standpoint these are looking extremely 'oversold' (I look at the 14-day 'Relative Strength Index' [RSI] which is at levels which when touched in recent years (eg Jun 2016, Jan 2018, Oct 2018) preceded very strong 2-3 month rallies.
Markets tend to overshoot in both directions for various behavioural and technical reasons, so even if the infection tracks as expected then there may be further to go down, but with interest rates being cut across the world (justifying a higher multiple on [reduced] earnings), China pumping liquidity into their weakened economy and Trump desperate for re-election in November, it wouldn't take much to trigger a massive rally. For what it's worth I have 55% of my investment portfolio in equities and I'm sitting on my hands as painful as it looks on my valuation.
If this thing drags on for months I can't see what will stop the market falling? What will make it bottom out given the ongoing hysteria?
Markets always look forward and discount the future. There is obviously considerable uncertainty about the ultimate course of this infection (mainly around the timing and the height of the peak) but regardless of how bad things get, I think it's generally agreed that the effects by definition will be time limited. Given that the most obviously impacted sectors (eg airlines, cruise lines) have already seen their share prices cut 30-50% then arguably they are already discounting a very bad scenario which may or may not transpire. Some of these sectors will obviously experience true demand destruction (albeit with scope for a subsequent sharp snapback) but others will only experience some degree of deferred demand at worst.
Even at a broad equity index level (which includes many sectors where the impact should be somewhat limited eg utilities, defence), from a technical standpoint these are looking extremely 'oversold' (I look at the 14-day 'Relative Strength Index' [RSI] which is at levels which when touched in recent years (eg Jun 2016, Jan 2018, Oct 2018) preceded very strong 2-3 month rallies.
Markets tend to overshoot in both directions for various behavioural and technical reasons, so even if the infection tracks as expected then there may be further to go down, but with interest rates being cut across the world (justifying a higher multiple on [reduced] earnings), China pumping liquidity into their weakened economy and Trump desperate for re-election in November, it wouldn't take much to trigger a massive rally. For what it's worth I have 55% of my investment portfolio in equities and I'm sitting on my hands as painful as it looks on my valuation.
Agree with much of what you say but it's unusual for uncertainty to last over a period of months in the way a pandemnic does. The downward trickle may continue for some time.
If this thing drags on for months I can't see what will stop the market falling? What will make it bottom out given the ongoing hysteria?
Markets always look forward and discount the future. There is obviously considerable uncertainty about the ultimate course of this infection (mainly around the timing and the height of the peak) but regardless of how bad things get, I think it's generally agreed that the effects by definition will be time limited. Given that the most obviously impacted sectors (eg airlines, cruise lines) have already seen their share prices cut 30-50% then arguably they are already discounting a very bad scenario which may or may not transpire. Some of these sectors will obviously experience true demand destruction (albeit with scope for a subsequent sharp snapback) but others will only experience some degree of deferred demand at worst.
Even at a broad equity index level (which includes many sectors where the impact should be somewhat limited eg utilities, defence), from a technical standpoint these are looking extremely 'oversold' (I look at the 14-day 'Relative Strength Index' [RSI] which is at levels which when touched in recent years (eg Jun 2016, Jan 2018, Oct 2018) preceded very strong 2-3 month rallies.
Markets tend to overshoot in both directions for various behavioural and technical reasons, so even if the infection tracks as expected then there may be further to go down, but with interest rates being cut across the world (justifying a higher multiple on [reduced] earnings), China pumping liquidity into their weakened economy and Trump desperate for re-election in November, it wouldn't take much to trigger a massive rally. For what it's worth I have 55% of my investment portfolio in equities and I'm sitting on my hands as painful as it looks on my valuation.
Agree with your analysis - down some more on this leg and then a bounce - but I have a nagging doubt about how far this one could ultimately go. Yield inversions have famously predicted 9 out of the last 5 recessions. But yield inversions followed by a yield spike and then collapse have tended to be much more accurate arbiters of doom.
