The Stock Market

[zorro1]

well well, another great day on the ASX and futures up 70 points

Really odd that majority of posts re markets and property on TV are around 80% NEG ,when its the opposite if you visit the related forums in other countries such as hotcopper.com.au , even hard core bears admit defeat, kid you not. Starting to think that people on here suffer depression or Asia fever as its commonly known

I don't really follow the Australian market, but the Ftse is up to on the back of gains by Banks and Miners. Banks and miners are not good indicators. Most times they make impressive gains only to retract a day or 2 later. Oil and commodities in particular are very volatile and tend to skew the markets.

I have seen nothing today that would tempt me to buy into this market. Saying that, I'd also want to see the US$ strengthening before shorting the market.

I've already shorted the Euro vs US$ once today and after moving the stop the position was closed with 60 pips profit. Euro strengthened again and so I now have another open position shorting Euro/US$ at 1.4300. Initially showed a loss, but I'd rather be trading currencies than the exchanges at the moment!

Of course, I may be wrong, I often am. It's impossible to get it right all the time. I just feel that there is too much downside risk in the stockmarket right now.

Loong, Banks and Miners have been bullish for 6 months now and still trending up. Have always been curious about trading currencies but as they say stick to what you know. No way would I have the courage to short the market now . I rang e trade pro my broker and asked if I could do it 2 months ago when I took all my money out (mid dow crisis lol) which is effectively a short anyways, however they don't provide the service not even CFds. I'm a bull at heart so threw it all back in ,thank goodness

[zorro1]

LOL midas you stalking me, I Just lurvvv the attention futures up 98 points now http://www.bloomberg.com/markets/stocks/futures.html there is a monster rally happeneing as we speak. Who should we believe , the billions enetering the market tonight ot Midas? .......not midas lol

Started this thread so we could keep the 2 separate.

Enjoy zorro but just be aware of this :-

Aug. 3 (Bloomberg) -- Australia's benchmark S&P/ASX 200 Index is poised to plunge as much as 19 percent within three months, based on technical analysis by Chart Partners Group Ltd.

http://www.bloomberg.com/apps/news?pid=206...id=azs3qhTNKwes

Midas, since you don't trade, you wouldn't be aware that we don't listen to Analysts anymore. DYOR on that one

[loong]

Zorro,

One thing I will agree with you about. NEVER listen to analysts. They have access to more information than we could ever dream about, but most of the time they are wrong.

Chartists are a different matter. Charts are an important tool and a chartist has a much higher success rate than an analyst.

As I've already stated, I am short Euro/US$ and looking at the charts it is around a crossroads. The trendline and resistance are the same. If it breaks much above 1.4300, I will be out of the deal. If it drops back, it will have influence on the markets (downwards)

[zorro1]

Zorro,

One thing I will agree with you about. NEVER listen to analysts. They have access to more information than we could ever dream about, but most of the time they are wrong.

Chartists are a different matter. Charts are an important tool and a chartist has a much higher success rate than an analyst.

As I've already stated, I am short Euro/US$ and looking at the charts it is around a crossroads. The trendline and resistance are the same. If it breaks much above 1.4300, I will be out of the deal. If it drops back, it will have influence on the markets (downwards)

Loong was just reading this post on another forum. What are your thoughts?

"all commodity currencies are going higher, much higher...because the yanks are determined to destroy their greenback...WHY??...because it solves their debt problem by screwing foreign bond holders and also greatly improves their ability to trade...which means jobs...

don't bet against the yanks...they are on a mission...there are no friends in international relations/trade...only interests...

you can go long the aussie big time tonight..load up..aud will be near parity with the lowly greenback by the end of this year"

[trajan]

holy moly, my KBANK F shares just shot up 5.6% just today....whats going on? are we on an extended bull run? I thought it ended last week....

have we truly past the bottom of this terrible recession?

[zorro1]

trajan, every action has an opposite reaction, and since the market doesn't care about Anylists anymore (why should they) the only simplistic way to view it is "the trend is your friend" there is no reason whatsoever except the market is never wrong so I say dont fight it. I'm finding mid caps and well researched penny dreadful s such PEN have been the strongest to bounce however they were the hardest to fall. Depends on risk appetite and if you believe the worst is over or not

Edited August 3, 2009 by zorro1

[trajan]

I took some profits off the table....BUT Standard Chartered is reporting results tomorrow (HSBC and Barclays reported good results today & I do think this added to optimism on this side of the globe)....will it shoot up again if earning results (even just from cost cutting) keep coming in ahead of estimates??

