Has the market bottomed?

Discussion in 'Sharemarket News & Market Analysis' started by Simon Hampel, 11th Nov, 2008.

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  1. AsxBroker

    AsxBroker Well-Known Member

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    Hi Norak,

    I must agree with Mark...What makes you think that everyone is now greedy?
    Everybody is actually scared witless. Hence, yields on bank stocks are high single digits fully franked.

    Have you asked any friends if they are investing in stocks? They'll look at you as if your a madman...Try it if you don't believe me...

    Chris, I think it's going to medium (well it's not short is it?) and deep (which it is).

    Cheers,

    Dan
     
  2. dudek

    dudek Well-Known Member

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    Whatever it is I would like to have some. Mine stuff doesn’t work. For some reason I still see people spooked for the next 12 months at least. And after that market will not have another bull run for few years.
     
  3. Chris C

    Chris C Well-Known Member

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    So I guess recent events have reposed the new question "where will the market bottom" or "when will the market bottom" rather than the original question of "has the market bottomed" because we clearly didn't find it in the last couple of a months.

    I'm personally of the opinion that calling what level and when the bottom will be achieved are not only quite a way off into the future but are dependant on so many variables it gets almost impossible to guess.

    What I would like to know is when people think we will reach 3000?

    At this stage I think a safe bet would be sometime in March, but I'm not completely writing off the chance it could still happen in February! I'd be VERY surprised if we weren't at 3000 at the end of March.
     
  4. BillV

    BillV Well-Known Member

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    I thought we were hovering around the same level since November
    and the dangerous reporting month of Feb is nearly over so what makes you think things will change for the worst now????
     
  5. Chris C

    Chris C Well-Known Member

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    One word. Nationalisation.

    In addition to that if good concessions aren't made quickly for a number of imminent country debt defaults it could respark a credit freeze and a west european banking collapse, though this threat is a little further away you can rest assured the market will be wanting to see some reliable solutions on this front formed sooner rather than later.
     
  6. davo6253

    davo6253 Well-Known Member

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    Until companies have been weeded out and aren't requiring government funds (Car companies?) and / or nationalisation to stay afloat I can't see things heading upward, how can anyone have confidence in a system that requires that sort of intervention?
     
  7. BillV

    BillV Well-Known Member

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  8. Chris C

    Chris C Well-Known Member

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    Firstly, I'm not sadistic. I don't want this stuff to happen. I just am struggling to get my head around how we can avoid it.

    Though for arguments sake lets say the world some how manages to arrest this free falling credit contraction (deflation) without massive printing and somehow can restore confidence to the markets which bring risk levels worldwide down. Then I'd be positioned much the same way as before the crash - emerging economies, oil and agriculture based commodities/stocks.

    Of course a lot would need to be taken into consideration. Like at the end of this crisis will financial systems and regulations be reformed? Will new models of economic management be adopted by central banks and governments? At what rate will credit begin to grow again? I'd probably still stay away from Australian property though, it might be good for cashflow in the short run, I just think that over the medium to longer term there won't be good growth in it.

    That said, I don't believe this will happen and obviously my position is and will continue to be in gold until all the foreseeable dramatic events are out of the way, because no one in their right mind will make investments if they can't be sure what the world will roughly look like in 12 months - and right now you hear it day in day out from all the top CEOs and CFOs around the world, "we not giving guidance at this stage because we just don't know".

    I'm also in gold right now because I just can't get my head around how the world will fund all the problems when everyone is running these massive deficits without printing money at extreme levels. It doesn't take a mathematician to see the numbers don't add up.

    So BV, can I ask you a couple of similar questions? Firstly, how do you see the world dodging these problems? And if these "wild" predictions do eventuate, what are you going to do?
     
  9. BillV

    BillV Well-Known Member

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    I think the world problems will sort out themselves.
    I also don't believe unemployment will be a big issue here.

