Cyprus-Forum.com

[erolz66]

so it is not Brexit that causes the fluctuation in value .... as it has yet to happen, it is speculators opinions and actions that cause the fluctuations.

Yes Brexit is yet to happen but the vote to leave is an 'event' that has happened, three years ago. So it seems to me that we are talking 'semantics' here. Brexit has not caused these movements, but the decision to have a Brexit in the future, something that has already happened, is causing them

Shut down the currency Markets today and the pound and most other currencies will stabilise as the value will then not be determined by speculators.

If you want proof of that look at the Pound/Euro currency charts on a weekly basis, When the markets close the graph almost levels out, because the computers are still doing the currency calculations but are not subject to the Hooray Henry's in the City adding their speculative opinions.

Sorry RH but with genuine respect that seems to me to just be patent nonsense, as far as I understand what you are saying properly. What currency markets are, what they allow, is for people to trade currencies without having to find individual parties with which to do so. Of course them being closed will lead to less volumes of trades happening and thus in turn less volatility when they closed. Reduce the ability for people to be able to easily sell one currency for another without having to find a counter party themselves and then there will be less of everything , volume in terms of trades, in terms of value of trades, volatility and anything else measurable. Your argument to me is analogous to saying if you reduce people's ability to pay for things with a debit card then the amount of debit card fraud will reduce, stop there use entirely then debit card fraud will reduce to zero. All true but it will also mean all the benefits of such means of payment will also reduce to zero as well.

I given my situation have a need to be able to regularly take an amount of sterling and sell it to somebody for an amount of Euro. I am not 'speculating', it is a real need. Now already if I can find a counter party myself when I need to make such a change I will do so and not need a market. If when I have £200 and I want and need Euros, I can find someone else who has the equivalent in euros and has a need to change them in to pounds, then I will do the trade this way and without the need for a market, mainly to avoid the costs of using a market. However the idea that I could always do this quickly and easily, find my own counter party and do a bilateral deal with them, when I have a need to change currency, if there were no market at all is not one I find credible , form 18 years personal experience of 'trading' such things on a near weekly basis.

Just because market can be used for speculation that does not mean that speculation is the only 'purpose' they can or do serve.

[erolz66]

In the last few hours the Bank of England has said that its opinion, best guess, as to what the effect of a no deal Brexit will be on Sterling's value is negative. Now yes their predictions are often wrong. Yes you can argue that they are 'biased' against Brexit politically (though I do not personally believe this). However if you were to say to me do I think the probability that their 'best guess' will end up being right or 'more right' than say the view of someone like Paphitis' being right or 'more right' then I would have to say yes.

Weather forecasters, professionals with lots of data and lots of money to process that data, are often wrong in their predictions. That does not mean therefore such predictions have no 'value' or 'use' at least as I see things.

[Robin Hood]

Erolz66:

Exactly the referendum, the way it was structured, told us nothing about the will of the people about the 'how'. I really am not arguing that we should not leave. I really am not arguing that how we should leave should be a 'democratic' decision not a fiat one as some clever means of seeking to lead to a no exit at all. I do accept that accepting that the how should be subjected to 'democracy' (direct or indirect) may have a consequence of increasing the chance and ability of those who want no exit all to get their aim but that is not why I advocate such. I advocate such because our democracy is more important than that increased risk imo.

I think you are trying to read too much into this? It was a binary vote, there were two options and neither of them were clearly or honestly presented to the electorate. But that was then and this is now ..... the decision has been made and the majority voted OUT. That is the mandate the vote gave to Parliament ...... and they screwed it up because when you see some of the things being bandied around THEY have no more idea of what leaving entailed than we do today ... three years later.

However there should in my view be some kind of democratic legitimacy in deciding how we leave. So majority of MP's would satisfy me. However if they are unable to agree by majority a way to leave and it is argued that no deal is the only way left then OK, fine ask the people. Not 'no deal' vs 'Remain'. Not no deal vs May s deal or some other. Just no deal exit , yes or no.

May went for a majority vote three times, to get HER deal through and our representatives in Parliament rejected it all three times! So you had a democratic vote on leaving and the negotiated deal was rejected .... democratically. So now what?

IMO: We do exactly what BJ has done and go back to negotiate a deal that is acceptable. Once we have got all we are going to get, we either let the Government make the decision to leave on that basis or again they reject it and we leave without a negotiated deal. But the EU negotiators are not prepared to discuss that. We therefore have no other option but to leave without a negotiated settlement ..... but that is not the UK’s fault as we are prepared to talk, it is the EU that is not.

