The recession's over

[markpatric]

I think that right now is the time for all australians to get themselves to a position of low debt as quickly as possible, if that means a downgrade in living standard so be it.
Many on this forum never went along with the highly leveraged mentality and I fully agree that is just asking for trouble and right now it could turn out to be VERY unwise.

 

[Aaron Sice]

low debt is good - but what about maintaining your debt and increasing your income and/or serviceability....?

many ways to skin a cat.

 

[Ausprop]

too true BC. Steve McKnight nailed it when he said the only position of strength in this market is as buyer. If your debt levels are too high now then it's probably too late - pin your ears back and go in harder. get cashflow to service and pay down debt

 

[joeExpat]

Those traders a prediction a 30% drop. I'm thinking this is more on the conservative side. I'll get back into the stock market in maybe December when the Dow hits maybe 5500, and Allords 2400-2500.

I think there is very little chance of March lows being seen again. Companies have recapitalised, are in better shape, and fear has subsided. My guess is only a 10-15% correction, 20% worst case, before a gradual recovery continues into next year. I'm taking some profits, but getting completely out of the market now is a risk.

 

[investor888]

Companies have recapitalised, are in better shape

but getting completely out of the market now is a risk.

Haha, well guys, it's only 1.5 - 2mths away now, so time will tell won't it. My prediction is a Sep/Oct/Nov sharp down. Maybe get back in for a while in Dec/Jan.

How is it a "risk" to get out of the market. After such a sharp risk, the risk is to stay in and watch your gains evaporate.

So who's crystal ball will be more accurate.


joeExpat, you can listen to the mainstream media and think things are all rosy. I'll rely on my research, and getting a picture on some of the true state of the world. China cutting back their lending now. The US completely stuffed, etc.

And there are more and more people now, who had stated even before the current sharp market rise that this rise would happen, now stating that the next down will be larger than March. I'm putting my money on the likes of Peter Schiff and others, who were laughed at before. But you can rely on Today Tonight and A Current Affair if you like,, hehe.

Bob Prechter "Quite Sure" Next Wave Down Will Be Bigger and March Lows Will Break
http://finance.yahoo.com/tech-ticker/article/299205/Bob-Prechter-%22Quite-Sure%22-Next-Wave-Down-Will-Be-Bigger-and-March-Lows-Will-Break;_ylt=Aszn06V.3PbDmDBT3G5B5Wi7YWsA;_ylu=X3oDMTE2ZnIwamc5BHBvcwMxMQRzZWMDdG9wU3RvcmllcwRzbGsDYm9icHJlY2h0ZXJx?tickers=^DJI,^GSPC,SPY,DIA,QQQQ,^RUT,BGZ&sec=topStories&pos=9&asset=&ccode=

 

[eternit]

lol investor888 you sound a lot like NR with your All Ord predictions

Haha, well guys, it's only 1.5 - 2mths away now, so time will tell won't it. My prediction is a Sep/Oct/Nov sharp down. Maybe get back in for a while in Dec/Jan.

How is it a "risk" to get out of the market. After such a sharp risk, the risk is to stay in and watch your gains evaporate.

So who's crystal ball will be more accurate.

joeExpat, you can listen to the media and think things are all rosy. I'll rely on my research, and some of the truer state of the world.

Bob Prechter "Quite Sure" Next Wave Down Will Be Bigger and March Lows Will Break
http://finance.yahoo.com/tech-ticker/article/299205/Bob-Prechter-%22Quite-Sure%22-Next-Wave-Down-Will-Be-Bigger-and-March-Lows-Will-Break;_ylt=Aszn06V.3PbDmDBT3G5B5Wi7YWsA;_ylu=X3oDMTE2ZnIwamc5BHBvcwMxMQRzZWMDdG9wU3RvcmllcwRzbGsDYm9icHJlY2h0ZXJx?tickers=^DJI,^GSPC,SPY,DIA,QQQQ,^RUT,BGZ&sec=topStories&pos=9&asset=&ccode=

 

[Bill.L]

Hi all,

Investor888,

Bob Prechter

,

That would be the same Bob Prechter that predicted the all time super duper fifth wave ending super cycle, never to be repeated, DOW high of 3000 in the early '90's.

The real problem is that people believe these gurus/investment newsletter writers. Some get it correct for a while until they make a call or two that stuffs their credentials. It is called survivorship bias in the ones around now.

Every year, usually end Dec beginning of Jan, there is an article or two in some newspapers about what different 'experts' think the value of the dollar, stockmarket, interest rates etc will be in 12 months time. Most get it wrong but have really good reasons . Most of the predictions are 'mild' (ie 10% one way or the other). Those who guess a year or two correctly get to Guru status.
Here is the rub though, markets have fat tails, so if you get a couple of those predictions correct (it helps to make lots of predictions), then you will have the gullible falling all over themselves to pay for more.

If the best you can do is state that Schiff said this and Prechter said that, then you really don't have a clue.

If history was a guide at all, then because our market (Australia) fell about the same percentage over the same time period as the Great Depression (ie 50% over 14-16 months), then perhaps the 5-6 year rally that followed to major new highs should also be expected. In context, the all ords would be at
10140 by 2015.

Of course history could be bunk, and this time it's different, but then why would the letter writers version of history be any better??

bye

 

[willair]

.

And when you get real-estate agents desperately spruiking, you definately know there is something wrong with the market.

