Speculation on "When" The Market Will Bottom

I'm not a trader, I'm an investor, I'm not acting in the short term, I'm looking for the long term.

Reading lots of opinion doesn't mean I agree to all of them, but reading alternative opinions allows me to find out what I don't know then go and research and learn such that I'm in a better position to make investing decisions.

I for the most part find mass media articles to be regurgitated fluff written by journalist, however on a lot of investing and finance sites (like this one) that allow comments and opinions to be posted you get a great variety of fresh information, granted you have to be ready to screen a lot of the crap out because "free advice" more often than not is priced at that rate for a reason.

None the less I have learned tons of reading articles and forums like these, blogs. Though I have probably learned the most of late reading comments left by others on blogs and forums.

Well when you are trying to beat the market it is a competition in a way.

I'm really starting to think that the fear in the market is over more than just some suboptimal company performances and that there are definitely some bigger issues in play.

I think it is more a sign that is still more bad news to come.


Also I'd like to revise my speculation on "when" it will bottom, I'm calling that there will be "a" bottom in late December or early January, before a period of stability and recovery followed by further falls finding another bottom sometime in the second half of next year. Crazy speculation I know I'm just backing that some bigger issues are going to hit the fan once we are through this period of turmoil.

 

I'm not a trader, I'm an investor, I'm not acting in the short term, I'm looking for the long term.


The same rule applies to investors (short/long term) assuming they do have rules.


I for the most part find mass media articles to be regurgitated fluff written by journalist, however on a lot of investing and finance sites (like this one) that allow comments and opinions to be posted you get a great variety of fresh information, granted you have to be ready to screen a lot of the crap out because "free advice" more often than not is priced at that rate for a reason.
None the less I have learned tons of reading articles and forums like these, blogs. Though I have probably learned the most of late reading comments left by others on blogs and forums.


It does not mean that some posters are right and some journalists are wrong...
How you can than find out who is wrong and who is right?


Well when you are trying to beat the market it is a competition in a way.

It may be a competition....but trying to get other people opinions who know as much as you do, may not be the best way to go.

 

Well that takes the fun out of this thread.

I don't know what these "rules" you are speaking of, but a short term trader has a very different mindset to a long term investor...

A short term trader cares about what is going to happen this today or this week, ie traders might like to short the market in the coming days and weeks on expectations we'll find new lows.

However a long term investors may look at STW today and go wow 10.5% yield - what a bargain, especially seeing I can margin in at 75% at interest rates of 8.99% with the high probability for rates to drop to 7.99% within the month.

What I'm saying is that in a bear market like this even a long term investor can't just act on with a narrow view of reacting to market statistics and signals, and element of timing is required. I'm not saying I know the bottom, or anyone knows the bottom, but to come of this market crash with your head above water its going to require some judgement and "educated" guessing.

 

Chris,

If do not know rules I am talking about, you do not have them. I am not talking about short term traders, but investors (preferably active investors).
There is not much difference between trader and active investor. Time span may be different, but to know how to protect your investment and how to manage a risk is a vital ingredient to successful investing. Sad story is that too many investors who do not have basic rules/system in place are in limbo today...Every investor (IMHO) should first look at current market conditions and next consider if buying into STW (as you said) is a good idea no matter how good interest might be.

Some investors may have a big problem to get own money back in the future, and even knowing where the bottom is may be of not much help to them.
I would say that the best teacher is a real life not necessarily other people opinions (some opinions are valuable of course).
There is nothing wrong with reading, as long as you can form your own opinion on certain issues.
So, asking people where bottom is or when market will recover is rather a hilarious question (IMHO).
Anyway...Have a good one.

 

I'll be the first to admit I don't have any rules about investing, as I'm presently not in the market. However I'd appreciate if you'd ellborate on what you rules you apply when you are trading. I'm always looking to see what others that have found success are using/applying.

 

Dow down again another 3.5% over night... not good at all..

 

correction, DOW down 5%

and our dollar down 4.5c back to 60c

 

"I'll be the first to admit I don't have any rules about investing, as I'm presently not in the market. However I'd appreciate if you'd ellborate on what you rules you apply when you are trading."

Shame on you!!!

Follow this link.... http://www.invested.com.au/79/trading-rules-366/

 

From everything I have been reading and seeing our dollar probably has further to fall in the short term as well. Though I'm still confident that the US$ will weaken over the longer term like it was through 2006 - 2007.

