Black Monday

[winner69]

and the US has Friday 13th tonight ....hmm

[Jantar]

What a terrible day its been. The value of my portfolio is down $0.32 on the close last week. :(

Is this the big drop we've been told to expect.

[Crackity]

What a terrible day its been. The value of my portfolio is down $0.32 on the close last week. :(

Is this the big drop we've been told to expect.

I'm picking one stock in your portfolio has been solid green all month Jantar ;)

[Jantar]

I'm picking one stock in your portfolio has been solid green all month Jantar ;)
Yes. I did take a wee bit of profit just to lock in the gains though. :t_up:

[skid]

Oh No!--good news in the States (what will Janet do--Oh dear)--Dow sheds 550 points for the week--Dont forget kids..good is bad and bad is good..----No No Janet,dont take away all that almost free money--We quite like this big Casino your forefathers have created where the odds are always in favor of the house-and if asking nicely doesnt work we will throw a hissey fit and and you can watch all those mom and pop investors and pension funds that also jumped on the bandwagon get fleeced--that will show you Janet,to stuff around with us---We own you-we own the Gov-and we will make you pay,along with others,even those tiny countries who think they are safe in their cocoons.;)

[percy]

Yet while this is going on, my friends and I am enjoying a record year on the NZX.
Just some of the stocks that are having a fantastic year are;AWK,CVT,EBO,FPH,FRE,GMT,POT,RBD,SCL,SKL,SUM and TIL.
With the "full moon" expected in both hemispheres on the 27th November I expect the strong momemtum to strengthen the upward trejactory.HNZ's agm on the 11th December will rally the whole NZX to greater heights .

[skid]

Yet while this is going on, my friends and I am enjoying a record year on the NZX.
Just some of the stocks that are having a fantastic year are;AWK,CVT,EBO,FPH,FRE,GMT,POT,RBD,SCL,SKL,SUM and TIL.
With the "full moon" expected in both hemispheres on the 27th November I expect the strong momemtum to strengthen the upward trejactory.HNZ's agm on the 11th December will rally the whole NZX to greater heights .

Enjoy those profits--no sense messing with a good thing---but keep looking over your shoulder just in case.

(which brings me to another George Carlin Quote--''did you ever try to pick up a suitcase that you thought was full,but was empty,''whoose''....for just a second you feel really strong'':)

[skid]

and just for those who need a really simple explanation

https://www.youtube.com/watch?v=XdH38k0iUgI

[BlackPeter]

And what a sucker rally it was!!! Now this is the point where everyone hangs on to their shares in the belief that the market will bounce back, just like it did last time. Turns out there was no need to panic then, so why panic now? And the market thus begins its long slow interminable decline until all those rally buyers finally get so despairing over their losses that they capitulate and sell. While thinking, why didn't I sell when the S&P went below its 200 day moving average. :confused: Of course, it could be just like last time (and the time before) but the question is - do you feel lucky punk?

7722

Sure KW, the market can crash any day if it so chooses ... and I agree, coming Monday is more likely to belong to the bears than to the bulls - certainly in Australia, and probably as well in NZ. Maybe a good time to go bush? Remind me to check the weather ...

Does this mean we need to be careful? Sure, we always should be. Does it mean we all need to sell our shares (hoping that there is still some greater fool out there buying them who didn't notice the recent mini-dip? I don't think so - and actually, if we think that through, than we might even find out that nobody might be left to buy any shares if everybody sells - not that many greater fools around (no reference to sharetrader posters with this or any other pen name intended;)).

History shows that it is sometimes the early sellers who make money (though only if they have the guts to buy back in later when everybody is desperate), but more often it is the people who are less nervous. Warren Buffet didn't make his fortune buy selling his shares every time the S&P dipped below the MA200.

Just wondering which fundamental reasons you would see for the markets to crash? I think we all got used by now to the idea that China is growing this year just 6.9% instead of 7, the US is doing not too bad and the "refugee crisis" in Europe might help to resolve the issues with an age pyramide balancing on its top. Yes, Australia has and will keep for some time its structural problems - but I even expect resources to come up again (though not tomorrow or next month, but maybe within the next couple of years). Emerging economies (and everybody else) likely to benefit from cheap oil - and just think about our airlines (like AIR) who benefit from continuously sending flocks of climate change leaders consistently around the globe.
Growth everywhere ...

Sure - at some stage markets all across the world need to adapt to lesser and potentially Zero growth (and maybe even some shrinking) - but does this mean that only cash is safe? If you analyse some real human catastrophes (like e.g. the aftermath of WW1 and WW2 in Europe), than it was never the people holding cash who have been king, but the people holding production capital (e.g in form of shares).

Everybody for themselves, but I don't see at this stage the need for panic (actually - I rarely do ...).

DYOR

[skid]

Sure KW, the market can crash any day if it so chooses ... and I agree, coming Monday is more likely to belong to the bears than to the bulls - certainly in Australia, and probably as well in NZ. Maybe a good time to go bush? Remind me to check the weather ...

Does this mean we need to be careful? Sure, we always should be. Does it mean we all need to sell our shares (hoping that there is still some greater fool out there buying them who didn't notice the recent mini-dip? I don't think so - and actually, if we think that through, than we might even find out that nobody might be left to buy any shares if everybody sells - not that many greater fools around (no reference to sharetrader posters with this or any other pen name intended;)).

History shows that it is sometimes the early sellers who make money (though only if they have the guts to buy back in later when everybody is desperate), but more often it is the people who are less nervous. Warren Buffet didn't make his fortune buy selling his shares every time the S&P dipped below the MA200.

Just wondering which fundamental reasons you would see for the markets to crash? I think we all got used by now to the idea that China is growing this year just 6.9% instead of 7, the US is doing not too bad and the "refugee crisis" in Europe might help to resolve the issues with an age pyramide balancing on its top. Yes, Australia has and will keep for some time its structural problems - but I even expect resources to come up again (though not tomorrow or next month, but maybe within the next couple of years). Emerging economies (and everybody else) likely to benefit from cheap oil - and just think about our airlines (like AIR) who benefit from continuously sending flocks of climate change leaders consistently around the globe.
Growth everywhere ...

Sure - at some stage markets all across the world need to adapt to lesser and potentially Zero growth (and maybe even some shrinking) - but does this mean that only cash is safe? If you analyse some real human catastrophes (like e.g. the aftermath of WW1 and WW2 in Europe), than it was never the people holding cash who have been king, but the people holding production capital (e.g in form of shares).

Everybody for themselves, but I don't see at this stage the need for panic (actually - I rarely do ...).

DYOR

You missed out the one single thing that has caused the most volatility in (at least) US markets--can you guess what that is? (it aint china(although thats worth watching)-it aint OZ-it aint refugees,oil,or emerging countries (although they will be affected).... Its....

[percy]

..the full moon on the 27th November.

[skid]

..the full moon on the 27th November.

OK..that too:)

[nextbigthing]

You missed out the one single thing that has caused the most volatility in (at least) US markets--can you guess what that is? (it aint china(although thats worth watching)-it aint OZ-it aint refugees,oil,or emerging countries (although they will be affected).... Its....

Posts on Sharetrader?

[BlackPeter]

You missed out the one single thing that has caused the most volatility in (at least) US markets--can you guess what that is? (it aint china(although thats worth watching)-it aint OZ-it aint refugees,oil,or emerging countries (although they will be affected).... Its....

Donald Trumps latest rumblings? The latest UFO sighting? Come on skid, I can't stand that much excitement, what is it?

[Baa_Baa]

You missed out the one single thing that has caused the most volatility in (at least) US markets--can you guess what that is? (it aint china(although thats worth watching)-it aint OZ-it aint refugees,oil,or emerging countries (although they will be affected).... Its....

US Fed about to start strangling their loose money policy and raise interest rates?

[ratkin]

AFR Talking up carnage on the markets tomorrow

[skid]

US Fed about to start strangling their loose money policy and raise interest rates?

And Baa Baa wins yea!:t_up:

[skid]

Futures are not always correct in predicting ,but it does look rather gloomy ATM
http://money.cnn.com/data/premarket/

[Bilbo]

Futures are not always correct in predicting ,but it does look rather gloomy ATM
http://money.cnn.com/data/premarket/

That says "Data as of Nov 13", and the figures are not changing, so I assume the futures market is not open and those figures may be from the close of after hours trading in the US on Friday? It might or might not include the impact of the attacks. Anyone know?

[skid]

That says "Data as of Nov 13", and the figures are not changing, so I assume the futures market is not open and those figures may be from the close of after hours trading in the US on Friday? It might or might not include the impact of the attacks. Anyone know?

Yes,being Sunday in the states-you are right-more time obviously passes from Friday to Monday as as I said future dont always make an accurate prediction-but as you say,with the Paris attacks included,its hard to be optimistic at the moment.
The Paris attacks will eventually settle,but the fact that it was down before is not great.

Guess the ball is in the Kiwi-Oz, Asian and Europeon markets markets to point the way first..

[Hoop]

Hmmm..Europe started a rot last night..Wall St carried it on and broke some technical support as well..It ended a huge rally up some~13% off what looked like a bullish double bottom.

..but...
the rally ended with a lower high...so the 4 month down trend continues on Wall St :p....we have Friday still to go, so what will the European/Americian investors do with these broken technicals?..

NZX is treating today (Friday) trading behaviour as a "she'll be right mate...no worrries" cum Monday..If I was short term trading NZX stuff, I don't know if I would want to stay "in" over this weekend

I wrote this midday friday 13th November....
Strange as it may seem, down trending markets and markets in a bear cycle always seem to get clobbered by a series of bad news events

EDIT:.. Wall St fell over -1% Friday. It was closed for the day when the Paris Terrorist attacks commenced..(4.20pm NYT)

[skid]

I was thinking more Interest rates than Paris--but pre market is better than Friday--still red but not a major

[Hoop]

Yes KW...and..please excuse my posting below as it's my latent furturist behaviour popping out...

This could be boon for online behavior......and the safety threat could help push through initiative disruptive technology

1..shopping (already here)
2..Restaurant on line...Pay online to cook your exquisite dinner (as per menu) via your home 3D printer..
3..Put on your VR headset and go touring...The VR program networks with hundreds of webcams or other interactive streaming devices within your visual perimeter gives you nanosecond interactive live updates...imagine being virtually present watching those dangerous events unfold around you..and knowing you are completely safe..Why watch CNN/BBC on the basic TV or Facebook/Twitter on your phone.eh?

OK thats enough of that from me....blame it on "nothing to do due to the rained out day"

[skid]

Yes KW...and..please excuse my posting below as it's my latent furturist behaviour popping out...

This could be boon for online behavior......and the safety threat could help push through initiative disruptive technology

1..shopping (already here)
2..Restaurant on line...Pay online to cook your exquisite dinner (as per menu) via your home 3D printer..
3..Put on your VR headset and go touring...The VR program networks with hundreds of webcams or other interactive streaming devices within your visual perimeter gives you nanosecond interactive live updates...imagine being virtually present watching those dangerous events unfold around you..and knowing you are completely safe..Why watch CNN/BBC on the basic TV or Facebook/Twitter on your phone.eh?

OK thats enough of that from me....blame it on "nothing to do due to the rained out day"

Apparently the 3d printer can print you up some prozac in the future if things are going particularly bad as well..---Rain here as well:)

[winner69]

all of the last seven bear markets (US) we’ve seen have been fueled, if not started, by the actions of the Fed.

Table shows the pain to come - but janet won't be doing anything but tease the market until mid to late next year (Presidential elections you see)

[Lewylewylewy]

What are peoples thoughts about when the farming (milk) sector might bounce back?

[stoploss]

What are peoples thoughts about when the farming (milk) sector might bounce back?

Hard to pick and if we could , we would all be super rich .
Just like to say generally markets overshoot to levels you would never envisage .They stay depressed and over bought ( irrational) longer than we can stay solvent .
I always remember the USA and the Gulf war" it will be all over in a year and we will be out of there " .... great Tui ad.Or maybe a building project this will be finished in 6 months ....
Commodities and economic downturns are much the same.
Currently many commodities are depressed including iron ore ...crushing the Aussie economy , plenty of people picking a turnaround in this and oil but it doesn't appear to be happening anytime soon .
Wish I could help you more , but hopefully these general thoughts on markets can help you shape your thoughts on your situation.

[Sideshow Bob]

Another view and a good read

https://keithwoodford.wordpress.com/2015/11/26/ongoing-disruption-and-volatility-in-dairy-with-winners-and-losers/#more-1392

[Lewylewylewy]

Thanks stoploss. I'm a bit of a novice at this kind of investment, so its great to be able to ask these dumb questions.

Speaking of dumb questions... Why are Aussies commodity prices so low?

[stoploss]

Thanks stoploss. I'm a bit of a novice at this kind of investment, so its great to be able to ask these dumb questions.

Speaking of dumb questions... Why are Aussies commodity prices so low?

Ok so it's not Aussie commodity prices , commodity prices are generally denominated in USD . So currently the Gold price in Aud has not had such a severe downturn for Australian producers as the Aussie currency vs the Usd has depreciated considerably to compensate for the weak economy , lower interest rates etc ...( getting off point a little here )
To answer your question WHY , in what some are calling the greatest commodity boom since the great gold rush ...Australia , Brazil , and China due in a large part to massive Chinese demand
started producing ever increasing amounts of iron ore , opening more mines in remote inhospitable regions/conditions .( Think 45 degree desert) Once the demand from China fell it has meant
an oversupply of the commodity and prices plunged .
Same goes for milk ...massive Chinese demand , farmers produce more and more as Fonterra happy to take it ...but they have to build more expensive processing plants .....demand drys up from China the price plummets . This is for the milk powder,value added high end products are ok - think A2 infant powder . Same goes for lumber prices ...it breaks my heart to see so many logs sitting at the Port, why not turn it into an IKEA product add some value , create some jobs .
You will be able to find a heap of stories on the current collapse in the oil price . Basically Saudi have the taps open full bore, Iraq and Iran back online, and America producing massive amounts of shale oil and gas to stem their massive imports.
This is just basic supply and demand . There are a heap of other reasons and other factors at play . Hard to explain fully and there is always another side of the argument , ways to pick holes in the reasoning etc ... so this is not a definitive , just my opinion . Good luck out there.

[xafalcon]

What are peoples thoughts about when the farming (milk) sector might bounce back?

The following need to change before a meaningful price recovery will occur. Not all need to happen, but several do, not just 1 or 2

- Russian ban on EU milk products must be lifted
- EU over-production must stop. Some member states have increased production significantly since quota's were dropped
- China must increase purchasing at least back to 2013 levels
- USA must not increase exports
- Fonterra must stop paying Aussie dairy farmers more for their milk than they pay their NZ farmers (who are also their company owners)
- Fonterra must grow branded value-add production 4-fold or more
- Forex must remain favourable

Many countries still subsidise dairy production. Current low prices don't necessarily hurt their farmers as much as NZ farmers. So NZ farmers have become the "swing producers" leading to massive ups and downs in farm returns. 10 years ago prices were much more stable year to year

[skid]

Will the spoiled wall street crowd revisit their interest rate paranoia and throw their toys out of the cot?--watch this space...

[BlackPeter]

Will the spoiled wall street crowd revisit their interest rate paranoia and throw their toys out of the cot?--watch this space...

Interesting to see how the European markets reacted on another reduction in the interest rate and a further QE ... markets dropped - DAX by more than 3%. Not sure whether this was disappointment about not enough QE - or disappointment that the RB has so little confidence in the state of the economy?

Probably just time for the Reserve Banks to show some guts and do what's best long term for the economy instead of trying to keep a bunch of fickle speculators happy. Negative interest rates will kill economies ... just wait for the first big pension funds (who can't fund their commitments due to "income from negative interest" anymore) to falter - now this would give a (not so nice) splash!

[skid]

http://www.wsj.com/articles/the-stock-market-is-missing-the-warning-from-junk-1449397806

[skid]

Geez-oil down another 3+%--could be another rough day on wall str.

[Crackity]

Geez-oil down another 3+%--could be another rough day on wall str.

Luckily our sharemarket marches to the beat of a different drum eh Skid ;)

[skid]

Luckily our sharemarket marches to the beat of a different drum eh Skid ;)

So not the Oil drum.. eh?

[Baa_Baa]

Luckily our sharemarket marches to the beat of a different drum eh Skid ;)

Lot of red today, maybe some nerves about DOW failing twice to make news highs from the recent August rout, after a stellar comeback though now currently falling to recent support? Other international markets are grappling with declines as well. Are we seeing big money taking profits locally?
7759

quick note: I drew the Fib retrace from the August bottom but if it is drawn from the Sept 29 low, then the current retrace is right on the significant 38.2% -- spooky Fibs. Probably bounce here eh?

