Join our investing community

Surely the bull market is going to end soon.. with pain..

Discussion in 'Shares' started by Glebe, 17th May, 2007.

  1. Glebe

    Glebe Well-Known Member

    Joined:
    15th Aug, 2005
    Posts:
    932
    Location:
    Sydney, NSW
    I'm skeptical about floats in this environment. I've become skeptical about the sharemarket in general recently.

    There is so much market froth, so much money looking for a home.. I can't help but think next year will present better buying opportunities.

    I'm making a crapload of money every month. Everyone is. Surely I'm not that clever? Surely we're all not that clever? :confused: My spreadsheet tells me I'll be worth $2m by the time I'm 35.. what a load of crap, these compounded 35% returns on equity have got to come to an end. You can't keep making 20% returns on 7% borrowed money. Companies can't keep making double digit earnings growth.

    Every headline is a good news headline, whether it's the IMF talking up global GDP or the budget's tax cuts or the US' soft landing... but something has to give at some stage. I don't know what it will be, or when it will be, but I don't think it's going to be pretty.

    I believe that interest in the share market has increased significantly over the last few months. I don't catch taxi's but I bet they're talking about shares again. The 23 year old's at my work, who don't remember the dotcom boom/bust are chatting over the water dispenser about their current 20c speccie and how, depending on the company, it's either some mining company that has hit a zinc deposit or a biotec that is on phase 3 trials of a wonder drug... either that or it's an ASX200 company who's revenue has increased over 10% despite Australia's GDP rising only 3%.

    I'm not going to sell, because I want to hold for life. I will continue to re-invest distributions but I won't put any more money than that into the market. I'm reducing my margin loan, tightening the belt buckle in preparation.

    Thoughts?
     
  2. Redwing

    Redwing Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    476
    Location:
    PERTH..WA
    It'll be interesting to see if China "catches a cold" and what happens then...

    PS: I'm still amazed at FMG's climb of late (appx 11% yesterday to $37.40) and still nothing out of the ground yet, this stock has overtaken BHP ??
     
    Last edited by a moderator: 18th May, 2007
  3. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,394
    Location:
    NSW
    Glebe,

    You are right. One day music stops. But how soon is soon? Next month...next year?

    The stock market is among the greatest arbiters of mass psychology that has ever existed.
    In the short run, the long run and everything in between, it is ultimately not business (companies earnings etc) and world events that cause the market to move, but rather it is what people think about these events that causes stocks to rise or fall.
    Think about it for a moment. When a piece of bullish news comes out, is it the news or the event itself that causes stocks to rise in price??
    It's people reacting to the news and their subsequent decisions to put more money into stocks based upon certain information that creates the demand which actually pushes prices higher.

    Enjoy the ride, make buckets of money and wait for confirmation that market is changing direction.
    Until than stay :cool: :cool: and...keep $$miling :D
     
  4. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    I think Peter Lynch said something like "I'd rather be caught with my pants up than with my pants down"...in reference to whether or not to be largely invested or not...

    Apart from giving you a disturbing visual perhaps that helps a bit?

    Cheers
    N.
     
  5. willy1111

    willy1111 Well-Known Member

    Joined:
    5th Jul, 2006
    Posts:
    54
    Location:
    Melbourne
    I guess the question is - is the market still fair value?

    Even though we have seen large increases, corporate profits have kept up - so the market isn't overpriced.

    But given the amount of money which needs to find a home over the next year or 2, it could be quite possible that stock prices get pushed beyond fair value and become overvalued.
     
  6. Glebe

    Glebe Well-Known Member

    Joined:
    15th Aug, 2005
    Posts:
    932
    Location:
    Sydney, NSW
    The Chinese sharemarket has fallen 15% over the past week. This is a good thing, hopefully it has a further 15% fall in it. It's become too overheated. It's been trading on a PE of 48x.

    I'm all for ''stronger for longer'' but for that we need a lack of irrational exuberance...
     
