realistically how far can the ASX drop?

[chilliaa]

I think i agree with willair. The share market has been ahead of fundamentals for 12 months. It has predicted in advance every deterioration in the world and local economy. This time I hope it's wrong, but I wouldn't bet against it.

See ya's.

I agree that the overall trend (ie positive or negative) is a good prediction of the future of the economy. I dont think anyone would argue against this. The beef i have is that the magnitude of the trend does not necessarily reflect on the real economy.
eg A 50% drop in the index does not mean a 50% drop in discounted future profits, or a 50% drop in employment etc.

There are other factors that influence the market, mainly
1) margin lending
2) weight of money in superannuation & funds management which can go against the market in times of weakness (switching effect).

 

[chilliaa]

If the ASX200 was still trading around 6000, i would be very hesitant about entering the market.
My whole investment philosophy is centers around risk vs return.
I stand by my beliefs that now is a good time to be entering the market on the following conditions:
1) you can take a 5yr minimum view point, and dont need those funds for 5yrs
2) you can wear short term volatility
3) you have sufficient funds to adopt a dollar average philosophy
4) as Sunfish correctly pointed out, the companies you are investing in must SURVIVE.

 

[soyabean]

you have sufficient funds to adopt a dollar average philosophy

If it is a good time to buy why don't we go in big bang ? My FPlanner to be (from one of the big 4) has just recommended me to go 1M in one hit now.
Comments please !

 

[oldjonesy]

mmmmm another short term forecaster?????
did it work out as you expected?????

Get your hand off it Darryl

 

[willair]

If it is a good time to buy why don't we go in big bang ? My FPlanner to be (from one of the big 4) has just recommended me to go 1M in one hit now.
Comments please !

Just ASK the F-P one question,would she or he take that sort of risk,and if so why ,anyone that drops i mill into this market may well find yourself in the next few weeks with 30% less then they started with,it's no problem for the F-P,THE TOTAL RISK IS ALL ON YOU, ..imho..willair
BTW ask the F-P how well they have done for their clients over the past 10 months and watch their eyes very carefully,the eyes do not lie..

 

[Rockstar]

If it is a good time to buy why don't we go in big bang ? My FPlanner to be (from one of the big 4) has just recommended me to go 1M in one hit now.
Comments please !

SB,

What exactly are they recommending to buy?

 

[urchin]

If it is a good time to buy why don't we go in big bang ? My FPlanner to be (from one of the big 4) has just recommended me to go 1M in one hit now.
Comments please !

you should preemptively fire your FP to be. that is highly irresponsible advice. seriously, the quality of financial advice people seem to be getting is absurd. geez....

 

[Sunfish]

My FPlanner to be (from one of the big 4) has just recommended me to go 1M in one hit now.

If that money is just sitting in a cash account somewhere then the idea has some (i stress: "some") merit.

If he suggests 10-20% in gold he just might be fair dinkum, if he suggests leveraging, he isn't. But Rockstar asked the big question:

What exactly are they recommending to buy?

 

[BayView]

4) as Sunfish correctly pointed out, the companies you are investing in must SURVIVE.

But that's the thing; no-one knows who's gunna survive or not.

For example; I heard today from my MB that GM motors could be folding world-wide in a week.

I certainly wouldn't be betting all my spondoola on shares; maybe a certain %, and no margin loans.

If I was investing $1 mill today that's not how I would be doing it (all shares). Not that I'm any expert, but I am fairly risk averse and so far haven't been creamed.

Some people say "oh yes, but you diversify".

It's laughable; if your 100% in shares, and you diversify into different sectors/funds etc, you're still in shares aren't you?

 

[soyabean]

What exactly are they recommending to buy?

Are you kidding me > Of course the FP won't tell me which ones until I sign up. He did say that the recommended portfolio would be about 20 - 25 stocks, the bank has the whole team all they do is researching good value stocks that are going to still be there in 10 years time. From what he was saying he has probably called the market bottom I think.
I have not signed up . And the fund is just a LOC, against equity, not margin lend.

 

[Sheryn]

If it is a good time to buy why don't we go in big bang ? My FPlanner to be (from one of the big 4) has just recommended me to go 1M in one hit now. Comments please !

Soyabean
Nobody manages your money as well as you would (unless you are really wealthy)!

I would be asking the FP how much money he has in the sharemarket...

Currently, I only have one share position as the market is too volatile.

I brought a small amount $10,000 in 1 x ASX listed company for the dividend a few weeks ago (and to focus on what was happening = feel the pain) That share is now worth $7000 so it has gone down, down and down if I lose this money it will not hurt me.

How would you feel if you invest $1,000,000.00 in the market tomorrow and by Christmas it is worth $700,000.00?

