Interesting thread guys. Here is my 2cents worth.
Just like to qualify trade what you see and not the news or fundamentals etc but here is dipping your toe in FA.
Current situations fundamental difference from the recessions in the last 100 years imo is demand. In the past people in advanced economies had little or nothing and were relatively poor. Two world wars also made sure of what they did have got totally destroyed. Admittedly there is some poverty but the haves make sure they keep their monies and fat cat advantages and have nots stay where they are.
Coupled with lack of demand, we don't have purchasing power but excessive levels of debt never seen before. This is what I called extreme capitalism - buying **** you don't need with money you don't have. Some people call it consumerism.
The geopolitical situ is changing too. It is becoming increasingly difficult to start wars and devide countries. Nations and peoples are aware of imperialism and how it all hangs together.
The microchip revolution is reaching end of its evolution process. Technology gap has spread and narrowed. Bright ideas and inventions don't last and run of abnormal profits much shorter than before.
Advanced economies have moved away from a manufacturing base to a service based industries. Global giants like IBM, Boing, GM, Cisco, AT&T will not be able to reign in super profits as before. Microsoft even? There is reluctance for pace of change for the sake of it.
Advanced economies have aging popullations and impending pension crises developing and reaching full maturity in the next 20 years.
All the above are seismic paradigm shifts in determining production and output.
WHAT IS WORST - merely from our perspective is India, China and Russia are waking up to capitalism. In these countries there is mass demand and popullation sizes. However, as we don't have a manufacturing base that is able to compete most of the initial supply of production will be fullfilled locally. Not only do these countries supply the world they can easily supply them selves at cheaper costs (less transport, language and export / import barriers to trade).
So as well as lack of deman, debt and market we have considerable competition.
IMHO we are well and trully stuffed for the next century unless we come up with some new lifestyle choices.
To further qualify these fundamentals, it was essentially, the housing and war machinary rebuild programmes that got us out of the 1929 recession.
Then post war re-building.
Then the post war baby boomers.
Then the micro chip techno revolution.
Raegan and Thatcher years of market liberalisation and manufacturing decimations was the icing on the cake. Selling nationalised industries for peanuts and borrowing like there is no tomorrow. Steam has run out.
The future is likely to be very bleak with global climate changes and shortages of water.
I can't see any way out of this period without a WWIII sadly to say. Wars that will create destruction facilitating the rebuilding of countries and thus economies and world trade.
In summary, I have two FA signals for a bottom. They are WWIII and Climate Change 🙁
Enjoy all that you do whilst it lasts... :cheesy:
K,
well let see . . .
Demand, is always there, because people are not all about logic. If consumers were all about logic, no one would pay Hallmark for a $5 card, and perfume and makeup sales would hit the floor, Diamonds would not signal your engaged, and Germany would need to cut the price of their cars and old men would not spend a fortune on hookers and cigars.
2008 for the first time in 20 years we have a year of global cooling, scientists scratch their heads, and no doubt WWIII would fix the economy, but there is no one left with missiles and warheads who is right now far too busy worrying about their at home economy to be much interested in saber rattling. Except Korea, who I would strongly advise to keep his 5 nukes parked if Kim Jong-Il does not want to turn his country into a sheet of glow in the dark glass. Talk about a country no one wants to stand up for.
lets go back to your history lesson, here is mine:
In 1953 they told my dad to build an A bomb shelter, to be safe, head for the hills they yelled!
in 1963 the nifty fifty stocks tumbled and they shot JFK, society was doomed, head for the hills we are doomed.
in 1973 Americans lined up for gas and we were told there was no more gas and there never would be again - we had to keep our Christmas lights off to save America. -- head for the hills.
in 1983 Regan was president and oil was selling for its all time low inflation adjusted price, run for the hills
1989 the US banks collapsed, they lost all their money in bad Latin American debts, head for the hills
in 1993 Value investing was dead, Warren Buffet was called an idiot, and the new information super highway tech era was starting - clearly everything we knew about stock valuation was unimportant compared to the the high tech marvel -- the Pets.com sock puppet.
in 2001 the dot com bubble was burst, the twin towers were knocked down by Saudi rich kid with a religious bent searching for a Muslim utopia state based on life in 1900 desert culture. George Bush bent on revenge missed his target by a few thousand miles and hit Iraq. Blame it on WMD's they never found. We all found out the "leader of the free world" is an idiot, an idiot with over 4000 atomic warheads. Head for the hills.
During this time Allen Greenspan was Harolded as the greatest fed chairman in history because he undid every law that kept banks from going overboard -- result banks went overboard, -- 2008 we found out just how overboard. 30% of US mortgages went Tapioca, and investors around the world got burned on sub prime debt. While the US citizens walk from freshly renovated houses, paid for by Europe and Asia. The stock Market drops about 50% in a year. Americans use Chinese investment to put themselves 10% more in debt now its 12 trillion. Smart investors scoop up great stocks in companies with strong balance sheets for pennies on the dollar. Crisis ends. bottom fishing swing traders make a bundle.
