just stay in AUD - will be at 80c soon enough.
How high can this dead cat bounce?
- Thread starter kum yin lau
- Start date
"eventually" we will be at parity. I predicted that in '04 and was shocked when we got so close so quickly.
I'm not a chartist but still believe we are in a secular bull vis the US$. Our recent dip is because of serious but short-term influences.They once said "Never bet against the US$" but now I believe it is "Never bet against the Pacific Peso or the Loony."
No Trog. I'm commenting on the market only because some are toey and want to jump in.
My only buy this year has been WPL and that's going OK. On the next pull-back (and there will be another) I'll take another step. I admit to being bloodied and having to keep Mrs Fish on side so it's softly softly catchee monkey for me.
My only buy this year has been WPL and that's going OK. On the next pull-back (and there will be another) I'll take another step. I admit to being bloodied and having to keep Mrs Fish on side so it's softly softly catchee monkey for me.
yeah i know the feeling - everybody's shares are down so its hard to justify buying more the the non-investing significant other
same boat here!Im not sure if the last down leg was the bottom or not (I think it may be but of course could just as easily be wrong).
What I am quite sure of is if it goes back down it wont fall much below the last low. The economic landscape is improving with each day - there are signs of this. Its gonna be a painful year or two but I suspect more in the real world than in the share market (which should have a good 12 - 18 months).
KY,
With the All Ords sitting at 3900 as I write are you still calling "the bounce"?
The trend looks to be forming. I'm still looking at going in early July.
Project 1080.
The project: 10 IPs in 80 mths.
I find this latest wave of optimism quite strange. Last week two of my neighbors got retrenched and from the stories I have heard many more have also lost their jobs. The latest reports from the banks were quite bad and WBC even cut its dividend by 20%. Have we really seen the worst of the GFC and are on our way to a recovery? Methinks not...
seems the damage in the real economy lags what happens in the financial markets. explains why in Dec 07 everyone was wondering what the big deal about stocks etc was all about. Similarly the stock market will pick up whilst the real economy adjusts
Yep, as ausprop says.
The stockmarket rallies before everything else, just as it busted way before everything.
Whether this is a real rally or not, who knows, but I've been puting some cash in, just in case it's the real thing, for the long term.
See ya's.
I think at times like these you have to look at the psychology of the market.
And dont think that retail investors are the only ones to act like a herd, "professionals" do as well, infact maybe more so. In the professional money making areana nobody gets fired for achieving 'average industry rates', but plenty get fired if they stick their neck out and get it wrong.
This is why i was saying that it is only in times of the recent downside volatility that a small investor actually has an edge over the professionals. A small investor lacks the institutional infrastructure that supports professional investors during normal markets, but a small investor is also only accountable to himself, he doesnt have to report to a boss, and thus can create his own time frame.
Anway the 'professional' mindset out there has been that this should have been a bear market rally (and who knows if it is, i dont give short term views on the direction of the market, such opinions to investors are a mugs game in my opinion, instead keep your eyes focused on an individual company's share price vs its intrinsic value, to hell with the market as a whole), and there will be plenty of time to establish positions in the market on any pull backs. The trouble is everyone has been thinking this way. And when everyone thinks this way: Guess what: It doesnt happen, and the reason it doesnt happen is because nobody has exposure to the market to 'give back' to those who are waiting for the pullback.
Australian Super Funds had 15% in cash the highest number in 15 years. In the US money market funds as a % of mkt cap of the NYSE peaked at 85% in Feb (its now down to 68% against an average over the last 20years of 30%).
So the big money instos have been on the sidelines, through this entire move, waiting, waiting, and waiting for the invevitable pullback. The problem is it hasnt come, they keep saying the markets are overbought, but they miss the big point: its under owned. Now June 30 is comming up which is annual reporting time for Australian instos and 6 monthly reviews for the US:
so you can feel the sweat building on some of these professional money managers: with the S&P now up 38% and the ASX +25%, those that are seriously underweight equities dont want their reports saying they are underweight equities and over weight cash after such a powerful rally (they are sweating because they can see the loss of their investment mandates, afterall these guys are paid to know what to do right).
Those that were underweight equities were waiting for 2 particular events that would destroy the rally and drive the market back to the lows: weak US reporting season and 2) US Bank Stress tests: Well the US reporting season was better than expected with US earnings down 32% against market expectations of 37% (again read this again: its not the actual result, its the actual vs expected that is so important to market pyschology).
To make things even worse, we have had significant short positions in the market. If you think the long only professional managers are sweating, the shorters are having heart pulputations. Those with long term shorts are really in doggie do do now, whats been a very successful strategy for the last 18 months, is now looking like financial kamakazie. If shorters want to exit their positions, they have to do so against a market that is rising, against professional investors who are underweight equities and sweating themselves, and against retail investors who are *****ing their ears up at the market actually going up for once. This will just add more fuel to the fire.
