Are N.Z. Equities too expensive ?

[Beagle]

https://www.goodreturns.co.nz/article/976506209/new-zealand-values-most-stretched-in-world.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Monday+29+J anuary+2018

Good fodder for debate here. I suspect like all statistics it depends upon how you interpret the numbers and the truth is probably somewhere in the middle. It one assumes the forward PE for the market as a whole is about 21 and the average for the last decade is just 16 is another 5 PE warranted with ultra low interest rates and a reasonable growth outlook ? What if interest rates rise in 2018 and 2019 ?

My take on this.
- Stellar growth companies like ATM FPH Synlait e.t.c. are skewing the data a bit.
- Some other large companies with modest growth prospects like POT and AIA are over priced and are impacting the data further.
- Safe large utility companies like all the gentailiers are trading on yield derived from free cash flow and the high PE's of that's sector are impacting the data even further.
- With a market average forward PE of 16 for the last decade in mind I think if you can find companies on a forward PE of less than 18 with reasonable growth prospects that could be one quite useful filter to apply as a stock selection marker. If sound growth prospects come at a PE of less than 16 it might be time to open the cheque book in a meaningful way.
- Some of the retirement stocks for example meet that criteria very nicely and have prevailing tailwinds for the next ~ 25 years.
- On the other hand holding stocks just for yield might be a little riskier than it was in years past as we enter a rising interest rate environment.
- Some diversification overseas seems to make good common sense with the currency where it now is.

[fish]

Thanks for that post Beagle
You have given a lot of useful advice over the years

[Dust]

Oh yeah, no doubt equities are overvalued everywhere at the mo cept for most of the emerging markets.

My take on NZ is the lack of security selections, to gain any sort of exposure in our market you've only got the handful to pick from so of course everything is overbought, like you said even the ones with modest growth are overpriced. I'm sure alot of people have resorted to buying the losers to gamble on any sort of value left in the market.

...and I'm picking it's going to get worse...when youve got more delistings than IPOs in a thriving global economy

[iceman]

Good points Beagle and no doubt a question we are all grappling with.
In the decade ending 31 December just gone, the NZX index rose 108%, NZ Bonds 95% and Auckland house prices 95%. So we've had a good run overall.

One issue that needs to be taken into account is the huge amount of bonds reaching maturity and redemption in NZ, an estimate $ 6-7 Billion in the first half of this year. It looks unlikely new issues will be but a small fraction of that. In the current low interest environment, where will this large amount of money go.
I suggest it may underpin the performance of good divie paying stocks for a while yet

[Dassets]

Back in the day I did some regression analysis on the NZ market. I collected data on interest rates, PEs , inflation, index levels quaterly for about 50 years. This was in the early 90s. What I found was a strong and stat significant relationship between PE and interest rates/ inflation I demonstrated that a PE band existed at certain inflation rates and implicitly interest rates. The band allowed for a bunch of other factors. From memory i would expect a band of 19 to 23x at current inflation. Yes there are a bunch of other issues such as pe calculation etc. But with over 200 points in each series it was pretty good. Never seen that analysis replicated in nz btw. But hey I did 3 stahe dividend discount models for the whole market and used matrix algebra to break down complex ownership structures back then too.

[Sideshow Bob]

All good points.

I would be interested in to what degree KiwiSaver is pushing NZ share/bond markets along. Averages about $450m per month going into providers ($5.4b/pa), and would expect still want a good portion in NZD investment. That flow is going to continue and should continue to grow.

[macduffy]

Good discussion, all!

Given the strong demand for NZ equities, one wonders why there's such a dearth of new listings - like, none since OCA last year - or, are there promotors, brokers and underwriters working furiously in back offices, that we don't know about? (OK, I know that's unlikely.)

[minimoke]

All good points.

I would be interested in to what degree KiwiSaver is pushing NZ share/bond markets along. Averages about $450m per month going into providers ($5.4b/pa), and would expect still want a good portion in NZD investment. That flow is going to continue and should continue to grow.in 2-19 another $1b will go into NZ Super fund increasing to $2.5b in 2022. Total contributed under the new labour govt approx $8b over 5 years

[Sideshow Bob]

Good discussion, all!

