Please tell me you're kidding.
Which other New Zealand city would you choose to flatten in order for us to have a better economy?
Printable View
We already have one (we'll only have to import all the workers).
I vote somewhere which needs to modernise and include 21st century things like good public transport and urban planning (Auckland it is then).
https://www.newsroom.co.nz/a-long-wi...-boring-stocks
Above article was published in 2021. Still there are some valid points for value investors.
Quoted from the above link.
“ Robert Jeremy Goltho Grantham CBE is the co-founder and chief investment strategist of Grantham, Mayo, & van Otterloo (GMO), a Boston-based asset management firm with quite a few billions of US dollars of assets under management. Grantham is in his 80s these days, but gained influence as an investor after correctly calling the dotcom bubble in 2000 and the dramatic GFC downturn in 2008.
Grantham doesn’t know when this big bang will happen, and he admits that while he got 2000 and 2008 right, he was three years early on the 1989 Japanese bubble bursting – GMO got out of Japan and the market continued to rise and rise. (“There is nothing more supremely irritating than watching your neighbors get rich,” he says.)
But Grantham predicts the next few months, maybe years, will be “intellectually exciting and terrifying at the same time”.
When good value becomes overvalued
Historically, the average PE ratio – in the US at least – was around 15. Put another way, investors were prepared to pay an average of $15 for one dollar of a company’s earnings.
Trouble is, markets have gone a bit crazy recently, and that’s hiked PE values. Sometimes to crazy levels. Tesla: 1692. Zoom: 483. Netflix: 91. Amazon: 91.
Market capitalisation is another traditionally-used matrix to judge a company. The theory is: large market capitalisation = big solid company = less risk. Until you look at what’s happened with Tesla, for example.
GMO analysts calculate that Tesla’s market cap, now over $600 billion, is bigger than the total market cap of all the other US automakers, plus all the European automakers, and all the Korean automakers, with Honda, Mazda, and Nissan thrown in. That’s despite Tesla selling approximately 100 times fewer cars than the other car makers
“What has 1929 got to equal that?” Grantham says.
Then there’s net tangible assets per share, or NTA. That’s the theoretical value of a company’s physical assets divided by the number of shares on issue.
A cunning investment strategy used to be to look for a company whose share price was less than its NTA.
Good luck with that. As share prices have soared, so NTA values have got increasingly out of line. Mainfreight’s NTA is $7, it’s share price $68.60. At Port of Tauranga, the NTA is $1.7, the share price $7.50.
NZ has big PEs too
Back to P/Es (price to earnings ratios). Another slightly scary thing I did last week was spend an hour or so perusing the PEs of New Zealand companies. Remember the average long term PE in the US is around 15. Maybe a bit higher in New Zealand, where investment money is chasing fewer listed stocks.
Not any more. Around the top of the range of NZX stocks, AFT Pharmaceuticals has a PE of 126, Michael Hill Jeweller is at 157, AMP 191, Meridian 108, GPS fleet systems company ERoad is at 168, Kathmandu 80, Genesis 82.
Crazy, huh?
Pockets of over-exuberance
Brad Gordon says many share prices are inflated.
“It’s time to be selective in your investments. There are certainly bubbles in there. There are pockets of value and pockets of over-exuberance.”
How can you tell?
Markets always go down in the end
Nikko’s George Carter is worried a bad experience in a downturn will put these new and enthusiastic investors off – possibly for good.
“We know markets will go down. My worry is there are people who have invested in the market but aren’t prepared for what it looks like when your balance drops 10-30 percent.”
Don’t bother trying to time the market
Of course, there’s no guarantee an expert is going to get it right any more than someone on a share chatroom. Timing is virtually impossible.
“In the long run, elevated valuations here should equate to lower future returns, based on the assumption that valuations ‘should’ normalise to lower absolute and relative long term averages,” says Mark Riggall, portfolio manager at investment company Milford.
“However, timing that is fraught with difficulties and there is no reason why New Zealand share valuations can’t retain their current premium (or even attain a higher premium) for the foreseeable future.
“For investors, it pays to stick with long term investing goals and not be swayed by short term deviations in markets (up and down).”
Even if the market crashes?
“As equity investors we don’t talk crashes, we talk volatility. Markets will get frothy and they will get oversold.”
