sharemarket good time to buy?

A quick look at some of the major stocks shows the most have fallen 50% of the last range up. Some have also fallen to the next resistance level of 75% of the range up.

Stocks that have fallen below the 50% range will be weaker.

At this stage there are no clear buy signals so, if you are into technical analysis then I would be holding off until a clear upward pattern emerges.

Buying now would be like trying to pick the bottom.

I have not traded stocks for a while so I was interested to see what the charts on a handful of the top stocks looked like.
 
crc_error said:
look at st george bank, yield is 10% but it will be less today as the banks will rally due to the US overnight
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I bought SGB a few days ago. I'm sure it will be up and down for a while yet but he yield was compelling enough. Cashflow +ve for now as long as rates dont rise mucg more or they cut the dividends. I'll be holding it for the long haul
 
"Yield" by convention means "dividend yield" which is 7.7% (Share price/div per share) for SGB. If you were talking about property, "yield" would be the prop value/ann. rent. That is "gross yield", of course but there are no exes. for dividends hence "gross" is redundant.
 
Is it a good time to buy in the sharemarket?

Absolutely! Certainly what's on offer these days are much better value than they were a few months ago. Will prices keep going down from here? Probably. But hey, if you've done the math and you've figured out that your target company/share is at an attractive level for purchase, go for it.

In many ways, very similar to purchasing property...
 
pjparker said:
If I wasn't in a position to buy, I would certainly look at increasing or at least starting salary sacrificing into Super, as long as you have your super in shares. If you are a lower income earner, do it after tax and take advantage of the co-contribution.
CHeers Paul.
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Hi Paul, yes it may be a good time to salary sacrifice if you are near 60, but at 27, I plan on keeping all of my spare cash as cash at the moment. Once I put it into Super, I can't get at for at least 30 years :eek: (who knows what the age will be by the time I get there!). If I need it to survive a property downturn, then I want it to be available and not locked away.

Cheers
Mike
 
pjparker said:
If I wasn't in a position to buy, I would certainly look at increasing or at least starting salary sacrificing into Super, as long as you have your super in shares. If you are a lower income earner, do it after tax and take advantage of the co-contribution. These negative times are great ways to top up. Remeber to think like property, long term. Studies I looked at at Uni years ago showed that if you had sunk all your money into shares just before the big crash, you would have still made heaps of money in the long run, especially if you DRP all your income.
CHeers Paul.
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Depends on your age. If you are younger than, say, 45, super may not be the best vehicle given the minimum age rules. It may make more sense to invest in your own name or using a company/trust. At 30, the co-contribution means very little to me since I can't access it until I'm 65.
Alex
 
Sunfish said:
"Yield" by convention means "dividend yield" which is 7.7% (Share price/div per share) for SGB. If you were talking about property, "yield" would be the prop value/ann. rent. That is "gross yield", of course but there are no exes. for dividends hence "gross" is redundant.
Click to expand...

I thought dividend yield was (dividend per share/share price) and calculating gross yield for property was (annual rent/property purchase price)?

And referring to CRC's formula...isn't calculating gross dividend yield derived by dividing the 100% fully franked dividend percentage by 0.7?

Eg...instead of multiplying by 1.43...instead 7%/0.7 gives you a gross up of 10% gross return
 
crc_error said:
look at st george bank, yield is 10% but it will be less today as the banks will rally due to the US overnight
Click to expand...


Just be very careful with 10% dividend yield assumptions. Bank share prices have dropped significantly for a very important reason. The market is factoring in the sub prime crisis materially impacting banks earnings. Banks are now facing significant increases in bad debt provisions, write offs as well as a general, significant increase in funding costs - most of which they are still wearing, despite a few additional increases on top of the RBA increases.

Aussie bank shares for as long as I can remember have an average dividend yield of 4.5-5.5%. So while your mid-year dividend may well be nice juicy one, over the medium term one of two things is going to happen:

1) The market will realise that actually, bank earnings won't be materially impacted by the credit crisis, earnings remain as forecasted or are only slightly downgraded, share prices rise and the dividend yield will return to 4.5-5.5%.
2) The banks will do what the market has already assumed they are going to do and reforecast their earnings significantly downwards. Share prices do nothing or drop further and the dividend yield will return to 4.5-5.5%.

Although having said all that, there is simply no better long term investment in Australia than good quality bank shares. So if you've got the money and a long term view, buy them my friend. They are the second best performing business known to man.
 
Rino said:
Just be very careful with 10% dividend yield assumptions. ......
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Agree... it's a risk. ATM bank earnings are forecast to be flat for this year, and back to +7% for subsequent years. Quality cpys don't like reducing their dividends... they like to be able to say 'we have never paid out reduced divs in the last 15 yrs). eg NAB didn't reduce its div when it had its serious forex issues a couple of yrs back. The banks payout ratio (ie how much of their earnings go towards paying a dividend) is currently around 65%, so they have a lot of headroom to keep the dividend steady (without borrowing to pay it).