The rules seem more applicable to those that are active in the market, though I can definitely see underlying value to the general buy and hold investors as well.

 

I am curious as to whether anyone who invests with a system or fixed set of rules has ever backtested their system/rules for validation? If so over what time horizon?

 

A few basic ideas are here TradeSim, MetaStock And Back Testing Your System

 

I was just re-reading some of my other posts to see what my thoughts were on things 2 months ago, as well as being interested to see if people's opinions have changed in the last two months.

I'm liking my revised speculation at this point, I think the really rough times are about to start for both Australia and the rest of the world. I can only see the ASX trending down for the next couple of months, and I think finding a bottom in the second half of 2009 would probably be a best case scenario.

Does anyone else have a new view of the future?

 

Chris,

I was watching market rising for the past week or so and started to think that we may see bit of optimism this year. I though, with companies posting profit downgrades how come market go up? Also if this is the worst we have seen since the great depression so far didn’t feel like it. IMO market stoped at around 3500 but once it drops below 3200 no one could tell where the next support figure is. Mid 2009 will be the tipping point and then companies will start to lick their wounds and start to move with their business. I also think there is a lot of project in the pipe line but it takes time to prepare and execute them. New budgets will help in the new financial year so I think we could see some positive mood coming after June this year. It may not produce another economic boom but I think it will set the bottom.

 

Does anyone else have a new view of the future?

“He who lives by the crystal ball soon learns to eat ground glass” - Edgar R. Fiedler
more...Financial Gurus Or Financial Nostradamus? | Street Smart Options Trading

 

I believe it has already bottomed, i think there was a huge amount of talk and scaremongering last year and scared people spread fear, i think a lot has already been factored in i think we will creep up over 4000 and stay there for a while before confidence returns and the market starts to trend upwards.

I think current prices offer a fantastic opportunity, historically shares roughly equal property in terms of capital gains (roughly 7-10% annually), but buying now at these discounted prices means that once the market hits and stabilises on the typical trend line then you have a head start of about 30-50%. Its a no brainer for me, the only problem i have is picking the right portfolio that will recover quicker or as quickly as the index, good luck to you and good luck to me.

 

I think the market has already bottomed on 20th November 2008 when it hit 3340 or so.

It's already up 10%!!! Probably because it was oversold...

Also NAB has completed it's $3.5 billion capital raising and WBC is currently doing one in January.

With companies posting profit downgrades and the shares actually rally means that the market had already expected worse downgrades and factored it in by selling down the stock. Now that the actual downgrades aren't as bad as expected the price moves back up.

Realistically, the market isn't suddenly going to move back up significantly this year, it is more like to have a range which it trends between.

If you want recover as quickly as the index you can buy the index...

The VIX is still quite volatile and we need to see it drop to less than 25 before investors will regain confidence in the market...

Bloomberg.com: Investment Tools

Cheers,

Dan

PS This is general information. Before making an investment decision speak to your FPA registered Financial Planner.

 

You're a man that loves to live in the present, aren't you Tropp...

So you are obviously of the belief that housing prices are not overvalued?

I personally think that in the next 12 - 24 months Australian housing prices will really start to suffer as a result of the increasing unemployment as we move into recession.

I have been watching the VIX for the last two months, and for a large part of December and early January, was I really starting to think, wow, maybe the worst is over - but in the last two days it looks like it is spiking again. I don't know whether it was the very big unemployment figures coming out of the US or that India company that is going bankrupt after fudging its numbers, but it would seem something has spooked the market again, and I'm quite interest to see where all the cards will fall by the end of next week. I tend to think we might see the XAO back under 3500 sometime next week...

 

I never mentioned an opinion on house prices, nor did i mention which country if any specifically when saying that house prices "roughly" double every 10 years (or "capital gains of roughly 7-10% annually")

My opinion on housing though since you asked, is that (in brisbane at least) prices will drop a little before stabilizing, drop about maybe 10%. However i feel property will move up again due to demand, low interest rates, government incentives but mainly due to public confidence returning, people coming out of their caves, digging the money out of the back garden or the mattress and trusting the system again.

I will be looking to buy a house in the next 12-18 months, and lock in the interest rate for as long as possible and pay off as much principal as possible in that time.

However i feel shares are value right now.

 

You're a man that loves to live in the present, aren't you Tropp...

It seems you are a man who can ruin the present by worrying about the future too much.