Feb 27 2007
Wild Market Ride
If I had to guess (and I am not a finance expert) it is possible the worst of the global correction is over. It started in China and hit here, averaging 3% everywhere. The last of the markets are being hit now. Japan’s index started 3% down and seems to be levelling off (possibly too early to tell). New Zealand’s definitely did as did South Korea’s – so if they all follow the same trend they represent the last markets to see the echo which started on the China index on what was yesterday. It is now 7:45 PM Eastern, which means the Shangai index will open soon. If it stabilizes it is a great indicator the correction, long overdue, may be pretty much a one day event.
Update: The market that started the drop (the Shanghai Composite) today has erased half its losses, with all other Asian markets rebounding from their starting lows. Seems the big correction might be over.
AJ
If this is a start of a true market correction then the result should be up and down days as weak hands shake out.
Historically market corrections average near the 10% range.
Also Chevez pulling a Putin rerun on grabbing controlling percentages of foreign oil projects helped grease the skids.
Well, I am not of the opinion the markets require a ‘true correction’ because inflation has been in check and unemployment here is low. I think it was a perfect storm of news, loose lips (Greenspan) and other things that just let the markets get a ‘correction’ out of their system.
Glancing at the Asian markets it looks like the pattern is fixed – start low and then rapidly level off. Without some new dire news I would say there is a good chance the market lay flat for a day then start slowly back up.
To see what is happening now
http://finance.yahoo.com/intlindices?e=asia
I think it all started with former Federal Reserve Chairman Greenspan going public with a prediction that the US economy would go into recession by year-end. That put the jitters in the Chinese market because we are China’s biggest customer.
Stock markets are subject to stampedes at times, much like yelling “fire” in a theater.
Here is how European exchanges are doing
http://finance.yahoo.com/intlindices?e=europe
Sure am glad I listened to Jim Cramer and got heavy into bonds three months ago.
Thanks, Jim, for the beach house in Belize . . .
All hail Global Economic Climate Change! Warming good, cooling bad, correction ok.