Blood on the floor.

[tommy]

mmm, a lot of microcaps bearing the brunt of the bleeding market, it's sooooooo tempting to get back into the market to pick up these cheapo stocks... but gotta stay put, it's gotta go lower than this[:p]

[JBmurc]

[V]8k paper loss today ,looking forward to the turn around can't be that faraway in the OIL GOLD sector esp. Gone Long LHG,OSH;)

[tommy]

Asia nosediving:

http://finance.yahoo.com/intlindices?e=asia

US markets also ready for more blood:

http://money.cnn.com/data/premarket/index.html

[clearasmud]

I think it is a good time to get into selected oil stocks for a 1-5 year timeframe.
I will remain fully invested 70% or so in oil and gas stocks.
The outlook for energy is good imo.
Check out http://www.321energy.com/archives.php
http://www.financialsense.com/

[tommy]

http://www.cnbc.com/id/17452413

Asian Markets Take a Beating; Japan, South Korea Close Down
By CNBC.com | 05 Mar 2007 | 01:19 AM



Asia's battered stock markets continued to tumble in the afternoon session Monday. Japan and South Korea both closed sharply lower while China and Singapore stocks were being pummeled.

The yen hit three-month highs against the dollar and the euro as investors rushed to close out risky trades and pay off the cheap yen loans that financed them, driving the Japanese currency higher.

The Nikkei 225 Average
NIKKEI 225 INDEX (NIKKEI) fell 3.3%, its biggest one-day tumble in nine months and a new low for 2007, as investors continued to dump exporters such as automaker Toyota Motor and Sony following the yen's rise. A stronger yen tends to hurt exporters because it erodes the value of their overseas sales. The selloff pushed the index below the psychologically important 17,000 level for the first time in nearly two months and left investors wondering when stocks will rebound.

In South Korea, the Kospi Index dropped 2.7% to their lowest close in more than a month, with foreign investors retreating from blue chips such as POSCO as an aversion to risk continues to pound global markets.

Also pressured, Australia's S&P/ASX 200 Index finished 2.3% lower, erasing all their gains for 2007, as investors sold index heavyweights such as the top miners on worries about the outlook for global equity markets following last week's selloff.

In markets still changing, Chinese shares fell as much as 3.5% in the afternoon session, led by blue chips, as the market was hit by weakness on global markets and a cautious mood during the country's annual parliament session. Investors continued to sell financial stocks, which led a plunge in stocks last week. Industrial and Commercial Bank of China, the biggest stock in the Shanghai index, was sharply lower.

Hong Kong's Hang Seng Index sank to 11-week lows, pacing sliding Asian equity markets, as growing concerns about the stronger yen and its implications for carry trades spurred a further selloff. China plays hit a near 14-week low before recovering slightly but were still down, led by mainland insurers and lenders, as investors fled emerging markets amid declining risk appetites.

Singapore's Straits Times Index fell as much as 4% with large capitalized stocks such as local lenders DBS, Southeast Asia's biggest bank, and Oversea-Chinese Banking, the top losers.

Underpricing Risk

A plunge of 8.84% last Tuesday on Shanghai Composite Index, the biggest drop in a decade, served as a wake-up call to global investors that they had been underpricing risk assets around the world.

Weak U.S. durable goods orders and worries about defaults on poor-quality mortgages later drove U.S. share prices sharply lower. Global markets have been struggling to stabilize ever since.

But Shang Fulin, chairman of the China Securities Regulatory Commission told reporters that China's stock market is too small and has too little foreign participation to be blamed for triggering last week's rout in global share prices. "China's stock market right now is relatively small and not very globalized. So it's not possible for it to have such an impact," Shang said.

Shang said each market behaved according to its own characteristics. "Markets in different countries are mainly influenced by their own domestic conditions and will influence each other according to the globalization of their market," he said on the sidelines of the annual session of the National People's Congress, China's parliament.