Given the strong demand for NZ equities, one wonders why there's such a dearth of new listings - like, none since OCA last year - or, are there promotors, brokers and underwriters working furiously in back offices, that we don't know about? (OK, I know that's unlikely.)

Just had a look under new listings on the NZX website, and there were none at all!

[Filthy]

Just had a look under new listings on the NZX website, and there were none at all!

surprise surprise.....



filthy

[value_investor]

Of course it's very expensive. Keep in mind we are in perhaps the greatest bull run in history so it logically it has to be unprecedented. You've got the perfect cocktail of tailwinds supporting this one.

Lets see, a global bull run supporting it locally, bringing in more money from overseas. The sentiment overseas is very good, I can't remember the last time where we had growth in unison in other countries on a macro level. No doubt more money for the NZX companies.

We have had some favourable business conditions in NZ, with very few trade sanctions or restrictions in the past 4 national governments. Kiwisaver and the impending super fund contributions coming back as well adds to the equation. I'm sure I'm missing a whole lot out.

Keep in mind, when markets are going well, investors start to believe that it will always be up for them and treat it like a money machine constantly pumping more in. When the market is down, pessimism takes over and investors start to exit the market. In fact, in the long term, both sides are never correct and the market just fluctuates up and down.

[JeremyALD]

Seems ok value to me. We have some pretty good yield and imputed divies. It's hard to find any screaming buys, but overall you can still find a fair bit of value. I wouldn't be surprised to see a flat year, but much like the housing market there seems to be factors that should keep share markets up this year

[Baa_Baa]

Of course it's very expensive. Keep in mind we are in perhaps the greatest bull run in history so it logically it has to be unprecedented. You've got the perfect cocktail of tailwinds supporting this one.

Lets see, a global bull run supporting it locally, bringing in more money from overseas. The sentiment overseas is very good, I can't remember the last time where we had growth in unison in other countries on a macro level. No doubt more money for the NZX companies.

We have had some favourable business conditions in NZ, with very few trade sanctions or restrictions in the past 4 national governments. Kiwisaver and the impending super fund contributions coming back as well adds to the equation. I'm sure I'm missing a whole lot out.

Keep in mind, when markets are going well, investors start to believe that it will always be up for them and treat it like a money machine constantly pumping more in. When the market is down, pessimism takes over and investors start to exit the market. In fact, in the long term, both sides are never correct and the market just fluctuates up and down.

That's a nice concise summary imo, who cares about the precise details, it'll do you head in trying to finesse the minutiae.

The winners will be the ones who understand what they're involved in and act decisively on the change in sentiment, when it happens, which it will. i.e on this leg of the cycle, when to sell and take profits. It is well past a 'buy and pray' market.

Routs are always alarming on the first day when you wake up and the US market or others have crashed a few % points, but the really big bear takes weeks, months or years to unfold (real crashes happen in slow motion) so there's plenty of time to divest and record a profit that is not quite so impressive as it was at the highs, but much more impressive than when it finally hits the lows, and significantly more impressive than riding out the whole cycle waiting a half decade or a whole decade to make a recovery to par value .

Personally, I don't think buying into anything at the moment is particularly sensible without ... an acute awareness of company fundamentals and in particular market sentiment, a complete detachment from emotion, and an ability to act immediately with conviction. Which most don't have, as far as I can tell. It's big ask, we're humans after all.

I'd encourage people to research 'momentum trading', not to be a trader per se, but to acknowledge that equities markets go up and down, and with it opportunities are presented to capitalise on upside and avoid downside. It might require learning some new skills, but it's worth it.

[minimoke]

Heard a headline on the wireless this morning something about the economist (?) who a few years back said "NZ is a rockstar economy" reckons 2018 and 2019 will still be very good years

[vici]

Good points all Beagle, value investor, Baa baa.
It's expensive sure, but is it too expensive?

Agree with the tailwinds helping throw more fuel on the fire.
Interest rates is the other big factor, that's ultimately what you're trying to beat isn't it? The risk free rate, or what you might safely get from the bank. With interest rates as historically low as they are, getting your ~3.5% at the bank where else do you put your money to get a better return?
Think there is still relative value to be found, but like Baa baa says I'd be exercising extreme caution with a bunch of stocks pretty highly overvalued/ optimistically fully priced.
When the crash eventually does come the price risk in these stocks means they have the most to lose, so as an investor need to have pretty strong conviction in the fundamentals and overall strength of the business to come out the other side.

