Royal Bank of Scotland Says "Sell Everything"

[btdt22]

Cataclysmic?

RBS is forecasting a cataclysmic drop of 10 to 20%. If I recall correctly it takes a 20% drop just to make it a bear market

[audreyh1]

With another 10% drop, we will make the definition of a bear market, as we are already down ten.

With another 20%, we'll hit around down 30%, which is still slightly less than the average bear market drop which is 32-34% down ball park.

Not quite as much, because we are dropping a percentage from a lower number. But good enough for hand waving.

Nevertheless, it's hard to call it catastrophic as it's not nearly as bad as the 2008 bear market credit crisis combo which had many bonds hit hard as well.

[braumeister]

Well, back in June of 2010, the same guy said:

Quote:

"We cannot stress enough how strongly we believe that a cliff-edge may be around the corner, for the global banking system (particularly in Europe) and for the global economy. Think the unthinkable," he said in a note to investors.

Wonder how that worked out for him?

[Running_Man]

Quote:

Originally Posted by braumeister Well, back in June of 2010, the same guy said: Wonder how that worked out for him?

Well in June 2010 bank stocks had the following price:

JPM 37.62
BAC 15.00
C 37.90

In October of 2011 they had the following price:

JPM 30.60
BAC 6.00
C 24.73


June 2010 was when the FED was ending QE1 and in November of 2010 the FED realized as RBS had that the financial system was in serious distress and announced QE2, at the same time Japan, and Britain announced their own QEso I would say that he actually got that call right.

For anyone who would mock this call, do not blame RBS for making this call if the market falls 40%. The argument they are making is that financial pressure that are being scoffed at are causing real issues. I just wonder how the Sovereign wealth funds in oil countries that hold over 5 trillion in financial assets are supposed to fund their countries monthly obligations without selling financial assets? How is China supposed to fund outflows of 170 billion a month. I think RBS just approached this as a mathematical question as a result of their algorithms and hated what they saw.

[Fedup]

A lot of people are in cash back in 2014. I'm just saying they maybe a little late. They should be a little more accurate since they are professionals.


Sent from my iPad using Early Retirement Forum

[audreyh1]

Quote:

Originally Posted by Running_Man Well in June 2010 bank stocks had the following price: JPM 37.62 BAC 15.00 C 37.90 In October of 2011 they had the following price: JPM 30.60 BAC 6.00 C 24.73 June 2010 was when the FED was ending QE1 and in November of 2010 the FED realized as RBS had that the financial system was in serious distress and announced QE2, at the same time Japan, and Britain announced their own QEso I would say that he actually got that call right. For anyone who would mock this call, do not blame RBS for making this call if the market falls 40%. The argument they are making is that financial pressure that are being scoffed at are causing real issues. I just wonder how the Sovereign wealth funds in oil countries that hold over 5 trillion in financial assets are supposed to fund their countries monthly obligations without selling financial assets? How is China supposed to fund outflows of 170 billion a month. I think RBS just approached this as a mathematical question as a result of their algorithms and hated what they saw.

Running_Man: I grudgingly concede that you have a good point.

It's hard to see past the huge gains market since 2011.

[RISP]

Quote:

Originally Posted by Chuckanut Assuming the RBS is right, we must immediately reunite with England in order to avert economic and social disaster. Time to learn how to spell colour and pronounce 'alumunium'. ��

It's 'aluminium'. Glad I could help.

Seriously, I never understood why American English dropped that second 'i'. Unlike color/colour or analyze/analyse, this changes the whole sound of the word.

[Nemo2]

Quote:

Originally Posted by RISP It's 'aluminium'. Glad I could help. Seriously, I never understood why American English dropped that second 'i'. Unlike color/colour or analyze/analyse, this changes the whole sound of the word.

World Wide Words: Aluminium versus aluminum

[RISP]

Quote:

Originally Posted by Nemo2 World Wide Words: Aluminium versus aluminum

Thanks Nemo, that was an interesting read.

Cliff notes: It's really just that the publisher of one dictionary screwed up. "Noah Webster’s Dictionary of 1828 has only aluminum, though the standard spelling among US chemists throughout most of the nineteenth century was aluminium; it was the preferred version in The Century Dictionary of 1889 and is the only spelling given in the Webster Unabridged Dictionary of 1913. [...] The International Union of Pure and Applied Chemistry (IUPAC) officially standardised on aluminium in 1990, though this has done nothing, of course, to change the way people in the US spell it for day to day purposes."

[rayinpenn]

Maybe they are right maybe they are wrong. I am not going to worry about it. I'll stay the course.