  7. MichaelWhyte

    MichaelWhyte Well-Known Member

    Joined:
    5th Oct, 2005
    Posts:
    798
    Location:
    Sydney, NSW
    Hi guys,

    I'm still up-beat on the ASX. Share prices still represent fair value based on earnings and PEs are below historic levels. Have a read of the following article by Shane Oliver for an analysis of the current market situation and draw your own conclusions.

    Putting the share bull market in perspective

    But it will end some day, just not sure what the catalyst will be, but I think that day is still some time off. I reckon 7000 by the end of Calendar 2007 is realistic.

    Cheers,
    Michael.
     
  8. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,394
    Location:
    NSW
    "I reckon 7000 by the end of Calendar 2007 is realistic"


    There is nothing wrong with speculation as long as you are fully aware that you speculate.
    It's quite possible ;) that XJO may hit 7000 in the future (my numbers are: 6880&6995).
    But in the meantime do not be surprised if we get a reasonable pull back (300&400points).
    :cool:
     
  9. MichaelWhyte

    MichaelWhyte Well-Known Member

    Joined:
    5th Oct, 2005
    Posts:
    798
    Location:
    Sydney, NSW
    Tropo,

    Yep, fully accept that I am speculating, and would be surprised if there weren't a few pull-backs along that road. I guess I'm just speculating that fundamentals suggests ongoing strength in the market for some time yet and that we have not yet entered the unjustified euphoria of an over-heated bull market.

    Cheers mate,
    Michael.
     
  10. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,394
    Location:
    NSW
    Michael,

    I am not a fundamental person, but to me market is still strong as a bull :D (below 6000&5800 I may re asses my view).
    Anyway....have a nice trip to 7000 :p
     
  11. perky

    perky Well-Known Member

    Joined:
    15th Aug, 2005
    Posts:
    300
    Location:
    Sydney
    Glebe,
    Resistance level at 6250 is going to be smashed this morning. This may be the correction we had to have.
    So lets look at what to short??
    WOW looks good for starters....
     
  12. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,394
    Location:
    NSW
    "Resistance level at 6250 is going to be smashed this morning. This may be the correction we had to have"

    Perky,

    I would not worry much at this stage...;)
    Typical sell off day because Dow is down 199 points. I see weak support at 6140 (XJO)
    Problem may arise below 6000-5800 (XJO).
    Stay tune :p
    :cool:
     
  13. Redwing

    Redwing Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    476
    Location:
    PERTH..WA
    Interesting Day yesterday; Wonder what today will bring to the table..

    I'm hoping that the Navra shares are enjoying this volatility
     

    Attached Files:

  14. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,394
    Location:
    NSW
    "Wonder what today will bring to the table.."

    DOW is down 129.95 - so we may end up in red ;)
     
  15. bundy1964

    bundy1964 Well-Known Member

    Joined:
    22nd Dec, 2006
    Posts:
    351
    Location:
    Adelaide, SA
    Today came with some pain. After close clean up added an extra 10% to the pain, managed funds were stable and I recived a distribution and had SGB go ex on me. Not a day to write home about.
     
  16. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,394
    Location:
    NSW
    Unfortunately today was a "down" day...
    I am afraid that coming Friday may well be as bad.
    If US market does not go up, we may go down again.
    :cool:
     
  17. bundy1964

    bundy1964 Well-Known Member

    Joined:
    22nd Dec, 2006
    Posts:
    351
    Location:
    Adelaide, SA
    2 big days for US economic data this week including housing loans, imports and exports, retail sales, outlook book for rate rises and jobless numbers.
     
  18. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,394
    Location:
    NSW
    I know. Good news for FX players :D
     
  19. Glebe

    Glebe Well-Known Member

    Joined:
    15th Aug, 2005
    Posts:
    932
    Location:
    Sydney, NSW
    As reporting season starts, the Commbank has announced a record profit...

    Anyone contrarians here had cash on the sidelines and taken advantage of the share market?

    Or are we all like me - already too leveraged to take advantage of the negativity?
     
  20. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    Unfortunately I'm in this situation too - some rather aggressive tax planning at the end of June has left me barely keeping my head above water these last few weeks ... unfortunate timing :(