[winner69]

FNZC reckon that the forward looking PE of the NZX is 22.7

The median PE is far lower at 15.6 with the gap of this to the average PE continuing to be at near record levels. Suggests that small and mid cap stocks have been left far behind and unsurprisingly this is where many attractive opportunities exist

Don’t worry about overall market valuations - be a stock picker and run with those


What’s the earnings growth of the NZX - might surprise some

[winner69]

Many say the high valuation multiples make sense where interest rates (low) are where they are today

But could it be that interest rates are low because (economic) growth rates are also relatively low.

Think about those two statements - they suggests no valuation premium (ie a high PE) is justified

Result could be medium / long term market returns will be subpar

Interesting

[percy]

Many say the high valuation multiples make sense where interest rates (low) are where they are today

But could it be that interest rates are low because (economic) growth rates are also relatively low.

Think about those two statements - they suggests no valuation premium (ie a high PE) is justified

Result could be medium / long term market returns will be subpar

Interesting

As always it pays to remember PEG.ie PE ratio divided by growth or PEGD ie PE divided by growth plus dividend.
Paying a PE twice to three times earnings is scary to me.
I am however, not able to find NZ stocks at present where the growth is higher than the PE ratio,so care is needed.
Non profitable companies with high goodwills, and or intangibles that taken out of their balance sheet, leaving no shareholder equity,I avoid.
I also look for companies that have the capacity to keep paying increasing fully imputated dividends.
Does not leave a lot of companies in NZ to invest in.!

[minimoke]

The other thing worth remembering, in my view is our love affair with property as an investment vehicle. As rental yields reduce there's a chance property owners, or those thinking of property will move to shares where the overall runs could be much better. This off course keeps demand for shares up.

[winner69]

As always it pays to remember PEG.ie PE ratio divided by growth or PEGD ie PE divided by growth plus dividend.
Paying a PE twice to three times earnings is scary to me.
I am however, not able to find NZ stocks at present where the growth is higher than the PE ratio,so care is needed.
Non profitable companies with high goodwills, and or intangibles that taken out of their balance sheet, leaving no shareholder equity,I avoid.
I also look for companies that have the capacity to keep paying increasing fully imputated dividends.
Does not leave a lot of companies in NZ to invest in.!

Appears forecast average earnings for NZX companies this year is about 6%/7% so you wouldn’t be buying the Index at a PE of 22 odd would you percy

Like you stick to stocks that meet our criteria and don’t worry about the Index (too much)

[percy]

Appears forecast average earnings for NZX companies this year is about 6%/7% so you wouldn’t be buying the Index at a PE of 22 odd would you percy

Like you stick to stocks that meet our criteria and don’t worry about the Index (too much)

Being a stock picker, buying the index, or placing funds under management does not appeal to me.Would take away all the fun.!
Yes I try to keep to stocks that meet my criteria.This off course means I do not share in the taxi drivers' hotties,and under perform them at times.Maybe my investment horizon is longer than theirs'.?

[Beagle]

FNZC reckon that the forward looking PE of the NZX is 22.7

The median PE is far lower at 15.6 with the gap of this to the average PE continuing to be at near record levels. Suggests that small and mid cap stocks have been left far behind and unsurprisingly this is where many attractive opportunities exist

Don’t worry about overall market valuations - be a stock picker and run with those


What’s the earnings growth of the NZX - might surprise some
What a great thread this has been so far. Thanks to all for your contributions so far. Just picking up on your point Winner. This disparity between the average, (if we are to assume this is a market capitalization based average), and the medium shows the degree of influence the average number is affected by factors I noted in post #1.
It shows there is indeed relative value to be found in the mid and small cap sector but I agree with another poster who suggested some people are punting on companies with little or no track record in an attempt to find value.

Just wanted to add a couple of snippets from my time spent watching world and business leaders opine at Davos as reported and shown on CNBC.
Worldwide economic growth predicted by many to be strong at 3.9% in 2018.
Consensus view that inflation generally is moderate but fiscal stimulus will have to be wound back as the year progresses to avoid inflationary pressures.
Still a LOT of money on the sidelines in cash.

