I am going to ruffle a few feathers, but let me still say it – We had a dream run from 2003-2008 and now it is over. The days of 20% salary hikes and 30% stock returns are gone (at least for now) for the masses.
If you are really good at your job or in investing, you may get above average raises or returns, but that is not going to be the norm for everyone
If you entered the workforce in 80s or 90s, you may have seen tough times yourself (or maybe your family did). The reason why the current slowdown feels horrible is because our expectations are high now. Don’t get me wrong – I am equally angry with the government for running the economy to the ground.
I faced a similar market from 2000-2003, when the market dropped by around 50% over a three year period. At the market bottom in April 2003, capital goods companies like BHEL, Blue star were selling at 5 times earnings. The current market darlings like Asian paints (15 times PE), Marico (around 5-7 times PE) and other consumption stocks were selling a very low PEs too. At the risk of getting philosophical, I can think of the following things to do this time around.
- Assess your risk tolerance: If you have trouble sleeping in the night after seeing your portfolio drop by 10-15% , you should reduce your level of equity holdings. My thumb rule – will I be able to sleep well if my portfolio dropped by 40%+ ?
- Clean out the trash: Now is a good time to clear up junk from the portfolio. A bear market and 40% loss on weaker ideas concentrates your mind. One should evaluate each position closely, sell the weaker ones and redeploy the cash in the better ideas.
- Have faith: There is no data or logical argument which can make you hold on to your stocks or add money to it. You need to trust that the markets will recover in time and so will your portfolio.
It is easy for people to say that they want to think independently and stand apart from the crowd. Now that that we have a blood on the streets and no end in sight, you will know whether you can truly do that.
6 comments:
The media are trying to 'help' the EU and Euro by not reporting the ongoing problems on the continent and in the EU systems.
This is what they have always done with regards to all things EU..... on the premise that we will be too far sucked in to do anything once we realise.
We may have realised just in time to save oursleves and our democracy.
total assets of the Spanish banking system are supposed to be around 3 trillion euro. I read somewhere that Spain's banks are collectively holding about 470 billion euro of construction loans on their books. many of these loans will undoubtedly need to be written down significantly or even entirely. there doesn't appear to have been much action on this matter so far. since the Spanish banks rely heavily on wholesale funding from other eurozone banks, the whole creaky edifice must be quite vulnerable to a sudden credit shock or financial panic. I doubt that French or Italian taxpayers will agree to bail out any Spanish financial institutions.
I don't much trust Rajoy or Spanish bank accounting... what are they hiding?
Somebody, somewhere must think the euro is here to stay.....
How many of you out there realise that a brand new European Central Bank mega building costing 100s of millions of pounds/euros is under construction out to the east of Frankfurt?
You have to ask why they need an even bigger building than the famous skyscraper in centeal Frankfurt opposite the opera house.
They don't. It is all about backhanders.
Does anybody out there know what salaries and perks are paid to the eurocrats in their offices in Brussels, Strasbourg, Luxembourg et al? I do.
Several of my friends are on that gravy train (and now own houses and apartments all over the shop even on grade D and C contracts - Grade A graduate level contracts are eye watering!)
Secretaries take more home than headteachers of decent sized comprehensive scools in most EU countries! Their chidren's private education is subsidised, their pensions are amazing. None of them actually do anything remotely useful which adds wealth to anyone. Like NATO and the UN....nice work if you can get it!
Time to get out.
Wake up people wake up!
Europe is, or is at least fast becoming, an irrelevant backwater, totally incapable of solving this, the deepest depression in its history, with any but brutally dictatorial methods.
Not only that but it's proving to be a major brake on global recovery.
Just consider : not a single enterprise of the scale of, say, Google or Microsoft, based on new ideas and new technology had emerged from Europe in the last 30 or forty years.
How long ago was it that Europe, and its new currency were to rival the US in in scope and scale?
Dream on!
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Commenter's avatar globalcity
6 minutes ago
and all of Europe will continue to fester whilst the countries of the continent are in the EU.
The EU 'social market model' is as unworkable and as undesirable as the command and control one they tried in the USSR.
As it is not democratic there is no way of stopping the programme worked out by the technocrats to take us all the way.
The system is set up so that nothing can change the direction the technocrats choose, save the technocrats themselves deciding to change course.
There are no indications that they are considering anything remotely like that.
The Euro still stands because the egotist that created it are still running the show. And they will not lose face regardless of what it will cost the people in the Eurozone for bailing out -Ireland, Greece, Portugal, Spain, Cyprus and Italy. Not forgetting also that international banks had loaned €Billions to these countries. The Bank of Cyprus had loaned to Greece and did not get repaid - look where that got them. What else? I wonder.
With debt burdens approaching or exceeding their GDP, what chance have these countries of repaying their debts in full?
So, the creditors, the rest of the Euro zone, will have to take the hit and that will suppress their own growth. More austerity?The euro has a limited life but probably as long as those egotists are still able to manipulate it. However, it is terminally ill.
Nothing will be properly sorted until the whole house of cards comes crashing down and inevitably, the market reasserts itself. The Markets win in the end. Always. And it will be specifically, the Bond markets that trigger the implosion of the Euro. Watch for the rising yields.
Another interesting piece in Die Welt.
EU Commissioner Günther Oettinger has said that Greece needs another bail out of tens of billions of euros but it will be a manageable sum.
Günther Oettinger: If the analysis of the German Federal Bank and the International Monetary Fund to look at, it comes as no surprise that Athens a third utility needs. It is the right time to think about the further development of Greece. Although it was not necessarily to discuss the topic of four weeks before the election. You might also have to wait for the next report of the troika of the EU, IMF and ECB, which will be available in October. But the statements of the Minister of Finance are very realistic.
The World: How do you assess the reaction of the German opposition?
Oettinger: You notice that the campaign is. The sharpest reaction came indeed from Gerhard Schroeder at a campaign appearance. I respect that. However, one has to be realistic: The opposition now throws Mrs Merkel and Mr Schäuble, have not quite told the truth in the Bundestag and operate salami tactics. But what would happen if all the medium-and long-term developments and also all possible and impossible other assistance programs would be discussed in detail? And in addition, had we told the Greeks already two years ago that more money will flow, the reforming zeal would quickly waned.
Die:Welt If the AdF speaks about another bail out of tens of billions for Greece will this harm the other parties?t
Oettinger: I do not think. The Germans are aware that Greece can not be from one day to the other back on their feet.
"The opposition now knows Mrs Merkel and Mr Schäuble, have not quite told the truth in the Bundestag and operate salami tactics."
Well that's a surprise
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