[Crackity]

Lot of red today, maybe some nerves about DOW failing twice to make news highs from the recent August rout, after a stellar comeback though now currently falling to recent support? Other international markets are grappling with declines as well. Are we seeing big money taking profits locally?
7759

tongue very firmly in cheek Baa ;)

[Baa_Baa]

tongue very firmly in cheek Baa ;)

perhaps, the Cracks are appearing again, lol ;)

[skid]

I was begining to think the market (US) was going to shrug off the Fed interest rise and then Bam! (or maybe just a Bam without the exclamation point--we'll find out Tues)

[bohemian]

I think it's all about oil or the price of it. Russians are budgeting on $30 bbl as I have read, so I think there is still some way to go. My holdings on the DOW were off 3% this morning and I am expecting a continuation of a down trend for a while. The only way to rationalise it is to see this as a buying opportunity. I hold mainly Visa.

[easy money]

I think it's all about oil or the price of it. Russians are budgeting on $30 bbl as I have read, so I think there is still some way to go. My holdings on the DOW were off 3% this morning and I am expecting a continuation of a down trend for a while. The only way to rationalise it is to see this as a buying opportunity. I hold mainly Visa.
Why worry....QE 4 is coming soon...to a market near you.

[pak]

A bit of fear creaping into the market again. China - trading halt, now big drop in US markets. Could be an interesting week.

[kizame]

Yep maybe a bit of cleansing about to happen.
Technically head and shoulders on the dow so we shall see what that brings, S&P 500 and Russell 2000 looking the same of course.

[skid]

another bad day on the US markets
So far they have managed to shrug off these drops but I guess it would be fool hearty to disregard

[kura]

7785

Old cartoon I found

[Tomtom]

A bit of fear creaping into the market again. China - trading halt, now big drop in US markets. Could be an interesting week. Emerging markets are the future of the global economy...an they always will be.

I can only restate my view on emerging markets:

It’s interesting to reflect that one of the most dominant features of the last two centuries has been an increasing divergence between the ‘developing’ world and the 'developed' world (measured by GDP per capita). In a way the aberration has been the last decade and a half in which developing countries have experienced higher growth rates than developed countries so briefly appeared although they were on a converging path with the developed world. However growth rates are not persistent and it appears the global situation is normalising with economies regressing towards the long term mean growth rates. That’s why it really interests people like me that many have come to see developing countries as a better bet than using resources in developed economies which have an extended track record of outperforming.

[bull....]

so much for having the week off lol might retest the 16000 level this week?, nz is still looking good though :)

[skid]

so much for having the week off lol might retest the 16000 level this week?, nz is still looking good though :)

New Zealand cannot hold out forever,to think a tiny economy like ours is totally insulated will lose you money--Its looking like China part 2....other markets tumbling as a result (Chinas market went down 7% in a few hrs before the ''circuit breaker''kicked in and closed the market--the 2nd time this week)

correction on a few hrs--it was 14minutes 7 secounds :(

[skid]

Emerging markets are the future of the global economy...an they always will be.

I can only restate my view on emerging markets:

Its a dangerous game though as many developing countries will get walloped with increasing interest rates(us)and commodities crashing

[skid]

So now the ''circuit breaker'' has been scraped --so Fridays trading in China will go where it will--this will allow market to bounce back as the day goes on, or carry on down to who knows where--but at least it will be reality,so in a way the veil will be lifted.

[Tomtom]

So now the ''circuit breaker'' has been scraped --so Fridays trading in China will go where it will--this will allow market to bounce back as the day goes on, or carry on down to who knows where--but at least it will be reality,so in a way the veil will be lifted. State funds pushing more money in to re-inflate prices as well.

[skid]

absolutley right TT

China’s market has stabilised, closing 2% higher. Beijing authorities are thought to have been buying up shares, in an attempt to restore confidence.

Traders were also encouraged that the yuan was fixed at a higher level today, easing fears of a currency war.But confidence in the Chinese authorities has been hit by this week’s drama: (Quote)

They (China) seem to be learning as they go..(whoops ..that circuit breaker was a bad idea) and maybe we shouldnt mess so much with our currency

big fear apparently was a currency war

They have plugged the hole in the dam---but will things go on their merry way? (the NZ and OZ market had time to react to Chinas market rise)unlike when things happen on the Dow.9US jobs report bummed them a bit--(Damn! more people got work-now they might raise interest again--who cares about the average Joe--its our portfolio that counts!)

[bull....]

State funds pushing more money in to re-inflate prices as well.

spot on manipulated stuff, Monday doesn't look to flash at the moment 2% fall aus, nz a guess at 1%

I was lucky to fade the manipulated bounce on Friday

[skid]

I suppose China is like an adolescent (in economic terms)which is experiencing ''growing pains'' as it tries to make the shift from childhood to adulthood

from the guardian

It should be no surprise that a rapidly growing industrial economy such as China’s is drifting into choppy financial waters. The advanced economies faced similar challenges at corresponding stages in their development. But, in coping with the consequences of financial turbulence, the advanced economies often suffered significant losses of output relative to potential. The Beijing authorities are professedly seeking to change China’s economic growth model from one which depends on exports and capital investment to one more firmly based on domestic consumption. But they may be over-estimating the extent to which politicians can choose how their economies grow. Since curbing growth in some sectors is usually easier than boosting it in others, the danger is that the attempt to re-orient the economy will result in overall weaker growth This is one reason, which seems to be widely acknowledged, why China’s future growth could well fall short not only of recent rates but even of the Beijing authorities’ more conservative projections for the years to come.

[percy]

I expect the slow down in China to gather pace as 50,000 Chinese holidays makers will shortly land in NZ.
With say a $4,000 average spend China is going to be $200 mil worse off.
Adding to this problem these holiday makers will return to China with suitcases full of Comvita honey and Trilogy beauty products.
Do Air NZ and THL have enough planes and camper vans to cope with the demand?

[skid]

I expect the slow down in China to gather pace as 50,000 Chinese holidays makers will shortly land in NZ.
With say a $4,000 average spend China is going to be $200 mil worse off.
Adding to this problem these holiday makers will return to China with suitcases full of Comvita honey and Trilogy beauty products.
Do Air NZ and THL have enough planes and camper vans to cope with the demand?

The Chinese Gov. is making mistakes ATM but they still call the shots--They may well put a stop to that(Chinese taking their dosh out)--after all,domestic consumption is what they are aiming for--Watch this space (but it wont happen over night)
Meanwhile we should be thanking our lucky stars we are not an oil and natural resources based economy--Oz may be in for a rough ride.

[percy]

The Chinese Gov. is making mistakes ATM but they still call the shots--They may well put a stop to that(Chinese taking their dosh out)--after all,domestic consumption is what they are aiming for--Watch this space (but it wont happen over night)
Meanwhile we should be thanking our lucky stars we are not an oil and natural resources based economy--Oz may be in for a rough ride.

Looks as though NZ is now "the land of milk and honey."
The future looks very bright for NZ listed companies.

[stevevai1983]

I expect the slow down in China to gather pace as 50,000 Chinese holidays makers will shortly land in NZ.
With say a $4,000 average spend China is going to be $200 mil worse off.
Adding to this problem these holiday makers will return to China with suitcases full of Comvita honey and Trilogy beauty products.
Do Air NZ and THL have enough planes and camper vans to cope with the demand?

NZ is one of the top holiday destination :) thanks to lord of the ring and hobbits movie.
the only disadvantage is the travel distance and air ticket is very expensive. if NZ is closer to china (e.g 3~5hours flight instead of more than 11hours..) then the traveler number could be easily tripled.
and yes we do buy lots of honey and beauty products, wool products.....oh and clothes like icebreaker :P

[Major von Tempsky]

If China is in a mess with record amazing debt levels how come they have only lowered their GDP growth estimate from 7.5% (plus) to 7.0% (plus) ?

If China is doing so well (plus 7.0% GDP growth) how come their imports have fallen and also their electricity production? (shades of Argentine's inflation estimates?)

If China is doing so badly how come their tourists are pouring into NZ at ridiculously high levels like there is no tomorrow?

If Chinese can drive on the left in Hong Kong, Malaysia and Singapore and Indonesia and Chinese tourists can drive on the left in Japan, why can't they drive on the left in New Zealand?

[Hectorplains]

[QUOTE=

If Chinese can drive on the left in Hong Kong, Malaysia and Singapore and Indonesia and Chinese tourists can drive on the left in Japan, why can't they drive on the left in New Zealand?[/QUOTE]

...they do.

http://www.stuff.co.nz/motoring/news/67496386/Crash-data-shows-danger-level-of-foreign-drivers

http://www.stuff.co.nz/national/crime/67318649/ruby-marris-crashaccused-named

:(

[Lewylewylewy]

If the NZX does go into turmoil, what happens to shares of companies whole are successful during the period, especially those trading at PEs around the 10 mark? Do they tend to go down and become bargains or do they hold up their value as they're still going strong?

I'm thinking about my holdings in companies like Scl and THL who I expect to deliver some good news in February.

Obviously shares trading at higher, speculative ratios go down amid such turmoil even if they're doing OK, because their prices are based on influence from people doing speculative trading...

[percy]

If the NZX does go into turmoil, what happens to shares of companies whole are successful during the period, especially those trading at PEs around the 10 mark? Do they tend to go down and become bargains or do they hold up their value as they're still going strong?

I'm thinking about my holdings in companies like Scl and THL who I expect to deliver some good news in February.

Obviously shares trading at higher, speculative ratios go down amid such turmoil even if they're doing OK, because their prices are based on influence from people doing speculative trading...

In GFC all stocks fell,and those who increased their dividends were the first to recover.
Companies carrying large debt [ie NPX] had to recapatilise,while others had cash issues to strengthen their balance sheets..
Today, NZ companies for the most part have very strong balance sheets,well managed, and are in very good shape,as is the country.
SCL and THL are going from strength to strength.
Yet volatility is something we have to learn to live with.

[Baa_Baa]

Hard to ignore this. NZ is not immune as the past week will attest on the blue chips.

Will it stop? Heck who knows, just don't ignore it.

7793

[BlackCross]

The difference between short and long-dated Treasury yields is narrowing, a classic harbinger of an economic downturn....

http://video.ft.com/4689884892001/US-Treasury-yield-curve-flashing-yellow/markets

Plus 'transports' are showing signs of stress... that's 2 warning signs and enough for me to reduce my holdings.

On a positive note I'm usually on the wrong side of any trade..lol.

[Lewylewylewy]

I guess an interesting thing about these particular troubles is that the shares that are dropping are not actually struggling. I guess the question is, will the events upcoming cause NZ companies to underperform.

[KiwiGekko]

I guess an interesting thing about these particular troubles is that the shares that are dropping are not actually struggling. I guess the question is, will the events upcoming cause NZ companies to underperform.

I am unsure which shares you are referring to, but markets are forward looking, so they're not struggling based on the data you have at hand right now that is in the rear view mirror. Depending on what scenario you think is likely these companies valuations could look completely different - that is what you're seeing priced in right now, combined with a bit of de-risking.

As for the second part of your question - will events (which events?) cause NZ companies to underperform? My observation is this: Globally we currently have a global oversupply of a number of commodities combined with a bit of a bit of a slow down in consumption, there are a number of headwinds coming into 2016 and NZ is not except from this, think Dairy. But so far we have had a wealth effect which I believe has been contributed to by Auckland's property market + tourism has been going from strength to strength & our other exporters are being helped by the exchange rate. Will that continue? Who knows, if picking markets was easy we'd all be sipping cocktails in the Bahamas, not posting here on a Sunday evening.

These are just my thoughts, DYOR etc etc.

KG.

[bull....]

watching 16000 dow , 1870 es tonight

[Lewylewylewy]

Today's the last day of drops, I'd say (for the short to medium term). All the announcements come out this week telling us how wonderful everything is.

[Baa_Baa]

Today's the last day of drops, I'd say (for the short to medium term). All the announcements come out this week telling us how wonderful everything is.

Sometimes just turning off the 'news' and watching the markets will give you a better sense of the morrow. http://www.investing.com/charts/real-time-futures-charts - select your favourite instrument and timeframe. Live.

[Lewylewylewy]

That's it, shares are just too much effort and hassle. Tomorrow I'm investing all my money into something more relaxing and enjoyable:

http://www.telegraph.co.uk/finance/personalfinance/investing/11817380/Lego-a-better-investment-than-shares-and-gold.html

[winner69]

Today's the last day of drops, I'd say (for the short to medium term). All the announcements come out this week telling us how wonderful everything is.

Yes it was lewy

The world is all happy again and stocks will continue to rise again

See, no need to worry was there

[Sgt Pepper]

From the UK Telegraph today reporting on confidential alert to high nett worth clients of Royal Bank of Scotland

“Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” it said in a client note.nd

Predicts a " cataclysmic year for stock markets" oil at $ 16.00 per barrels, and markets "falling by one fifth"

[xafalcon]

From the UK Telegraph today reporting on confidential alert to high nett worth clients of Royal Bank of Scotland

“Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” it said in a client note.nd

Predicts a " cataclysmic year for stock markets" oil at $ 16.00 per barrels, and markets "falling by one fifth"

And there will be another "expert" recommending the exact opposite to their clients......

My key learning from the GFC / Great Recession is that economic forecasting ability has gone from average to (very) poor. So much so, that most economists now seem to spend their time analysing the past and attributing causes to various situations that have already happened, rather than there being a general consensus opinion of the future that is broadly supported by the majority of forecasters

The general vacuum of consensus opinion of what the future holds seems to amplify the "sheep mentality" and move markets very quickly over short time frames. I guess this in itself provides short term buying and selling opportunities if you can get the timing right

[BIRMANBOY]

http://3.bp.blogspot.com/_pEIRLP9WzWU/THForimZMJI/AAAAAAAADXA/HJ0n3yLMD04/s400/media_http9gagcomphoto15158540jpg_onphqocmpmJzFgC. jpg.scaled1000.jpg (http://www.google.co.nz/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi90rWc7qLKAhVIKKYKHTmpAW8QjRwIBw&url=http%3A%2F%2Fanimalpicturebeautifulanimals.blo gspot.com%2F2011_05_01_archive.html&bvm=bv.111396085,d.dGY&psig=AFQjCNEfKhE1NFP9vKBilxXVy32oOqhCLw&ust=1452639470426737)

[bull....]

watching 16000 dow , 1870 es tonight

still watching for a test of these levels

[LAC]

Lots in red this morning...

[BlackCross]

The annual SocGen strategy presentation fronted by the bank’s famous (equity) bear Albert Edwards.

Investors are coming to terms with what a Chinese renminbi devaluation means for Western markets. It means global deflation and recession. The coming carnage is an indirect result of the failure of the Fed’s QE. It may not have done much to boost US growth, but it certainly inflated global asset prices into the stratosphere. The one area though, where US QE did unambiguously boost growth was in emerging markets (EM) as surplus money poured into these supposedly superior investment opportunities, leading to massive EM foreign exchange intervention to hold their currencies down. This turned ineffective US QE into very effective EM QE in terms of boosting EM economic growth. A commodity bubble and the resultant US shale investment boom were all consequences of the Fed’s QE. The illusion of prosperity is shattered as boom now turns to bust. But I do hope this time around the Queen won’t ask, as she did in November 2008, why nobody saw this coming!

http://ftalphaville.ft.com/2016/01/13/2150068/if-i-am-right-the-sp-would-fall-to-550-a-75-decline-from-the-recent-2100-peak/

Interesting read!

[winner69]

OMG blackcross - I read the rest of it

Didn't like this bit - S&P at 550 - ouch, but possible.


Where will this all end? I believe the Fed and its promiscuous fraternity of central banks have created the conditions for another debacle every bit as large as the 2008 Global Financial Crisis. I believe the events we now see unfolding will drive us back into global recession. I have long believed that 30y US bond yields would converge with Japan, just as Germany has now done. But a key part of my Ice Age thesis is that the US equity market remains in a valuation bear market that did not fully play itself out in March 2009, when the S&P touched the 666 level, and we will see new lows…

If I am right and we have just seen a cyclical bull market within a secular bear market, then the next recession will spell real trouble for investors ill-prepared for equity valuations to fall to new lows. To bottom on a Shiller PE of 7x would see the S&P falling to around 550. I will repeat that: If I am right, the S&P would fall to 550, a 75% decline from the recent 2100 peak…

[bull....]

always funny when you see a down draft in the market, people come out with sensationalist headlines.

really funny was the part bull market within a bear market hahaha - I thought the market has been trending up for over 100yrs so shouldn't it be a bear market within a bull market - so many idiots abound with these headlines

[Hoop]

always funny when you see a down draft in the market, people come out with sensationalist headlines.

really funny was the part bull market within a bear market hahaha - I thought the market has been trending up for over 100yrs so shouldn't it be a bear market within a bull market - so many idiots abound with these headlines

Bull....

A mission for you

Head over to Crestmont Research (http://www.crestmontresearch.com/stock-market/) it tells you about bull markets within bear markets...

...then...

Head over to Winner 69 ST thread (Investing Strategies and Secular bear Markets (http://www.sharetrader.co.nz/showthread.php?5171-Investing-strategies-and-secular-bear-markets))..Start at the first post and read all 25 pages There is a lot of information so be warned its heavy going in parts for people who are not into share Market theory and how it all networks together so will take some time to read and mentally absorb...so arm yourself with your favourite beverages and snacks...relax take your time and enjoy.:)

..then..

