Share Market Crash will bring up or down on housing Market

[TheAnalyst]

Analyst, when you talking about "value" in a stock, are talking about perceived "value" rather than say a fundamental "value"? If this is the case then I can understand your argument otherwise I'm still confused.

I mean it. A lot of people buy the perceived value, rather than fundamentls which I used ANZ as an example. Two years ago ANZ was worth $19 a share, now worth $29 (I do not know exact). Based on the same numbers of shares for ANZ, the ANZ now is worth %50 more than it was. If you take into account the rights issue etc coming into the trading, ANZ is worth probably %60 more than it was 2 years ago... Could it be possible, NO.

Today I heard the CEO of CBA said they were going to increase the rates becasue of the US subprime problem. He also said they were little impacted by the US. I have no idea what he is saying. My intepretation was CBA can not keep up the profit as they are now without charging to their customers. In other words, they could not keep the "hope" for the share holders.

Macquiaire was first to have reached $100 a share. The CEO get $millions pay increase. I am not sure whether now their shareholders should ask him to pay back on his salaries....

 

[steveadl]

I mean it. A lot of people buy the perceived value, rather than fundamentls which I used ANZ as an example. Two years ago ANZ was worth $19 a share, now worth $29 (I do not know exact). Based on the same numbers of shares for ANZ, the ANZ now is worth %50 more than it was. If you take into account the rights issue etc coming into the trading, ANZ is worth probably %60 more than it was 2 years ago... Could it be possible, NO.

Analyst, I've asked you about this before and we've found that you and I agree on some of the issues. BUT you really need to stop using this ANZ example as it doesn't hold water, and is confusing people.

Their yield is still about 5% based on their current price - so not overvalued. You have to look at the actual figures of ANZ to determine whether they previous 2yrs share price rise was excessive or not.

The share price rose 50% or so in 2 yrs - did their profits rise largely too? Yes they did. If you look back, 2yrs ago at a price of $19 they were probably on the same 5% yield. So why is a 5% yield at $29 over valued??!!

 

[WildDog]

I mean it. A lot of people buy the perceived value, rather than fundamentls which I used ANZ as an example. Two years ago ANZ was worth $19 a share, now worth $29 (I do not know exact). Based on the same numbers of shares for ANZ, the ANZ now is worth %50 more than it was. If you take into account the rights issue etc coming into the trading, ANZ is worth probably %60 more than it was 2 years ago... Could it be possible, NO.

Today I heard the CEO of CBA said they were going to increase the rates becasue of the US subprime problem. He also said they were little impacted by the US. I have no idea what he is saying. My intepretation was CBA can not keep up the profit as they are now without charging to their customers. In other words, they could not keep the "hope" for the share holders.

Macquiaire was first to have reached $100 a share. The CEO get $millions pay increase. I am not sure whether now their shareholders should ask him to pay back on his salaries....

Share price of a stock go up and down on any given day, depend on how Mr Market feel that day, it doesn't reflect values or it true worth.

if you can determine a true intrinsic value of a stock (a bit of art and science, no concrete rules) that where you make the money in the market and lot of it and with little risk.

and that the game I play .. I stack up lot of $$$ some months ago and last 2 days I been buying when people are selling .. and I continue to buy as long as I consider something is worth a dollar and are selling at 70 cents or 50 cents.

For example according to my calculation I consider ANZ at $29 is neither cheap or very expensive so I wont touch it if ANZ was to sell for $20 I would buy it. But it ain't so I drink coffee and watch movies and look for other stocks that show that sort of signs.

FLT (Flight Center) is an example I use, I buy it at $10.50 because I think this baby worth at least $15-$16 but the market got it wrong.
now it's trading close to $19 a year later so it reach the upper limit of what I consider a cheap stock so in the next week or so I do another calculation to see if it's still worth $19 bucks and could potential go higher... if it inst I sell it and I go look for another stock that experience this sort of behavior.

