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It's not so terrible

Discussion in 'General Investing Discussion' started by Jacque, 17th Sep, 2008.

  1. Jacque

    Jacque Team InvestEd

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    I always like reading what Ross Gittins has to say- of all the business writers, he certainly seems to impart the most common sense. Take his latest article, for example....

    Worrying Only Makes Things Worse
     
  2. Chris C

    Chris C Well-Known Member

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    I tend to agree with his sentiments. It is far from the end of the world, and I'm sure over a 3 - 5 year time frame of Australia's economic growth this won't be much more than a speed bump requiring us to slow to 20km/hr briefly on what otherwise has been a 60km/hr road. I'd like to think that will continue into the foreseeable future. Then again I'm young and naive and have never seen a recession...

    ;)
     
  3. Billv

    Billv Getting there

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    same here, but with all the bad news and the everyday economic squeeze
    consumer confidence is at all time low and it will require a big dose of good news as well as interest rate cuts to be revived.

    Edit: and food and oil prices are not coming down either.
    Crude oil has dropped by at least 30% in the past few months and at the bowser the price is still the same.
    The supermarkets chains and oil companies are ripping us off and the government which was voted in to protect the working class and consumers is absent...
     
  4. ilori

    ilori Well-Known Member

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    I read somewhere (and it stands to reason) that market recoveries begin against a backdrop of despair and can make substantial gains before people realise (or believe it).

    That's were a dilemma stems from... many people are taking the position of standing aside and waiting for right time to invest (nothing wrong with that of course)... but very easy to miss the quick recovery gains - then a feeling of having 'missed the boat' after waiting so patiently...
     
  5. Billv

    Billv Getting there

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    That's fund manager propaganda.
    They don't want us to move our money to cash
     
  6. Tropo

    Tropo Well-Known Member

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    Correct !! :cool:
     
  7. Thudd

    Thudd Well-Known Member

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    That's the invisible hand for you, contrary to popular belief (and that the govt of the day would like you to believe) they have very little say over it. The libs don't believe in artificially manipulating the market and labour wouldn't get the support.
     
  8. dmesh87

    dmesh87 Member

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    I dont think oil companies are ripping us off. While the oil prices have dropped all oil is sold in US currency therefore because the USD and AUD is now at 0.79 our dollar buys less oil then it did a month ago which means the drop in the ratio of the australian to american dollar has destroyed some of the benefit that falling oil prices would give.
     
  9. Billv

    Billv Getting there

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    ok lets say that they do it for our own good.
    They keep the prices high because they don't want us to go and spend our money on plasmas and other unnecessary things and increase inflation...:D
     
  10. Chris.R_WA

    Chris.R_WA Well-Known Member

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    This is one of my pet annoyances...sorry BV.

    Oil companies charge the "market" rate for petrol at the terminal gate (ie one-step upstream from the bowser), much like us landlords do for rent on our IPs.

    If we set rent too high, or keep it high when other LL's are dropping rents our customers (tenants) will switch to another property.

    Likewise, Aus petrol/diesel prices are determined largely by the margins in Singapore. Oil companies will charge exactly what it costs for a private importer (or other oil company/competition) to get the equivalent product to Australia (and most of it is substandard quality, not to Aus environmental specifications...). It is a true free-market in many senses, as Australia is net-short of most petroleum products.

    The only other step to the consumer is the service stations themselves, which are predominantly franchised/privately owned&operated.

    Off-topic over :)

    Rgds, Chris
     
  11. Alwayslooking

    Alwayslooking Well-Known Member

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    Hi Jacque
    Yes it is a waste of time as "Apparently only 2% of what we worry about actually comes true".....
     
  12. Billv

    Billv Getting there

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    I knew there was a reason for my sleepless nights...:D
     
  13. Billv

    Billv Getting there

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    Chris

    I was going to let this one go but it bothers me...
    It's not like that at all mate, they charge whatever they can get away with and there is nothing we can do about it.

    Competition is between petrol stations not between oil companies. Oil companies are only a few and they have a happy family relationship so they keep their prices high for as long as they can get away with.

    And it's not that any gov authority can prove that they are ripping us off anyway.
    Petrol at a particular pump doesn't have an ID or a serial number so we can't tell when they bought it. Additionaly, it's not that the gov. cares anyway because the higher the price is the more GST they are collecting.
    So to summarise it all, THEY ARE RIPPING US OFF !!! and they will continue doing so because they can.

    IMHO
     
    Last edited by a moderator: 21st Sep, 2008
  14. AsxBroker

    AsxBroker Well-Known Member

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    I agree with Bill...

    If our groceries went up 15% in a week, then fell back down on a certain day in the week we'd be upset.

    Ironically it's ok for the oil companies to do it...

    The only reason they do it is because they can.

    There was an interview recently with one of Caltex's executives (the other oil companies didn't want to be interviewed... I can't imagine why...)

    He said basically that they make 80% of their money by people buying things in the shop. I wasn't surprised as you can buy the same things almost half price in the supermarket.

    He also said that for each litre of oil they make 1.5c profit after all expenses (refinery, distribution, salary, etc). Which doesn't sound like alot...Then you figure out how much petrol is pumped in a year, according to the caltex annual report in 2007 (http://www.caltex.com.au/assets/Caltex_AR_2007_download.pdf) it was 10.9 billion of transport fuels. Which with 1.5c per litre is a profit of $163,500,000!!! Sounds like its always a good time to buy petrol companies...

    Cheers,

    Dan

    PS This is not a recommendation to buy, sell or hold securities. Speak to your FPA registered financial planner before making an investment decision.
     
  15. Chris.R_WA

    Chris.R_WA Well-Known Member

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    OK OK,

    I can feel the angst coming through my screen :)

    The point I was trying to get across is that the business model is no different to other companies...ie Banks charge the most interest and fees that they can get away with...and there is nothing we can do about it!!

    I think this is painfully obvious to everyone who has to fill up, and sadly the alternative is the same as the banking analogy...if you dont like the cost don't use the service (borrow money, drive a car...whatever) = not really practical for most consumers!

    On Dans point about buying Oil Company shares, I have tried this earlier this year as a hedge, and it didn't quiet work out that well!! I lost money on the shares, and I STILL paid more for petrol. It may have worked better with an upstream oil producer like Woodside, than the Integrated Oil Companies I tried.

    I keep thinking about the fact that the only cure for high petrol prices, is high petrol prices...consumer behaviour is already starting to change with new car sales across US and Oz moving away from higher fuel consumption vehicles.

    Didn't mean to get the pulse rates so high! :)

    Rgds, Chris