Down goes the Dow

POTO,

Put on you glasses first, read, and then if you still want to buy some YINN go ahead..

Sharma said he’s shunning Chinese stocks and those in countries that rely on China for growth...

The market collapse has challenged some investors’ long-held conviction that the Chinese authorities have a firm grip on the economy and markets and that the government is always able to achieve its goals, said Sharma.

“What happened in China last week was so significant in that for the first time, you’ve got this sign that something is out of control,” Sharma said. “Confidence damage is going to last for a while.”

Hey POTO put your spin on this one:

http://online.barrons.com/articles/why-beijing-is-so-desperate-to-halt-stocks-slide-1436593213?mod=BOL_hp_mag

Can't comment unless you post the entire article.

POTO,

Sorry the link doesn't open, I have a business subscription to Barron's. You may be able to pull it up on a search. The article is by Jonathan Laing, "Stocks Test Bejing's Legitimacy," in the July 13th edition of Barron's.

"Normally crises happen in deficit countries. If earnings go down, they can’t afford to buy stuff. The Chinese have been producing more than they consume for years. They have $4 trillion in reserves. They can buy goods and services from abroad. That’s a cushion for them: If their output falls, they can maintain their living standards. And that’s really good for us because it increases net demand."

The takeaway, for Chovanec, is that "from the point of view of the global economy, what matters isn’t how much China is producing, but how much the Chinese consumer is consuming." Rebalancing won't be easy, and it may mean a couple of years in which China both produces less and consumes less. But ultimately, it also may mean that China does less subsidizing of production — which has been its strategy until now — and more to encourage consumption, as that's going to be necessary for its future. And a China that consumes more is a China that can buy more from America.

I agree that China must transition from exporting to growing internal demand. Rebalancing the Chinese economy is a huge task, from the over production of steel to the Ghost Cities, time will tell if this can take place without a hiccup.

The Chinese situation is an interesting one.

There is arguably inefficiency in panic. It is difficult to determine which is more efficient in the aggregate, letting markets proceed and a certain number of defaults to occur, or managing them to lower and/or delay yields.

One thing for sure, intervention serves to re-allocate both risk and reward, compared to non-intervention.

Current actions may indeed benefit "China" in the aggregate, over a certain time-frame. Interesting stuff.

I do not invest in China.

I question much that goes on in China from the commodities expansion, real estate and stock market. I have a small short in place that I sold, and bought back again. We'll see if the government can make me a loser. On the subject of an investment, at this point it sems a crap shoot either way. In a financial sense, I find it hard to figure what is real and what is manufactured.

Ghost of Igloi wrote:

I question much that goes on in China from the commodities expansion, real estate and stock market. I have a small short in place that I sold, and bought back again. We'll see if the government can make me a loser. On the subject of an investment, at this point it sems a crap shoot either way. In a financial sense, I find it hard to figure what is real and what is manufactured.

you ever feel like you're just old and don't understand the economy anymore, GOI? That sounds aggressive on my part and I don't really know how hold you are...but as a, I hope, keen observer of human psychology it just sounds like you are saying something like 'this isn't the economy I grew up with therefore it must be fake"

I'm 47 and starting to feel that way sometimes - I could see being 60 and just having a huge resistance to things.

For instance, if you were in the biz in the 70s and 80s you saw some valuations lower than today and if you bought then you did well in the 80s and 90s. So that might have fixed the way you see the world.

But for the last 25 years there haven't been valuations that low... so that fixed view of the world doesn't match up with anything. People have made lots of money for 25 years despite the CAPE being 25 or more for just about all of that time. So maybe you just saw bah humbug.

Anything resonating there?

GOOG up $100 in around 5 trading days - 20%. that's around $30 billion in market cap in a week.

not sure what to say - 30 billion is the size of viacom or csx and google just added that.

is this bullish or bubblish? I don't know. but wow - what a company to grow liek that at its size.

It's bs'ish, that's for sure.

