Ha, yeah if that happens then we have extreme problems. Don’t rule it out. At some point interest rates will have to go up unless we have a complete meltdown.
New News update - China to allow pension funds to join their stock market…desperate times =desperate measures.
From Reuters:
Aug 23 China on Sunday allowed pension funds managed by local governments to invest in the stock market for the first time, potentially channelling hundreds of billions of yuan into the country’s struggling equity market.
China published a draft rule on the move for public consultation on June 30, at the height of a recent stock market rout.
Despite a series of official measures aimed at supporting the market, investor sentiment has remained fragile amid continued signs of slowing economy.
The State Council, or cabinet, published the finalised rules on Sunday after shares slumped nearly 12 percent last week, the worst weekly performance since June.
Pension funds will be able to invest up to 30 percent of their net assets in the country’s stocks, equity funds and balanced funds, according to rules published on the State Council’s website.
Previously, the pension funds could only invest in bank deposits and treasuries.
Together the funds have assets of more than 2 trillion yuan ($322 billion) that can be invested, meaning about 600 billion yuan ($97 billion) could theoretically go into the stock market, state media has estimated.
According to the new rules, pension funds can also invest in convertible bonds, money-market instruments, asset-backed securities, index futures and bond futures in China, as well as the country’s major infrastructure projects.
Im set to ride out this shit storm. I got out back in October or November of last year when the S&P went under its 200DMA for the first time in a while and am sitting in cash which is as safe as I can make my 401k money and actually has outperformed the S&P this year(think I am up .5% and the S&P is in negative territory). Think i got out at ~1800, which after seeing what went on after and it climbing to 2100+, I kind of kick myself for getting out, but I think when this thing comes down this time, it will be as bad or worse than in 07-08. Hopefully people TODAY dont get into the same position as 07-08 and sit in the market as it falls 40-50% and then cry “whoa is me all my retirement is gone, again”, but I fear that is exactly what will happen. No lessons learned from last time. Me? ill be laughing all the way to the bank when the next bull market happens.
And when that fails?
Apparently they are wanting another revolution, when folks have their pensions seized or the figure out over night they lost their entire retirement fund there are going to be a lot of very angry chinamen out for blood.
I think the way this all fell in to place we are in a much better position than we were before it happened.
When you’re the only game in town, everyone wants to get in and play.
Sorry, but you lost me here. On one hand, you are set to ride out this storm, but on the other hand you have liquidated your 401K to cash? The biggest losers in '08 were the people who jumped out of the market near the bottom and missed the recovery in '09-12. How are you going to laugh all the way to the bank when the next bull market happens if you are holding cash?
When I got back from Iraq circa Summer 2009 (I was totally insulated from the “Crash”…and had no idea it even happened) I saw Ford shares at ~$5ea and bought three thousand of them before I even knew what happened in the market. I knew there was no way Ford would stay at $5.
Certainly worth way more now than if I just put that cash in the bank…
How soon before this happens here? I also have to ask, are these pension funds willingly investing in stocks,equity funds, etc, or are they being forced to? I’m guessing they’re being forced to. And that to me, is a sure sign of desperation. I guess we’ll soon see how this plays out…
The question is, can the ETF shovelers @ Citibank, J.P. Morgan, Goldman-Sachs, et.al., keep ahead of physical demand (I’m betting they WON’T…). Everything else, is a popcorn fart.
No one can know what the real bottom is, until after it has happened. So when will you put your cash back in? If you don’t put your cash back in, you will lose buying power to inflation unless you invest in Ibonds or TIPS.
The big problem with selling and going to all cash is knowing when to get back in and trying to get over the psychological hump of committing to getting back in. I read about people all the time that got out in 2007/8 and still haven’t gotten back in because the “market is at all time highs”. It is almost always at “all time highs” when it is going up.:rolleyes:
As long as you have a risk appropriate asset allocation, you will easily be able to “ride it out” without needing to go 100% cash. I use Age-10 in fixed income with the balance in a 60/40 mixture of US/International equities. If I hit my re=balancing tolerance band, I’ll sell some fixed income and buy more stocks. If not, I will just keep following my plan and keep adding more every month.
Not to mention, by not being in good quality broad market index funds you are losing out on at least a decent 2% dividend return which will likely beat anything you can get in cash unless you have access to the government TSP G-Fund.
It’s the new normal everywhere else. Plus it will be a great way to keep people locked in the casino-gulag, with nowhere else to stick it. It would keep the already-detached-from-reality markets chugging along in Walking Dead mode for a while longer.
Many pension funds are operating as what some refer to as private equity. They have divisions that buy companies and operate them for profit, then often sell those companies to other investors and record those gains.
Mitt Romney was a PE guy. He would raise funds from investors, buy stupidly-run companies, reorganize them and recognize the gain. This is as old as the Roman empire.
Which is exactly where my TSP money goes to (for now). I am guaranteed the principal back in a worse-case scenario. Granted the return ain’t great, but right now and for the foreseeable future security is what I’m after. Looking to retire in about 12 1/2 years so I can’t afford a 2008-level loss.
I don’t mind that…but my real question remains whether or not the Chinese pension funds are willingly investing in things that they weren’t allowed to before, or are they being forced? That’s the real question…If they’re being forced to, that tells me that things in China are far worse than we can imagine. There’s a couple of articles over at David Sockman’ s contra corner about China that are worth reading. I honestly feel things in China are far worse than we know. We’ll find out soon.
All that gold hoarding may have merely been a hedge against imploding Chicom Gov’t assets.
Hopefully the hemorrhaging is stabilized before they go full-retard.
As the Gerald Celente used to say, “Those who lose everything…Lose “it””
There are some high-end Chicom electronics I’d like to scoop up before they go down the drain. Hopefully the exchange rate will work out advantageously for me before the missiles start flyin.
