Scary stuff

No Offence, but it really doesnt seem you have any stratergie in place at all. Are you going to make investment decisions at whim dictated by market sentament?

It seems that you have made investment decisions which you either don't understand, and or aren't willing to accept their risk and associated volatility. Looks like your displaying greed by the fact that your far to over geared for your own comfort, and showing to much fear each time the market makes normal movements. Markets never go up in straight lines. If you expect stability in capital, then shares arn't for you.. Best you stick to fixed interest and bonds.. certainly don't use margin loans if you don't like magnified volatility.

 

crc,

I have a well formed strategy, I just like to "test" it every now and again by posting stuff that gets bights. If something feels a bit serious, that is worth reviewing in light of your strategy, then I'll post something to see where others stand.

You've just got to be careful not to interpret stuff too literally. I'll post "I think the market is over-valued" to see if there's anyone else out there with a similar view that's too scared to post it because they think its unpopular. I must admit to a little bit of that sort of action lately. If you read my posts carefully you'll see a lot of "I'm considering" and "I might" and "potentially" in there as its really devil's advocate stuff, and I apologise to the forum if they believe that is innappropriate.

I'm just really wary of group think which can infiltrate these places if you let it.

Rest assured, my strategy remains intact, as does my share portfolio.

Cheers mate,
Michael.

PS All the stuff I posted around Boatboy's how to retire thread was real though. I wouldn't play devil's advocate when giving advice, only when seeking it...

PPS This thread had died after Tropo's original post. If I hadn't posted my devil's advocate stuff then it would have stayed dead and all this great discussion would not have ensued!

 

Hi Michael,

I can't see what is there to test. You have a commitment to build your assets and retire by 2015, which is great. Then you seem to read some 'experts' view (mind you he probably drives a white execuative commodore) on how the world is going to end, and you take the bate and appeir to be closing up shop based on their 'view'. If your financial stratergie based around taxi driver recommendations?

It is silly to knee jurk react to everything that happens in the market. There are going to be ups, and downs in the market, but funtamentally the economy remains strong, with strong profits announced recently by Virgin, CBA etc.

I'm glad you didnt decide to close up shop with your share portifilo, as persoanally believe that would have been silly. If you have a longer term view to retire in 8 years time, let me rest assure that your shares will be worth more then, than they are today.

<i>Very scary stuff indeed. Actually makes me consider trading out of my MF holdings completely on the back of the current bounce from the fed cutting commercial rates by 0.5%.

I reckon this is much bigger than painted and that the current level at even 5700 is probably unsustainable. I could foresee 5000 or even 4500 before this is ended. Would hate to have to sell the IP in a fire sale to fund my managed fund margin calls...</i>

Selling down portifilos, firesale of IP's??? All ords at 4000?

Tom

PS can you post the link to Boatboys retirement plan? I want to read it again.

 

Tom,

Granted, I did go a bit scare-monger on that one and probably a tad too far. Fair cop. But just FYI, I have a several hundred thousand cash buffer so definately would not have to sell down assets to fund margin calls. I have my downside well protected. It would take a monumental collapse of the ASX for me to be in a situation where I had to dispose of assets to fund losses, despite my alluding to that potential.

The intent of my initial post was to stimulate discussion on this topic. I wanted to get other people's impression of where it was going and its implications. I achieved that end, though admittedly got a bit caught up in it along the way.

I'll take a slap on the wrist and temper the enthusiasm of my posts negative/positive in future. But don't you reckon the whole "this is just a blip" discussion gets a bit boring after a while?

The old adage of judge someone by their actions not by their words comes to mind... Particularly when their words are just devils advocacy on an online investing forum.

BTW, my shares are only a small part of my strategy. They're my cashflow vehicle which is why their capital price movement is largely irrelevant. I just rely on a 10% pa distributed income from them to cover my borrowing costs and feed a little bit into my property machine. Capital price movement is only important if it triggers a margin call and thereby has a negative cash flow impact.

Ciao,
Michael.

 

Yep, I'm 'guilty' of this too - I've even taken some 'cheap shots' to stir the discussion as it gets a bit dull here sometimes ! Better than no discussion at all hey ?

GSJ

 

Agreed,

And this thread was seriously dead before I jumped in with my initial reply. Go have a look, it was 4 days before anyone posted a response to Tropo's link.

I do think you need to temper that devil's advocacy stuff a bit though. I'm taking that on board and will be a bit more circumspect in the future. Its just that the topic really interested me and wasn't seeming to get much traction over here. The feedback after I posted a few times got really interesting and I appreciated all those posts.

I draw the line at cheap shots though, but I'll forgive you for your one at me a while back on BBs thread.

Cheers mate,
Michael.

 

Hi Tom,

Just a couple of points about your observation that my exploration of the current market drivers was a silly knee jurk reaction...

To which I would direct your attention to the following:

Be careful not to presume that current strength in the economy is an iron clad assurance of ongoing strength. The reason I delved deeper into the drivers of this correction is because it had the potential to derail the current global expansion if the credit squeeze went global. There's still no gaurantee that this is all behind us. If recent developments are enough to force Ben Bernanke to flip-flop, then they're important enough for me to explore in greater detail. I trust you'll forgive me that exploration, and also forgive me the devils advocacy approach of doing so.

And if the facts do change Tom, what are you going to do? Stick to the premise that the global markets are impenetrable and assured of ongoing strength despite evidence to the contrary? As an investor it is important to remain vigilent. I have a strategy, but I am an active investor and reserve the right to vary that strategy should the rules of the game change.