[ananda77]

quote:Originally posted by clearasmud

I think it is a good time to get into selected oil stocks for a 1-5 year timeframe.
I will remain fully invested 70% or so in oil and gas stocks.
The outlook for energy is good imo.
Check out http://www.321energy.com/archives.php
http://www.financialsense.com/



...that's my strategy as well for the medium- to long term. As a matter of fact, this has been my strategy since Day One in the sharemarket some time ago.
However, a 10% exposure to mainly gas- and alternative energy stocks will do it for me at the moment

...in terms of asset location:

-NOTHING AMERICAN

Kind Regards

[SEC]

quote:Originally posted by SEC

My prediction is back to 5500 - old support/resistance line, a good 10% shakeout (typical correction size - we're almost half way there already)


2/3's there now! Foregone conclusion ASX200 will reach 5500 IMHO. Wallet still closed, I'll start buying around 5500 and will buy aggressively if it dips below 5500 because it may bounce quickly.

SEC

[WASL]

quote:Originally posted by Flying Goat

Reckon the All Ords will be back to 5,400 by the end of the week ... hehe

Anyone else care to take a guess for market close at Friday 9th Mar 2007?

FG

[WASL]

Hi FG,

My prediction is that you are about right with an All Ordinaries of ~ 5,400 by week's end. More interesting is the question "What will happen after that?"
I think it will hover around 5,400 (+/- 1.5%) until October and then will fall a further 3-4% to (say) 5,250. January 2008 - back to 5,600 from where it could go anywhere. I do NOT believe the Australian election result will have any effect on the market.

Regards to ALL


WASL

[tommy]

DOW opens low:

http://money.cnn.com/data/markets/

Europe in the red too:

http://finance.yahoo.com/intlindices?e=europe

[JBmurc]

quote:Originally posted by JBmurc

[V]8k paper loss today ,looking forward to the turn around can't be that faraway in the OIL GOLD sector esp. Gone Long LHG,OSH;)



:DLIKE TODAY ASX looking alot better much green on my screen maybe a dead cat bounce with most of the world Sharemarkets falling along with gold oil other commods so maybe not the time to buy until the rest of the world also stops falling.
Have taken my profits on LHG and now gone short 314 very short term gold looks weak.
OSH looking good buying at 3.33 be keeping long with current high impact drilling-Overall bullish on crude oil 70+ before june

[whiteheron]

It looks very much as if low tide may have arrived or at least be very close

I have been organising funds (just received) to take advantage of what appear to be some bargains but on checking prices I have discovered that all but one of the shares that I have on my list have already turned around, in some cases quite substantially

Oh well, thats how it goes I suppose !

[thereslifeafter87]

It almost looks like the tail is wagging the dog.

China drops like a stone, the US follows.

The US is down overnight, yet all the Asian markets (bar NZ) are up.

I was hoping for more downward pressure over the next few days. Some of my small/microcaps are ridiculously undervalued. If they went lower I'd be having a field day.

[soulman]

The market bouncing today is of no suprise. Shares in Oz and Asia was oversold yesterday by at least half so they are now recovering the other half. A drop of nearly 400 points surely can't be sustained and a dead cat bounce always comes in once every few days.

[tommy]

Hi all,

mmm, is this another dead cat bounce or is it time to get back in?
Asia starts in positive terrority, if the Nikkei can stay positive for at least three sessions to claw back its big losses then Asia should be okay... the fall in Nikkei was aggravated by the strong yen that fueled fear among shareholders of export-oriented companies like Canon and Toyota (stronger yen means lower profits due to currency conversion!)

http://finance.yahoo.com/intlindices?e=asia

Still watching from the sidelines, too much uncertainty in the market at the moment[:I]

[Flying Goat]

quote:Originally posted by thereslifeafter87

It almost looks like the tail is wagging the dog.

China drops like a stone, the US follows.

The US is down overnight, yet all the Asian markets (bar NZ) are up.

I was hoping for more downward pressure over the next few days. Some of my small/microcaps are ridiculously undervalued. If they went lower I'd be having a field day.



life >87,

Which small caps are undervalued?!

