Interesting piece in this week’s Barron’s looking at the stock market capitalization as percentage of the GDP. Of course everyone and their dog are thinking this is one of the worst sell-offs in history and prices are mighty depressed now, so that’s not new but from a market timing perspective looking at this chart seems to suggest that we can drop some more till the 40% line, and furthermore that there’s no need to rush in, given that it takes a bit of “basing” action till things pick up again.

Does Extreme Stress Signal an Economic Snapback? – Barrons.com

Another encouraging sign is the shrinking value of U.S. stocks relative to nominal U.S. gross domestic product. At the market peak in 2000, stocks were valued at twice the size of the economy, but the relationship has adjusted this year to an estimated 59%, well below the long-term average of 79%. To get back to 79%, the S&P 500 would have to rise 36%, to 1,090. The relationship got as low as 40% in the late 1940s, when investors feared another depression, and in the inflationary 1970s.

Looks like Citi’s CEO Vikram Pandit’s recent attempt at a vote of confidence in his company and stock has led to sitting on $3.5 Million in (at least paper) losses, a drop of 50% in his recent $7 million investment (excluding options) just a few days ago.

Bloomberg.com: Pandit, Deputies Buy Citigroup Shares After Plunge

Pandit, 51, bought 750,000 common shares, paying an average of about $9.25 apiece, Citigroup said in a filing with the U.S. Securities and Exchange Commission. He also bought 100,000 preferred shares. In all, he spent about $8.4 million.

It now appears the board is “weighing options“.

Btw, I have no exposure to this stock (anymore lol), it’s just interesting to watch these historic events and processes unveiling at breakneck speed unseen before.

Quite a bit of panic out there today. Too bad the middle part was choppy. Anyways, I was looking at C, one of the ugliest charts out there, well of a company that is still listed and/or not government owned.

Alwaleed or not, I went to check out the bank’s Singapore branch website and look up info on funds insurance. Sure enough on the front page a large banner says: “Announcement on Deposits Guarantee in Singapore”. The main part says:

We continue to see rapid developments in financial markets around the world. Of particular note is the coordinated action by governments and regulators to instill confidence and stability in the global financial system.

In Singapore, you will be aware that the Monetary Authority of Singapore has announced that it will guarantee all Singapore dollar and foreign currency deposits of individual and non-bank customers from October 16, 2008 until December 31, 2010. This guarantee will apply to all licensed banks in Singapore, including Citibank Singapore Limited and Citibank NA, Singapore Branch. Under this guarantee, all individual and corporate customers, including
those under the current Deposit Insurance Scheme administered by the Singapore Deposit Insurance Corporation, will enjoy protection from the Singapore Government on the full amount of their deposits for the duration of the guarantee.

With this announcement, all your savings deposits, current accounts, fixed deposit accounts and Supplementary Retirement Scheme bank accounts in Singapore are guaranteed by the Singapore Government.

This sounds fine. Although with Temasek / GIC / Who-Knows-What-Other-Company performance lately who knows what’s safe and what isn’t.

Barclays would rather pay 14%! interest on a loan to Arab countries in the Middle East instead of use UK government lending facilities which are much cheaper but will require changes to management structure and their salaries. Can they send any stronger message than this that they don’t care about investors and all they’re interested in is keeping their inflated salaries and fat bonuses? Let’s see how shareholders like this, so far the stock fell 11% today.

Bloomberg.com: Barclays Seeks $11.8 Billion From Investors to Bolster Capital

Chief Executive Officer John Varley tapped sovereign wealth funds in the Mideast to avoid a U.K. government bailout plan that calls for overhauling management boards, capping executive salaries and banning dividend payouts. Barclays fell as much as 11 percent in London trading today.Barclays will sell 5.8 billion pounds of convertible notes and preferred shares that pay as much as 14 percent annual interest through 2019 to the Mideast investors, the London-based company said today in a statement. The bank also plans to sell as much as 1.5 billion pounds of securities to new and existing shareholders in an offering that closes today.

BusinessWeek’s Ben Steverman makes some good points here. Alan was making a similar point a few days ago in our conversations. I think there should be quite a few intelligent investors out there who aware of this well. But of course acting on it and getting the timing right are a completely different ballgame and way way tougher, for anyone.

Stocks: The Meltdown and the Media – BusinessWeek

Wall Street has been through crises before—1907, 1929, the 1970s, and 1987 all tested investors as much as the financial crisis of 2008. But this time, something is different: Three cable business channels and countless web sites offer 24-hour coverage of financial markets seven days a week.

The sheer quantity of information available raises the question: Could the media actually be contributing to the very crisis it is covering?

During past crises, average investors needed to wait until the evening news or the next day’s newspaper to learn how their investments had done.
A Recipe for Panic

This year, the financial panic has unfolded minute by minute in front of investors’ eyes. Meanwhile, online tools allow investors to make rash decisions, buying or selling stocks with the click of a mouse.

Pretty shocking Chart of the Day today. The decline this year has been larger than that of 1929 at the beginning of the Great Depression.

Is the situation now worse than back then? Are the prospects for the future worse off? I’m not sure, I’m inclined to think not, if only because of the relatively fast action being taken around the world by governments and central banks. But you never know, history repeats itself but curved balls and black swans make sure it’s never quite in the same way.

As someone living off the markets I’m of course quite obsessed with what’s going on with stocks, wall street, the economy etc. But when this obsession spills over to other people who aren’t normally interested in the markets you know that we’re in some sort of extreme, either everyone and their dog is excited about buying stocks (can be replaced with property too) or everyone and their neighbour are very worried about their investments. Obviously we’re now in a time of fear and worry. Here’s another ‘indicator’ for this, the Men’s Health Daily Dose that I get in the mail has now started talking about the stock market on every other email. This time with the intriguing title: ‘Her Touch Can Ease Stress And Clear Your Mind’ :-)