Further thoughts.
No question new money coming to the market every single month from Kiwisaver now 10 years old is having a supportive effect on the market.
The high average dividend will be supportive of the N.Z. market as interest rates rise.
We are fortunate to have an imputation system that allows us to reclaim tax paid by our companies, not all that many countries do.
We are fortunate to not have capital gains tax on shares, enjoy that while it lasts.
Many commentators are now calling the end to the great bond rally of the last 20 years and long term interest rates look certain to head higher from where I sit. Long dated corporate or Govt bonds look like a very poor place to have capital allocated to me.
Lower yielding REIT's could come under pressure as interest rates rise, I prefer highest yielding REIT's like ARG and GMT, both PIE funds.
Our corporate tax rate is starting to look a little high relative to other OECD nations.

[minimoke]

We are fortunate to not have capital gains tax on shares, enjoy that while it lasts..
My understanding is that there is a tax on shares if they are bought with an intention to sell and they are sold for a gain. Not Capital Gains TAx I know. But a tax on gains all the same. (judging by the language of many posters here they clearly intend to hold shares for the purpose of selling - and show no hesitation in actually selling when opportunity for gain seems to be reversing.)

[Beagle]

Probably a topic best left for a different thread minimoke. I simply made that remark to put our market valuation into context as other markets do indeed have an all encompassing capital gains tax system and some have capital gains tax and no ability to claim imputation or other tax credits back.

[couta1]

Probably a topic best left for a different thread minimoke. I simply made that remark to put our market valuation into context as other markets do indeed have an all encompassing capital gains tax system and some have capital gains tax and no ability to claim imputation or other tax credits back. Yes agreed, just chasing tails getting into that subject, although I like what winner said a few years ago," We are all traders, it's just the time till sale that's different".

[percy]

Yes agreed, just chasing tails getting into that subject, although I like what winner said a few years ago," We are all traders, it's just the time till sale that's different".

I always buy to hold forever,and to receive growing dividends.
I only ever sell to preserve capital, [so as I may remain "well positioned"].

[peat]

I am not going to suggest that NZ shares arent highly valued
POT and AIA are highly valued for sure and their obviously achievable growth may not be as superlative as ATM PPH.
But there is a very different risk profile involved in holding either of these very moaty transport/infrastructure shares cf the general market which obviously allows higher valuations than your standard businesses that are based on competing with other similar businesses. I would suggest they deserve at least a significant chunk of their high valuation based on the barrier to entry in their industry without even considering their performance. Growth doesnt always come from where you expect it to - as shown by AIA's very profitable recent sale of shares in other airports.
Sydney Airport for instance trades on a PE twice that of AIA, and would be comparable in terms of monopolistic advantage
POT would appear to be especially highly valued and I wouldnt buy it myself , but then I said that at just over $4 and now it is over $5.

As market become more and more highly valued and then some clouds begin to appear on the horizon we should also note that there quite often tends to become a very discernible flight to quality and so well managed monopolies will benefit from that.

[Beagle]

http://www.sharechat.co.nz/article/18875124/amp-capital-nz-stays-neutral-on-stocks-listed-property-overweight-on-cash-foreign-exchange.html?utm_medium=email&utm_campaign=AMP%20Capital%20NZ%20stays%20neutral% 20on%20stocks%20listed%20property%20overweight%20o n%20cash%20foreign%20exchange&utm_content=AMP%20Capital%20NZ%20stays%20neutral%2 0on%20stocks%20listed%20property%20overweight%20on %20cash%20foreign%20exchange+CID_69c02eda99431794a 9323022fffd7b80&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle18875124amp-capital-nz-stays-neutral-on-stocks-listed-property-overweight-on-cash-foreign-exchangehtml

AMP Capital opines on the subject.

[peat]

yes I was just thinking this article was very relevant to the thread!
Pretty much agree , and very noticeable that they inject some emotion into their comments by using the word 'euphoria' in their latest report.

