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Aug 11th 2015, 5:01 pm
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Time: Aug 12th 2015, 8:30 am

2008 is over at last. It has been an extremely turbulent year and everyone s swept under its currents such that it was hard to see what actually happened nike roshe run flyknit tilbud , so, here s a recap of what happened in the stock market in 2008. Summing up, the Dow lost a total of 4488 points this year, down 33.84 . The Nasdaq composite lost a total of 1075 points, down 40.54 . The S& P500 lost a total of 565 points, down 38.49 . The more volatile Nasdaq Composite became the loss leader this year just as it is expected to be the gain leader in a rising market, so nike roshe run flyknit køb , no surprise there. Both the Nasdaq Composite and the S& P500 went lower than the low of the last crisis in 2002. Only the Dow managed to stay above the last crisis level marginally. I had expected it to also make a lower low but it did not. How did it all begin? Indications of this 2008 market crash actually started showing up as early as July of 2007 when short term bond yields begun yielding higher than long term bond yields in a bond yield curve that is almost perfectly horizontal above the 4 yield line. Such a bond yield curve indicates excessive optimism in the capital market as the 20yr bond hit an all time low price (relative to recent years). Bond prices go down when demand for bonds goes down. Demand for bonds goes down when capital gets reallocated, usually into the equities market (for simplification sake), resulting in high bond yields. At that time, the Dow was trading well above the 13000 points level, just one step from the 14000 level resistance which marked the beginning of the 2008 market crash. At the same time, foreclosure rates had been and continued to rise nation wide, putting pressure on the value of the most complex derivative instrument ever created amongst investment bankers billige nike roshe run dame , CDOs or Collateralized debt obligations. All 3 major indices hit their peak in October of 2007 and begun their long retreat. The retreat didn t look at all menacing for a start as all 3 major indices backed down to their respective short term support levels and even rebounded slightly, making it all look like a classical pullback in a strong primary bull trend. At that time, the Fed s still all confused with what to handle, inflation or growth, and talks of Stagflation begun showing up as real GDP went sideways in Q3 2007 and then retreated in Q4 2007. This was when 2 groups of economists; Recession Talkers and Goldilocks, begun their battle of tongues over the major wires. Of course, now we know who knew better. Sensing danger nike roshe run tilbud , investors begun taking positions in bonds once again, bringing bond yields down from their previous highs. The Fed also begun taking Fed Fund Rate down from its high of over 5 in August gradually (too gradually, argued by some economists). At this time, a perfect storm is brewing as the more the Feds cut rates, the lower the dollar goes and the higher commodities prices went (as well as prices at the pump of course), putting further pressure on the real economy. The first warning sign of a recession surfaced in January 2008 as unemployment rate hit 5 for the month of December 2007. 5 is a psychological level that says that something might be wrong in the economy as full employment rate (normal unemployment with minimal cyclical unemployment) is around the 4.5 level (number arrived at from my own research). That was probably one of the catalysts that caused all 3 major indices to break their respective short term support levels downwards in the first month of 2008, threatening the integrity of the primary bull trend that was in place since 2003. At the same time nike air force 1 dame tilbud , inflation continued to be a problem as oil continued it march to the $140 per barrel level while talks of CDOs becoming worthless due to significant doubt about the fixed income ability of mortgage loans built into them begun hitting the wire. In fact, it was around this time when analysts begun finding CDOs being over rated by rating agencies (well, like one of the high profile analysts said, they belonged to the same club). By February of 2008, it has become apparent from the charts that the intermediate term bull trend has been compromised as investors rushed for quality, depressing short term bond yields to almost half of what they were just a couple of months ago. On the charts, however nike air force 1 deconstruct prm , it could still be argued that the Dow merely made its first major intermediate term correction since the primary bull trend started in 2003. Such a technical correction is also an acceptable argument under the Dow theory as some technical chartists expect the major indices to make a rebound from that level, which, did not happen (even though the Dow did rebound just a little bit for a couple of months as technicians took position). At this time, however, the economy s already not looking at rosy as it did just months ago with rising unemployment, lowering durable goods order, rising oil price and a dropping GDP. Signs of trouble also begun emerging in the investment banking sector as major investment bankers started changing CEOs and writing off worthless CDOs and subprime loans. By this time nike air force 1 low herre , the Fed is beginning to get it that the economy is in real danger but has yet to take major actions on the fed fund nor to take coordinated action with central banks around the world. The dark cloud also spreaded into stock markets worldwide, making it obvious that this is not only an USA crisis but a world crisis. By July 2008, investors were convinced that the economy is indeed in a recession (at last) and the credit crisis is deeper than most has expected. All 3 major indices made their first significant downwards breakout, totally disintegrating the previous primary bull trend, and stated without a doubt that the bear has arrived. All hell broke loose after that as Lehman Brothers closed down, unemployment rate soared and real GDP went negative. Investors begun rushing for the door, taking major indices down by a greater magnitude each month. The Dow was down 9
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