FG

[pago]

hi fg.i doubt asx has hit bottom yet,there were several oversold stocks yesterday on my list some of which have moved up today.take your pick,eve hasnt moved yet.aim listing,price,have alook,your call ,cheers pago,

[Huang Chung]

Could someone please enlighten me as to what the 'yen carry trade' is [?].

Never heard of it until a couple of days ago, now its all that the talking heads on CNBC seem to go on about.

I take it that its just the yen strengthing against the USD...is this correct?

[moimoi]

punters borrow funds in low interest rate countries like japan and invest the funds in higher yielding investments in other countries.....

some unwinding of the carry trade has occurred recently.....ie: selling NZ investments (selling the NZ$ which has dropped 3 cents against the $US in past week) and repurchasing the yen (which has caused it to strengthen) in order to pay their yen loans back.....

there is copious amounts of info on this all over the net.

cheers
moi.

[trader10]

Hi HC,


quote:"yen carry trade"
quote:

A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. A trader using this strategy attempts to capture the difference between the rates - which can often be substantial, depending on the amount of leverage the investor chooses to use.

Here's an example of a "yen carry trade": let's say a trader borrows 1,000 yen from a Japanese bank, converts the funds into U.S. dollars and buys a bond for the equivalent amount. Let's assume that the bond pays 4.5% and the Japanese interest rate is set at 0%. The trader stands to make a profit of 4.5% (4.5% - 0%), as long as the exchange rate between the countries does not change. Many professional traders use this trade because the gains can become very large when leverage is taken into consideration. If the trader in our example uses a common leverage factor of 10:1, then she can stand to make a profit of 45%.

The big risk in a carry trade is the uncertainty of exchange rates. Using the example above, if the U.S. dollar were to fall in value relative to the Japanese yen, then the trader would run the risk of losing money. Also, these transactions are generally done with a lot of leverage, so a small movement in exchange rates can result in huge losses unless hedged appropriately.

Cheers

;)

[SEC]

quote:Originally posted by thereslifeafter87

I was hoping for more downward pressure over the next few days. Some of my small/microcaps are ridiculously undervalued. If they went lower I'd be having a field day.


Be patient, the downward pressure is likely to recommence soon. To call this the end of the correction is too soon - it happened too quick. ASX200 target 5500. A second downward fall in this correction will be more protracted.

SEC

[moimoi]

trader10....you obviously know more about the subject than i....one thing i have never understood, and maybe you can enlighten me.....

How does one borrow the funds from said bank in japan in the 1st place?? I'm assuming the majority of it is done by massive global investment banks etc, with their large asset bases...but how do the smaller 100-400k punters do it without having some form of japanese based collateral / security for the loan.??

cheers
Moi. :-)

[Huang Chung]

Many thanks Trader and Moi. There is more to the carry trade than I thought.

Gee, the investment landscape can be one big minefield, can't it....

[trader10]

moimoi,

Would help you very much if you had a "friend" there...... easy to borrow.....

Other ways to do it..... having a co. , or have a the right amount of assets to be able to negotiate the transactions....

A mate of my has and ex- gf(japanese)...she lives there and is citzen......easy peasy.....

cheers ;)

[soulman]

Another bounce. Are you investors feeling you missed out on these low prices? Traders on the other hand loves these volatility (buy one day, sell the next few days, and of course timing are crucial for traders). I got in 2 stocks the other day and sold out the next for a nice gain.

More downturn to come? We shall see. I am predicting 5500.

[tommy]

quote:Originally posted by soulman

Another bounce. Are you investors feeling you missed out on these low prices? Traders on the other hand loves these volatility (buy one day, sell the next few days, and of course timing are crucial for traders). I got in 2 stocks the other day and sold out the next for a nice gain.

More downturn to come? We shall see. I am predicting 5500.




The market is all over the place at the moment, thinly-traded illiquid stocks are jumping up and down like a yo-yo!! Not back into the market yet because this mid-week recovery seems to be only temporary in the correction phase, driven by largely by the green Asian market first and then the European and US markets.

