Asia markets battered amid global sell-off

[Sapiens]

Asia markets battered amid global sell-off

HONG KONG (MarketWatch) -- Stocks slumped throughout the Asia-Pacific region Wednesday, with Japan's benchmark Nikkei 225 ending 2.9% lower after Wall Street's sharp sell-off and the yen's strengthening against major currencies.
Shares in Hong Kong, China and throughout the Asia-Pacific region also posted sharp declines. And some analysts suggested the downtrend isn't over yet.

"We are seeing a domino effect; the consolidation looks like it might continue for a while until the problems in the U.S. are resolved," said Alex Tang, head of research at Core Pacific-Yamaichi in Hong Kong.
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HBC ) fell 1.5%. Earlier this month Europe's largest bank reported 2006 pretax profit in its U.S. personal-banking division fell $725 million, owing to rising loan defaults.
The U.S. Mortgage Bankers Association said on Tuesday that the rate of homes entering the foreclosure process in the fourth quarter hit a record 0.54% and the delinquency rates on U.S. home loans rose to 4.95% from 4.67% in the preceding quarter. Delinquencies among subprime mortgages, or those offered to poorer borrowers with lower credit scores, increased to 13.33%, up from 12.56% in the preceding quarter.
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ASIA MARKETS: Stocks Tumble Across Region On Fears Over U.S. Growthhttp://www.nasdaq.com/aspxcontent/Ne...INE000337.htm&

ASIA MARKETS: Stocks Tumble Across Region On Fears Over U.S. Growth



By Chris Oliver

Stocks slumped throughout the Asia-Pacific region in afternoon trade Wednesday, with Japan's benchmark Nikkei 225 down 3% in the wake of a sharp sell-off on Wall Street and a strengthening of the yen against major currencies.

The Nikkei 225 index fell 484.39 points, or 3%, to 16,695.85 in mid-afternoon trading. The index had ended the morning session down more than 500 points. The broader Topix index of all first-section issues on the Tokyo Stock Exchange was 2.8% lower at 1,678.88.

Big losses on Wall Street for all the major U.S. indexes, along with growing uncertainty about the U.S. economy -- particularly in the housing sector and in the subprime lending market, weighed on stock markets throughout the region.

[DemonD]

Re: Asia markets battered amid global sell-off

Asian markets back up 1% Thursday 3/15 (Ides of March).

Here is my best guess: This is normal fluctuation on the way down. Triple witching friday is coming up and I believe a lot of put options have been bought so the markets may make a short term turn to the positive this week, with overall resumption to the downside.

What is a little weird to me is how the homebuilder and lender stocks are getting support when the blue chips are not bouncing back as much. Maybe this is a further sign of bearishness?

I've always had a long-term goal of obtaining an army of what I consider to be high quality blue-chip, dividend paying/dividend achiever stocks. These stocks are not bouncing back as much as some of the lower quality issues, at least on the ones I'm tracking.

Dead cat bounce a good place to exit? Man I can feel the cognitive dissonance burning in my head. The LTBH strategy of "Don't do something, just stand there!" continues to reverberate whenever I consider pulling the trigger on my taxable accounts. (Non-taxables I've already positioned, as there is no tax penalty for moving stuff around.)

[jk]

Re: Asia markets battered amid global sell-off

demond, as a general principle you should not let taxes determine whether to sell something. if you no longer think it's a good investment, sell it.

even if you have 100% profit, and you were smart enough to get that profit so quickly it's still short term, and you're in, say, the 40% marginal bracket including state taxes, then you'll pay 20% of the sales proceeds in taxes. so, even with these stringent conditions, you should hold only if: 1. you believe any sell-off is likely to be less than 20%, and 2. after a sell off, you will want to hold those same positions.

[Sapiens]

Re: Asia markets battered amid global sell-off

demond, as a general principle you should not let taxes determine whether to sell something. if you no longer think it's a good investment, sell it.

I agree.

But to be safe DD, please note:

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[DemonD]

Re: Asia markets battered amid global sell-off

demond, as a general principle you should not let taxes determine whether to sell something. if you no longer think it's a good investment, sell it.

even if you have 100% profit, and you were smart enough to get that profit so quickly it's still short term, and you're in, say, the 40% marginal bracket including state taxes, then you'll pay 20% of the sales proceeds in taxes. so, even with these stringent conditions, you should hold only if: 1. you believe any sell-off is likely to be less than 20%, and 2. after a sell off, you will want to hold those same positions.

Sapiens, thanks for the disclaimer. I've got a good handle on most of what I'm doing, this is the tough one. One year for these funds will be July 22. Which basically means do I think the stock market will hold up until then. The tax hit is much greater than 20%. Short-term capital gains are taxed at your regular income tax rate. This would be closer to 35% for me.

