Dead Cat bounce?

[HKG2301]

OK, so I'm relatively new to the NZ market, investing in the NZX less than a year. It's still not clear to me how much we're driven by the US markets, but assuming there's a link (at least during Covid), should we not be calling this a Dead Cat Bounce and preparing for a re-test of the March lows? That's certainly on the cards for the US markets, especially if they've badly mis-timed their Covid 're-opening', which is likely. Will our market ignore another 20% drop in the US markets, or should we be battening down the hatches as well?

[ynot]

OK, so I'm relatively new to the NZ market, investing in the NZX less than a year. It's still not clear to me how much we're driven by the US markets, but assuming there's a link (at least during Covid), should we not be calling this a Dead Cat Bounce and preparing for a re-test of the March lows? That's certainly on the cards for the US markets, especially if they've badly mis-timed their Covid 're-opening', which is likely. Will our market ignore another 20% drop in the US markets, or should we be battening down the hatches as well?

Billion dollar question. Nobody knows.l

[blackcap]

OK, so I'm relatively new to the NZ market, investing in the NZX less than a year. It's still not clear to me how much we're driven by the US markets, but assuming there's a link (at least during Covid), should we not be calling this a Dead Cat Bounce and preparing for a re-test of the March lows? That's certainly on the cards for the US markets, especially if they've badly mis-timed their Covid 're-opening', which is likely. Will our market ignore another 20% drop in the US markets, or should we be battening down the hatches as well?

Why would there be another 20% drop in US markets? Surely the best predictor of future US market prices is today's price? What do you know that all other market participants in the US do not know? Like ynot said, its really is the $m question. No one knows what tomorrow's prices will bring.

[Entrep]

Surely the best predictor of future US market prices is today's price? Equally as valid for 23 March and look where we are

[blackcap]

Equally as valid for 23 March and look where we are

It certainly is. But you cannot tell me that you know for certain or are even positively sure which direction markets are going to take tommorrow or next week.

[ynot]

It certainly is. But you cannot tell me that you know for certain or are even positively sure which direction markets are going to take tommorrow or next week.

Absolutely no idea. For the record my guess is down.

[SBQ]

Billion dollar question. Nobody knows.l

Exactly and recently Warren Buffet at his annual meeting made the same claim. No one and NO ONE with certainty and reliability and consistently time after time can tell you where the share markets will be tomorrow, next month, or next 2 or 3 years. What Buffet kept saying in his slide show presentation: "Never bet against America" and he's demonstrated many examples in his meeting of times in the past how the US came from nothing, to a super power, netting Americans to live a high standard of living with the highest disposable income around the world - all in a period of 230 years. And this is while OTHER nations around the world were competing against the US - ie the EU model, is failing...

[ynot]

Exactly and recently Warren Buffet at his annual meeting made the same claim. No one and NO ONE with certainty and reliability and consistently time after time can tell you where the share markets will be tomorrow, next month, or next 2 or 3 years. What Buffet kept saying in his slide show presentation: "Never bet against America" and he's demonstrated many examples in his meeting of times in the past how the US came from nothing, to a super power, netting Americans to live a high standard of living with the highest disposable income around the world - all in a period of 230 years. And this is while OTHER nations around the world were competing against the US - ie the EU model, is failing...

Yes I heard him, but then he does have a vested interest in wanting to talk the market up. Like all great empires they eventually will go down.

[peat]

I just said coincidentally (before seeing this thread ) on the Ebos thread that this is NOT a DCB

over 50% retracement and six weeks long so far means shallow and brief are not fit descriptions of what is going on.

[SBQ]

Yes I heard him, but then he does have a vested interest in wanting to talk the market up. Like all great empires they eventually will go down.

The Roman Empire went down. The Egyptian, etc. A question of 'when' will the US empire go down? Not in mine or my children's lifetime. If it's a question of WWIII where everyone blows each other up... no investment asset would matter as they would all crumble to ashes.. gold would be worthless.. everything. But for the meantime, Buffet is correct.

[HKG2301]

Why would there be another 20% drop in US markets?

Lots of reasons, starting with the fact that the economy is in recession, but markets are already back at pre-Covid levels. Nasdaq is back at February levels, FFS, and they were considered to be in serious bubble territory even then. Which kinda ignores the real state of the economy, with 30 million plus newly unemployed, a record retail sales drop and a 50% drop in GDP. Oh, and they're trying to re-open before actually recovering from Covid. Then there's the historic reaction to such a huge sell-off, very seldom ending in a V bottom. More usually, there's a dead-cat bounce (bear market or short squeeze rally) of about 20-30% before returning to re-test the initial low. At least. Even given the Fed's unprecedented support, I don't expect it will be any different this time.

[ynot]

I just said coincidentally (before seeing this thread ) on the Ebos thread that this is NOT a DCB

over 50% retracement and six weeks long so far means shallow and brief are not fit descriptions of what is going on.

Are you implying onward and upward from here ?

[HKG2301]

It certainly is. But you cannot tell me that you know for certain or are even positively sure which direction markets are going to take tommorrow or next week.

Not suggesting anyone is certain about market direction, it's all a question of probabilities. There are charting statistics/indicators that can help, such as whether a market is overbought or oversold. Also economic indicators, which I touched on earlier and won't bore you with again. My guess is a re-test of the March lows, so I'm short the SPX with options as a hedge. But the next question is, what happens to the NZX (with Covid hopefully under control here) when/if the US markets (Covid definitely NOT under control) do tumble again?

[Aaron]

No idea but I am picking at minimum a retest of the March lows at some time within the next 12 months as the effects of the lockdown ripple through company earnings and further dividends get cut.
0% in the bank might be better than 0% in equity if combined with capital loss as well. At least in the short to medium term.

People may even start to question trickle down economics and the need to artificially keep asset prices at elevated levels(see Bill English's concerns in his report). The Covid-19 lockdown might be the pin that pops the everything bubble.

Or we could have a currency crisis/inflation first and asset prices continue to rise substantially in nominal and not so substantially in real terms and anyone in cash gets wiped out. I am picking the former rather than the latter but do not have strong convictions that this will happen. From what I read Mr Balance has pretty strong convictions it will be inflation/monetary crisis due to ever more unprecedented central bank monetary stimulus globally as well as rampant govt spending.

I am hopeful NZ is not quite as insane as the US, China and Europe and the NZ dollar will hold some value but if foreign funny money is pouring in to buy NZ equities we will have no chance of any significant fall in asset prices.

Negative interest rates means there is no limit to asset valuations. The only restriction becomes how much you can borrow and US hedge funds are closer to the monetary spigot than I am.

Something else entirely may happen as lately historically significant events and actions seem to be happening on a regular basis e.g. the speed of the latest bear market and the size of central bank stimulus as well as the speed to the return (possibly (not likely in my opinion)) of a new bull market.

[peat]

Are you implying onward and upward from here ?

no not at all
nor am I implying there will be a new low.
all Im saying is that it is a real bounce so far , no dead cats involved.

[HKG2301]

No idea but I am picking at minimum a retest of the March lows at some time within the next 12 months as the effects of the lockdown ripple through company earnings and further dividends get cut.
0% in the bank might be better than 0% in equity if combined with capital loss as well. At least in the short to medium term...

You raise many good points there, Aaron. Food for thought.

Definitely agree that inflation will be a problem, with this amount of US Fed spending (read 'printing'). Inflation in the USD eventually becomes inflation everywhere. We keep quite a bit in gold, silver and miners (eg GDXJ). Silver has taken a hit so far, but holding onto them all for now.

[HKG2301]

Why would there be another 20% drop in US markets? Surely the best predictor of future US market prices is today's price? What do you know that all other market participants in the US do not know? Like ynot said, its really is the $m question. No one knows what tomorrow's prices will bring.

Re-reading this, it sounds like you're saying if the market is up today then the 'up' price is correct, ie the efficient market theory. The market always settles at the 'right' price.

So, if the market is up, it's predicting further 'up'...?

That may have worked quite well the last few years, when BTFD (buy the dip) was the best, perhaps only strategy. Not sure that will be the case any more! ��

[Beagle]

https://www.bing.com/images/search?view=detailV2&id=967019EE646FAEFE006D307E08EC238D964E5C8B&thid=OIP.GU_2SAco5EQRSZ52h48DGQHaF2&mediaurl=https%3A%2F%2Fi.pinimg.com%2Foriginals%2F af%2Fd4%2Fd2%2Fafd4d29c6e19b77bd79017a1d24a8d76.jp g&exph=388&expw=491&q=snowmobile+cats+bouncing&selectedindex=0&ajaxhist=0&vt=0&eim=1

What an amazingly high bounce ! Snow Leopard would be proud of that ! Definitely a live cat but as the old saying goes a picture says a thousand words and purr-fectly encapsulates what would appear to be highly likely to happen next.

I have been investing for nearly 40 years and have never seen a greater disconnect between share prices and the underlying economy and its likely future effect on corporate profits.

I don't think people are going to go back to the shopping malls and get on aircraft and stay at hotels and eat out at restaurants just because the Govt says its okay. The Big Bad Bear is still lurking and I think we are right at the peak of the middle part of the W, except the last part of the W will be like an L shape....might take years for things to go back to anything like they were....take care out there folks.

[SBQ]

https://www.bing.com/images/search?view=detailV2&id=967019EE646FAEFE006D307E08EC238D964E5C8B&thid=OIP.GU_2SAco5EQRSZ52h48DGQHaF2&mediaurl=https%3A%2F%2Fi.pinimg.com%2Foriginals%2F af%2Fd4%2Fd2%2Fafd4d29c6e19b77bd79017a1d24a8d76.jp g&exph=388&expw=491&q=snowmobile+cats+bouncing&selectedindex=0&ajaxhist=0&vt=0&eim=1

What an amazingly high bounce ! Snow Leopard would be proud of that ! Definitely a live cat but as the old saying goes a picture says a thousand words and purr-fectly encapsulates what would appear to be highly likely to happen next.

I have been investing for nearly 40 years and have never seen a greater disconnect between share prices and the underlying economy and its likely future effect on corporate profits.

I don't think people are going to go back to the shopping malls and get on aircraft and stay at hotels and eat out at restaurants just because the Govt says its okay. The Big Bad Bear is still lurking and I think we are right at the peak of the middle part of the W, except the last part of the W will be like an L shape....might take years for things to go back to anything like they were....take care out there folks.

There is no disconnect. The reality is those with $ are sick with holding cash in the bank account. Low interest rates = only fools hold cash in the bank account for long periods of time. I know specifically those that accumulated cash reserves in the short term for the sole intention to buy equities. This is apparently in Warren Buffet's recent annual meeting where they said for the individual, holding gov't bonds that pay insane low interest rates - what does that mean when you factor inflation? Look at the 10 year bond rates?