Maybe the promise of a massive Trump fiscal pump will be the last hurrah but I suspect it will be a lower high. China really worries me. You just can't trust any data coming out of there and people are sent to jail or disappear because they sell stock or just give a negative opinion. If something gives in China, that would justify a 20-30% drop.
Ok, so currently FTSE All World index stands at 343.87. I'm going to go for (based on Saturday morning 1. August European time) 354.19
the 52 week range for this index is 324.16 - 383.39
As a Brit I dont generally look at the FTSE All World Index, but will take a stab at it being higher than your prediction. I'll go for 365.
The FTSE to be at 7000. No money on these though..... just for fun.
Sorry Golfie, I just had to LOL that first bit. Are you advising clients only to Buy British? Good man, if so...except that you realise that the FTSE100 might as well be called the FTSE 100 roubles, don't you?
Anyway FWIW, my forecast pretty much fits with yours, but your forecast means that FTSE 100 would be some 10% below its 52 year high, and so I am not sure that means you could claim it's all gone away by then, as Ralphie will still be looking somewhat dismayed at his holdings...
Ok, so currently FTSE All World index stands at 343.87. I'm going to go for (based on Saturday morning 1. August European time) 354.19
the 52 week range for this index is 324.16 - 383.39
As a Brit I dont generally look at the FTSE All World Index, but will take a stab at it being higher than your prediction. I'll go for 365.
The FTSE to be at 7000. No money on these though..... just for fun.
Sorry Golfie, I just had to LOL that first bit. Are you advising clients only to Buy British? Good man, if so...except that you realise that the FTSE100 might as well be called the FTSE 100 roubles, don't you?
Anyway FWIW, my forecast pretty much fits with yours, but your forecast means that FTSE 100 would be some 10% below its 52 year high, and so I am not sure that means you could claim it's all gone away by then, as Ralphie will still be looking somewhat dismayed at his holdings...
No, just that working in the City for a few years & having a TOPIX screen in front of me I have been accustomed to gauging things by UK indices, then US & Japan. I'm.also well aware that the FTSE100 us very heavily weighted by just a few stocks but it's a good indicator of where the market is heading.
And my prediction is based on where YOU said it could be on 1st August. Of course it means about a 10% fall from where it was at the start of the year, but a lot better than where a few on here said it could be....(seeing as these discussions have mainly been fueled by a few posters anguising over their portfolios & the falls they've seen this week) and the general doom & gloom that currently surrounds equity markets
FWIW (and I think I said this upthread) I wouldn't be surprised to see the FTSE around 7500 by the end of the year.
I wouldn't predict where the markets will be in a few months, as it's like predicting where Charlton "will be" by the close of the transfer window in August.
However, I will be looking at doing S&S ISAs for me & the wife in both tax years in the next couple of months, as I am certain that the next few months are a great buying opportunity.
End of year 5 % FTSE above 7000 ........ 45% 6500-7000 ......45% 6000-6500 ........5% Below 6000
Years ago used to spread bet the Dow and ftse on City Index , IG index , financial spreads etc prolly 20 years ago and lose small fortunes I remember you had to sell the Diff Dow/ftse at 4000 it was never going wider than that 🤪
OK I'll make a note somewhere of people's predictions above, any more want to give it a go? No money, no one-up -man -ship. Choose the index you are personally comfortable with.
But only @oohaahmortimer is allowed to do spread %s, as he has trademarked the thing, the rest of us have to man up and go for one figure per index.:-)
All of a sudden, that meagre 1.2% cash ISA rate is looking more and more prudent.
I understand your sentiment. But over the last 13 years that would have lost me 5.5% year on year, even at these low levels. In other words I'd only have half the money in my pension that I have now. And that's if I sell today.
Annoyed I transferred my cash Isa into funds a month ago now, as had spare time for the research etc, rather than get caught up and have only got to do so now!
Can't believe all the "get in and buy" advice on here this morning.
The FTSE is now at a level last seen on 24/2/16. 4 years of slow growth wiped out in 11 days as the traders in the city don't like uncertainty! And I'm no expert but anyone who thinks the market will bottom out soon, with the constant bad news on TV and in the papers about the spread of the coronavirus, is surely going to be hugely disappointed. In fact, I'll stick my neck out and say I can see the FTSE falling to about 4500 by the end of this month. And could still go much lower.