Sent from my iPad using Early Retirement Forum.

[NW-Bound]

Abby Cohen of Goldman Sachs said "Buy, buy, buy", for US stocks that is. Remember her? She was called a permabull back in the late 90s when she said "Buy, buy, buy". What I like about Abby is the articulate manner when she speaks, whether you side with her or not.

Goldman Sees 11% Upside in S&P 500 After an Emotional Selloff - Bloomberg Business

[Bestwifeever]

I've been thinking about this pronouncement as the markets fall this week. Perhaps people who actively trade might follow the RBS's advice but I would imagine these people would already have crunched their own numbers in making trading decisions and don't wait to act on pronouncements like this. I imagine the rest of us have settled on an asset allocation that is comfortable for each of us and that takes into account the level of risk we can abide. So we encounter a period where our investments fall in value--now we are supposed to jump in and sell everything? I don't think so.

Jamie Dimon of JPM made a statement this week (paraphrasing) about how the US economy has been so strong so of course it will hit some bumps, and the headline writers are saying "Dimon says sell!" Or "Dimon says economy is great!" Gah.

[Car-Guy]

Quote:

Originally Posted by RunningBum Buy signal?

Yes, it is for me. (The market would have to drop a lot more before I'd use up all my spare cash, but I have begun buying back in.) YMMV.

[Dawg52]

Quote:

Originally Posted by NW-Bound Abby Cohen of Goldman Sachs said "Buy, buy, buy", for US stocks that is. Remember her? She was called a permabull back in the late 90s when she said "Buy, buy, buy". What I like about Abby is the articulate manner when she speaks, whether you side with her or not. Goldman Sees 11% Upside in S&P 500 After an Emotional Selloff - Bloomberg Business

I've always liked her. She was a regular on Louis Rukeyser's show and made a lot of good calls. Hasn't always been right though.

[satpoolman]

Quote:

Originally Posted by marko You're implying that Matt was less idiotic than Squawkbox?

Good one!

[Corporateburnout]

Quote:

Originally Posted by Bestwifeever I imagine the rest of us have settled on an asset allocation that is comfortable for each of us and that takes into account the level of risk we can abide. So we encounter a period where our investments fall in value--now we are supposed to jump in and sell everything? I don't think so.

+1.

That's what long term investors/retirees should do. Anything else would be market timing and would stress me out more since I won't know when to get back in. I'll start worrying when the market is down 50%+ but even then I won't do anything but keep rebalancing at the 10% variance from planned AA.

Off to a nice steak dinner with a nice bottle of wine.....Already booked a cab.

[NW-Bound]

I would love to be able to say "To hell with the market, I am not going to deny myself of my usual bottle of Chateau Lafite". But the truth is, I have never had such a bottle, even in the best of times.

So, I just came back from Lowe's where I got some more flooring material, and now finished eating up the rest of my batch of homemade onion soup for a late lunch before heading back upstairs to finish my DIY project.

By the way, I was happy today to find at Lowe's the oak staircase nosing to match with a 3/8" engineered oak plank I am going to use for the stairsteps and landing. Such a simple thing, yet until one looks, he does not know how hard it is to find something that will fit. So, I will try to ignore the fact that I have just lost another new CR-V today.

[Corporateburnout]

Quote:

Originally Posted by NW-Bound I would love to be able to say "To hell with the market, I am not going to deny myself of my usual bottle of Chateau Lafite". But the truth is, I have never had such a bottle, even in the best of times.

No Chateau Lafite for me even the 2010 vintage is too rich for my blood. I was thinking more like the 2009 Jordan Cabernet.

[sansha]

Agreed, I'm no financial expert, but if you think the markets will eventually recover, it's better to buy during one of these panic sell periods, when the market dips. Though I haven't started buying yet.

I'm conservative and think the market is often corrupt from the Federal side and Wall Street. But the Fed manipulating interest rates to zero drives retirement investors to it in hopes of some return that will keep up with inflation.

[ziggy29]

Quote:

Originally Posted by sansha I'm conservative and think the market is often corrupt from the Federal side and Wall Street. But the Fed manipulating interest rates to zero drives retirement investors to it in hopes of some return that will keep up with inflation.

See, there's the problem. In 2008, the Fed had a lot of ammo in the form or lowering interest rates, and they pretty much used all of it. It helped avoid a total and complete meltdown of the global financial market, but the ammo they used (dropping interest rates to zero) has not recovered to be made available again.

I'm not a doomsday type but it does concern me that if it gets bad enough, there's almost nothing the Fed or other global central banks can do.