When your mission is completed... you may have a new perspective on who the idiots are within the media world:)

EDIT: Anything that confusing.. write the query on the IS&SBM thread...Its a good educational thread

[bull....]

Bull....

A mission for you

Head over to Crestmont Research (http://www.crestmontresearch.com/stock-market/) it tells you about bull markets within bear markets...

...then...

Head over to Winner 69 ST thread (Investing Strategies and Secular bear Markets (http://www.sharetrader.co.nz/showthread.php?5171-Investing-strategies-and-secular-bear-markets))..Start at the first post and read all 25 pages There is a lot of information so be warned its heavy going in parts for people who are not into share Market theory and how it all networks together so will take some time to read and mentally absorb...so arm yourself with your favourite beverages and snacks...relax take your time and enjoy.:)

..then..

When your mission is completed... you may have a new perspective on who the idiots are within the media world:)

EDIT: Anything that confusing.. write the query on the IS&SBM thread...Its a good educational thread

yet to hear about a legend who based there investing on cycles lol

[Hoop]

yet to hear about a legend who based there investing on cycles lol

Buffett..Buys up the wreckage after the carnage...
Soros....broke the Bank of England..

[bull....]

Buffett..Buys up the wreckage after the carnage...
Soros....broke the Bank of England..

come on hoop, soros is more a macro investor and buffett a value investor I don't think cycles play a huge part in there investing as both invest during bull and bear markets.

[Hoop]

come on hoop, soros is more a macro investor and buffett a value investor I don't think cycles play a huge part in there investing as both invest during bull and bear markets.
Ever asked yourself where did these guys like Buffett and Soros get all this money from to buy up the wreckage..
Ever asked yourself why Soros was doing a lot of selling in the last half of 2015
Of course.. money can be made in a bear market using different strategies...

Ever wondered why the insurance companies shied away from the once lucative basic life policies of the 1960,s and 70's...
Every wondered why Superannuation oscillates from being an excellent investment to one that's only average at best..resulting in generations that retire without wealth..
Ever wondered why a market perceived by investors as not being overvalued goes into a bear market...
Ever wondered why you struggle to make money late in an old bull market..
Ever wondered why fund managers and the "experts" were wrong in the past...(maybe a hidden agenda..eh?)
Ever wondered why 70% - 90% of all stock Market investors lose money over time..when the trend is av +7%/pa

[Adam H]

"70 - 90 % of all stock market investors lose money over time"

Ever wondered if stats get pulled out of thin air?

[dobby41]

Ever asked yourself where did these guys like Buffett and Soros get all this money from to buy up the wreckage..
Ever asked yourself why Soros was doing a lot of selling in the last half of 2015
Of course.. money can be made in a bear market using different strategies...

Ever wondered why the insurance companies shied away from the once lucative basic life policies of the 1960,s and 70's...
Every wondered why Superannuation oscillates from being an excellent investment to one that's only average at best..resulting in generations that retire without wealth..
Ever wondered why a market perceived by investors as not being overvalued goes into a bear market...
Ever wondered why you struggle to make money late in an old bull market..
Ever wondered why fund managers and the "experts" were wrong in the past...(maybe a hidden agenda..eh?)
Ever wondered why 70% - 90% of all stock Market investors lose money over time..when the trend is av +7%/pa

I have wondered all these things (except the last as I have never seen that stat before).
Any answers?

[Jantar]

....
Ever wondered if stats get pulled out of thin air?
It is well known that 78.3% of all stats are pulled out of thin air. :mellow:

[LAC]

That would mean 70-90% of the people on ST are going to lose their money....... you heard it here 1st

[jetski1999]

its only a paper loss until sold same as a paper profit,
saying that i am picking we are heading for a bear market so have moved my positions to more defensive stocks and am now short on a lot of holdings locking in profits i have already made

[Tomtom]

S&P has been trading at over two standard deviations from mean so a selloff isn't completely unexpected in my view, with or without the China excuse.

[Joshuatree]

It is well known that 78.3% of all stats are pulled out of thin air. :mellow:

you are a very savvy exception Jantar and i think you know that ;)

[winner69]

you are a very savvy exception Jantar and i think you know that ;)

When you going to install that update Joshua

[Joshuatree]

OK, theres always one followed by another; 3rd sure thing in life:)

[bohemian]

Ever asked yourself where did these guys like Buffett and Soros get all this money from to buy up the wreckage..
Ever asked yourself why Soros was doing a lot of selling in the last half of 2015
Of course.. money can be made in a bear market using different strategies...

Ever wondered why the insurance companies shied away from the once lucative basic life policies of the 1960,s and 70's...
Every wondered why Superannuation oscillates from being an excellent investment to one that's only average at best..resulting in generations that retire without wealth..
Ever wondered why a market perceived by investors as not being overvalued goes into a bear market...
Ever wondered why you struggle to make money late in an old bull market..
Ever wondered why fund managers and the "experts" were wrong in the past...(maybe a hidden agenda..eh?)
Ever wondered why 70% - 90% of all stock Market investors lose money over time..when the trend is av +7%/pa Is this another conspiracy theory?

[goldfish]

Ever asked yourself where did these guys like Buffett and Soros get all this money from to buy up the wreckage..
Ever asked yourself why Soros was doing a lot of selling in the last half of 2015
Of course.. money can be made in a bear market using different strategies...

Ever wondered why the insurance companies shied away from the once lucative basic life policies of the 1960,s and 70's...
Every wondered why Superannuation oscillates from being an excellent investment to one that's only average at best..resulting in generations that retire without wealth..
Ever wondered why a market perceived by investors as not being overvalued goes into a bear market...
Ever wondered why you struggle to make money late in an old bull market..
Ever wondered why fund managers and the "experts" were wrong in the past...(maybe a hidden agenda..eh?)
Ever wondered why 70% - 90% of all stock Market investors lose money over time..when the trend is av +7%/pa

I have as well...plz do tell.

[Hoop]

Is this another conspiracy theory?

No


I have as well...plz do tell.

Post #1084

(http://www.sharetrader.co.nz/showthread.php?10339-Black-Monday/page73)Ever wondered why 70% - 90% of all stock Market investors lose money over time..when the trend is av +7%/pa.

Type ....."Do most people lose money in the stock market?" and google it ...there are about 31,200,000 results take your pick..

[percy]

No



Post #1084

(http://www.sharetrader.co.nz/showthread.php?10339-Black-Monday/page73)Ever wondered why 70% - 90% of all stock Market investors lose money over time..when the trend is av +7%/pa.

Type ....."Do most people lose money in the stock market?" and google it ...there are about 31,200,000 results take your pick..

Great to know Sharetraders are part of the 10% to 30% of investors who make money.
Last year 183 of the 208 who entered ST competition made money.177 beat the bank deposit rate.
Even our own "ill famous" Couta1 was up 37.16%,while 100 were up over 20%..
Maybe we are better off just investing in NZ?

[Leftfield]

Great to know Sharetraders are part of the 10% to 30% of investors who make money.
Last year 183 of the 208 who entered ST competition made money.177 beat the bank deposit rate.
Even our own "ill famous" Couta1 was up 37.16%,while 100 were up over 20%..
Maybe we are better off just investing in NZ?

Agree Percy, well said.

Interesting rally on Wall Street today….. it will be interesting to see if it is a 'sucker rally' or the real thing. That said, I'm increasingly of the opinion that NZ stocks are generally nicely insulated from much of the international market mayhem.

[Joshuatree]

Body Armour and Tin Hats Off. SunblocK 500 on. Get out there and celebrate NeeewwwW ZealanD ..."Glistens like a Pearl at the bottom of the world ",YEEEAHHHh. Have an UPP day.Smile at someone as you click on a Trade.:t_up:

[winner69]

Body Armour and Tin Hats Off. SunblocK 500 on. Get out there and celebrate NeeewwwW ZealanD ..."Glistens like a Pearl at the bottom of the world ",YEEEAHHHh. Have an UPP day.Smile at someone as you click on a Trade.:t_up:

Yes he world is all happy again

About time the nzx had a decent run ......due for one ......nzx capital index only up a pathetic 3% over the last year

A rising tide lifts all ships (except the sinking ones) ....that's what we need

[Hoop]

Great to know Sharetraders are part of the 10% to 30% of investors who make money.
Last year 183 of the 208 who entered ST competition made money.177 beat the bank deposit rate.
Even our own "ill famous" Couta1 was up 37.16%,while 100 were up over 20%..
Maybe we are better off just investing in NZ?

Ever wondered why 70% - 90% of all stock Market investors lose money over time..when the trend is av +7%/pa.
I Wish people wouldn't misconstrue my sentence which has no relevance to my original meaning, just to fuel their own unrelated counter-argument against it's validity..
I wrote this sentence to compliment my original post with highlighted websites..so anyone who hasn't read my post and the highlighted sites will be lost in translation

Percy.... of course most Investors (when most belatedly buy in) make money when a raging Bull Market Cycle is in progress even a dart throwing monkey...we all know that .. so you and others should have realised my sentence meant something more informational....

Sighhh....

[percy]

Ever wondered why 70% - 90% of all stock Market investors lose money over time..when the trend is av +7%/pa.
I Wish people wouldn't misconstrue my sentence which has no relevance to my original meaning, just to fuel their own unrelated counter-argument against it's validity..
I wrote this sentence to compliment my original post with highlighted websites..so anyone who hasn't read my post and the highlighted sites will be lost in translation

Percy.... of course most Investors (when most belatedly buy in) make money when a raging Bull Market Cycle is in progress even a dart throwing monkey...we all know that .. so you and others should have realised my sentence meant something more informational....

Sighhh....

As you well know I prefer the glass half full rather than half empty...lol.

[Balance]

Merrill Lynch Bob Farrell: "When all the experts and forecasts agree, something else is going to happen"

As true as it is ever going to get and hard to go wrong with that piece of advice.

[bull....]

watching open if we smash lower to flash crash lows or if that support at 1965 - 70 holds

[Joshuatree]

2-3% down in USA. Body armour and tin hats back on:ohmy::eek2:

[winner69]

2-3% down in USA. Body armour and tin hats back on:ohmy::eek2:

Just install that update Joshua - and all will be fine

[percy]

Looks as though we will indeed have a "Black Monday" this week.!!

[BlackPeter]

Looks as though we will indeed have a "Black Monday" this week.!!

I hope you are right ... black numbers in my book look so much better than red;)

[CatO'Tonic]

Michael Pento is usually a bit of a pessimist but even so, this article has some disturbing parallels in our part of the world. It will be interesting to see the effect deflation has on the huge levels of corporate and government debt in the states.
http://www.cnbc.com/2016/01/15/a-recession-worse-than-2008-is-coming-commentary.html
I'm sitting on the sidelines, 100% cash and watching with interest. Might see some good bargains in a year or so.

[Hoop]

Michael Pento is usually a bit of a pessimist but even so, this article has some disturbing parallels in our part of the world. It will be interesting to see the effect deflation has on the huge levels of corporate and government debt in the states.
http://www.cnbc.com/2016/01/15/a-recession-worse-than-2008-is-coming-commentary.html
I'm sitting on the sidelines, 100% cash and watching with interest. Might see some good bargains in a year or so.

Hmmm..I have this feeling that video sees commentators believing that the USA economy is sound and will remain sound in 2016 and onwards....so no problems at home..I think that's insular thinking which can lead to unplanned contingency problems which looking at past history has sometimes resulted in causing severe consequences..

Has USA's top trading partners got big problems???...I think 2016 will see Canada in the news as China already is.....also Mexico could be a surprise contender (20% export is Oil) .......so Yes... Oil could be the next recessions catalyst...as many Countries have other Commodity dependence issues as well...

Canada is the world's 5th largest producer of Oil and Mexico is 9th largest...If these top USA trading partners get into the financial poop then USA has an export problem. The EU is not in the position yet to take up the export slack......yep ..a recipe for potential surplus goods, discounted prices (deflation), job losses and all other things that happen when national economies overheat and shrink to correct...

The Equity Market is an leading indicator to a financial downturn...Doesn't look that great does it in seeing Countries Equity Markets entering into a Bear market cycle in tandem.....Sort of a general global warning sounding off....eh?

[Baa_Baa]

NZX defies gravity and thumbs it's nose at international equities markets, so far anyway. Given the quantum of international money in NZ equities, it seems NZX is either a good hiding place or ripe for profit taking.
7806
Hypothetically if the NZX has topped, it's curious that the rising support trend line, the 50% Fib retrace, and the 2007 highs all converge around 4335.

[winner69]

Baabaa - can u do that chart on nz50c (the capital index)

[Baa_Baa]

7807
Baabaa - can u do that chart on nz50c (the capital index)
Is that a resistance test and fail? :(

[Baa_Baa]

Baabaa - can u do that chart on nz50c (the capital index)

Lets take a closer look.

All data, weekly chart, log scale, 39EMA weekly approximates to 200DMA
7810

3-year, add the trusty 10/14 EMA's
7809

1-year, breakout and two weekly closes below - fail. 10/14 EMA's tested, still a 'hold'.
7808

[xafalcon]

Oil could be the next recessions catalyst

As oil is consumed globally, but only extracted and sold in economically significant quantities by a few lucky countries, cheap oil will always be a boost to average world growth, so long as the cost reductions are passed along to consumers.

In NZ this is not happening, but I expect the government to apply more pressure to big oil this year as we get closer to the election and more people start asking why the cost of crude oil has fallen by 75%, but pump prices are only marginally lower than when crude was $110/bbl.

[winner69]

Thanks BaaBaa

Interesting just looking at things without the impact of dividends

[Baa_Baa]

Thanks BaaBaa

Interesting just looking at things without the impact of dividends

It's like we're on another planet, not just another part of the world. Check the charts here: http://www.zerohedge.com/news/2016-01-15/black-friday

[Hoop]

As oil is consumed globally, but only extracted and sold in economically significant quantities by a few lucky countries, cheap oil will always be a boost to average world growth, so long as the cost reductions are passed along to consumers.

In NZ this is not happening, but I expect the government to apply more pressure to big oil this year as we get closer to the election and more people start asking why the cost of crude oil has fallen by 75%, but pump prices are only marginally lower than when crude was $110/bbl...

A consumers view on cheap oil will always be a simplistic rosy looking view..but the overall view is one of many effects (some which spiral out of control) from a disruptived energy market...You have to tackle the mind straining interactions of networks to learn about Market Physics so to be able to understand, for example, the US Oil investment being only 1% of US GDP, yet the oil declines last year dragged GDP down 0.4 percentage points...

Other simple disruptive effects are..
Cheap petrol prices act as a tax reduction..the Reserve bank or FED may not like not having no control on this easing of the money supply to the masses..It creates problems as to how to tighten the money supply during cheap oils deflationary effect on the economy.....
Currency devaluations upsets from Oil producing nations...
Supply/demand gets screwed up
etc
etc

Then there's the socio-economic effects...Countries in dire straits tend to do dumb things...People do dumb things like assume cheap oil is forever and financially over commit..

Yes there will be winners...some economists think it may benefit the EU community.

NZ cheap prices not happening....Don't expect government to apply the pressure...the government takes about $1/litre in various taxes..
see here for the cost breakdown for 91 octane (AA analysis) (http://www.aa.co.nz/cars/maintenance/fuel-prices-and-types/how-petrol-prices-are-calculated/)

[Baa_Baa]

Here's a repost from @winner69 on the US markets threads, pointing to an article by Clive Maund. The Great Stock Market and Economic Train Wreck of 2016...

http://www.sharetrader.co.nz/showthread.php?6114-Dow&p=601706&viewfull=1#post601706

The big picture sure is ugly compared our relative calm in sunny NZ.

[janner]

Hmmm.. yep ..a recipe for potential surplus goods, discounted prices (deflation), job losses and all other things that happen when national economies overheat and shrink to correct... .Sort of a general global warning sounding off....eh?

Job losses ??..

Automation is upon us.. 2020 appears to be the turning point.. Guangdong requires 80% of all manufacturing to be automated by 2020.. As a point..

Just look at the competition between household names vying to have their driverless vehicles on the road by 2020...

Before that happens.. Gas ( Petrol ) stations will be unmanned.. Already beginning..

New York Yellow Cabs have set 2018 to be driverless..

" .Sort of a general global warning sounding off....eh? "...

Indeed Hoop..

Of course there will be opportunities out there..

However.. I will choose to stick with the basics :-)))

[xafalcon]

..

A consumers view on cheap oil will always be a simplistic rosy looking view..but the overall view is one of many effects (some which spiral out of control) from a disruptived energy market...You have to tackle the mind straining interactions of networks to learn about Market Physics so to be able to understand, for example, the US Oil investment being only 1% of US GDP, yet the oil declines last year dragged GDP down 0.4 percentage points...

