Discussion in 'Shares' started by Nigel Ward, 15th Feb, 2007.
Market soars to all-time high - Business - Business - smh.com.au
Well done Nigel ....
Well I can't take much of the credit I prefer to buy when things are cheaper...
I think you may be right though...anyone for 6400 before an April correction?
I know I finished the day 0.7% up even with WES taking a beating today /
0.8% CG will cover interest costs for me each month
I know....Everybody is looking for bargain these days. But 6000 still may be a good buy
I can not tell right now what may happen at 6400 - if we get there...because a long time ago I donated my crystal ball to the charity...
What is with the "6400" figure? Is that some magical milestone, or just a random number you're using?
With Real Estate, you can get a reasonable feel for how the market is, but what about the share market? Do people here think there could be a correction soon, or would that just be a wild guess??? i.e. are there any indicators to say that its way overbalanced and waiting to crumble?
Actually - it's just as difficult with the real estate market - possibly even worse, since you don't have up to date data on the macro-market ... the best you can usually do is get a gut-feel for your local micro-market that you track and know well.
I know plenty of people who sold out well before the peak of the last real estate boom, and indeed I could have bought a lot more property than I did - I stopped buying about 2 years too early.
There is a vast array of information on the internet now that can be of assistance. My first line of reference is economist’s commentaries on Australian and world economies. They tend to look at the broad macro economic issues that impact on the share market, and particular sectors of the market which are notable for performance or lack of performance.
There are many indicators of how the markets are traveling, and one of the most favoured one is the average price of companies within market sectors divided by the forecast earnings (across companies within the sectors) for the next 12 months, giving an estimated P/E number. The calculated numbers are compared to historical figures and a magical above or below fair value figure is derived. A lot of other factors are taken into consideration, but the P/E numbers appear to be very significant.
The P/E figures are really a guide to how profitable companies are performing relative to the price you pay for your investment. The current surge in the ASX indexes is being driven by robust company profits, benign inflation, and merger and acquisition activity (relative low cost of money funding private equity takeovers).
However getting back to your question, there is no simple answer; else we would all be millionaires.
So far IMHO it's a guess with some trend backing.
Charting can give you a feel for what you think the market will do based on the past. I like the 6 month charts from the ASX as my crystal ball for short term trades and extend it out for long term buy and holds and add in the position the lender takes on them with most of mine being high LVR and with a history of paying dividends. I have traded stocks at 2 to 7 days for a reasonable profit so far my wins are greater than my losses, at times I miss the bottom or have run out of credit or sell before the top so something is left for someone else in the deal. Being a vulture of the market is a fairly full on job though.
Do not worry about 6400 figure/"magic number".
It's Nigel's guessed number (maybe magical one) based (my guess only) on the last XJO run from 5000 to 5407 - when XJO broke up long term resistance line at 5000.
Using the same logic now .... XJO may well hit 6400 and pull back....Who knows...
The way I calculate my numbers is a bit complicated and has nothing to do with randomness.
Nobody invented indicator (and nobody will) which will tell you when correction may hit the market.
IMHO we may wait for correction for quite a while (but pull back is a matter of ....when). Corrections (1987 type) do not occur overnight.
PS - Market usually reverses when taxi drivers are giving tips!!!
"I think you may be right though...anyone for 6400 before an April correction?"
Well done Nigel !!! Congratulation !!!
Separate names with a comma.