Well, have we at long last reached the day when Williams is prepared finally to declare the Great Bear Market officially open for business? Hmm, let's take a closer look before coming to a firm conclusion, shall we?

Markets certainly took another wee peek over the edge of the cliff during the week, that's for sure. Then there's the matter of the sub prime mortgages/CDO meltdown - more or less everyone in the financial business is still asserting that the problems therewith are confined to that sector. (ie to hedge funds that hold/held the toxic waste referred to in recent issues of these ramblings). But we can note that Sowood Capital (a US hedge fund set up by a couple of fellows who had previously managed Harvard University's endowment fund) has just gone phut, taking (inter alia) $350m of Harvard's money with it, not to mention $30m worth of the Massachussets state pension fund - the point in mentioning this here, is that according to Sowood's managers, they "didn't own any sub prime mortgage debt". Oh yes they did - they just didn't know it! Why not? Because they had doubtless bought 'packaged' debt CDOs from someone else (Bear Stearns?) in the fond belief that what they then owned was AAA rated and thus top quality stuff. And frankly, a whole lot of these guys shouldn't even be allowed to handle small change because they are often seriously clueless about how the smartest money actually operates.

Next, we see that a major German investment company is being bailed out by the banks - they're blaming sub prime holdings for their troubles. Then we can note that several French and Australian hedge funds have barred all withdrawals - the certain sign that they too are effectively worthless but can't quite come to terms with that fact.

And there's more! - American Home Mortgage Investment Inc (the USA's 10th biggest lender - ie massive) has just announced it has run out of cash and "could go bankrupt". A message from Williams to its managers - it's not "could", guys - it's "will."

This side of the pond, HSBC is setting £120m aside to cover refunds of overdraft overcharging, plus bad debt at its USA subsidiary - or "loan impairment charges" as they're calling that - sounds good, but the total cost is going to be an awful lot more than a measly £120m, of that we may be certain. They just want to let the really bad news come out in dribs and drabs.

Then there's the fact that Bear Stearns itself (and it's a very famous international merchant bank with over 1000 staff in London alone, and 15000 or so worldwide) has had its own credit rating slashed by Standard and Poors - methinks Goldman Sachs and Lehman Bros (the biggest of the competition) won't be far behind in that regard either.

Next, the much - vaunted Blackstone IPO (use the WICS search engine for references to Blackstone) has seen the share price tumble since launch - an example of REALLY smart money parachuting out with impeccable timing, that's for sure.

And I guess the final thing worth reporting is perhaps the most significant of all - the US government is in total denial - according to the Treasury Department "There is no credit crisis". Now THAT is a sure sign that there most assuredly IS a credit crisis.

Moving along, scams this week centre on "scams discovered" I guess - British Airways being the guilty party of course. Oh yes, and banks being required to set £2bn aside to cover refunds from years of overcharging. The sin of course is not in the commission, it's in the having been found out.....as will also apply soon enough to PM Brown when it's discovered that maybe his economic skills as Chancellor weren't quite as sharp as he would have had everyone believe. UK home repossessions are at an eight year high according to the Council of Mortgage Lenders (CML) and that's a trend not likely to change any time soon. Housebuilders would not be a great sector to be investing in at the moment, that's for sure - especially since the credit crunch means that buyouts just ain't gonna happen. (I thought last week that the EMI one might be pulled, but it just squeezed through before the door was slammed - unlike that of Mitchells and Butlers, and just look at what happened to its share price as a result!) Mind you, maybe the housebuilding sector will be rescued when they're allowed to build 3 million new houses on flood plains.....special insurance deals doubtless will be offered as an incentive to anyone crazy enough actually to buy one.

Finally, I note that the effects of globalisation have reached Switzerland at long last, with the supply of Swiss Army knives being put out to tender by said Swiss Army. They need 65000 new ones it seems. Now over the years I admit to having lost the odd pocket knife, but 65000? Maybe this time they need to buy a model with an inbuilt homing device ...Anyway, it seems the cheap Chinese copies will be in with a chance, much to the absolute horror of Swiss citizens everywhere - and from experience, I have to agree with them. One of the banes of the Williams Christmas present thing as a youth, was being given 'fishing knives' by well meaning aunties. Usually these were copies of the Swiss ones and it has to be said they lasted somewhat less than a long time before giving up the struggle....there's gratitude for you! Currently I've had a 'proper' one for several years and it's still as good as new - sometimes globalisation can be a bad thing.

Oh yes - you were wondering about my thoughts regarding the bear market - I nearly forgot! Well, in the words of a highly respected analyst, "Confidence is on the run" and that just about sums things up. I recall mentioning a long time ago that many (far too many!) fund managers are too wet behind the ears ever to have experienced a bear market, nor any kind of recession. Such bright young things predominate in the financial industry, and now they're beginning to worry because they have really no idea at all how to react to the credit crunch. Shortly, they will begin to panic, of that we can be sure. So my answer is: "Yes, this is the start of a massive bear market that's going to wipe out the investments of more people worldwide than has ever happened before." Strong words eh? We'll see of course, but that's the way it looks now, to this old stager. It's highly likely that decent 'buy' trades will become harder and harder to identify - yes, they will be there, but they'll be better hidden than for some time. Does that mean we should be happy to have all our trades as 'sells' for the foreseeable future? Not at all - if you have (say) the recommended maximum number of trades (ie 12) running all as 'sells' and the market rebounds sharply (as it will do, on a regular basis) then you might lose a whole lot more than anticipated. Therefore, if all you can find are 'sells' (which means you're possibly not researching enough) then you should stick to around HALF the total - ie 6 or so. Don't get greedy because that NEVER works except by accident!

Okay, moving on then to today's charts, first we'll update that of Jardine Lloyd Thomson from last weekend, because things there have changed - almost certainly due to the credit crunch by the look of things. Had they been getting courted by private equity? If so, that's another engagement ring being sent back. Then there's Whitbread - again I'm showing you this one to demonstrate by just how much these potential private equity deals had been propping up share prices overall, and how the credit crunch has begun to affect things. Finally we'll look at Minerva again because the bottom line of the channel (see last weekend) that had been supporting the price, is now doing the opposite - it's fascinating (at least it is to this sad person) how such things happen so very often! .... I guess it's not THAT sad, given that such knowledge can add a few quid to the bank balance from time to time....Anyway, that will do for this weekend, so all the best until next weekend as usual - happily the car sailed through its MOT and I have a certificate in Welsh to prove it!

Happy Trading

Ian.

'IMPORTANT NOTICE: These WICS charts are for EDUCATIONAL PURPOSES ONLY. They represent only MY understanding of what is happening in the market for any particular share, stock, commodity or index. In NO circumstances should they be construed as recommendations to trade. If I choose to trade what I see, that is MY decision. YOU must, in turn, come to YOUR OWN conclusions about what action, if any, YOU might choose to take'