[cobran20]

cobran20, on 16 May 2011 - 11:10 AM, said:

Discretionary spending is looking very sick

Another example of the market responding in advance of the broad media:

Australian shoppers ripped off by retailer mark-ups - Choice

[Solomon]

2% today.
Nothing unusual happening here.
Its got nothing to do with all the negative news.
Its just the stock market factoring in the next 6 - 12 months.
Those traders can foresee the future you know!

[wulfgar]

No body interested in the ASX anymore. At some point me may see the ASX tank to 3000 again.

Quote

Local stocks set to follow US, Europe down
June 9, 2011 - 7:43AM

The Australian market again has received negative leads from offshore trading overnight, with Wall St and European markets ending lower while oil bounced higher. Precious metals fell, and base metals were mixed.

At 6.28am AEST on the ASX 24, the June share price index futures contract was eight points lower at 4533.

Read more: http://www.theage.co...l#ixzz1OjQisw6M

[cobran20]

cobran20, on 24 May 2011 - 09:39 AM, said:

These may do a better job at causing Stevens to panick if they continue to slide.

The minnows are leading the way.

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[savagegoose]

gold up stocks down whats not to like

[cobran20]

A fine example of 'buy the rumour and sell the news'!

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[staringclown]

cobran20, on 23 June 2011 - 07:50 AM, said:

A fine example of 'buy the rumour and sell the news'!

Tell me about it. I had dreams of 3.30... It's 11 billion but in payments over time and the government has an out clause till 20% of the NBN is complete. Not to mention the shareholder vote!

[cobran20]

I wonder how that Hedge Fund Manager plans to short our housing market. He has a few choices to make!

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[sydney3000]

sydney3000, on 08 March 2011 - 05:53 AM, said:

I haven't. I am certain the markets will keep rising and it has nothing to do with the central banks printing money. When the market bottomed my shares were 17% of my wealth. Since then I stuck every cent into savings accounts and my shares have more than doubled. My shares are still only 17% of my wealth.

I believe others would have experienced the same scenario of a rise in share value not actually tilting the balance of their portfolio towards shares. Hence there is no need to rebalance and the share market will not sell off. In addition to that anything compared to house prices is undervalued at this stage.

note:
stock market unit price = Australian index unit price (e.g. All Ordinaries)
stock exposure's unit value = my combined stock portfolio value

I am still stumped about this.

Looking at the stock market unit price is one way of assessing its valuation. I am not sure if it is the true driver behind its future pricing. I wonder if the actual exposure of the population to the stock market has a bigger impact on the future pricing.

When I look at my own situation I conclude the following:

(The numbers are not the actual values but normalised. I am excluding superannuation and any offshore assets to simplify the picture.)

1. I was punished for risk like everybody else.
2. At the bottom of the cycle in 2008 I had

total assets $100,000 (100%)
cash $83,000 (83.0%)
stocks $17,000 (17.0%)

3. I de-risked by directing all new disposable income into cash since 2008.

4. By February 2011 my combined stock unit values had maxed out. I know this because I didn't sell them when I had the chance.

total assets $287,000 (100%)
cash $240,000 (83.6%)
stocks $47,000 (16.4%)

5. I had come to the conclusion that my financial situation had not changed even though the stock exposure's unit values had risen by 175% between 2008 and 2011.

6. It is August 2011 and the current situation is:

total assets $286,000 (100%)
cash $260,000 (88.9%)
stocks $26,000 ( 9.1%)

The stock market seems overpriced based on its unit price in August 2011 being higher than in 2008. The stock market seems underpriced based on the cash-to-stock ratio of my portfolio where the stock component in August 2011 is 45% less than in 2008.

If my total stock unit value is greater than in 2008 but its compontent in the total asset pool shrunk by 45% it may mean I am underweight in stocks.

7. If all other participants in the markets were rational (?) like me (?) they would have focused on gathering cash savings between 2008 and 2011. Their cash-to-stock ratio would show the same "stock market valuation oddity" where the stock exposure's unit value rises while the cash-to-stock ratio rises as well due to cash savings growth outpacing the stock exposure's unit value growth.

8. My heart says we should see a repeat of the 1930s stock market crash because the economic environment is deadly. My mind says there is no reason for stocks to decline because people have already de-risked immensely.

