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Slide Looks Worldwide
Old 06-13-2006, 06:27 PM   #1
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Slide Looks Worldwide

NEW YORK (Reuters) - The month-long slide in global stocks has wiped out at least $2 trillion in wealth, leaving investors few alternatives to preserve their holdings aside from bonds and money markets.

The Dow Jones industrial average <.DJI> is off 8.2 percent since mid-May and as ofTuesday's close had erased its gain for the year. The Nasdaq Composite Index <.IXIC> is off 12.75 percent from its high for the year on April 19 and the Standard & Poor's 500 Index <.SPX> has fallen by nearly 8 percent from its May peaks.

"It is essentially one consistent story worldwide, starting here in the U.S. There is a fear that the Fed's repeated commitment to limiting inflation demonstrates a willingness to risk economic activity," said Christopher Low, chief economist at FTN Financial in New York.

On Tuesday, Tokyo's Nikkei average booked its biggest one-day percentage fall in two years, tumbling 4.14 percent, wiping out more than 16.56 trillion yen ($145 billion) in market value from the Tokyo Stock Exchange's first section. It was the biggest one-day point drop since immediately after the September 11, 2001, attacks on New York and Washington.

In Europe, the FTSEurofirst 300 <.FTEU3> index of top European shares has fallen about 11 percent since May 11. The index finished at 1,238.5 points on Tuesday, its lowest closing level since November 30.

Since its year high hit in early May, the MSCI World Index <.MSCIWO> of global stocks has lost $1.9 trillion in market capitalization, nearly 12 percent of its value and more than the economic output of the United Kingdom.

The index compiled by MSCI Barra does not account for all global stocks, meaning the total amount of lost wealth is greater still.
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Re: Slide Looks Worldwide
Old 06-13-2006, 06:32 PM   #2
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Re: Slide Looks Worldwide

Blame the central banks. All of them. The head of the UK central bank actually came out and said they've made a terrible mistake by providing so much liquidity for so long. Now they are "fixing" their mistakes. Hang on for a rough ride.
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Re: Slide Looks Worldwide
Old 06-13-2006, 06:45 PM   #3
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Re: Slide Looks Worldwide

What's interesting is that so many people were heavily weighted towards international (and gold/commodities) because of concerns about the declining dollar.

Yet it is the international and metals markets that have really taken it on the chin!

When things finally come to unwind, it never seems to happen in the "expected" way. Causes stampedes sometimes.

Audrey
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Re: Slide Looks Worldwide
Old 06-13-2006, 06:48 PM   #4
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Re: Slide Looks Worldwide

Screw the world!!!!

I've lost 2 years of living expenses in 1 month.

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Re: Slide Looks Worldwide
Old 06-13-2006, 06:52 PM   #5
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Re: Slide Looks Worldwide

Quote:
so many people were heavily weighted towards international (and gold/commodities)
international, esp EM, and commodities have been much too popular ... itself a sign of impending doom sell-off. more fundamentally, both are also to a great extent functions of the US economy, so ...
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Re: Slide Looks Worldwide
Old 06-13-2006, 07:07 PM   #6
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Re: Slide Looks Worldwide

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Originally Posted by 2B
Screw the world!!!!

I've lost 2 years of living expenses in 1 month.

How long did it take to "gain" those 2 extra years of living expenses, huh? Probably just the 3 months before that?

Easy come, easy go....

Audrey
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Re: Slide Looks Worldwide
Old 06-13-2006, 07:30 PM   #7
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Re: Slide Looks Worldwide

Quote:
Originally Posted by 2B
I've lost 2 years of living expenses in 1 month.
Sing it, sistah--I lost my husband's gross annual salary, and then some. He ain't happy, but he's verrry quiet about it.
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Re: Slide Looks Worldwide
Old 06-13-2006, 08:45 PM   #8
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Re: Slide Looks Worldwide

Aint easy!! I didn't lose as much as some of you guys but I'm torn between the decision of buying now or buying later. I want to just close my eyes and buy but can't help thinking maybe market will dip lower.

Ah, nature of human being.............
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Re: Slide Looks Worldwide
Old 06-13-2006, 11:00 PM   #9
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Re: Slide Looks Worldwide

Do both..
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Re: Slide Looks Worldwide
Old 06-14-2006, 04:47 AM   #10
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Re: Slide Looks Worldwide

Quote:
Originally Posted by audreyh1
How long did it take to "gain" those 2 extra years of living expenses, huh?* Probably just the 3 months before that?

Easy come, easy go....