Other simple disruptive effects are..
Cheap petrol prices act as a tax reduction..the Reserve bank or FED may not like not having no control on this easing of the money supply to the masses..It creates problems as to how to tighten the money supply during cheap oils deflationary effect on the economy.....
Currency devaluations upsets from Oil producing nations...
Supply/demand gets screwed up
etc
etc

Then there's the socio-economic effects...Countries in dire straits tend to do dumb things...People do dumb things like assume cheap oil is forever and financially over commit..

Yes there will be winners...some economists think it may benefit the EU community.

NZ cheap prices not happening....Don't expect government to apply the pressure...the government takes about $1/litre in various taxes..
see here for the cost breakdown for 91 octane (AA analysis) (http://www.aa.co.nz/cars/maintenance/fuel-prices-and-types/how-petrol-prices-are-calculated/)

The situation in USA is completely expected. The US would be an oil and LNG exporter if their laws allowed it. In fact the US government is in the process of lifting their export bans as they are running out of storage capacity. Being that USA is producing more than they consume at present, they are an exporter in all but name. So there should be a disproportionate effect on their economy. Same for Canada that you mentioned, also Saudi, Kuwait, Oman, Iraq, Nigeria, Norway etc. Many of those countries get a double whammy from reduced drilling activity compounding low crude prices.

However the balance of the world (>>50%) gets a nice "cost of living" reduction, and can spend their money elsewhere. Generally stimulating their domestic economy = growth in the the majority of the world, including China, India, EU. Exactly what economists are saying is needed, more growth in more countries.

I don't see or hear many countries central banks saying they want to reduce growth, and this lower oil price is making that job so much more difficult for them to achieve....... As I'm sure you know, most central banks are furiously trying to stimulate their economies and have run out of scope to reduce interest rates. So I'm 100% certain they see the lower oil price as a very helpful situation. It most definitely doesn't cause or contribute to damaging deflation, as people cant and won't put off filling the tank until next week/month because it may be cheaper

I suggest you research NZ importer & refiner margin creep. This is what the government will be forced into addressing. John is very good at reading the court of public opinion, and will happily "eat frogs" if he believes it is a benefit politically. Red peak flag is a recent ideal example. Expensive petrol most definitely wont be allowed to become an election issue

Remember that doom & gloom rubbish reporting appeals to people and sells, so more is written & printed. I prefer to research situations myself and draw my own conclusions.

In this case. Cheap Oil = Major boost to world economy. Winners >> Loosers

[Valuegrowth]

I agree with you that Cheap Oil = Major boost to world economy. Oil and other commodity importers are winners. Global consumers will have more money in their pockets.Many industries will benefit from lower oil. 2016 is going to be another year of opportunities.

http://www.forbes.com/sites/investor/2016/01/07/aaii-sentiment-survey-not-surprisingly-pessimism-rebounds-strongly/#2c8e79665a0c1ba0c7db5a0c

AAII Sentiment Survey: Not Surprisingly, Pessimism Rebounds Strongly

Predictions can go wrong

Following link posted in 2010.Market didn’t have bloodbath as he predicted.

http://www.telegraph.co.uk/finance/markets/7966529/Stock-markets-face-a-bloodbath-warns-SocGen-strategist-Albert-Edwards.html

Stock markets face a 'bloodbath', warns SocGen strategist Albert Edwards

By Angela Monaghan
6:00AM BST 27 Aug 2010

[Valuegrowth]

There are two types of fear in the market

·The fear coming from unknown news
·The fear of missing out gain

[Yeshiva]

The situation in USA is completely expected. The US would be an oil and LNG exporter if their laws allowed it. In fact the US government is in the process of lifting their export bans as they are running out of storage capacity. Being that USA is producing more than they consume at present, they are an exporter in all but name. So there should be a disproportionate effect on their economy. Same for Canada that you mentioned, also Saudi, Kuwait, Oman, Iraq, Nigeria, Norway etc. Many of those countries get a double whammy from reduced drilling activity compounding low crude prices.

However the balance of the world (>>50%) gets a nice "cost of living" reduction, and can spend their money elsewhere. Generally stimulating their domestic economy = growth in the the majority of the world, including China, India, EU. Exactly what economists are saying is needed, more growth in more countries.

I don't see or hear many countries central banks saying they want to reduce growth, and this lower oil price is making that job so much more difficult for them to achieve....... As I'm sure you know, most central banks are furiously trying to stimulate their economies and have run out of scope to reduce interest rates. So I'm 100% certain they see the lower oil price as a very helpful situation. It most definitely doesn't cause or contribute to damaging deflation, as people cant and won't put off filling the tank until next week/month because it may be cheaper

I suggest you research NZ importer & refiner margin creep. This is what the government will be forced into addressing. John is very good at reading the court of public opinion, and will happily "eat frogs" if he believes it is a benefit politically. Red peak flag is a recent ideal example. Expensive petrol most definitely wont be allowed to become an election issue

Remember that doom & gloom rubbish reporting appeals to people and sells, so more is written & printed. I prefer to research situations myself and draw my own conclusions.

In this case. Cheap Oil = Major boost to world economy. Winners >> Loosers

Thanks for that insight. Especially about doom and gloom reporting.

[winner69]

1 - NZ shares been rerated over the last few years. NZ market PE now higher than global average (so says AMP Capital). Any reversion to the mean will probably impact nz to a greater degree than other markets

2 - Dividend growth in NZ has been significantly higher than earnings growth (sustainable?)

3 - The beta of the NZX over global shares is about O.6% (monthly) . Global shares go up/down 1% NZX goes up/down 0.6%

4- Trends take much longer to play out then one thinks.

5- some have seen it all before

Just 5 things I have noted lately - don't ask me what it all means except that if world markets collapse the nzx will be affected to some extent.

[bull....]

one thing most people forget is if you sell where are you going to get a return - cash lol ( no end in sight to low returns from cash) maybe nz is popular because economically we are doing alright with stable govt and people all over the world like our returns compared to there's.

[stoploss]

one thing most people forget is if you sell where are you going to get a return - cash lol ( no end in sight to low returns from cash) maybe nz is popular because economically we are doing alright with stable govt and people all over the world like our returns compared to there's.

Most people Sell to protect their capital . No point of holding on for a 10 cent divi if the share price goes down 50 cents ......

[bull....]

Most people Sell to protect their capital . No point of holding on for a 10 cent divi if the share price goes down 50 cents ......

only if you know it will go down 50c, it maybe the one that goes up 50c

[fish]

I simply do not understand why people are not taking more interest in the gentailers-the chances of the sp going up must at least equal the chances of going down-and in the meantime great dividends-annoucements are due out soon.

[K1W1G0LD]

Welcome to the realworld worrywarts, major corrections happen about once a decade , like business and company corrections ...................all cyclical ..................c'est la vie ..........................the sky will not fall.

[skid]

Welcome to the realworld worrywarts, major corrections happen about once a decade , like business and company corrections ...................all cyclical ..................c'est la vie ..........................the sky will not fall.

Thats a great outlook for living your life--but lousy for your bank balance

Meanwhile Bull..Cash is not a great growth commodity at this stage ,Its true,but in times of turmoil its a very good commodity for preserving wealth...Its the stuff you buy those shares with,so if shares go down,the value of that cash(lol)goes up in terms of what you can buy.
Everyone is looking for growth,but there is more than one way of achieving this.
In an indisputable bull market(pardon the pun) then growth is a pretty good strategy..but when things look dicey it is not so silly to think defensibly..(that defense can turn into an offense if one plays his (or her)cards right and sells and buys at a bargain later.

So we have 2 camps going on here with the market being the wild card.

Im mostly in cash atm as the prospects of finding a good share in this environment seem to be running against suitable odds and my warts (if I had any) would not be worried at all.

[xafalcon]

1 - NZ shares been rerated over the last few years. NZ market PE now higher than global average (so says AMP Capital). Any reversion to the mean will probably impact nz to a greater degree than other markets

2 - Dividend growth in NZ has been significantly higher than earnings growth (sustainable?)

3 - The beta of the NZX over global shares is about O.6% (monthly) . Global shares go up/down 1% NZX goes up/down 0.6%

4- Trends take much longer to play out then one thinks.

5- some have seen it all before

Just 5 things I have noted lately - don't ask me what it all means except that if world markets collapse the nzx will be affected to some extent.

TheNZ sharemarket make-up has been heavily skewed towards yield stocks in recent years by thegovernment sale of the power companies & air NZ. This causes/heavily contributes toseveral of your observations above. Especially

2 - Power companies pay out from fcf, allowing higher dividends

1 - As a result of 2. I can't see any lowering of average P/E unless the power companies lower their dividends.

3 - The NZ market is less exposed to volatile commodity and tech sectors thanmany other major markets, with heavy weighting towards reliable cashflowbusinesses with captive markets, so reduced SP volatility expected

The problem is that in times of caution, the NZ market still gets sold off even though business fundamentals haven't changed - the same amount of electricity will be sold at the same price regardless of what's happening in the world, the same number of houses and commercial building will be built, people will still travel to NZ on holiday and to live, the NZ economy is still one of the best developed markets in the world, the government is stable and moderate and pro-business, NZ FTA's coming into effect and increasing income.

However the basic heard mentality seems to trump all "real fundamentals". August 2015 was the same. It's just the depth and duration which is uncertain

[skid]

TheNZ sharemarket make-up has been heavily skewed towards yield stocks in recent years by thegovernment sale of the power companies & air NZ. This causes/heavily contributes toseveral of your observations above. Especially

2 - Power companies pay out from fcf, allowing higher dividends

1 - As a result of 2. I can't see any lowering of average P/E unless the power companies lower their dividends.

3 - The NZ market is less exposed to volatile commodity and tech sectors thanmany other major markets, with heavy weighting towards reliable cashflowbusinesses with captive markets, so reduced SP volatility expected

The problem is that in times of caution, the NZ market still gets sold off even though business fundamentals haven't changed - the same amount of electricity will be sold at the same price regardless of what's happening in the world, the same number of houses and commercial building will be built, people will still travel to NZ on holiday and to live, the NZ economy is still one of the best developed markets in the world, the government is stable and moderate and pro-business, NZ FTA's coming into effect and increasing income.

However the basic heard mentality seems to trump all "real fundamentals". August 2015 was the same. It's just the depth and duration which is uncertain


Thats one of the pitfalls of globalization--Other countries can stuff up even your own fundamentals,especially if you are commodity based.
We are lucky at this point its food items rather than natural resources like Australia---''we all thought Chinas demand would go on forever''-but they are looking to create a domestic economy that produces for itself so nothing is certain--it will take time though.

[stevevai1983]

Thats one of the pitfalls of globalization--Other countries can stuff up even your own fundamentals,especially if you are commodity based.
We are lucky at this point its food items rather than natural resources like Australia---''we all thought Chinas demand would go on forever''-but they are looking to create a domestic economy that produces for itself so nothing is certain--it will take time though.

Some big pictures:
Chinese people born after 1980 have huge difference with their parents in terms of spending.
Our parents they suffered "dark age" especially the "cultural revolution" (true true dark age...), they are extremely conservative about spending.
Their saving rate is insane: basically save everything only spend minimum amount of money.
However in my generation, our saving rate drops significantly. We like to spend and enjoy our lives.
People born after 1990 spend even more money. It's the trend.
Also during the past 25 years, lots of family became middle class, the ability to spend has increased dramatically.
so here is my guess: after 10 years, when 1980 generation dominates the country, china's consumption/demand will boom...

[BIRMANBOY]

Yes I agree with your post, however I don't believe it will take 10 years for the "boom". Its been trending well up for years

GDP annual growth for China data from World Bank
1996 to 2000 was 9.5%,
2001 to 2005 was 7.8%
2006 to 2010 was 7.7%
2011 to 2015 was 7.3%
So even though some people are saying China is going to be a huge factor in a slowing economy, the reality is that this is a very small reduction going from 7.8% down to 7.3 % and over 16 years. World population is still growing, growing affluence and looser purse strings from new generation should ensure more spending and growing need for consumables. Also add into this a similar situation in India and actually any drop in markets etc , I believe will be fairly short in duration. Money will keep flowing and excess money will be mopped up by share markets. A forward looking person might be looking at buying up some dirt cheap miners etc. in Au and sitting on them for 5 years of so.








Some big pictures:
Chinese people born after 1980 have huge difference with their parents in terms of spending.
Our parents they suffered "dark age" especially the "cultural revolution" (true true dark age...), they are extremely conservative about spending.
Their saving rate is insane: basically save everything only spend minimum amount of money.
However in my generation, our saving rate drops significantly. We like to spend and enjoy our lives.
People born after 1990 spend even more money. It's the trend.
Also during the past 25 years, lots of family became middle class, the ability to spend has increased dramatically.
so here is my guess: after 10 years, when 1980 generation dominates the country, china's consumption/demand will boom...

[stoploss]

Yes I agree with your post, however I don't believe it will take 10 years for the "boom". Its been trending well up for years

GDP annual growth for China data from World Bank
1996 to 2000 was 9.5%,
2001 to 2005 was 7.8%
2006 to 2010 was 7.7%
2011 to 2015 was 7.3%
So even though some people are saying China is going to be a huge factor in a slowing economy, the reality is that this is a very small reduction going from 7.8% down to 7.3 % and over 16 years. World population is still growing, growing affluence and looser purse strings from new generation should ensure more spending and growing need for consumables. Also add into this a similar situation in India and actually any drop in markets etc , I believe will be fairly short in duration. Money will keep flowing and excess money will be mopped up by share markets. A forward looking person might be looking at buying up some dirt cheap miners etc. in Au and sitting on them for 5 years of so.








Birmanboy that looks to be trending down to me ? although still a number ( if real ) that most countries would love to have :)

[BIRMANBOY]

Picky picky..Yes but a very small drop over the afore mentioned 15 year period. I should have said that the trend has stayed up. H:pappy now? Real? World Bank...as real as any number I suppose.
Birmanboy that looks to be trending down to me ? although still a number ( if real ) that most countries would love to have :)

[stoploss]

Picky picky..Yes but a very small drop over the afore mentioned 15 year period. I should have said that the trend has stayed up. H:pappy now? Real? World Bank...as real as any number I suppose.

yep as real as those S&P AAA rated CDO 'S ...........:)

[xafalcon]

Birmanboy that looks to be trending down to me ? although still a number ( if real ) that most countries would love to have :)

No, he got it pretty much correct. Trending up since 2001-2005. Remember you've got to look at absolute growth, not % growth yoy (because exponential economic growth can never be sustained).

1996 to 2000 was 9.5% = 9.5% absolute
2001 to 2005 was 7.8% = 8.5% absolute
2006 to 2010 was 7.7% = 9.1% absolute
2011 to 2015 was 7.3% = 9.3% absolute

But yes, other countries would like to have those sort of growth figures

[skid]

Have you noticed anything different in the last year with Chinas share market?

[Hoop]

TheNZ sharemarket make-up has been heavily skewed towards yield stocks in recent years by thegovernment sale of the power companies & air NZ. This causes/heavily contributes toseveral of your observations above. Especially

2 - Power companies pay out from fcf, allowing higher dividends

1 - As a result of 2. I can't see any lowering of average P/E unless the power companies lower their dividends.

3 - The NZ market is less exposed to volatile commodity and tech sectors thanmany other major markets, with heavy weighting towards reliable cashflowbusinesses with captive markets, so reduced SP volatility expected

The problem is that in times of caution, the NZ market still gets sold off even though business fundamentals haven't changed - the same amount of electricity will be sold at the same price regardless of what's happening in the world, the same number of houses and commercial building will be built, people will still travel to NZ on holiday and to live, the NZ economy is still one of the best developed markets in the world, the government is stable and moderate and pro-business, NZ FTA's coming into effect and increasing income.

However the basic heard mentality seems to trump all "real fundamentals". August 2015 was the same. It's just the depth and duration which is uncertain


I have experienced several Bear Market cycles..Played in a few , been clawed, mauled, made money, lost more money, lost sleep, worried, frustrated... Until I adopted TA discipline I watched my long term portfolio lose $5,000 a day for weeks on end and say that's OK (possum in the headlights..eh?)......So I have the experience to not caring being to be called a sheeple/worrywart/peamabear/Dr Doom/scaremorger


In any downturn or recession the share market is a leading indicator and triggers well before the event.....very important to remember this fact...where there's smoke there's fire...so one should not to be sucked into holding the baby in fear of being ostracised by ones own peers (sheeple worrywarts idiot stupid or just being being shunned or ignored by the herd) Sometimes a section of the passionate herd can produce anger so in mental fear you decide to follow the herd just to avoid clashing with that powerful outspoken section within the herd...however most often the followers find the powerful leaders opinions and beliefs very satifying to the point that what they preach is total true to the whole herds beliefs and will always happen..(self - fueling)

OBJECTIVE TO SUCCESSFUL INVESTING...Be totally focused and not lose portfolio capital that took years to produce...It's that simple!!!

