2008 a Humiliating Year for Global Investors, Grim Outlook for 2009
Stock-Markets / Global Stock Markets Jan 02, 2009 - 07:47 AMBy: Oxbury_Research
Good-bye 2008: Wish We Never Knew Ya! - Much like an embarrassing family member or friend, or humiliating past pictures taken of you in a ridiculous outfit or pose, we'd all like to pretend that 2008 never happened and it was just a figment of our imagination.
Personally, we've had friends lose their jobs, watch their business nosedive, pull their hair at sharply reduced retirement incomes and/or be abandoned by their wives. And everyone's investment portfolio got blasted to one degree or another.
It didn't matter what you invested in, you still lost . The "winning investment" was the one that managed to leak one dollar in four (or fewer) by the end of this wretched year. Take a look at how bad things went around the globe:
Asian Markets |
European Markets |
American Markets |
|||
| New Zealand | -32.8% | London | -31.33% | AMEX BioTech | -17.72% |
| Korea | -40.73% | Switzerland | -34.77% | Mexico | -24.23% |
| Nikkei 225 | -42.12% | Sweden | -38.75% | Gold Bugs | -26.13% |
| Australia | -43.01% | Frankfurt | -40.37% | Russell 2000 | -34.80% |
| Taiwan | -46.03% | Spain | -40.56% | Canada | -35.03% |
| Thailand | -47.56% | Paris | -42.68% | AMEX Oil | -37.19% |
| Hong Kong | -48.27% | Israel | -46.19% | S&P 500 | -38.49% |
| Singapore | -49.41% | Finland | -53.41% | NASDAQ | -40.54% |
| India | -52.45% | Russia | -72.41% | Brazil | -41.20% |
| Shanghai | -65.39% | Iceland | -94.43% | Argentina | -49.82% |
You're not feeling excessive pain if you were heavily into biotech stocks, the Mexican stock market, or gold and silver. But if you're a Russian or Icelandic speculator (or risked a few dollars in Shanghai ) you're most likely on suicide watch about now.
Collectively, the stock market had its worst year since 1931 and every asset class you can think of was bludgeoned with the heavy club of capital losses.
But fear not, say the permabulls: 2009 will be better! Oh yes, we're sure it will be. Iceland in particular couldn't possibly get much worse ... could it?
Look Out Below: Plunging House Prices
The bottom can't be in yet, however (except possibly for Iceland ) as the latest reports indicate that the home prices in 20 major U.S. cities dropped at the fastest rate on record .
Mounting foreclosures and slumping sales pushed the S&P/Case-Shiller index down 18% in the 12 months to October, a slight acceleration after dropping 17.4% in the year through September. The S&P/Case-Shiller index has fallen every month since January 2007 and now the declines in Atlanta , Seattle and Portland have surpassed 10% percent for the first time .
Those of you who enjoy the winter sports of downhill skiing and tobogganing will certainly see the resemblance between this Case-Shiller index chart and your favorite winter sports slope:
By comparison the weekly Dow chart descended a lot more abruptly before finding some kind of base around the 8500 – 9000 area. However, having a broken leg or two and losing your expensive skis at the bottom of the equity cliff doesn't make you feel particularly grateful, does it?
And the fact that the apparent base is forming into a bearish triangle (see the blue lines) isn't especially comforting either. The Dow looks considerably more likely to break out of that triangle on the downside rather than the upside. Oh dear …
Don't Worry, The Government And Their Magnificent Bailout Plan Will Save Us All … Right?
All too predictably, and much like a hapless marksman who fires his weapon before bothering to ready and aim it effectively, the government is now claiming that the monies distributed in that $700 billion bailout package can't be easily tracked nor assessed for their effectiveness .
A Dec. 10 meeting of the Financial Stability Oversight Board headed by Federal Reserve Chairman Ben Bernanke discussed the "difficulties associated with monitoring the use of specific funds" of the program after taking into consideration "the variety of policy actions taken by the U.S. government to support financial stability and promote economic growth."
Well, we're glad they figured that out before they went and spent it all and -- whoops ... it seems they didn't!
So just like the greediest and most panic-stricken newbie speculator, the geniuses in charge of this country's finances blew their wad with no plan to track progress and properly gauge any return on investment. All that money, which amounts to the biggest government bailout plan in history (inflation-adjusted or otherwise) … and they now claim they don't know exactly where it went.
You have to give the thieves on Wall Street and in Washington some credit, though. They've found a wonderful scheme for robbing the taxpayers and they've certainly stuck to it so far. It's not like the $700 billion is their money, after all. Why else would the following have occurred this year?
• Paulson assured Congress that merely promising to give beleaguered mortgage lenders Fannie Mae and Freddie Mac access to Treasury funding would calm market fears at no cost to taxpayers. Then the market called his bluff and now the Treasury owns both companies in a move which will probably cost taxpayers billions.
• Paulson submitted a plan to ‘save' the U.S. financial system that was all of three pages but which carried a $700 billion price tag and a provision that his spending was exempted from court challenges. That must be why there was no tracking mechanism for the money. Silly details like that just won't fit on three pages . Hey, there was barely enough room for the campaign donors … err, troubled Wall Street firms to fit in there!
• That same three page bailout bloated to 451 pages and another $130 billion in pork before passing with only the merest fig leaf of oversight over how the original $700 billion was going to be spent.
We could add several pages more of gross incompetence like the ones above but quite frankly, it's just too depressing. It is New Year's Eve as we write this, after all.
The Year Ahead
We can take some comfort in that 2009 is unlikely to be much worse than 2008. What can we expect, however?
USA Today informs us that global trade will shrink by 2% in 2009, which isn't great news for anyone. What's more, no one is expecting U.S. real estate as a whole to even stabilize in 2009, never mind raise a tentative bullish nose in the air. Stocks have been subjected to unrelenting carnage and except for biotech and precious metals, aren't likely to rebound any time soon as there is no demand for other products.
And if this is truly a multi-year depression, the lack of savings and self-sufficiency amongst most First World city-dwellers is hardly inspiring. At least in the 1930's, people knew how to farm and look after themselves. How will today's coddled softies survive without Starbucks, iPhones and SUV's?
Good investing (and good luck in 2009!) despite the grim times which are surely ahead,
Nick Thomas is a seasoned veteran of technical analysis and has mastered all intra-day trading in stocks, options, futures and forex. He prefers to scout investments as one asset class of many and shapes his investment strategies accordingly. He writes extensively about offshore banking and offshore tax havens and is active in the career development field of independent investment research.
Nick Thomas
Analyst, Oxbury Research
Oxbury Research originally formed as an underground investment club, Oxbury Publishing is comprised of a wide variety of Wall Street professionals - from equity analysts to futures floor traders – all independent thinkers and all capital market veterans.
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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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