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Hesitant - Rising Unit Prices

Discussion in 'Managed Funds & Index Funds' started by archangelsupreme, 11th Oct, 2007.

  1. archangelsupreme

    archangelsupreme Well-Known Member

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    I'm looking at the following funds to add to my portfolio

    * Challenger China Share Fund
    * BlackRock Merril Lynch Growth

    ...However....the unit prices have increased drastically over the past few weeks...i'm hesitate to buy-in at a high unit price...though i'm torn...

    * What if it keeps rising? Should I not worry about it and invest anyway as i'm looking long-term
    * I originally hoped that after the 3rd quarter distributions that unit prices would drop...BUT THEY HAVEN'T....they've gone up and up.

    I don't know, i'm happy on one hand because these increases have helped me gain $1k out of my investment in Macquarie/BT in just over 1 month....but i want to invest more....

    BTW - I kinda bite the bullet this weekend and put in my application for the Colonial First State Geared Share Fund....fingers cross..

    argh...torn.
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    ... that's always a good thing - going up is what we like :D

    Isn't that what you want ? For them to keep rising ?

    If you look at the performance history of these funds (assuming they have a long enough history), you will see that they generally do go up and up and up. Sometimes they go down for a bit, but then they go up and up and up again.

    The longer you wait, the more you miss out on the growth.

    Now, if you believe that the market is going to turn and we really are near the peak - then perhaps you don't want to invest in that fund ... find another fund to invest in that covers a different market. But otherwise, I suggest you don't wait for the fund to drop before buying ... it may not happen for a long time.
     
  3. Simon

    Simon Well-Known Member

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    Would you rather buy a stock that was:

    Rising?

    Stagnating?

    Falling?

    I think it is a common mistake we all make at first to sell the risers and keep the poorer performers.

    Remember: The trend is your friend!
     
  4. Billv

    Billv Getting there

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    I personally wouldn't touch stocks at this point of time.
    I believe we are in for a serious correction starting with the US share market
    sometime this year or early next year.
    This is my opinion only do your own research.
    Cheers
    Bill
     
  5. crc_error

    crc_error The Rule of 72

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    You left the end bit off, so I'll finish it off for you..


    The trend is your friend!...... only until the end!
     
  6. coopranos

    coopranos Well-Known Member

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    Bill
    Interested in hearing why you think this is the case
    Cheers
     
  7. archangelsupreme

    archangelsupreme Well-Known Member

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    Yeah i'm quite interested to hear your reasoning...

    I'm thinking of waiting this wave out and invest during the next trough...
     
  8. Billv

    Billv Getting there

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    Because IMO the US is due for a big correction
    additionally, there is the subprime problem in the US.

    So far many financial institutions lost money but all the subprime loans
    have not matured yet.
    The experts are saying that the majority of the subprime loans will start maturing late this year and early next year.
    As soon as they do many more institutions and funds will have problems.

    Reserve banks have pumped billions of $$$ into the market
    but financial intitutions don't want to lend to each other as they don't know
    which one is going to go bust next.

    I am guessing that things will get worse before they get better.
    This is my opinion only and based on my own reading/research.
    I am thinking that the US stock market will have a big correction
    and others will follow including our ASX etc.

    If all this happens our super funds will also be hit.
    fyi, I have already moved my super to the STA capital guaranteed fund/Cash fund. It only makes 5% but I will be able to sleep at night...:)

    Remember, if/when it all turns sour, you won't have time to change over
    and you won't be able to sell because none will be buying...:eek:

    Cheers
    Bill
     
  9. bundy1964

    bundy1964 Well-Known Member

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    As I see it the bigest problem was junk bonds made from the mortgages which in the last 1/4 were revalued leaving many hedge funds holding the parcel. Future defaults were priced in at the time leaving investors out in the cold.

    The US has 401 funds that typicaly invest 40% into the large cap stocks, 20% into small caps, 20% bonds and 20% offshore, that creates pressure on the market to keep rising.

    China while buying anything we can dig up has a future fund that is 100 times larger than our own and no interest in investing it in their own country, guess where that will go and what that will do to prices. In their sights is BHP and RIO as part of their top 10 investments to make. Hong Kong is expected to benifit from an opening up of money being allowed to be invested offshore.

    Localy we look like having food drive inflation which will raise interest rates which in turn puts a higher value on our $ making our ROI look attractive to OS investors. Our super funds put pressure on the market to rise. Mining boom is creating jobs for the next few years and pulling other companies along for the ride. Under supply does end up with an over supply eventualy, spec mining companies may fail when over supply happens. Some are saying we have 10 years of mining boom left, I will be happy to milk it for the next 3.

