Something Positive

I think it's a given that the developed world won't grow for the next years. Japan could be some kind of playbook for what the markets have installed for us.

But there are going to be some very nice winning stocks. I'd like to see CEOs merging and acquiring and cutting costs. It's the only logical thing to do. Just like banks are doing.

That's what's got me optimistic at the moment. There's a big chance that states and consumers suffer in the coming years with unemployment remaining elevated. That doesn't mean that the companies listed on stock exchanges will suffer aswell.

Even if half the companies went bust, there would suddenly be a huge opportunity for cash rich companies. From a "Darwin" point of view, 20% of companies going bust might be a good basis for sprouts to appear. The more acceptable way of achieving that solution: Two companies merge and lay off 10% of their combined workforce...

I'm sure will see some of that in coming months, years. The companies just keeping still and changing nothing are the ones I wouldn't want to be near... unless they have lots of cash obviously...

Barclays also negative on sustainability of current rally:

Consequently, for the time being we are not inclined to change our tactical asset allocation: we advise investors to remain neutral risky assets, while being underweight European risk across assets. The latter would be offset by higher regional equity, rate and credit exposure to the US and/or Japan and EM, which should serve us well in a short-lived bounce in risk sentiment. While valuations of many risky assets look attractive following the recent sell-off (see, for instance, Reaction to the US sovereign downgrade, 7 August 2011, for an assessment of present US equity valuations), we recommend to stay invested “close to home”, as value at risk is particularly elevated at this juncture and the interplay of macroeconomic momentum and policy-driven events does not provide a clear buying signal for risky assets other than for a very short-term recovery in risk sentiment. Neither would we want to be short risky assets, as decisive policy action, particularly by euro area politicians, if it were to happen, could provide the trigger for a more substantial relief rally. By contrast, while we expect the macro momentum to improve in the course of H2, the effect on asset prices would most likely be modest and gradual. That said, we would review this tactical view should a more credible, comprehensive and timely approach be adopted by politicians in Europe to contain the crisis and address the underlying reasons.

Buying Now Could Be The Proverbial First Mouse Going For The Cheese

Well the market got the Reversal I wrote about yesterday morning.

I've seen comments out from BlackRock, Henderson, Pioneer Investments saying this is the moment value investors can find interesting purchase prices.

A lot of the argument is based on historical P/Es, S&P downgrade alone not suffice to cause selling of Treasuries and panic reaching investors. However some of the above are only expecting 6-10% rally from the low. Well we've had that by today (I believe) in some markets.

Some points that make me pessimistic:

A majority of the several longterm investors I spoke to think we haven't seen a bottom yet. They're not in the least in panic mode.

There are two rating agencies out there Fitch and Moody's who haven't done the obvious yet. Downgrade the US.

I can imagine a prolonged drip-feed of negative news into the market over coming months as sentiment drops occuring feed into real consumption reduction.

Worry often gives a small thing a big shadow

or "Every path has its puddle"

well this path seems to be a river now.

I guess it's like in the mountains, near the top, small little streams, but at the foot of the mountain cascading waterfalls...

We need a nice -10% day WITH REVERSAL now....

Then again with a US president saying his country will always be Tripple A just shows lots of people haven't "got it" yet. The greek guys said the market was being unfair and overreacting.

I think it's depression time. Or time to take a step back and see what matters in life. Mostly it's not numbers in an account. I know exactely how it feels though, if you do think that, after getting clobbered...

Why the US equity market is overreacting, in my opinion

It's about the STATE not the COMPANIES...

This just released from S&P....

"The sovereign downgrade will not affect the ratings or stable rating outlooks on the six U.S.-domiciled highest-rated nonfinancial corporate issuers: Automatic Data Processing Inc. (ADP; AAA/Stable/A-1+), ExxonMobil Corp. (AAA/Stable/A-1+), Johnson & Johnson (AAA/Stable/A-1+), Microsoft Corp. (AAA/Stable/A-1+), General Electric Co. (AA+/Stable/A-1+), and W.W. Grainger Inc. (AA+/Stable/A-1+).