This is a market for speculating, not investing, which is why people like chemical are both making and losing money at the moment, while investors are going nowhere fast.

This is just a quick visit to refute the above poster. Please do your homework and read the thread. I only MAKE money.

Chemical Reagent wrote:

This is just a quick visit to refute the above poster. Please do your homework and read the thread. I only MAKE make-believe money.

Fixed it.

agip wrote:

MessageGOOG up $100 in around 5 trading days - 20%. that's around $30 billion in market cap in a week.

not sure what to say - 30 billion is the size of viacom or csx and google just added that.

is this bullish or bubblish? I don't know. but wow - what a company to grow liek that at its size.

Tech stocks up 6% in the last 6 trading days. I think I'll take it. Maybe the thing to do is wait for the S&P to get to 2150, take profits, and do it over and over and and over and over and and over and over....

About the Chinese market..,,, Valuation for Shanghai (NOW) vs. S&P:

Shanghai Crash compared to 1987 and 1929:

I don't know how many here have been at this long enough to actually remember the 1987 crash, but before CNBC and IBD, in Los Angeles we had KWHY channel 22. I remember one particular commentator, who was a stock broker, talking about "investors unlucky enough to get through to their broker so they could sell at the bottom." I remember back then a bunch of people predicting the end of the country, and depression worse than 1929, etc. But if fact, 1987 was a BUYING opportunity, and it was a MARKET event, not an economic event, and everything people outside Bloomberg and Goldman-Sachs are saying now about China, they were saying then about the US then.....and they were totally wrong.

If Shanghai does follow the 1987 analog, the retest of the lows will come just before Labor Day, and I will go long if it occurs.

"Maybe the thing to do is wait for the S&P to get to 2150, take profits, and do it over and over and and over and over and and over and over...."

lol stealing chemical's MO, except for S&P? lol

I have a serious question for the gurus:

If I buy in the USA a total world stock fund that includes things not American, does the value fluctuate as non-USD currencies fluctuate?

Serious lurker wrote:

I have a serious question for the gurus:

If I buy in the USA a total world stock fund that includes things not American, does the value fluctuate as non-USD currencies fluctuate?

Yes.

Compare local currency returns with US$ returns. (Unless fund is currency hedged; e.g. the ETF DBAW.)

agip,

Perhaps I am old and out of touch at soon to be 65. However, like you I am a CFP, also have CLU and ChFC. I have a BS in Business Administration and a Master in American Studies. Right out of college I worked for two years under the VP for marketing for a Fortune 500 firm. I was a college head track coach at a Division I school for nineteen years and nineteen years in this business with a major wirehouse. So I think I have quite a bit of education in and outside of my current career. As a coach I gained a lot of experience with human nature. It leads me to believe that I am correct, and investors are being lead off a cliff. As I said in the past, I would never advise anyone to get completely out of stocks or bonds, but I think people should temper their expectations on financial asset returns. I feel my role is as a backstop, for better or worse, I am the guy who has to give BOTH sides of the argument not just what comes from conventional Wall Street sources. If you take your oathe as a CFP seriously you understand my point. I believe it is foolish to think QE Unlimited by numerous world central banks will not end in tears. THIS QE IS AN EXPERIMENT THAT HAS NEVER BEEN DONE BEFORE. Adequate price discovery is not my theory, it is the universal law of economics. Why do you think central banks PBC, ECB and the Fed are actings like their underwear is stuck in their crack? It seems uncomprehensible to me that so many people are blind to this. I have a brain and I plan to use it. Even when it comes to running, I see things we did 40 years ago are back in vogue today. As they say, history doesn't repeat itself, but it does rhyme. And yes I did have the pleasure to train under Mihaly Igloi, whom I learned much about discipline. So in summary, I find it typical behavior for people to claim this is a new era. I find it ridiculous that Netflix is bought up 11% today and trades at 185 times earnings. I think there will be Hell to pay. I have nothing to gain in these exchanges other than to offer an opinion.