Investors are looking out for the longer term. They see people WILL go back to shopping, go to dining, go on travels, just like before. Why? Because like previous pandemics, they not permanent and human innovation always trumps fear. Vaccines will aid in getting out of the COVID19 transistion.

[SBQ]

No idea but I am picking at minimum a retest of the March lows at some time within the next 12 months as the effects of the lockdown ripple through company earnings and further dividends get cut.
0% in the bank might be better than 0% in equity if combined with capital loss as well. At least in the short to medium term.

People may even start to question trickle down economics and the need to artificially keep asset prices at elevated levels(see Bill English's concerns in his report). The Covid-19 lockdown might be the pin that pops the everything bubble.

Or we could have a currency crisis/inflation first and asset prices continue to rise substantially in nominal and not so substantially in real terms and anyone in cash gets wiped out. I am picking the former rather than the latter but do not have strong convictions that this will happen. From what I read Mr Balance has pretty strong convictions it will be inflation/monetary crisis due to ever more unprecedented central bank monetary stimulus globally as well as rampant govt spending.

I am hopeful NZ is not quite as insane as the US, China and Europe and the NZ dollar will hold some value but if foreign funny money is pouring in to buy NZ equities we will have no chance of any significant fall in asset prices.

Negative interest rates means there is no limit to asset valuations. The only restriction becomes how much you can borrow and US hedge funds are closer to the monetary spigot than I am.

Something else entirely may happen as lately historically significant events and actions seem to be happening on a regular basis e.g. the speed of the latest bear market and the size of central bank stimulus as well as the speed to the return (possibly (not likely in my opinion)) of a new bull market.


You make some statements but with what backing or reference?

What does Bill English know? He knows how to screw the average NZ worker with Kiwi Saver as it's a proven money tree for IRD to tax year after year.. while the smarter investor looks to buying tax free real estate. Show me where assets prices are elevated? Oil? = nope, precious metals? = nope, houses? = nope. In my view, prices have deflated as the 'money supply' has vaporised. If there was no gov't printing of $, we would be in great serious state to the point of having wars.

Again, where's the proof of rampant inflation? In 2008 the US gov't did massive QE and have prices ran out of control? Nope. In recent events is the $3T in monetary printing in the US going to cause inflation? Again, look at the 'money supply'. Easily over $3T has been lost out of thin air through assets vaporisation.

https://www.thebalance.com/causes-of-inflation-3-real-reasons-for-rising-prices-3306094

Above link talks of 2 key causes of inflatio - also worthy to click on the link on 'Quantity Theory of Money'.

But the average NZ investor doesn't read this kind of stuff. They coddle around, see and hear what others say and bode along agreeing (such as at any point gov'ts go on a spending spree = inflation).

The NZD currency is not going to hold value. That's because we're too small of a country and what we have to offer is 2 tricks. One = agriculture resource extractions and Two = Tourism. You can bet tourism won't come back any time soon and it would take AirNZ several years to regain what they last recently in global flights (as globally disposable incomes disappears). If you want a strong NZD, you need LESS of it's currency exported (as locals buy imported products because NZ doesn't make many things), and / or have more of NZ products exported as more currency flows into NZ than going out.


Not sure where you mean about asset valuations in a negative interest rate environment. What negative rates really mean is savers of cash are punished and those that borrow are rewarded. So the person that has more incentive to borrow funds from the bank to buy more houses will stand in a much better position than the person that has cash (a solution where the rich get richer). Banks aren't going to give $ to anyone... just those that meet the requirement and the same would apply to corporate shares that try to vie for bank loans instead of borrowing privately from the public. There is no free lunch even at negative interest rates, meaning the banks (lenders) will gain more in the spread.

[ynot]

[QUOTE=SBQ;813190]There is no disconnect. The reality is those with $ are sick with holding cash in the bank account. Low interest rates = only fools hold cash in the bank account for long periods of time. I know specifically those that accumulated cash reserves in the short term for the sole intention to buy equities. This is apparently in Warren Buffet's recent annual meeting where they said for the individual, holding gov't bonds that pay insane low interest rates - what does that mean when you factor inflation? Look at the 10 year bond rates?

Investors are looking out for the longer term. They see people WILL go back to shopping, go to dining, go on travels, just like before. Why? Because like previous pandemics, they not permanent and human innovation always trumps fear. Vaccines will aid in getting out of the COVID19 transistion.[/QUOTE



Just because investors need to park funds somewhere does not necessarily make the stock market a good idea.

The long term investments you are referring to, first need to give a positive return.

How do you think these businesses are going to prosper in this current environment.

In case you haven't noticed the US economy is on the brink of meltdown.

[peat]

i think the banks lose by the numbers getting smaller overall , their spread has to shrink.
But more importantly I think there IS a free lunch with negative interest rates. I am not sure if its logical or not but the way I see it the banks are going to hold off as much as possible applying negative rates to their retail customers. Because those customers will be elastic. If a bloke cant get something on his $100k for 3 months he's not going to leave it there except at the most baddest of times. But the RBNZ (once Orr sorts his business out) will apply increasingly negative rates to the banks and so retail banking will get squeezed bigtime as the industry works on both sides of the ZERO line.

(Was thinking I was in the banking stocks thread lol) your fault W69

[Beagle]

There is no disconnect. The reality is those with $ are sick with holding cash in the bank account. Low interest rates = only fools hold cash in the bank account for long periods of time. I know specifically those that accumulated cash reserves in the short term for the sole intention to buy equities. This is apparently in Warren Buffet's recent annual meeting where they said for the individual, holding gov't bonds that pay insane low interest rates - what does that mean when you factor inflation? Look at the 10 year bond rates?

Investors are looking out for the longer term. They see people WILL go back to shopping, go to dining, go on travels, just like before. Why? Because like previous pandemics, they not permanent and human innovation always trumps fear. Vaccines will aid in getting out of the COVID19 transistion.

Which year will a reliable vaccine be widely available in N.Z. and in the meantime ? Think about it...

You're trying to put words into my mouth. At no point did I say I intended to hold cash for a long period of time. I sold out of most of my shares in February 2020 and I am very pleased I did. I think there's a whole new generation of investors that have only ever known a bull market, and from your response I would think it appears you're one of them. Cash in the bank earning 2.5% on term deposit for 2020 will look like a really great return if the whole market tanks 30% and we get asset price deflation.

[HKG2301]

There is no disconnect. The reality is those with $ are sick with holding cash in the bank account. Low interest rates = only fools hold cash in the bank account for long periods of time... Investors are looking out for the longer term.

I can see several disconnects, not least forward PE & cancelled dividends v's present market valuation.

But I think what you're saying is that over the long term, shares beat those paltry interest rates hands down, so just close your eyes tight and we'll get through this eventually. Which is likely correct, although it may take a while.

However, if you choose to manage your investments a little more proactively, side-stepping an obvious drop might be a smart move in situations like this.

AIR.NZ is a good example here: many shareholders dropped them like a hot potato. Others wish they had. How long before those shares recover from the Covid transition?

[peat]

Cash in the bank earning 2.5% on term deposit for 2020 will look like a really great return if the whole market tanks 30% and we get asset price deflation.

You mean with the govt earning 1% :p

There we go cherry picking again


I have decided to post my prediction for the SP500 in this thread
here it is with the yellow lines being the future as I see it most likely.

11502

So that is for the Daily

here is the one for the shorter term. Note that in this case the dotted line were drawn earlier so it is already tracking kind of on target

11503



It is good to put it out there and be judged haha

they are both the same pattern
of course
- a bearish gartley - over different time frames. If they both go to plan then towards the end it will be a mighty fall and should hit the old lows at least maybe a lot more, who knows.
And that last phrase is the most important thing I've said. lol

[blackcap]

Which year will a reliable vaccine be widely available in N.Z. and in the meantime ? Think about it...

You're trying to put words into my mouth. At no point did I say I intended to hold cash for a long period of time. I sold out of most of my shares in February 2020 and I am very pleased I did. I think there's a whole new generation of investors that have only ever known a bull market, and from your response I would think it appears you're one of them. Cash in the bank earning 2.5% on term deposit for 2020 will look like a really great return if the whole market tanks 30% and we get asset price deflation.

Interesting you mention that. From Sharesies today:

Sharesies stats
Sometimes it's easy to get caught up in short-term gains, and we forget to take time to focus on how much things can grow over longer periods of time—kind of like investing for the long-term!
So we thought we'd share a bit of a reflection on the last year.
6 May 2019:
• 43,000 investors
• $13.8m invested through Sharesies
6 May 2020:
• 146,000+ investors
• $370m+ invested through Sharesies
We're blown away, to say the least ��

[Joshuatree]

You mean with the govt earning 1% :p

There we go cherry picking again


I have decided to post my prediction for the SP500 in this thread
here it is with the yellow lines being the future as I see it most likely.

11502

So that is for the Daily

here is the one for the shorter term. Note that in this case the dotted line were drawn earlier so it is already tracking kind of on target

11503



It is good to put it out there and be judged haha

they are both the same pattern
of course
- a bearish gartley - over different time frames. If they both go to plan then towards the end it will be a mighty fall and should hit the old lows at least maybe a lot more, who knows.
And that last phrase is the most important thing I've said. lol

Pretty meaningless to me Peat.Can you put your prediction in words and over what timeframes would be useful , thanks. I think we are in for more downers but if NZ and Aus successfully form a bubble together without 2nd waves and our food and logs etc keep being wanted by the world, maybe Aus and NZ will separate a little from other mkts. And be great if Aussies come over for the ski season.Aussies make up what 20-25% of our tourists and kiwis re 40-45%? kiwis will have to retrain and work on farms and replace the what 8,000 foreign workers at Queenstown etc. We are going to have to adjust and be flexible in this new emerging world. There thats a maybe positive outlook.

[peat]

Pretty meaningless to me Peat.Can you put your prediction in words and over what timeframes would be useful , thanks. I

Down to 2600 on the SP500 over the next few weeks then up to 3100 during the month after that and then DOWN HARD AND FAST so maybe the fall will occur in June which will mean sell in May and go away can be right one more time.

[SBQ]

[QUOTE=SBQ;813190]There is no disconnect. The reality is those with $ are sick with holding cash in the bank account. Low interest rates = only fools hold cash in the bank account for long periods of time. I know specifically those that accumulated cash reserves in the short term for the sole intention to buy equities. This is apparently in Warren Buffet's recent annual meeting where they said for the individual, holding gov't bonds that pay insane low interest rates - what does that mean when you factor inflation? Look at the 10 year bond rates?

