FTSE big crash

[KDave]

2 minutes ago, freefall said:

So I expect a managed, slower decline by devaluing the pound, inflating away debts and purchasing power. 

They will devalue by spending on infrastructure projects - roads, rail, power and make work. Industry will be built up around government spending, new industrial supply will come online all over the west which will see western economies transformed. 

The benefits of inflation will end up in those areas of the market that are best positioned to supply the projects with what they need - materials and energy. In a sellers market companies providing the first point of supply can set the price and thus can beat inflation, those further down the chain must either eat the cost and reduce returns or pass on cost (combination of the two), but the further along you get the lower the returns and the more inflation hurts. At the consumer end, things will get very expensive and the companies selling will not be making much. Inflation will be the end of the consumer economy and the start of an industrial one.

Governments will use low interest rates to justify the required spending to devalue and invest - "we must invest our way out of the crisis" will continue throughout the decade. This is just the start of it;

https://www.investmentweek.co.uk/news-analysis/4012262/budget-2020-gbp600bn-pumped-uk-infrastructure-biggest-programme-public-investing

[vand]

On 15/05/2020 at 11:42, GoldenPhil said:

Raises the question whether or not "future cash flow" has been factored in with a second peak or without a second peak. 

 

On 15/05/2020 at 11:53, zhoutonged said:

Or whether the economy can simply be turned on again at the flick of a switch, to factor in future cash flow requires a reliable crystal ball.

 

The corollary argument is that, unlike previous recessions, we have voluntarily put ourselves into this recession with the temporary restrictions we have placed upon ourselves. We did not reach the natural end of the business cycle and it was not yet unsustainable imbalances in the economy that tipped us into this downturn, therefore you can't make the argument that there is anything structurally wrong with the economy that needs dissolving and restructuring, so unlike previous recessions we are much better placed to bounce back to "business as normal".

 

[Kman]

1 hour ago, vand said:

so unlike previous recessions we are much better placed to bounce back to "business as normal".

Record unemployment, travel restriction, people scared to be within 2m of one another

The travel, holiday and leisure industries are going to be hard hit

Not to mention if we relax the lockdown and have a second wave and are forced into a second full lockdown

I appreciate your optimism and I hope you're right but I can't see any bouncing back,

[HerefordBullyun]

2 hours ago, Kman said:

Record unemployment, travel restriction, people scared to be within 2m of one another

The travel, holiday and leisure industries are going to be hard hit

Not to mention if we relax the lockdown and have a second wave and are forced into a second full lockdown

I appreciate your optimism and I hope you're right but I can't see any bouncing back,

Agreed the travel leisure hospitality industry will be hit hard. Europe it will be even worse, that is thier main income. Greece Spain Turkey espically.

[Cointreau]

On 14/05/2020 at 21:36, HerefordBullyun said:

Well look at the all time price of Deutchse bank what it was pre crash and look at its price today. This is the biggest bank in Germany - The amount of Toxic debt and deriraritives its owns is astounding. When that goes that is the euro down shatpipe %100. And considering Greece Itay Spains GDP of debt is unreal, its ticking timebomb.  The euro I think will fail before the dollar IMHO.

When Deutsche goes kaboom gold will go whoosh!

[Cointreau]

The markets will crash again in the autumn. Come September I will be short the Footsie.

[Cointreau]

I'm intrigued by my bank Barclays share price. It dropped below 80p without my noticing. What happened?

I remember the sp dropped to 50p in 2008/2009 sometime and it recovered to 300p. I might take a punt here.

Currently 97p.

[freefall]

17 hours ago, Cointreau said:

I'm intrigued by my bank Barclays share price. It dropped below 80p without my noticing. What happened?

I remember the sp dropped to 50p in 2008/2009 sometime and it recovered to 300p. I might take a punt here.

Currently 97p.

I think it's because when asked about negative interest rates, the Bank of England representatives have been coy and refused to rule them out. From what little I know this seems to be really bad for banks trying to make a profit.  

[GoldenPhil]

My guess would be 5 year tracker mortgages.  If interests rates go negative then people on those products could be paying zero interest 

[GoldenPhil]

But every person with money in the bank will also be paying their bank for saving it. If you have £100 in there after a year at -1% you will only have £99 in there and so on. 

[vand]

On 14/05/2020 at 22:12, Madstacks said:

After such a large unexpected and catastrophic event for the markets we should be seeing way more of a crash - Sub 3750 and I might start buying. 

3750.. keep dreaming

[johnno]

I read that in the first quarter GDP fell by 2%, that was up to end of march which only accounted for 1 week of lock down. I hate to imagine what Q2 will look like given that most if it is in lock down. If GDP falls a significant amount then we might see a major recession meaning stock markets will fall. Like I said its all ifs and buts!!

