Bear market danger signals
Wednesday, January 2nd, 2008The market’s down, gold and oil have hit record prices. What are the danger signals in a bear market?
The market’s down, gold and oil have hit record prices. What are the danger signals in a bear market?
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Supbrime, credit crunch, secutirization…the use of clichés to describe the market is all designed to stop us thinking.
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The fallout from the US mortgage mess continues to hurt the US market and beyond. Clearly, issues once specific to the US are now flowing through to other markets as banks force borrowers to sell assets and investors scramble away from risk. And it will get worse.
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Is the US market about to bust? Investors think US housing is going to get worse but the experts say there’s no need to panic because the fundamentals are good. It’s just an ordinary down day, they say.
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The market seems to be bracing itself for the next shoe to drop with the two Bear Stearns hedge funds which had bet big on subprime mortgage sector now virtually worthless. As fed chief Ben Bernanke has indicated, things are going to get worse before they get better.
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