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Where YOU think the market's heading

Created:

29 December 2008

Written by:

Jonathan Eley

Our recent 'Big Question' feature on whether the market was likely to start recovering in 2009 provoked a big response. Here are a selection of the postings received through the feedback form on the website.

More downside to come...

"I expect operating losses/profits to bottom out in 2009 and history suggests market will have bottomed out by then. However this time is different. Depending on how far the market falls there will be massive shortfalls in pension funds that companies will have to top up in 2009 and beyond and many affluent existing and soon to retire pensioners who do not have 100% guaranteed pensions will have to cut their spending. For pension funds bottoming out is by no means the same as "market recovery" - John Hayter

"In short, no. Global demand is falling for raw materials, oil has fallen from highs and global unemployment is rising. I estimate that the ftse 100 index will be at or below 3500 year ending 2009. House prices will continue to decline in the UK by a further 12-15% in 2009, as the jobless total rises steeply with somewhere between an additional 700-800,000 people out of work. I think there is still lots more bad news to come from hedge funds and derivitave markets in 2009 as the full extent of 'bad debt' loans begin to mature. Strains on company balance sheets will be increased by pension fund shortfalls. You only have to look at whats happended in Japan since the early 90s market crash where low interest rates and economic stimulas packages have failed to kick start the economy. I predict that China's demand for raw materials will slow, and Russia's reform programs will slow to a halt as tax revenue income reduces significantly from reduced returns from oil & gas revenues. I don't see any bright spots currently within the global economy, i think the weight of govermental debt here and in the USA will inhibit consumer spending, because once the economy does pick up then taxes will need to be raised to repay borrowing. I don't think we should look for a growth within the UK economy until mid 2010 and then only at a late of 1-1.5% I suspect that the German economy will be the first to recover and then that recovery will slowly spread across the EU regions." - Sydney

"The expected bad news on earnings, job losses and prospects are coming through daily. The markets will notice this in the new year, and will react badly. Will there be a recovery later in the year? The bank recovery programme is not working, according to Mervyn King. So stock market recovery will probably not be until 2010, and the economy later that year." - David Coldwell

"My opinion, for what it's worth is that we are still due one big down leg in the markets and, at some stage, in the first 3 to 6 months of 2009, it would not surprise me in the least if the Dow went to around 6,000 with the Footsie around 3,000. But, just like in other bear markets, just when you least expect it a recovery will occur. I've gone virtually all into cash at the moment, fearing the above in these volatile markets but, when I feel the time is right, I will dive back in as there will be a lot of profit to me made when the markets really turn again." - 'Tito'

"Having read your top article today about the prospects for 2009, I have to agree but also disagree. ! I agree with most of it regarding the unlikely event of a Bull market reappearing, but I think it is actually going to get much worse and as company results come in showing bad figures, and as more banks go bust, the Bear market will escalate. Another reason, and this is a controvertial matter, but which I strongly believe in, concerns the use of 'charts' 'candlesticks' 'graphs' 'moving averages' 'history' and all those other items that 'gurus' love to use to predict forthcoming market events. ! In my opinion all these 'charts' are quite worthless. Markets are driven by sentiment, events, and company results, and those alone.Daily 'events' are the pushes that either push up or push down, and no amount of 'charting' will make any difference. Most of the predictions we hear about for 2009 are based on these 'charts' but its the actual 'events' as they happen in 2009 that will determine if we are to enjoy a Bull or Bear market. Millions are spent, both financially and in man hours, on these 'charts' and unfortunately many gullible investors pay good money for them as well, but they would be better off saving their money for the 'events' that will trigger a market movement. I strongly believe that we have a long way to go yet in the Bear market, and its continuation long into 2009 and beyond, but it will all depend entirely on 'sentiment' and 'events'." - Ray Pearson

"I wish I could feel that there is a way out of the mire but it seems to me that our political masters both here and the USA are running around like headless chickens without a clue what to do. While these things are cyclical I feel this time we are ill deployed to emerge successfully. Our industry is terminally sick and the delusion that the financial sector will take its place is now exposed to be smoke and mirrors ,just a gambling casino posing as a respectable depository for hard earned funds I hope I'm totally wrong but it doesn't look good" - Alan Samuels

Property bubbles the cause

"This crisis has been created through the combination of the irrational increases of real estate prices and the facilities for lending money, with a parallel irrational increase in house valuations for obtaining mortgages and cheap money (low interest rates). This bubble can only be solved by returning a painful road to the point it should be in the 2000-2003. The mortgages done after 2003 are almost in default and the house prices got after 2003 are not real. Until we go back to that situation in stock exchange prices and real state prices the crisis will not have been solved.

Workers will also have to adapt to the real situation, as the ideal world in which we thought we were living is not true any more. From chineses to finnish workers wages, the differences are so huge that in a global economy they tend to approach, and although the laws are strict to modify them, the facts will make them stay nearer. So finnish wages will have to go down or stop increasing and chinese wages will go up very fast. Hard times to solve a difficult global puzzle." - J A Abad

Bankers behind bars?

"I doubt it would recover if the perpetrators of financial scandals and fraud are not in prison doing time. Secondly, the criminals are high level high society people which will probably get a tap on their knuckles and sentence will be light. So long as this mentality of treating white collar crime persist around the world there would be no respite and the downturn will continue way beyond 2009. Regulators should also be regulated as the check and balance game did not play out here. Ponzi schemes like direct selling and multilevel marketing applied in financial and non-financial industries commencing first from the US has resulted in this shaky economy where nothing is really built on substance but just on quick sand. American economists should have sat on this rather than just blaming Wall Street for all this mess. They are equally to blame for teaching defective mathematical models to the world and now we see it as a scam that was legitimate in their eyes."

"What a load of crap you would have a better opinion asking the criminals behind bars not the ones running the banks."

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