I use TA more than FA in these uncertain times as FA is a lagging instrument and TA is a more sensitive tool...So as I'm a TA chartist which requires one to have a more insular personality I don't care about herd bullying...actually when I see it happening these last few months it reinforces my belief that the primary tide has turned bearish..This same animal herd behaviour (humans are an animal species) also happens at the other end of the cycle too when the bear dies...

The "NOW" as it is happening:...It is very difficult (nearly impossible) to pinpoint a reversal from bull cycle to bear cycle...its easy to look back in hindsight to see it but not when it is happening..Therefore over a period of many years I have been collecting "ducks" (leading indicators that correlate with corrections leading to reversals) I now have some (not many) behavioural ducks similar to those that DOW Theory uses.

...Recently..after trawling the various forums I've found strong correlations between... bullying/banning.. and the beginning/stage 1 of stock (and index) reversals so I've added herd bullying etc as a duck to my collection...

When most of my ducks line up in a row..A cyclic reversal is ready to happen..unfortunately life is a bitch and like many other Expert Fundmentalists newsletters I've read when the USA Stock Market became over-cooked 2 years ago we failed to assume the varying lagging effect of nature..for example the hottest time of the year is well after the sun has reached its Zenith yet logic (although we know it's false due to experience) should say the past its zenith is a warning for colder weather and it theoretically "normal" that cooling effect should start appearing right after that solar zenith.
Without experience..one would assume that the theoretically expected cold weather will not be too bad as it has not yet happened and as time passes and the warm weather remains it leads increasingly many to believe that the Sun Zenith/hotness theory is just a load of crap...

Which brings me to write about lagging effects and quote XAFalcons post:

I found an interesting correlation which is partially behavioural as well ....The often (not always) occurring lagging effect of Utilities stocks within the stock market (which is overall leading)..From the reading I've done within the forums (to gauge the behavioural aspect)..When Utilities start to lag in a possible bull reversal to bear People think of the "now" which is usually bullish as the economy is booming in the consumer sector....peoples behaviour naturally assumes that everyone needs these products and will always have to, and they are right to assume this..therefore a type of defensive stock mentality is formed as we will always need power to live..It's a necessary consumer item, right?

At this point I will disclose that I have been in the NZ stockmarket on/off for 43years and seen 6? lost count:) bear market cycles...so I will claim experience just like the weather example of knowing that a winter will happen and have multiple experiences what a winter feels like...

As the bear market cycle progresses the bear develops claws and after relentless number of failed stock market rallies and down waves the stubborn investors behaviour slowly changes from rosy hope to one of despair and frustration..as it become evident now to the majority of the herd that the economy has turned down with lower company earnings, some companies failing and job losses..also the vocal leaders of the herd now become negative effecting the rest of the herd,,This trigger selling and lowers momentum ...the first damaging Capitulation wave hits..at this point of the Bear Market cycle the spotlight now shines onto the defensive Ultilities and the bear attacks....The reason is, that investors now take a less rosy view and analyse the Utility companies with more scrutinity and find the Utilities have rising bad debt levels as people without jobs struggle to pay on time or renters just quitting the property and shift leaving a bad debt..Failed companies or falling demand due to product surplus = fall in manufacturing output so less power used...The flow on effect is Utility companies announce lower profits lower dividends..some smaller Utility companies may fail putting the fear of God up the defensive Investors.....and so on...The end result is that Ultilities play catch up with the rest of the market and so are eventually mauled...

At the height of the Bear market...there is usually no place to hide... even cash in the bank may not be safe...everything is down turning and capital sucking...the one place to go (Shorting strategy) is curtailed or shut down...doom and gloom for everyone even those cashed up...The cashed up investors have extra problems..the fear that their brokering company may fold and their trading accounts full of money either frozen or lost..so if they pull their money out...(which they might not be able to do).. their ability of quick trades (bear market strategy) disappears..so the market momentum lowers again and the next down wave is longer(extended).

As money evaporates within the bear market the spotlight then focuses on the banks again...depositors get skittish and if an unfounded rumour surfaces about a certain bank no matter have financially strong it is it could cause a customer stampede cause that bank to become financially unstable and temporarily restrict their customer accounts..which if its a large bank it has the potential to upset consumer demand especially the big ticket stuff such as new cars etc but also discretionary spending as the fear of becoming broke and no available credit stymies consuming spending.

Meanwhile the buy and holders hang in and it's about this time their Investment strategy starts coming unglued when a company in their portfolio that relies on consumers goes into receivership creating a permanent real loss...that they can't recover from...this causes another market downturn as it is the buy and holders turn to feel the wraith of the bear and many bail out in fear of permanent loss

So old saying goes "the bear market doesn't kick you out it wears you out"...........so why be in it to begin with?????

[dobby41]

OK - you have me worried now Hoop.
Unfortunately what you say shows a lot of logic that I can't argue with (insufficient experiance).
I feel a few sleepless nights coming on.

[Lewylewylewy]

does that mean you're 100% cash now?

[skid]

I read just today that on the Dow it has past the point where the buyers were jumping in for bargains and the whole market was more involved than before where on the previous drops a few big companies were affecting the market.

In the GFC I sacrificed interest to buy Kiwi bonds which gave me better nights sleep --of course nothing is totally safe but Id pick the Gov. over banks (just in case this plays out to Hoops scenario)
I was able to pay off the mortgages so did that as well (of course housing can crash,but its still something)

Most of these defensive gestures were ,in the end not needed but it was good to know I would hopefully survive.

I have become a more conservative being since then,especially since getting a bit long in the tooth.

The biggest advantage of all...not needing to many material things to be happy:)

[BlackPeter]

Good post, Hoop - and well argued, but still - are you saying that you have seen 6 bears in the last 4 decades where you had to be worried about money in the bank? Now - I have been only half of this time in NZ ... but remember only one time (during the GFC) when I started to be interested in the liquidity of my bank ... and nothing happened.

Yes, there has been as well the dotcom crisis and the Asian crisis (i.e. if this is 3 for 20 years, than 6 for 40 years sounds plausible), but often it was more hype than fundamentals - and never that bad with sufficient investment discipline and diversification. Actually - even during the GFC where it felt everything was crashing ... I saw investors sitting on a conservative bond portfolio (no - unfortunately not me) who happened to make a handsome profit throughout this period (well - around 4 to 5% annually) - year after year.

So - I think we both agree that the secular bull is coming to an end (and yes, we might be already there ... ask me again in a year).
What comes from here? Yes, it might be a bear ... or it might be hibernation. Japan springs to mind. A typical bear starts at a time of high interest rates ... and that's not really what we've got now. Just saying - the fact that there is no sensible yielding alternative for the money might in my view keep stock prices up.

However - even if we assume that we are moving from here into one of the more drastic bears (which I don't think is likely), than there are methods to conserve capital: diversification (across industries and geographic boundaries), holding solid stocks with reasonable PE (yes, there are still some around), (solid) bonds. Some money into gold might no go astray as well - and maybe the bear experience is not as bad as you describe.

Whatever we are doing being afraid of the bear is in my view not the right strategy. Being cautious clearly is.

[skid]

Its amazing how the ''no other alternative for the money'' (which is a growth orientated mindset)can be destroyed by FEAR (or the protect your capital mindset)--

[winner69]

blackpeter .........
Yes, there has been as well the dotcom crisis and the Asian crisis (i.e. if this is 3 for 20 years, than 6 for 40 years sounds plausible),[/ but often it was more hype than fundamentals - and never that bad with sufficient investment discipline and diversification.

Yes BP, the fundamentals of companies (solid ones at least) don't radically change in market crashes

What changes is hype - ie sentiment - and the general willingness of punters to pay 'too much' for a stock. Seen as a risky investment.

PE ratios fall, stocks are rerated downwards, and share prices fall as a consequence.

[Hoop]

........but remember only one time (during the GFC) when I started to be interested in the liquidity of my bank ... and nothing happened........

...........Whatever we are doing being afraid of the bear is in my view not the right strategy. Being cautious clearly is.
Was that Westpac?
We witnessed the Govt bail out to prevent the BNZ collapse during the the NZX 1990 bear market cycle


OK - you have me worried now Hoop.
Unfortunately what you say shows a lot of logic that I can't argue with (insufficient experiance).
I feel a few sleepless nights coming on.

Emotion is public enemy No 1 in share investing..It's the primary cause of decision making problems ...Worry is an emotion so reduce or eliminate that emotion..:)


does that mean you're 100% cash now?

No..I've gone up to 25% in AX & NZX stocks (purchased some AIR recently) cash 75%...I am applying the "rowing" strategy now which is a bear market investment strategy even though the NZX index is still in a bull cycle...


.......Most of these defensive gestures were ,in the end not needed but it was good to know I would hopefully survive.............

Yes...often the case... in the end the worst case scenario never eventuates but its prudent to have that investing contingency in place.


Yes BP, the fundamentals of companies (solid ones at least) don't radically change in market crashes

What changes is hype - ie sentiment - and the general willingness of punters to pay 'too much' for a stock. Seen as a risky investment.

PE ratios fall, stocks are rerated downwards, and share prices fall as a consequence.

Exactly!!!
Nice summary Winner
And unfortunately a stock may become unloved after a bear event and its PE Ratio stays suppressed for years..so creating lost opportunity for its investors during the next Bull market cycle

[xafalcon]

Question for Hoop regarding NZ generators in relation to your post above

"rising bad debt levels as people without jobs struggle to pay on time or renters just quitting the property and shift leaving a bad debt..Failed companies or falling demand due to product surplus = fall in manufacturing output so less power used...The flow on effect is Utility companies announce lower profits lower dividends..some smaller Utility companies may fail putting the fear of God up the defensive Investors.....and so on...The end result is that Ultilities play catch up with the rest of the market and so are eventually mauled..."

With extra generation capacity required to be built by approx. 2019, where are you expecting to see the negative driver(s) coming from?

When I analyse your list I come up with

rising bad debt levels as people without jobs struggle to pay on time or renters just quitting the property and shift leaving a bad debt = very difficult in NZ to do this. Unless you own the property you have to give a bond, which limits the ability to "cut & run". Home owners less likely to default and have an asset that can be sold

Failed companies or falling demand due to product surplus = fall in manufacturing output so less power used. = plenty of other users to soak up any reduced usage at this point in time, new generation construction can be easily postponed = increased fcf

The only significant threat I see for NZ generators and their income stream and dividend payments is the closure of Tiwai Pt. This issue will be forced (either way) before any additional generation capacity is committed. With minimal over capacity at present, even total closure of Tiwai Pt probably won't represent a real threat to business viability, more a short term perturbation.

With government ownership of 51% of most power generators, comcom won't get involved (not that they have anything to get involved with, there is already plenty of competition)

Other positive power demand factors include

NZ has high immigration (1.3% population growth)

Business seems to be doing very well, according to NZIER. Many expanding

Low interest rates, stimulating consumer activity

New FTA export opportunities

Rampant tourism growth

I see the NZ power generators being in a very nice situation regardless of whatever the next 3-4 years may bring (short of a natural disaster/ foot & mouth, other extreme situation)

[JBmurc]

Was that Westpac?
We witnessed the Govt bail out to prevent the BNZ collapse during the the NZX 1990 bear market cycle


One thing is the banks always get looked after even if they have been operating outside the laws and get themselves in trouble you can expect them to be bailed out by the Gov (TAX payers) ..

Also a ban on short selling if the outlook starts to looks to bleak in the market ...I'm sure many Oil producers would like that support currently.....

And if free cashflow's come under pressure it's only a matter of lifting fees ...

[Ginger_steps_]

The only significant threat I see for NZ generators and their income stream and dividend payments is the closure of Tiwai Pt. This issue will be forced (either way) before any additional generation capacity is committed. With minimal over capacity at present, even total closure of Tiwai Pt probably won't represent a real threat to business viability, more a short term perturbation.

With government ownership of 51% of most power generators, comcom won't get involved (not that they have anything to get involved with, there is already plenty of competition)


The only threat???? How about solar!!! Why do you think the government has been selling off power assets?? One of my family members works as a senior project manager for a government owned power co. Recently he wrote a paper for them on future power demand.
Photovoltaics on the market are currently about 27% efficient and only capture limited spectrums of light. Photovoltaics already exist with 45% efficiency which capture almost all spectrums of light (rainy days, sunset etc). They have stated they will release those to market when they reach 50% efficiency. On top of this a german university has just designed a new Aluminium battery, using no new materials or new tech - it has not lost any efficiency after being cycled a few thousand times = lower equipment costs. Add in vehicle battery technology and super capacitor technology and we have the perfect storm for power companies expected to start in 5 years.
The cost of of solar currently sits at around 34-37cents per kilowatt - including installation and maintenance - marginally higher than grid power. In 5-7 years solar power is forecast to cost 7.5cents per kilowatt - including installation and maintenance!!!!!! People will be leaving the grid in hoards, power prices will skyrocket to compensate (not everyone can leave the grid) - which i guess to an extent means their income stream will degrade slowly. From where I am sitting solar has got to be the number 1 threat to power companies over the next decade.

[frostyboy]

xafalcon, your question is a strawman. Hoop was explaining the cycle with changes to growth rates, rather than the DCF components of NZX power companies.

[winner69]

You heavily invested in generators xafalcon?

As far as hoops comments go I do net that CEN share price halved during the last market collapse - while th fundamentals remained pretty OK

Disc. Know stuff all about these power companies.

[Jantar]

The only threat???? How about solar!!! .........
The cost of of solar currently sits at around 34-37cents per kilowatt - including installation and maintenance - marginally higher than grid power........
And here you have nicely demonstrated the fallacy of solar generation. Yes, the cost of solar generation is currently just over 30 c per kWh and dropping, so lets compare that to the cost of other types of generation.
Oil - 24 c per kWh
Gas turbine - 8 c per kWh
Gas CCGT - 6.5 c per kWh
Wind - 5 c per kWh
Hydro 1.5 c per kWh

When you say that solar is marginally higher than grid power, you are including the cost of transmission, distribution and security in the price of grid power. This is only correct if all solar power is directly replacing grid power without exporting any over generation from solar. As soon as you require a grid connection then that comparison is lost.

[xafalcon]

You heavily invested in generators xafalcon?

In the NZ generators I currently have some very recent exposure to CEN and longer term with GNE. SP for both still on the right side of my purchase prices, and 6-month reports out next month. But looking for alternative views to my own, so I can sense-check my logic for retaining or selling. Hoop seems to have a different view of the NZ generators, and I'm wanting to understand why. I'm definitely not a TA analyst, so there may be something there that alters my view of future overall performance (SP and dividend) of the NZ generators

As always, I try and learn from people with different views/opinions to get the best outcome

[Jantar]

I am another one who is in quite deep in the energy market. Energy shares make up around 50% of my portfolio. Currently holding CEN, GNE, IFT, MEL, and NWF.
I know, someone is going to tell me that IFT is not an energy share, and strictly speaking that is true. However they are heavily exposed in the energy market through TPW.

No longer holding VCT, and not interested in MRP.

[skid]

Question for Hoop regarding NZ generators in relation to your post above

"rising bad debt levels as people without jobs struggle to pay on time or renters just quitting the property and shift leaving a bad debt..Failed companies or falling demand due to product surplus = fall in manufacturing output so less power used...The flow on effect is Utility companies announce lower profits lower dividends..some smaller Utility companies may fail putting the fear of God up the defensive Investors.....and so on...The end result is that Ultilities play catch up with the rest of the market and so are eventually mauled..."

With extra generation capacity required to be built by approx. 2019, where are you expecting to see the negative driver(s) coming from?

When I analyse your list I come up with

rising bad debt levels as people without jobs struggle to pay on time or renters just quitting the property and shift leaving a bad debt = very difficult in NZ to do this. Unless you own the property you have to give a bond, which limits the ability to "cut & run". Home owners less likely to default and have an asset that can be sold

Failed companies or falling demand due to product surplus = fall in manufacturing output so less power used. = plenty of other users to soak up any reduced usage at this point in time, new generation construction can be easily postponed = increased fcf

The only significant threat I see for NZ generators and their income stream and dividend payments is the closure of Tiwai Pt. This issue will be forced (either way) before any additional generation capacity is committed. With minimal over capacity at present, even total closure of Tiwai Pt probably won't represent a real threat to business viability, more a short term perturbation.

With government ownership of 51% of most power generators, comcom won't get involved (not that they have anything to get involved with, there is already plenty of competition)

Other positive power demand factors include

NZ has high immigration (1.3% population growth)

Business seems to be doing very well, according to NZIER. Many expanding

Low interest rates, stimulating consumer activity

New FTA export opportunities

Rampant tourism growth

I see the NZ power generators being in a very nice situation regardless of whatever the next 3-4 years may bring (short of a natural disaster/ foot & mouth, other extreme situation)

Im afraid your assumption about bond covering bad debts for a rental is in most cases pretty far off the mark--you will almost always be left in the hole with a bad tenant--It takes time to get rid of a tenant,even if they have broken the tenancy agreement.

In terms of shares,all you have to do is look at the charts of any share you wish during the GFC.