Investors are looking out for the longer term. They see people WILL go back to shopping, go to dining, go on travels, just like before. Why? Because like previous pandemics, they not permanent and human innovation always trumps fear. Vaccines will aid in getting out of the COVID19 transistion.[/QUOTE



Just because investors need to park funds somewhere does not necessarily make the stock market a good idea.

The long term investments you are referring to, first need to give a positive return.

How do you think these businesses are going to prosper in this current environment.

In case you haven't noticed the US economy is on the brink of meltdown.

I'm not buying it. Let me show you 2 links:
https://static.seekingalpha.com/uploads/2017/3/21/saupload_history_of_market_corrections2-hires.png

and recently Buffet's response: 'Never Bet Against America'
https://www.investopedia.com/5-takeaways-from-the-2020-berkshire-hathaway-annual-meeting-4843875

I don't know about you or most of the people on this forum but Buffet's words should mean a lot more than any other NZ based financial advisor or critic.

[Joshuatree]

Nothing against Buffett but he has just bet against America. He has had 2nd thoughts and sold out of Airlines. Thats about as big a warning as he can give us.And im not going near ETFs at this point unless they are negatively related to the mkt.

[ynot]

[QUOTE=ynot;813193]

I'm not buying it. Let me show you 2 links:
https://static.seekingalpha.com/uploads/2017/3/21/saupload_history_of_market_corrections2-hires.png

and recently Buffet's response: 'Never Bet Against America'
https://www.investopedia.com/5-takeaways-from-the-2020-berkshire-hathaway-annual-meeting-4843875

I don't know about you or most of the people on this forum but Buffet's words should mean a lot more than any other NZ based financial advisor or critic.

I have great respect for Buffet but for the first time for me his words regarding not betting against the US were driven from self preservation and or delusion that US can never fail. Personally I think for many reasons their best years are behind them.

[SBQ]

Nothing against Buffett but he has just bet against America. He has had 2nd thoughts and sold out of Airlines. Thats about as big a warning as he can give us.And im not going near ETFs at this point unless they are negatively related to the mkt.

You mean airlines are "THE" proxy of American businesses? haha..
What % of businesses Berkshire owns that are American? The position in airlines was tiny and pretty much insignificant to the whole operations of Berkshire.

Any other comments against the graph I posted? I hear people think this time it's going to be different. As different as those I heard in 2008 that said the US was going to fall.

In the previous post, negative interest rates will erode the NZD currency as how it's been shown in Europe. Almost all our banks in NZ are Australian, maybe the NZ Reserve Bank has an interest to charge these banks $ in negative rate interest territory (as retail banks are required to PAY the central bank for parking their funds there...)

[SBQ]

[QUOTE=SBQ;813269]
I have great respect for Buffet but for the first time his words regarding not betting against the US were driven from self preservation and or dillusion that US can never fail. Personally I think for many reasons their best years are behind them.

You may seem to view it this way sitting on this side of the world. As an investor, the +s are far more in the US than in NZ. Lower taxes, lower regulations, highest disposable income per capita in the world. Why would I stand for investing anything in NZ? The flow of innovation continues on in America (why did Elon Musk move to America? why do countries like China have to copy and steal things from America? In uni if a professor catches a student copying and cheating, they're kicked out. But in the real world, China is let off the hook for selling copies out the back door to other countries... what i'm getting at is America's secret sauce is still there. No one has to believe me but that Dow Jones graph is very convincing to me where America is heading.

[Joshuatree]

I think its highly likely 2nd 3rd 4th etc Covid waves are going to create havoc in USA and take them down a horrible hole, economy and all.Lets face it many of the states will have bought it on themselves because they wanted to get a haircut.Haircut they will get alright. Buffett has given us the big clue and naturally he is patriotic.Apple pie.

[blackcap]

I think its highly likely 2nd 3rd 4th etc Covid waves are going to create havoc in USA and take them down a horrible hole, economy and all.Lets face it many of the states will have bought it on themselves because they wanted to get a haircut.Haircut they will get alright. Buffett has given us the big clue and naturally he is patriotic.Apple pie.

Can you spell out how this is going to take them down a horrible hole? Why would the rest of the world (Europe in particular) not also be taken down this horrible hole? Remembering Europe has more deaths per capita and worse outcomes than the US?

From a market perspective only (empathy aside) old people dying in droves is a good thing. It eliminates those that do not contribute and are net dependent on the state. So possibly the US markets, if they remain open, and old people die off will benefit relatively greater than other markets that try to preserve their elderly?

I don't know the final outcome either, its possible that the second and third waves etc will be bad, but then NZ is not immune either.

[Joshuatree]

Im hoping like hell that NZ and Aus are nearly there but the numbers of people completely ignoring social distancing and bubbles is pretty scary. Im hearing this anecdotally and its not just young people but folks of all ages. We are on a knife edge atp. Yes not just the USA.

[ynot]

Can you spell out how this is going to take them down a horrible hole? Why would the rest of the world (Europe in particular) not also be taken down this horrible hole? Remembering Europe has more deaths per capita and worse outcomes than the US?

From a market perspective only (empathy aside) old people dying in droves is a good thing. It eliminates those that do not contribute and are net dependent on the state. So possibly the US markets, if they remain open, and old people die off will benefit relatively greater than other markets that try to preserve their elderly?

I don't know the final outcome either, its possible that the second and third waves etc will be bad, but then NZ is not immune either.
Unemployment for starters and who said other nations were not heading south.

[HKG2301]

From a market perspective only (empathy aside) old people dying in droves is a good thing. It eliminates those that do not contribute and are net dependent on the state. So possibly the US markets, if they remain open, and old people die off will benefit relatively greater than other markets that try to preserve their elderly?

Harsh.

Also, not sure why you think the over 70's are "net dependant on the state". Retirees in the first world, and the US in particular, are the ones with most of the private wealth! It's more the millennials that are penny-less, still living with their parents.

Regardless, if the markets are all enjoying a Covid-driven race to the bottom, gotta assume it will be led by the US if they try to 're-open' without a vaccine. They don't have universal healthcare, 30 million are already unemployed (with many more to come) and they have guns, lots of guns. It's like fanning a bush-fire.

Don't mean to be political, just trying to read the markets and plan ahead...

[blackcap]

Harsh.

Also, not sure why you think the over 70's are "net dependant on the state". Retirees in the first world, and the US in particular, are the ones with most of the private wealth! It's more the millennials that are penny-less, still living with their parents.

Regardless, if the markets are all enjoying a Covid-driven race to the bottom, gotta assume it will be led by the US if they try to 're-open' without a vaccine. They don't have universal healthcare, 30 million are already unemployed (with many more to come) and they have guns, lots of guns. It's like fanning a bush-fire.

Don't mean to be political, just trying to read the markets and plan ahead...

Not harsh at all, I did preface it with a "from a market perspective only". Over 70's are not net contributors. (They are all receiving some sort of benefit etc) Yes retirees have the wealth, but it is lazy wealth. Better they pop their clogs and the young entrepreneurs inherit it to invest and do stuff. Again before you call me harsh, again just from a market perspective only. I am not advocating we kill people or let our elderly die, just trying to understand like you the impact on markets and not trying to be political either.

[peat]

here is the one for the shorter term. Note that in this case the dotted line were drawn earlier so it is already tracking kind of on target

11503

It is good to put it out there and be judged haha


I see this as tracking okay at this point because we have already reached the first target and the second target. Price is more important than time !

11506

[Aaron]

You make some statements but with what backing or reference?

What does Bill English know? He knows how to screw the average NZ worker with Kiwi Saver as it's a proven money tree for IRD to tax year after year.. while the smarter investor looks to buying tax free real estate. Show me where assets prices are elevated? Oil? = nope, precious metals? = nope, houses? = nope. In my view, prices have deflated as the 'money supply' has vaporised. If there was no gov't printing of $, we would be in great serious state to the point of having wars.

Again, where's the proof of rampant inflation? In 2008 the US gov't did massive QE and have prices ran out of control? Nope. In recent events is the $3T in monetary printing in the US going to cause inflation? Again, look at the 'money supply'. Easily over $3T has been lost out of thin air through assets vaporisation.

https://www.thebalance.com/causes-of-inflation-3-real-reasons-for-rising-prices-3306094

Above link talks of 2 key causes of inflatio - also worthy to click on the link on 'Quantity Theory of Money'.

But the average NZ investor doesn't read this kind of stuff. They coddle around, see and hear what others say and bode along agreeing (such as at any point gov'ts go on a spending spree = inflation).

The NZD currency is not going to hold value. That's because we're too small of a country and what we have to offer is 2 tricks. One = agriculture resource extractions and Two = Tourism. You can bet tourism won't come back any time soon and it would take AirNZ several years to regain what they last recently in global flights (as globally disposable incomes disappears). If you want a strong NZD, you need LESS of it's currency exported (as locals buy imported products because NZ doesn't make many things), and / or have more of NZ products exported as more currency flows into NZ than going out.


Not sure where you mean about asset valuations in a negative interest rate environment. What negative rates really mean is savers of cash are punished and those that borrow are rewarded. So the person that has more incentive to borrow funds from the bank to buy more houses will stand in a much better position than the person that has cash (a solution where the rich get richer). Banks aren't going to give $ to anyone... just those that meet the requirement and the same would apply to corporate shares that try to vie for bank loans instead of borrowing privately from the public. There is no free lunch even at negative interest rates, meaning the banks (lenders) will gain more in the spread.

I am just providing an opinion. I lack the time, resources or intelligence to provide balanced journalism backed by facts and figures, but I think the thread was asking for people’s opinions and I provided mine. I would recommend you put me on ignore.

You are really onto Bill English about Kiwisaver but as already explained it was Labour and Michael Cullen who brought it in.

You are right Oil is low, precious metals (gold) not so much, houses -really?? (where is your backing or reference for this statement) look at the reserve banks inflation calculator. 2009 to 2019 a 6% compounding increase in housing. compared to the CPI of 1.5% over the same period you are full of s**t if you don't think house prices have been rising at a rate much higher than the CPI.
When I say "inflation", I am generally referring to asset prices as this is an investment related website. You are correct CPI was only 1.5% for the last 10 years but that is irrelevant to an investor if electronics and clothing have been dropping in price while asset prices have been rising and continue to be supported by monetary policy.
I am not the only one to consider inflation.

To Quote (see post #19) “holding gov't bonds that pay insane low interest rates - what does that mean when you factor inflation? Look at the 10 year bond rates?”

I do only regurgitate what I read and lack the brain power for original thought but there are a number of valuation metrics that indicate stock prices are at historically high levels. Also, you can check for yourself whether companies are cutting or reducing dividends.

You are probably right about the NZ$ we are small fry and with large US hedge funds buying up successful NZ companies and exporting dividends the $NZ possibly won't hold up internationally.