The flip side is the market could go up....

I normally trade the share market with my own equity and 2 margin loans when the market is going up BUT I am basically sitting on the side lines watching, thinking and learning.


Regards
Sheryn

 

[Rockstar]

Are you kidding me >

No I am an ignoramus with shares. Though Mrs Rockstar is studying up hard at the moment so I have started taking a teeny interest.

 

[Sunfish]

Quote:
Originally Posted by chilliaa
4) as Sunfish correctly pointed out, the companies you are investing in must SURVIVE.
But that's the thing; no-one knows who's gunna survive or not.

Not yet. So be patient.

For example; I heard today from my MB that GM motors could be folding world-wide in a week.

Chapter 11 bankruptcy is a long way from folding. You can limp along under Chap 11 for a loooong time.

BTW Jim Puplava was saying GM was in trouble years ago.

 

[Sunfish]

And the fund is just a LOC, against equity, not margin lend.

Don't do it! Read up on the latest about "Storm financial" and Mannie Cassimatis starting here:

http://www.stormfinancial.com.au/ins_exc.php

You will find some more on the Townsville Bulletin website. Yesterday, an article by Tony Raggatt is the latest. It starts:

Two Townsville retirees have lost their home and life savings in the sharemarket crash and may have to live out their days in a caravan, their family has claimed.

He was leveraging his clients into shares and there are a lot of tears and recriminations.... and law suits.

Mrs Thommo had a call from one of her ex-client/friends today who is a Storm investor. A very worried lady. She probably will come out OK because she was invested during the good years. Naturally, I don't know any of her details, confidentiality et al.

Neither you nor your "big four" advisor have any idea what might happen in the next year.

 

[Sheryn]

STOCKS entered the second-worst bear market in Australian history today as Asia tumbled more than 5 per cent on recession fears.


Quote from...

http://www.theaustralian.news.com.au/business/story/0,28124,24680839-643,00.html


I wasn't aware (oblivious) of the worst bear market, I am glad that this bear market is happening before we retire so I can learn...


Regards
Sheryn

 

[charttv]

BTW Jim Puplava was saying GM was in trouble years ago.

ditto Jim Rogers. He classified it as a perma short coz it was so poorly managed.

 

[Bill.L]

Hi all,

Sheryn, that newspaper is a bit slow.....

It was reported here yesterday

The previous largest corrections were 55% (70-74), 48% ('87 crash) 46% ('29-'31 crash). We are currently at about 49%.

... in this thread.

bye

 

[chilliaa]

But that's the thing; no-one knows who's gunna survive or not.

For example; I heard today from my MB that GM motors could be folding world-wide in a week.

I certainly wouldn't be betting all my spondoola on shares; maybe a certain %, and no margin loans.

If I was investing $1 mill today that's not how I would be doing it (all shares). Not that I'm any expert, but I am fairly risk averse and so far haven't been creamed.

Some people say "oh yes, but you diversify".

It's laughable; if your 100% in shares, and you diversify into different sectors/funds etc, you're still in shares aren't you?

well you can start by downloading the companies latest annual report, forget about all the glossy stuff and head straight to the accounts and notes to the accounts.

I cant recall many companies that went bankrupt when they had controlled debt (or even better no debt!!!) and positive cash flow. Even with no debt you need to make sure the company has positive cash flow (especially free cashflow) otherwise it could just burn any cash in the bank and may soon be trying to access debt in an unforgiving market.

Whats the debt situation in GM? what is the level of their unfunded pension & entitlements schemes? Are the unions comming to the negotiation table? Why are they 'burning cash' as stated, if they are burning cash they are obviously not cash flow postive and thus in this climate should be avoided.


As i keep saying the stock market is a basket of stocks, unlike bull markets where the rubbish is carried along with the stars, in this type of market you had better be prepared to do your homework.

 

[yadreamin]

I am at the stage where no matter what facts , figures or charts are produced l am starting to feel "its different this time" damn scary l reckon.

Just listening to ABC and now reports showing that Australia will go into recession and it wont be a softy either. [ who do l believe ???]
All major/leading economies in the world are now in recession.

Its time to start to really worry .
Sure is blowing the SANF out of the water.

cheers
yadreamin

 

[BayView]

Are you kidding me > Of course the FP won't tell me which ones until I sign up. He did say that the recommended portfolio would be about 20 - 25 stocks, the bank has the whole team all they do is researching good value stocks that are going to still be there in 10 years time. From what he was saying he has probably called the market bottom I think.
I have not signed up . And the fund is just a LOC, against equity, not margin lend.

Can't you research and buy your own stocks?

Why do you need the FP for that?

I guess you pay them to do it for you?