crystal ball
- Thread starter scott
- Start date
Ask me in about 4.5 months, I should have it back from the repair shop by then!!!scott said:
I mean hey, what's your rush??!!! Why not in the next 6 months (say by Xmas) or 12 months, or better still sometime in the near future???
All good things come to those......
Well, I think you know the rest Scott!!
RichardC said:The money hasn't been taken from the market, some was merely transferred from the impatient/over-extended to the professionals. Happens regularly.
Richard has summed it up well. Wednesday morning was the classic case of capitulation. After a shocker on Wall street people had had enough and were even saying on this forum how the portfolio was being liquidated. The professionals snapped up quality companies at bargain prices.
The current concerns about shares are to do with inflation and interest rates. If interest rates rise, then earnings yields should in theory contract to compensate. For earnings yields to contract, prices drop. The opposite happened in the mid 90's when interest rates dropped, and it's what caused the huge share and property booms.
If interest rates are going up, then will Sydney property prices start another boom? I think not, although people may like to tell me why they think a boom could start as I can't see how. People are already hocked to the eyeballs with debt now.
If you look at history, the sharemarket generally crashes when it gets overvalued. In the last 2 times, 1987, and 2000, property at the time was at very cheap levels with juicy rental yields. When shares crashed, the money went into property and was the start or continuation of the boom. Has property this time got great rental yields?
Just my opinion, but if the sharemarket is going down because of inflation, then property is going down with it. I don't think the sharemarket is going down though. Profit results in a few months from the resource and energy sector will amaze even the bulls. This profit from resource companies will then flow through to the rest of the stockmarket, the property market and the whole economy.
Property is safer than shares. That's a fact. Shares can correct 10% on tiny little concerns and investors turn into sheep. That's why banks lend to much higher levels with property. But this higher level of gearing on property then evens up the levels of risk. Highly geared property is then just as risky as moderately geared shares. Especially if shares are paying a higher yield than property which could well be the case.
That's what I think. Good luck with it all.
See ya's.
The good thing at the moment is that there's a different "professional" opinion about where the share market is going to suit everyone.
If you think the correction has ended and now's the time to buy bargains, then you'll find many supporting opinions. However, if you think this is just a suckers' rally before further large falls, then there are plenty of supporting opinions for that too.
So the question is, do you want to miss out on the current bargains, or join the suckers about to be burnt?
Cheers,
GP
If you think the correction has ended and now's the time to buy bargains, then you'll find many supporting opinions. However, if you think this is just a suckers' rally before further large falls, then there are plenty of supporting opinions for that too.
So the question is, do you want to miss out on the current bargains, or join the suckers about to be burnt?
Cheers,
GP
GreatPig said:..........So the question is, do you want to miss out on the current bargains, or join the suckers about to be burnt?
Cheers,
GP
Yes. Every transaction requires a buyer and a seller. The seller reckons the cup is half empty but the buyer reckons the cup is half full.
Only time proves who will be right.
However, if one is lucky enough (with the right crystal ball - not the pirated ones from China) to pick good stocks (not the dogs), the odds tend to favour the bulls.
ASX all ords chart for the past 50 years - trend has only gone up, in any five year time frame.
There are a few stocks that have performed well for many years (even decades). Most important is to avoid those that totally collapse (this is where residential property is safer - cannot totally collapse and go into insolvency).
Stock selection using Fundamental Analysis requires financial analysis skill and of course, some luck (all investments seem to require this
). Technical Analysis merely trade the short term volatility (some exponents do not even bother to check what the company does!). Long term investing is a different approach. The aim is to select stocks that double or triple in value over the years (the banks have had a solid run for over 10 years now, Woolworths has been a sound performer for years, AGL has been around for 100 years, Sonic Healthcare has had a solid run for 10 years, etc.).But of course, the past performance does not ensure future performance and the reversion to the historical mean has probably started (in both equity markets and property markets - in the commercial property sector - notice the few veterans that have sold out recently).
The stock market corrections during the past 3 years were mild. The current correction is not as mild and the aftermath remains to be seen.
Nevertheless, it is likely that the easy gains (courtesy of easy and cheap credit) is now over. Reversion to the historical mean, might have to be respected (like it or not - mean markets are back in play).
Interest rate rises have more potency these days due to record debt levels (household sector debt is at an all time high). Consider what a 1% rate rise (even at successive 0.25% increases) can do to consumer confidence these days. Might not happen, but if it does, markets will stall, at best, fall more likely. American rate rises at 16 successive 0.25% from 1% to 5% and probably rise to 5.25% at the end of this month, will slow things down in USA and have ramifications to global exporters and hence the world economy.
Caveat emptor.
Like in today's Sunday Telegraph.GreatPig said:
Page 89, article by Terry McCrann: "The big jump in share prices on Wall St late last week does not signal happy days are here again. In fact, it points to the disturbingly exact opposite."