    Some could argue that our corporations are very profit driven and have an aggressive and greedy management structure and therefore will be trigger happy when it comes to reducing their staff levels.

    Therefore, unemployment could affect any of us but as long as we have savings or money in our offset to keep us going through any difficult period we will be fine. I am not worried. In extreme Financial Hardship I can also withdraw funds from my super to pay my Mortgage etc.

    The things that do worry me are our government's massive spending and the affects of the carbon tax about to hit our economy and the general public.
     
  10. Chris C

    Chris C Well-Known Member

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    I sort of agree and disagree. I don't think Australia is "special" or "immune" to this crisis though we do have a couple of things going for us that countries like the US and the UK don't (natural resources), but that said, that will only mean our recession wont' be "as deep" as the rest of the world.

    Unfortunately though the bottom of this recession hasn't even been reached yet so we can expect to slide into a recession of our own soon, if we aren't in one already. This will be the main determinant of how deep out unemployment is.

    Also from what I have been reading the rate of contraction in China is slowing marginally and there is hope that with its large reserves that it has built up will allow it boost consumption signifncatly over the coming years, which would obviously be great for us. Though it will be far from the catalyst we'd need to return to boom times (not that I think we'll ever get back to like it was).

    That is exactly what the government is trying to prevent right now; it's trying to prevent the free market sorting the problems out... Do you know what the state of the financial world would have been if US let AIG go down after LB, not to mention all the money the US has already ponied up to the other failing US banks.

    :eek:

    Unfortunately as I mentioned above, I don't think they can bailout the market forever, and eventually something will have to give, whether it's the banking institutions or US treasuries doesn't matter, because whilst there is severe deflationary pressure in the economy coupled with the huge amounts of debt the developed world the outcome is just a matter of time.

    I sincerely hope the deflationary contagion doesn't catch on here in Australia otherwise we too may start sliding down the slippery slope because compared to most developed countries we are as bad if not worse when it comes to levels of debt in our society.

    Can you blame them. That's what they are paid to do. They'd have a bigger case to answer if they won't maximising profits.

    I personally always love how everyone hates the banks yet so many of own their shares, and yet we never complain about their double digit growth and healthy dividends!

    :cool:

    I completely agree. My feeling is, unless government projects yield a net benefit to society they shouldn't be undertaken regardless of economic climate. The last thing this country needs is a big national debt at the end of this crisis.
     
  11. BillV

    BillV Well-Known Member

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    Chris

    And coming back to the subject, I think we are at the bottom or very close to it and we could be going up and down this level for a while but the recovery will come, it's just a matter of time. :)
     
  12. Chris C

    Chris C Well-Known Member

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    What are you basing this on?
     
  13. AsxBroker

    AsxBroker Well-Known Member

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  14. BillV

    BillV Well-Known Member

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    Let's say there is always light at the end of a tunnel
     
  15. Chris C

    Chris C Well-Known Member

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    So it's an emotion/gut based analysis?
     
  16. Chris C

    Chris C Well-Known Member

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    Yeilds are definitely getting better but they are still not positively geared compared to margin loan rates... and I think in this market you can't factor any capital growth given the credit contraction going on, therefore investment decisions should large be based on yields.
     
  17. tropic

    tropic Well-Known Member

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    I think the yields are dropping quickly this years as many companies are cutting down to create buffer.
     
  18. Chris C

    Chris C Well-Known Member

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    I don't disagree that earnings will be dropping for the most of this year, though in times like these I'm expecting that prices will drop quicker than earnings...
     
  19. BillV

    BillV Well-Known Member

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    No but I don't feel like explaining myself
     
  20. Chris C

    Chris C Well-Known Member

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    Well I hope you can appreciate that most people don't (or at least shouldn't) put a lot of value in opinions that aren't back by some form of reasonable analysis.

    I'm not saying yours aren't back by good justifications, but if you are unwilling to elaborate, then I personally am unwilling to put much value in your comments.