realistically how far can the ASX drop?

Well I'll have a chat to my financial advisor....with the knowledge that no-one truly has a clue and discuss from there. I think I will cautiously enter the market.

Im sure many on here have lost quite a bit and thats very unfortunate. For myself its a calculated risk....purchasing at 3500 is FAR better than purchasing at 6800. My initial idea is to invest say 20% of my funds at 3500 and re-asess every 2 months on further investment thereafter.

I dont intend to pick a small handfull of companies( as to be honest i wouldnt know what to purchase....and id feel more comfortable not putting too many eggs in a handful of baskets) or trade ( as im not arrogant ir silly enough), Im intending to purchase via a managed fund or LIC.- and hold.

I will be a passive investor, with a long term view, pumping as much cash in as possible along the way.
I dont have the knowledge many on here have, but it seems almost that the more you know the more you dont. Sometimes people are too clever for theyre own good and ignore the fundamentals of what makes good sense long term......( though advice will be professionally sought taxwise and the best methods etc)

My investment philosophy is KISS....keep it simple stupid.......stick to basic fundamentals.....invest with a long term view......diversify over the entire ASX.....and finally allow a buffer in case things go really wrong.....oh lastly dont panic and smile if they do....because hopefully ive been smart enough to leave a healthy buffer and not succumbed to being too greedy :)
 
Two the above two posters:
major lession ive learned this year:
stager your investment inflowers over a longer period. If you have $50k to invest, try investing $2k a month for the next two years.

My mistake was getting in too early. I'm still in the game so to speak, but i must admid the pressure if building.
Its not so much the fundamentals, the stocks ive invested in have mostly held up very well based on fundamentals (ie public announcements when they become available have basically been within my expectations).

Its the fact that i have to be mindful the market can be silly for longer than i can remain solvent. This is especially more relevant as the size of your share portfolio grows.
 
Hi all,

At todays bottom, the All Ords is 49% off its high. The only other occasion this has occurred in the last 133 years was between the '70 high and the '74 low. (total loss 55%) On that occasion the ords made 2 further attempts at the high before capitulating in '74.

For our market to fall much further it is signaling that conditions are worse than at any time in the last 133 years. Given that the great depression and 2 world wars occurred in that time, my opinion is we are not that badly off.

My expectations are that the ords will climb a wall of worry from around these levels. (give or take a couple of hundred points).

I am currently long shares after being out of the market for the last year, as of last friday. I have a stoploss in place on all shares and despite the carnage in the last couple of days, am down a grand total of $20, despite thousands invested.

Thommo, have a look at the charts of FGL, CCL, ANN, RMD, SIP etc over the last few months, before you get too bearish.

bye

PS. Buy shares that are going up in price, and get rid of your losers quickly.
 
Ebbie said:
Up until recently I thought we were nearing the bottom but after hearing rumours of a Derivatives Meltdown and doing a Google search to read up on it I've realised we could be in for much much worse before it gets any better.

I sold the rest of my shares yesterday and will be keeping the cash in my offset account for the next 3 months while I wait to see what happens!
Click to expand...

You may have just sold at the bottom.

I predict a rally today and can just smell a major rally in the coming weeks with panic buying as everyone piles back in. The market is just looking for an excuse (any) to rise.

DOW up 150 this morning.
 
oldjonesy said:
You may have just sold at the bottom.

I predict a rally today and can just smell a major rally in the coming weeks with panic buying as everyone piles back in. The market is just looking for an excuse (any) to rise.

DOW up 150 this morning.
Click to expand...

You are taking the pi$$, aren't you?
 
chilliaa said:
Two the above two posters:
major lession ive learned this year:
stager your investment inflowers over a longer period. If you have $50k to invest, try investing $2k a month for the next two years.

My mistake was getting in too early. I'm still in the game so to speak, but i must admid the pressure if building.
Its not so much the fundamentals, the stocks ive invested in have mostly held up very well based on fundamentals (ie public announcements when they become available have basically been within my expectations).

Its the fact that i have to be mindful the market can be silly for longer than i can remain solvent. This is especially more relevant as the size of your share portfolio grows.
Click to expand...

Hi Chilliaa,

I know how you feel with getting in too early. But when I think about it for many of us this is really just human nature of wishing we could pick the bottom which is impossible at the best of times let alone now when the vast majority of experienced forecasters never imagined stock prices could get this low. However with our share portfolio around 20% down overall as at yesterday but having received a swag of dividends (bank divvies just around the corner) it's still all good.

Fortunately our loans are property based with an LVR still less than 30%. However despite the low LVR the loan amount is still relatively large and so being very conservative I won't borrow any more than that now. With interest rates coming down we are now taking advantage of this opportunity to quickly reduce debt.

We still continue to add to our LIC/ETF portfolio in the SMSF every month or so as new salary based funds come in.

So overall feeling pretty good about things. Great income stream purchased at a discount even though it would have been nice to have purchased at yesterdays prices:) but crystal ball wasn't working; dividends continue to flood in; low LVR with fantastic opportunity to reduce debt with interest rates coming down rapidly and; still averaging into the SMSF to take advantage of further drops and able to access super (at 55) in just over 6 years. Not trying to brag etc here but merely pointing out that I ensure I look to the positives rather than get caught up in the massive amount of doom and gloom everywhere at the moment.

Brenda gave the best advice in a post somewhere yesterday along the lines of "must write note to myself not to peek at the portfolio for at least another 3 months".

Cheers - Gordon
 
Hi all,

Austini,

I quoted the same line from Brenda, but from a completely different perspective.

Brenda gave the best advice in a post somewhere yesterday along the lines of "must write note to myself not to peek at the portfolio for at least another 3 months".
Click to expand...

