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.

actual levels of the AXX are fairly meaningless when looking back that far.

What would be more interesting would be to know P/E of the AXX over that time. I suspect that in 2000/2001 the p/e was ridiculously high, which led to the crash. At the current time and looking at the no of small companies with low single digit p/e's, i would not be surprised to see the AXX p/e being close to an all time low, which could indicate it may not have much further to fall - if any.

The major factor that effects the AIM market is spare cash in the hands of the UK population that can speculate on AIM stocks.

Which is why the coming fall ?? may be more severe than the last bottom.

Lots more bad news to come...........


http://money.cnn.com/2008/07/20/news/economy/paulson_economy.ap/index.htm?postversion=2008072014


Paulson braces public for months of tough times

Treasury secretary says problems in the banking system are a "manageable situation" - but that it will take time to work through them.

July 20, 2008: 2:47 PM EDT

WASHINGTON (AP) -- Treasury Secretary Henry Paulson sought to reassure an anxious public Sunday that the banking system is sound, while also bracing people for more troubled times ahead..................

A very good post on AFN - and this poster knows their banking stuff.


Chairman2 - 20 Jul'08 - 23:49 - 11666 of 11680

Not many bank bulls here -

I think most of what is currently debated is in the share
prices - including credit default projections, the lower
expectations of RBS over Barclays, Lloyds lack of mistakes etc.

More bad news is certain to come all the way through to 1st Quarter
2009 at the very least. But the market does act as leading
indicator and will turn well before the good news actually6 arrives.

For those who believe we are approaching the bottom the proven
strategy is to start a regular small-sums buying programme. The
advice is based on the the difficulty of recognising the exact bottom
and the rapidity of recovery once it starts.

Personally I would suggest waiting some moree. There is one big bad
factor that I do not believe is priced into bank shares at least by
PI's. Most PI's are holding or buying bank shares because of the juicy
looking (historic) yields. But I dont think they will see dividends
at that level for a very long time.

Below is a sour comment I posted on the Lloyds Bank board after my
reading of this weekend's press:

Do not rely on Banks to pay dividends - they will not be allowed to
(Scrip dividends are worthless rubbish -forced rights issues by another
name)

Neil Woodford of Invesco Perpetual quoted in Sunday Tel Today.

Elsewhere articles in all papers make clear Al & Leic board given no option
by FSA but to bow to a shortgun t/o by Abbey/Santander.

FSA also alledged to remain very worried about future trading for the
mortgage banks (yep that includes Ye Olde Nagge's C&G)

Finally consequences of the humungous failure of the Halifax Rights
Issue (forced on the HBOS Board by the incompetents at the FSA)
still to be worked out. But the small-minded pea-brained regulators
in Canary Wharf do not take kindly to two fingers being shewn by
London Investors to bank rights issues (their first ploy after the
Northern Crock rescue fiasco)

Watch this space for more market value destroying initiatives from
those charged with "Preserving the integrity of the finacial system".
(You have to laugh dont you?)

http://www.citywire.co.uk/personal/-/news/markets-companies-and-funds/content.aspx?ID=308740

Oil price could reach $250 by next year, says AAA-rated manager

By Danielle Levy | 10:34:39 | 21 July 2008

Citywire AAA-rated Nicolas Komilikis of Amiral Gestion believes it is incredibly unlikely that the oil price will go down and says $250 a barrel by next year is not beyond the realms.............

I am biased as I hold plenty of BEG and recession is good for them, but it shows the problems are only just starting, and going to get a lot worse it seems.

http://www.begbies-traynor.com/companies_with_%22critical_problems%22_increase_almost_700_per_cent_/404

Companies With "Critical Problems" Increase Almost 700 Per Cent

Begbies Traynors Red Flag A!ert Statistics signal increasing difficulties for UK companies

Worsening economic climate results in seven times as many companies experiencing Critical Problems in Q2 2008 compared to Q2 2007
Over 4,200 companies experiencing critical problems in Q2 2008
Construction, IT and retail sectors suffering the most
Credit Crunch deepens with nearly 30 per cent increase in critical problems compared to Q1
Begbies Traynor, the UKs leading independent business rescue, recovery and restructuring specialist, today reveals that the number of UK companies experiencing Critical Problems in the second quarter of 2008 has increased substantially over the same period in 2007. Staggeringly, 4,258 companies faced critical problems (those with CCJs totalling over 5,000 or Winding-Up Petition related actions) in the second quarter of 2008 compared with 542 as in the same period last year, an overall increase of 685 per cent.

The research also shows that conditions are getting more difficult as the year progresses, with an increase in the number of companies facing critical problems of nearly 30 per cent (28.68 per cent) in Q2 2008 compared to Q1 2008.

Ric Traynor, Executive Chairman of Begbies Traynor Group, commented, The last set of Red Flag A!ert Statistics showed the effects of the credit crunch were just beginning to be felt by UK businesses. With credit conditions still tightening, these new figures demonstrate that the ................................

http://www.independent.co.uk/news/business/news/us-lenders-fear-worst-after-two-more-fail-878795.html


US lenders fear worst after two more fail

By Stephen Foley
Monday, 28 July 2008

American bank executives are braced for another volatile and dangerous week after the collapse over the weekend of two more regional lenders.

First National Bank of Nevada and First Heritage Bank NA in California were taken over by the banking regulator after running short of money on Friday.

The Federal Deposit Insurance Corporation, which seized their assets, appeared last night to have averted a customer panic, with no reports of queues at branches. More US banks seven in total have failed so far this year than did in the whole of the previous four years, and it is just two weeks since the country's third-biggest banking collapse ever. That failure, of IndyMac, triggered scenes reminiscent of a run on the bank as customers queued for their cash.