[[im a bit upset with some so-called professionally run mutual funds who are not taking advantage of this long bull run (but, of course, they all free-falled when times were bad).....Im doing better than they are on "free form" trading....Im thinking of dumping them and consolidating with good mutual funds (using the present run ups as a "test" of performance)]]

[zorro1]

Roubini currently being interviewed on ABC. He's saying the "worst is over". Expects unemployment in US to hit 11%. US to grow 1% pa for next two years. Afraid of protectionism.

PS- Somebody needs to fix his tie for him.

double PS the markets seem to back him but then again he is "anal izing" what would he know???

[loong]

Loong was just reading this post on another forum. What are your thoughts?

"all commodity currencies are going higher, much higher...because the yanks are determined to destroy their greenback...WHY??...because it solves their debt problem by screwing foreign bond holders and also greatly improves their ability to trade...which means jobs...

don't bet against the yanks...they are on a mission...there are no friends in international relations/trade...only interests...

you can go long the aussie big time tonight..load up..aud will be near parity with the lowly greenback by the end of this year"

I don't believe that the Americans want to intentionally destroy their currency. The government has one main objective and that is to be re-elected. A weak US$ affects the standard of living of US citizens and that just wouldn't do.

In reality, the US$ is near to worthless and has been for decades. After all, what is a $ bill? It's an IOU issued by the Americans. It has a perceived value because it is the main trading currency, but it has nothing of substance to back it up!

While the Chinese continue to subsidise the western lifestyle, the $ will stay relatively high. I think the Chinese have more power to destroy the US $ than the Americans do themselves.

I would imagine that Rio and BHP would not like to see AU$ parity with US$ as it would affect their earnings. The US$ will have periods of support, but in the long term, it has to weaken further.

[Abrak]

Zorro,

One thing I will agree with you about. NEVER listen to analysts. They have access to more information than we could ever dream about, but most of the time they are wrong.

Chartists are a different matter. Charts are an important tool and a chartist has a much higher success rate than an analyst.

As I've already stated, I am short Euro/US$ and looking at the charts it is around a crossroads. The trendline and resistance are the same. If it breaks much above 1.4300, I will be out of the deal. If it drops back, it will have influence on the markets (downwards)

Loong, the concept that analysts (especially as an ex-one) can always be wrong despite their inside knowledge is fairly ridiculous. And if you truely believed they were consistently wrong they would be worth listening to simply on the basis that you could make money being contra their recommendations.

The reason that analysts are 'seen' as being wrong is because of this. Lets assume a stock is worth 2 and trading at 2. One analyst says it is worth 1 and is a sell, another says it is worth 5. If the stock goes from 2 to 4 then nobody listens to the analyst that says it is worth 1 because he is wrong, they tend to believe in the guy who says it is worth 5. When it falls back to 2 that analyst is seen to be wrong while everyone has forgotten the bearish one.

Assuming the market is right and 'the trend is your friend' as someone else mentioned is illogical because a market would discount this factor if it was 'right'.

I believe that any investment strategy that someone sticks to will probably work because, in general, people are prone to investing by sentiment - namely buying at the top and selling at the bottom.

Assuming that the market is wrong works pretty well too. Most bear and bull runs reflect a movement of P rather than an underlying improvement of E. Or in the case of say property a rise in P more than a rise in income. It is therefore not that difficult to work out a fundamental value with an accuracy of say 30% while market price movements are usually 100 to 200%. So on that basis you can outperform based on buying at a 50% discount to fair value and selling at double fair value. It is a much more heroic assumption when selling on a PE of 40x and buying on 5x that the E is wrong and the market is right.

I do agree that markets go in trends so betting with them is just as likely (or more likely) than betting against them. The problem is that you cannot apply conviction - the market is trending up so it is likely to continue is a punt. If you use fundamentals, you can have much more conviction. If I find a stock that is on a PE of 3x and will likely double its earnings in the next 5 years, I can be 90% certain to make money on a 5 year view. The fact it has halved and is still falling is irrelevant and if it falls more I can simply buy more with greater certainty.

My main point is this, I would comfortably put US$500,000 in a stock that was grossly undervalued, while I wouldnt put even US$100,000 in something that I simply felt was on the way up.