My opinion is that this is a head in the sand approach. I try to confront unpalatable positions and act. Not looking at a problem has never made one go away in my experience. Do you have different experiences??

bye
 
Bill.L said:
Hi all,

Austini,

I quoted the same line from Brenda, but from a completely different perspective.



My opinion is that this is a head in the sand approach. I try to confront unpalatable positions and act. Not looking at a problem has never made one go away in my experience. Do you have different experiences??

bye
Click to expand...

There is no head in the sand. There is nothing I can do to prevent a sharemarket crisis.

There is no point in selling for a loss as I do not need the money.

I am quite confident the companys I have invested in will not be going broke in the near future, in fact they are poised to make a bucket of money in the longer term.

So what is the point of upsetting myself by watching the market go even lower? Is watching the off-paper value of a portfolio going down going to enhance my wellbeing in some way?
 
evand said:
That's a joke post. Right?
Click to expand...

:confused:
What did you find funny about my post?

What I am saying is that if the pharmaceutical sector is seen as a safer heaven now than the banking sector is taking a hit, this doesn't mean that the situation is not reversible

One day people will say hung on, share A looks expensive and share B is much cheaper, offers similar yields and the sector it's in is looking like it's about to take off and the trend will change
 
Bill.L said:
Hi all,

Austini, I quoted the same line from Brenda, but from a completely different perspective.

My opinion is that this is a head in the sand approach. I try to confront unpalatable positions and act. Not looking at a problem has never made one go away in my experience. Do you have different experiences?? bye
Click to expand...

Hi Bill,

Must admit I couldn't go 3 months without looking at my "non-super" portfolio. However it is purely an income oriented portfolio (top 200 industrial shares) and unless the dividend is likely to be axed or under treat for an extended period or the company looks like it could go bust then I leave well enough alone and enjoy the dividends. I avoid debt laden stocks and low income resource stocks. I know divvies could be slashed in the future for some stocks but take this into account when buying. That is, I'm not niave, I go in eyes wide open.

As for the SMSF which holds a larger part of the portfolio I'm quite happy to stick my head in the sand with the likes of ARG, AFI, MLT, AUI and STW etc. Importantly there is no company specific risk in the normal sense and for these diversified LICs/ETFs funds are spread across a number of them.

Some time ago when I was wanting to determine my long term investing strategy I set out to find realtively wealthy old foggies (in their 70's and 80's plus) who had been investing for decades. You won't find them on Sommersoft as most don't own a computer:D However you will still find a few of them attending the older Listed Investment Company AGMs. I still keep in touch with some of them (who I treat like mentors). Like a lot of oldies they love to share their advice. Typcially they tend to have a similar approach in that they keep enough cash to cover living expenses for at least 3 years but leave their LICs well alone. Having this cash on hand not only gives peace of mind but also means they are unlikely to be a distressed seller of their shares in tough times. In fact they treat their shares like a member of the family and would never get rid of them. They know that ARG and AFI etc are conservative, diversified beasts with no debt and have been through difficult times before such as the great depression.

I have been in contact with two of them recently and asked what they thought of the current market situation (by phone as they still don't have a computer and internet). They just laughed finding the doom and gloom and capital ups and downs amusing, being very relaxed about it feeling confident that the income which is what matters to them is likely to continue. They reminded me that ARG has never missed a dividend even in the great depression. But if a dividend did skip a beat or two then 3,4,5 years plus cash on hand means it is no big deal.

So, lets see, whose advice should I follow. Some on Sommersoft who seem to have trouble sleeping at night even when they're out of the market or these wealthy old foggies who have been investing for many decades.

Cheers - Gordon
PS: I can assure you the above is not a fairly tale.

Also as for stop losses etc I'm not into that rubbish anymore having been a fanatical technical trader of stocks and futures years ago. Passive income is my motto nowadays. Much prefer to spend my spare time with friends, fishing and drinking etc rather than watching the market.
 
Last edited:
Hi Brenda,

Just in response to your post..

There is nothing I can do to prevent a sharemarket crisis.
Click to expand...

You make the decision to participate or not.

I am quite confident the companys I have invested in will not be going broke in the near future, in fact they are poised to make a bucket of money in the longer term.
Click to expand...

In the long run most shares/companies go to $0. History tells us this. I dont have a list of the main Australian shares from the year 1900, but the stocks (all of them) that made up the DJIA at the beginning of 1900 have been delisted (gone broke).

So what is the point of upsetting myself by watching the market go even lower? Is watching the off-paper value of a portfolio going down going to enhance my wellbeing in some way?
Click to expand...

You shouldn't be getting upset about the market at all, that's my real point. People should never get into the position where the market can upset them, hence why I have always been harping on about buying shares that are going up in price and getting rid of the losers.
Nobody knows what is going to happen in the future, all predictions are just guesses. Companies that look really good get hit by elephants from left field way too often. The ''co-incidence'' of their share prices already being marked down when the elephant hits defies belief.

In property, you were a genius for buying property that threw off cash on a 100% lend because it had been in the doldrums for years. You then bought more and more as prices started to rise. Again you were a genius by selling many, as interest rates started to catch up and prices exploded.

I am willing to bet that when there were problems with rising IRs, tenants, hot water services, PMs etc, that you didn't just stop looking at the situation for a couple of months hoping it would go away.

Back to the sharemarket, the market as a whole may rise, but individual companies may not. Personally I think it is a great time to be looking for bargains that are starting to show signs of life, but I have been sitting on cash for the last year. I have a very low threshold for pain in the sharemarket, brought about by many mistakes over many years in the '80's and early '90's.

bye
 
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