Unlike in the IndyMac case, the FDIC has sold the customer accounts of the two latest casualties to another regional player, Mutual of Omaha Bank, which guarantees all deposits.

Analysts believe hundreds more banks could still fail. On Saturday, a housing bill aimed at stemming the tide of foreclosures was passed by Congress, and it is expected to be signed by President Bush this week.

While the bill may provide relief to struggling homeowners, and includes provisions for the federal government to prop up mortgage giants Fannie Mae and Freddie Mac, it is light on measures to help the regional banking system. A rally in financial sector stocks early last week was reversed on Thursday and Friday.

Attention is likely to focus once more on the performance of Washington Mutual shares, which lost a third of their value last week. The banking giant said it had cash and liquid assets of $50bn and was well able to finance its lending operations.

Ahead of us getting into it, I wonder what peoples outlooks are for the Autumn.


For myself I see the present rally is just a bear market rally, a relief rally that comes after weeks of sustained selling, it is only normal for buyers to come in to trade the move up, before the next leg down.

What could drive the next leg down ?

That could be the reporting period in late August through September.


Although many an analyst is trying to poke the embers and raise a rally talking of PE's, the thing they are all missing is the fact we have as yet not had the round of "missed earnings forecasts" "warnings going forward of slowing growth, reduced growth" etc... and then the round of downgrades than ensues this.

I think too many people are rushing in to buy what is clearly not a market bottom - too much media it trying to stoke up the fires and get people buying (for their own gain ?) - and this could all go bang over the Autumn/Winter period.

I would certainly, at the moment, expect the market lows of March/April 2009 to be well below where we are today.

A week or so ago on Bloomberg some fund manager mentioned that there is the highest ever number of short positions open and also 3.5 trilion dollars in cash waiting for the right time and as you say this isn't it!

Someone reminded me of the Zeitgeist movie, and for anyone looking at todays events "credit crisis" etc... its well worth watching Part III in the movie.

You will see so many parallels of "what happened then" as to "what happened just before the credit crisis" - eg use of margin, free credit etc.. before they pulled the plug.


Part I deals with anti-religion, and whilst its totally true imo, some people will no doubt prefer not to see part I as they will be unable to comprehend.

Part 2 deals with 911 and 7/7, and whilst again I view it as very truthful, some people may wish to avoid this as they are unable to comprehend.


And so the interest, in financial terms and in view of the "current" credit crisis, is Part III.


The link to the Google Video Player is :

http://video.google.com/videoplay?docid=-594683847743189197


** If you have 2 hours you can set aside, I would suggest viewing the whole movie, but otherwise skip through and watch Part III.

The movie was made well before the current credit crisis, but I am sure on watching part III you will be able to see some of the past events, happening again.......

Freddie Mac in trouble...... from cnn.com


BREAKING NEWS
Mortgage finance giant Freddie Mac posts second-quarter net loss of $821 million. Loss much wider than had been expected. More soon........


Stocks set to falter
5:05am: Dow Futures point to lower open as investors digest big loss at troubled mortgage finance giant Freddie Mac; oil hovers above $119.

http://news.bbc.co.uk/1/hi/business/7552336.stm

Page last updated at 10:14 GMT, Sunday, 10 August 2008 11:14 UK

UK economy 'worse than thought'

Many UK manufacturers face an 'uncomfortable' time, the CBI says.

The CBI, the UK's largest employers' organisation, has warned that the UK economy is deteriorating faster than it previously thought.

There was "no doubt that the mood has darkened in the last two or three m...............

http://www.thisismoney.co.uk/news

Bank to give gloomy outlook for the UK
Simon Duke, Daily Mail

11 August 2008, 7:46am

The Bank of England is expected to slash its economic forecasts for this year and next amid signs that inflation is spiralling out control.

Gloom: Inflation is making interest rate cuts impossible


In this Wednesday's quarterly inflation report, Governor Mervyn King is likely to warn that the credit crunch and collapsing consumer confidence are inflicting real damage on the economy.
But any hopes of an imminent fall in borrowing costs are set to be dashed, as King may signal that rampant food and energy price rises have left the Bank's hands tied.

King's gloomy prognosis will intensify fears that a severe downturn over the Summer will push Britain towards recession.

Lehman Brothers economist Peter Newland said: 'A downward spiral between tightening credit conditions and falling demand is now a reality. A technical recession of two quarters of negative growth is more likely than not over the coming 12 months.'

The Bank, which left rates on hold last week, is tipped to warn that the inflationary menace is on the rise.

King is also likely to take a red pen to his previous forecast for growth in economic output of 1.5pc this year.

The move would be a huge blow for Chancellor Alistair Darling, who is relying on growth of between 2% and 2.5% this year to balance the government's books. Official figures due on Tuesday are expected to reveal that inflation has jumped to a 16-year high above 4% - twice the Bank's 2% target set by the Chancellor.

With factory gate price rises set to jump to more than 10pc this week, Britain's biggest business lobby admitted that the 'mood has darkened in the last two or three months'.

Richard Lambert, head of the Confederation of British Industry, predicted growth prospects for 2009 and 2010 would be 'no better than anaemic'.

The fall-out from rampant price rises and the credit crunch is spreading fast.

The number of companies expecting to make staff redundant has risen to 27% from 22% over the past three months, the Chartered Institute of Personnel and Development will warn this morning.

Worth a watch and listen :


http://news.bbc.co.uk/1/hi/business/7766057.stm


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