Personally with the ASX200 at 3900 odd, i think the easy short term money has already been made. From here you must really give due consideration to your investment time frame. On a 5 year view point, the market is still VERY attractive. But on short term (ie 1 year or less), its more uncertain, especially if you are buying individual stocks (as opposed to the index), as many of the better stocks have already rallied as the professionals start grabbing them. Some of the speculative stocks, and those that are opperate in commoditised industries (ie no pricing power), or those with only OK fundamentals, might still be cheap, but they are cheap for a reason.
One further point i can say, is that the faster the index rises from here because of the factors mentioned above, the higher the probability of a future pull back. The headache becomes at what point does the pull back occur and at what % pull back???? The faster the index moves upwards from 3900 the harder will be the future pull back. Why ASX200 at 3900 and not ASX200 at 3100??? because nobody had exposure at 3100, for a pull back to happen you need one of two things:
1) something really dire needs to happen, worse than anything that has been happening during 2008, or
2) you need people to start buying stocks pushing up the prices, only to find that the economic environment doesnt justify the short term euphoria in buying stocks again. But for this factor to work, you need OTHER people buying stocks, if nobody buys then its irrelevant goes everyone is already underweight equities.
And dont think that retail investors are the only ones to act like a herd, "professionals" do as well, infact maybe more so. In the professional money making areana nobody gets fired for achieving 'average industry rates', but plenty get fired if they stick their neck out and get it wrong.
This is why i was saying that it is only in times of the recent downside volatility that a small investor actually has an edge over the professionals. A small investor lacks the institutional infrastructure that supports professional investors during normal markets, but a small investor is also only accountable to himself, he doesnt have to report to a boss, and thus can create his own time frame.
Anway the 'professional' mindset out there has been that this should have been a bear market rally (and who knows if it is, i dont give short term views on the direction of the market, such opinions to investors are a mugs game in my opinion, instead keep your eyes focused on an individual company's share price vs its intrinsic value, to hell with the market as a whole), and there will be plenty of time to establish positions in the market on any pull backs. The trouble is everyone has been thinking this way. And when everyone thinks this way: Guess what: It doesnt happen, and the reason it doesnt happen is because nobody has exposure to the market to 'give back' to those who are waiting for the pullback.
Australian Super Funds had 15% in cash the highest number in 15 years. In the US money market funds as a % of mkt cap of the NYSE peaked at 85% in Feb (its now down to 68% against an average over the last 20years of 30%).
So the big money instos have been on the sidelines, through this entire move, waiting, waiting, and waiting for the invevitable pullback. The problem is it hasnt come, they keep saying the markets are overbought, but they miss the big point: its under owned. Now June 30 is comming up which is annual reporting time for Australian instos and 6 monthly reviews for the US:
so you can feel the sweat building on some of these professional money managers: with the S&P now up 38% and the ASX +25%, those that are seriously underweight equities dont want their reports saying they are underweight equities and over weight cash after such a powerful rally (they are sweating because they can see the loss of their investment mandates, afterall these guys are paid to know what to do right).
Those that were underweight equities were waiting for 2 particular events that would destroy the rally and drive the market back to the lows: weak US reporting season and 2) US Bank Stress tests: Well the US reporting season was better than expected with US earnings down 32% against market expectations of 37% (again read this again: its not the actual result, its the actual vs expected that is so important to market pyschology).
To make things even worse, we have had significant short positions in the market. If you think the long only professional managers are sweating, the shorters are having heart pulputations. Those with long term shorts are really in doggie do do now, whats been a very successful strategy for the last 18 months, is now looking like financial kamakazie. If shorters want to exit their positions, they have to do so against a market that is rising, against professional investors who are underweight equities and sweating themselves, and against retail investors who are *****ing their ears up at the market actually going up for once. This will just add more fuel to the fire.
Personally with the ASX200 at 3900 odd, i think the easy short term money has already been made. From here you must really give due consideration to your investment time frame. On a 5 year view point, the market is still VERY attractive. But on short term (ie 1 year or less), its more uncertain, especially if you are buying individual stocks (as opposed to the index), as many of the better stocks have already rallied as the professionals start grabbing them. Some of the speculative stocks, and those that are opperate in commoditised industries (ie no pricing power), or those with only OK fundamentals, might still be cheap, but they are cheap for a reason.
One further point i can say, is that the faster the index rises from here because of the factors mentioned above, the higher the probability of a future pull back. The headache becomes at what point does the pull back occur and at what % pull back???? The faster the index moves upwards from 3900 the harder will be the future pull back. Why ASX200 at 3900 and not ASX200 at 3100??? because nobody had exposure at 3100, for a pull back to happen you need one of two things:
1) something really dire needs to happen, worse than anything that has been happening during 2008, or
2) you need people to start buying stocks pushing up the prices, only to find that the economic environment doesnt justify the short term euphoria in buying stocks again. But for this factor to work, you need OTHER people buying stocks, if nobody buys then its irrelevant goes everyone is already underweight equities.