Interestingly the Nikkei is down again today despite some pressure off the yen, as is the broader TOPIX. Looks like Tokyo is still uncertain of the economic prospects of the US economy at the moment, quite understandably.

I would be worried if this is the end of the correction on ASX, as it just happened too fast and not deep enough.

I also expect another 200-300 points to be shaved off All Ords.

[soulman]

I think buy the stock, not the index. AFG at $10 (I missed out though) and MFS at $4.70's is at bargain level and these are snap up. SUN at $20 is also the support price. Any other big fall might see these back at those prices and I will be a willing buyer as prices at these levels will not last long.

[ananda77]

A lot of talk has been going on as to the reasons for the huge sell-off in international equity markets. Amongst quite a few theories, the one about the threat of the Chinese Government introducing a capital gains tax made me laugh the most.

Anyway, here are some more punts which come down to the basic idea that it's (OF COURSE) the fault of the other

...American Hollywood at it's best...

and G.W. Bush thinks, he is in the White House because he sees himself as the main actor on GOD'S earthly stage to fight terrorism...

The Chinese Position:

<center>http://www.globalresearch.ca/index.php?context=viewArticle&code=CHI20070306&articleId=4999</center>

...the China Connection...

<center>Who owns the Dollar</center>

<center>http://www.amconmag.com/2005_07_04/article1.html</center>

Kind Regards

[ananda77]

...and if conspiracy theories are of interest (or not), it's good to be informed/prepared...

...The Plunge Protection Team...

<center>http://www.informationclearinghouse.info/article17251.htm</center>

Kind Regards

[ananda77]

...an interesting interview with George Soros in the Financial Times:

<center>http://www.ft.com/cms/s/269b437c-ccca-11db-a938-000b5df10621.html</center>

excerpts:

I think we need to leave behind the involvement with the Iraq war and I think we need to actually question the war on terror because that’s where we really went off the rails.

Well, I’m afraid that the situation in Iraq is out of our control. We have messed it up and we are not in really a position to correct it. So we have to extricate ourselves with the least possible damage and then we have to pay a lot more attention to the Palestine problem, which is still solveable.

Yes, because there is this frame of the war on terror and Hamas as a terrorist organisation that you can’t accept as part of the Palestinian government and you can’t have a peace in Palestine without Hamas because Hamas, if it’s not part of that settlement, is bound to destroy it. So you must deal with Hamas and I think we are in the process of committing a blunder, similar to the blunder of going into Iraq, by not accepting Hamas as a negotiating partner.

I would say that we will not take military action against Iran, that reason will prevail and we will refrain from doing something that will be very, very counterproductive.

excerpt from Who rules America

[i]What is abundantly clear is that one of the main threats to world markets – and the health of the financial ruling class – is an Israeli military attack on Iran.
This will extend warfare throughout Asia and the Islamic world, drive energy prices beyond levels heretofore known, cause a major recession and likely a crash in financial markets. But as in the case of the relationships between Israel and the US, the Zionist Lobby calls the shots and its Wall Street acolytes acquiesce. As matters now stand, the pro Israel Lobby supports the escalation of the Iraq war and the savaging of Palestine, Somalia and Afghanistan. It has neutralized the biggest and most concerted effort by big name centrist political figures to alter White House policy. Baker, Carter, former military commanders of US forces in Iraq have been savaged by the Zionist ideologues. Under their influence the White House is putting into practice the war strategy presented by the 'American' Enterprise Institute (a Zioncon thinktank). As a result parallel to Bush's appointment of Paulson and Wall Streeters to run imperial economic policy, he has appointed an entire new pro-war civilian military-security apparatus to escalate and extend the Middle East wars to Africa (Somalia) and Latin America (Venezuela).

Sooner or later a break between Wall Street and the militarists will occur. The additional costs of an escalating wars, the continual ballooning debt payments, huge imbalances in the balance of payments and decreasing inflows of capital as multi-national repatriate profits and overseas central banks diversify their currency reserves will force the issue. The enormous and growing inequalities, the massive concentration of wealth and capital at a time of declining living standards and stagnant income for the vast majority, gives the financial ruling class little political capital or credibility if and when an economic and financial crisis breaks.