Cheers,
Michael.

 

Suit yourself .

Thanks!

GSJ

 

Hi Michael,

The sub-prime credit problem isn't a new one. It has been known about for the last 12 months, so if you felt it was a issue, which is a fair call to make, then why didn't you react earlier? Just because the market decided to react in the last few weeks, then now is the time you react?

This is why I'm saying you had a knee jerk reaction, because these problems has been known about for the last 12 months, yet you only reacted to it when you saw red numbers on your refresh screen.

I attend the freeman fox market updates, and last year they highlited that later in 2007 we should expect a 10% market correction, so this correction is in line what I have been expecting. Plus if you look at the all ords charts, you can see the market channeling upwards with a few smaller corrections along the way.. We have been in the upper channel for the last few months, so its not un-expected to see the correction. since the channel is widening, we will see bigger falls, along with bigger gains.

Freeman Fox also predict that we will get more volality now, but the market will pickup and we will see new records broken with valuations probably overshooting by 20%. Around 2010 we should see a major market correction, or even a crash which will begin the next phase of the investment cycle, and thats the cash cycle. This means high interest rates 10%+ due to inflation, low unemployment, which will cause alot of problems in both shares and property prices..

Peter Spann went as far as saying we could see a recession.

So you ask what I'm doing? Well my plan is well in tact, and I expect to exit the market in 2009 all together where I will put my money into fixed interest and await the crash/recession when then I'll be able to buy up again some cheap property/shares, once their cycles begins.

Why do I trust Freeman fox? Well they indicated to get into property in the late 90's, then in 2003 they said to get into shares as the market cycle is turning, they also correctly predicted this correction.. I'm not saying he is always right, but does make sence in their reasoning on why they believe these coming problems will happen.

Tom

 

Here is a chart I did last week, you which illustrates what I'm trying to explain.

I also have attached a copy of the LPT property index..

 

Lurking in the background, and been insanely busy getting a house finished off, so just having a look in.

Saw Michaels comment's re: me, and appreciate it all, and sort of glad that I can be in a position to sit on my hands a bit and see how this all plays out

crc_, those links that you asked for.

http://www.invested.com.au/31950-post63.html

http://www.invested.com.au/32024-post79.html

Dave

 

CRC,

Sounds good to me! I was just testing whether that assumption still held true. Markets and economies don't always perform as predicted and in line with nice neat cycles. To truly understand what the market is likely to do you need to keep challenging your underlying assumptions.

I like Freeman Fox too, and I subscribe to the concept of one last big bubble boom too, but that doesn't mean that I'm writing 2010 in my diary and acting blindly in line with that date. I accept that there is the basis for ongoing strength in the economy so want to keep in the ASX for the foreseeable future until that market gets over-heated (I like the 20% sort of number for over-heating). But I'll also keep checking my assumptions on a daily basis to make sure the rules haven't changed. This seriously had the potential to rewrite the rule book regardless of what Peter Spann's crystal ball is saying.

Make a strategy and execute it, but don't fall asleep at the wheel is what I'm advocating.

Cheers,
Michael.

PS Can you see how enlightening this discussion has been since we have taken opposing views on the current situation? It has been a very insightful discussion IMHO.

 

I always enjoy discussion!! Especially thought provoking discussion. Thats the purpose of this site!

 

crc_error,

Talking about doom and gloom .....
What P.S said about End of the World??
Is it still scheduled for 2012 & 3.35 pm Sydney time - or maybe P.S with other TAXI drivers changed his mind?
If we are playing to the same schedule who cares about recession/correction in 2009 & 2010 or 2109.

 

he said the market cycle should change around 2010 give or take.. no one said anything about the end of the world.

 

Ooooo. What a pity....

PS - He also predicted that 6000 is top for our market- he missed (so far) by approx. 430 points... What a disappointment !!
So - is he another Nostradamus or not?

 

Maybe these guys are right. They make the peak net worth around 2020, beyond then we should be out of the markets in asset protection mode.

And they are the "oracle" so they must be right.

Forget Peak Oil, Peak Net Worth is the Real Danger! :: The Market Oracle :: Financial Markets Forecasting & Analysis Free Website

I reckon there's a fundamental thread of truth to these arguments which is why I try to keep my eye on the ball. Its also partly why I'm going so hard now to try and build my net worth before around 2015 when I downsize my debts and live comfortably off my accumulated wealth. Should have enough by then that borrowings don't need to factor as much in my thinking and my leverage can be eliminated.

I'm not clever (or stupid) enough to try and put an actual date on it though. I just reckon there's a day of reckoning coming sometime in the next decade that could potentially be avoided if financial markets pull a rabbit out of a hat, but I'm factoring into my thinking anyway. Better safe than sorry.

In the meantime, let the good times roll!

Cheers,
Michael

 

And he also said to mortguage the kitties into the Macquarie Equinox Multistratergie capital protected fund, and so far its been one of the worst performing funds I have ever seen!

 

"I just reckon there's a day of reckoning coming sometime in the next decade that could potentially be avoided if financial markets pull a rabbit out of a hat, but I'm factoring into my thinking anyway. Better safe than sorry."

Michael,

In case of 'reckoning'
I am just reading a book 'The Great Reckoning' written by: James Dale Davidson and Lord William Rees-Mogg. Giant doom and gloom stuff.
With some correct (would you believe) predictions those guys are late at least 17 years...Dealing with predictions I always apply salt, pepper, ground chillies and KFC.

 

Hehehe...

You always make me smile mate!

Thanks,
Michael.