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.

An article from III

http://www.iii.co.uk/

The great bull market of 2008

Ken Fisher 26.09.07

By the time Halloween passes, subprime ghosts, ghouls, and goblins should be starting to be forgotten. About time! Fretting fake credit crunches is futile (see my past column Credit scare is no crunch). Barring another correction down-leg (unlikely, but still possible), US and global stocks seem set for a nicely positive 2007. The FTSE lags global stocks, but don;t despair - US and UK market direction correlate far more than folks fathom. All this subprime fretting and queuing for deposits is blinding bearish Brits to a more fundamental force fueling shares this year. The even better news? The same force makes 2008 likely to be positive for Brits, Americans, and the world.

Lame duck US presidents are great for the markets
What is this fundamental force? A US president in the fourth year of his term - historically a great time for shares. Believe it or not, the US's presidential term cycle is powerfully predictive for shares globally. Line up US, UK, or world market returns since 1926 by the US's presidential terms, and you'll notice the pattern's the same the world over. Front halves have poorer average returns and the greater share of negative years. The third year's best - the US hasn't seen a negative year since the barely-negative 1939. The UK's even better. No negatives since 1931, with a third-year average of 24%. Fourth years aren't as uniformly glorious, but with a 12% average FTSE return and fewer negative years than both years one and two (only one mildly negative fourth year in the last 39 years), it's a fine time for shares.

Fear of legislation
How can US politics impact British shares? Easy, because 'politics' derives from the Greek 'poli' meaning 'many' and 'tics' meaning 'tiny bloodsucking creatures'. In the UK or the US, bloodsuckers are the same - their legislation is simply redistribution of money or property rights. To humans, losses feel two-and-a-half times more painful than gains feel good. When poli-tics pass some dumb law, the losers hate losing way more than the winners like winning. Those not involved fear they'll be hit next. Legislation is rather like witnessing a mugging - it creates outsized fear the next victim could be anyone - including you - eek! Even the fear of legislation is enough to ratchet risk aversion.

The US president is the head tic. Throughout history, any president's party nearly always loses relative power in mid-term elections, even when re-elected. Mr. Tic knows if he doesn't get his landmark agenda (the massive muggings) passed in his first two years, it's less likely in the back half when his supporters get supplanted. History bears this out with few exceptions. Landmark legislation nearly always lands in the first half. Because Americans are likelier to be mugged in the first half, loss aversion increases leading to poorer returns and a greater share of negative years.

Impotent US poli-tics good for UK
The second half's a different story! Stymied poli-tics can't legislate much, therefore lessening loss aversion and leading to happier markets. Third years should see fewer muggings, but fourth years are fine too. This year seems a typical third year - poli-tics babbled and blustered but bore little legislation. And next year looks no different - the less they accomplish, the better it is for you and I!

The US's impotent poli-tics spell good times for UK. Why? Go back to my earlier statement - US and British markets correlate more than folks fathom. At 35% of the world's economy and 50% of its capital markets, the US correlates strongly with the non-US world and Britain. With a galloping global economy, unexpectedly strong earnings, and benign long-term interest rates - stymied US poli-tics should set British shares soaring in 2008...............................................

with markets seemingly calming down, i am coming to the view that BoE will NOT reduce rates this week ...... that being so, how will the markets react? ..... for sure that cannot be good news for any high street company nor, i suspect for the financials (wrong sector for now anyway) ..... but overall? ...... any thoughts?

with Cable ($:) now at 20434, whereas only a week ago it touched 19975 and hovered around 20050, the market is also betting against an interest cut by BoE on Thursday.

Mr B might vote for one, to show some willingness or sympathy for first time buyers, or even the high street which is flat on its back, but that is unlikely.

Meanwhile, Dow has powered through 14000 (currently 14035).

All the above indicates to me that the markets are getting ahead of themselves on both sides of the Atlantic, and a sharp correction could be imminent ...... don't ask me to nominate how great or for how long!!

Dow closed at 14087 up 192 points...is this realistic in this market? I feel a downturn is imminent.

Poor bears have been slaughtered of late havn't they. All these crazy calls of sub 10,000 Dow and the other rubbish........very very wrong so far............

September (according to the historians) is said to be the worst month of the year, well it wasn't this year was it? Still lots of bad news to come out regarding debt in my view so a great deal of caution is required in October.

PP .... Pooh Bears have done very well indeed out of NRK though!

once a bull always a bull! its like being a blue!

oh and why do people go on on about early 2000, didnt something quite horrendous happen in America which will have an obvious effect on the markets or has that slipped some peoples minds.

Yep. george W was elected.

Very true Al .

What has George Washington done to deserve that then? ;-)

Cut down cherry trees, the bloody environmental vandal :-)

You certainly know your onions.... :-)

and what does the W stand for????? (that could be a whole new thread!)

Now that the summer scares have receded into history & the markets are starting to pick up, are those people who were sitting on their hands now looking to invest?
With the FTSE at 6600 & the DOW at 14000 things are still looking reasonably optimistic at the moment, imo, but of course another big scare could set us all back again. Lots of companies now coming up to divi date & with valuations looking reasonable after the summer, there are still opportunities to make money. Some analysts are even suggesting that Tech stocks are now going to be a good defensive play, which is probably stretching it a bit, but going defensive doesn't yet seem to be necessary, imo.

I suspect the the next crisis will be related to overvalued Chinese equities that will also hit commodities

"Now that the summer scares have receded into history & the markets are starting to pick up, are those people who were sitting on their hands now looking to invest?"

Generally HC, definetley not.

Just watched Panorama about the Sub-Prime bubble waiting to burst over here IMHO.

The programme just reinforced what I have been banging on about for a couple of months on this thread. Please have a look for yourself.

">http://bbc.co.uk/1/hi/programmes/panorama/default.stm

That's a dead link, Stan.

Checked that it's the right address Harry but for some reason it won't link.

Suggest you go to www.bbc.co.uk click on a "P" on their ABC facility look up Panorama click on it and you will then get the page.

http://www.sharecrazy.com:80/tipsheet/adlard5.html


couple of people touting elliot waves and reasons they think a powerful downleg is just around the corner, signalling the end of the bull cycle...
should we take notice?
damned if you do and damned if you dont, but i for one, intend to use tight stops from now on...