With foreign investors owning 47% of all marketable US Treasury bonds in 2006 compared to 33% in 2001 and foreign holdings of US corporate debt up to 30% today, from 23% just 5 years ago, a rapid sell-off would totally destabilize US financial markets and the economic system as well as the world economy. A rapid sell-off of dollars with catastrophic consequences cannot be ruled out if US-Zionist militarism continues to run amuck, creating conditions of extended and prolonged warfare.

The paradox is that some of the most wealthy and powerful beneficiaries of the ascendancy of finance capital are precisely the same class of people who are financing their own self-destruction. While cheap finance fueling multi-billion dollar mergers, acquisitions,

[ruethewhirl]

Ananda,

Time to switch off your PC and go for a walk mate!

[Flying Goat]

Thanks for the Soros link Ananda.... great stuff!

[tommy]

Markets in the green again today, but still not quite convinced that the correction is over...

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Axao&draw.x=0&draw.y=0

Traders must be loving this volatility at the moment!

[Halebop]

It will only take a little bad news to tip it right now. Australia is approaching the tax loss season to boot. I'm happy to miss out on any upside in the short term.

[contrarianinvestor]

quote:Originally posted by Halebop

It will only take a little bad news to tip it right now. Australia is approaching the tax loss season to boot. I'm happy to miss out on any upside in the short term.

Halebop. Can you explain this Australian tax loss phenomenon? I have very litte knowledge on this topic. I can remember Peter Lynch mentioned something in his One Up book.

[SEC]

quote:Originally posted by Halebop

It will only take a little bad news to tip it right now. Australia is approaching the tax loss season to boot. I'm happy to miss out on any upside in the short term.


Eh?????

Australia tax year is from July - June, any tax loss selling is only evident in the last 2 - 3 weeks of June, and only then on shares that have lost gound since July last year (of which there aren't that many for FY07).

I also think the ASX200 is still in correction mode but to think tax loss selling is one of the reasons for a correction is clutching at straws.

SEC

[mark100]

Rather than tax loss selling, most investors will be reluctant to sell before June for fear of incurring a large tax bill.

I believe we are still in correction mode. The index can't drop 6% in a week and then bounce back like it never happened. If it does then I fear the index could enter a blow off top. I am 50% cash and have been since mid Feb, mainly selling out of stocks when they reported.

Halebop, aren't you always happy to miss out? I'm under the impression that you've been sitting on a pile of cash for the past 18 months

[Halebop]

quote:Originally posted by SEC

Eh?????

Australia tax year is from July - June, any tax loss selling is only evident in the last 2 - 3 weeks of June, and only then on shares that have lost gound since July last year (of which there aren't that many for FY07).

I also think the ASX200 is still in correction mode but to think tax loss selling is one of the reasons for a correction is clutching at straws.

SEC


There are plenty who do it before the last few weeks of June to avoid further losses rather than compound them. A friend and now retired broker always advised to do it before being forced to join any rush to exit. He always considered the "season" to be April to June and so do I. For me though Australian capital gains tax was not the issue but if I wanted to sell a loser I'd prefer to do it before 200 others rather than after.

I'm not attributing tax loss selling to the correction. I attribute fear, inflation, stretched fundamentals and a lot of hot money to the correction. The tax loss comment "to boot" was merely aknowledgeing another input at a time long holders might not enjoy an extra source of selling pressure.

[Halebop]

quote:Originally posted by mark100

Halebop, aren't you always happy to miss out? I'm under the impression that you've been sitting on a pile of cash for the past 18 months

In the last 18 months I've been mostly cashed up. If it was calculated, I'd guess my average "cash weighting" has been around 80 to 90% in that time. Despite that there has still been some trades but no serious attempt at finding holds. At this very moment though it's 100% cash, my downside is restricted to the stability of the banking sector and the $A/$NZ cross rate and my opportunity cost is any further gains the market might make. It's still pretty close although recent drops have given me some breathing space to maintain a record of beating both my benchmarks (the NZX and ASX) year on year. I'm pretty happy with that considering how little cash I've had exposed to stock markets although the opportunity cost of that caution is that I've missed out on doubling (and perhaps tripling) my money instead.