WHY THERE IS NO IMPACT ON OUR TOP-RATED U.S. INDUSTRIALS

According to Standard & Poor's criteria, ratings on a nonfinancial corporate borrower may exceed those on the sovereign if we expect the borrower to continue to fulfill its financial obligations, even in a sovereign default scenario. Depending on the industry sector or individual company's financial strength, a company may be better or less able to withstand macroeconomic shocks or other country-related risks. In considering corporate ratings vis-à-vis the sovereign rating, we consider how exposed a company would be to a typical sovereign stress scenario, which, in the past, has included: sharp currency movements, credit shortages, a weakened banking sector, higher government taxes and fees, late or partial payments from the public sector, a more difficult regulatory environment, economic contraction, and rising inflation and interest rates.

Corporate entities that we would typically consider to be most exposed to country risk include firms with mainly domestic customers, highly cyclical companies or companies for which profitability is highly correlated with the general condition of the economy, and companies with high exposures to government sector customers. Corporate entities that typically are least exposed to country risk include globally diversified companies and export-oriented companies. Local economic conditions have less of an effect on such companies, and they generally benefit from currency depreciation."

Excerpt!

source: S&P

S&P is the good guy - Uncle Sam a bloody halfwit

"Safe-haven flows saw U.S. Treasury prices erase early losses on Monday, pushing down yields on the securities despite Standard & Poor’s unprecedented decision to cut the U.S. government’s credit rating by a notch below AAA." Marketwatch.com

Got to love all people bitching about S&P doing something "unprecendented". Looking at a graph of US deficit and seeing the level of debt clearly shows the root of the evil. Money junkie governement...

The analyst who had the guts to downgrade the US is a hero in my eyes. If I saw correctly from the S&P press release, he's canadian :)

Trying To Have Sex When Having Just Lost USD 20k

Well, I hadn't just lost it. It has been more of a gruelsome torment over the last several months.

I stopped looking at the FX account - until yesterday. Something about the being bombarded ALL DAY with the news: Record level, Debt, etc... that just doesn't let you keep cool.

So anyway, I have a -1600 pip loss and decide to a. buy 1 lot more around 1.26 (only had one lot) and put in a stoploss on CHFGBP at 1.24. Sure enough this morning I'm closed out at 1.2393 or so ...

Luckily or unluckily my girlfriend has been on my mind most of the time - and enjoying life. But this morning, seeing that loss really affected me physically. I didn't want to let on to her though. There didn't seem any point. She's very careful with money so the thought of me just chucking it out the window in such a way would have been rather couterproductive I felt.

But trust the SNB to intervene once my fear level is reached. For a moment I just thought, that when headlines get really bad a turning point is near. This time it may be so once again. As the "weak" hands, like mine, have now been crushed I wouldn't be surprised.

Now time to about planning a comeback! Or think of another way to fullfill my gambling addiction?!

Why someone with money is the best kind of advisor

Just to get it out straight away: I'm not loaded. I'm well off compared to the majority of people on the planet, but here in Switzerland I'm in the lower half. I don't mind too much though (Work-life-balance etc).

But one thing I've come to realise: People with money, owners of a company with good cash-flow are the people that should advise you when it comes to investing. Recently I was speaking to a guy, owns his own advisory company, has 12 employees and is very well off. When he talks about investing, he doesn't say "you need to buy X, you need to buy Y". He asks everyone he meets their opinion on things his interested and then based on their rational will choose his side, i.e. if he likes it or not.

Another place I noticed you should listen to "sales people" is in swiss private banking. The owners, the guys whose relatives actually founded the bank, are very well off financially. There not interested in the "fast money". They want investments. Specifically the guys I'm thinking of, who work in senior advisor roles at private banks, own substantial wealth and advise with a view to making sure that in 25 years you as client will still be standing and still be paying them for there services.

Long-term dedication is one key. Giving advice that you follow yourself another.

Your thoughts?