[nakachalet]

most of you are pretty much correct in believing that the usd is worth practically next to nothing nowadays.

besides many chartists also are able to demonstrate on their viable charts that usd is going down the drain fast.

since 1985 when i took my first crack at the market, many avid observers of the market also went on record to state the very obvious at the time that the usd practically is not worth the paper printed on and it sure was not worth having in anyone's portfolio.

i am much older now and i am not sure whether i am any wiser.... lol my family members thought i was not quite normal, tending to shrubs and durian and rubber trees all day long and staying up half of the night watching funny movies that have no live person, only different colored worms crawling all over the 52 in screen.... lol

recently i became even more perplexed and bewildered to the extreme, so to speak, regarding the worthlessness of the usd which has been very apparent to so many of my fellow traders here and else where around the globe. worse, whenever i focused on this topic of usd worthlessness to hold and only fools would own.... i became very nervous and restless at night too.... lol

until about a week ago, my mind was very much at ease again on this usd matter, perhaps i should not so soon liquidate it in exchange for miss yuan yet....

twenty some years ago, i fell in love with miss yen' stocks head over heel.... because every specialist advised that miss yen's stocks were going to the moon and beyond.... they must be correct, i told myself and all those working for me.... because they have all the most up to date info on hand.... about the same time, i was also informed from the very wise insiders to unload my intel as well.... lol

realistically, i have no one else to blame, except myself for marrying miss yen and stayed with her too long.... lol as for intel she was a faithful lady giving me twins and triplets and much more, when the stocks split again and again and again....

coming back to the seemingly worthless usd question.... perhaps my fellow traders could explain--

why the ministerial staff from different regions of the world, when attending the summit meeting in phuket, brought along MR. FRANKLIN as their chief security in residence...., if in fact he is so worthless as many perceived?.... lol

just a trading question ok? have no intention to annoy fellow asian sleeping tigers and tigresses.... (my daughter said i must give every gender an equal opportunity. she claimed to know several tigresses from hkg, s'pore and japan who can easily outperform her old dad any given night.... lol)

Edited August 3, 2009 by nakachalet

[loong]

Sorry Abrak,

I didn't say that analysts were always wrong. In fact if 10 analysts consider a stock a buy and 10 consider it a sell, then half of them have to be right.

I do not have the knowledge and access to as much information as the analysts and so I will always take into consideration what they have to say.

I enjoy reading the Motley Fool

http://www.fool.co.uk/latest-stories/

and the contributors do point me in the direction of some good undervalued companies. If a company catches my interest, I will try to find out what the analysts have to say as part of the decision making process of whether to buy or not.

For additions to my portfolio, analysts opinions can be very helpful.

For short term trades via CFDs and spreadbetting, I am only interested in charts and sentiment. No matter how good analysts are, they cannot turn the tide of sentiment.

At the moment, the optimists are outweighing the pessimists, but we all know that this will turn at some stage. We just don't know when. When the tide turns, I will be looking for shorting opportunities, but I won't be selling the shares that I own, because I am fairly confident that any fall in price will be temporary.

Anyway Abrak, yours was a very valid post full of good points and I can't argue with anything that you say.

[Bisto]

I bought BOI at 47CENT and AIB at 43 Irish Permanent at €1.02 and now iv jumped out.

It seems to me that the previous eutophia is returning again.trying to recover lost dreams.

fools with money chasing the dragon. €1.72. €1.67. € 2.98

happy day's

[thaihome]

Virtually every currency in the world is based on a perceived value; the USD is certainly not unique. I do have to ask when it looked like the entire world was going to hel_l in a hand basket late last year, why did the USD shoot up like a rocket? Because when the times got tough, people knew what was safe. That just drives some people crazy.

TH

[flying]

I do have to ask when it looked like the entire world was going to hel_l in a hand basket late last year, why did the USD shoot up like a rocket? Because when the times got tough, people knew what was safe. That just drives some people crazy.

TH

Agreed that was the perception. That if the financial world was collapsing that the USD would be the last man standing. I am not sure that story will continue to stand in light of what has happened since then. Folks seem a lot more interested in how things work lately. We will see at the next down turn where they run before the end of this year.

[vedantafx]

Virtually every currency in the world is based on a perceived value; the USD is certainly not unique. I do have to ask when it looked like the entire world was going to hel_l in a hand basket late last year, why did the USD shoot up like a rocket? Because when the times got tough, people knew what was safe. That just drives some people crazy.

TH

Nothing to do with the fundamentals of the US being good or anything. The JPY also shot up more so than the USD, and the JPY shot up against the USD...

Pointers I would understand first to understand why the USD strengthened...

• Balance of trade, the deficit widened 2001-2007, and USD weakened, as the credit markets froze and a contraction got underway, dollar liquidity dried up, and the trade deficit narrowed, the Baltic dry shipping index collapses, exports collapesed and the trade deficit that had been widening contracted, which would be USD favourable.
  