My main equity investments have been in withdrawl mode for a while now , slowly ever so slowly reducing a number of mutual funds.
I am reluctant to reduce overseas unhedged exposure though when the Kiwi is high,which incidentally is via an AMP Capital fund

[Beagle]

Days like today I am happy that I am of a similar view to you Peat and AMP and sitting on a pretty reasonable cash allocation but most other days this month it hasn't felt so good lol

[minimoke]

Days like today I am happy that I am of a similar view to you Peat and AMP and sitting on a pretty reasonable cash allocation but most other days this month it hasn't felt so good lol
Like you I am "well positioned" in cash. But yields on cash are abysmal. Which makes even expensive stocks look more attractive - thus pushing demand.

[Beagle]

Like you I am "well positioned" in cash. But yields on cash are abysmal. Which makes even expensive stocks look more attractive - thus pushing demand.

I keep mine with Heartland in their 2.75% on call account so at least it keeps pace with inflation and if the "custard" hits the fan and assets get cheaper then one's purchasing power goes up ! I agree that you are quite right that globally the returns on cash are pitiful, (2.75% is unheard of) which is definitely one factor fuelling the global rally.

[minimoke]

I keep mine with Heartland in their 2.75% on call account ....
Hmmm. I wonder if they have a Special Rate for shareholders. Percy?

[Aaron]

I keep mine with Heartland in their 2.75% on call account so at least it keeps pace with inflation and if the "custard" hits the fan and assets get cheaper then one's purchasing power goes up ! I agree that you are quite right that globally the returns on cash are pitiful, (2.75% is unheard of) which is definitely one factor fuelling the global rally.

That is a great on-call rate. I guess Heartland's lending rates are higher as well. Does this mean they have riskier customers or are the main banks screwing over savers?
https://www.heartland.co.nz/savings-and-deposits/savings-account

I am using Rabodirect rolling over three monthly term deposits at roughly 3%. Banks ratings as follows.
https://www.rbnz.govt.nz/regulation-and-supervision/banks/prudential-requirements/credit-ratings
ratings explanation
https://www.rbnz.govt.nz/-/media/ReserveBank/Files/regulation-and-supervision/banks/3498179.pdf?la=en
At least part of my money is tied up for three months. In Heartland you can transfer it out at the first signs of trouble. I suppose it is unlikely any bank will go under. Are the NZ taxpayers still underwriting/gauranteeing the bank business in NZ?

[Aaron]

Just read the thread heading. I hope nz equities are too expensive I have been waiting for them to get cheaper for a while now. Good to see heartland providing interest rate competition. Interest rates go up asset prices come down. Maybe the world is normalising

[percy]

Hmmm. I wonder if they have a Special Rate for shareholders. Percy?

HBL usually send special rate cards through with reports,however, mention you are a shareholder and would prefer the shareholders' rate.

[percy]

Just read the thread heading. I hope nz equities are too expensive I have been waiting for them to get cheaper for a while now. Good to see heartland providing interest rate competition. Interest rates go up asset prices come down. Maybe the world is normalising

For those of us who loaded up in the market a few years ago,as well as enjoying the market being too expensive, we are very relaxed with the increasing dividends.

[Beagle]

That is a great on-call rate. I guess Heartland's lending rates are higher as well. Does this mean they have riskier customers or are the main banks screwing over savers?
https://www.heartland.co.nz/savings-and-deposits/savings-account

I am using Rabodirect rolling over three monthly term deposits at roughly 3%. Banks ratings as follows.
https://www.rbnz.govt.nz/regulation-and-supervision/banks/prudential-requirements/credit-ratings
ratings explanation
https://www.rbnz.govt.nz/-/media/ReserveBank/Files/regulation-and-supervision/banks/3498179.pdf?la=en
At least part of my money is tied up for three months. In Heartland you can transfer it out at the first signs of trouble. I suppose it is unlikely any bank will go under. Are the NZ taxpayers still underwriting/gauranteeing the bank business in NZ?

The move by the main trading banks to either pay no interest or so little interest on call accounts its laughable is a fairly recent phenomenon. Really at the rates the main banks are paying they're saying they don't want people to have their money on call. No there's no deposit guarantee scheme that I'm aware of unlike in some other countries. Some of Heartland's lending is at the riskier end of the scale but the main trading banks also have a fair slice of risky lending on their balance sheet's too.

