Stock market losses: All but guaranteedgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
It's pretty much guaranteed that our international trade is going to significantly decline going into January 2000, because of great uncertainty about system failures. Even if there aren't any failures the entire world is going to put everything on hold until they are sure it is safe. So what is going to happen well before that is the stock market is going to begin to reflect the fact that a decline in trade and productivity is approaching. What it comes down to is a big waiting game. Those who can afford to risk it are going to hang in there hoping that the Dow will continue to rise. But the nervous ones are already beginning to pull out so the overall trend is a decline. Here are some Illustrations from the Economist magazine which I beleive are a fairly accurate prediction:
Also we have to try to estimate the Millennium Factor - the idea that we have never before experienced such a landmark calendar transition during modern times, and that people will be reacting irrationaly. There's some pretty good articles at this site: http://www.economist.com/editorial/freeforall/19-9-98survey/index_survey.html
-- man (firstname.lastname@example.org), February 21, 1999
You can make big bucks with the Stockmarket crash this summer, if you buy LEAPS Stock Options that expire in January, 2000. Ask your stockbroker! Just sit on it until the market crashes and watch the value of your put options skyrocket! Then cash out and buy silver and gold to preserve it!
-- Freddie the Freeloader (email@example.com), February 21, 1999.
Some of the futures traders are betting that a cash crunch will send interest rates soaring.
-- Bender (firstname.lastname@example.org), February 21, 1999.
If interest rates go up 1% were toast. The only way I see out of this mess is a mix between what Malaysia done and what Japans getting ready to do. Lots of pain either way. Personally, I would rather have hyper inflation then a deflationary depression. GO PRECIOUS METALS
May GODS Will Be Done
-- flierdude (email@example.com), February 21, 1999.
There is a risk that the markets won't trade during January 2000 expiration. Therefore, options coming due at that time may become worthless, even if the market goes belly up. For safety's sake, I would move the majority of any options position further out, say July. Having some stuff that expires 01/00 is OK, just wouldn't put all my options eggs in that particular basket, FWIW.
-- Nathan (firstname.lastname@example.org), February 22, 1999.
One of the important factor to monitor closely is the # of new LOW's! On Friday, I recall the # were quite high for Nasd. & NYSE. Over 120 or so.If it continues for another 2-4 weeks, watch out another big decline may be near. But I stiill feel the biggest threat is Sept. or later of this year. As I have written before on financial forecasts, keep an eye on Japan especially April on. Red China's situarion is volatile with a 30% chance of devaluation this year. Certain industries will be down like utilities, Auto, banks, as we get near year end. Just an opinion.
-- Ray mond Kwong (Kcorner67@hotmail.com), February 22, 1999.
Your own chart shows a deviation from the norm of 1% of GNP, returning to the norm by end of 2000, and then rising slightly above the "no Y2K" flat line. That is insignifigant in the big picture. If Y2K is no worse than that - bump in the road would be an overstatement. Worm track in the road would be closer. Even I don't subscribe to that!
And what is up with the interest rate thing? 1%!!!! It came down nearly 1% just last year! Were we 'toast' in 97? Sure, the Fed manipulates the stock market and the economy by pushing interest rates and the money supply around - that is their job! But a recession does not make us 'toast'.
-- Paul Davis (email@example.com), February 22, 1999.
Cheeez, Paul. I have never 'attacked' you before, but I've got to speak up here. Goldman Sachs and all brokerages make money on people betting on increasesin the market. Massive short positions and puts for a broker like Goldman Sachs is a money loser. Derivatives and similar financial instruments require finding stockholders to 'lend' you their shares at a fixed return at a fixed time. Of course all financial forecasts will show a blip with rapid recovery. If you were selling stocks, what would you forecast? Extrapolating last century to this is ridiculous. Todays Nasdaq and Dow is held up by rickety vapor stocks that produce nothing...not even the hope of profits. I see two drops. 500-700 in the fall, a sputtering attempt at recovery and another slow 1,000 - 1500 drop from December through April. One thing for sure, we will find out one way or another. I don't want to be right.
Did you hear about the time Paul was on an airplane from New York to L.A.? After 30 minutes, the captain announced that they were shutting down one engine-no cause for alarm, but they would be one hour late getting to L.A.
Over Chicago, the captain announced that number 2 engine would have to be shut down. No safety hazard, yet they'd be 2 hours late getting into L.A. Over Denver, the captain said the number 3 engine was overheating and would have to be shut down...they would now be 3 hours late getting into L.A.
Paul turned to the passenger beside him and said "I hope nothing happens to that last engine...we'll be up here all day."
-- PNG (firstname.lastname@example.org), February 22, 1999.
Markets here in the U.S have defied the law of gravity for a while now, even taking into account the various 'corrections' of last July - September and October of 1997. The dollar still maintains it's position as the fiat reserve choice for the world, and the US financial markets have been steadier than most others adding to the percieved notion that here is the 'safe haven'. I have been posting about financial markets for months and my opinions have not changed. We are in for trouble - Big Time. Watch corporate earnings continually being lowered quarter after quarter, interest rates, the advance/decline line, the p/e ratio, dividend yield, short positions, anything you want. By any historical measure you want to use the equities market here in the US is manic and absurd. The picture has not improved, even without Y2K.
What is the picture?
Visualize a see-saw balanced on a cliff. The part safe over the rock is the PPT sitting down holding up the other side, on which rests the financial markets precariously resting over thin air. When the signal is given, and the PPT gets off it's end of the see-saw, look out below. Going Down. Just my opinion.
-- Rob Michaels (email@example.com), February 22, 1999.
Similarly, I was going to buy some gold call options at a price of $390 expiring in December 99 - in the end I decided not to as I thought if the cat gets out of the bag and gold rockets to say $1500 an ounce I would never be able to collect as the whole house of cards will have come down...
I'm still thinking of doing the same thing for gold and/or silver, expiring in sep/oct instead - this will cost me more but at least I have a fighting chance of collecting.
Any comments on this strategy?
Or should I just buy physical eagles and be damned!??
The leaps strategy sounds interesting but how do you collect?
What about the Prudent Bear fund?
Anyone have any ideas to make a quick buck???
Maybe buy call options on Toilet Paper, Tampax and Scotch? :)
Open a y2k compliant Brothel???
Andy - who has prepared, knows a tidal wave is coming, and would like to try and surf it for a while, if you get my drift....... :)
-- Andy (2000EOD@prodigy.net), February 22, 1999.
Andy: The best and latest up to the minute info about speculating in Precious metals is on the kitco discussion group (www.kitco.com). So if you are serious about wanting to speculate you can get some ideas there, along with the appropriate disclaimers.
The generally accepted allocation under normal circumstances is to have between 5% and 10% in physical PM's (of your total investable asset portfolio) divided however you want between gold and junk silver. A typical recommendation for junk is one bag per person. So if there are four people there are four bags. This is not considered to be a bullish position. These are just guidelines. Goldbugs have higher, sometimes much higher, allocations to the PM group.
The one piece of advice that I continually give is to do your Y2K prep first, which includes a core position in hard money that you have physical possession of and keep unless/until called for in an emergency, and then consider speculating in anything that you want with only that which you can afford to lose. I am not confident that I will be able to collect even if I bet correctly and so have basically been on the sidelines. The Prudent Bear fund is a good one if you want to short the market without needing to do it yourself with individual issues in a margin account. David Tice manages the fund and it does what he says it should - goes down when the market goes up, and up when the market is down. Right now I think he is net short about 75%. Rydex Ursa is another well known fund that takes positions in PM and sells short. Tice is often on CNBC, usually on Friday's after the market closes, so you can check out what he is thinking first.
p.s. I like the call option suggestions :) but rather than speculating in the markets, why not go to Las Vegas - at least you get a free drink or two!
-- Rob Michaels (firstname.lastname@example.org), February 22, 1999.
You say that Options that expire in Jan. 2000 are no good. Hey, you sell your stock put option positions as soon as the market has crashed! That will be this summer. You don't hang on to them until 2000! That would be stupid! The only reason you buy the Jan. 2000 options is because you do not know when the market will crash. It could be July, but it also could be Oct. or Nov. So, the best put option to buy is one that expires in Jan. 2000!!!!!
-- Freddie the Freeloader (email@example.com), February 24, 1999.