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Morgan Stanley issues triple sell warning on equit
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Livermore
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10-Jun-2007 09:50
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I agree with ten4one |
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iPunter
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10-Jun-2007 09:35
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ten4one... |
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EastonBay
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09-Jun-2007 21:57
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ah yah... the good post for is meant for ten4one. I like the analogy... short and sharp. It bites, ouch! |
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teeth53
Supreme |
09-Jun-2007 08:52
Yells: "don't learn through life, learn to grow with life " |
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STI is post to bound up another 200 points to see 3.7k |
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ten4one
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09-Jun-2007 08:20
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Hahaha .............very similar to the USA. After they've clear their forests and have fully developed, they're now telling others not to cut the trees and remain the jungles and stayed poor. Cheers! |
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hotstock
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09-Jun-2007 00:09
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By Ambrose Evans-Pritchard Last Updated: 1:34am BST 06/06/2007 Morgan Stanley has advised clients to slash exposure to the stock market after its three key warning indicators began flashing a "Full House" sell signal for the first time since the dotcom bust. Morgan Stanley warns the 'mid-cycle rally is over' Teun Draaisma, chief of European equities strategist for the US investment bank, said the triple warning was a "very powerful" signal that had been triggered just five times since 1980. "Interest rates are rising and reaching critical levels. This matters more than growth for equities, so we think the mid-cycle rally is over. Our model is forecasting a 14pc correction over the next six months, but it could be more serious," he said. Mr Draaisma said the MSCI index of 600 European and British equities had dropped by an average of 15.2pc over six months after each "Full House" signal, with falls of 25.2pc after September 1987 and 26.2pc after April 2002. "We prefer to be on the right side of these odds," he said. The first of the three signals Morgan Stanley monitors is a "composite valuation indicator" that divides the price/earnings ratio on stocks by bond yields. It measures "median" share prices that capture the froth of the merger boom, rather than relying on a handful of big companies on the major indexes. "If you look at all shares, the p/e ratio is at an all-time high of 20," he said. The other two gauges measure fundamentals such as growth and inflation, as well as risk appetite. "Investors are taking far too much comfort from global liquidity. Markets always return to fundamental value, so people could be in for a rude awakening. This is the greater fool theory," he said. "The trigger may be rate rises by the Bank of Japan, or a widening of credit spreads. There are lots of little triggers." Morgan Stanley is not predicting a recession, believing bond yields will fall during a correction and act as an "automatic stabiliser" for the world economy. Once the market shakes off the latest excesses, it's back to the races. |
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