Audrey
Actually, it was my YTD gain as of early May. Five months to "make" it and 1 month to watch it swirl down the toilet of Broad and Wall. I'm essentially flat for the year as of today.
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Re: Slide Looks Worldwide
Old 06-14-2006, 07:29 AM   #11
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Re: Slide Looks Worldwide

Quote:
Originally Posted by 2B
Actually, it was my YTD gain as of early May.* Five months to "make" it and 1 month to watch it swirl down the toilet of Broad and Wall.* I'm essentially flat for the year as of today.
Well - that's really not so bad then, is it? Sure, it's disconcerting to see a sell off that fast, but as of the beginning of this year you didn't have those two extra years of living expenses (and it must have been more like 4 months to gain as the sell of started 2nd week in May, and early Jan was no picnic).

I know it's not so fun to lose money. But it's all relative.

Audrey
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Re: Slide Looks Worldwide
Old 06-14-2006, 07:47 AM   #12
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Re: Slide Looks Worldwide

Quote:
Originally Posted by audreyh1

I know it's not so fun to lose money. But it's all relative.
Every family seems to have some of those scattered around. Amazing, isn't it?

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Re: Slide Looks Worldwide
Old 06-14-2006, 07:51 AM   #13
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Re: Slide Looks Worldwide

Quote:
Originally Posted by 2B
Actually, it was my YTD gain as of early May. Five months to "make" it and 1 month to watch it swirl down the toilet of Broad and Wall. I'm essentially flat for the year as of today.
You are right - it goes down much faster than it goes up. I have not updated my portfolio spreedsheet in fear of finding the amount that has declined (in paper).
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Re: Slide Looks Worldwide
Old 06-14-2006, 07:55 AM   #14
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Re: Slide Looks Worldwide

At my peak about a month ago, I think I had calculated that my investments had "made" about 50% more than my job brought in so far this year. I dunno if I even want to peek at the numbers now!

Oh well, it's not like I'm anywhere near the point that i need to go buy a refrigerator so that i can live in the box it comes in, or anything like that. It'll get better. Eventually.
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Re: Slide Looks Worldwide
Old 06-14-2006, 08:01 AM   #15
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Re: Slide Looks Worldwide

Times like this make me glad that I have a few years of living expenses in CDs. Also, pssst Wellesley
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Re: Slide Looks Worldwide
Old 06-14-2006, 08:18 AM   #16
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Re: Slide Looks Worldwide

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Originally Posted by LL
Times like this make me glad that I have a few years of living expenses in CDs. Also, pssst Wellesley
Bingo!... to both of the above.

I haven't lost a minute's sleep over the current market gyrations. Although I will admit to doing a little rebalancing while a couple of my funds are having a sale.
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Re: Slide Looks Worldwide
Old 06-14-2006, 08:51 AM   #17
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Re: Slide Looks Worldwide

Amen, I listened to one of gurus on this board about 4 years ago and put 5 years of $$ into cash which is now almost all money market...heck it is all liquid and only a fraction below CDs. That is 5 years above current 1/2 time salary which will end in 09. Then will have 5 years cash to supplement Soc Security...

message is...keep 4-5 years cash or CD and let the market do its thing.I believe they call this a "correction" and it has happened dozens of times before and will happenm dozens of times again....Life as a big time market "mogal!"

I am a little surprised at "growth" stocks....I thought they were due for a nice year...but there is still time!

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Re: Slide Looks Worldwide
Old 06-14-2006, 10:57 AM   #18
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Re: Slide Looks Worldwide

I recent changed some of my investments (around May this year) to try out a new style of investing. It breaks the money down into 4 parts.

25% Bond Index Fund
25% TSX Index Fund (Canada)
25% S &P 500 Index Fund (US)
25% International Index Fund

Even with the entire market shift down I'm only down 6%

So that tells me that even if I thought bonds/CD/Money Market are boring I'm very glad I changed my 100% equity style investments to a more balanced approach. It's nice to have some cushion during the market correction.

I just wish I had more cash to go shopping for cheap stocks. I found an income trust the other day with a P/E of 10.2 and a div return of 15.2%. Sigh!

CF
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Re: Slide Looks Worldwide
Old 06-14-2006, 02:36 PM   #19
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Re: Slide Looks Worldwide

It was fun while it lasted. At my peak for the year,
I told my better half it looked like we would be able
to FIRE this year. Last night I said, sorry dear, it will
be awhile longer. -- Sigh.

I will admit, I will probably sleep better projecting a 4% adjusted
withdrawal than the 3% adjusted + 2% fixed that I convinced
myself would work back at my portfolio's peak.

I know I will feel better if the market goes up for at least a few
months after we FIRE. There are few financial scenarios that
scare me more than RE at a major market top.

The other conundrum is which starting value to use. Almost
all of the studies I've seen use January 1 values, not the highest
portfolio value for the year. I suppose I should at least see
the value stick for a few months before crying wolf again to
the better half.
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Re: Slide Looks Worldwide
Old 06-14-2006, 03:44 PM   #20
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Re: Slide Looks Worldwide

Well.............the dow finished up 110 points today. Good to seem my portfolio actually go up for a change.*
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