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.

Time after time I see threads like this ...... investors blaming everyone else for their own dodgy investment decisions. If you can see a market that looks likes it's going to fall, why the *&^% do you not just open up a derivatives account and short it yourselves instead of blaming others???????

All this provides ammunition for those investors who detest CFD's and their spreadbet cousins and swear they are destroying the stock market. If the regulated market means anything, surely it means that shareholders are entitled to believe that company's prospects, rather than shadowy manoeuvers by traders who appear to have more more money than is good for them, or us?
But the problem is the people who misuse derivatives and distort markets, not the derivatives themselves.

Jeremy Lacey
Editor Shares Mag

Not sure I can agree with post 6 at all.

Trading and derivatives of one sort or another have driven markets since they began. Any percieved damage to a particular stock is more often than not relatively short-lived. As for believing a company's prospects, I strongly believe that long term those always shine through (or not) and if you are an investor rather than a trader, then volatility should not matter.

However, I can see that derivatives can distort things to a certain extent, but I do not believe it is near as widespread as many with an axe to grind would have us believe.

The biggest problem with threads such as this is it gives a mouthpiece to disgruntled shareholders/investors who are still in when their stop-losses should have taken them out, as Hil alludes to.

I was like that once! ;-))

Excelent post Mickey.

I just feel the day of the INVESTOR (not trader) appears to be gone forever. Theres plenty of stock out there and I mean plenty thats at lower prices than it was over 2 year ago or more and a lot of it is stock that is positive earnings enhancing. The stock as moved higher but it as come back down again, hence my terminology are stocks in a vicious circle and are we as investors just chasing our tails. What is causing this phenomenon?, I beleive it to be an over supply of credit within the market.

Glad to see the point of view of the flip side but beleive me I havent raised this question because I am blaming others nor have I not made money over the last few years, its just a far differing market place I now see to that one I entered over 21 years ago and Im not sure that it is for the best in the Financial world especially when pensions are in such a mess.

Any more views please??????????????????????????????.

cheers GF.

hilary - 13 May'05 - 09:12 - 5 of 8

Spot on.

I saw it coming in January, the writing was clear enough even for a numpty like me.

Good advice.

Sorry to say it but no-one can complain really - we aren't
frog-marched to the brokers and made to invest or trade.
We all know the risks - oh please..we should by now!
Ups and downs come and go, it all works in cycles, what seems
to be the prevailing trend now, will change and change again.

If it didn't - would any of us bother to play this game?
If it didn't how could the market continue to operate?
and how would any of us make a profit - it needs movement & change.

On a brighter note not everything is down - if anyone else has
BXTN we're doing pretty good today!
:>)

Seawalker perhaphs some people dont like the idea of shorting stocks and markets. I myself dont and Ive yet to be convinced by any shorter of their argument although I do acknowledge they have been in place since year dot.

My argument isnt against shorting, its against the over supply of credit readilly available in the markets and the use to which it is put.

cheers GF.

I would argue that the majority of people using derivatives are working FTSE 100 and 250 stocks.

For a long time I have maintained that one of the best pointers of general market trend, direction and sentiment comes from the SMX and AXX charts. This is because the derivative interest in smaller capitalised companies is minimal and direction is therefore much clearer and easier to identify.

Here's AXX for 2 years:



And here's SMX:



It's pretty clear from the sma's in both of those charts which side of the line the bulls are sitting, imo, without any interference from derivative traders.

If you pull up the same chart for UKX, you can see that the overall effect is the same, but the price line is much more jagged and prone to short term (daily/weekly) fluctuations:



I would argue that those short term fluctuations are the likely work of derivatives, but the overall price move over a period of time is the work of general sentiment brought about by fundamentals and economic and political conditions.

Excellent charts Hils. I've never seen those ones before. Thanks.

I have to say the new charts on MoneyAM are excellent.
Off topic. I didn't realise untill today that if Glazier gets 75% he could off load debt on to Man Utd. No wonder the supporters/share holders are peed off, as I understand it at the moment their debt free. At least the Russian goes to matches, Glazier has never been to Old Trafford.

MS

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