Discussion in 'Shares' started by Simon Hampel, 11th Nov, 2008.
Has the market bottomed - ASX - Australian Securities Exchange
I'm sitting on some serious losses from a position in STW I took about 18 mths ago. But nonetheless I went buying again (chasing losses) on the 27th October. At the time it looked like capitulation/bottom to me...... but time will tell.
Talk about covering your bases for a recovery pattern, does anyone want to take a punt of what it would be?
At the end of his article he suggests that the Dow Jones Index will follow somewhat of a long term recovery, which would probably suggest that most of the world will follow a somewhat similar path.
Just a bit of history.
Worst Stock Market Crash: 1930-1932
This is the grand daddy of them all.
Investors lost 86% of their money over this 813 day beast. This market crash combined with the 1929 crash, makes up the Great Depression.
If you had $1000 on 9/3/1929 (beginning of the 4th worst crash, it would have gone down to a whopping $108.14 by July 8th, 1932 (end of the worst crash) or an 89.2% loss.
To recover from a loss like that, you would have to watch your portfolio go up 825%!
The full recovery didn't take place until 1954, 22 years later!
Bulls and Bears: Tales of the Zoo: The 10 worst stock market crashes in U.S. History
Maybe I read it wrong but I thought he was talking about what the pattern would look like when it bottomed (which is a recovery in a way) which would then lead to an overall recovery?
I like to be optimistic Tropo 22 years later! I want to be retired around then
Yep...Daryl was talking about few basic patterns which may lead to recovery.
Market may follow those patterns or mixture of different patterns.
At this stage of the game, full recovery is a long way away. It’s a matter of years rather than months (IMHO).
If you do believe that history likes repeating itself, comfortable retirement for some people may be another dream.
Anyway...Have a good one.
A bit more history..
The Australian Version of the Great Depression
The peak in the All Ordinaries index likewise ocurred around March 1929 ( 51.7)
By January 1931 (22 months later), the index had dropped 45% to 28.76.
Had you bought into the market at this point, the next 1 year would have earned you a 16% return , within 2 years you would have made 40% return, within 3 years you would have made a 73% return
Lesson 2. Black Friday 1987
Sept 1987 AORD is 2305. By November had dropped 47% to 1217.
U]Had you bought into the market at this point[/U], the next 1 year would have earned you a 20% return , within 2 years you would have made 33% return.
in the last week of October 2008, the All Ord closed at 3693, or 46% below its peak from Oct 2007......
Buy I say...
but this does not consitute advice - get professional advice blah blah blah
Why do you say that?
Ok, the ASX is now at the 4100 level and the 1 year trend is still pointing downwards but how much more bad news are out there and how much of it is newsworthy?
The media will soon get tired of listening to their doom and gloom and will stop reporting it so the situation can only get better.
Looking at the ASX chart it seems to me that the upwards trend will probably start when we reach the 4450/4500 level.
The 4500 level is important for 2 reasons.
1. Because of the market's recent behaviour (it forms a certain pattern) and
2. Because it's the ASX long term average growth level. (the level where the ASX would have been if it only had average growth and didn't have the sharp rises of the past few years).
The ASX probably won't stay at that level and could fall under 4500 for a while longer, however, the chart points to this level as being significant in signaling the change in direction.
I hope the above doesn't spoil your full recovery theory...
I would not pay much attention to the media.
All those guys are paid well to make you believe that quick recovery is around the corner.
Simply, follow the chart (preferably weekly).
Currently trend is down. There is nothing on the chart (at the moment ) which may indicate quick recovery.
Temporary short lived rebounds (bull traps) mean nothing.
The 4500 level is not important at all. It is just another round number.
There is no certain pattern around 4500 level.
Do not try predict where XJO may or should be, and do not try to see patterns which do not exist (that is a common mistake people are making).
The most important number at the moment (in terms of possible recovery) is 5177/81 level (XJO).
XJO under this level is still bearish (IMHO).
I hope that above doesn't upset your optimism...
It does actually, how do you expect me to sleep after this?...
Anyway, we can touch base again when the change we've talked about occurs in a couple of months time....
Could the same not be said that media are paid well to make you believe that a recovery is a long way off?
Not being argumentative, just trying to understand.
The media is preoccupied with the here and now, one minute its a skill shortage the next its the greatest financial crises since the great depression.
blah blah blah
Tune off and switch off youll probably be better off for it, unfortunately in my job i cant
Can you imagine what would happen if people heard on TV what you just said above?
What would you do? It’s all about herd psychology. Nobody wants to hear bad news.They certainly don’t want to pay for bearish view.
I think we may have already seen the bottom as there seems to be a lot of support around the 3,800 mark. The market will test this point over the next couple of months but I think the recovery may have already started. But it is going to take 3 years + to recover.
Yes there will be more bad news to come with days of high volatility, but these will just represent good buying opportunities, for those who still have cash.
We are approaching a world of 0% interest rates, and nothing spurs capitalism like "Free Money". The big with get bigger, the smaller will be swallowed up and when the dust settles these compaines will be making serious $$$. Avoid small companies and stick with the big boys and you can't go wrong.
Remember there is a lot (a bloody huge amount) of cash sitting with fund managers waiting to be invested...
I agree, and it's just a matter of time before they start buying again.
Surely they can't wait forever and the returns on cash are getting smaller by the day...
I'm buying STW in 5K tranches. Any purchase that I can make a quick (1-2 weeks) 5% gain on, I'll sell.
Any tranches that I can't make a quick gain on, I'll hold for the dividend long term and transfer to my margin lender to reduce my LVR. I see it as a win win strategy assuming of course that we haven't got another big downturn coming.
My thinking (hoping) is that we've seen the worst of the selling and are now bouncing along the bottom. I want to take advantage of the volatility but at the same time have broad diversification and avoid anything speculative.
me too but I am only buying in small parcels because I am not confident in the markets yet and I also have a few things to work out.
For the first time in 3 years my IP's are nearly cash flow neutral
and the interest payments are getting smaller by the month so I'll need to cancel my tax variation or to find ways to minimise my tax bill.
I am thinking that I'll either have to buy 1 more IP and increase my -ve position and/or to get a margin loan and buy shares with it
or to salary sacrifice into super and use those funds to buy shares...
I am leaning towards the salary sacrifice option because I'll only pay 15% tax it's less risky and when opportunities come along I can cancel it and take advantage of the situation
I bought CBA 2 days ago
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