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:
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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:
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....
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.
watching open if we smash lower to flash crash lows or if that support at 1965 - 70 holds
2-3% down in USA. Body armour and tin hats back on:ohmy::eek2:
Looks as though we will indeed have a "Black Monday" this week.!!
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-rec...ommentary.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?
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.
Attachment 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.
Baabaa - can u do that chart on nz50c (the capital index)
Attachment 7807Is that a resistance test and fail? :(
Lets take a closer look.
All data, weekly chart, log scale, 39EMA weekly approximates to 200DMA
Attachment 7810
3-year, add the trusty 10/14 EMA's
Attachment 7809
1-year, breakout and two weekly closes below - fail. 10/14 EMA's tested, still a 'hold'.
Attachment 7808
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.
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
..
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)
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/showthr...l=1#post601706
The big picture sure is ugly compared our relative calm in sunny NZ.
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 :-)))
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
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...0c1ba0c7db5a0c
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/m...t-Edwards.html
Stock markets face a 'bloodbath', warns SocGen strategist Albert Edwards
By Angela Monaghan
6:00AM BST 27 Aug 2010
There are two types of fear in the market
·The fear coming from unknown news
·The fear of missing out gain
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.
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.
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.
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.
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.
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...
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.
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
Have you noticed anything different in the last year with Chinas share market?
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?????
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.
does that mean you're 100% cash now?
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:)
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.
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)--
Yes BP, the fundamentals of companies (solid ones at least) don't radically change in market crashesQuote:
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.
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.
Was that Westpac?
We witnessed the Govt bail out to prevent the BNZ collapse during the the NZX 1990 bear market cycle
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..:)
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...
Yes...often the case... in the end the worst case scenario never eventuates but its prudent to have that investing contingency in place.
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
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)
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 ...
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.
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.
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.
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.
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
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.
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
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
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.
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
Is this not correct (monthly price chart)?
Attachment 7822
In a nutshell...There are times to try to make money...and times to try not to lose it;)
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
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.
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.
China posts slowest growth in 25 yrs and Shanghai up 3+% (man ,they must have been expecting some pretty horrible numbers!)
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!
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.
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.
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/inve...case-scenario/
Over time, whether it be 3 years or 25 years, everything will be alright :)
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.
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? ;)
looks like a nice bounce of those supports at the open:)
did ya get the fade up 30 handles now as we go thru support
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/conn...eddling-safety
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
This is not 2008 - it's actually worse
http://affluentinvestor.com/2016/01/...ctually-worse/
Hey bull ....after all this it might be an UP day
Unless the sellers come out again after a brief rally .....hmm hmm
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?
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
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.
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/marke...#ixzz3xkIpwkMD
"
Yes, I saw that. Tricky times. Let's hope JP Morgan is wrong :)
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=...=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
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.