Can't see at the moment how the falls will stop. Terrible trading on Europe today will undoubtedly mean the Dow drops again tonight, maybe another 1000 points. That leads to another fall tomorrow in the FTSE. And so it goes on.
I've lived through a lot of crashes and yes, the market has always come back even if it has taken time eg 15 years to get back to the levels reached on 31/12/99. But this one looks very different to me and and with the kiddies in the City having little experience of events like coronvirus I can see this sell-off continuing for some time. (Not that the City traders care, of course, because they will still make their money even in a falling market). But for those of us invested for our future these are worrying times.
@PragueAddick My guess for the FTSE at 1 August is 5,300.
Can't believe all the "get in and buy" advice on here this morning.
The FTSE is now at a level last seen on 24/2/16. 4 years of slow growth wiped out in 11 days as the traders in the city don't like uncertainty! And I'm no expert but anyone who thinks the market will bottom out soon, with the constant bad news on TV and in the papers about the spread of the coronavirus, is surely going to be hugely disappointed. In fact, I'll stick my neck out and say I can see the FTSE falling to about 4500 by the end of this month. And could still go much lower.
Can't see at the moment how the falls will stop. Terrible trading on Europe today will undoubtedly mean the Dow drops again tonight, maybe another 1000 points. That leads to another fall tomorrow in the FTSE. And so it goes on.
I've lived through a lot of crashes and yes, the market has always come back even if it has taken time eg 15 years to get back to the levels reached on 31/12/99. But this one looks very different to me and and with the kiddies in the City having little experience of events like coronvirus I can see this sell-off continuing for some time. (Not that the City traders care, of course, because they will still make their money even in a falling market). But for those of us invested for our future these are worrying times.
@PragueAddick My guess for the FTSE at 1 August is 5,300.
You often reference 'kiddies in the City' and similar but with respect I don't think you understand what is causing the sell-off - most trading/market-making is done electronically these days (if I understand the cohort you're referring to it's probably old school market-makers). If markets sell off it's because there's significant selling pressure which requires lower prices to clear. That selling in turn is being driven by a combination of institutional investors (pension funds, sovereign wealth funds, insurance cos. etc.) and more speculative investors (hedge funds, retail investors etc.). It's got nothing whatsoever to do with City wideboys unless they actually oversee a pool of investment capital which is highly unlikely.
Can't believe all the "get in and buy" advice on here this morning.
The FTSE is now at a level last seen on 24/2/16. 4 years of slow growth wiped out in 11 days as the traders in the city don't like uncertainty! And I'm no expert but anyone who thinks the market will bottom out soon, with the constant bad news on TV and in the papers about the spread of the coronavirus, is surely going to be hugely disappointed. In fact, I'll stick my neck out and say I can see the FTSE falling to about 4500 by the end of this month. And could still go much lower.
Can't see at the moment how the falls will stop. Terrible trading on Europe today will undoubtedly mean the Dow drops again tonight, maybe another 1000 points. That leads to another fall tomorrow in the FTSE. And so it goes on.
I've lived through a lot of crashes and yes, the market has always come back even if it has taken time eg 15 years to get back to the levels reached on 31/12/99. But this one looks very different to me and and with the kiddies in the City having little experience of events like coronvirus I can see this sell-off continuing for some time. (Not that the City traders care, of course, because they will still make their money even in a falling market). But for those of us invested for our future these are worrying times.
@PragueAddick My guess for the FTSE at 1 August is 5,300.
But today isnt all about the virus. Seems mostly to do with the oil price.
Comments
the 52 week range for this index is 324.16 - 383.39
Markets always look forward and discount the future. There is obviously considerable uncertainty about the ultimate course of this infection (mainly around the timing and the height of the peak) but regardless of how bad things get, I think it's generally agreed that the effects by definition will be time limited. Given that the most obviously impacted sectors (eg airlines, cruise lines) have already seen their share prices cut 30-50% then arguably they are already discounting a very bad scenario which may or may not transpire. Some of these sectors will obviously experience true demand destruction (albeit with scope for a subsequent sharp snapback) but others will only experience some degree of deferred demand at worst.
