A good post - I have taken a bit of a haircut by first not...

A good post - I have taken a bit of a haircut by first not reacting fast enough to the drop then going too short into the recent recovery. Live and learn and but as you say, most of us have not made money overall. I doubt that the hedge funds have either unless they are in treasury bonds.

So what we know for sure is there is now a lot of money off the table, worldwide. This latest further downward leg will shake out even more investors and leave new money sitting in risk free safe places. Now house prices in the US are falling on top of slow auto sales, a huge employer, as is the building industry. Share and property values are declining, gold is stagnant so US bonds are seen as the haven. Proof of that is the 10Yr bond yield has fallen 15% since July 9. Subtract your % losses from 20% and tell me it hasn't been a great place to be as the face value of the bond has increased as well as a 4.5% yield.

Is this the stuff bull markets are made of? I think not, I doubt the next rally will come close to the peak of the one that has just finished. True believers (or mad bulls) will continually bid the market up as they see false bottoms only to see a lower one emerge later. I wish I had heeded a US commentator a few weeks ago who predicted we were seeing a financial markets train wreck occur in slow motion.

We are talking weeks, probably months to clear it up but the resultant loss of confidence probably heralds a recession as people sell assets and reduce spending to compensate. House prices may be only 1 brick in the structure but it's a foundation one of this current boom.