The good times are over?

Discussion in 'Investment Strategy' started by crc_error, 9th Jan, 2008.

Join Australia's most dynamic and respected property investment community
Page 4 of 5
  1. Tropo

    Tropo Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    2,303
    Location:
    NSW
    "I suggest that you really want to try and break that habit "


    Not a chance.
    He was born that way.:rolleyes:
     
    Tropo, 11th Jan, 2008
    #61
  2. Alan__

    Alan__ Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    508
    Location:
    Sydney
    Pulled out the old chart last night for the ASX200 going back 20-odd years and if anyone thought the last 4 years or so was normal, think again!

    I have no idea what will happen to stock prices but throwing an old ruler on the screen and looking at a 20 year trend, you'd have to expect the ASX to be a LOT closer to 5000 than 6000 now.

    Obviously a lot of other considerations such as resources boom etc to consider, but for whatever reasons, the trend in the last 4 years or so is way beyond what a longterm trend would indicate is likely.

    Interesting times indeed.
     
    Alan__, 11th Jan, 2008
    #62
  3. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    Yes Alan, I have done the same in the past, and have noted what you have seen!
     
    crc_error, 11th Jan, 2008
    #63
  4. samaka

    samaka Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    268
    Location:
    Sydney
    Reckon you could pull it out again and post a link :D

    I can only get XJO data from 2000
     
    samaka, 11th Jan, 2008
    #64
  5. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    here you go..
     

    Attached Files:

    crc_error, 11th Jan, 2008
    #65
  6. lorrimer

    lorrimer Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    154
    Location:
    Brisbane, Queensland
    One thing that doesn't change is whether stocks represent good value according to their P/E ratios. On that basis Aussie stocks are not overvalued, in fact some represent very good value ATM.
    I was watching CNBC last night and it was mentioned that US stocks were now the cheapest they have been since 1990, relative to P/Es
    It was also said that before the last recession US stocks fell by 20% just prior to the recession, but then only fell by a further 1% during the recession.
    They were making the point that a lot of the bad news is already factored into share prices and now, or at least soon will be the time to start bargain hunting.
    Perhaps that's why the Dow has risen for the last couple of days on a barrage of negative news
     
    lorrimer, 11th Jan, 2008
    #66
  7. Tropo

    Tropo Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    2,303
    Location:
    NSW
    According to Bloomberg DOW has risen on the couple of “good” news:
    Speculation that W. Buffet is going to invest in insurance bonds and possibility that US may cut interest rate.
    As for bargain hunting I would wait a bit longer.
    :cool:
     
    Tropo, 11th Jan, 2008
    #67
  8. Tropo

    Tropo Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    2,303
    Location:
    NSW
    XJO monthly

    Below is XJO monthly chart....
    :cool:
     

    Attached Files:

    Tropo, 11th Jan, 2008
    #68
  9. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    Tropo how about XPJ! lol
     
    crc_error, 11th Jan, 2008
    #69
  10. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,412
    Location:
    Sydney
    XPJ looks something like this (I'm not an expert with trendlines):
     

    Attached Files:

    • xpj.png
      xpj.png
      File size:
      19.2 KB
      Views:
      27
    Simon Hampel, 11th Jan, 2008
    #70
  11. tasmo

    tasmo Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    46
    Location:
    Canberra, ACT
    Centro have not been suspended from trade, however Centro requested a trading halt until Tuesday pending an announcement from Centro.
     
    tasmo, 11th Jan, 2008
    #71
  12. Tropo

    Tropo Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    2,303
    Location:
    NSW
    Hey Sim,

    Not bad. Not bad at all....
    Almost spot on...:D

    But XPJ is NOT looking good at all.:eek:
     
    Tropo, 11th Jan, 2008
    #72
  13. Alan__

    Alan__ Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    508
    Location:
    Sydney
    Yep.....point taken Lorrimer. There are a variety of reasons why the ASX may be 'high' at the moment. Maybe many are justifiable.

    Longterm trends take into account many, many factors. good economies, bad economies, Iraq invasions, positive times in various sectors, high interest rates, low interest rates, low unemployment, high unemployment etc etc.

    The point I'm making is that in the longish term, say 20 years plus, the rise we have seen seems to beyond the longterm trend. What could change some of those good PE ratios? An end/slowing of the resources boom? Higher interest rates? Higher unemployment? More problems in the US? Middle East tensions? Who knows, but the list of negatives is probably just as likely as the list of positives. We just don't know what the future holds do we?

    However, we do know historically that taking into account the multitude of events that happen in a 20 year period we have seen an average x% growth. The last 4 years or so has really bucked the trend. It may be justified in the longterm but to be honest I think most investors have short memories and I tend to lean towards longterm averages as being a reasonable indicator. I may be wrong, but that's my personal gut feeling.

    :)
     
    Alan__, 11th Jan, 2008
    #73
  14. Glebe

    Glebe Well-Known Member

    Joined:
    29th Sep, 2019
    Posts:
    819
    Location:
    Central Coast NSW
    Hi Alan,

    I don't dispute your figures per se, but the mistake alot of people make is to use an axis that is not exponential.

    See CRC's graph (non exponential), and see Tropo's one (exponential). The exponential ones are the most relevant to the human eye for looking at trends. It's all about percentage increases not absolute increases.
     
    Glebe, 11th Jan, 2008
    #74
  15. Glebe

    Glebe Well-Known Member

    Joined:
    29th Sep, 2019
    Posts:
    819
    Location:
    Central Coast NSW
    Glebe, 11th Jan, 2008
    #75
  16. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,412
    Location:
    Sydney
    The one big trap about using P/E ratios as an indicator is that there are two variables which make up the measure - Price and Earnings.

    We tend to focus too much on price - "the share price is too low for their current earnings" ... which it may be now - but there may also be a reason why there isn't the big institutional support for that stock any more ... their earnings might be expected to drop (due to many things).

    One big issue we face right now in Australia is that while P/E ratios might seem reasonable - if we do get this "global recession" that everyone is talking so much about ... we can't help but be affected by this at least to some degree - and it means lower income for our own companies, hence the P/E ratio starts to rise all on its own due to the falling E.

    P/E ratios are not absolute values anyway - you can't say that a ratio of X is good or bad - it's always taken in the context of what other shares are currently trading at. A change in sentiment towards a sector or region may well be enough to see a lowering of P/E ratios too.
     
    Simon Hampel, 11th Jan, 2008
    #76
  17. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    ZFX was a perfect example of PE ratio not been a good indicator. The PE for 2007 was very low, but that was because their earnings were expect to drop significantly in 2008.
     
    crc_error, 12th Jan, 2008
    #77
  18. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    crc_error, 7th Mar, 2008
    #78
  19. Nawor

    Nawor Member

    Joined:
    24th May, 2017
    Posts:
    20
    Location:
    Adelaide
    CRC,

    You were such a bear on property a few months back. No need to start spruiking property now that you have caved in a bought a place. You should have stuck to your original thoughts - property is overpriced and the market is doomed to crash.
     
    Nawor, 7th Mar, 2008
    #79
  20. BillV

    BillV Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,555
    Location:
    Sydney
    What happens is anyone's guess but IMHO the upper end market
    and areas with high investor participation could come down as a result of the problems in the sharemarkets.

    I base my assumption on the fact that when people get in trouble
    they don't sell their PPOR, they first offload their IP's.

    Cheers
     
    BillV, 7th Mar, 2008
    #80
Page 4 of 5
Buy Property Interstate WITHOUT Buyers Agents!

Buy Property Interstate WITHOUT Dropping $15k On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia