The market seems to be selling-off on the back of limited bad news imo, apart from the dollar that is.

If you can hold your nerve and apart from any short term requirements to offload poor performing stocks, I have a couple!!, my advice would be sit tight. This does not have the feel of the tech(mining!) bubble at all. Difference being there are a lot of good fundamentals, unlike in 2000 when there were a lot of over rated nothing companies.

He is an active trader who actually makes his living trading commodities. He argues that straight commdities, rather than shares in mining etc, will always in the long term go up, though he agree with me, when I e-mailed him last week that commodities - e.g. copper and gold - were well overdue for a substantial correction; why did I not take my own advice? ..... He highlights in particular the growing needs for commodities in the developing economies, especially China (of course) and India .

He has a web page trend-follower.com

OK. Sounds interesting. I'll take a look.

Strawbs.

Conspiracy theory???

Artificially created sell-off, warning shot to lots of small investors, don't want too many private investors making too much money. There has been alot of money pumped back into the markets recently, they don't want to kill the investment flat again.

The theory is that investments are best left to the profesionals, I think thats what they were trying to do. The mm's just go and make it look worse by marking everything down ridulously and making it look worse than it actually is.

Still time will tell.

Worked with me. :-) But as you say. Only time will tell.

Strawbs.

Ellio .... what a load of rubbish!

Putting it more diplomatically, Ellio, that's an interesting thought, but it may indicate that you've been thinking about the issue a little too much.

Actually, I have been chatting to my stockbrokers, Elvis & JFK Ltd, in Roswell, New Mexico, and they think Ellio may have a point.
;-)
Alan

I've seen their ads in the Daily Sport . . . .

Americans in particular are obsessed with conspiracy theories from the assassination of JFK onwards ..... Not sure it is not just another aspect of modern society where there is great reluctance to accept responsibility for our own actions

Don't anyone start on about Elvis ,i know he's alive ! .

ha/ who is his this ELVIS GUY??

Cynic, you saying that JFK wasnt a conspiracy then???????????????.

What about the magic bullet or have you not seen that or beleive one bullet can deviate 5 times in different directions within the human mass?.

Responsibilities for ones own actions? , well yes I agree with you on that point especially within the Oilys and commodities sectors but then again I saw the bubble bursting here many months ago , why should I take on the negative impacts inflicted on perfectly sound and value stocks well away from these sectors.

The MMs as per usual just take the mick and earn a very good bonus at the year end, lets face it summer trade to them is basic salary most years.

Turnover to them is critical.

Ellio,
I see where you're coming from.. but it's unlikely...anyway, since when have mms, stockborokers etc., had the best interests of PIs in mind.. I've been stitched up by a few of them.. ie HB, city equ. etc.,. My best gains have been when i have made my own decisions !

This week has been a typical "sell in May and go away" cycle with USAs higher inflation and interest rates scare a trigger for the slide..

It'll probably slide a bit more but recover in the autumn/winter but maybe not dramatically.. IMO

Goldfinger
I think JFK was a lot murkier than his public image, though I am more of the opinion that, if anyone, the mafia may have been behind the assassination rather than the Russians or similar.

But going back to the markets ..... If I was an MM in a turbulent market, I too would increase the spreads as a means of self- protection as much as anything else. Similarly, I would not be averse to refusing a large sell (or buy) order (size being relative to the cap etc) at the published price. For sure, where there is only one MM as is the case with many small(er) stocks, there is per se no competition, but such is life.

And for Skyhigh (and others), IMO it is the spectre of higher inflation in US linked to almost inevitable further rate increases with their potential effect on the US domestic and thus worldwide economies, that was the real catalyst behind the recent dramatic falls. That said, and I admit I was foolish enough not to follow my own advice, this was a sharp correction just wating to happen as the copper price in particular, but indicative of a wider problem, spiralled to ridiculous levels.

Cynic - I was just wondering, and don't want to be rude like, but how old are you?

Very! ..... 60 in July since you ask .... Out of curiosity, why? .... am i really that puerile (quite possibly!)

Worth a read?

Echoes of late eighties crash persist in markets
Published: May 19 2006 20:57 | Last updated: May 19 2006 20:57

For those of a certain age, some of the recent goings-on in the markets are reminiscent of the dotcom bust six years ago, writes Tony Jackson. For those of a less certain age, such as myself, a more remote parallel comes to mind the late 1980s.



In one sense, let us hope the parallel is inexact. In one day in October 1987 the Dow fell 500 points, equivalent to 2,500 points today. Anyone predicting that now would be taken away in a van. But the echoes persist. Then as now, people had fretted for some time that the markets had gone up too far, too fast. Indeed, the Dow had peaked in August 1987.

So why did it collapse in October? Because it did, seems to be the answer. The Yale academic Robert Shiller polled US investors immediately after the crash, asking just that question. The commonest reason given was that the market had been overpriced.

In the circumstances, that might seem a statement of the obvious. But Mr Shiller also asked whether investors thought the crash was due to a specific cause, such as profits or interest rates, or to investment psychology. Two-thirds chose the latter.

So why had they kept on buying before? That at least is an easy one. What we have here is the Greater Fool Theory.

This says that even though you are perfectly aware a thing is overvalued copper, say, or shares in a fly-by-night oil explorer you keep buying it anyway. Why? Because the thing is still going up. When the time comes, you will find a Greater Fool to take it off your hands. Until, of course, the music stops and the Greater Fool turns out to be you.

Here is another possible parallel. In October 1987, part of the problem was the recent introduction of computerised programme trading, designed to sell automatically when a certain trigger was reached. What no one seemed to have spotted was that in a crash, the computers would keep on selling against each other until someone switched them off.

Today, such programmes would seem laughably primitive. What we have instead are equity and credit derivatives, in vast quantities. These are of mind-hurting complexity and even the people who trade them have PhDs in physics (yes, really). No one seems very sure what would happen if that lot blew up, but I for one am rather keen not to find out.

Another slightly unsettling thought is that in 1987, the Wall Street crash was in one sense a surprise. People thought the US market was rather overvalued, but the Japanese market was screamingly so. So when the collapse happened, they were looking in the wrong direction.

Even more bizarrely, the Tokyo market shrugged off the Dows crash and kept on climbing for another two years. By the end of 1989 it was nearly 50 per cent higher again. And then it had a real crash. The fall in the Dow, it turned out, was really only a blip in the long bull market that kept going until 2000. Tokyos Nikkei index, by contrast, is still less than half its 1989 peak.

So are we headed for further big falls this time round? As the 19th century Baron Rothschild said in reply to a similar question, if I knew that, dear lady, I should be a rich man. For what it is worth, I doubt it. But I worry just the same.

It is not so much that shares are obviously overpriced, in the developed markets at any rate. It is rather that everything else has gone up as well, from oil to oil paintings.

Even within the equity markets, it is striking that nothing looks obviously cheap any more. Contrast the dotcom boom, when a lot of traditional companies were decidedly cheap and went up accordingly when boom turned to bust.

As for gold, I am not about to pronounce on whether it is worth $700 an ounce. I merely point out that when it peaked at $500 in late 1987, it had risen by $200 since 1985.

Similarly, I have no firm views on whether interest rates and bond yields are too low. But I would prefer it if some UK government index-linked bonds had not been trading at such bizarrely low yields lately. And I see the French bank SociGale has just spent an extra 6.5bn (4.4bn) on hedging its corporate loans, in preparation as it tactfully puts it for more normal trading conditions.

I also note that, as this paper reported a few days ago, there has been an unprecedented boom in corporate bond issues in the past week or two and also in company flotations. That might be because everyone is in such a terrifically good mood. Then again, it might not.

As for the rise of the hedge funds and private equity, dont even get me started. But that is how it is with investor psychology. There are always things to worry about. But for a long time the past three years, in this case you dont let them bother you. And then you do.

And after all, parallels can be pressed too far. In the UK in 1987, the crash passed off fairly quickly and markets resumed their upward march. Then, a couple of years later, inflation took off and interest rates went to 15 per cent. The housing market slumped, and a large part of the retail trade with it.

That couldnt happen today. We have learnt our lesson, and now we know better. Dont we?

pity anyone long on the sensex today, if they had a open postion from friday, it lost 1100 points in one session 10% in a day had to stop trading for an hour.

Market taking another bashing this morning ,oil especially .

Grim again. isn't it !
looks like sub 5500 on the way and then ?