Economic Situation in South-Eastern Europe

RGE Monitor

There are excellent analysis of the economic trends and situation in the South-Eastern Europe.

4200 Again

ASX 200 has just broken through the 4200 from below. Looking back at the lows of the previous week this now looks like the stellar heights.

RaboPlus Waives Fund Fees

RaboPlus Australia waived all their fees on mutual funds. That includes entry, exit, and ongoing fees on funds purchased through RaboPlus account. The option remains open until the end of the year.
Right on time to do some purchasing. :D

Current Economic Conditions in Australia

Business Spectator - Grim data seen a rate cut clincher

The article contains a review of current economic indicators for Australia. Inflation is sliding lower quickly. The number of job ads fell 5.9% in October, house prices fell 1.8% in the third quarter, and interest rates are all falling down. Retail sales sank 1.1% in September.
The market already priced in the new RBA rate cut, which will be decided tomorrow.

Investing in a Bear Market

Stocks Bear Market Long-term Investing Strategy :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

The sum of the previous analysis suggests that we can discount a 1930's style wipeout of the stock market, and viewing a volatile sideways trend for at least the next 6 months to be followed by an gradual upward curve.

An analysis of the situation at FTSE stock market. Done even before the last week's lows. Forecasting slow upwards movement from there.
Glad that I came to the same conclusions. Buy at dips and in installments as the market is so volatile. The only reasonable thing is to average the whole low period instead of gambling on the bottom in one go. I've "had" so many bottoms in the past couple of months. Fortunately, I invested only small amounts and generally averaged down the initial investments. And, yes, just like Buffett, I'm more interested in steady flow of dividends than the stellar jumps of growth stocks.

Here is the most important part of the article, listing step-by-step instructions on how to invest in a bear market:

An investment strategy needs to take these factors into account to determine when the anticipated capital is to be invested.

• Bear Markets Analysis - Favors buying on selloff's during the post 30% drop bear phase.
• LIBOR is frozen so is a negative for investing at this time. The aim is to see LIBOR to fall to below 0.7% above base the interest rate. Current is 1.16%, the more it falls the more bullish the outlook for the stock markets.
• Chart price patterns remain negative, they clearly indicate that the stock market is not done on the downside.

Therefore the rules for stock market investing are -

1. Allocate the amount of capital that is to be invested over a period of time as 100%.

2. The aim is to invest between 5% and 15% per month of the above capital.

3. The trigger for 10% investment in any month is if the stock indices one is investing are within 10% from the bear markets low.

4. The Trigger for an additional 5% investment is if in any month LIBOR is below 0.7% above the base interest rate.

The goal is to scale into the stock market over the next 6 to 12 months i.e. effectively buying into weakness rather than strength and limiting investing when the market exhibits a sharp rally. This implies an investment range of between 5% and 15% in any given month.

I.e. if the intention is to invest $10,000 into the stock market then one would aim to invest between $500 to $1,500 in any month that fullfilled the investment criteria.

Therefore depending on how the stock market performs over the next 12 months, the amount invested in a stocks portfolio should gradually increase towards the 100% commitment.

It's a Trader's Market - Forecast for the Rest of 2008 and Beyond

Forget Buy-and-Hold; It's a Trader's Market - Seeking Alpha

On average traders can expect market gains for the remainder of 2008; doesn't that sound nice? Specifically, we can expect a 10-15 percent gain between now and year's end, based on the quarterly analysis. Additionally, based on the top ten monthly losses we can expect marginal losses in November and solid gains in December and January (3 months later). By aggregating the information, the case for the bulls is even more powerful, but the bearish case is NOT closed. It is almost certain that volatility will continue to be front and center, which will foster an environment fit for traders.

I don't know if it's me picking the bullish signs or is it that more and more analysts are throwing these out into public. Apparently, from now until the end of the year there is 10-15% gain to be made. Adding to the gain made last week, that should be the bulk of recovery from the bottom last month. After that it's a phase 1 - sideways movement for some time until another bull starts.
That's what the books say. Now, to invest or not, the choice is yours.

More Bulls Raise Their Voice

Another Perma-Bear Converts To Bullish-ism - Barron's - Seeking Alpha

Tighter regulation is coming and we’ll face a relatively long, deep recession until Q4’09. But by Leuthold's calculation, stock market bottoms occur when a recession is 60% over. That’s this month.

There are more bullish signs in the news. We can see that there is some buying in the markets as prices go up steadily.
The credit markets are easing and credit is flowing again. After the US elections there should be more stability, as well.
So, according to the quote above, the recession is to go on through the 2009 but the market bottom has been reached last week. Or is very close to it.

Inflation Starts Decreasing in Australia

Australian inflation fell 0.2% in October and is the first fall since 2006. The annual amount is now 3.9%, down from 4.5% reached in September.
It is expected that inflation will continue to slide and reach RBA target of 2-3% mid 2009, well ahead of expected 2010.

Rents are also decreasing by a small percentage but will hopefully continue the trend.

Reversal at the End of October

October's End: Reversal Patterns Are Global - Seeking Alpha

Whether these reversals are the real thing or just a prop at the end of the month that the funds needed remains to be seen next week...

Credit is Flowing Again

The Economist from October 25 contains a story on recovering credit markets. The credit is starting to flow through the system again. LIBOR is continuing a slide down and the volumes of money flowing through the system have increased ten-fold.
These figures have helped most of the this week's rally in the share market prices.
Still, where to from here nobody seems to know.