I was thinking NZ govt debt to GDP was lower than some other countries and our central bank money printing might not be as extreme so there might be more reason to have faith in the $NZ but due to our small size that may be irrelevant.

Did you not realise your house price growth for the last 30 years is at least in part to falling interest rates?

You raise a good point (I have chopped up your sentence a little)

"What negative rates really mean is savers of cash are punished and those that borrow are rewarded. Banks aren't going to give $ to anyone, borrow funds from the bank to buy more houses will stand in a much better position than the person that has cash (a solution where the rich get richer)."

I think you have hit the nail on the head with that statement. You own houses and enjoy central banks supporting house prices. It makes you wealthy and you don’t want it to change, perfectly understandable.

[SBQ]

I am just providing an opinion. I lack the time, resources or intelligence to provide balanced journalism backed by facts and figures, but I think the thread was asking for people’s opinions and I provided mine. I would recommend you put me on ignore.

You are really onto Bill English about Kiwisaver but as already explained it was Labour and Michael Cullen who brought it in.

You are right Oil is low, precious metals (gold) not so much, houses -really?? (where is your backing or reference for this statement) look at the reserve banks inflation calculator. 2009 to 2019 a 6% compounding increase in housing. compared to the CPI of 1.5% over the same period you are full of s**t if you don't think house prices have been rising at a rate much higher than the CPI.
When I say "inflation", I am generally referring to asset prices as this is an investment related website. You are correct CPI was only 1.5% for the last 10 years but that is irrelevant to an investor if electronics and clothing have been dropping in price while asset prices have been rising and continue to be supported by monetary policy.
I am not the only one to consider inflation.

To Quote (see post #19) “holding gov't bonds that pay insane low interest rates - what does that mean when you factor inflation? Look at the 10 year bond rates?”

I do only regurgitate what I read and lack the brain power for original thought but there are a number of valuation metrics that indicate stock prices are at historically high levels. Also, you can check for yourself whether companies are cutting or reducing dividends.

You are probably right about the NZ$ we are small fry and with large US hedge funds buying up successful NZ companies and exporting dividends the $NZ possibly won't hold up internationally.

I was thinking NZ govt debt to GDP was lower than some other countries and our central bank money printing might not be as extreme so there might be more reason to have faith in the $NZ but due to our small size that may be irrelevant.

Did you not realise your house price growth for the last 30 years is at least in part to falling interest rates?

You raise a good point (I have chopped up your sentence a little)

"What negative rates really mean is savers of cash are punished and those that borrow are rewarded. Banks aren't going to give $ to anyone, borrow funds from the bank to buy more houses will stand in a much better position than the person that has cash (a solution where the rich get richer)."

I think you have hit the nail on the head with that statement. You own houses and enjoy central banks supporting house prices. It makes you wealthy and you don’t want it to change, perfectly understandable.

With respect to housing prices, i'm in full agreement that they rise far faster than what the CPI figures claim to say. The US market is definitely different to the NZ market in terms of house prices and inflation. The 2008 crisis certainly placed a huge dent in US housing prices and many banks went bankrupt ; even today, i'm certain the majority of housing prices have barely recovered to peak 2006/2007 levels. However during the same time, NZ housing prices were largely 'unaffected' by the 2008 GFC and continued their insane projections as in previous decades. With avg income x years to buy avg price house in the Auckland market, we're talking prices similar to NYC, SanFran, top top cities in the USA. So on the US front in terms of inflation, it's a LOT LOT less than the inflation i've seen in NZ. As you mentioned when it comes to prices of vehicles, electronics, etc. America consistently brings those products priced CHEAPER than what the NZ consumer could ever buy. These small differences in price do add up over 20 or 30 years of inflation ; but in terms of what the US has experienced, there is no better place for a person to consume, and having a high level of disposable income.

Most nations in the OECD have lower debt / GDP than the US. But does that mean investing in America is a riskier bet? We can look at this at a local level. Look at your neighbours or the people around you that have made their wealth in a BIG way? They take risks by leveraging, borrowing larges sums - perhaps buying NZ residential properties and amassed a huge amount of wealth in a period of 10 or 20 years ; far more than the average working person could earn. This is the same view as in the US, their ability to go more in debt means they're going to be more productive and create more businesses, etc. When we look at places like Africa, there's good reason why no one invests there because it's simply not productive enough - not to mention very risky / with political issues. So when the US issues bonds, the rest of the world kinda lines up ; including China. But in previous crisis say the Greek crisis over leaving the EU, they issue bonds that very few buyers around the world would care to invest in. As Buffet recently mentioned, Argentina is having troubles now with debt.

House price growth in NZ or in the US? The latter I would say for most parts have not risen past the 2008 pricing level, especially in the high end market where the rich celebrities / 1% own. In NZ? As I mentioned before in other threads, that's a horse of a different colour because we have little or no tax applied to ownership of residential properties. I would not put all that down to low interest rates, especially in the US. You recall the reason for all the banks there owning toxic debt? We saw banks doing sub-prime mortgages (loans that had lower than prime rates ; JUST to get any person to sign up into a house - regardless of any merit). Banks were incentivized because they could profit off it by selling the loan contracts onwards.. and so on ; it didn't matter what rate of interest rate was applied as the focus then was to get anyone in.

[Aaron]

Reading this a dead cat bounce may be less likely as we see assets continue to rise with currency devaluation.

https://www.linkedin.com/pulse/changing-value-money-ray-dalio/?published=t

[HKG2301]

Non-farm Payrolls tonight in the US (announced pre-market open), which will be a biggy. Always the most closely watched monthly economic indicator, it will be particularly important this time, showing the first full month of covid-effected numbers.

Pre-covid the monthly change might be in the region of +200,000 new jobs. Last month it was a huge -701,000 jobs lost. This time around the market is expecting -21,500,000. Yes, you read that right. 21.5 million jobs lost in a month and the markets are climbing. Lapping it up.

So that's the expected Non-farm Payroll number. WATCH OUT BELOW! if the actual numbers turn out worse than that.

Interesting that the overnight futures markets are climbing steeply in anticipation. Pump & dump...?

[HKG2301]

Reading this a dead cat bounce may be less likely as we see assets continue to rise with currency devaluation.

https://www.linkedin.com/pulse/changing-value-money-ray-dalio/?published=t

Not sure I follow you, Aaron - can you expand?

If we agree that a stock market plummet into recession is deflationary (followed by inflationary emergency $-printing measures), why are you expecting the value of assets to rise? Or do you mean other assets, such as gold. Or possibly you're taking a much longer term view?

:confused:

[SBQ]

Reading this a dead cat bounce may be less likely as we see assets continue to rise with currency devaluation.

https://www.linkedin.com/pulse/changing-value-money-ray-dalio/?published=t

Ray Dalio makes a lot of comparisons of the past to what we've seen today. In a different video of him he kept saying the 'ingredients of the 1929 stock market crash' is the same what happened 2 months ago. However, he's left out some key issues because the gov'ts of 1929 did not have many tools to avert major crisis. We live in a far more efficient market society and issues like QE, FDIC, the spread of information, etc. meant crashes are not as significant. There are far more monetary tools today than 50+ years ago so despite what Mr Dalio claims, I would only take it with a grain of salt.

He's a big fan of gold or tells others to invest in a diversified way by holding multiple different assets. He would be right about market fear pushing gold prices up - but historically, it has not risen much more than inflation. Warren Buffet has be critical about owning gold as it's value is purely speculative and produces nothing to the economy ; vs owning a business, it creates far more for the economy in terms of GDP than what precious assets would ever do. His phrase was, "You can look at it.. you can fondle it... it just sits there... and nothing more".

If you read Ray Dalio - again he talks plentiful about historical data, the past, what happened etc.. but not for once i've seen him say people should buy this TODAY or say what asset class is going to be superior for the next 6 months or 2 years etc. All investment gurus won't put their profile on the line because they could be wrong and you don't become famous by being wrong too many times. Easy to talk about what could happen, how the currency would devalue or ? But in the whole article I fail to see the 'opportunity cost' of holding something else? He's a big bear against people holding cash deposits ; but the rich will say you NEED cash in order to make opportunities. During times of crisis, 99% of the people don't have the liquid cash to take advantage of investing. Likewise with all the fund managers that get paid a lot for (and I like to say this...) for merely breathing air.

Markets are pointing up and if you look at the DOW around 24K level, it's not a lot less than the all time peak of 29K. So many of these gurus are saying wait for the next major crash.... and a month goes buy... they say the same thing... and again until so and so guru is forgotten. Post 2008 was no different as we had these experts say the same thing... wait.. wait and the market goes up.. and then they say wait and wait and the train has left. The only thing that is certain is, as I posted in the link before that "Human Innovation Trumps Fear" and you can bet Ray Dalio is a strong believer in this view despite how much of a bear he's been on currencies.

Again, I say consider your options. What ARE the options for people nowadays when it comes to investing? More than ever the younger generation are starting to get an idea. They have the internet and can make their own judgement and the vast majority do believe holding cash does nothing. Holding real estate (overall in all markets) doesn't rise much more than inflation. Owning gold doesn't increase productivity in the economy. I would say, investors are scared about holding cash or bonds and view the only de facto option is buying equities. No matter how bad the economy is or how high unemployment is etc.. and the saying goes, never let a crisis go to waste!!!

[peat]

Target 3 achieved
My work is done

11518


And, yes... yes
11519

[kiora]

"As markets collapsed on Covid-19, what has the media been reporting (financial media included) – death, job losses, infections, shutdowns, market declines, toilet paper pandemic – anything and everything that is a sensationalized headline. And it is what we see and react to. Magicians always say – “what the eyes see and the ears hear, the mind believes”."
https://www.sharecafe.com.au/2020/05/08/understanding-market-dynamics-looking-beyond-the-headlines/

[HKG2301]

"As markets collapsed on Covid-19, what has the media been reporting (financial media included) – death, job losses, infections, shutdowns, market declines, toilet paper pandemic – anything and everything that is a sensationalized headline. And it is what we see and react to. Magicians always say – “what the eyes see and the ears hear, the mind believes”."
https://www.sharecafe.com.au/2020/05/08/understanding-market-dynamics-looking-beyond-the-headlines/

A strange article, best explained by reading it in terms of a swing-trader's views, as opposed to an investor's.

Sure, the US is experiencing a short-covering rally brisk enough to make your eyes water, and well done to the author for riding that wave. But does he really expect it to last forever? S&P500 at 3,000 perhaps? Or 4,000? And, when the rally surely peters out, what then?

Yes, the press & media have been full of doom & gloom, but then, we are experiencing a global pandemic compounded by an economic shut-down. What does he want, feel-good articles on gardening and upcoming movies?