China seems happy that their GNP results are not worse than expected so that should calm markets ..for now

[Jantar]

Im afraid your assumption about bond covering bad debts for a rental is in most cases pretty far off the mark--you will almost always be left in the hole with a bad tenant--It takes time to get rid of a tenant,even if they have broken the tenancy agreement......
As far as electricity supply is concerned, a tenant who has a bad debt with one energy company will struggle to get credit with another. Instead they will be offered prepay electricity, so bad debts are very low.

[xafalcon]

The only threat???? How about solar!!! Why do you think the government has been selling off power assets?? One of my family members works as a senior project manager for a government owned power co. Recently he wrote a paper for them on future power demand.
Photovoltaics on the market are currently about 27% efficient and only capture limited spectrums of light. Photovoltaics already exist with 45% efficiency which capture almost all spectrums of light (rainy days, sunset etc). They have stated they will release those to market when they reach 50% efficiency. On top of this a german university has just designed a new Aluminium battery, using no new materials or new tech - it has not lost any efficiency after being cycled a few thousand times = lower equipment costs. Add in vehicle battery technology and super capacitor technology and we have the perfect storm for power companies expected to start in 5 years.
The cost of of solar currently sits at around 34-37cents per kilowatt - including installation and maintenance - marginally higher than grid power. In 5-7 years solar power is forecast to cost 7.5cents per kilowatt - including installation and maintenance!!!!!! People will be leaving the grid in hoards, power prices will skyrocket to compensate (not everyone can leave the grid) - which i guess to an extent means their income stream will degrade slowly. From where I am sitting solar has got to be the number 1 threat to power companies over the next decade.

I don't agree. I have looked very closely into this for my own prospective solar installation. I figure 15 years is more realistic

Problems with solar uptake include

- high capital cost

- long payback period

- usage v's generation time mis-match

- physical size of battery storage (Tesla don't call it a power wall for nothing....)

- no installation subsidy in NZ

- buy-back rate is about $0.08/kWhr, so only true economic option is grid-tied partial generation (eg 2-3kW)

- limited number of potential solar houses (must be owner occupied, early adopter, want solar, have money, will stay in current house long enough to achieve pay-back etc)

- potential future "grid-tied solar penalty charge" to cover costs associated with supply costs and frequency sync

[skid]

As far as electricity supply is concerned, a tenant who has a bad debt with one energy company will struggle to get credit with another. Instead they will be offered prepay electricity, so bad debts are very low.

Go back and look at the charts--You will see that electricity companies are anything but stable in terms of SP

[Baa_Baa]

With respect, can you all take the power company vs solar discussion elsewhere. This thread is about what happens when the markets turn to custard, which they might do. Skid has it right, check the chart of all companies during the GFC and you'll find some clues, quality companies get hurt as well, some even go bust. Crap companies definitely go bust. Investors without strategies for capital preservation get hurt, or take forever to recover. Etc etc.

[xafalcon]

Im afraid your assumption about bond covering bad debts for a rental is in most cases pretty far off the mark--you will almost always be left in the hole with a bad tenant--It takes time to get rid of a tenant,even if they have broken the tenancy agreement.

In terms of shares,all you have to do is look at the charts of any share you wish during the GFC.

You misunderstand. It is the electricity bond that I was speaking of, not the tenancy bond. The power company will cut off the power really quickly if you stop paying. No need to apply to the tenancy tribunal. I am a 23 year self-managed landlord, only had one bad group of tenants over the years that got evicted via tenancy tribunal (they even took a brick and mortar bbq from the back lawn, but didn't damage the property)

The NZ generators weren't publicly owned in the GFC........ These are what I am trying learn more about

[Jantar]

....

The NZ generators weren't publicly owned in the GFC........ These are what I am trying learn more about

CEN was. :D
It did lose around $1.50 (around 25%) of SP following the GFC but there were still plenty of trading opportunities during that period.

[skid]

You misunderstand. It is the electricity bond that I was speaking of, not the tenancy bond. The power company will cut off the power really quickly if you stop paying. No need to apply to the tenancy tribunal. I am a 23 year self-managed landlord, only had one bad group of tenants over the years that got evicted via tenancy tribunal (they even took a brick and mortar bbq from the back lawn, but didn't damage the property)

The NZ generators weren't publicly owned in the GFC........ These are what I am trying learn more about

Perhaps go back to the GFC days and see which companies DID do well.
If things get bad-the share market can be a very ugly place--(but of course we are not there yet) good to be prepared with a number of strategys.

[Baa_Baa]

CEN was. :D
It did lose around $1.50 (around 25%) of SP following the GFC but there were still plenty of trading opportunities during that period.

Is this not correct (monthly price chart)?
7822

[Jantar]

Is this not correct (monthly price chart)?
7822
Looks correct to me. Around $7.50 when the bankruptcy of Lehman Brothers occurred in September 2008 and dropped to around $6.00 by Sept 2009.

[skid]

In a nutshell...There are times to try to make money...and times to try not to lose it;)

[winner69]

Looks correct to me. Around $7.50 when the bankruptcy of Lehman Brothers occurred in September 2008 and dropped to around $6.00 by Sept 2009.

High was $9.99 in April 08 and a year later in April 09 low was $5.38

Wow .... down 46% in a year

That's what market crashes / corrections can do

PS - seems to have been in a downtrend since as well. Now $4.70. Just as well I don't know much about nz power companies

[Baa_Baa]

High was $9.99 in April 08 and a year later in April 09 low was $5.38

Wow .... down 46% in a year

That's what market crashes / corrections can do

And how much further down is it now! Ergo, it never recovered, even below the post GFC lows now. :scared:

(cue the buy hold and pray / dividend hounds who have nerves of steel, no care for capital preservation and can show that all things considered if you did nothing prior to or after the GFC, it'd be all OK in the long run, notwithstanding opportunity cost/lost). Some clever people can do that.

[Jantar]

High was $9.99 in April 08 and a year later in April 09 low was $5.38

Wow .... down 46% in a year

That's what market crashes / corrections can do

PS - seems to have been in a downtrend since as well. Now $4.70. Just as well I don't know much about nz power companiesThat $9.99 was the peak price during a failed takeover attempt. I have taken the start of the GFC as being when the Lehman brothers went under. Maybe others can justify a different start date.

However the point is that even during a downturn there are opportunities for gains to be made.

[winner69]

That $9.99 was the peak price during a failed takeover attempt. I have taken the start of the GFC as being when the Lehman brothers went under. Maybe others can justify a different start date.

However the point is that even during a downturn there are opportunities for gains to be made.

Thanks, said I knew little about power companies

The NZX50 (and ther markets) started tanking well before the GFC became known. The NZX50 topped out late 2007

[skid]

China posts slowest growth in 25 yrs and Shanghai up 3+% (man ,they must have been expecting some pretty horrible numbers!)

[Snoopy]

And how much further down is it now! Ergo, it never recovered, even below the post GFC lows now. :scared:

(cue the buy hold and pray / dividend hounds who have nerves of steel, no care for capital preservation and can show that all things considered if you did nothing prior to or after the GFC, it'd be all OK in the long run, notwithstanding opportunity cost/lost). Some clever people can do that.


No one can claim to have done that well out of Contact over the last year. But looking at a share chart will give you a far bleaker view than what actually happened. Post GFC there have been several share issues as a result of the now closed DRP. There has been a discounted cash issue too, plus a bumper 50c special dividend last year, plus ordinary dividends. Just looking at a chart you will get the wrong answer because you are ignoring half of the return information!

SNOOPY

discl: hold CEN long term and very pleased with my investment!

[CatO'Tonic]

I'm pretty sure the NZ markets were in pretty poor shape by the time of the Lehman collapse. I remember Nathans Finance going into a trading halt in August of 2007. I had VTL shares at the time and lost pretty much all their value. Similar things were happening with several of the NZ finance companies. I don't know how much of that was related to crook US mortgage securities though. I was in the US for most of 2008 and the best entertainment to be had was watching CNBC. It was a time of huge volatility, well before the big investment banks like Lehman and Bear Stearn collapsed. I remember the Dow going up as much as 800 points in a day but the prevailing trend was well and truly down. Jim Cramer was a nervous wreck. Quite similar to whats happening at the moment. There are big up days and big down days but nobody really has a clue what is going to happen in 2016. I've been around long enough to be wary of those who say they do. That's why I'm out. I'm not worried about the possibility of missing out on any upside in the next year. The downside potential is too scary, especially for someone who doesn't have the time, skills or inclination to watch these markets like a hawk..
Best of luck to those who are prepared to have a go.

[skid]

China posts slowest growth in 25 yrs and Shanghai up 3+% (man ,they must have been expecting some pretty horrible numbers!)

ahh....I get it now---the Chinese are thinking they are going to get a stimulus out of this

[Baa_Baa]

No one can claim to have done that well out of Contact over the last year. But looking at a share chart will give you a far bleaker view than what actually happened. Post GFC there have been several share issues as a result of the now closed DRP. There has been a discounted cash issue too, plus a bumper 50c special dividend last year, plus ordinary dividends. Just looking at a chart you will get the wrong answer because you are ignoring half of the return information!

SNOOPY

discl: hold CEN long term and very pleased with my investment!

Very interesting points, you get to the nub of the issue.

Just as a matter of interest Snoopy, if it's not a big effort and you have the history, do you know what todays' net return of say a $10k passive investment in CEN would be, had one bought it at these three points:

1. The Aug 2000 low of $2.43
2. The equivalent share price as today at say the May high 2003 of $4.63
3. The Apr high 2008 at $9.99

No worries, don't bother if that's a pain in the proverbial. I just think it would be an interesting exercise to see whether in toto the total returns have overcome the capital losses (noting 1. includes capital gain), at varying points along the stellar rise of CEN from 2000 to 2008, wherefrom thereafter the capital has never recovered.

TIA, BAA.

[Baa_Baa]

I'm pretty sure the NZ markets were in pretty poor shape by the time of the Lehman collapse. I remember Nathans Finance going into a trading halt in August of 2007. I had VTL shares at the time and lost pretty much all their value. Similar things were happening with several of the NZ finance companies. I don't know how much of that was related to crook US mortgage securities though. I was in the US for most of 2008 and the best entertainment to be had was watching CNBC. It was a time of huge volatility, well before the big investment banks like Lehman and Bear Stearn collapsed. I remember the Dow going up as much as 800 points in a day but the prevailing trend was well and truly down. Jim Cramer was a nervous wreck. Quite similar to whats happening at the moment. There are big up days and big down days but nobody really has a clue what is going to happen in 2016. I've been around long enough to be wary of those who say they do. That's why I'm out. I'm not worried about the possibility of missing out on any upside in the next year. The downside potential is too scary, especially for someone who doesn't have the time, skills or inclination to watch these markets like a hawk..
Best of luck to those who are prepared to have a go.

Every now and then, a gem is uncovered. Thanks for sharing your experience, I'm sure it is poignant for many a member and lurker here.

BAA

[Bobdn]

In difficult times, I make myself a nice cup of tea and seek out articles like this one to comfort me. http://money.cnn.com/2015/06/21/investing/stocks-market-worst-case-scenario/

Over time, whether it be 3 years or 25 years, everything will be alright :)

[xafalcon]

China posts slowest growth in 25 yrs and Shanghai up 3+% (man ,they must have been expecting some pretty horrible numbers!)

OK, I'll throw some petrol on this one. Skid this isn't directed at you :). The media has been printing this "assessment" since mid-afternoon, they don't bother (or perhaps can't) use a calculator, and prefer printing doom & gloom.....

It is NOT the slowest growth in 25 years

The market grew as much last year as it grew the previous year (slightly more in fact)

Anyone thinking exponential (increasing yoy) growth can be sustained for any length of time is seriously deluded (yoy figures below are taken from a random google graph)

12M yoy growth to Jan 2014 = 7.6%
12M yoy growth to Jan 2015 = 7.2%
12M yoy growth to Jan 2016 = 6.8%

Taking Jan 2013 as baseline 100 to illustrate, using above yoy growth figures as multipliers
Jan 2014 = 107.6 (GDP absolute growth = 7.6)
Jan 2015 = 115.3 (GDP absolute growth = 7.7)
Jan 2016 = 123.2 (GDP absolute growth = 7.9)

Regardless of which year you set as the baseline 100, the outcome will be the same. Absolute GDP growth increased from Jan 2014 to Jan 2015 to Jan 2016

It certainly looks like a good GDP print to me.

I do wonder how the world would be now if China hadn't significantly helped to pull the western world through the GFC with their stellar growth and through this growth allowing developed countries to import dis-inflation for 7 years while still paying top-dollar for their (China's) commodity imports (until fairly recently). The "China effect" on combating the GFC has largely gone without acknowledgement. But I believe the world owes China a big thank-you

[Baa_Baa]

OK, I'll throw some petrol on this one. Skid this isn't directed at you :). The media has been printing this "assessment" since mid-afternoon, they don't bother (or perhaps can't) use a calculator, and prefer printing doom & gloom.....

It is NOT the slowest growth in 25 years

The market grew as much last year as it grew the previous year (slightly more in fact)

Anyone thinking exponential (increasing yoy) growth can be sustained for any length of time is seriously deluded (yoy figures below are taken from a random google graph)

12M yoy growth to Jan 2014 = 7.6%
12M yoy growth to Jan 2015 = 7.2%
12M yoy growth to Jan 2016 = 6.8%

Taking Jan 2013 as baseline 100 to illustrate, using above yoy growth figures as multipliers
Jan 2014 = 107.6 (GDP absolute growth = 7.6)
Jan 2015 = 115.3 (GDP absolute growth = 7.7)
Jan 2016 = 123.2 (GDP absolute growth = 7.9)

Regardless of which year you set as the baseline 100, the outcome will be the same. Absolute GDP growth increased from Jan 2014 to Jan 2015 to Jan 2016

It certainly looks like a good GDP print to me.

I do wonder how the world would be now if China hadn't significantly helped to pull the western world through the GFC with their stellar growth and through this growth allowing developed countries to import dis-inflation for 7 years while still paying top-dollar for their (China's) commodity imports (until fairly recently). The "China effect" on combating the GFC has largely gone without acknowledgement. But I believe the world owes China a big thank-you

What did China get from it at the expense of the others? They certainly aren't looking for your thanks. Look more deeply into this, you are close but perhaps not realising they are not concerned with combating GFC. In fact the bigger the crisis the better perhaps. There is no thanks due, you have to drill down to the self interest and the reasons why.

[Lewylewylewy]

Speculative shares are down, but are they a bargain? I say no, they were over priced to consider their potential growth. Now prices are dropping to reflect their potential drop. If the markets recover they'll be a bargain, otherwise they're only as good as their return. FPH is a good example of this. This is the speculation game.

But how about shares that aren't speculative? Those that are priced based on their return with good prospects? I say there are some bargains here. Maybe they'll drop further, due to market sentiment, so maybe it's better to buy later... I don't know, but I think there are certainly some bargains in such shares today. By example THL, reports of massive amounts of tourism in NZ in the past year, we are just waiting for a big announcement/dividend.Of course there's also the consideration of longer term position in the event of a global financial event, in which case shares like SCL and SEK are currently good buys. Again, will they be better buys if you wait? Maybe. But my point is, there's still good buying or there.
I have adjusted my strategy accordingly.

PS: remember John key would talk about NZ having a goldilocks economy? I always figured he just meant gold star economy and just got his words muddled. But of course he was referring to all the free porridge we've been enjoying before the 3 bears came. If you recall the fairytale, it was the 3rd bear that killed the sleepy fatcat. This is the 3rd drop we've had over fears of the states of China lately... But then who invests based on fairytales? ;)

[Whipmoney]

In difficult times, I make myself a nice cup of tea and seek out articles like this one to comfort me. http://money.cnn.com/2015/06/21/investing/stocks-market-worst-case-scenario/

Over time, whether it be 3 years or 25 years, everything will be alright :)

Very interesting article.

The author didn't elaborate but the after effects of 1929 were so bad due to (FED) monetary policy still being in its infancy. Central Banks have been smoothing out major depressions ever since.

[bull....]

looks like a nice bounce of those supports at the open:)

[bull....]

did ya get the fade up 30 handles now as we go thru support

[winner69]

did ya get the fade up 30 handles now as we go thru support

Jeez bull ....it's down 1.7% from the days high in pretty short time

What happeed

[winner69]

I found this useless bit of info interesting -


The S&P 500 is a weighted index, which means that large-cap stocks are more heavily weighted. However, if each stock had equal weighting, the performance of the S&P 500 would look very different. According to Jefferies & Company, the average stock in the S&P 500 is down 20% or more from its 52-week high.

The charts here along with other bad stuff
http://www.mauldineconomics.com/connecting-the-dots/im-not-peddling-fictionim-peddling-safety

[bull....]