I have ~ 38% of my portfolio allocated to cash at this point which demonstrates the degree of caution I have to where the markets are at present. I confess this sized cash allocation has felt a little too conservative at times this summer with the market roaring away like the bit fat fairly mature Bull it is some days...I guess after a stellar 2017 I am content to rest on my laurels a little this quarter and see how things unfold through to 31 March and go from there. This feels about right to me and passes the "sleep test" so I'll just follow my gut instinct and stick with that cash allocation in the short term. The key risk I find with sitting on a sizeable cash allocation is resisting the temptation to spend it :)

[peat]

That is a great on-call rate. I guess Heartland's lending rates are higher as well. Does this mean they have riskier customers or are the main banks screwing over savers?
https://www.heartland.co.nz/savings-and-deposits/savings-account

I am using Rabodirect rolling over three monthly term deposits at roughly 3%. Banks ratings as follows.
https://www.rbnz.govt.nz/regulation-and-supervision/banks/prudential-requirements/credit-ratings
ratings explanation
https://www.rbnz.govt.nz/-/media/ReserveBank/Files/regulation-and-supervision/banks/3498179.pdf?la=en
At least part of my money is tied up for three months. In Heartland you can transfer it out at the first signs of trouble. I suppose it is unlikely any bank will go under. Are the NZ taxpayers still underwriting/gauranteeing the bank business in NZ?

No the banks in NZ are not govt guaranteed.
Yes I use the Rabo 60 day notice account for 3% that strikes me as useful, and stops me from acting on a whim. I keep enough aside (at a much lower rate) for trading settlements
I have no concern with Rabo as an institution so dont need to take into account any 'signs of trouble' with them.

[minimoke]

No the banks in NZ are not govt guaranteed.

Agreed - but they are all probably too big to be allowed to fail. I have seen no change in appetite from government to intervene in the same way they did with South Canterbury Finance should an event occur.

[peat]

Agreed - but they are all probably too big to be allowed to fail. I have seen no change in appetite from government to intervene in the same way they did with South Canterbury Finance should an event occur.
Their distaste for excursions into corporate welfare resulted in the OBR - which can result in depositors taking a haircut.

https://www.rbnz.govt.nz/regulation-and-supervision/banks/open-bank-resolution

[minimoke]

Their distaste for excursions into corporate welfare resulted in the OBR - which can result in depositors taking a haircut.

https://www.rbnz.govt.nz/regulation-and-supervision/banks/open-bank-resolution
One of the bits being non-frozen funds are Govt Guaranteed. That'll be the interesting figure in a failure.

[Aaron]

Their distaste for excursions into corporate welfare resulted in the OBR - which can result in depositors taking a haircut.

https://www.rbnz.govt.nz/regulation-and-supervision/banks/open-bank-resolution

Sorry had to edit as I actually read the OBR link from Peat, instead of asking silly questions.

My funds are so low they might all remain unfrozen. Maybe I should split some with a Heartland Bank deposit account.

Unlikely that banks will fail??? 2007 was the last time and potentially that was a lot of banks globally what has changed other than ultra loose central bank policy.

I think todays economists must have studied under the John Law school of economics. I can't see a lot of difference between today and the Mississippi bubble.

[Aaron]

For those of us who loaded up in the market a few years ago,as well as enjoying the market being too expensive, we are very relaxed with the increasing dividends.

Well done.

[BobbyMorocco]

I have ~ 38% of my portfolio allocated to cash at this point which demonstrates the degree of caution I have to where the markets are at present. I confess this sized cash allocation has felt a little too conservative at times this summer with the market roaring away like the bit fat fairly mature Bull it is some days...I guess after a stellar 2017 I am content to rest on my laurels a little this quarter and see how things unfold through to 31 March and go from there. This feels about right to me and passes the "sleep test" so I'll just follow my gut instinct and stick with that cash allocation in the short term. The key risk I find with sitting on a sizeable cash allocation is resisting the temptation to spend it :)

I know exactly how you feel but if and when the market turns I think you'll find it quite nice having that cash sitting around to scoop up some bargains. That's when you'll be glad you resisted temptation. I admit it is tough though. I cashed up a business last August and have been a little unsure what to do with a lot of the proceeds, because the market does seem pretty stretched. It pains me to say a lot of it is still sitting in an on call account with Westpac earning a measly 2.1%. I must find the time to do something about that!