I think the problem is beyond just holding the mutual funds is that I've lost the ability to come up with fundamentals for the stock market. How can anyone give a truly diligent answer to the fundamentals underlying equity prices when we are entering a bust that will be of a magnitude greater than anything we've ever seen? I know I need to get out, the question is will that bust drive down the price per share of equities significantly in the next 4 months.I have confidence in my fundamentals for the next 2-5 years or so, but shorter term I'm not sure. Either way I'm taking a bit of a short-term gamble.

Right now I'm going to hold. Sorry for hijacking the thread sapiens, I'll keep any further updates on the general page.

[Sapiens]

Re: Asia markets battered amid global sell-off

DD, have you considered your own business? A simple endeavor out of your home perhaps...may provide substancial advantages.

[jk]

Re: Asia markets battered amid global sell-off

Sapiens, thanks for the disclaimer. I've got a good handle on most of what I'm doing, this is the tough one. One year for these funds will be July 22. Which basically means do I think the stock market will hold up until then. The tax hit is much greater than 20%. Short-term capital gains are taxed at your regular income tax rate. This would be closer to 35% for me.

the tax is only on the gain, not the whole position. i've [likely over-] estimated the tax at 20% of the whole position [not just the gain] in my example.

[DemonD]

Re: Asia markets battered amid global sell-off

sapiens, I have considered that, and right now I don't earn enough money either through my regular job or through investments to make a company worth while. although i do have a certain hobby that i could make into a business with certain tax advantages which I know i should talk to a professional about.

JK - i ran the numbers and you are right. the question now is what will the fed do, and how will that effect the stock market. I have two mutual funds so i've considered liquidating one and holding the other for the 4 months (they are basically 50/50). A difference of a couple hundred bucks might not make or break my long term investing horizon but i want to get out with obviously the highest nominal number I can get.

[jk]

Re: Asia markets battered amid global sell-off

demond, just be ready, mentally, to say you did the right thing [in a probabilistic sense] even if you turn out to be wrong. i.e. think it through so that you won't kick yourself if the outcome is not the one you desire.

[grapejelly]

Re: Asia markets battered amid global sell-off

it's not always a good time to be in the stock market. There are some stock pickers like William O'Neill who can make money in any market but in a secular bear one who is buying the market can expect a negative return for quite a long time. It isn't obvious, though, because of bull cycles punctuating the bear.

We are in, IMHO, a secular bear that started in 2000 and will end perhaps around 2015 or whatnot. Think 1966-1980 and this is perhaps the early 1970s. Adam Hamilton of Zeal LLC just wrote a public article about this I was reading last night...

John Mauldin has made the same point as have others. If you are trying to invest your way to a secure future, if you make the wrong move, you can have a negative return that will prevent you from reaching your goal with the timing that you want, given the usual human lifespan.

For me, this is the time to be in precious metals. PMs will outperform the stock market, I think, for many years. Mostly physical metal, with some mining stocks.

The negatives for the US stock market are just too many: PE ratios aren't terrible but dividend ratio is quite bad. And earnings as a percentage of GDP are at a near all time high. Etc.

Asian markets? I would wait. The time to buy was a few years ago. Too much appreciation too fast. I believe in India and China long term, no question, but not given the past year. Except perhaps for Thailand. I don't know.

What you want to do is have money gaining value somewhere on the sidelines so you can step in and be a buyer at those times when everyone else is selling. That is how great fortunes can be made through investment.

[jk]

Re: Asia markets battered amid global sell-off

it's not always a good time to be in the stock market. There are some stock pickers like William O'Neill who can make money in any market but in a secular bear one who is buying the market can expect a negative return for quite a long time. It isn't obvious, though, because of bull cycles punctuating the bear.

We are in, IMHO, a secular bear that started in 2000 and will end perhaps around 2015 or whatnot. Think 1966-1980 and this is perhaps the early 1970s. Adam Hamilton of Zeal LLC just wrote a public article about this I was reading last night...

John Mauldin has made the same point as have others. If you are trying to invest your way to a secure future, if you make the wrong move, you can have a negative return that will prevent you from reaching your goal with the timing that you want, given the usual human lifespan.

For me, this is the time to be in precious metals. PMs will outperform the stock market, I think, for many years. Mostly physical metal, with some mining stocks.

The negatives for the US stock market are just too many: PE ratios aren't terrible but dividend ratio is quite bad. And earnings as a percentage of GDP are at a near all time high. Etc.

Asian markets? I would wait. The time to buy was a few years ago. Too much appreciation too fast. I believe in India and China long term, no question, but not given the past year. Except perhaps for Thailand. I don't know.

What you want to do is have money gaining value somewhere on the sidelines so you can step in and be a buyer at those times when everyone else is selling. That is how great fortunes can be made through investment.

i pretty much agree with everything gj says here. it's part of the reason my only net equity exposure here is in john hussman's fund, hsgfx, because i know he is fully hedged at times like this, and will make money on the spread between his equity holdings and his short index hedges.

re: asia, i keep waiting for a big downdraft in u.s. markets. at that time, i expect asian markets to sell off even more sharply in sympathy. that will be the time to re-enter equites, but with asian and global equities, not so much u.s. equities.