Trillion dollar bet against stocks going down

Investors worldwide are betting more than $US1 trillion on a collapse in stock prices.

More than $US1.4 trillion of equities worldwide are now on loan, about a third higher than at the start of 2007, data compiled by Spitalfields Advisors, the London-based firm specializing in securities lending, show. Almost all of that is being used to speculate that shares will fall, according to James Angel, a finance professor at Georgetown University who studies short selling. The global economic slowdown, $US447 billion in
bank losses and an explosion of funds that can profit from stock declines spurred the increase in short selling, helping send 22 of 23 countries in the MSCI World Index into bear markets.

More here (first grab a cup of coffee, it's 3 pages long)
Trillion dollar bet against stocks | theage.com.au

 

Lotta people losing money at the moment then? Given there more up than down in the last 3 or four days?

MJK

 

Someone must be making money

 

Hi Gang,

Well I'm hoping the shorters keep going full bore for awhile yet. I've still got 50% of my funds (that was set aside wating for a bear market) to place into the market yet. So hopefully today is only a relief rally.

Cheers - Gordon

 

the market seems to have re-bounded from the 4900 support.. it will be interesting if the market breaks through this point.. since PE are so low, I'm starting to wonder if the market will go any lower..

 

Wouldn't you say we have been in a bear market for a while now?

I'm actually hoping the market turns around and heads north (more of today please), but I'm just your typical buy and hold type of investor that has taken a hammering of late.

Anyway, time will tell eh.

 

Many reports I have read lately seem to suggest that although there may not be further major falls (other than possibly a single day "no hope" large decline) the market is likely to be quite volatile within a wide price band with maybe some degree of downtrend for the next year or two (or more!). No doubt there will be trading bounces along the way but still it is unlikely to kick off another bull market any time soon.

Some other interesting points being suggested is that the RBA deliberately wants to keep the housing market subdued whilst the State/Federal Gov'ts & Resource sector embark on massive infrastructure projects. So this equates to highish interest rates for some time yet. If the housing market was also to take off at the same time (resulting in extreme capacity constraints) inflation could reach peaks not seen for a couple of decades. So it seems that our economy needs to be kept subdued until the initial major phases of infrastructure work is well under way. And this along with other things affects consumer confidence which flows onto the stockmarket.

Of course no one can be sure but the above seemed a reasonable prediction to me. Whatever happens I'm still happy because I've invested quite a lot of funds into the market between mid June and last Friday at what I consider to be quite good prices with many down anything from 30 - 55% from their 52 week highs.

So if above transpires it will provide opporunity to add to my long term holdings at the bottom of the band as volatility reigns.

God forbid I might even have to brush up on my charting and T/A skills from when I traded stocks and futures years ago Don't laugh Tropo

Cheers - Gordon

 

I'm starting to think myself we have bottomed out, as we bounced right off the 4800 support..

 

The price of oil is coming down and this could be the reason for the turn around but is this enough to change market sentiment?
Cheers

 

I guess time will tell..