If you put it to the people to vote again do you honestly believe the majority have any more idea now as to what it is all about, than they did in 2016? I don’t see that from the comments on here as opinions are still driven by the original referendum result.

So I will ask a further question if I may ? Do you think that Johnson should shut Parliament down entirely in order to achieve an no deal exit that the 'people' have said via their elected representatives, is not the majority will ? Do you see no 'danger' to democracy in doing that akin to the danger there would be if brexit were to not happen at all ?

No, that is what a dictatorship is all about! It would remove the constraints imposed to prevent a single person making that decision. That is what I see happening in the US and the President (in our case Prime Minister) is calling the shots and overriding the Senate and chaos ensues.

I do not know if your saw my re post here of a post I had made elsewhere immediately after the 2017 GE and TM's loss of her majority ? It says exactly what you have said above but before it was cocked up not hindsight.

Sorry but no I didn’t see it. I have only recently made any comments on the subject as I think most of the comments are based on emotions, doom-and-gloom and ‘what-ifs’ by people who did not get the result THEY thought was the right one. The situation has now changed and the train is shortly leaving the station!

What I do not and cannot accept is because all of that is legitimate and true for you personally, that has to also mean therefore it is also true of all the other 17.2 million who voted to leave (or even 93% of them) as well. Now it may be that you are not saying this and if not, then ok but others here from the leave side of the argument are, as I understand them, arguing exactly that in order to try and make out there was is and always had been a majority who support leaving without a deal.

Were you aware, were any of the people aware that it would require negotiations just to leave and these legal points all had to be negotiated? At the time I thought it was just ‘Article 50’ to make the decision formal and to set a date. I then assumed we would do just what Trump does ...... "We are leaving ..... and goodbye! "

Then the detail falls into place over many months as the regulations are rescinded and we broke away from EU regulation to run our own ship. I never really went into the event in detail ..... and I don’t think many people did .... even those running the show in Parliament! We, as a people voted to leave ...... and we stick by that.

[Robin Hood]

Erolz66:

Yes Brexit is yet to happen but the vote to leave is an 'event' that has happened, three years ago. So it seems to me that we are talking 'semantics' here. Brexit has not caused these movements, but the decision to have a Brexit in the future, something that has already happened, is causing them.

Brexit was not an ‘event’ it was a decision ..... nothing changed! But the value of the pound changed simply through the guesses and predictions by speculators ANTICIPATING what THEY thought might happen and selling sterling to buy Euro’s and Dollars. In almost every case, what they predicted did not happen. The decisions were made by speculators, there is no other rational explanation.

Sorry RH but with genuine respect that seems to me to just be patent nonsense, as far as I understand what you are saying properly. What currency markets are, what they allow, is for people to trade currencies without having to find individual parties with which to do so.

I think that is a total misconception! The individual parties put their money into an investment fund based on currency . This fund is managed by the major banks and a lot of the money is in the form of deposits by pension funds and insurance companies. As I understand the system, this is the money they move around at a rate of many billions of pounds A MINUTE. The amount of money they ‘play’ with is many times the GDP of the UK every single day. It is that volume of trading that determines the exchange rate.

It is all driven by algorithms and extremely powerful computers. Algorithms are continually upgraded to improve the speed of response to currency moves and see maybe changes of .000001% in the volume and thus the rate. Even the distance (i.e. time) between the computer and the Markets computers is critical as it takes time for the information to travel from A to B ...... but that time is measured in billionths of a second for light signals travelling at 185,000 miles a second!!!

All you do is exchange your pounds for Euro’s at a rate determined by currency traders on a day rate ...... this rate changes at the currency traders end, thousands of times a second. These traders may only make a fraction of a percent on a change in the rate of exchange ..... but multiply that by the volume and they can make (or lose) millions in a day just on a fraction of a percentage point change. So how will Brexit change that? Will all these computers suddenly stop working ..... and would it affect the REAL economy if they did?

I am quite willing to be challenged on that as it was a long time ago I went through this exercise.

But how much real wealth does all this market trading produce whether it is commodities, currency, futures, bonds, shares etc.? When you look at it this is all circulating within the financial and banking system ..... not in the economy, that is why QE did not cause inflation because the money NEVER went into the real economy. It inflated asset prices.

