The volatile Wall Street
November 13th, 2008 by Lou Muddaris
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 8282.66 | -411.3 | -4.7% |
| NASDAQ | 1499.21 | -81.69 | -5.2% |
| S P 500 | 852.3 | -46.65 | -5.2% |
| FTSE 100 | 4182.02 | -64.67 | -1.5% |
| Nikkei 225 | 8695.51 | 0 | 0.0% |
| SPI Futures | 3793 | -193 | -4.8% |
| All Ords | 3,884.00 | -38.2 | -1.0% |
| Oil | 55.98 | -3.43 | -5.8% |
| Gold | 718.3 | -14.5 | -2.0% |
| Silver | 9.48 | -0.325 | -3.3% |
| Aluminium | 1860 | -46.5 | -2.4% |
| Copper | 3592 | -98.5 | -2.7% |
| Lead | 1257 | -28 | -2.2% |
| Nickel | 10550 | -410 | -3.7% |
| Tin | 14125 | -575 | -3.9% |
| Zinc | 1095.5 | 15 | 1.4% |
The volatile Wall Street
Wall Street had another volatile session last night.
Again, like every market commentator I could describe and recite the reasons for the overnight 400 point fall. Day in day out it's the "usual suspects", fear, poor economic data, dire company profit warnings, companies desperate for cash, etc etc. So my advice is, if like us you are in this for the long term, then accept that markets have highs and lows, and that markets are forward looking 9 to 12 months. Therefore, market levels today are predicting company results 9 to 12 months down the track. It is in these times of market lows that most wealth is generated by smart investors. By following the Warren Buffet example we should be investing at these levels.
About last night
The Dow lost 400 points on one factor and that was the change in mind by the Treasury over the $700 billion stimulus package. Henry Paulson, the U.S. Treasury Secretary made no apologies for abandoning buying those toxic bank/mortgage debts and will now instead redirect that cash to directly invest in financial institutions to stimulate credit card loans, car loans and student loans. His reason was that the original idea "would take too long to work and wouldn't stop the market turmoil". It looks very much like he has taken a leaf out of the European and in particular China's idea of how to get the economies working!
Our banks
They are oversold on a long term view. NAB has raised $3 billion through a rights issue. The negative sentiment being generated from the U.S. and European banking sector isn't exactly helping yet our banking system is one of the strongest and most stable in the world. Yesterday, Kevin Rudd and Treasury Secretary Ken Henry were the most upbeat they have been in awhile with the former saying "there are very early beginnings of some form of normalization in global financial markets", and the latter saying "there is reason to be confident that Australia can indeed avoid a negative quarter of growth". Again, time will tell.
How low can we go?
Nobody knows. Where is Nostradamus when you need him? It appears there is a growing feeling that the recent lows of 3,724 reached on Oct 28th will be retested. Indeed our good friends at Ord Minnet are saying that historically 75% of lows are re-tested within 44 days. Again, only time will tell but I will say in 3 years time we will be so much higher.
There is no U.S economic data tonight but Friday sees retail sales, consumer sentiment and business inventories.
Have a good day.
Quote of the day
"Remember today is the tomorrow you worried about yesterday"
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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