 

[Dean1337]

I mean it. A lot of people buy the perceived value, rather than fundamentls which I used ANZ as an example. Two years ago ANZ was worth $19 a share, now worth $29 (I do not know exact). Based on the same numbers of shares for ANZ, the ANZ now is worth %50 more than it was. If you take into account the rights issue etc coming into the trading, ANZ is worth probably %60 more than it was 2 years ago... Could it be possible, NO.

Today I heard the CEO of CBA said they were going to increase the rates becasue of the US subprime problem. He also said they were little impacted by the US. I have no idea what he is saying. My intepretation was CBA can not keep up the profit as they are now without charging to their customers. In other words, they could not keep the "hope" for the share holders.

Macquiaire was first to have reached $100 a share. The CEO get $millions pay increase. I am not sure whether now their shareholders should ask him to pay back on his salaries....

Ok, so if I understand you correctly, when the price of ANZ increased, people percieved that it as becoming expensive to purchase. Even though, fundamentally ANZ looks like a good buy in comparsion to other companies, the fact that its price has risen dramatically has made people cautious. It only takes a few events (like the subprime problem) to cause people to start mass selling shares.

Do you define a share as being "overbrought" when it reaches that critical point where it only take one piece of bad news to causes a mass sell?

 

[TheAnalyst]

Share price of a stock go up and down on any given day, depend on how Mr Market feel that day, it doesn't reflect values or it true worth.

if you can determine a true intrinsic value of a stock (a bit of art and science, no concrete rules) that where you make the money in the market and lot of it and with little risk.

and that the game I play .. I stack up lot of $$$ some months ago and last 2 days I been buying when people are selling .. and I continue to buy as long as I consider something is worth a dollar and are selling at 70 cents or 50 cents.

For example according to my calculation I consider ANZ at $29 is neither cheap or very expensive so I wont touch it if ANZ was to sell for $20 I would buy it. But it ain't so I drink coffee and watch movies and look for other stocks that show that sort of signs.

FLT (Flight Center) is an example I use, I buy it at $10.50 because I think this baby worth at least $15-$16 but the market got it wrong.
now it's trading close to $19 a year later so it reach the upper limit of what I consider a cheap stock so in the next week or so I do another calculation to see if it's still worth $19 bucks and could potential go higher... if it inst I sell it and I go look for another stock that experience this sort of behavior.

Wilddog, very well said. Unfortunately I am not good at elabrating these like you did.

 

[TheAnalyst]

Ok, so if I understand you correctly, when the price of ANZ increased, people percieved that it as becoming expensive to purchase. Even though, fundamentally ANZ looks like a good buy in comparsion to other companies, the fact that its price has risen dramatically has made people cautious. It only takes a few events (like the subprime problem) to cause people to start mass selling shares.

Do you define a share as being "overbrought" when it reaches that critical point where it only take one piece of bad news to causes a mass sell?

Hi, Dean. People talk market setiment. When it is a bull market, people see everything is cheap. I played Antisense at 20cents a share after I read Shares 2 years ago (as advised in the megzine). After a while, when I checked their Annual Report and website, I found I have bought a pile of ****. I then dumped all immediately. Everything is buying up, even the banks. I am not looking at a particular share (if I want to, I need to read their annual report). Overbought is when everyone is buying; oversold is when everyone is selling and does not want to listen to the comments of the share market.

 

[alexlee]

Hi, Dean. People talk market setiment. When it is a bull market, people see everything is cheap. I played Antisense at 20cents a share after I read Shares 2 years ago (as advised in the megzine). After a while, when I checked their Annual Report and website, I found I have bought a pile of ****. I then dumped all immediately. Everything is buying up, even the banks. I am not looking at a particular share (if I want to, I need to read their annual report). Overbought is when everyone is buying; oversold is when everyone is selling and does not want to listen to the comments of the share market.

So earnings are irrelevant? i.e. if the shareprice is increasing because people are buying, and people are buying because earnings are increasing, then the share is still overbought?