Even at a broad equity index level (which includes many sectors where the impact should be somewhat limited eg utilities, defence), from a technical standpoint these are looking extremely 'oversold' (I look at the 14-day 'Relative Strength Index' [RSI] which is at levels which when touched in recent years (eg Jun 2016, Jan 2018, Oct 2018) preceded very strong 2-3 month rallies.
Markets tend to overshoot in both directions for various behavioural and technical reasons, so even if the infection tracks as expected then there may be further to go down, but with interest rates being cut across the world (justifying a higher multiple on [reduced] earnings), China pumping liquidity into their weakened economy and Trump desperate for re-election in November, it wouldn't take much to trigger a massive rally. For what it's worth I have 55% of my investment portfolio in equities and I'm sitting on my hands as painful as it looks on my valuation.
Somebody will make big money out of this.
Maybe the promise of a massive Trump fiscal pump will be the last hurrah but I suspect it will be a lower high. China really worries me. You just can't trust any data coming out of there and people are sent to jail or disappear because they sell stock or just give a negative opinion. If something gives in China, that would justify a 20-30% drop.
The FTSE to be at 7000. No money on these though..... just for fun.
Anyway FWIW, my forecast pretty much fits with yours, but your forecast means that FTSE 100 would be some 10% below its 52 year high, and so I am not sure that means you could claim it's all gone away by then, as Ralphie will still be looking somewhat dismayed at his holdings...
And my prediction is based on where YOU said it could be on 1st August. Of course it means about a 10% fall from where it was at the start of the year, but a lot better than where a few on here said it could be....(seeing as these discussions have mainly been fueled by a few posters anguising over their portfolios & the falls they've seen this week) and the general doom & gloom that currently surrounds equity markets
FWIW (and I think I said this upthread) I wouldn't be surprised to see the FTSE around 7500 by the end of the year.
However, I will be looking at doing S&S ISAs for me & the wife in both tax years in the next couple of months, as I am certain that the next few months are a great buying opportunity.
5 % FTSE above 7000 ........ 45% 6500-7000 ......45% 6000-6500 ........5% Below 6000
Years ago used to spread bet the Dow and ftse on City Index , IG index , financial spreads etc prolly 20 years ago and lose small fortunes
I remember you had to sell the Diff Dow/ftse at 4000 it was never going wider than that 🤪
values were around 10k and 6k on those indexes
But only @oohaahmortimer is allowed to do spread %s, as he has trademarked the thing, the rest of us have to man up and go for one figure per index.:-)
ftse 100 6200
shock horror I’m doom and gloom
You've always been right about our away support numbers so I'm paying close attention to this...
August 1st
6765 and people releived it has recovered some ground after getting hit further in the next few weeks.
Looks like it's going to be another ugly day tomorrow.
Great time to invest.
The FTSE is now at a level last seen on 24/2/16. 4 years of slow growth wiped out in 11 days as the traders in the city don't like uncertainty! And I'm no expert but anyone who thinks the market will bottom out soon, with the constant bad news on TV and in the papers about the spread of the coronavirus, is surely going to be hugely disappointed. In fact, I'll stick my neck out and say I can see the FTSE falling to about 4500 by the end of this month. And could still go much lower.
Can't see at the moment how the falls will stop. Terrible trading on Europe today will undoubtedly mean the Dow drops again tonight, maybe another 1000 points. That leads to another fall tomorrow in the FTSE. And so it goes on.
I've lived through a lot of crashes and yes, the market has always come back even if it has taken time eg 15 years to get back to the levels reached on 31/12/99. But this one looks very different to me and and with the kiddies in the City having little experience of events like coronvirus I can see this sell-off continuing for some time. (Not that the City traders care, of course, because they will still make their money even in a falling market). But for those of us invested for our future these are worrying times.
@PragueAddick My guess for the FTSE at 1 August is 5,300.
So what do you reckon then? Where are we at the moment? Fear or panic?