End of Year Equity Review
Zak Vora, December 10th, 2009
10/12/09
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Change since 09/12/09
The juggernaut that is the end of year run-through continues as we steamroller through into reviewing equity market. I’ve gotta get this done so that I can change into my very dodgy outfit for the office Christmas party. Yes it’s true whilst other financial institutions have been forced to cancel their Xmas parties we’ve decided to simply hide in disguise as we enjoy ours. So if you happen to come across a pile of lunatics with an Xmas theme about them you know who you’ve bumped into, whatever you do just don’t tell the media.
Predictions at End of 2008:
- GM would not last and would be forced into bankruptcy, expect 2 if not all 3 US automakers to file for bankruptcy.
- Dow at the time was over 8700, predicted the Dow would hit 6500.
- Banking would become the new utility industry through over-regulation.
Assessment End of 1st Quarter 2009:
- Reiterated that GM would go under despite assistance from the Obama administration
- Following on regarding the banking industry, nationalize key banks in the worst affected economies and once the economy turns around sufficiently privatize them as quickly as possible.
- Repeated the call for the Dow to get to 6500
Assessment End of 2nd Quarter 2009:
- GM and Chrysler had gone into Chapter 11 bankruptcy proceedings by this stage.
- Banking stocks managed a resurgence in share price despite crippled balance sheets*Dow managed to hit the 6500 target and got to a low of 6470 before rebounding, climbing dramatically to 8300 at this stage. New target for the Dow, for year end 5000.
Assessment End of 3rd Quarter 2009:
- Dow continues to perform and hits a high of 9900, but pulls back to the 9700 mark – the 5,000 target looking decidedly wrong at this stage. Argued that equities were suffering from ‘irrational exuberance’ led by cheap money in search of a return but when the free money tap gets turned off realistic equity valuations would return.
End of Yeart Final Review 2009:
- Dow continues to perform and reaches a high just over 10500, currently residing at 10,400
- Some major banks have been pretty much nationalized as states looks to protect the integrity of the banking system, most notable examples are RBS and Lloyds in the UK.
On the whole the calls on the equity markets were pretty much there with the only notable exception being the call on the Dow after hitting the 6500 target. I still believe that we will be seeing the 5,000 level in the future as the asset bubble that has once again been created finally bursts. As always thought the question is when. Tomorrow brings the last of the year end assessments covering the interest rate markets. In the meantime I’m off, I’ve just had a penguin and a Christmas pudding walk past my desk, and the music is blasting out from all corners. I think it’s time to get into my party gear.
Have a good day…
Tags: banking, banking stocks, bankruptcy proceedings, Chapter 11, Dow, equity valuations
This entry was posted
on Thursday, December 10th, 2009 at 9:00 pm and is filed under Blog, Featured.