Just for some balance: Antisense is a loss making company currently trading at 3 cents, and has a 17m market cap. To compare Antisense and ANZ, or to use Antisense as a proxy for the market is <insert your favourite phrase here>.
Alex

 

[TheAnalyst]

So earnings are irrelevant? i.e. if the shareprice is increasing because people are buying, and people are buying because earnings are increasing, then the share is still overbought?

Just for some balance: Antisense is a loss making company currently trading at 3 cents, and has a 17m market cap. To compare Antisense and ANZ, or to use Antisense as a proxy for the market is <insert your favourite phrase here>.
Alex

Alex you missed the whole picture what I said. I said when the market is in bull status. Everything seems cheap to buy and therefore push up other shares. I did not try to compare ANZ and Antisense. Unfortunately, you can not see the big picture of what I said, then lead to the different views. Even in the 1987 Aug crash, there were still some shares going up. I am talking about overall market, not a particular share. I played AMP, ANZ, Strathfield, Antisense, West Mining, News Corp, Computer Shares, and many others. I only try to see the market setiment and what people think in the bull market.

 

[Kennethkohsg]

Dear Analyst,

1. What's exactly the "big picture" that you see or/and have in mind that you want to share with us in this forum?

2. A sudden market crash of more than 30% within a 5 days working/trading period. similar to what has happened between 19th Oct 1929 and 24th October 1929 period or/and the beginning of a steady prolonged bear market commencing from July 2007 as perwhat has happened from 1929 to 1933 period?

3. As in many of past market correction or crash incidents, one will find, on hindsight, the same market will eventually reach new record-breaking price levels again over the time... however, I must also acknowledge here that , after more than 10 years period, the Japanese share/property markets has yet to fully recover from its last dizzy falls.

4. Looking forward to understanding you views properly and learning from you further, please.

5. Thank you.

regards,
Kenneth KOH

 

[Mofra]

I mean it. A lot of people buy the perceived value, rather than fundamentls which I used ANZ as an example. Two years ago ANZ was worth $19 a share, now worth $29 (I do not know exact). Based on the same numbers of shares for ANZ, the ANZ now is worth %50 more than it was. If you take into account the rights issue etc coming into the trading, ANZ is worth probably %60 more than it was 2 years ago... Could it be possible, NO.

Why not? On a forward PE basis is is running at domestically listed bank averages on the numbers stated. To the wider market mean (in its sector) it hasn't appreaciated a ludicrous amount.

Today I heard the CEO of CBA said they were going to increase the rates becasue of the US subprime problem. He also said they were little impacted by the US.

Because Australian & US securitisation processess are extremely different, existing loan books for confirming lenders are already protected, and Low Docs loan market share is much smaller than the US. The Sub-prime market is only impacting on a portion of new borrowings from deposit holding organisations.

You have to understand the 4 majors use a portion of their loan book as loss leaders, not as a profit driver.

You'd be surprised to learn that only 20% major bank customers are profitable - contributing about 140% of profit. In other words, 80% of Australian bank customers cost the bank money. These are industry averages. Any rate rises above the 25 basis point rate would be directed towards the 80% of unprofitable clients, as private bank clients often have their rates set independantly.

I have no idea what he is saying.

A point we can both agree on.

Hi, Dean. People talk market setiment. When it is a bull market, people see everything is cheap. I played Antisense at 20cents a share after I read Shares 2 years ago (as advised in the megzine). After a while, when I checked their Annual Report and website, I found I have bought a pile of ****. I then dumped all immediately.

So you bought without conducting sufficient due diligence, considering you didn't check either thier figures or charts until "after a while". It is obviously clouding your judgement about conditions now. Most investors (even private clients) do far more research than this, then spend a great deal of time calculating their position sizing & exit criteria.

Alex you missed the whole picture what I said. I said when the market is in bull status. Everything seems cheap to buy and therefore push up other shares.