C'est la vie. [B)]

[Halebop]

quote:Originally posted by contrarianinvestor

Halebop. Can you explain this Australian tax loss phenomenon? I have very litte knowledge on this topic. I can remember Peter Lynch mentioned something in his One Up book.

It's just a product of a market where trading is possible and practical and / or capital gains taxes are applied.

Imagine you have shares in 2 companies. One has performed well and you sell. You find you have to pay $20 tax on your $100 gain. The other was a disappointment and has not lived up to your expectations. You decide to sell, incurring the loss of $50 and thereby reducing your taxable income by $50 and reducing you tax bill by $10. So your net gain is just $50 and your net tax bill reduced to just $10, thanks to selling the dud as well.

So now knowing this happens, in future years as you approach the end of your tax year, you may decide to sell some duds that you don't expect a quick recovery on in order to reduce your tax bill. In some instances you may repurchase them later, hopefully at the same or lower price, leaving you no worse off in term of ownership but having reduced your tax bill at the same time.

The bulk of selling happens closer to the end of the financial year although any selling-at-a-loss within the financial year counts. Knowing this, it can also be used as a trading strategy. You can short sell a share that has performed badly during the year, in expectation that tax loss sellers will drive it even lower and you will be able to buy back lower. Alternatively, if you think the fundamentals are sound on a company but it's share price has been a dud, you can wait until the end of the financial year to buy while the price may be temporarily and unreasonably depressed.

I was taught never to invest on the basis of tax. That also includes tax loss selling. The investment itself must provide the merit, not the transaction. But the tax loss season can still be used as both a trading tool or a cheap accumulation opportunity. I'm not normally brave enough to short a company because shorting is measureable and can turn into a trap sprung by professional traders (plus the last few years have been kind to most of the big companies where shorting is practical/possible). But the opportunity to buy your pre-determined company cheaply if the price suffers should be considered.

[ananda77]

...Halebop, the clever Cashman...but maybe you DO buy some gold after reading this...:):):)

<center> creditor chases [debtor] chases creditor</center>

<center>http://www.informationclearinghouse.info/article17267.htm</center>

<center>http://www.informationclearinghouse.info/article17274.htm</center>

Kind Regards

<center>http://img.villagephotos.com/p/2004-12/905046/USDTrash.gif</center>

[soulman]

Is it just me or has our market gone from strength to strength since the so-called correction. Too much money sitting on the sideline snapping these fair value stocks. Super, Future Funds, QAN and Private Equity activity all pointing to excess cash flows looking for a home. This could just be a short term correction and I see our market heading to 6000 again before falling to 5800 in June.

[winner69]

quote:Originally posted by soulman

Is it just me or has our market gone from strength to strength since the so-called correction. Too much money sitting on the sideline snapping these fair value stocks. Super, Future Funds, QAN and Private Equity activity all pointing to excess cash flows looking for a home. This could just be a short term correction and I see our market heading to 6000 again before falling to 5800 in June.


... if cash goes into these fair value stocks where does the cash that the sellers get go to?

[tricha]

Correction, I do not think so, where are all those extra billions in super funds going to find a home.

Correction, what a bunch of sheep:( The good thing about it was if you had spare cash it presented an outstanding buying situation.

Greed and inflation is in and the ASX has only one way to go.

7000 on the way!

[soulman]

Good point winner69 but I suggest the seller are heading to their cash account. Sitting on cash while the market correct itself to 5500 - 5600. It might still happen though but this bounce is a sizeable one although another large Shanghai fall might just be around the corner to spark another round of selling worldwide.