Fundamentals still apply. The 'Earnings' part of PE ratios will still eventually drive the markets lower when reality kicks in. Maybe sooner rather than later, given the fact that the S&P is now back at the pre-covid levels of October, and the Nasdaq at early Feb levels!

Or does the author think that 'this time it's different'? Heard that one before...

[HKG2301]

The other alternative, of course, is that the author is 'talking his book'. A lot of that going round...

[blackcap]

A strange article, best explained by reading it in terms of a swing-trader's views, as opposed to an investor's.

Sure, the US is experiencing a short-covering rally brisk enough to make your eyes water, and well done to the author for riding that wave. But does he really expect it to last forever? S&P500 at 3,000 perhaps? Or 4,000? And, when the rally surely peters out, what then?

Yes, the press & media have been full of doom & gloom, but then, we are experiencing a global pandemic compounded by an economic shut-down. What does he want, feel-good articles on gardening and upcoming movies?

Fundamentals still apply. The 'Earnings' part of PE ratios will still eventually drive the markets lower when reality kicks in. Maybe sooner rather than later, given the fact that the S&P is now back at the pre-covid levels of October, and the Nasdaq at early Feb levels!

Or does the author think that 'this time it's different'? Heard that one before...

This time it is different though. Look at the interest rates. They are what discount rates are derived from and valuations are derived from discount rates. PE's can be in the 30's and still be relevant in a low interest rate environment. Other than that, I too do not know.

[HKG2301]

Netflix valued at 83 times earnings on a TTM basis, as of April 29. Even taken as a multiple of 2023’s estimated cash flow, the multiple is 45!

The stock bounced 55% since mid-March, one of the best performers since the covid crash, and it's still up there at $442. Almost double it's price in September.

I'm not denying it's been a fun ride, but really? You don't think this bounce back is a tad overdone?

[Aaron]

Not sure I follow you, Aaron - can you expand?

If we agree that a stock market plummet into recession is deflationary (followed by inflationary emergency $-printing measures), why are you expecting the value of assets to rise? Or do you mean other assets, such as gold. Or possibly you're taking a much longer term view?

:confused:
To quote from the article
"Printing and Devaluing Money Is the Easiest Way out of a Debt Crisis
There are four ways out of a debt crisis
1/ Austerity (spending less)
2/ Debt defaults and restructurings
3/ Transfers of money and credit from those who have more than they need to those who have less than they need (e.g., raise taxes)
4/Printing money and devaluing it"

Number 4 is the easiest and most politically acceptable to people who don't want to 1/ cut back 2/ go broke 3/ pay more tax. It is also what is actually happening on a much bigger scale each time there is a crisis. No one in power is proposing any of the other options and they can't because the people who vote don't like options 1/-3/ and they mostly don't understand option 4/

he says currencies devalue against debt which is another way of saying the price of everything goes up and as we have seen so far real estate and shares have been increasing faster than anything else. If money printing continues shouldn't asset prices continue to rise?

The economy plummets into recession, central banks print money and hand it out then this goes into asset prices. 2008/09 financial institutions got the money asset prices have been going well ever since. This time more is going to main street so consumer prices might rise as well, more so if globalisation decreases and cheap labour in Asia is replaced with well paid workers back in the developed world. I have no idea what will happen, I am expecting this to be a dead cat bounce but it might also be a lost opportunity for me.

Ray Dalio doesn't propose any solutions or investments. He did say "cash is trash" and was hammered for that after the crash earlier this year. He also recommends diversifying.

[blackcap]

Netflix valued at 83 times earnings on a TTM basis, as of April 29. Even taken as a multiple of 2023’s estimated cash flow, the multiple is 45!

The stock bounced 55% since mid-March, one of the best performers since the covid crash, and it's still up there at $442. Almost double it's price in September.

I'm not denying it's been a fun ride, but really? You don't think this bounce back is a tad overdone?

You use Netflix as an example. A bit extreme. But say a market PE of 30 in this new environment should be sustainable. If interest rates stay low and authorities keep printing money.

[Aaron]

You use Netflix as an example. A bit extreme. But say a market PE of 30 in this new environment should be sustainable. If interest rates stay low and authorities keep printing money.

Blackcaps post is saying something similar. Easy money, low interest rates high asset values.

[blackcap]

Blackcaps post is saying something similar. Easy money, low interest rates high asset values.

Very much qualified with the last statement though. If that does not hold, I do not believe in PE's of 30. Back to the 10's for me then.

[HKG2301]

... currencies devalue against debt which is another way of saying the price of everything goes up and as we have seen so far real estate and shares have been increasing faster than anything else. If money printing continues shouldn't asset prices continue to rise?

The economy plummets into recession, central banks print money and hand it out then this goes into asset prices. 2008/09 financial institutions got the money asset prices have been going well ever since. This time more is going to main street so consumer prices might rise as well, more so if globalisation decreases and cheap labour in Asia is replaced with well paid workers back in the developed world. I have no idea what will happen, I am expecting this to be a dead cat bounce but it might also be a lost opportunity for me.

Ray Dalio doesn't propose any solutions or investments. He did say "cash is trash" and was hammered for that after the crash earlier this year. He also recommends diversifying.

Understood. Meaning, I think, that you're talking longer term.

Short term, the crash is deflationary: businesses fail, assets are sold off in a fire sale (witness gold), jobs are lost, cash is king.

Then, money-printing kicks in to aid a recovery and inflation drives asset prices North again. Cash becomes trash, if you don't return to hard assets: property, gold, whatever.

Timing is everything!

[Aaron]

I am wondering whether there will be a crash in asset prices at all or whether money printing will keep everything elevated. I don't know but am guessing there will be another leg down (along with more money printing) when the economic impact of the lockdown has time to flow through.

Timing is good if you get it right but hard to achieve in practice (for me at least).

[HKG2301]

You use Netflix as an example. A bit extreme. But say a market PE of 30 in this new environment should be sustainable. If interest rates stay low and authorities keep printing money.

TSLA would be extreme. :)

I agree, the Fed pressure (printing, purchases and rates) is huge. Unprecedented levels. And I've learned the hard way that 'Don't bet against the Fed' has been true for at least a decade now. However, they are trying to balance a calamitous economic disaster. The dam has burst and there's no un-bursting it. Hence, longer term, we can expect the recovery to take years.

Shorter term, these Nasdaq levels remind me of the dot-com years. Remember that: 'a new paradigm', 'PE is meaningless these days' and 'this time it will be different'? In short, un-sustainable.

IMO, we haven't seen the bottom yet. And that bottom will not be V-shaped.

So my concern is, how will all this effect the NZ markets? Both NZX and property? To what extend will the biggest global crash in history infect ('scuse the pun) our small corner of the world?

[blackcap]

TSLA would be extreme. :)



Shorter term, these Nasdaq levels remind me of the dot-com years. Remember that: 'a new paradigm', 'PE is meaningless these days' and 'this time it will be different'? In short, un-sustainable.

?

I do remember vividly. I was a dealer at the time. Interest rates on deposits were in the order of 7-8% as well. Huge difference with now. Try putting a WACC of 12% in a DCF as opposed to 5%. Makes the wold of difference.

But I too am looking at all this unfolding with bewilderment.

[HKG2301]

I do remember vividly. I was a dealer at the time. Interest rates on deposits were in the order of 7-8% as well. Huge difference with now. Try putting a WACC of 12% in a DCF as opposed to 5%. Makes the wold of difference.

But I too am looking at all this unfolding with bewilderment.

It's like watching a slow-motion train wreck. I can't take my eyes off it.

We're very cash-heavy (a good place to be, at the mo') and ready to snap up some good deals when the market returns to realistic levels. Not jumping back in just yet though...

;)

[Entrep]

11539

last time we saw this was pre-GFC

[peat]

So my concern is, how will all this effect the NZ markets? Both NZX and property? To what extend will the biggest global crash in history infect ('scuse the pun) our small corner of the world?

the way we're going not as much as others , BUT still quite a bit overall.




We're very cash-heavy (a good place to be, at the mo') and ready to snap up some good deals when the market returns to realistic levels. Not jumping back in just yet though...

;)

I'm less cash percentage wise than I was before COVID. ultimately value is a lot better down here than up there , even if its not as cheap as we want , and its still quite selective.
For that reason I'm prepared to take more risk than I was before. Not sayin hock the farm at all of course. But prepared to put more in than I take out, quite distinct from earlier.

[Bjauck]

...And this is while OTHER nations around the world were competing against the US - ie the EU model, is failing...
The USA came together in 1789 as former British colonies with a common legal system, culture and language.
THE EU/EEC started in 1957 as group of nations with a diverse range of languages and cultures.

There has been a co-operative international system including bodies such as the IMF, OECD, WTO which allowed the USA to prosper by co-operatively trading and investing around the World. It was not the USA versus the World - until Trump came along.

The UK joined the EEC in 1973. Until it left in 2016 its GDP per person in USD terms increased by a factor of 13. Since it left the EU (2016-19) ts USD GDP per person has fallen.

Between 1973-2016 The USA GDP per person in USD terms only increased by a factor of 10.7.

Please explain why you think the EU is failing in comparison to the USA.

Figures from https://countryeconomy.com

[SBQ]

The USA came together in 1789 as former British colonies with a common legal system, culture and language.
THE EU/EEC started in 1957 as group of nations with a diverse range of languages and cultures.

There has been a co-operative international system including bodies such as the IMF, OECD, WTO which allowed the USA to prosper by co-operatively trading and investing around the World. It was not the USA versus the World - until Trump came along.

The UK joined the EEC in 1973. Until it left in 2016 its GDP per person in USD terms increased by a factor of 13. Since it left the EU (2016-19) ts USD GDP per person has fallen.

Between 1973-2016 The USA GDP per person in USD terms only increased by a factor of 10.7.

Please explain why you think the EU is failing in comparison to the USA.

Figures from https://countryeconomy.com

For as long as I can remember, it's always been "The US" vs the world, well before Trump made this observation. I've heard the most moronic excuses locally here in NZ about why there's been bias against Americans? One being, during war times, Americans were known to come and impregnate our women. This view would be synonymous over in Europe as many tourists i've met from those regions have a similar view. Over the years living in NZ, I put it down to simple jealousy, and certainly not recent issues like Trump is voicing this out. I even recall watching 80s movies where Americans were portrayed negatively in the rest of the world (in pop culture) ; this is nothing new.