Let me ask you a question? If the value of a company’s shares rise or fall on the markets, does the Company actually gain or lose anything from that? In other words how much of that market valuation goes back to the Company as ‘cash’?

I given my situation have a need to be able to regularly take an amount of sterling and sell it to somebody for an amount of Euro. I am not 'speculating', it is a real need. Now already if I can find a counter party myself when I need to make such a change I will do so and not need a market.

Not strictly true! Unless you have found a Taverna owner or car dealer who will give you a better rate for cash than you can get from the bank, the rate you get is determined by the currency market.

Just because market can be used for speculation that does not mean that speculation is the only 'purpose' they can or do serve.

So what other purpose do they serve? If you want to move large sums of money this is only possible through a bank ....... or a suitcase if you don’t mind breaking the law and taking the risk. Go into a bank with a large bundle of cash and they will accept it but immediately freeze it and call the police and the revenue! You then have to satisfy them it is all above board and if you can’t prove it you lose the money and face charges. This is one of the reasons the banks want to phase out cash completely.

Your money goes into the pot and the speculators keep shifting it around and on each movement they make ‘a bit’. What purpose do they serve? They make money .... period! This money does not go into the real economy so it has no effect on it. IMO: Money speculators do more harm than good for any economy!

[Paphitis]

ZZZZZZZZZZZzzzzzzzzzzzz

[miltiades]

Every reporting media clearly gives Brexit as the sole cause of the pound weakening, a weak pound will push prices on foodstuff Electronics and practically everything that is imported into the UK and in turn create inflation , unemployment and an economic meltdown for the nation.
Apparently holiday makers are now facing the realities of the impending suicide at airports throughout the UK they get less than one euro to their pound.
More than one million Brits living in Europe have seen their UK pensions, or savings reduced considerably . Boris, supported for so many, will go down in history as the only ....buffoon to ever lead a nation, a buffoon leading more buffoons. !!

[Paphitis]

Every reporting media clearly gives Brexit as the sole cause of the pound weakening, a weak pound will push prices on foodstuff Electronics and practically everything that is imported into the UK and in turn create inflation , unemployment and an economic meltdown for the nation.
Apparently holiday makers are now facing the realities of the impending suicide at airports throughout the UK they get less than one euro to their pound.
More than one million Brits living in Europe have seen their UK pensions, or savings reduced considerably . Boris, supported for so many, will go down in history as the only ....buffoon to ever lead a nation, a buffoon leading more buffoons. !!

Who watches the media these days? The media feed you a narrative. Even the internet does with its algorithms. That's why I use DuckDuckGo!

It's especially important to use DuckDuckGo when doing research on controversial topics such as Climate Change, Climate Alarmism, Socialism and inter-sectional woke politics. I would add currency manipulations to this as well. In fact, volatility is a traders best friend.

Only the blind who are easily led and controlled only take the traditional media as gospel. There is so much factual information out there but you need to know HOW to find it.

It's 2019 Miltiades! Get with it sport!

[Maximus]

Let me ask you a question? If the value of a company’s shares rise or fall on the markets, does the Company actually gain or lose anything from that? In other words how much of that market valuation goes back to the Company as ‘cash’?

Just because market can be used for speculation that does not mean that speculation is the only 'purpose' they can or do serve.

So what other purpose do they serve? IMO: Money speculators do more harm than good for any economy!

Yes, the company gains or loses from the rise or fall in its share price. The whole point of a company going public and issuing shares is to raise money. They then can use this money to invest in their operations and try to grow the business.

Would you rather own a company who’s shares trade for $1 or $1000?

If I buy one share in your company at $1, what are you going to do with it?

Speculators play their part in the market too. they provide liquidity, they help create an efficient market and keep spreads tight. Most of them lose anyway. Seriously, speculators don’t make up as large a proportion of the market as you thinK. If we are talking about foreign exchange, most of the volume is from the banks themselves, investment managers and commercials. Your independent speculator is at the bottom of the food chain.

Would you rather have a market that has a huge depth of liquidity with competitive bid and asking prices close together or one that has shallow or sparse liquidity with a wide spread between the most competitive bid and most competitive asking prices? I think the preference is obvious. It is actually the latter market that can be easier manipulated.....

Let’s take the housing market, speculators operate here as well. This market is notorious for not being as liquid as other markets. It can take ages to sell your property. Imagine in there were no speculators. It might take even longer to sell your property. Imagine you are ‘desperate’ to sell. Wouldnt you be glad someone is willing to take a punt on it and give you cash?

