red and blue BBQs - patience, trust and DD Message Board

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Microcap & Penny Stocks : red and blue BBQs - patience, trust and DD

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To: RockyBalboa who wrote (32)	9/14/2001 3:42:58 PM
From: RockyBalboa	Read Replies (1) of 49

After the unthinkable happened... While many small investors believe that the attacks on the twin towers mark a turning point in the ongoing bear market, and this belief is further nurtured by information provided by different Wall St. brokers, the picture is not rosy, at all. Amongst all the snake oil, independent market watchers call for a further 20 to 30% drop in numerous DJ and SP components as well as flat indices over the next quarters, best case. But before that happens the DJ and SP will make new bottoms and should trade at mid 1990 valuations. The sudden disruption of consumer confidence, weak labor markets and a liquidity trap which makes otherwise vital money injections useless is key to a further fall in asset prices may it be raw good other than strategic, housing with the exception of NY, and equity. U.S. brokers encourage people not to sell securities in a panic with the reason that the fragile market systems may not withstand huge ticket volumes and to wait to watch an orderly market develop. In principle this is a good idea, but it will not prevent the markets from finding its new price. European markets made a different experience. With no trading halt and no disruptions in order handling and trading systems the markets seemingly know only one direction: south. Take the german DAX as an example. The major stock index which components are equally made up of banks, insurances and techs easily broke the crucial 5000 support and lost on 25% in two weeks. It lost 14% in the aftermath of the fatal attacks on Sept 11th and never recovered with more bad news in air traffic, leisure and insurance sectors ahead. It is well understood the the E70Billion short term lending facility made available by the ECB ensures that liquidity is available to commercial banks but has not been made to boost the sagging stock markes. Due to the expected volatility European brokers urge their individual clients via email to avoid large exposure and to "play it small" if someone needs to play at all. No advice about buying or selling short stocks has been made and financial authorities did not make either. Some brokers announced a temporary increase of margin requirements on stock positions and forex deals.

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