Check out the Media Watch piece from last night. They are getting desperate. Hey Propertunity, your not one of these guys are you?,, haha, just kidding.
http://www.abc.net.au/mediawatch/transcripts/s2651632.htm

- First, a young bloke - had recently bought two properties - WOW ! .. must do it too !
- Next a more mature guy - definitley time to get in NOW .. best time ever ..
- Third, another young bloke - getting in now - buy an IP - best time ever ..

Further investigation however, revealed that ..

- The 1st was a sales guy from Ray White
- The second was his boss, the owner of that office
- The third was also from Ray White a business manager or something, same Ray White office ..

I happen to know the person that runs the company at New Farm
his Mother is also a RE agent up at Moorooka,so it runs in the family,
but what they did on national media is a bit stupid,,imho willair..

 

[Bill.L]

Hi all,

What do the following years have in common?? '29, '30, '41, '51, '72, '73, '80, '81, '87, '89, '07, '08.

They were the times when our stockmarket fell 20% or more from the July/August (month closing)highs over the next 6-8 months in the last 109 years. That is 12 times in 109 years.

Please note that during the worst economic slumps, such a fall of 20%+ only happened 2 years in a row. We have just experienced 2 such years. History suggests that we would have at least 6 years before such an event happens again and possibly a lot longer.

Sorry to spoil he G&D story with a few facts.

bye

 

[Sunfish]

Lies, damned lies and statistics.

 

[Bill.L]

Hi Thomo,

Lies, damned lies and statistics.

absolutely.

So with the greatest printing of money in history currently happening around the world, and that money needing a home, what other conclusion is there??

bye

 

[WinstonWolfe]

So with the greatest printing of money in history currently happening around the world, and that money needing a home, what other conclusion is there??

bye

Unfortunately, they don't give the printed money away for nicks. They want interest.

and where does the increased capacity to pay interest come from?

 

[Player]

Taxes

Unfortunately, they don't give the printed money away for nicks. They want interest.

and where does the increased capacity to pay interest come from?

The "masses" taxes

 

[WinstonWolfe]

The "masses" taxes

actually that's an interesting point.....
a significant portion of the 'new' money is borrowed (bond issuance) by treasury from foreigners.

foreigners want interest which gets paid from tax revenue, paid by JoePublic.

when that money goes into circulation via bank lending to end consumers, JoePublic pays interest again.

Sure, there's a bit of overlap of the two interest payments, but everyone wants to skim a bit of the interest on its journey from Joe to foreigner.

And if interest rate is higher than gdp/wage growth rate, then JoePublic ends up paying more household income as interest.....

Poor old JoePublic.

 

[Bill.L]

Hi WW,

and where does the increased capacity to pay interest come from?

Deflated value dollars that will get printed in the future, just like it always has been. In the '80's we had money supply growth of 20% and interest rates of 15-17%. Recently we have had 20% money supply growth and interest rates of 6-8%.

Great big hyper-inflationary ponzi scheme? possibly, but I don't see any inclination by politicians anywhere to stop it, because the alternative looks much worse.

bye

 

[WinstonWolfe]

Hi WW,

Deflated value dollars that will get printed in the future, just like it always has been. In the '80's we had money supply growth of 20% and interest rates of 15-17%. Recently we have had 20% money supply growth and interest rates of 6-8%.
bye

Trouble is, if aggregate hours worked and wages don't inflate sufficiently to cover combined money supply growth and real interest rate, then the % of household income that is interest increases.....and this is a transfer of real wealth from borrowers to money handlers and lenders.

 

[Bill.L]

Hi WW,

In the '70's we had high inflation with negative real interest rates, I see no reason why that cannot happen again. It would be robbing the savings of the prudent to pay for the economic mess. With the GFC many people have moved a lot of their super money to cash, thinking it prudent.

bye

 

[investor888]

Bill, L. If the best you can do is state that Schiff said this and Prechter said that, then you really don't have a clue.

No I said I do my own reseach as well. Peter, etc, is saying what I think will happen as well. I don't base my ultimate financial actions on these guys or any other analyst.
Like I said in previous posts, I think the company creative accounting and stimulus packages will eventually be found to only have covered up the real problems that exist, and I think that we will see another sharp downturn.

But hey, we'll see who is richer in Dec/Jan won't we.

What do the following years have in common?? '29, '30, '41, '51, '72, '73, '80, '81, '87, '89, '07, '08.

Nothing in common as well. We never saw such hugh stimulus packages in 80, 81, 87, 89, etc.

In the '70's we had high inflation with negative real interest rates, I see no reason why that cannot happen again. With the GFC many people have moved a lot of their super money to cash

Dude, like others, I didn't loose 25% of my super on the last market down. Lost a less on the way down (~10%), gained on the way up in shares, now switching back to cash (ahead of the way down ahead).

 

[Aaron Sice]

i refuse to sit my money in cash - i'llpark it any other way - RE, Art, gold - hell, even an offset to save some outgoings - but cash?

nope. not for me. ever.

 

[investor888]

bill.L, If history was a guide at all, then because our market (Australia) fell about the same percentage over the same time period as the Great Depression (ie 50% over 14-16 months), then perhaps the 5-6 year rally that followed to major new highs should also be expected. In context, the all ords would be at
10140 by 2015.

Maybe you should read up on your history. The 1st fall in the Great Depression was about 50%, then after a rally, it feel even more, then after another rally, it fell even more, for a total of about 87% off the peak.

So if you want to compare the current market with the Great Depression, we are 1/3 of the way through (50% fall, and then a 45% rise). Next, big fall below March figures.