Jeez bull ....it's down 1.7% from the days high in pretty short time

What happeed

winner the mentality in the us at the moment is sell any rally, often lately asia futures rallies hard into us open and then sells hard down during us session - easy money when you have a mentality like this and pretty much does it every day

ps - don't try this unless you know what ya doing dyor

[winner69]

This is not 2008 - it's actually worse

http://affluentinvestor.com/2016/01/this-is-not-2008-its-actually-worse/

[winner69]

Hey bull ....after all this it might be an UP day

Unless the sellers come out again after a brief rally .....hmm hmm

[skid]

xafalcon--I just passed on what I read--thanks for the clarification(and extra work) i agree they cant keep going exponentially.
They are changing from import -export economy to more domestic based but they still rule the waves as far as export.

Bobdn--Have you ever heard the term 'time is money'' Its a finite commodity--perhaps one of the most valuable to an old fart like me.
I believe it is far to valuable even to the young bucks to completely disregard.

China has left many countries dependent on the ''lollies'' they have produced,and the easy ride from their countries selling to them.
I dont think that is a good thing--It has stuffed alot of countries infrastructure to produce,(just like large ''walmart'' style corporations have done to small businesses in America.Many would argue that economically we should have ''bitten the bullet'' instead of postponing what will eventually be the inevitable ( The States must take alot of the blame for this in their redistribution of wealth from the average to the already rich) It disturbs me to see New Zealands gov.going down this path of ''cuddling up''to the USA-(I like to think that part of out heritage is that the gulf between the have and have nots is not as great as some(but its getting worse)
As you may be sensing,Im not a big fan of globalization in terms of our quality of life(we have to think of that too) That is whats going to kill us economically if this thing goes pear shaped --It will also stuff up our quality of life ,I believe when this TPPA takes hold (just like the Super City in Auckland has few supporters)--Its horrible for poor countries when someone in Washington makes a decision that causes tons of suffering in some poor area of India or the Philippines etc.
But its here, so we need to keep one eye on overseas markets--big mistakes by them will cause grief here as well.

This is of course a rant,you can thank China if you like,their economy is after all a result of cheap labor and decisions made after they were shafted by the Asian crises(we will sell to them and keep a major stockpile of their currency so this never happens again)
It was a result of the money men playing at speculating as they had a free reign while Bill Clinton was busy trying to survive the Monica Lewinsky debacle.
China has a major labor force,they are a power to be reckoned with,but do they have the ''right stuff'' when it comes to economic decisions..so far there has to be doubt.

Meanwhile the fact that the US markets could not bounce big from Chinas 3+% market rise has to be a concern (when does the psyche turn from buying bargains to waiting for a rise to get out.)

As usual ,life is complicated an the law of unintended consequences plays out often,in economic and political decisions as well.

Of course the 'sky will not fall'' and you can always go make tea,but ask yourself..why do I go to work, or invest in the share market?

[xafalcon]

What did China get from it at the expense of the others? They certainly aren't looking for your thanks. Look more deeply into this, you are close but perhaps not realising they are not concerned with combating GFC. In fact the bigger the crisis the better perhaps. There is no thanks due, you have to drill down to the self interest and the reasons why.

Of course I realise China didn't do it out of the goodness of their heart. Like EVERY other country in the world, they are focusing on what's best for their own purposes. In China's case, that is raising the living standards of their people from almost subsistence level towards western standards through rapid growth built on low labour costs and copying / OEM outsourcing increasingly sophisticated manufactured goods.

If China was not doing this so well through the GFC, the world would be a whole lot worse off. Commodity exports would have been significantly lower volume and price, consumer goods more expensive, western business profitability lower, western inflation and cost of living higher etc

The GFC would have dragged on years longer

The western efforts to combat the GFC have largely been a failure. QE in USA pumped up bank balance sheets and asset values, but didn't kick-start the economy as was intended. QE in the EU is outright failing. Australia's blind assumption that iron ore and coal demand would continue to grow and support their economy was proven wrong. Ditto oil producing nations.

What I was saying is that the effect on the rest of the world through the GFC as a result of China's activities, was to do way more in combating the GFC than any central bank accomplished through their own program of economic stimulation or is prepared to acknowledge

[skid]

The western efforts to combat the GFC have largely been a failure. QE in USA pumped up bank balance sheets and asset values, but didn't kick-start the economy as was intended. QE in the EU is outright failing. Australia's blind assumption that iron ore and coal demand would continue to grow and support their economy was proven wrong. Ditto oil producing nations.

What I was saying is that the effect on the rest of the world through the GFC as a result of China's activities, was to do way more in combating the GFC than any central bank accomplished through their own program of economic stimulation or is prepared to acknowledge---Quote

Interesting you say that as many think the rise in Chinas market is in anticipation of more western style QE stimulus.

[Bobdn]

Already lost a quite a bit so will wait it out. For example, bought in at ANZ at 29.75 (nz). Hopefully will keep on paying dividends and share price will not go down too much more. If it does, I'll just need to console myself with reinvestment through the drp.

[theace]

Already lost a quite a bit so will wait it out. For example, bought in at ANZ at 29.75 (nz). Hopefully will keep on paying dividends and share price will not go down too much more. If it does, I'll just need to console myself with reinvestment through the drp.

From the Sydney Morning Herald ... Doesn't look for your ANZ stock


"A Morgan Stanley analyst predicts ANZ Bank will cut its dividend in the second half of this year, and he argues the market will remain cautious on the stock unless new chief executive Shayne Elliott makes significant changes.ANZ shares under-performed the other major banks by an average of 10 per cent in 2015, and 40 per cent over the last five years, research by analyst Richard Wiles says.
Part of this is because of its lower exposure to retail banking, but Wiles, who is "underweight" on the stock, says in 2015 the market's concern shifted to ANZ's higher risk profile.
Wiles says that for investors to "re-rate" the stock, new chief Shayne Elliott needs to outline an "ANZ solution" to address these concerns.
Elliott may consider higher provisioning, a capital raising, asset sales, and a lower dividend payout ratio, the note says. He's penciling in dividends of $1.55 a share for the full year, compared with $1.81 last year.
"We believe revenue and credit risk, business mix, dividend risk and strategic uncertainty will weigh on ANZ's share price performance," the note says.


Read more: http://www.smh.com.au/business/markets-live/markets-live-oil-drowns-wall-st-rally-20160119-gm9jku.html#ixzz3xkIpwkMD
"

[Bobdn]

Yes, I saw that. Tricky times. Let's hope JP Morgan is wrong :)

[Snoopy]

Very interesting points, you get to the nub of the issue.

Just as a matter of interest Snoopy, if it's not a big effort and you have the history, do you know what todays' net return of say a $10k passive investment in CEN would be, had one bought it at these three points:

1. The Aug 2000 low of $2.43
2. The equivalent share price as today at say the May high 2003 of $4.63
3. The Apr high 2008 at $9.99


I see where you are coming from Baa. I may yet do as you ask. But a couple of points you need to know about

1/ 30th April 2008 say a trade go through at $9.99. But the closing price on that day was $9.55 and the low was $9.06. Quite a big difference. So I would say very few shares actually traded at that all time high spot price.
2/ You are looking at both a best and worst case scenario to get a feel for what was/is happening? But all three of these cases are really quite unrepresentative of what most investors will have experienced.. If you have a look here:

https://nz.finance.yahoo.com/q/bc?s=CEN.NZ&t=my&l=on&z=l&q=l&c=

You will see that most of the trading for the complete history of the company has been around the $5 mark. My own average holding price is in the $4.70s.

3/ I have seen before graphed out by traders the case of the hapless investor who buys right at the peak and then grimly holds on as his/her shares grind ever lower in price. But I put it to you that such a person is very unlikely to exist. Why would someone chasing steady dividends suddenly decide to jump in at the peak, when the dividend yield is lowest? I submit to you the person that bought in at $9.99 was very likely a trader, gambling on some market event. When that event didn't happen they were probably 'stopped out' at a small loss, and did not experience the graphed effect on their wealth.

When I am investing in a company like this, I usually try to buy in in three tranches so that I avoid putting all my money in at an extreme price , such as the $9.99 price you highlight here. So even if it was me that had bought in at $9.99, I wouldn't have bought all of my shares at that high price. Thus to a substantial extent I see this exercise as a 'straw man' event.

SNOOPY

[Snoopy]

I am another one who is in quite deep in the energy market. Energy shares make up around 50% of my portfolio. Currently holding CEN, GNE, IFT, MEL, and NWF.
I know, someone is going to tell me that IFT is not an energy share, and strictly speaking that is true. However they are heavily exposed in the energy market through TPW.

No longer holding VCT, and not interested in MRP.

Hey Jantar. If you believe in the value of the grid, and the need of all users to retain a connection to that, why are you not invested in Vector? The energy gentailers you are invested in will keep having a great cashflows to be sure. But if eneregy itself is supplemented by users with their own solar panels at non peak times, the energy component of what the consumers buy in their power bill will go down - yes? So isn't the winner in your scenario the likes of wholesale network operators like Vector, not the gentailers?

Also what do you see as the weakness of MRP relative to other gentailers?

SNOOPY

[Jantar]

Hey Jantar. If you believe in the value of the grid, and the need of all users to retain a connection to that, why are you not invested in Vector? The energy gentailers you are invested in will keep having a great cashflows to be sure. But if eneregy itself is supplemented by users with their own solar panels at non peak times, the energy component of what the consumers buy in their power bill will go down - yes? So isn't the winner in your scenario the likes of wholesale network operators like Vector, not the gentailers?

Also what do you see as the weakness of MRP relative to other gentailers?

SNOOPY

I sold Vector when I got the first hint of Otahuhu and Southdown Gas fired power stations being shut down. Vector own the gas lines into the Auckland area and with so much less gas being transported that would be a major drop in income for them. They cannot simply increase the transmission price to other users or natural gas prices in Auckland would be way out of line with the rest of the country.

Vector must feel the same as they have offered their gas line for sale and shortly after their SP dropped. After they sell it I would consider buying back into Vector.

MRP is one company that I have always considered over priced. Yes, they have good cash flow and so are able to pay good dividends. But those same dividends are so far above their earnings that they are dropping the NTA of the company and eating into their ability to expand. Also, such a high PE ratio just makes them unattractive to me.

[xafalcon]

Hey Jantar. If you believe in the value of the grid, and the need of all users to retain a connection to that, why are you not invested in Vector? The energy gentailers you are invested in will keep having a great cashflows to be sure. But if eneregy itself is supplemented by users with their own solar panels at non peak times, the energy component of what the consumers buy in their power bill will go down - yes? So isn't the winner in your scenario the likes of wholesale network operators like Vector, not the gentailers?

Also what do you see as the weakness of MRP relative to other gentailers?

SNOOPY

IMO the local lines companies are ripe for comcom to jump on their rather large usage charges and give them a taste of what chorus went through......

They are monopolies, so clearly fall within the jurisdiction of comcom

Too much risk of regulatory intervention for me

[Baa_Baa]

@Snoopy on reflection it was a dumb question, sorry. Obviously the sum of the DRP's, dividends etc added to the share price at those date will prove nothing. I acknowledge your points about progressively buying when you think the time is right and being in for the very long haul.

[bull....]

wow , after gapping lower thru the supports and wiping out all those stops lol the market stages a massive rally back from 3% down to end up for the day?

[skid]

wow , after gapping lower thru the supports and wiping out all those stops lol the market stages a massive rally back from 3% down to end up for the day?

The markets are certainly all over the place--Its like diving into the bottom of a waterfall atm---Its heading back down atm,but it looks like a get out of jail card was produced for that 3% drop

[Leftfield]

Brian Gaynor added a touch of sound thinking today…

http://www.radionz.co.nz/national/programmes/ninetonoon/audio/201786240/brian-gaynor-on-world-market-plunges

[xafalcon]

IMO these large intra-day swings show the market is simply trading on fear and herd mentality rather than any fundamental analysis

Fear of loosing money on declining SP as "everyone" else appears to be selling v's fear of missing out on profits on rising SP as everyone else appears to be buying.......

But that is the nature of the market - part analytical, part psychological. It's just the relative ratio of the two that changes. Ratio firmly favours psychological atm

Not a happy place for the faint hearted investor though

[skid]

IMO these large intra-day swings show the market is simply trading on fear and herd mentality rather than any fundamental analysis

Fear of loosing money on declining SP as "everyone" else appears to be selling v's fear of missing out on profits on rising SP as everyone else appears to be buying.......

But that is the nature of the market - part analytical, part psychological. It's just the relative ratio of the two that changes. Ratio firmly favours psychological atm

Not a happy place for the faint hearted investor though

Trouble is ,its a disturbing prelude to a bear.

[warthog]

Brian Gaynor added a touch of sound thinking today…

http://www.radionz.co.nz/national/programmes/ninetonoon/audio/201786240/brian-gaynor-on-world-market-plunges

Gaynor isn't exactly a disinterested party.

[skid]

Gaynor isn't exactly a disinterested party.

Nope--They are invested big in PEB:confused:

so with US markets --catastrophe averted but still down 1.56% (Dow) S&P-1.17% down--Nasdaq got away with only .12 down

[Pixelator]

wow , after gapping lower thru the supports and wiping out all those stops lol the market stages a massive rally back from 3% down to end up for the day?

PPT had to work overtime today :(

[skid]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11577191

[Hoop]

wow , after gapping lower thru the supports and wiping out all those stops lol the market stages a massive rally back from 3% down to end up for the day?

????? which markets are you referring to.....

Wall st did not finish up...

DOW...One support break at opening 16000 which saw a big drop which found temporary mini support at 15750ish so probably only 1 stop triggered one buy triggered around 15750ish area going the other way (rising) late in the day...the 15450 saw some very short term TA buy signals and created a floor

DOW closed down -1.55% at 15767...Overall breaking one support but have a super bounce off the very important 15400/15500 support zone thereby seeing buyer momentum return..sometimes this behaviour can create an end to the drop, sets a bottom and a platform for a new rally...we will find out with time what will happen....however any rally should be viewed as a correctional type (sucker)...

One Day chart with 15minute periods below

S&P500... ditto
http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=DJIA&uf=8&type=4&size=4&sid=1643&style=320&freq=7&entitlementtoken=0c33378313484ba9b46b8e24ded87dd6&time=1&rand=949661380&compidx=aaaaa%3a0&ma=4&maval=50%20100%20200&lf=1&lf2=1024&lf3=256&height=981&width=1045&mocktick=1

[Hoop]

Brian Gaynor added a touch of sound thinking today…

http://www.radionz.co.nz/national/programmes/ninetonoon/audio/201786240/brian-gaynor-on-world-market-plunges

But is that what he is really thinking???...hard to know...eh..

The thing is with asking a high profile Fund manager for a public statement....If he/she has reservations that the market could plummet another 20% (very likely if this Bear market cycle is confirmed (not NZX..still a bull).. how likely is it that he/she will respond in saying "Chances are high the market will crash"......

[BIRMANBOY]

I seem to remember you saying that or something similar in August...but you'll be right eventually..maybe.:p
Trouble is ,its a disturbing prelude to a bear.

[Beagle]

http://www.cnbc.com/2016/01/20/msci-global-stock-market-index-hits-bear-market.html

Very interesting how our market performance compares to others. Anyone got any theories why we are tracking so well on a relative basis ?

[macduffy]

Probably many reasons.

NZ economy in relatively good shape.
NZ sharemarket doesn't usually experience the extremes of volatility of most other western markets - 1987 excepted!
Relatively low participation/importance, individually and to the overall economy.
Doesn't have many miners or oilies on the NZX.

How's that for a start?

;)

[see weed]

http://www.cnbc.com/2016/01/20/msci-global-stock-market-index-hits-bear-market.html

Very interesting how our market performance compares to others. Anyone got any theories why we are tracking so well on a relative basis ?
Good yields. Better than putting it back in the bank at 3%. My ATM shares are up 250% today. Bought 20,000 IFT in 5th and 6th October and if I sell the rest today would profit of $5322 which includes div. The money in bank would of made me $446 over the 3 months at 3%. Ps Roger thanks for the pgw info.

[skid]

I seem to remember you saying that or something similar in August...but you'll be right eventually..maybe.:p

Doesnt mean it will happen (long term) just means keep an eye out (I dont predict).....(and be careful not to spill that half full glass all down your shirt):)

Futures (US)and Asian markets looking a bit better today


PS--If ATM was the world economy ,we'd be in great shape!

[sb9]

After being down on open most yield stocks are posting good gains just in time for HY results to be released soon.

[xafalcon]

PS--If ATM was the world economy ,we'd be in great shape!

Today yes, next month likely, 6 months maybe, next year probably not

I would prefer the ideal world economy to be likened to something with strong fundamentals and a reasonable PE, rather than a bubble that will burst at some unpredictable point in the future......

[skid]

Today yes, next month likely, 6 months maybe, next year probably not

I would prefer the ideal world economy to be likened to something with strong fundamentals and a reasonable PE, rather than a bubble that will burst at some unpredictable point in the future......

Well,in that case ,maybe they are not so different:)

[macduffy]

Mark Lister of Craigs is a little underwhelmed by all this talk of a crash.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11577528

[Beagle]

Probably many reasons.