No Analyst, it only seems cheap to mug punters. You'd be surprised how tightly controlled fundie position sizes and hedge books are. With all due respects nothing you have said on this thread so far leads me to believe you have the foggiest idea (ignoring my earlier posts notwithstanding).

 

[TheAnalyst]

Why not? On a forward PE basis is is running at domestically listed bank averages on the numbers stated. To the wider market mean (in its sector) it hasn't appreaciated a ludicrous amount.


Because Australian & US securitisation processess are extremely different, existing loan books for confirming lenders are already protected, and Low Docs loan market share is much smaller than the US. The Sub-prime market is only impacting on a portion of new borrowings from deposit holding organisations.

You have to understand the 4 majors use a portion of their loan book as loss leaders, not as a profit driver.

You'd be surprised to learn that only 20% major bank customers are profitable - contributing about 140% of profit. In other words, 80% of Australian bank customers cost the bank money. These are industry averages. Any rate rises above the 25 basis point rate would be directed towards the 80% of unprofitable clients, as private bank clients often have their rates set independantly.


A point we can both agree on.



So you bought without conducting sufficient due diligence, considering you didn't check either thier figures or charts until "after a while". It is obviously clouding your judgement about conditions now. Most investors (even private clients) do far more research than this, then spend a great deal of time calculating their position sizing & exit criteria.


No Analyst, it only seems cheap to mug punters. You'd be surprised how tightly controlled fundie position sizes and hedge books are. With all due respects nothing you have said on this thread so far leads me to believe you have the foggiest idea (ignoring my earlier posts notwithstanding).

You quoted me without context to argue your points. For example, the CBA one. All I said was CBA had no base to increase their rate becuase they were little impacted. Because they want to keep their profit, then they want to increase their rate to satisfy the share buyers. That is the stupidity to quote someone without context.

You can argue your point. I bet you DO NOT dare to buy or you have been deeply in the shares. You do not dare to accept the fact that the share market will go the deep water in the next few months. It is purely a LOSER's phychology. Wake up, dump your shares. Othewise you will be in deep problem, probably you already are.

 

[alexlee]

You quoted me without context to argue your points. For example, the CBA one. All I said was CBA had no base to increase their rate becuase they were little impacted. Because they want to keep their profit, then they want to increase their rate to satisfy the share buyers. That is the stupidity to quote someone without context.

You can argue your point. I bet you DO NOT dare to buy or you have been deeply in the shares. You do not dare to accept the fact that the share market will go the deep water in the next few months. It is purely a LOSER's phychology. Wake up, dump your shares. Othewise you will be in deep problem, probably you already are.

Uh, and what exactly is the issue with CBA aiming to raise their profit to support their shareprice? Isn't that what companies are supposed to do?

So what are you shorting?

 

[TheAnalyst]

Mofra, you also talked about how hedge fund was tightly controled ----- you are a joke. This morning an exppert on the radio said the hedge fund was just the beginning.... You can only cheap yourself, I believe.

Wake up, dump your shares. Otherwise, by the end of this year, we may not be able to find you on the forum.

 

[steveadl]

Mofra, you also talked about how hedge fund was tightly controled ----- you are a joke. This morning an exppert on the radio said the hedge fund was just the beginning.... You can only cheap yourself, I believe.

Wake up, dump your shares. Otherwise, by the end of this year, we may not be able to find you on the forum.

Analyst, based on the comments and examples you have given on the stock market, I don't think it's a good idea for you to start advising people to 'dump their shares.'

A lot of logical arguments and points have been raised to your comments which you have failed to intelligently explain your reasoning to.

If a share is of reasonable value (and for about the 5th time now, you have still not proved that ANZ/CBA are over valued!), then yes of course they will likely take a hit if the market collapses 30% tomorrow, but they will come back - if you are buying a share at a price which gives you a 5% yield, then it drops tomorrow due to market sentimentality (& not a fundamental problem with the business), you are still getting that 5% yield (ok you could have maybe got a 6% yield if you waited a bit longer, but that's another issue). It's herd mentality that helps cause these crashes in the first place.

