OK, it's not the sort of news to gladden the hearts of everyone who's been burned by the markets but at least we know that many punters, those day traders who borrowed to buy stocks that they thought would go up and up, have cashed in their chips and returned to their day jobs. There's no doubt that some of the more ludicrous levels of worthless stocks were due to rookies who were sucked into the whole day-trading thing and believed the hype on the message boards and simply borrowed to push the stocks st
A friend sent me one of those little mathematical curiosities recently - you know the sort where you think of a number, add another number and do a few more calculations before it spits out the amount of times per day you ring your broker in despair. Anyway, in this case, the number it spat out was your age. Having done the calculations in my head I was surprised to see that my resulting age was wrong. I resorted to the calculator. The age was still wrong. I mulled it over for a while. And then I realised the horrible fact. It wasn't wrong at all. It was me. I'm two years older than I thought I was!
This came as a total shock. I used to laugh at women who shaved a couple of years off their ages, thinking them pathetic and sad, but now I realise that it might not be their fault at all. Somewhere along the line one year blends into another and before you know it you've notched up another birthday without even realising.
The downside of this discovery is that the markets now have two years less in which to stage a dramatic recovery before I start panicking about my pension. Despite the best efforts of the investment industry, most people only start thinking about pensions when they reach their 30s and it takes a few more years before they finally decide to set up one of their own. Eeveryone who set up a pension plan in the past couple of years is ruing their timing and wishing they'd been carefree and irresponsible for a bit longer.
With that in mind I looked at markets a bit more uneasily last week and found some cold comfort in the information put out by the New York Stock Exchange that said margin debt, which is money borrowed by investors to buy stocks, fell in July by 7 per cent to $136.2 billion (€138.8 billion). This was the third monthly fall in a row and it's now at its lowest level since October 1998. It won't surprise you to know it was at its highest in March 2000, totalling $278.5 billion.
People are still hopeful that the market is bottoming out but there are less calls to get in now while stocks are cheap because we're not sure that they can't get cheaper. Despite continued gloom, the Fed's decision not to cut rates at its last meeting has meant that analysts are poring over the numbers trying to decide if there's really a recovery around the corner.
The Fed governors are being cautiously optimistic, suggesting that 3 per cent growth in the first half of the year was reasonable, that consumer spending was growing and that there has been a rise in tech investment for the first time in two years. Nevertheless, the Kansas Fed requested rate cuts at four Federal Open Market Committee meetings, so it will be interesting to see what Greenspan says at its conference later today. I'm sure he'll mention those growth numbers and try to persuade us that things have started to improve.
If only it felt like that! Which, of course, is the biggest problem. If you've lost your shirt then the last thing you're ready to do is hand over your shoes as well. It's probably why Nasdaq Japan has called time on its Global Marketplace venture. When it was set up in 2000, it seemed like a good idea. It hoped to provide the possibility of 24-hour global trading for keen investors. Unfortunately, less than 100 companies listed on the exchange and they've had to write off another $10 million in the past few months. So now the plug is being pulled. Nasdaq Europe is a lame duck with its last company flotation two years ago.
Maybe the whole idea of a global marketplace was always fanciful, although I don't see why. It shouldn't be so difficult to trade any stock, anywhere, any time, but the ventures were driven as much by those now-defunct amateur investors as the professionals. In these more regulatory conscious times investors have to be aware that accounting principles in one country are not necessarily the same as those in another.
I don't care what exchange my fund manager uses but I hope the stocks in the portfolio are ones that have been pummelled as much as they're going to be. I'm all for taking the long-term approach. But with the knowledge that I'm two years closer to retirement than I thought, I'm having to cross my fingers a bit tighter than before.