[GoldenPhil]

Thing is with so much currency being poured into the economy and it being given to large corporations NOT people via the tax or benefits system hyperinflation is possible 

[vand]

Some much level-1 thinking on here.. quite depressing for a supposedly clued up forum.

 

[GoldenPhil]

2 hours ago, vand said:

Some much level-1 thinking on here.. quite depressing for a supposedly clued up forum.

 

What do you think the value of the FTSE will be 6 months from now? 

[GoldenPhil]

It depends.  If they stash the cash then at a certain point all come out spending you are correct. 

BUT 

If they spend it when they get it and don't hoard it then it should breath life into the economy at a steady and healthy rate and encourage growth. 

The true value of our benefits system is that people recieving it must spend it all to be able to survive so money pumped into the poor helps the whole economy.  Money given to savers can be dangerous and lead to hyperinflation.

[vand]

14 minutes ago, GoldenPhil said:

What do you think the value of the FTSE will be 6 months from now? 

You're asking the wrong question. Level 1 thinkers always do that. 

It's not all that important to me where it is in 6 months, because I'm investing with a much longer time horizon in mind. I would argue that if you are worried about where the market will be in 6 months then all you're doing is speculating, you're not investing at all. Investing requires patience for long term secular changes to be reflected in prices, which takes place over years, not months.

 

[Martlet]

16 minutes ago, zhoutonged said:

Im not being funny but I obviously think the inverse of you.

I would argue currency going directly to the people by way of furlough payments/benefits, helicopter money etc would make hyperinflation more likely.

🤔

That seems like level 1 thinking. Level 2 thinking recognises the payments are in lieu of regular salary, they have outgoings to deal with, worry about job security so not buying goods or services beyond the essentials. 

[Martlet]

24 minutes ago, GoldenPhil said:

What do you think the value of the FTSE will be 6 months from now? 

Up, or down.

[GoldenPhil]

4 minutes ago, vand said:

You're asking the wrong question. Level 1 thinkers always do that. 

It's not all that important to me where it is in 6 months, because I'm investing with a much longer time horizon in mind. I would argue that if you are worried about where the market will be in 6 months then all you're doing is speculating, you're not investing at all. Investing requires patience for long term secular changes to be reflected in prices, which takes place over years, not months.

 

Are you saying you dont know?

Let's keep it simple. Will it be higher or lower than today? You have a 50/50 chance of being correct. 

[Martlet]

1 minute ago, zhoutonged said:

So you don't see inflation in essentials? Beginner level

Beginner?  Oil is down, so transport and energy costs are lower; retail will have large inventory to sale driving prices down.  If you can even buy goods because the shops remain closed.  Services are closed or trying to get by so price pressure is down ward. Have you considered these factors?  

[Kman]

I read a lot "don't try and time the market" but isn't that more a general rule in normal times? we aren't in normal times

It seems like 100% you can time the market, a crash is looming

The more important question is how long after the crash will it take to hit the bottom, 1 month, 2, 6? a year?  2 years?

Another important question is, a crash will come, even if it's not this year or because of corona, will that crash drop it lower than current prices? if so there's no benefit to me getting into the market in the next 5 years without a crash because I would be put back to square one anyway 

I'm going to try and time the market and I don't think there's much downside not to 

[vand]

What does it matter if I say I expect it to be higher and it's actually lower.. or vice versa?

The downside of me being wrong is nothing because I'm buying throughout the period regardless. 

 

If that sounds evasive to you then.. I don't really give a shoite. Armchair geniuses like you are 2 a penny on the internet.  If you want to be taken serious then I suggest you post ALL your trades - entry and exit - ahead of making them. If you have a market beating track record after 5 years I'll happily acknowledge you to be a genius, otherwise you're just another monday morning quarterback.

 

 

[GoldenPhil]

3 minutes ago, zhoutonged said:

Savers free up capital to be invested into an economy improving production and lowering the real price of goods, they tried it in the US before they lost the plot.

Could you explain this in more detail? 

[GoldenPhil]

2 minutes ago, vand said:

What does it matter if I say I expect it to be higher and it's actually lower.. or vice versa?

The downside of me being wrong is nothing because I'm buying throughout the period regardless. 

 

If that sounds evasive to you then.. I don't really give a shoite. Armchair geniuses like you are 2 a penny on the internet.  If you want to be taken serious then I suggest you post ALL your trades - entry and exit - ahead of making them. If you have a market beating track record after 5 years I'll happily acknowledge you to be a genius, otherwise you're just another monday morning quarterback.

 

 

Averaging as you suggest is an absolutely sound way to proceed. Many busy or financially illiterate people do it as it ensures on average an ok entry when prices are high they overpay when prices are low they underpay (both relative to future price). 

Personally I prefer to enter when things are low and exit when they are high as this maximises profit.  So I want to know where the FTSE will be in 6 months. That's all.