Experts Warn of Stock Market Hysteria - Der Speigel

[Eurobabe]

Experts Warn of Stock Market Hysteria
Der Spiegel

Markets crashed all across Europe Monday, with Germany's DAX losing 7 percent of its value. But analysts advise against panic -- in fact, they say, now might be a good time to pick up some cheap stocks. Five percent, 6 percent, 7 percent: For the German DAX stock market index, Monday was a day of steep falls. A €1 billion loss at the bank WestLB, combined with the fears of a global recession, helped push the DAX beneath the psychologically important 7,000-point mark.

It wasn't just the DAX which was hard hit. London's FTSE 100 index also fell 4.5 percent, while in Paris the Cac-40 dropped 4.6 percent. Elsewhere the Tokyo Nikkei 225 index fell by 3.9 percent. US markets were closed for a public holiday, however. Is the DAX now set to keep falling? No, say experts. "It looks dramatic at the moment, but it is not as bad as it seems," Matthias Jörss, head of equity strategy at the leading private bank Sal. Oppenheim, told SPIEGEL ONLINE. "We have gotten used to rising prices over the years -- especially in Germany. Now we are simply seeing a correction." There had been signs that a crisis was looming. Every investor knew that the US mortgage crisis was bound to have consequences -- the only question was when. "At the beginning of the year, the market hid all the risks," says Jörss. "It was clear that things were first going to get worse before they got better...."

'We Are Seeing an Avalanche'

The trigger for the market crash was the news from WestLB on Monday morning. Over the weekend, the bank had to admit to a billion-euro capital requirement because of misguided investments on the US mortgage market. "At first they gave the impression that they had nothing to do with the cheap loans in the US -- and then suddenly €2 billion were missing," chides Jürgen Kurz of DSW, a German association which represents private investors. "That unsettles the market tremendously. The result is panic selling like today." Other banking stocks fell into the downward spiral. "What we are seeing is an avalanche," says Kurz.

http://www.spiegel.de/international/business/0,1518,druck-530010,00.html

[fascisthunter]

1. This Guy is Hysterical

:rofl:

[Dems Will Win]

2. Time to buy bear funds, sell the whole market short?

The monoline insurers collapse this week kiddies, and there goes a trillion bucks. That's the new word - MONOLINE

GBCW.

[sendero]

6. Exactly..

.... they are dead company walking yet the financial media still acts like they might survive. BBBWWWWWWaaaaahhaahhahaha!

[lurky]

3. Analysts say to go bargain hunting.

Well if they analysts say it, it must be a good idea!

Edited for :sarcasm:

[truedelphi]

4. The concluding paragraph of the original article advises:

Nevertheless, there are certain lessons which should be learned from the current crisis, says the DSW. "We need more transparency and greater responsibility from boards," says Kurz. In addition, he says, risk management must be improved. "It's not acceptable that a bank can take enormous off-balance-sheet risks within the framework of some kind of special purpose entity. These kinds of bodies should not be allowed to exist." The financial authorities should now introduce a strict regulatory framework, he says.
####
It seems like every time there is a crisis - 1929 through 1941, S & L Crisis of the eighties, the dot com crash, the Enron and other big business scandals, and now the housing/mortgage markets,
the message is the same.

But then a new and even more exciting bubble comes along, with new and even more exciting slogans,
such as "This is a new economy" "Since it is a new economy, it can only go up and never go down."

"Buy these stocks now, or you'll never again have a chance to get on board the winning ticket to instant wealth."

Et Friggin' cetera!

[gateley]

5. And the Chief of the IMF calls the Global Economic Crisis "serious"

http://money.cnn.com/2008/01/21/news/international/europe_econcrisis.ap/index.htm?section=money_latest

[sendero]

7. Until the full extent ..

... of the losses from the subprime debacle are known and written off, you'd have to be crazy to invest in any of this stuff.

And it isn't.