Whats your opinion????????????????????????????????????????????????????.

To be honest Im getting a little fed up with all this Credit and Margin within the market, as I see it leads to volatility and sideways markets as short - termism leads the way.

Spreadbets, CFDS, T plus and many more are having a very negative effect on the market as I see it, even Winnie and Evil K admitted this last year, whats the solution if there is one? or are we stuck in a circle chasing are arses and tails. Your opinions whatever way, would be most welcome.

cheers GF.

Quote from Hillary, "I would argue that the majority of people using derivatives are working FTSE 100 and 250 stocks." ENDS.

Indeed they are and I would also suggest that the direction these stocks take impacts the market as a whole.

The fact is theres just too much credit out there and some companys are becoming playthings, toys for the TAers who in general are the ones with the credit facilities.

Take NLR as an example, its become not an investment but a vehicle on which the day traders and intra day traders are riding up and down at will aided by the MMs who just thrive on the turnover. Theres far more stocks like this one aswell.

Theres no skill no guile to it, just follow the herd one way and then the other. Its gambling and its never seen investment. Hence my header above.

Is this the way the markets are going to be set for the future?, if they are pity the long term investors.

cheers GF.

snoball - See the new charts thread at the top of the "Room". They are exceptionally good.

GF - wasn't having a dig at you personally. I'm well aware of your ability to stockpick extremely successfully and do understand your position as an "investor".

Al

Hi Big AL,

no problems, Im not saying I am right or wrong I just wanted to get the general feel of how people think investing will go in the future aided by all these new investment tools like CFDs etc and I have no doubts we shall see even more.

cheers GF.

I think the main cause for the market being as it is, is due to political and economic anxieties or instabilities.

I think the effect of the Iraq war on oil prices, the actions of America and Britain in trying to dominate the international scene, with future barely concealed military or subversive intentions make the economic present and future unpredictable.

The American economy is on the wane and, although still mighty, will be more and more dependant, in the short term at least, on the oil producing states, who will act more and more as America and Britain are doing now, in their own interests. Ie. increase their wealth and influence by raising the price of their main commodity ie. oil.

I think America can huff and puff for a while longer, maintaining their threats but ultimately, as the emerging nations economies become more efficient, it will be their own economy which will defeat them.

I think in the past investment for many was seen by many way of gaining financial rewards by investing in a company paying increasing yields and some share price growth, perhaps and hopefully, investing in some shares which will show these returns in the future.

The market now seems to be more dependant on short-term increase (or fall) in share price.

This accounts for the increase in the use derivatives (bought on margin) in one form or another on a short-term basis, which may be safer than long-term investing.

Long-term investment seems increasingly risky.

A lot of the present instability in the market is due to Bush, Blair and their cohorts future actions being unpredictable. (North Korea, Iran, Middle East in general.) We owe them a lot.

However, if I had enough courage and thought myself smart enough, I might try to utilise derivatives in on form or another.

goldfinger,

I'm not sure if I didn't explain myself well enough, but the point that I was trying to make with the 3 charts is that derivatives might influence markets over a very short period of time (as seen by the jaggedness of the UKX price line, compared to the relatively smooth AXX line), but they won't influence an underlying trend over a sustained period of time.

You could conversely argue that the increased use of derivatives serves to increase liquidity within the market place , thereby tightening spreads and removing some of the volatility which is a feature of thinner trading. In which case, are derivitives not beneficial to all participants?

One thing I don't like is this so called shorting, correct me if I am wrong but how can it be fair to borrow shares to short something when you don't know if there will be sufficient shares to fill your order when it gets to the level of buying.
I certainly don't like to think my shares have been borrowed by some twit who is shorting the company who's shares I have bought and paid for.

I know, caveman. Shorters are the scum of the earth and hanging would be too kind to them. They should be made to watch Tottenham play every week for a year ....... they'd soon change their evil ways then!

:o)

;-)

Steady on Hilary... Spurs have been playing some good stuff under Martin Jol. Ok so there's a long way to go but we're getting better. This weekend is going to be fascinating. Who do you fancy for the drop. I'm not a Soto fan but I do have a lot of respect for Harry.

Anyone who shorts has got to have ****'s of steel. I only wish I did, and have the expertise to do it. There's a lot of money to be made if you call it right.

MS

And a lot of money to loose if you don't.

Too true Fred.

Have a good one.

MS

i have not read through all these postings...but in answer to the original question the answer is certainly "YES"....and that is borne out by the fact that the average time a share is now held is but a fraction of the time a share was held 50 years ago

someone may have the exact number of those days !!!!!!!!!!!!!!!!!!!!!!

spivs will eat themselves. hopefully. sadly the pi and new business suffers.

Just got in from pub,not a good idea to post comment but...........For a start very good thread GF.
In my opinion there are two ways that this is going:

1. Invest in a share that you think is going to do well and ride out the storms that will follow.

2. Don't bother researching a new company that has promise and may come good because in the short term it will be shorted,if there is nothing to back it up now.

Is it a good thing then,that having the ability to short a company due to over exposure on hope,will then keep the share price at a more realistic value over a period of time?Is this the modern way or has it always been so?

In my ignorance,I thought if enough people invested in a company they thought would do well (over say the next year or so)then that was it!!How wrong I have been...to find out that there are people gambling on the failure of that company ie.lack of positive news in the short term.Then having the buying power to bring a company down to make a profit......well it blows my mind.If the company doesn't deliver then people sell that is my point,not banking on a company failing before it starts so to speak.
I can see both sides of the coin but all i can see is the small investor loosing out.
It would be interesting to hear a view from a company that has been shorted and how it effected them in any way(especially long term)!

just me ramblings.night

The market has been irrational and paranoid for as long as it as existed. The trick is to act in a manner than takes advantage of it rather than be steered by it. At the end of the day the market is a quotation tool not a valuation tool and therefore as long as you are not over leveraged you should take advantage of this fact.

With historically low interest rates it is unlikely that asset valuations will have a smooth ride for some time as the various economic factors revert to someting closer to normality.

I don't think you would expect anything better from the market when in my opinion the country is led by short-term spivs. Attitudes of the masses are created by their leaders.

Have a look at www.comstockfunds.com
article
What You Think You Know That Isn't So

In the late 1990s we wrote a lengthy report with the above title at a time when investment advisors, strategists and economists were exclaiming that all one had to do was ignore the stock market fluctuations, invest in stocks at any time, and watch your nest egg return an average of 10% per year. We pointed out that although there was a kernel of truth in the argument, investors were actually running great risks in buying stocks at excessive valuations near the end of secular bull markets. Although valuations are somewhat lower than the ridiculous heights reached in early 2000, the cyclical bull market since October 2002 has once again put the market in a position where the risks of losing money--or at least not making anyare once again very high.



The kernel of truth in the long-run thesis is that U.S. stocks really have returned about 10% a year on average over the very long term. There are two factors,

Good post jumpin.

Im still yet to be convinced by the flip side that the markets in small caps especially, are being led by nothing other than credit punters.

cheers GF.

Over the long term small caps have outperformed large caps but are much more volatile. However long term thinking is not for the highly leveraged.