[h=2][/h]http://video.cnbc.com/gallery/?video=3000410815 Worst is over: Tom Lee "Tom Lee, FundStrat Global Advisors. gives investors an idea of typical market behaviors after corrections as well as his sector picks, which include healthcare and technology." This analysis airied on CNBC Fast Money a few minutes ago. It is an analysis of the behavior of past corrections and recoveries. It is quite interesting, in my opinion. I find this kind of information to be more helpful than the spate of depressing numbers presaging gloom and doom. I recognize China is the fly in the ointment, and predicting what the PBOC will do in the short term is akin to juggling knives while blindfolded. Nevertheless, this too will pass. HTH. YMMV. (also posted elsewhere, but I thought this sufficiently interesting to repost here given the nature of the conversation)
That's the beauty of investment cycles. They last long enough for people to forget about the last bust (and boom) and allow investors to act irrationally in one direction or the other. It doesn't always pay to be contrarian but when the noise gets louder in the financial media, when there's a bit of blood on the streets, and when everyone is running for the hills, that's a good time to start assessing new opportunities. That's until the sky really does fall and the world really does end.
How can you say the US dollar is going to plummet when everything that has happened the past two weeks is because China has devalued their own currency ( which inversely increases the strength of the dollar). If anything, the reverse is going to be true in that the US economy is going to suffer a bit because of the high cost of US goods sold overseas because of the strong dollar. As far as the debt.. what China did last week helps us in a ton of ways, most importantly the yield payed on US bonds has been significantly lowered, this mean the gov´t is going to be paying less in interest moving forward. At the same time, the high value of the US dollar means that more investors and foreign companies will be holding US dollars for safety ( trust me, you don´t want to be holding China money right now).
Between politics and short-term memory of most investors, it really is easy pickens to invest nowadays. I still know people who are 100% out of the US stockmarket for the last 7 years because they were sure Obama was going to kill the economy. The stock market has nearly doubled in that time. And like you said, when everyone else is panicking... that is when you should be window-shopping for your next purchases.
This will happen over and over. It is just the way of the market. If you are in it for the long haul, these types of corrections or pullbacks are simply buying opportunities. It is like the best products in the market are on sale for a limited time.
The best thing about it is that 2008 is not happening anytime soon. This was just a correction of the market, but we are not even close enough to a new financial crisis. Some of the bankers have learned their lessons the hard way and are not willing to lose again. However, losing money is pretty common in these moments. I was reading the other day about a team of fund managers who had lost more of $50 of their portfolios. That's a huge loss, but hopefully, it will be recovered pretty soon. I wish I had money to invest now. I would have jumped right in.
There were a lot of fund managers for overseas funds that were overexposed to China, and there were some funds that were strictly China funds. I hope those guys have safety nets under their window sills. But the truth is, there should have always been this type of risk assessment with China. They have not had open markets for long, and they are very radical with how they do things. I am not saying anyone should have been worried that they were going to devalue their own currency as fast as they did, but we should have been expecting they would do something boneheaded sooner or later. I think a lot of investors in the USA and western europe fail to see how immature some of these gov´ts are when it comes to dealing with international commerce.
Well, the Chinese are known for making their own rules. I wouldn't be surprised if they did any other crazy stuff. I don't know if any other government would have regulated the local stock market the way China did. Not even Greece.
I see these drops as buying opportunities! Don't bet against Uncle Sam, the US stock market will live longer than anyone on this forum.
Yeah, I guess what I meant is that China for the last decade has tried to pretend to be a democracy with capitalism.. and a lot of investors bought into it and treated it like an open market economy. But when push came to shove, they are just a country where the gov´t has completely control and can crash things any way they like. What the china gov´t did this month is going to change how investors view them for the next 10 years.