9. Fast-forward to June 2012 and assume the following worst case economic scenario:

- I am continuously employed until then
- I continue to bank disposable income
- the stock exposure's unit value returns to the bottom in 2008

total assets $307,000 (100%)
cash $290,000 (94.5%)
stocks $17,000 ( 5.5%)

If my total stock unit value is equal to 2008 but its compontent in the total asset pool shrunk by 65% it may mean that stocks are a screaming buy.

10. I am at a loss at what point in time it would be wise buy stocks again and how much influence the stock market unit price ought to have.

This post has been edited by sydney3000: 05 August 2011 - 10:13 PM

[cobran20]

The US banks are on the hook again!

[Solomon]

cobran20, on 08 August 2011 - 11:57 PM, said:

The US banks are on the hook again!

Barclays. The best of a bad bunch.
Bank of America looks to be on the nose.
What's the news there?

[cobran20]

Solomon, on 09 August 2011 - 12:05 AM, said:

Bank of America looks to be on the nose.
What's the news there?

AIG Suit Against BofA Is Latest From Mortgage Meltdown

[Solomon]

cobran20, on 09 August 2011 - 12:42 AM, said:

AIG Suit Against BofA Is Latest From Mortgage Meltdown

Thanks Cobran.

[serious groper]

WTF happened today on the ASX?

It goes according to plan then suddenly a 200 point rally???

During our lunch breaks we decided that the crash has ended...... is this like us believing that if we introduce a carbon tax that we will lead the rest of the world?

Or is this algorithms getting in on a buy assuming a brief rally tomorrow? Before a huge sell-off?

If things go bad again tonight, the ASX will be in for a 10% drop in 1 day....... will they call in Gordon Ramsay to shut it down if that happens?

[Solomon]

serious groper, on 09 August 2011 - 05:19 AM, said:

WTF happened today on the ASX?

It goes according to plan then suddenly a 200 point rally???

During our lunch breaks we decided that the crash has ended...... is this like us believing that if we introduce a carbon tax that we will lead the rest of the world?

Or is this algorithms getting in on a buy assuming a brief rally tomorrow? Before a huge sell-off?

If things go bad again tonight, the ASX will be in for a 10% drop in 1 day....... will they call in Gordon Ramsay to shut it down if that happens?

It was all staged to give the shorters a haircut!!!
Maybe this is a case of thinking we are different here, and that we can be distinct from the world.
Who knows.

[sydney3000]

I have a suspicion this was it. Prior to 2008 every man and his dog traded stocks outside superannuation. These days only few people do. Superannuation funds are buy and hold shops. There weren't many weak hands to shake out.

[Solomon]

Have now had a little time to reflect and a bit of sleep as well.
A couple of things are clearer.
1. There is still significant wealth available to fund such a recovery, in such a short time.
2. That this market is capable of touching 2009 lows, given the right hiccup.
3. That bullish attitude is still in control. (ie; Most don't see a declining market as a morally good thing)
4. I now know why I could never be a stock trader, and why I don't dabble in the stock market. (I haven't got the nerve)

What an interesting couple of days.
Why do I get the feeling there is still more to come.

[AndersB]

The All Ordinaries is up about 2.5%

So what's next?

On the one hand the debt problems in the US and Europe have not gone away.

But the US Fed will keep their zero interest policy until at least 2013.

The ECB has started to buy Italian and Spanish government debt instruments, so the immediate threat of big trouble in these countries has gone away. But of course, longer term this is still a serious problem.

At home, it seems mortgage rates are discounted up to 1% and fixed term home loans interest rates have been dropped by a couple of banks. The RBA and the federal government seem to be ready to loosen monetary and fiscal policy if necessary. That could be interpreted as a de facto RBA put option by the market (the authorities won't stand idly by to watch a plunging market).

So, if there is less downside risk, then up is the only way to go - for now.

But as a bear, maybe it is time to sell soon?

[Max Carnage]

Quote

But the US Fed will keep their zero interest policy until at least 2013.

Great. The US economy must be even more f*cked than I thought. Hooray! Share prices to the moon!

[cobran20]

Max Carnage, on 10 August 2011 - 01:21 AM, said:

Great. The US economy must be even more f*cked than I thought. Hooray! Share prices to the moon!

They're kicking the can further down the road, hoping that it last another couple of years. They certainly want a positive result for their 2012 election year.