AAR & TOL 01 (May 08 - Oct 08)

[ishak]

5) So what if a few Investment Banks collapse ? Is the entire Financial System going to collapse ?
TOL:-

The financial system in US might be more tightly linked than we know and one failure might not cause the whole house to be brought down, a couple more might do the trick.

It pays now to be vigilant about the state of US financial system which is also linked to the rest of the world economy.

Agree with the rest of your posts.

[Cherry]

winston wrote:

So what if a few Investment Banks collapse ? Is the entire Financial System going to collapse ?

Hi Winston

May I add:

I think there is a difference between a bank and an investment bank. A bank is a people's bank. An investment bank is an institution or broker for high net-worth clients, and dealing in instruments, some of which are difficult to understand.

I don't think the entire Financial System will collapse just because a few Investment Banks collapse. There are intricate connections between them, the people's banks and the financial system though, so the impact will be great. Trust for one another, and the suspicion of what skeletons are yet to be revealed by the others are some of the hurdles at present.

Correct me please, if I am wrong.

[winston]

Although the headlines news are very bad, with billions of write-offs and investment banks and banks failings, life will still go on.

It may look like the end of the world esp if you are sitting on some call options though .

Other than that the sun will shine tomorrow, business goes on, life goes on. It may take a few years to work out some of the issues..

The question is which sector will rebound first ?

[helios]

The question is which sector will rebound first ?

1. financial banks? the root of it?

2. agri-ingredients business is still strong ...

3. medical reits and pharmaceutical courier & logistics biz?

AOR.

[Cherry]

winston wrote:
The question is which sector will rebound first ?

Adding to San San's list:

4. One or two listed South Africa companies that will have commercial benefits from the World Cup to be hosted by South Africa in 2010. Will appreciate it if you know and can share how we can go about buying into these companies in the South Africa stock exchange, and the inherent risks of a Singapore investor, apart from the share price fluctuation risks.

A close similarity to the present financial woes is the 1997 Asian financial crisis. How the Asian share markets turned around, length of time taken, which sector or sectors rebounded first? I wonder if you can remember or have knowledge of it. Would appreciate if you can share.

[Cheng]

A very interesting depiction of the Economic cycle, via Matt Blackman's EquiTrend Weekly Market Watch

[Cheng]

[winston]

TOL:-

To short a share, a margin is required.

With the onset of the credit crunch, wouldn't some of these lines be withdrawn ?

Also, another simple way to discourage short-selling is to increase those margin requirements ...

[kennynah]

TOL : not so simple to adjust margin requirements overnight...it affects all brokerages and existing shorts as well...if they suddenly up the margin requirements, what will likely happen is that existing shorts will likely be margin called...then more force selling may occur...worse effect

[winston]

Theoretically speaking, one could ask for new margin requirements for new short selling orders only. Agree that there could be some admin issues..

Maybe the easiest way is to ban new short selling orders for shares that have dropped a certain amount, within a certain time period..

Short-Selling is good for the system as it helps identify weak companies. However, after the weak companies have been identified and hammered, then the practice should perhaps not be allowed to continue..

Does not really matter. This discussion will not put $$ in my pocket. Time to focus on something that would..