Intrinsic Value, interested to know what cycle you think we are in at the moment? The ASX seems too hot and overvalued I can only find a handful of companies that are undervalued but they are being heavily shorted daily. Bonds have little value.
Can you provide a bit of an insight to where you think things are heading?
honestly I don't know, we are at a reflection point, share markets are trading above their intrinsic values. But those intrinsic values are based on this point in time, it is possible that future intrinsic values will improve if the economy improves. If this happens then the share prices could be valued correctly.
But from reading general annual meetings, many businesses are saying that they are not seeing things improving, not by much anyway.
So basically its my view that money is being pushed into equity markets because
(a) interest rates are so low (so the risk free or alternative rate is so low)
(b) the trend is now up, so all the trend followers and all the 'dumb' money that invests based on trends rather than value is also blindly moving into the market.
As for those shares that appear 'cheap', I am nervous of many of them. They might be cheap for a good reason.
I am much happier when the market is fearful, when fearful, many good quality companies are 'cheap' because of a lack of general market buying support. That market fear allows one to buy good quality companies at significantly below intrinsic value. Since they are good companies, I don't have to worry about the underlying companies, only the price paid for them.
I am personally selling gradually, reducing my margin loan (as others out there are suddenly increasing them again).
I am using excess funds to expand my personal business interests.
So what am I buying in the share market:
not much
I am slowing buying Chinese banks, only for a maximum exposure of 10% of the portfolio. I need to find at a minimum another 10 investment opportunities (and preferably 20, I don't like 10% exposures, it increases risk too much).