• It was excessive USD liquidity in the system that blew up these bubbles, rising asset prices were negatively correlated to the USD rate,ie, as asset prices rose the USD weakened. In USD terms, eventhough the S+P went up 50% 2003-2007, it was down in terms of Euro, Yen, GBP etc etc, as the USD had weakened. Post 2007, and during the turmoil, assets prices began to plunge the USD went up in value. Dollar liquidity drying up and credit destruction is favourable to the USD, as so many loans and assets are priced in USD. As assets fell in value, USD dollars got destroyed and they went up in value.
  
• The FED stepped in, and ramped up those printing presses( mouse strokes) and have created tremendous amounts of new USD which has started to bring liquidity back into the system, hence assets have started to rise but the USD has weakened in the same period.
  

IF assets correct again, USD will strengthen, along with JPY which is why I went short GBP/JPY...So essentially we are proping up all these banks, and bad assets, the stock market is rising, and the economy is recovering, yet debt has been increased. A proper recession should reduce debt, reduce spending, liquidate bad debts, yet we have increasing USD liquidity, rising stocks, but yet bigger problems. The problems are not over yet, and I think will get worse again in the next 18 months time. I m actually medium terms USD bullish, but longterm these deficits, debt loads, incompetent central bankers will lead to some sort of USD crisis. Whether it will be a slow depreciation over a number of years, until the USD index is below 40 (?) or a very rapid move down remains to be seen.

[zorro1]

The big one, umeployment numbers just out . Better than expected , futures just jumped 80+ on the spot, will be a clear run to 10,0000 on the Dow now probably followed by a heavy sell off. All looking good short to medium term for holders

[lannarebirth]

The big one, umeployment numbers just out . Better than expected , futures just jumped 80+ on the spot, will be a clear run to 10,0000 on the Dow now probably followed by a heavy sell off. All looking good short to medium term for holders

10 Day Open TRIN says a lot of energy expended getting here. We'll see.

[Abrak]

One point on the dollar value that I think is underappreciated is that it is structurally overvalued. The US$ dollar is pegged to the Yuan (whose money supply is 2/3rd the US despite having an economy a third of the size). I dont think that any valuation of the dollar can be made without taking this into account.

For instance if the yuan is 30% undervalued then it is only natural that the dollar should be 20% overvalued. The peg essentially makes them one and the same money supply and currency. I dont know if this makes sense but it sort of has a certain logic to me.

Excess Chinese surpluses counter US deficits.

[Jingthing]

I never left the market. No, I am not bragging. Its good to see it now climbing out of the big hole.

[Abrak]

To me the concept that people assume the market is right or momentum is the way to make money is just a ridiculous notion by which a sensible head is virtually certain to make money.

There was once a very successful investor called 'Peter Lynch' a value investor, maybe the Warren Buffett of his time. He made a couple of interesting comments...

Short-term there's little correlation between a company's earnings success and its stock price...long-term there's a 100% correlation; so, buy quality and be patient.

Thousands of experts study overbought indicators, oversold indicators, head-and-shoulder patterns, put-call ratios, the Fed's policy on money supply, foreign investment, the movement of the constellations through the heavens, and the moss on oak trees, and they can't predict markets with any useful consistency, any more than the gizzard squeezers could tell the Roman emperors when the Huns would attack.

By the way this isnt meant as a defense against analysts. By the time their 'report' comes out every bit of information will have already been transmitted to the sales desk, market makers, clients etc. I do fundamentally believe though that if you put in enough effort to understand which companies have good fundamentals and are wrongly priced you will outperform any market.

The real key to this is not averages - it is conviction. Once in a while you will find a stock that is trading at 5 and worth 25. You risk reward is so great that you can put in 5 times your normal investment. Momentum investment lacks conviction - you might be right a lot of the time but you cant place big bets.

I admit that most of this is based on my experience with the Thai market - people simply gamble or are more likely to buy something because it is going up (e.g. more expensive) than anything else. Gambling in a casino is 99% luck a stock market is not like that gambling against profession investors and intermediaries is unlikely to succees.

I cant think of many investment gurus whose reputation is based on momentum, the stockmarket being right, going with the flow, not betting against the market etc..

[Jake1]

The big one, umeployment numbers just out . Better than expected , futures just jumped 80+ on the spot, will be a clear run to 10,0000 on the Dow now probably followed by a heavy sell off. All looking good short to medium term for holders

Yup, people's unemployment benefits are running out. Once you're un-employed for a certain length of time you're no longer counted as un-employed

Funny how that works

[thaijasmine]

I never left the market. No, I am not bragging. Its good to see it now climbing out of the big hole.