On the known downside there will be big write downs (eg Centro has cost ANZ $200M), there will be pain from residential repossessions, there will be increased funding costs,... and there will be risks that are currently unknown. It's mostly business as usual for the banks in this part of the cycle.

How long is the credit squeeze going to last for ? 1yr ? 2 yrs ?. Whenever it ends the banks earnings will continue to grow again. They'll have less competition from the pesky non-banks that were recently wiped out. So in the current FY there are known reduced earnings, and probably a little more currently unknown risk. I believe this unknown risk is probably already factored into the price, which is why they are yielding 10%+. There's talk of major hedge fund shorting campaigns against them.

However, I'd agree medium to long term they will continue to perform as other quality blue chips will perform. I plan to be buying more at 10%+ yields some time over the next 6 months. In 5 yrs I expect to look back & I wish I had more $$ to buy a lot more at those crazy yields. Same goes for some of the LPTs. This scenario is what value investors have been waiting for.
 
Rino said:
Just be very careful with 10% dividend yield assumptions. Bank share prices have dropped significantly for a very important reason. The market is factoring in the sub prime crisis materially impacting banks earnings. Banks are now facing significant increases in bad debt provisions, write offs as well as a general, significant increase in funding costs - most of which they are still wearing, despite a few additional increases on top of the RBA increases.

Aussie bank shares for as long as I can remember have an average dividend yield of 4.5-5.5%. So while your mid-year dividend may well be nice juicy one, over the medium term one of two things is going to happen:

1) The market will realise that actually, bank earnings won't be materially impacted by the credit crisis, earnings remain as forecasted or are only slightly downgraded, share prices rise and the dividend yield will return to 4.5-5.5%.
2) The banks will do what the market has already assumed they are going to do and reforecast their earnings significantly downwards. Share prices do nothing or drop further and the dividend yield will return to 4.5-5.5%.

Although having said all that, there is simply no better long term investment in Australia than good quality bank shares. So if you've got the money and a long term view, buy them my friend. They are the second best performing business known to man.
Click to expand...

Actually banks used to have a net yld of around 7% with a PE of around 8 - 10 times earnings.
 
I took the dive and bought
bhp,ctx,wdc,wow,sun - already down 4% :(
I still think more volatility is ahead, and if the market falls below 5000 points I might buy again.
 
I think Woolworths is reasonably safe to buy in as people need food, groceries, and petrol everyday.

I would be weary of financial and mining stocks in particular as this is affected by the general economy.

Will be interesting to see what happens to bank stocks on Monday given the information about Bearn Stearns and their near collapse with their exposure to the US mortgage market (sub-prime). :D
 
I can't wait for Monday and will be definately be buying in again. Maybe not monday, might wait to see what happens in the US, but I know, as a long term investor, I'll be laughing at these prices in 10 years time. I'll be keeping some funds aside though just in case things worsen over the coming months, I like to DCA.

Cheers.
 
I'm currently buying selectively at the moment. Especially the shares from blue chip companies that are cash flow positive at margin lending rates.

Sure, it might go down more, but it might not. I'd rather buy it at the price I'm happy, and hold it CF+ until market sentiment recovers. It may take a while for the general market sentiment to bounce back, but individual shares can recover quickly once too many value investor pile in. I suspect the short sellers will then scramble for the exit.

Cheers,
 
I was looking through the AFR today for yields.

Banks didn't do it for me at the moment, the PE's and yields just aren't that hot historically speaking if you look at what can happen to them in bear markets and the jury is still out on the uber critical issue of just how much the 'E' side of the P/E equation is going to flex, some quality listed funds, LIC's and LPT's were looking pretty nice.

To get a classic buy signal from some pretty trusty indicators we are a long way off though. I'm watching the coppock indicator and that is ages away from any sort of signal as it requires a real sustained market clean out and disinterested phase before it's set to trigger again. Last trigger was super sweet in 2003, wonder how it will hold up the next time it goes?

Also I would wait for all these curve thingies to go non funky before thinking about the banks, no harm leaving some profit on the table I think. It's all so complex though value adding to shares, which is why I'm off the opinion that you are better off indexing here, concentrating on increasing your job/biz income and value adding with property, much easier imo.
 
yes get in there guys... buy and push my poor financials back up :eek:
Having said that, Andrew_A good point about earnings outlook ... i would guess it is likely the next 6-12 months of announcements will be interesting and retail potential spending cuts from rate rises may take some time to hit the bottom line of companies.
 
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