Boring sounds OK.”
Valuegrowth, what part of the country are you in and can you introduce me to your dealer please, you are on some good $hit and I'd like to get me some if possible.
The S&P500 began the year bang on the 25 year average forward PE ratio. Read my lips. Bang on. It is ever so slightly above the average now.
Now if you take the top 10 companies out of the S&P500 and look at the average PE of the other 490... What do you find Valuegrowth?
You have highlighted some of the companies you have found with ridiculously high ratios, where is your highlighting of all the ones with PE ratios of less than 5 both here and in America? Where is your margin analysis to go with your earnings?
With your incredible NTA analysis, are you sure it's just surging prices that has elevated them, or is something else going on.
Is that the same Grantham who predicted the great crash of 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022 and now the mother of all crashes that was due in 6 months time around 2 years ago but still coming? That guy?
Please tell us how he 'correctly called the dot com and GFC' give us a detailed analysis.
Jake would say, too much weights not enough speed work, then something else which I wont repeat.
Get with the program for your own sake.
Yes there is some expensive stuff out there, so what? Were also in the middle of a GFC like decimation for hundreds if not thousands of companies.
Write us an article about the hundreds of companies that are trading below 2012 levels with single digit PE's and when the last time was that we had such a massive amount of them to choose from.
New Zealand’s Central Bank Set to Raise Interest Rates, Leave Door Open for More
New Zealand’s central bank is poised to raise interest rates for a 12th straight meeting and may signal it’s not done yet as surging immigration and looser fiscal policy counter its efforts to curb demand.
The Reserve Bank will lift the Official Cash Rate by 25 basis points to 5.5% Wednesday in Wellington, according to 18 of 21 economists in a Bloomberg survey.
https://www.bloomberg.com/news/artic...her-tightening
and lets not forget real rates are still negative
Hi Valuegrowth, I thought this was interesting. Been playing long NASDAQ vs short either Russell 2000 or S&P500 for a while now & has been paying off rather well.
23 May 2023 06:15
LIVE MARKETS-S&P 500 tech sector has reached a major milestone
* Nasdaq gains, S&P 500 edges higher, DJI dips
* Comm svcs leads S&P 500 sector gainers; staples weakest
group
* Dollar, bitcoin edge up; crude gains; gold slips
* U.S. 10-Year Treasury yield edges up to ~3.70%
Welcome to the home for real-time coverage of markets brought to
you by Reuters reporters. You can share your thoughts with us at
S&P 500 TECH SECTOR HAS REACHED A MAJOR MILESTONE (1415
EDT/1815 GMT)
The S&P 500 tech sector has accomplished a major feat.
Indeed, over the past week, the tech sector /S&P
500 index ratio hit all-time highs:
As the Y2K tech bubble was about to pop, the SPLRCT/SPX
ratio hit 0.651 on March 10, 2000. Shortly thereafter, or 10
trading days later, the S&P 500 posted a record high close on
March 24, 2000, before beginning a severe bear market.
More recently, on December 10, 2021, the ratio once again
topped at 0.651. The S&P 500 established its record-high close
15 trading days later, or January 3, 2022. The SPX then once
again kicked off a bear-market decline.
On Tuesday of last week, the SPLRCT/SPX ratio finally
exceeded 0.651. Four trading days later, it now stands at 0.66
on Monday. And this with SPLRCT still down about 11% from its
late-December 2021 record high, and the SPX still off about 12%
from its January 2022 peak.
It now remains to be seen if this modest breakout so far in
tech sector relative strength vs the SPX to new all-time highs
will prove sustainable, or if it will be short-lived, and once
again precede a severe reversal in the benchmark index.
Indeed, with much attention being paid to weak breadth, and
the handful of tech-titans/FANG index names, that have
been driving the market higher this year, a sudden sharp
reversal in tech's relative strength back below its former
peaks, in the absence of a major rotation or broadening, may
leave the market especially vulnerable to decline.
(Terence Gabriel)
*****
TMRW RBNZ show ...short term direction wud depend upon 25or 50 bips ....market looking for 25 ...but not looking for either a pause or 50 bips
Pause 5% chance ...25 bips 50% ...50bips 45% ...but how many times stocks will tumble on rate worries ...bear fatigue setting in ?? Bull shud know ...