
RBS: Brace for a full-fledged crash in global stock and credit markets over the next three months - gibsonf1
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/18/cnrbs118.xml
======
jcromartie
I, for one, hope this leads to a wholesale (no pun intended) reevaluation of
our financial attitudes. There is plenty of blame to go around, and while a
lot of it lands on predatory lenders and greedy speculation, consumers are
largely responsible as well.

It's the end of a decadent age that was never good to begin with. That's the
biggest shame, really. This whole mess was driven by consumer desire for shiny
objects that just aren't that nice. They wanted shoddily-built mansions, as
long as they were large enough to look impressive. They wanted unsafe and
barely luxurious vehicles, as long as they are big and intimidating!

But, back on topic, I sure hope that the business world still sees a big need
to spend on things like web applications and custom software. Otherwise, if
business focuses on scaling back and being frugal, IT is in big trouble.

~~~
edw519
_if business focuses on scaling back and being frugal, IT is in big trouble._

OTOH, this could be a fantastic for the _right_ people in IT. Imagine,
converting from SAP to an open source or SAAS alternative could save you $8
million per year. An entire industry could be built around this. Miss this
while your competitors do it and you could be in for a world of hurt.

------
Mystalic
Nobody is immune; EVERYONE should have major back-up contingencies and savings
that can be easily liquidated. Spread it internationally too, because having
all of your money in one nation's markets or bank system is crazy at this
point...

~~~
steveplace
Money in your savings is guaranteed by the federal government (up to 100k I
think).

If the fed goes down, it doesn't matter where your money is.

If you're talking about investments, that's easy. Go long energy and short
everything else.

------
icey
I'm kind of surprised that this isn't getting more activity. It seems like
this is a big deal to me.

Is RBS just being overly protective?

What are some things us average joes should do to protect our well-being?

~~~
steveplace
Quotes like these from "analysts" come out about 3 times a day. Generally it's
just noise and nothing to trade on. It does create transaction fees for the
brokers, though.

Evidence: go find quotes from Abby Cohen (permabull) and Meredith Whitney
(permabear) for the past 3 weeks. They go talk smack on CNBC/bloomberg every
so often and it makes headlines.

~~~
icey
Ordinarily I dismiss these sorts of claims immediately... But the Royal Bank
of Scotland seems to be a fairly reputable source to me.

~~~
steveplace
You could say the same thing about the analysts at Goldman Sachs who say that
crude oil is going to 200, all the while holding /CL contracts.

Or brokers from Lehman saying their subprime exposure is contained.

I'm not trying to knock on these guys... they have a hard job. But they are
not the best place to get opinion.

~~~
icey
It's not remotely the same thing. Goldman Sachs and Lehman were protecting
their bottom line. RBS is making this announcement as a public service - They
have nothing to gain from this at all.

~~~
steveplace
Really?

"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah,
the bank's _credit strategist._

The guy is an investment banker. He is placing directional exposure to the
downside of the market. He has plenty to gain from it (as do I).

Reports by analysts are by no means a public service.

And your original question ("What should normal people do"): you can reduce
your market exposure by reducing your directional bias (delta) against your
market weighted (beta) portfolio. So buy puts, sell calls, sell OTM credit
spreads, buy {SDS, QID, GLD, DUG, DXD} or something like that.

~~~
icey
Hmmm, on re-read, it would appear you are right. I stand corrected.

------
TrevorJ
I have a gut feeling that they are right on this one.

------
bprater
What about gold?