NZ economy in relatively good shape.
NZ sharemarket doesn't usually experience the extremes of volatility of most other western markets - 1987 excepted!
Relatively low participation/importance, individually and to the overall economy.
Doesn't have many miners or oilies on the NZX.

How's that for a start?

;)

Its certainly a start but I'm surprised how well its held up.


Good yields. Better than putting it back in the bank at 3%. My ATM shares are up 250% today. Bought 20,000 IFT in 5th and 6th October and if I sell the rest today would profit of $5322 which includes div. The money in bank would of made me $446 over the 3 months at 3%. Ps Roger thanks for the pgw info.

No worries mate and congrats on your ATM return...you have been a vigorous supporter of the brand and deserve the returns you're getting, (for those that weren't there, at the last Auckland meeting See weed spent most of the time doing the rounds of the pub talking to other punters all about ATM and handing out information on it).

As you suggest I think the dividend yield has a lot to do with it. Also cash in the bank is such a pitiful return, (but that's not a unique thing to N.Z. by any means !). The other thing is cash in the bank is subject to the open bank resolution and with no deposit guarantee insurance available in N.Z. it makes the risk adjusted return probably amongst the very worst in the world.
With almost zero inflation and RBNZ poised to cut further I expect high yield shares with a robust balance sheet and solid business model to do well over the next couple of years.

I think one can still make a case for a decent sized N.Z. equity allocation to their portfolio in these highly uncertain times. Nobody and no chartist or expert can reliably predict the future.

[winner69]

Mark Lister of Craigs is a little underwhelmed by all this talk of a crash.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11577528

All Mark only knows about market crashes is what his dad and grandad told him.

Oe day he might personally experience one.

[skid]

Its certainly a start but I'm surprised how well its held up.



No worries mate and congrats on your ATM return...you have been a vigorous supporter of the brand and deserve the returns you're getting, (for those that weren't there, at the last Auckland meeting See weed spent most of the time doing the rounds of the pub talking to other punters all about ATM and handing out information on it).

As you suggest I think the dividend yield has a lot to do with it. Also cash in the bank is such a pitiful return, (but that's not a unique thing to N.Z. by any means !). The other thing is cash in the bank is subject to the open bank resolution and with no deposit guarantee insurance available in N.Z. it makes the risk adjusted return probably amongst the very worst in the world.
With almost zero inflation and RBNZ poised to cut further I expect high yield shares with a robust balance sheet and solid business model to do well over the next couple of years.

I think one can still make a case for a decent sized N.Z. equity allocation to their portfolio in these highly uncertain times. Nobody and no chartist or expert can reliably predict the future.

Yes,NZ shares have held up well,considering..but cash in the bank ,although a pitiful return,will still hold out far longer than share plunges in terms of asset protection...If things get bad --shares will go first IMO (like in the GFC)

Meanwhile ,every one is so infatuated with how well the NZX is doing ,I just wonder if its not tempting fate---(what else is there than superstition in these ,impossible tp predict times):)

[Baa_Baa]

Yes,NZ shares have held up well,considering..but cash in the bank ,although a pitiful return,will still hold out far longer than share plunges in terms of asset protection...If things get bad --shares will go first IMO (like in the GFC)

Meanwhile ,every one is so infatuated with how well the NZX is doing ,I just wonder if its not tempting fate---(what else is there than superstition in these ,impossible tp predict times):)

This old saying has three words, complete the adage:

Buy - Hold - ?

On a lighter note, SP500 plumbed the depths at 1804.50 well below the August lows, then recovered to back test the Aug lows (futures) .. the test went on for an extended 1.5 hours today, but failed, currently 1854.

NZX might not be plumbing the depths, far from it, but it sure doesn't like these falling US bourses .. day after day. It's like a slow leak so far, a few cents each day. US equities currently on track for the worst January since ...

[pierre]

what else is there than superstition in these ,impossible to predict times):)

I'm not sure there's ever been times that have been possible to predict......lol.

[bull....]

hi hoop I was referring to us markets, anyway its up today at the moment - yesterday it found support at 15500 dow which was the 23% fib retracement level which was prior support last time as well.
we still have hope of finishing the week positive if we close above 16000 for the week then it still is support on the weekly

[skid]

I'm not sure there's ever been times that have been possible to predict......lol.

Lets say ,more possible to predict
http://www.marketwatch.com/story/how-trend-following-can-help-avoid-large-drawdowns-2016-01-21?mod=MW_story_latest_news

---Interesting times when you read the headline ''US Stocks sharply higher'' and its up .35% (dow) Nasdaq down by the same S&P up.05 ...(your not setting the bar very high ,guys):)

[macduffy]

Lets say ,more possible to predict---Interesting times when you read the headline ''US Stocks sharply higher'' and its up .35% (dow) Nasdaq down by the same S&P up.05 ...(your not setting the bar very high ,guys):)

Just the usual over-reaction that we've come to expect from "the media" - we need to grab your attention, you know!

;)

[Yeshiva]

Is the crisis over already?

[skid]

Is the crisis over already?

Yep--Chinas ok now--only down 3.34% yesterday

[bull....]

Is the crisis over already?

You take the blue pill -- the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill -- you stay in Wonderland and I show you how deep the rabbit hole goes.

Morpheus

what pill did you take

[Yeshiva]

You take the blue pill -- the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill -- you stay in Wonderland and I show you how deep the rabbit hole goes.

Morpheus

what pill did you take

The one that makes me float above Haifa feeling very happy.

[BIRMANBOY]

I guess they call it Haifa ....reason.:cool:
The one that makes me float above Haifa feeling very happy.

[pierre]

You take the blue pill -- the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill -- you stay in Wonderland and I show you how deep the rabbit hole goes.

Morpheus

what pill did you take

The blue pill certainly helps to stiffen your resolve in other endeavours - I'm sure the manufacturers have never thought of it being useful with with regard to share trading....

[janner]

For goodness sake !!!

The rich will always be with us..

They want THE BEST..

The best baby food.. The best Kiwi fruit.. The best Honey.. The best apples.. The best Lamb.. The best grass fed beef.

When they go on holidays ..

They are looking for the best...

And you want to sell your shares ?????

OK... If they are not invested into the best that NZ has to offer..

[janner]

Dyor.. :-))))

[skid]

For goodness sake !!!

The rich will always be with us..

They want THE BEST..

The best baby food.. The best Kiwi fruit.. The best Honey.. The best apples.. The best Lamb.. The best grass fed beef.

When they go on holidays ..

They are looking for the best...

And you want to sell your shares ?????

OK... If they are not invested into the best that NZ has to offer..

and which share did you say will surge only selling to the rich? (Its the middle class that makes companies rich IMO)--Maybe Im missing the point--if your saying to be invested in the best NZ has to offer,cant argue with that, although sometimes its not so easy to determine.

Looks like the pressure is off--everyone did well yesterday-Japan went up 5%(guess they needed a break)-Its still beyond me why China takes such a heavy handed approach to their currency meddling -its reaked havoc twice now.

They say shares are still overvalued in the USA--what about NZ? guess it depends on what you base it on.

[skid]

I think its relevant to put this link in the ''Black Monday'' and ''wars of the world threads''

http://www.marketwatch.com/story/russia-china-and-saudi-arabia-are-on-the-ropes-2016-01-22?mod=MW_story_top_stories

[xafalcon]

I read that column as the white house talking itself up.

Being that he says USA is the #1 oil producer, the effects of low oil price must therefore hurt USA more that any other nation. That he didn't even mention this, makes me skeptical about the rest of his piece.

[Snow Leopard]

I read that column as the white house talking itself up.

Being that he says USA is the #1 oil producer, the effects of low oil price must therefore hurt USA more that any other nation. That he didn't even mention this, makes me skeptical about the rest of his piece.

USA is:
probably still the largest producer of oil;
definitely the largest consumer of oil.

and they consume a lot more than they produce.

Best Wishes
Paper Tiger

[Bobdn]

I read that column as the white house talking itself up.

Being that he says USA is the #1 oil producer, the effects of low oil price must therefore hurt USA more that any other nation. That he didn't even mention this, makes me skeptical about the rest of his piece.


no, the US has a highly diversified economy. Oil production really is only a tiny part of an enormous economy.

PS: http://www.bloomberg.com/news/articles/2016-01-21/asian-futures-point-to-rebound-amid-oil-jump-stimulus-prospects

Interesting video in this link featuring an interview with Nouriel Roubini. He explains where he thinks oil is heading and why; useful insights for dummies like me :)

[Bobdn]

Has this already been posted? Hope not. Such an interesting graphic showing what has been happening across markets.

http://davidstockmanscontracorner.com/wp-content/uploads/2016/01/1x-1-21.jpg

[xafalcon]

no, the US has a highly diversified economy. Oil production really is only a tiny part of an enormous economy.

PS: http://www.bloomberg.com/news/articles/2016-01-21/asian-futures-point-to-rebound-amid-oil-jump-stimulus-prospects

Interesting video in this link featuring an interview with Nouriel Roubini. He explains where he thinks oil is heading and why; useful insights for dummies like me :)

Economic diversity is irrelevant in regard to what I said.

I was speaking only about oil production (extraction) and the effect 75% lower prices must have on the US economy v's the effect is has on other nations economies.

And since this wasn't even mentioned in the article written by a white house spin doctor, it brings the "accuracy" of the entire piece into question IMO

[moka]

In the short term, which could be a couple of months or a couple of years, investing in NZX or elsewhere is not about the economy but about risk – am I going to get my money back or rather how much money could I lose = risk management.
The risk is another crisis like 2008 the housing crisis. This is an oil crisis but the underlying issue is the same - a credit, debt, banking or liquidity crisis because of cheap credit, easy lending, and risky loans such as to US shale oil producers. Are banks and other lenders going to get their money back? Not all of it, because some oil producers will go bankrupt, which will trigger other bankruptcies. And some countries which rely on oil revenue may go bankrupt too.


One of the causes of 2008 was 9/11 which was seen as an attack on American capitalism. To restore confidence in the free-market capitalist system and avoid a recession the Federal Reserve lowered interest rates, and this combined with freeing up the financial sector led to cheap credit, easy loans, light regulation and a housing boom with rotten mortgages and financial engineering such as mortgage-backed securities and credit default swaps.


2008 happened because years of low interest rates and the world awash with cash which lead to easy lending on risky assets. And when those assets became toxic credit dried up. Banks would not lend to other banks because every bank had the toxic assets on their balance sheet.

So the cure for 2008 to avoid a recession was low interest rates and print lots of money to encourage banks to lend. Cheap credit and easy lending again and seven years later here we are at the next crisis. No wonder Soros says he sees the similarities to 2008. Hopefully it won’t be as bad as 2008 because the banks are stress tested more now, but there are going to be losers including pension funds and retirees.


http://www.cnbc.com/2016/01/14/oil-credit-crunch-could-be-worse-than-the-housing-crisis-commentary.html
(http://www.cnbc.com/2016/01/14/oil-credit-crunch-could-be-worse-than-the-housing-crisis-commentary.html)

“Oil and gas companies borrowed heavily when oil prices were soaring above $70 a barrel. But in the past 24 months, they've seen their values and cash flows erode ferociously as oil prices plunge — and that's made it hard for some to pay back that debt.


Since 2006, an additional $1 trillion of capital expenditures by just 59 companies has been spent on shale drilling and operations, according to oil-and-gas industry site OilPro.com. And another $1 trillion of energy-bond debt has gone on the books, according to the Bank for International Settlements. Energy-company bonds will sell off and create a pall of risk avoidance across all industries”.

[trader_jackson]

In the short term, which could be a couple of months or a couple of years, investing in NZX or elsewhere is not about the economy but about risk – am I going to get my money back.
The risk is another crisis like 2008 the housing crisis. This is an oil crisis but the underlying issue is the same - a credit, debt, banking or liquidity crisis because of cheap credit, easy lending, and risky loans such as to US shale oil producers. Are banks and other lenders going to get their money back? Not all of it, because some oil producers will go bankrupt, which will trigger other bankruptcies. And some countries which rely on oil revenue may go bankrupt too.


One of the causes of 2008 was 9/11 which was seen as an attack on American capitalism. To restore confidence in the free-market capitalist system and avoid a recession the Federal Reserve lowered interest rates, and this combined with freeing up the financial sector led to cheap credit, easy loans, light regulation and a housing boom with rotten mortgages and financial engineering such as mortgage-backed securities and credit default swaps.


2008 happened because years of low interest rates and the world awash with cash which lead to easy lending on risky assets. And when those assets became toxic credit dried up. Banks would not lend to other banks because every bank had the toxic assets on their balance sheet.

So the cure for 2008 to avoid a recession was low interest rates and print lots of money to encourage banks to lend. Cheap credit and easy lending again and seven years later here we are at the next crisis. No wonder Soros says he sees the similarities to 2008. Hopefully it won’t be as bad as 2008 because the banks are stress tested more now, but there are going to be losers including pension funds and retirees.


http://www.cnbc.com/2016/01/14/oil-credit-crunch-could-be-worse-than-the-housing-crisis-commentary.html
(http://www.cnbc.com/2016/01/14/oil-credit-crunch-could-be-worse-than-the-housing-crisis-commentary.html)

“Oil and gas companies borrowed heavily when oil prices were soaring above $70 a barrel. But in the past 24 months, they've seen their values and cash flows erode ferociously as oil prices plunge — and that's made it hard for some to pay back that debt.


Since 2006, an additional $1 trillion of capital expenditures by just 59 companies has been spent on shale drilling and operations, according to oil-and-gas industry site OilPro.com. And another $1 trillion of energy-bond debt has gone on the books, according to the Bank for International Settlements. Energy-company bonds will sell off and create a pall of risk avoidance across all industries”.



Interesting article, but the reality is that low oil prices impact consumers, and in theory their spending, in a positive way, even if 'the big oil companies' are struggling to produce the billions of dollars of profits they have historically been able to produce. Low oil prices is a 'global tax cut'.

Collapsing house values (which occurred in 2008 as a result of 'stupid' lending on the whole american housing market, eg 110% mortgages) do the complete opposite, and scare everyone... consumers, bankers you name it (we all have to live somewhere right?). I am sure there are many banks who have loaned many billions to many oil/mining companies, some of which will go under as a result of oil and commodity prices being so low... but they would not have loaned (hopefully) anywhere near as much as the amount they would have in the housing market, and therefore the banks themselves won't collapse. In the case of most New Zealand and Australian banks (and potentially other places around the world), they are extremely well capitalized, and the american economy, which is growing nicely, does not rely hugely on oil industry and production.

So while many of these 'big oil companies' may struggle, to say we are heading for any recession close to the 2008 Great Recession as a result I think is very far fetched.

[skid]

Interesting article, but the reality is that low oil prices impact consumers, and in theory their spending, in a positive way, even if 'the big oil companies' are struggling to produce the billions of dollars of profits they have historically been able to produce. Low oil prices is a 'global tax cut'.

Collapsing house values (which occurred in 2008 as a result of 'stupid' lending on the whole american housing market, eg 110% mortgages) do the complete opposite, and scare everyone... consumers, bankers you name it (we all have to live somewhere right?). I am sure there are many banks who have loaned many billions to many oil/mining companies, some of which will go under as a result of oil and commodity prices being so low... but they would not have loaned (hopefully) anywhere near as much as the amount they would have in the housing market, and therefore the banks themselves won't collapse. In the case of most New Zealand and Australian banks (and potentially other places around the world), they are extremely well capitalized, and the american economy, which is growing nicely, does not rely hugely on oil industry and production.

So while many of these 'big oil companies' may struggle, to say we are heading for any recession close to the 2008 Great Recession as a result I think is very far fetched.

Its not just big oil companies --Its whole countries,most developing,but some big ones as well,like Russia---They start wars for this kind of stuff,in the case of Russia--smaller countries=economic turmoil (possibly) Its far more than customers,most who have far more money than they need to survive ,paying a bit less at the pump.
But its more than just oil..sooner or later it gets to ..Debt.

We have created globalization..(Its the difference between ours, and our grand dads ,way of life)...and we now have to live with it ,one way or another. Many forget about this in little ole NZ.

[Beagle]

Welcome to the forum Moka.

One thing I've learned in 32 years of investing is just when you think you've got it all figured out the market does the exact opposite. A wise investor hedges his bets.
I have just over 50% in cash at present and I am risk averse and only holding stocks I consider to be good value and resilient. I try and avoid absolute bets like going to 100% cash or being fully invested for the simple reason that I've learned to avoid trying to assume I know for sure what's going to happen next.

That said, there's no doubt the oil price collapse has opened up a new avenue of risk but these things are usually cyclical and I think oil will revert to a more normal level within a reasonable timeframe.
I see Greece's credit rating has recently been raised a notch due to economic reforms...who would have thought that would happen a couple of years ago ?

[skid]

Im not disagreeing with your basic investment strategy...but there are plenty to take Greeces place

http://www.usatoday.com/story/money/business/2014/07/31/countries-near-bankruptcy/13435097/

mind you,being in the EU did pack a bit more punch with Greece.