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Per my posting above (post #3) the overall foreign market has more than tripled in value during the past five years, why would a pull back be so surprising?
If you are taking the pullback to be confirmation of American financial incompetence, should American competence get credit for the runup?
Per my posting above (post #3) the overall foreign market has more than tripled in value during the past five years, why would a pull back be so surprising?
If you are taking the pullback to be confirmation of American financial incompetence, should American competence get credit for the runup?
From what I have been reading, America is largely responsible for the "run up" or as others put it, over valuation of various stock markets. A good deal of this is related to the creative sub-prime housing market.
One would think (and maybe it has) that our global markets would add some stability to our own market as it seems like diversification to me. However we seem to be in this constant state of bubble creation and bubble popping that is becoming more prevelent today.
What do you think this ultimately means for the average Joe in the US?
From what I have been reading, America is largely responsible for the "run up" or as others put it, over valuation of various stock markets. A good deal of this is related to the creative sub-prime housing market.
One would think (and maybe it has) that our global markets would add some stability to our own market as it seems like diversification to me. However we seem to be in this constant state of bubble creation and bubble popping that is becoming more prevelent today.
What do you think this ultimately means for the average Joe in the US?
Actually, global financiers snapped up bundled subprime mortgage packages as quickly as they could be made available. Greed and sovereignty are largely mutually exclusive.
It's said over here that even if interest rates are dropped it won't encourage people to buy homes 'cos they think homes will become cheaper after they have invested, no good thing.
Actually, global financiers snapped up bundled subprime mortgage packages as quickly as they could be made available. Greed and sovereignty are largely mutually exclusive.
What is so sad is that pension funds got on the gravy train.
It's said over here that even if interest rates are dropped it won't encourage people to buy homes 'cos they think homes will become cheaper after they have invested, no good thing.
I don't know much about the UK, but in the States, the decline in housing prices is most pronounced in a few glamorous, overpriced areas. Real estate remains a good investment for the average family in most of the country.
(Referenced to Post #12, I took too long to respond ) I think it means very little, unless they are planning on retiring this year and draw a fixed % of their income from their investment portfolio (401K or otherwise).
Regarding the stock market being overvalued, the S&P 500 closed at 1325 on Friday, and that priced it at 16.83 times reported earnings (P/E Ratio). In contrast, on January 31st, 2001, the S&P 500 closed at a price of 1335, and it was priced at 27.55 times reported earnings. Today's market isn't wildly overpriced.
The financial sector is going to have some short term earnings issues, but much of our market is non-financials. Those firms have largely absorbed their biggest problem, the energy cost factored into cost-of-goods-sold, and are now poised to make some decent money.
(Referenced to Post #12, I took too long to respond )
The financial sector is going to have some short term earnings issues, but much of our market is non-financials. Those firms have largely absorbed their biggest problem, the energy cost factored into cost-of-goods-sold, and are now poised to make some decent money.
The real catastrophe was when "junk mortgages" were packaged into debt products and often times, rated akin to conventionally solid home mortgage bonds.
The fact is, there is a world of difference between a primary residence purchased by a middle income family with decent credit using 15%-20% down and a pre-construction nightmare purchased with an IOM on purely speculative grounds with 0% down by someone who owns 20 others just like it and derives no personal income from anything other than the "flipping" of houses... Obviously, the former of the two scenarios is immensely secure while the latter is just as insecure, but the commingling of junk mortgages with traditionally solid mortgages into indiscriminate debt instruments is what has caused so much of this mess.
The term "mortgage backed bond" gained such favor and caused such ease in the financial markets that so many of them failed to acknowledge that the type and security of the mortgages that backed a lot of those bonds were a world away from the mortgages that backed them, say, 15 years earlier.
The thing is, it isn't like this was some complex financial theorem that only a few eggheads could understand. EVERYONE saw this coming and a lot of institutions avoided purchasing such debt like it was a biblical plague... Now that the locusts are here, everyone finally "gets it".
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) I think it means very little, unless they are planning on retiring this year and draw a fixed % of their income from their investment portfolio (401K or otherwise).