Some reading: https://foreignpolicy.com/2018/07/10/3-versions-of-europe-are-collapsing-at-the-same-time/

Now for some hard figures:

https://tradingeconomics.com/european-union/gdp-per-capita-ppp $38K
https://tradingeconomics.com/united-states/gdp-per-capita-ppp $55K

During my last year at uni we did a study on the European Union model. We also debated on the issues & roles of the UN, NATO, WTO, etc. Perhaps the best years of my study because a lot of it had little to do with text book studies and more with real world issues. This was in 1997 before the EU currency was about to be floated. For the UN, the conclusion we based was it was a 'useless' organisation. Some 20 years later and they still prove to be useless against global conflicts.. yet we criticized why the US continued to fund most of the UN's budget. Took until 2016 when Trump came in for the US gov't to realise this problem. and we look at issues like the WTO and NATO - again all organisations with their shortfalls. Canada for years has lodged complaints with the WTO against the US but somehow, the WTO can't impose binding laws against the US. Wow! is this not a surprise?

But for the most compelling issue is the formation of the EU. What was it's motive, it's role? why? We came down again, to the simple conclusion. They wanted to adopt a model that the USA has used for the past 200+ years. A "Unification of States". Yet we saw so many shortfalls. Europe has a diverse mix of cultures and languages, many that maintain conflicts that had gone for generations. You have a huge gap between the haves and the have not nations within Europe. Then there's sovereign debt issues that never was marked by the ECB - that is, the EU nations never 'consolidated their debt' - you have Italy that claims debt from Germany over the war years. The US had sorted their debt consolidation centuries ago. Martin Armstrong talks a lot about the EU monetary problems and debt financing on various member states:

"There is no real EU unity behind the curtain which is when the debt was NEVER consolidated from day one. They wanted a single currency, but not a single responsibility for the debt."
https://www.armstrongeconomics.com/international-news/europes-current-economy/draghi-calls-for-consolidation-of-debts/

and from a 3rd reporting of Mr. Martin:

https://snbchf.com/2017/02/martin-armstrong-eu-disintegration/

"Every nation including the United States should consider the success of Switzerland and its small government. They provide the ideal example of democracy in action and how to rid society of bureaucratic corruption."

Switzerland is not part of the EU and seems to be holding well. (helps to have all that money as a once tax free haven nation). But to have greater nations like UK to pull the lion share and propping up poor EU nations is not going to work in the long term. Germany being the largest economy is getting the short end of the stick by being part of the EU.

A lot more can be discussed about the issues of the EU - but from what the EU model was intentionally meant to do... we're witnessing the model falling apart.

[HKG2301]

... A lot more can be discussed about the issues of the EU - but from what the EU model was intentionally meant to do... we're witnessing the model falling apart.

Can't argue that. But sadly the US seems no better these days, at least with Trump at the helm.

Hopefully things will improve in November because now, more than ever, the US and the world needs a safe pair of hands at the helm.

The coincidence of political, social and even military unrest in so many parts of the world was worrying before the pandemic, much of it exacerbated by Trump's mischief. Now it's positively scary!

[SBQ]

Can't argue that. But sadly the US seems no better these days, at least with Trump at the helm.

Hopefully things will improve in November because now, more than ever, the US and the world needs a safe pair of hands at the helm.

The coincidence of political, social and even military unrest in so many parts of the world was worrying before the pandemic, much of it exacerbated by Trump's mischief. Now it's positively scary!

IMO the US has done well. From an investment point of view the DOW was under 18K when Trump came in, now even after the crash the DOW is around 23K, so it's $ better invested than sitting in the bank. Could it be argued under Democrat rule the stock market would of gone higher? -very unlikely without Trump's corporate tax cut.

There is a real political divide in the US and that's shown in the people. But if you look closely what they're fighting over amounts to very little over the direction where the US is heading. As I mentioned before, the US maintains the attraction of skilled migrants which fuel's the nation's 'Secret Sauce'. Have a look at history what the US has done in liberating Japan after WWII and S Korea in the Korean war? They didn't have to misbehave or steal in a certain way that we've seen China done in the past 20 years.

Have a look at main street in America. What do Americans really feel about China? Don't follow the media as they have their own agenda and instead, have a talk at the people living there. What they tell me is they've had enough with 'globalist' views which disadvantages everyone. Issues like Climate Change doesn't seem to fit well as no gov't seems to have a viable answer. I get replies like "Since when Carbon Tax has been able to change the climate?... gov't collect that money and then where does it go? Will all that $ go towards renewable energy and if so ; WILL IT make a difference?" That's never been how the Americans solve problems by relying on gov'ts to fix things. One thing certain, America is all about making deals and if the rest of the world is taking advantage, then sooner or later things will change. It's this change that is causing the divide between the US vs the Rest of the World or more specifically, China. Canada & Mexico had NAFTA and after some 30 years, it turned out only Canada & Mexico had the benefit; after repeated issues from softwood lumber disputes, Canada's GST, etc. made NAFTA unfavourable for Americans. No past presidents would push that issue.. until Trump came along with the USMCA. Now, let's see what will happen with China. It may be that China will never get a trade deal and the Americans will just carry on. Certainly the problem with China is they depend on exports. They are a nations of exports. If the trends shows that western corporations pull out of China because their products attract tariffs in their home markets, then what would China have left to go? No one questioned how China's rise came at the benefit of US trade.

Sooner or later, nations around the world will need to show their cards. Canada sides with America just like NZ does with Australia. If China's ways do not change, then does everyone accept this as the norm? That's why we have musicians such as Bryan Adams implying about China's habit of bat eating, wet market culture. Though his recent apology was made, it will not change the fact that Western views are... the Chinese have a long reputation of being devious, uncivilized, cheating, etc. I would expect more of this activity for Xi Ping Pong's China 2025 Global Feat goal.

The real question is, will Americans continue to buy Made in China? I do believe NZ should not be so reliant on trade with China. How did we lose our Kiwi ingenuity?

[HKG2301]

IMO the US has done well...

I get that you subscribe to the idea of American Exceptionalism but, even if historically true (for one brief shining moment), isn't that a bit of a stretch in Trump World? Traditional Republican fiscal conservatism has gone out the window, to be replaced by corporate socialism. Media-manipulation, paranoia and hyper-partisanship have split the country down the middle. Citizens United, superpacs and the lobby system have replaced true democracy. MAGA populism and the military-industrial complex have replaced global leadership.

But I'd rather not get into that here. ;)

Instead, I'm trying to get a feel for how much the impending US depression will affect our markets here, given we've (hopefully) got a reasonable grasp on Covid-19, while the States most certainly hasn't. Maybe simplest to phrase the question in terms of IF-THEN...

IF the US markets are not experiencing a V-bottom, but simply a bear market rally, leading inevitably to a re-test of the March lows,

THEN will the NZX inevitably get dragged down when the US tumbles, regardless of our quite different situations as regards Covid?

I've traded the US markets for decades and am reasonably confident of my read there, but I'm new to the NZ market so grateful for any insight into how rigidly one follows t'other.

[SBQ]

I get that you subscribe to the idea of American Exceptionalism but, even if historically true (for one brief shining moment), isn't that a bit of a stretch in Trump World? Traditional Republican fiscal conservatism has gone out the window, to be replaced by corporate socialism. Media-manipulation, paranoia and hyper-partisanship have split the country down the middle. Citizens United, superpacs and the lobby system have replaced true democracy. MAGA populism and the military-industrial complex have replaced global leadership.

But I'd rather not get into that here. ;)

Instead, I'm trying to get a feel for how much the impending US depression will affect our markets here, given we've (hopefully) got a reasonable grasp on Covid-19, while the States most certainly hasn't. Maybe simplest to phrase the question in terms of IF-THEN...

IF the US markets are not experiencing a V-bottom, but simply a bear market rally, leading inevitably to a re-test of the March lows,

THEN will the NZX inevitably get dragged down when the US tumbles, regardless of our quite different situations as regards Covid?

I've traded the US markets for decades and am reasonably confident of my read there, but I'm new to the NZ market so grateful for any insight into how rigidly one follows t'other.

Doesn't matter how the US is handing the COVID. The people there want their freedom back at the cost of lives. The productive part of society wants to work. The unproductive (for most part), the elderly, sick, obese, etc? will have to deal with the virus. Corporate US was never designed to be stopped or quarantined; that's not how America came to rise. They're a nation of making deals and they've certainly worked out the collateral damage by restarting the economy.

I've been invested in the US equities since I left Canada to NZ some 25+ years ago. My close analysis of the NZX is a scam. Everything from how you buy shares to how the NZX manipulates the bid / ask pricing schemes.. to the NZ brokers that cream commissions and account managements fees. To the silly emphasis of shareholders wanting dividends over tax free capital gains. It's nothing part of the finance studies I learned back in Canada or in the US. The only thing.. and ONLY thing that is keeping listed NZ companies a float on the NZX is the way our tax laws are biased towards NZ equities than foreign equities (ie. FIF on foreign share investments).

How will foreign markets affect NZ? I would be more concerned on the NZD currency as this has a direct impact on people's standard of living. You have less.. consume less.. live less.. with a weaker NZD to the USD. Another factor is NZ is a highly regulated country - when the businesses close up - new ones don't spring up. But in the US? The people there like to take risks and they will do so if the gov't steps away (removing regulations). Have a look at every aspect of NZ's industry in terms of regulation. Building, health care, ACC, vehicle ownership WOF, none that represents a competitive advantage to doing business abroad. Remember we have a gov't that does not care about businesses and has a history of implementing more and more regulations. (recently the NZ FMA making it illegal for foreign brokers to serve to NZ residents if they're not licensed by the FMA).

If you have children... consider that NZ is not the be all end all place to make it happen. There's good reason why so many Kiwis have left NZ and thought of coming back but could not do so or.. simply preferred the lifestyle abroad.

[Panda-NZ-]

How will foreign markets affect NZ? I would be more concerned on the NZD currency as this has a direct impact on people's standard of living. You have less.. consume less.. live less.. with a weaker NZD to the USD. Another factor is NZ is a highly regulated country - when the businesses close up - new ones don't spring up. But in the US? The people there like to take risks and they will do so if the gov't steps away (removing regulations). Have a look at every aspect of NZ's industry in terms of regulation. Building, health care, ACC, vehicle ownership WOF, none that represents a competitive advantage to doing business abroad. Remember we have a gov't that does not care about businesses and has a history of implementing more and more regulations. (recently the NZ FMA making it illegal for foreign brokers to serve to NZ residents if they're not licensed by the FMA).


One word.. patent law. Thankfully we don't have this here. Also no culture of litigation for every minor issue.

[HKG2301]

Yet I can't help thinking, this is the place I'd rather be...

:t_up:

[SBQ]

One word.. patent law. Thankfully we don't have this here. Also no culture of litigation for every minor issue.