 

[TheAnalyst]

Analyst, based on the comments and examples you have given on the stock market, I don't think it's a good idea for you to start advising people to 'dump their shares.'

A lot of logical arguments and points have been raised to your comments which you have failed to intelligently explain your reasoning to.

If a share is of reasonable value (and for about the 5th time now, you have still not proved that ANZ/CBA are over valued!), then yes of course they will likely take a hit if the market collapses 30% tomorrow, but they will come back - if you are buying a share at a price which gives you a 5% yield, then it drops tomorrow due to market sentimentality (& not a fundamental problem with the business), you are still getting that 5% yield (ok you could have maybe got a 6% yield if you waited a bit longer, but that's another issue). It's herd mentality that helps cause these crashes in the first place.

Steve, I do not how many people in the share market are for the long term (let us see 5 years). Most of the small investors are traders I believe. If you buy NAB 5 years ago, you do not worry about. If you buy now, you can still not worry about because as you said you had 5% yeild, it does not matter it drops 20% or 50% ----- because it does not matter you have the 5% yield. If everyone has this philosophy, the share market would have crashed many times in the history; it will not have a bear market but only bull market.

I am not asking anyone to accept my opinion. All I am siad I concluded that all ords will drop below 5000 even 4000 this year or next year, the DOW will drop below 10 000. No body has to believe it. Otherwise I would charge for that. You only do on your own beliefs.

Have you heard yesterday it droped 5% during the day? who knows next week? It reached to 5400 point during the day yesterday, so it is not far from 5000. As you said if you invest for 5% yield, you do nto have to worry about it. Telstra, after many years, has not reached the level it was, you did have high yields. No worries, I invest for long term and 5% yield.

I will start buying after the all ords down under 5000.

 

[alexlee]

I am not asking anyone to accept my opinion. All I am siad I concluded that all ords will drop below 5000 even 4000 this year or next year, the DOW will drop below 10 000. No body has to believe it. Otherwise I would charge for that. You only do on your own beliefs.

Have you heard yesterday it droped 5% during the day? who knows next week? It reached to 5400 point during the day yesterday, so it is not far from 5000. As you said if you invest for 5% yield, you do nto have to worry about it. Telstra, after many years, has not reached the level it was, you did have high yields. No worries, I invest for long term and 5% yield.

I will start buying after the all ords down under 5000.

So why not short the market until it goes below 5000, then start buying?
Alex

 

[Sunfish]

The bum fell out of the price of gold last night when logically it should be firming with this uncertainty. It is already at the equivalent of 5000 for the XAO. Why not buy gold futures?

 

[Dean1337]

I don't agree with Anaylst's approach to the share market but I do think he has a point (assuming that I understand his point).

ANZ has risen by, let say 50%, over the last two years. However, incomes have risen only approx 10% over the last two years. That's a 40% difference between the two. If you compare incomes to share prices and notice that the gap between the two have closed then you could conclude that a share is less affordable than previously. At what point a buyer would considers a share "overvalued" is at the discreation of the buyer. As the gap between incomes and share prices drop, the number of buyers who consider a share "overvalued" will increase.

Regardless whether a companies yield remains the same, improved or worsened, if the price of a share becomes hard to purchase then that company will have less buyers. You have to remember that not everyone uses a fundamental analysis when purchasing shares.

 

[HiredGoon]

The bum fell out of the price of gold last night when logically it should be firming with this uncertainty.

You can't meet margin calls and unwind your positions with gold, for that your need $US so everything is being sold off.

The Aussie dollar has plunged 10% (everyone's houses are worth 10% less in international buying power than they were a week ago) much harder than gold so gold is up in Aussie dollars.

 

[Ausprop]

Fat Prophets released some comment re gold today... said that central banks were wary of signalling panic with rising gold price hence, with plenty of reserves, are selling it down. They are still bullish on gold and gold stocks.