Then, page 90, article by Alex Wilson: "However, Friday's dramatic rebound neutralised many of the losses and market watchers say the worst is over. What is more, the market may be poised to being its bull run afresh."
Later in that second article, quoting Commsec chief equities economist Craig James: "But now, with stocks at fairer values, he said the market was set to resume its growth trend."
Hmm... the market loves me, it loves me not, it loves me, it loves me not...
GP
One crystal ball says house price fall
http://www.theage.com.au/news/busin...-on-home-prices/2006/06/18/1150569212716.html
It is the process of reversion to the mean (mentioned in many investment books). Annual returns revert to historical averages over longer term time frames (use 10 to 20 years and returns tend to average 10% p.a.).
Prices do not rise 20% to 30% p.a forever. They never do. In some years, prices fall, even for successive years (in property and shares).
Sydney and Melb. (most suburbs) peaked in 2003. Perth started booming much later than other capital markets (due to timing of the mining boom and 'over priced' houses in Sydney and Melb. taking some investors to Perth in 2003/04/05).
http://www.theage.com.au/news/busin...-on-home-prices/2006/06/18/1150569212716.html
It is the process of reversion to the mean (mentioned in many investment books). Annual returns revert to historical averages over longer term time frames (use 10 to 20 years and returns tend to average 10% p.a.).
Prices do not rise 20% to 30% p.a forever. They never do. In some years, prices fall, even for successive years (in property and shares).
Sydney and Melb. (most suburbs) peaked in 2003. Perth started booming much later than other capital markets (due to timing of the mining boom and 'over priced' houses in Sydney and Melb. taking some investors to Perth in 2003/04/05).
GreatPig said:
This is why I usually ignore short term volatility. A buy and hold program for several stocks suits me. I am prepared to wait for my portfolio to double every few years. The last 3 years were too easy. The next 3 years are highly unlikely to be that friendly.
But, 10 years from now, my portfolio is likely to be much higher (due to the compounding effect of retained earnings within balance sheets). If a good company is generating 20% to 30% rise in ROE (return on earnings) for many years, (has been the case with some companies these past few years) I prefer to let these stocks do the profit earning than to try to make such profits elsewhere.
BHP has been generating over 35% p.a. ROE recently. Some people complain BHP pays too low a dividend yield. For me, I do not complain. At that level of ROE, BHP is more likely to make more money with retained earnings than I can earn with the dividends that it pays me (but I realise that some investors need dividend income for other purposes).
Note: I am merely chatting, nothing more. I know people prefer individually different investment styles. Nothing wrong with any approach, as we all aim to profit from investments
I can't remember such divergence of opinion among the pundits I read over the weekend.
Don Coxe at http://www.bmoharrisprivatebanking.com/webcast.asp is one I respect greatly and his observation that all four major central banks are similtaneously tightening liquidity (my nomination for the root cause of asset inflation) should be of concern to all investors, including RE.
Don Coxe at http://www.bmoharrisprivatebanking.com/webcast.asp is one I respect greatly and his observation that all four major central banks are similtaneously tightening liquidity (my nomination for the root cause of asset inflation) should be of concern to all investors, including RE.
Delta said:BHP has been generating over 35% p.a. ROE recently. Some people complain BHP pays too low a dividend yield. For me, I do not complain. At that level of ROE, BHP is more likely to make more money with retained earnings than I can earn with the dividends that it pays me (but I realise that some investors need dividend income for other purposes).
Note: I am merely chatting, nothing more. I know people prefer individually different investment styles. Nothing wrong with any approach, as we all aim to profit from investments
I agree there. If a company is making heaps over time, the share price should go too. BHP only pays a pityfull dividend because the company chooses to. I don't want the dividend. If BHP can generate a 35% or higher return on equity, then let them have my dividend. If BHP payed out it's earnings as dividend, then the growth would be much less and the debt much higher, although the 10% fully franked dividend would be nice.
See ya's.
RichardC said:
I agree there. The difference in opinion is massive, and I suppose that's why the volatility has gone sky high. Housing to crash, housing to take off. Shares to crash, shares to resume the boom. Blah Blah. I'm moderately geared into both classes, [as in farmland, not Residential] so if everything busts I should be OK, and being moderately geared, should be able to take advantage if things go pear shaped in either asset class.
See ya's.
My (property cycle) crystal ball says a resounding NO.
In fact my property cycle crystal ball indicates a long slump for Sydney yet. I note BIS Shrapnel issued a press release a day or two ago which I think indicated a recovery may not arrive until 2008-09. Based on my own research of the Sydney property market I'm thinking at this point that the recovery will even be later than that... i.e. after 2010
Of course as time passes and the Key Drivers of the property cycle change for example if net migration into Sydney booms then the likelihood of an earlier recovery is greatly improved.
I am planning to undertake a 'speaking' tour of the major Australian cities sometime in 2007 to reveal my research into the Australian property cycle. I look forward to increasing my local property knowledge of Australias major cities at the same time.