Good thread and great thoughts. Keep 'em coming!

[pierre]

If NZ equities were too expensive yesterday, they certainly headed out of the ballpark today!

[Beagle]

I know exactly how you feel but if and when the market turns I think you'll find it quite nice having that cash sitting around to scoop up some bargains. That's when you'll be glad you resisted temptation. I admit it is tough though. I cashed up a business last August and have been a little unsure what to do with a lot of the proceeds, because the market does seem pretty stretched. It pains me to say a lot of it is still sitting in an on call account with Westpac earning a measly 2.1%. I must find the time to do something about that!

Good thread and great thoughts. Keep 'em coming!

All manner of different sorts of temptations on Trade me that need to be carefully navigated around too :)

[bull....]

theres a old saying that goes .... so how goes january so how goes the rest of the year

[Filthy]

theres a old saying that goes .... so how goes january so how goes the rest of the year

based on that logic bull, we are maybe looking at a reasonably flat year then eh...

might have to start trading the little peaks and troughs a bit more this year to make a buck, rather than using the usual buy/hold strategy.

that said, I do rather like following percy’s mantra.... especially with time being on my side…




filthy

[minimoke]

If NZ equities were too expensive yesterday, they certainly headed out of the ballpark today!
For me it was a strange day - but a learning day (stop watching share transactions during the day!). Portfolio#2 went down to 8.2% profit during the morning but closed the day at 10.8% profit.

[percy]

For me it was a strange day - but a learning day (stop watching share transactions during the day!). Portfolio#2 went down to 8.2% profit during the morning but closed the day at 10.8% profit.

Watching share transactions during the day does not achieve anything for me,other than getting me excited at times.
Why I watch the market closely is for announcements.
Then I have to analyse them,and if action buy/hold/sell is required, do it.

[Beagle]

If NZ equities were too expensive yesterday, they certainly headed out of the ballpark today!

That was quite a "move" in the final 15 minutes of trading wasn't it ! First time I have seen end of month institutional window dressing to that extent for several years. I guess they were determined to have a positive start to 2018 as without that spurt the NZX50 would have been negative for the month. Makes all our end of month portfolio revaluations look good so I suppose we should be happy...even if it did look contrived. I started the day thinking we would get a bit of a belting on the back of the very soft U.S. market but we had possibly ? the strongest day of 2018 so far, ironic isn't it !

[couta1]

That was quite a "move" in the final 15 minutes of trading wasn't it ! First time I have seen end of month institutional window dressing to that extent for several years. I guess they were determined to have a positive start to 2018 as without that spurt the NZX50 would have been negative for the month. Makes all our end of month portfolio revaluations look good so I suppose we should be happy...even if it did look contrived. I started the day thinking we would get a bit of a belting on the back of the very soft U.S. market but we had possibly ? the strongest day of 2018 so far, ironic isn't it ! Yes I dispatched a couple of stocks at close last night, never look a gift horse in the mouth,still expecting a 10-15% correction at some stage this year.HLG and ATM are my not too expensive long term holds.

[Beagle]

Yes I dispatched a couple of stocks at close last night, never look a gift horse in the mouth,still expecting a 10-15% correction at some stage this year.HLG and ATM are my not too expensive long term holds.

You're as cunning as a hungry beagle.

[macduffy]

That was quite a "move" in the final 15 minutes of trading wasn't it ! First time I have seen end of month institutional window dressing to that extent for several years. I guess they were determined to have a positive start to 2018 as without that spurt the NZX50 would have been negative for the month. Makes all our end of month portfolio revaluations look good so I suppose we should be happy...even if it did look contrived. I started the day thinking we would get a bit of a belting on the back of the very soft U.S. market but we had possibly ? the strongest day of 2018 so far, ironic isn't it !

Yes, that's the way I read it too, although I note that some commentators reckon it was more a case of funds selling Xero on its last day of NZX trading and reinvesting the funds. Unlikely to see pro fund managers acting that way, I would think.

[Beagle]

Yes, that's the way I read it too, although I note that some commentators reckon it was more a case of funds selling Xero on its last day of NZX trading and reinvesting the funds. Unlikely to see pro fund managers acting that way, I would think.