Very well done !

But you still made yourself look like a complete idiot in that other thread

about Obama saving the world from a Depression

http://money.cnn.com/2009/08/06/real_estat...world/index.htm

[Abrak]

Yup, people's unemployment benefits are running out. Once you're un-employed for a certain length of time you're no longer counted as un-employed

Funny how that works

Jake1,

I looked at this statistic some time ago because it is often quoted. I believe that say you are unemployed over a year you are no longer counted by some measures as unemployed (for various reasons). You do not however get removed from the unemployment statistics. So unemployment will not fall just because there are less people being being made unemployed this month than a year ago. (You are very likely to get the numbers revised downwards for this month when next months figures are released.)

Unemployment is fudged by the underemployment number but not by unemployed being reclassed.

The rise in employment this month is a strange non-seasonal variation. Unemployment is unlikely to fall for at least a year (more likely 3).

[Jingthing]

http://money.cnn.com/2009/08/06/real_estat...world/index.htm

Yes, if you read the thread you are referring to you will see I was not talking about the housing situation, rather the banking and credit crisis. Avoiding a great depression does not mean that things will be instantly rosy. Yes, Obama deserves the credit for saving the world from a new great depression.

Edited August 7, 2009 by Jingthing

[Abrak]

http://money.cnn.com/2009/08/06/real_estat...world/index.htm

Yes, if you read the thread you are referring to you will see I was not talking about the housing situation, rather the banking and credit crisis. Avoiding a great depression does not mean that things will be instantly rosy. Yes, Obama deserves the credit for saving the world from a new great depression.

What exactly did Obama do? As I see it Bernanke deserves credit for avoiding an outright depression with some fairly innovative monetary policies. Unfortunately he also deserves to be hung upside down by his balls for creating the problem in the first place.

I believe in 10 years time Obama will go down in history as the person who sold austerity to the American people.

[Jingthing]

The bailouts and stimulus packages, anything the banks needed to be saved. The thing that was heading us towards total MELTDOWN was the BANKING and CREDIT LIQUIDITY crisis. He also picked that genius Geithner even though he is not popular.

The biggest mistake O has made so far? The stimulus packages were not BIG ENOUGH.

Austerity? Well what choice is there? The bubble has burst.

Edited August 7, 2009 by Jingthing

[flying]

The big one, umeployment numbers just out . Better than expected ,

Yup, people's unemployment benefits are running out. Once you're un-employed for a certain length of time you're no longer counted as un-employed

Funny how that works

Yes 9.4% versus 9.5% non adjusted Average Party on!

Remember too that The great depression rallied hard before its final fall.

What has this rally been made on? Borrowed dollars & what else???

Not to say there is not money to be made short term for those willing to take a risk.

But really the irrational exuberance associated with certain flag wavers is silly.

http://www.nytimes.com/2009/08/02/us/02unemploy.html?_r=4

The biggest mistake O has made so far? The stimulus packages were not BIG ENOUGH.

Yes and I am sure you will want to move back to the greatest nation on earth & help to pay it back too?

You have mentioned in other threads as an alternative man with no children you have no future stake.

So.......

It is not surprising that you do not give a hoot about the future generations whose future is being used/destroyed today.

Edited August 7, 2009 by flying

[basjke]

=

The biggest mistake O has made so far? The stimulus packages were not BIG ENOUGH.

I agree with you they should have been much bigger and have put the tax payer in a much higher debt.This crisis is just starting and will get worse for the next 1 or 2 years.However everyone knows that Bush created the problem and didn't do anything to fix it as he knew his party would lose the next elections anyway and that's why the current president has such a big problem.

I'm not an american but I'm trading and I saw this problem coming.That's why I sold 70% of my portfolio before Christmas 2007 and are still in cash.

When a nation goes buying a hamburger on credit then you are asking for problems.

[Jingthing]

Yes and I am sure you will want to move back to the greatest nation on earth & help to pay it back too? Attached Image

You have mentioned in other threads as an alternative man with no children you have no future stake.

So.......

It is not surprising that you do not give a hoot about the future generations whose future is being used/destroyed today.

The alternative, total global financial meltdown, which we were very close to, would have been much more devastating and wealth destroying than what we are dealing with now, and will be dealing with for decades to come. Actually, I do care about the future of the species (not so hung up on nation states), such as confronting man made global climate change and nuclear proliferation. It is ignorant and definitely homophobic to make assumptions about people based on their sexuality. BTW, shall I remind you that childless people pay for the education of a country's youth, and are mostly happy to do so.

Edited August 7, 2009 by Jingthing