[Robin Hood]

Maximus:

Yes, the company gains or loses from the rise or fall in its share price. The whole point of a company going public and issuing shares is to raise money. They then can use this money to invest in their operations and try to grow the business

.
Absolutely 100% correct, well almost ......... however that scenario applies ONLY with the initial purchase of shares on the day they are traded! If you look at a share certificate it has no intrinsic value stated on it! Why? Because all it is is a receipt in return for the initial purchase of XX shares and has only a perceived value on the trading markets. If the MARKET value of those shares rises by say 50% the day after they trade, the Company does not get another cent. The holder of the receipt can cash in and sell it for 50% more then he paid for it. He made a profit out of the increase in price by selling the receipt ..... but no profit for the company!

Would you rather own a company who’s shares trade for $1 or $1000?

Value is of no significance it is just what you are prepared to pay! If I thought I could buy the shares for $1 and sell them the following day or following week for $1.50, then I would go for it. But if I am wrong and they drop to .75c then I lose, because the company is not going to give me anything back! So I lose, not the company as they still have the money for each share I bought speculating I would make a profit!

The rise and fall in value is determined by market speculators and has virtually no effect on the company.

If I buy one share in your company at $1, what are you going to do with it?

As you said..... invest it in the operation of the company. More to the point in this instance, what are YOU going to do with your share? You could hold on to it and reap profit from the dividends or you could sell it when the perceived market value of the share reaches your target level. But it is never anything other than a receipt for an initial $1 investment.

Speculators play their part in the market too. they provide liquidity, they help create an efficient market and keep spreads tight. Most of them lose anyway. Seriously, speculators don’t make up as large a proportion of the market as you think. If we are talking about foreign exchange, most of the volume is from the banks themselves, investment managers and commercials. Your independent speculator is at the bottom of the food chain.

I have already said that to Erolz. Speculators play their part in the Markets but the Markets are not representative of the performance of the economy. That is a mirage! The economy needs direct investment and that does not come from share valuation as the value is only perceived and remains within the financial system, only the initial share purchase put the money into the economy. The markets and the economy are two different things.

Would you rather have a market that has a huge depth of liquidity with competitive bid and asking prices close together or one that has shallow or sparse liquidity with a wide spread between the most competitive bid and most competitive asking prices? I think the preference is obvious. It is actually the latter market that can be easier manipulated.....

I would respectfully suggest that if the initial ‘share’ investment was into a BOND with a face value and term limits, then the value would remain constant and your interest on those bonds would be your return. Not a perceived value set by speculators who will likely know sod all about the industry the company is involved in. If the company needs more money it sells more bonds. Bonds are retrieved on more-or-less known and fixed values there is no room for speculation the return is based on performance!

Let’s take the housing market, speculators operate here as well. This market is notorious for not being as liquid as other markets. It can take ages to sell your property. Imagine in there were no speculators. It might take even longer to sell your property. Imagine you are ‘desperate’ to sell. Wouldn’t you be glad someone is willing to take a punt on it and give you cash?

Once again, buying and selling existing property does nothing for the real economy as the value (Wealth) is locked into the property. It may go up, it may go down according to availability of funding and the amount of property available. But once again it is not reflective of the real wealth creating economy. This is why giving QE to the banks to loan instead of into wealth creating industry didn’t work. The banks fed it into mortgages and other financial assets!

The economy did not benefit ..... the banks and market speculators did. And what do they actually do for the economy ...... tell me, because as far as I work it out they don’t! They make money and most of that is locked into assets and the banks hold the assets as security for the money they normally create to give credit. The QE money went to banks to buy up ‘asset backed securities’ for that read property with loans that have defaulted. The QE bought out the debt from the banks, the money paid to the bank wrote of the book debt and then disappeared ......... and the assets got sold off to provide the banks with the interest they lost.

So I say again IMO opinion there is no room for speculators in the economy, what is needed is investment in wealth creating projects, not speculative money making ventures within the banking and financial system. That's the way I see it!

[Kikapu]

A company going public also retains shares for itself and not all is sold off in the initial offering, so when stock prices rise, so does the equity in the company.

House prices which rises does have a direct benefits to the economy, since many homeowners do use the rise in the equity in their homes to use the money to remodel, buy furniture, a car and so on, therefore, the rise in house value is not money that is locked up.