Brace yourself

I like your impression
It's always a few bumps on the road when market is just about to hit a round number.

 

This question may show my ignorance but do you guys actually invest in the ASX as a bunded stock or do you invest in individual stocks in the ASX.

What I mean is ...is there a stock code that represents the ASX200 for example that can be invested in? etc....

I notice that there is an ASX code selling at $34.90 atm but there is no XJO code?

MJK

 

Hi MJK.

May I call you 'M'?

There is an ASX because the Australian Stock Exchange is actually a Public Company that you can buy the same as you can go buy NAB, BHP etc. It's a business in its own right.

The XJO is an Index rather than an individual company. I guess the more common way of 'buying the Index' would be to buy into an Index Fund which pools money and does just that........keeps a ratio of shares that reflect the current index. If for example, resource stocks became a smaller proportion of the Index then the 'Index Fund' would change its makeup accordingly.

Note: I'm no expert though. See my prediction for yesterday.

 

Alan,

M is fine

So, all this index watching makes me think many of the posters in this thread are invested in index funds/investments? Is this correct? What Index investments are people invested in specifically.

Michael whyte was lamenting that last quarter he could have made an extra 23k if he invested the capital in an index rather than Navra. So what would Michael invest in re the index if not Navraor individual shares ( please note that we now understand the value of NI being an income fund I'm only using the example to learn about indexes).

MJK

 

Hi 'M'.

I don't think you'll find many are necessarily 'investing in the index' but rather are using it as a bit of a scorecard comparision. ie. how am I/my Fund going this week compared to the Index.

NavraInvest probably get this even a little more in that their Fee Structure is based on an outperformance of the ASX200 Index.

 

Isn't there an index futures contract you could buy?

 

MJK,

If I were to buy the index I'd probably look at buying a LIC. These are listed companies, as described above, that buy stocks across the index. They typically beat the index too as they do trade the stocks. One example of these stocks if you want to track its performance against the index is Argo Investments FPO, ASX code (ARG). Its trading at about $7.00 a share today. A quick look at its chart shows that it mirrors the index closely. It was trading at about $5.40 a share about a year back, so that's about 30% growth that its achieved over the last 12 months.

Cheers,
Michael.

 

I'm invested in Navrainvest, as well as a Tyndall managed fund and a Vanguard managed fund. From memory these try to mirror the index. Those funds that do tend to have lower fee structures than most retail funds since there is little 'intelligence' or 'value adding'.

 

You can trade any index using future and options.

Also you can trade any index like XJO using CFDs (Contracts For Difference).
Trading CFDs is very similar to trading shares, but with some important advantages:
Leverage trading = allow you to gear up your investments and increase your profit potential or loss...
Go long (buy) or short (sell) = give you the opportunity to profit in bull and bear markets.

 

XJO is down today = That's what happens when RBA governor is talking in the very ambiguous way
I think I need few more beers...

 

Thanks for your replies Michael & Glebe. You are contributing to my education.

How about that...I actually have some Tyndal & Vanguard

MJK

 

1. So what do you guys make of this current weakness in the ASX?
Is it just an temporary abberation or a firm pull back from over optimism?

2. What do you guys think of the weaknesses in commodity prices (oil & mining)? Why has demand dropped or the prices dropped so suddenly? What is driving weakness in world pricing? I hear it mentioned on radio but have no understanding?

MJK

 

Study: stock market acts oddly before a crash

Feb. 15, 2006
Special to World Science

Physicists have found that shortly before and after stock market crashes, stock prices start to follow distinctive patterns, somewhat like those found in heartbeats and earthquakes.

The findings might lead to a system to predict stock-market crashes, they added—but not necessarily to stop them.

In the study, University of Tokyo researchers analyzed the Standard & Poor’s 500 index, a closely watched measure of U.S. stock performance. They found that over time frames of more than a day or so, short-term changes in stock prices usually obey a class of statistical patterns in which the most likely changes are relatively small ones.

But for two-month periods surrounding crashes—such as the “Black Monday” plunge of October 19, 1987—fluctuations of all sizes are equally likely, they found. One result of this behavior, they noted, was that a graph of the fluctuations looks statistically similar if plotted over different time scales, between four minutes and two weeks.

The study appears in the Feb. 17 issue of the research journal Physical Review Letters.

This type of change in behavior is known as “criticality,” the researchers wrote. According to an article in the Feb. 14 issue of Physics News Update, a newsletter of the American Institute of Physics, they drew an analogy with a class of metals that can become magnets when placed in a magnetic field.

These “ferromagnetic” materials are each associated with a characteristic temperature known as the critical temperature. Below it, the metal arranges itself into distinct regions, in each of which the spins of the atoms become aligned the same way among all atoms. These regions, which contribute to the magnetism, look similar at different magnifications.

This self-similarity is also found in graphs of the time intervals between heartbeats, or between earthquakes, the researchers added, according to the publication. But there is also a key difference: in those cases, the self-similarity stems from yet a different mathematical pattern, called a power law. Things that obey power laws become less likely with increasing size according to a characteristic formula.

The university’s Zbigniew Struzik told Physics News Update that it’s unknown whether the new findings could lead to an early-warning system for crashes. One problem is that the warning could actually produce the crash, by inducing panic, he told the publication: thus, the tipoff could either “compensate for or neutralize the crashes, or make them worse.” He added that his team will be researching how individual trading decisions lead to “criticality” in the stock market.

 

ASX200 up 1.7%!!

Come on Tropo, get excited!!!!

And stay cool...

 

Huh?

Looks like under 1.0% to me... It closed at 4879.1, up 43.6 on the day.

Still in the black and a decent little recovery but a way to go yet to get back to the 5000 odd level.

Cheers,
Michael.

 

Glebe,

NOT YET !!
Above 5000 I'll be excited ( and you as well)
Until than >>> I am still paddling = 121 points to go

ALWAYS

 

Price Index - Feb 21, 2006 4:17:02 PM
First High Low Last Movement Turnover ($A) Volume
4799.9 4879.1 4835.5 4879.1 79.2 1.65% 3,894,136,231 460,224,58

according to smh anyway...

But I don't think it started at 4799.9, I think it started at 4835. I don't get it, I think SMH is wrong.

 

Open - 4846.1
High - 4879.1
Low - 4835.5
Close - 4879.1
Trades 658 & +43.6 points & 0.9%

 

Glebe,
Nothing goes to heaven in straight line - even XJO.
Tomorrow XJO may drop down to 4868/60
If not next number is 4924/29
Be

 

Tropo,

Or then again it might just keep tracking to heaven in a straight line!

Looks like another day in the black. She's currently up 30 points and looks like testing previous highs. ASX200 traded intra-day to around 4930, and previous high close is 4957. Not far adrift now!!

Bring on 5000 I say, then its all blue sky.

BTW, my Navra fund should be doing well as we're into that "final third" of the recovery towards previous highs. Happy days... Once she beats that high I'll post a summary of the "incremental value" that Navra added above the "zero" of the index from peak to peak.

Cheers,
Michael.