From an engineering perspective, patents are meaningless in a world where everyone steals. NZ generally follows international patent laws just so the west follows any NZ patents. But for China, is it OK for a company like Huawei to steal IP and sell it to us? Plenty of cheap stuff on Alibaba of questionable tech sources.

Have many friends living in the US, none of them feel threatened by being sued or doing something minor. I do believe gov't regulations gives less back in public good than if done by the private sector. A clear example where I grew up, BC, Canada the auto insurance authority is ICBC (wholly gov't owned and operated). Next door is Alberta which the province operates entirely privately run insurance where they leave people to sue. Residents of BC have always paid excessively more on auto insurance than Alberta and claimants received less in BC from auto injuries than the latter. Similar examples can be seen in telephone, utilities, etc. (I believe in NZ telephone is a clear example of where gov't state owned could not pass on the benefit to the consumers where the private operates could).

[MSJ]

The USA came together in 1789 as former British colonies with a common legal system, culture and language.
THE EU/EEC started in 1957 as group of nations with a diverse range of languages and cultures.

There has been a co-operative international system including bodies such as the IMF, OECD, WTO which allowed the USA to prosper by co-operatively trading and investing around the World. It was not the USA versus the World - until Trump came along.

The UK joined the EEC in 1973. Until it left in 2016 its GDP per person in USD terms increased by a factor of 13. Since it left the EU (2016-19) ts USD GDP per person has fallen.

Between 1973-2016 The USA GDP per person in USD terms only increased by a factor of 10.7.

Please explain why you think the EU is failing in comparison to the USA.

Figures from https://countryeconomy.com

When i look at the UK GDP Growth rate all i see is lower highs and lower lows..the trajectory has been down since the 70s ?

https://tradingeconomics.com/united-kingdom/gdp-growth-annualhttps://d3fy651gv2fhd3.cloudfront.net/charts/united-kingdom-gdp-growth-annual.png?s=ukgrybzy&v=202005130654V20191105&d1=19200616

[kiora]

Sometimes even Blackrock managers say what they believe

"DeSpirito added that when it comes to stocks, absolute valuations, which calculate present values of businesses by forecasting future cash flows, “are not cheap. That said, stocks are still very attractively priced when compared with bonds. The implied equity risk premium (the expected return on stocks over bonds) is still quite high,” said DeSpirito.


His stock picks include a mix of stable health care, technology and consumer staples businesses and a mix of more cyclical financials, energy and industrials companies.

If the virus “continues to wane,” and activity starts to normalize, S&P 500 SPX, 1.79% earnings estimates for 2021 should “approximate the original estimates for this year.

“A recession shouldn’t really change either the long-term growth of the economy, the earnings power of the S&P 500 index, or the valuation of the market. The market always overshoots in corrections,” said DeSpirito."
https://www.marketwatch.com/story/blackrock-portfolio-manager-says-stock-investors-should-watch-out-for-these-blind-spots-right-now-2020-05-26?siteid=yhoof2&yptr=yahoo

[kiora]

"The first year following the five biggest bear markets over the last 90 years averaged 71%, underscoring the importance of staying invested and avoiding the urge to abandon stocks during market volatility."
"History has shown that strong businesses find a way to survive and even thrive when times are tough. Those that can adapt to difficult conditions and become stronger often make attractive long-term investments."
Long time coming on NZX. Waiting,poised....... for the next biggie NZX company
https://www.goodreturns.co.nz/article/976516859/guide-to-market-recoveries.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+27+May+ 2020

[kiora]

"The interesting thing to watch now will be how quickly cash that may have found itself deposited in a mattress account is now 'put back', as the RBNZ expects it to be."
"So, according to the RBNZ annual figures over $1 billion more in the hard folding stuff was out there as at March 25, 2020 than had been the case a year earlier. Total cash in the hands of the public was just under $7.318 billion,"
https://www.interest.co.nz/banking/105237/reserve-bank-says-lead-level-4-lockdown-some-800-mln-extra-cash-was-pumped?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Thursday+28 +May+2020

[Aaron]

NZX50 at 11,118 or 8% below all time highs. Central banks will do whatever it takes to keep them elevated. Jerome Powell doesn't even think his policies are increasing wealth inequality. I think he was a lawyer so lying should come easy to him. Adrian Orr I guess is obliged to follow suit as there is also a currency war to consider.
It is upsetting mostly as I was hoping for a chance for buyers and sellers to find prices and interest rates that reflect risk at much lower prices and much higher interest rates.

From what I read from (admittedly US centric) news even the experts (intelligent people) are suggesting there is no free market when it comes to interest rates and asset prices. These policies are killing capitalism and as more wealth and power ends up in fewer hands we are likely to see worse outcomes for people generally. In fact historically it is the quickest way to communism. The switch to nationalising businesses will be easier if central banks own the stock market.

Gold below $1,700 today all is well so I guess it is not a dead cat bounce but the fastest recovery, probably in history (definitely a "V"). Buy and hold, don't fight the central banks.

[Baa_Baa]

Buy and hold, don't fight the central banks.

Do you own any shares yet Aaron, or still waiting?

[ynot]

So everyone in agreement here, it's going to be a V recovery ?

[Aaron]

Do you own any shares yet Aaron, or still waiting?

Missed the crash waiting for the dead cat bounce. Still think there might be further to go but less likely as we seem to be coming out of lockdown OKish. I held onto what I had but what I was wanting was the opportunity of a lifetime, which I may have had in March to buy more dividend paying shares at a good yield and to leverage up so I no longer have cash. That way central bank insanity won't upset me as much.

Also distressing I am what might be considered overweight in gold producers EVN, NCM, NST & RMS(leftover from a previous disastrous investment) they have done OK but not the riches I was hoping for. Also uncomfortable holding these as they are a speculation and I have little idea about gold mining and gold markets other than central banks are ruining the value of a dollar and gold is a safe haven. If central banks start selling gold I may never retire.

[Aaron]

So everyone in agreement here, it's going to be a V recovery ?

NZX50 looks like a V to me. Possibly the economic effects of the lockdown are yet to fully flow through, economy is still missing international tourism but with an Aussie bubble that is 50% of the tourist market back. I suspect it won't be another 10 years for the next opportunity of a lifetime though but I have been wrong before.

[peat]

About a month ago I posted a chart of SP500 which said it would go down (to 2600) then up to approx 3100. At the time it was about 2880

I post the chart of 3rd May again here for ref

11646

3100 seemed a long way away then with everyone bearish (hence the title of this thread) but here we are now 3115 as I type
Interestingly we never had a decent down leg (impact of more QE ?) during the predicted pattern but it is still valid.

So at this point NOW we wait for a confirmation that the trend has changed downwards before going short big time with main target 2200 but take some profits if it hits 2760

I will discuss the confirmation when/if it occurs so we can all be sure of what I am saying

[ynot]

About a month ago I posted a chart of SP500 which said it would go down (to 2600) then up to approx 3100. At the time it was about 2880

I post the chart of 3rd May again here for ref

11646

3100 seemed a long way away then with everyone bearish (hence the title of this thread) but here we are now 3115 as I type
Interestingly we never had a decent down leg (impact of more QE ?) during the predicted pattern but it is still valid.

So at this point NOW we wait for a confirmation that the trend has changed downwards before going short big time with main target 2200 but take some profits if it hits 2760

I will discuss the confirmation when/if it occurs so we can all be sure of what I am saying
Sorry Pete, I did see your original post. Appreciate your interpretation.

[Joshuatree]

Thanks Peat, please keep sharing your expertise there. BBOZ bear trading fund is with in a few cents of what i paid for it (since sold)back in Feb!

[Entrep]

Also

11648

[Aaron]

Thanks Peat, please keep sharing your expertise there. BBOZ bear trading fund is with in a few cents of what i paid for it (since sold)back in Feb!

When should we buy BBOZ? or BEAR?(for the more conservative)

[Joshuatree]

A dangerous naive question.Im not a licensed qualified financial advisor for one.
Not reckoing anything for these risky plays. But for me, i want exposure to the down side in a hedging type way.I have Gold for Global. BBOZ and BEAR are others for ones Australian exposure. Peats T/A is a very helpful tool.

[ynot]

I had a dabble with BBOZ. It does not always behave as you would expect. Be warned. I was happy to get out with 10% loss.

[peat]

probably overstepping the mark with my clarity here. PLEASE NOTE MY SIGNATURE DISCLAIMER

We all know that one should not follow a random stranger on the internet and all investment decisions rest entirely with the pusher of the button.

Patterns are probabalistic which like nuclear ballistic means they can blow up in your face really fast. Posiition sizing to limit risk , sleepless nights when it all goes wrong , frustration when they go right, (just after hitting your stop) are the joys of speculators and none of us want that.

I once wrote a poem on this

We are experiencing a big lull in volatility at the moment and this could come back at any time with a vengeance. Which means prices could go either way very quickly.

[Aaron]

A dangerous naive question.Im not a licensed qualified financial advisor for one.
Not reckoing anything for these risky plays. But for me, i want exposure to the down side in a hedging type way.I have Gold for Global. BBOZ and BEAR are others for ones Australian exposure. Peats T/A is a very helpful tool.

Hopefully Peat's disclaimer is not for my benefit. I am only asking for opinions I won't be taking anyone to court as I am a believer in people taking responsibility for their actions but I am always interested in other people's opinions. Usually I am looking for some confirmation bias as it is a bad habit of mine. I hope no one ever listens to me. Based on the amount of research I bother to do I could be classified as a gambler/speculator rather than an investor, although ideally I want a large portfolio of regular dividend paying companies my laziness is a problem.
In that vein Peat how do you short the S&P500?

[peat]

for this scenario there a few ways that I might respond to my own prognostications

(i) given that its all one market I would consider reducing exposure within my portfolio. Take some profits etc. for instance I am now completely out of PAZ and AFT and yes yes I know they've gone up further (because I left some for others coz I'm a nice guy lol)
(ii) short the SP500 using CFD's - as noted previously I use CMC.
(iii) go short some currency pair that is normally correlated to Risk on/Risk off eg Eur/Jpy or Aud/Usd

my disclaimer is for everybody just in case , these threads have a few lurkers I believe.

[HKG2301]

So everyone in agreement here, it's going to be a V recovery ?

Not me.

I can't accept a V-recovery or 'this time it's different' philosophy. Just don't see it, considering the wide-ranging economic effects of the global lock-down.

Yes, the US Fed and central banks have been pumping eye-watering amounts of liquidity, but how long can that 'corporate socialism' last? Forever? The death of capitalism as we know it.

Reality will eventually have to kick in: bankruptcies, job-losses, deflation then massive inflation. Every source that I trust refers to a 5 or 6 year recovery period from this depression. Minimum. And that assumes a viable Covid vaccine, which is not a given. There still isn't a vaccine available for SARS 1.