You could well be right as there was quite a kerfuffle when XRO exited the NZX50.

[bull....]

Yes, that's the way I read it too, although I note that some commentators reckon it was more a case of funds selling Xero on its last day of NZX trading and reinvesting the funds. Unlikely to see pro fund managers acting that way, I would think.

end of month window ramping lol , would have been a negative mth otherwise

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11985657

[peat]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11985657

First two paragraphs include Craigs and Comvita. Oh dear is this too blatant

[Dassets]

To put you straight ramping may have happened years ago but that is long gone in terms of institutions doing it. The Warminger FMA case more than touches on that type of behaviour and current expectation as to what is acceptable and what isnt in todays regulatory framework.

[Beagle]

First two paragraphs include Craigs and Comvita. Oh dear is this too blatant

Suppose we better brace for another capital raise (with guess who as the lead broker) to fund their "phenomenal" growth.

[777]

Another doom and gloom by a nobody.

https://www.stuff.co.nz/business/101064349/crash-warnings-intensify-heres-what-you-should-do-when-it-happens

[minimoke]

Another doom and gloom by a nobody.

https://www.stuff.co.nz/business/101064349/crash-warnings-intensify-heres-what-you-should-do-when-it-happens
Shame you have to read this dribble to the very end to get to the key point "Jim Rogers, founder of the Quantum Fund, has been predicting the worst since 2011". One day he will be right

[Beagle]

Even a broken clock is right twice a day...doesn't make it very useful though does it !

[minimoke]

But on a more serious note - I really do despair if the financial literacy of people is so lacking they do not understand markets go down. Even in the share market there is a correction happening every day on one stock or another to some degree or other. Its something to be aware of and pan for - but its not all doom and gloom. And if we learn from the past it will be less gloomier.

[bigbruce]

POT PE 41
AIA " 28
FBU " 58
SKC " 59

too high for me

[Beagle]

https://www.cnbc.com/2018/02/02/heres-the-stock-markets-big-sell-off-by-the-numbers.html

[couta1]

https://www.cnbc.com/2018/02/02/heres-the-stock-markets-big-sell-off-by-the-numbers.html I'm looking forward to Monday, just need A2 to drop below $8.50 to hit the top up button, but I may be too optimistic, will be buying some other stocks anyways. With Tues a public holiday in NZ, it could be a very black Wednesday for us if the US markets continue to correct.

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12012023

Market helped along a lot by one particular stock I think but in answer to the thread question I posted some time back I still think there are pockets of value left.

[sb9]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12012023

Market helped along a lot by one particular stock I think but in answer to the thread question I posted some time back I still think there are pockets of value left.

Is that stock ATM by any chance...:p

[winner69]

OMG — the guy who normally says things are all OK now saying making money over next few years might be a bit hard ...but he essentially saying what some said on recent ST threads

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12012646

[Beagle]

He makes some good points but this comes across as looking like "investor conditioning" Their managed funds are spread far and wide around the world, so far and wide you often end up with very mediocre performance. No question this is a stock pickers market and you need good FA and TA skills to make money now. Happy to back my own judgement and analysis. A case of diworseification for broker managed funds ?

[winner69]

He makes some good points but this comes across as looking like "investor conditioning" Their managed funds are spread far and wide around the world, so far and wide you often end up with very mediocre performance. No question this is a stock pickers market and you need good FA and TA skills to make money now. Happy to back my own judgement and analysis. A case of diworseification for broker managed funds ?

Suppose you achieving interplanetary returns these days ....just a phrase I heard on TV ....cool though

[Beagle]

Suppose you achieving interplanetary returns these days ....just a phrase I heard on TV ....cool though

Great returns so far this year mate but no room for complacency or smugness. Just enjoying a good run hitting the ball out of the park so too speak for a change... probably get bowled next delivery lol.
Actually speaking of interplanetary. Fair bit of energy involved in this solar event https://www.msn.com/en-nz/news/techandscience/massive-solar-storm-slamming-into-earth-tomorrow-could-cause-power-outages-and-stunning-views-of-the-northern-lights/ar-BBKb1lK?ocid=spartandhp
I suppose we'd better get our tin foil hats out for tomorrow :)