The Coming Crash (no later than 1H2012)?

[kazukirai]

Hey! Maybe we can try it in Valuebuddies? We choose a "hot" topic and invite debates for a fixed period - like 7 days? Then we do a poll at the end (May need to install a polling tool or gadget in Valuebuddies - not sure whether its possbile as I not IT savvy.

How's that for fun and generating alternative views? The purpose is not to "win"; but to encourage critical thinking.

Moderaters, what do you think?

I like the idea very much actually, although I'm not sure whether the focussed nature of the debate (like imposing a timeframe of 7 days) will add much value to what we already have here as a forum vs The Economist as a publication.

Time limit imposed- we'll probably end up with the same few posters who can/will meaningfully contribute to the debate.

W/o Time limit- Not much difference from what we already have.

I also suspect the topics that are more Social/Political in nature will receive a lot of responses (everybody has an opinion in politics no?) whereas Investing ones will see less participants.

Having said that, I'm all for running a trial/pilot. As to the technical aspects, will have to let Cyclone respond to that.

[Behappyalways]

In the interview with Der Spiegel, Ms Lagarde re-emphasised the need to increase recapitalisation of banks "so they are strong enough to withstand the risks coming from sovereign borrowers and from weak growth". Said the IMF chief: "This is key to cutting the chains of contagion."

http://www.todayonline.com/Hotnews/EDC11...-IMF-chief

http://www.minyanville.com/businessmarke...1/id/36694

http://www.minyanville.com/businessmarke...1/id/36708

http://video.cnbc.com/gallery/?video=1640401359

(PS: This video which is about 1 year old. Take note of his talk at 12:00. The main event in investing is getting the big picture right)

[arthur]

Be careful of what one wishes.
It could turn out more extreme than what one hope for.

We are a generation that never seen the Great Depression nor the deflation spiral nor hyperinflation nor any World Wars.

What makes the world different from what was then 80 yrs ago?

[Behappyalways]

It is bearish that FINANCIALS continue to lead down. This was one of the most important clues in me telling you way back in May that the market would be on borrowed time. On many occasions, I stated the financials were acting just like they did in 07-08. Speaking of financials. Do not ignore Bank of America. I continue to wonder just what is going on as the stock was being pummelled before Warren Buffett stepped in. I continue to worry that they had to raise $13 billion when they said they didn't need to. This bears watching as financials have sold off since that news.


It is bearish that cash in mutual fund's coffers is still below 4%...a very low level indicating a lack of ammo but more importantly...this will mean they will have to sell if redemptions start to pick up. And just to give you an important lesson, it is these redemptions that lead to more selling...which leads into deeper bear markets.

http://www.tradingmarkets.com/stocks/com...78165.html

http://www.cnbc.com/id/44110774/Bad_timi...record_low

[Musicwhiz]

It is bearish that cash in mutual fund's coffers is still below 4%...a very low level indicating a lack of ammo but more importantly...this will mean they will have to sell if redemptions start to pick up. And just to give you an important lesson, it is these redemptions that lead to more selling...which leads into deeper bear markets.

I think it's well and good that you have highlighted all this news and your deductions. But my question is - how should we, as investors, position ourselves to take advantage of the impending crisis?

Whether there is a deep recession or just a shallow downturn, the fact is there will be companies which can still continue to thrive and pay out decent dividends, and maybe even eke out modest growth. So I guess our aim should be to seek out such companies and to assess if Mr. Market is offering them at good value. If so, then we should snap up the shares ASAP!

[karlmarx]

It is bearish that cash in mutual fund's coffers is still below 4%...a very low level indicating a lack of ammo but more importantly...this will mean they will have to sell if redemptions start to pick up. And just to give you an important lesson, it is these redemptions that lead to more selling...which leads into deeper bear markets.

mutual funds are not like hedge funds. they are more restricted in terms of what they can/cannot do. they are not like hedge funds where they can hold 30% or more cash if they wanted to. mutual fund managers also don't time the market. the little cash that they hold are more likely to be used to meet redemption obligations than for opportunistic purchases. the onus is on the retail investor to time the market themselves.

[yeokiwi]

Actually, if the money does not go to properties, stocks and commodities, where can it go?
With the T-bills and bonds return at all times low, how long can an investor hold on to its cash without putting it back to stocks and properties?

WB is smart, he got the deals that come with both bond and stock options.(aka preferred stocks)
I also want but in S$

As for us, small time investors, is it wise to hold on to large amount of cash?
With the kind of stock market fluctuations, it would be quite daring to hold on to 100% equity but it is also quite unwise to hold on to 100% cash.
The crash may or may not come but life still has to go on.(or rather, dividends still have to come in, I am a sucker for dividend.)

[pianist]

how much % are you into equity at the moment?

[yeokiwi]

how much % are you into equity at the moment?

I suppose the qn is directed towards me?
Including the expected incoming cash, my ratio stands at 70% equity, 30% cash.

[pianist]

I suppose the qn is directed towards me?
Including the expected incoming cash, my ratio stands at 70% equity, 30% cash.

yes thks for e reply. that quite a high % i think
i tot i saw a report today on the world's 300 largest pension funds..on average their % is about 37% equity..
..for me i am coincidentally also around 37% equity remaining cash/fds but i get trembled legs these nites ;p