Personally, I bought heaps in the NZX at the March lows which I've been offloading the past 2 weeks. Quite a lot today, actually.

I'll then sit back and wait for the next tumble, which I see as inevitable. Probably led/triggered by the US markets, which are teetering now, IMO.

[I'm also short the SPX through long puts, and long gold, silver & PM miners. :t_up:]

[HKG2301]

NZX50 looks like a V to me. Possibly the economic effects of the lockdown are yet to fully flow through, economy is still missing international tourism but with an Aussie bubble that is 50% of the tourist market back. I suspect it won't be another 10 years for the next opportunity of a lifetime though but I have been wrong before.

Not sure about that 50% figure, Aaron.

Aussies previously made up 40% of international visitors, 24% of 'visitor spend'. Interestingly, Kiwis made up 15% of visitors to Australia, 6% of 'visitor spend'.

Of course, an exclusive Tasman bubble could pump both of those figures.

https://edition.cnn.com/travel/article/new-zealand-australia-travel-bubble-intl-hnk/index.html#:~:text=Over%20in%20Australia%2C%20New% 20Zealanders,country's%20fourth%20biggest%20export %20industry.

[peat]

[I'm also short the SPX through long puts, and long gold, silver & PM miners. :t_up:]

FTR the same type of bearish patterns are forming in the PM's. Silver especially fits the same pattern, Gold is a bit more extended but could well trigger the same effect

[HKG2301]

FTR the same type of bearish patterns are forming in the PM's. Silver especially fits the same pattern, Gold is a bit more extended but could well trigger the same effect

Thanks, Peat.

They are long-term investments for me. A no-brainer, given the inevitable inflationary effect of all this printing.

Can't argue there's a heap of manipulation in the PM markets, but the long-term trend is up, I reckon!

[Aaron]

Not sure about that 50% figure, Aaron.

Aussies previously made up 40% of international visitors, 24% of 'visitor spend'. Interestingly, Kiwis made up 15% of visitors to Australia, 6% of 'visitor spend'.

Of course, an exclusive Tasman bubble could pump both of those figures.

https://edition.cnn.com/travel/article/new-zealand-australia-travel-bubble-intl-hnk/index.html#:~:text=Over%20in%20Australia%2C%20New% 20Zealanders,country's%20fourth%20biggest%20export %20industry.

Sorry fake news, I knew it was a decent chunk though.

If you don't mind me asking what did you buy in March and what criteria do you use when making a purchase?

Just being nosy.

[HKG2301]

If you don't mind me asking what did you buy in March and what criteria do you use when making a purchase?

Back half of March, I bought IPL, PCT, KPG, IFT, ARG, SPG, APL, ARV, MET - you can probably spot the trend there - as well as CEN, FRE, ABA, BGP and (sadly) NZR.

Two main reasons: they were either on my shopping list, and/or stood out as grossly oversold.

I now think they are getting overbought again (post-covid exuberance?), so have eased out of many of those holdings. I still have core positions that I'll hang onto, but I'm otherwise content to wait and see how this drama unfolds.

If what we've witnessed in recent global events (especially in Washington) had been portrayed in The West Wing TV series (say), we'd have called it WAY over-dramatised and OTT. But that's the real world we're living in now, it seems...

:scared:

[Joshuatree]

The world is unlocking and its chocks away atm, euphoria growing.Whos looking at the daily deaths anymore, who's skirting around other people still, who's stuck in a traffic jam.Gotta cash in on this mania ehh .FOMO is back with a vengance. Warning ,warning, warning.:mellow::cool::confused::scared::eek2:

[ynot]

The world is unlocking and its chocks away atm, euphoria growing.Whos looking at the daily deaths anymore, who's skirting around other people still, who's stuck in a traffic jam.Gotta cash in on this mania ehh .FOMO is back with a vengance. Warning ,warning, warning.:mellow::cool::confused::scared::eek2:

Yea right.

[kiora]

""When market volatility increases, liquidity decreases as market makers reduce the inventory they are allowed to carry within their portfolio," the investor explained."
https://finance.yahoo.com/news/a-view-from-the-trading-floor-algorithms-having-outsized-impact-amid-coronavirus-panic-160248892.html

[Aaron]

Not that I am comparing myself to Stanley Druckenmiller but I think he might be suggesting a recovery.

https://www.zerohedge.com/markets/ive-been-far-too-cautious-druckenmiller-admits-hes-humbled-fed-enabled-v-shaped-market

[macduffy]

Not that I am comparing myself to Stanley Druckenmiller but I think he might be suggesting a recovery.

https://www.zerohedge.com/markets/ive-been-far-too-cautious-druckenmiller-admits-hes-humbled-fed-enabled-v-shaped-market

Aren't we constantly warned not to bet against the Fed?

:ohmy:

[HKG2301]

Not that I am comparing myself to Stanley Druckenmiller but I think he might be suggesting a recovery.

Possibly confusing economic recovery (we are far from that) with a speculative market bounce...?

[Aaron]

Aren't we constantly warned not to bet against the Fed?

:ohmy:

Its been great advice for the last decade or so. Sadly I am not good at taking advice.

Correct not an economic recovery but a financial market recovery that he was too cautious on. Bill English was on the money months ago when he suggested people might question why asset prices are high when everything else is not so hot. He was right about the asset price disconnect but wrong that people might question why this is. Young people who should be caring are more concerned about George Floyds murder. It is not even a NZ issue. That said central bank tomfoolery is an international issue.

[HKG2301]

Recovery? I couldn't put it better than this article at Zero Hedge...

https://www.zerohedge.com/markets/welcome-anything-goes-market

[kiora]

Always good to go back & read what you where thinking at the time.
Confirmation bias anyone?

[HKG2301]

Always good to go back & read what you where thinking at the time. Confirmation bias anyone?

Make mine a double! :t_up:

[kiora]

Make mine a double! :t_up:

Time in the market versus timing the markets reverberates again agh! :)

[Joshuatree]

Recovery? I couldn't put it better than this article at Zero Hedge...

https://www.zerohedge.com/markets/welcome-anything-goes-market

Yes thanks for sharing. Im still over 50% in cash since feb and awaiting what is imo inevitable. Protecting assets and reducing risk is where its at for us for now .With some hedging, goldies etc as well.

[HKG2301]

Time in the market versus timing the markets reverberates again agh! :)

Yes, that's a valid argument, but depends a lot on how active a trader you are, and whether you have access to short trading options ('scuse the pun).

For me it's not simply black/white, in or out of the market. I am not only long, and not only exposed to one sector or one market.

I'm also older, in 'capital preservation', rather than 'speculative' or even 'dollar-cost-average' mode, so if I can side-step a 20-30% drop in the markets, signalled by this seemingly irrational exuberance, I will.

For me, quick profits are secondary; asset protection comes first.

[peat]

It’s all on like Donkey Kong!

(From Westport)

[Joshuatree]

Yep DOW down nearly 1900 points.

[HKG2301]

And VIX bounced from 26 back up to 43!

This next week's going to be interesting, with triple witching on the 19th (Q2 options expiration). Looks like we won't have to wait for the next round of earnings (starting mid-July) to shake out the RobinHooders...

Now, how much of this will spread to the NZX...?

[Aaron]

Damn when things looked a bit soft late yesterday I logged into ASB Securities made my buy order got to preview my order for BEAR.ASX then thought I don't really understand this so I didn't click OK.

Unfortunately my understanding is that BEAR will do pretty well today. As an aside ASB Securities said I couldn't place a buy order for BBOZ.asx online but gave me an 0800 number at which point I tried the apparently less risky BEAR.

Has anyone else come across this with BBOZ. What is the deal something so risky you need to talk to a broker first??

Coulda Woulda Shoulda. Possibly just a blip today in a recovery or a dead cat bounce?

[stoploss]

Damn when things looked a bit soft late yesterday I logged into ASB Securities made my buy order got to preview my order for BEAR.ASX then thought I don't really understand this so I didn't click OK.

Unfortunately my understanding is that BEAR will do pretty well today. As an aside ASB Securities said I couldn't place a buy order for BBOZ.asx online but gave me an 0800 number at which point I tried the apparently less risky BEAR.

Has anyone else come across this with BBOZ. What is the deal something so risky you need to talk to a broker first??

Coulda Woulda Shoulda. Possibly just a blip today in a recovery or a dead cat bounce?
Have a read of the bear thread this was covered recently

[ynot]

My experience with bboz. You need to be in early and out fast on a hard falling market.

[blackcap]

Have a read of the bear thread this was covered recently


The pitfalls of leveraged investments like BBOZ are well discussed in this publication:

http://www.stockmarket.co.nz/iastart.htm

Click on the May 2019 issue which is free. Page 2 covers it well.

[Aaron]

Thanks to all for the advice. Disappointed not to have bought BEAR but not distraught as it would have been dumb luck. With a new army of investors joining up to trade shares we could be back up again on Monday.

[kiora]

"Jim Cramer: A Zweig Wave Is One That's Definitively Worth Surfing"
https://realmoney.thestreet.com/jim-cramer/jim-cramer-a-zweig-wave-is-one-that-s-definitively-worth-surfing-15348353?puc=yahoo&cm_ven=YAHOO&yptr=yahoo

[Joshuatree]

Good read thanks. What with dont fight the fed or the tape and at your rear all these little Sharesies etc reef fish gobbling up volume i could quite happily step out of the sharemarkets but into what is the prob?

[HKG2301]

I'd be a lot happier riding the wave if it didn't feel so much like a tsunami! And it seems I'm not alone, given the VIX is still at 35 and, perhaps more importantly, the VVIX is at 140...!

[jr1973]

Does anyone have a view on commodities. The US market is trading around 30 times multiple which is crazy, however commodities are at historic lows by comparison. Oil is in its bottom quartile by average which makes it appear cheap. Taking a 5 year view, it looks very attractive. Sugar has been testing all time lows. Some price discovery me thinks... anyone share the view?

[peat]

Does anyone have a view on commodities. The US market is trading around 30 times multiple which is crazy, however commodities are at historic lows by comparison. Oil is in its bottom quartile by average which makes it appear cheap. Taking a 5 year view, it looks very attractive. Sugar has been testing all time lows. Some price discovery me thinks... anyone share the view?

I was looking at 3 of the big Aussie resource companies the other night BHP RIO and WPL and they all seem not unreasonably priced based on a standard equity valuation method. I interpret this as the mainstream view being bearish commodities (I'm not incl PM's here.)

Oil is so fraught politically that one needs to consider all those aspects of it. Who wouldve thought the Saudis would dump like that? So I am not sure if you can judge its price levels in terms of quartiles by average.