    Fairly easy now to protect your positions by using short CFD's, warrants and options as well as other products so nowdays you can make money in bull and bear markets.
     
  10. Billv

    Billv Getting there

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    We don't know what the chinese are planning to do with their money
    but one thing is for sure, When they are ready to spend money to buy BHP they won't pay $50 a share they will first make sure the market has crashed so they can buy them for half price.

    And I am sure they have the monetary power to crash world stock markets if they wanted to. So why buy BHP or RIO, now if you can buy them later for a lot less?

    Yes if you know how and have time and money
    but you will have to be willing to accept risk.
    I have zero risk tolerance these days...

    Cheers
    Bill
     
  11. bundy1964

    bundy1964 Well-Known Member

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    Time will tell Bill.
     
  12. AsxBroker

    AsxBroker Well-Known Member

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    Personally I'm all in.
    The ASX/S&P300 have already shown us how fickle the market is. From it's lows in July it has bounced back substantially and made new highs.

    Australian shares are trading at reasonable values and companies are making the profits to support those valuations.

    Our employment rate is at record lows as there are not enough people to hold all the jobs ( jobs > people ) which from the point of an employee is a great thing to pick and choose, not so good if your the employer.

    Australia's subprime loans are around 1%, America's 15%...

    Our economoy at the moment is running fine, we might see some changes after the elections.

    Cheers,

    Dan

    This is a personal opinion and not advice to invest in any markets. Speak to your FPA financial planner, accountant or tax adviser before making an investment decision.
     
  13. Billv

    Billv Getting there

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    Hi Dan,

    I don't doubt that our economy and most of our busineses are doing fine
    but answer me this please.
    If a US stock market crash were to happen, is it going to affect our stock market or not?
    Would you buy now into the market and if so what would you buy?

    Cheers
    Bill
     
  14. AsxBroker

    AsxBroker Well-Known Member

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    Yes, financial markets are all linked. As I said earlier, the US market had a shockwave in July and our market dropped about 12% or 14% (CRC probably knows the exact amount), it recovered reasonably quickly and here we are a few months later reaching new highs.
    I like are Ausbil Active Equity fund for Aussie funds and T Rowe Price Global Equity and AXA/Bernstein Equity Global Value for International equities. I'm also thinking about the Macquarie Direct Property fund which has about 70% aussie property and 15% in asia and 15% in lpts (for liquidity).

    Obviously this is a personal opinion and not an inducement to invest in the abovementioned funds. Speak to your FPA registered financial planner, accountant or tax adviser before making an investment decision.

    Cheers,

    Dan
     
  15. Billv

    Billv Getting there

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    Thanks Dan
    Don't worry I am only getting opinions.
    I am not going to invest in any funds for now.
    Cheers
    Bill
     
  16. bundy1964

    bundy1964 Well-Known Member

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    My shopping list is -

    ZFX picked up some Friday
    BHP
    RIO
    LEI
    ANZ
    CBA
    WES
    CTX
    AGF
    LEP
    CSR
    STO
    WPL
    WOR

    IVE IVM if they are supported next month by my margin lender and would supliment/replace AGF. All usual disclaimers apply as I have NFI about what I am doing :p
     
  17. Billv

    Billv Getting there

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    Bundy mate
    Not a bad choice but I would have left the banks out.
    Additionally, what goes up must come down...:)
    Cheers
    Bill
     
  18. bundy1964

    bundy1964 Well-Known Member

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    Banks have been kind to me though and those 2 I am underwieght in. ADB has been kind to me now returning 9.5% plus franking credits.

    I seemed to have survived the 87 crash, the tech wreck, bear markets and 9/11. I plan on being in the game a while longer.
     
  19. Billv

    Billv Getting there

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    yeah bank returns are great.
    Hopefully they will be making just as much money next year.
    Did you have ADB stocks in 87?
    How were the returns in those days?
    Cheers
    Bill
     
  20. bundy1964

    bundy1964 Well-Known Member

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    My one surviving pre 87 asset did drop 30% pretty quickly in the crash. From memory they were returning much the same as markets are today. Last distribution was a 60% return for 6 months based on original purchase price or 30% on the price in June and so far is 9.85% up since then or 10.75% going by the funds site wich last updated on the 10th.

    ADB I have only held since the early 2000's so it has doubled in price over 4 or 5 years, pity it is now merging.