[Halebop]

quote:Originally posted by ananda77

...Halebop, the clever Cashman...but maybe you DO buy some gold after reading this...:):):)

Ananda I've only watched the 1st "Consumer Debt" video so far but found it very interesting. I don't totally agree with his inference that consumer debt is augering fiscal armageddon - for that to happen "systemically" asset values and cash flows must also implode. Environmental and sustainability concerns present a much better argument against consumerism (says this rampant consumer). So I think not probable unless a few more "bad luck ducks" yet line up. The bit about bankrupcty law amendment is a total rort on the the part of corporate America. They should apply the same test to directors and officers of companies if they believe the mechanism to be fair (and they should think about where those rules would inevitably lead - less risk taking and innovation - the bedrock of US's productivity growth)

On your gently jesting prognosis of gold, it too is a currency and would suffer a meltdown just as badly. If there is less liquidity out there because of a financial meltdown, I don't see lots of gold being the solution. It would be just as inflationary as "hot money" and quite literally unproductive. Even if it somehow became the currency of choice, legislators would merely legislate a gold solution as they have in the past. I think just like captains of industry in depression time, I'd flee to government stock and have (enjoy?) a 5 year investment hiatus before returning to pick the carcass of stock markets past.

[wns]

quote:Originally posted by Halebop
I think just like captains of industry in depression time, I'd flee to government stock and have (enjoy?) a 5 year investment hiatus before returning to pick the carcass of stock markets past.


Hi Halebop, when you refer to "government stock", what do you mean? Government bonds? Or something else? Any countries / governments in particular? I'd appreciate if you could please flesh that out a bit... Putting it another way, in the event of a depression, what would be a safe place to put your money?

[Halebop]

quote:Originally posted by wns

Hi Halebop, when you refer to "government stock", what do you mean? Government bonds? Or something else? Any countries / governments in particular? I'd appreciate if you could please flesh that out a bit... Putting it another way, in the event of a depression, what would be a safe place to put your money?

WNS it was a hypothetical answer to a hypothetical situation raised in the video linked by Ananda77. I'm not offering that we will see a crash by next Tuesday. But here's my take on a financial crash / depression / deflationary scenario on the scale of "The" depression (Although unlikely to be an exact duplicate, I'm sure debt and speculation would be in the mix)...

During "The" crash pretty much only one asset class provided positive returns ...there were exceptions like shares in companies involved in the Radio Broadcast industry but anyway... cash was king. The problem with cash itself was that if stuffed in shoe boxes it provides no returns and presents its own security risk... ...But if stuffed in bank accounts while banks are facing systemic risk you might lose the lot anyway as one bank after another collapses. The exception in this case was government bonds (Stock in NZ). Although interest rates dropped to miserable numbers like 2%, they were largely capital stable (some high grade, longer term Higher yielding Government bonds actually rose in value) and even if governments got themselves in trouble the surety provided by millions of tax payers provided investors with the comfort that as long as their society outlasted the depression, the bonds would have value. So while cash and bonds maintained value, deflation impacted stocks, businesses and real estate and they dropped by 10 to 20% per year for 6 or 7 years. As economies imploded and the price of good and services also dropped, the future value of cash actually rose. This is not a scenario we are famililar with in an environment of even relatively low inflation - in an inflationary environment we are taught to invest in appreciating assets and not harbour high cash holdings because inflation diminishes it's purchasing power.

Governments also structured artificial laws around gold and other hard commodities, which is a weakness gold bugs forget (Do you really a kilo of gold buried under your back shed anyway?)

So in the event of deflationary fiscal armageddon, I would favour lending my money to government. Alternatives to centrally managed finances are pretty bleak and probably require me to have a working knowledge of stone tools and goats. ...All a bit of fun on a Tuesday night but I'm not really planning on this outcome just yet.

[tommy]

Interesting discussion between halebop and others indeed, though I do not think crash + deflation is imminent... and even if there is, IMHO there will still be sectors in which people can invest in the stock market and make money from growth companies in such a climate despite the overall downturn in the domestic stock market i.e. recession-proof companies whose clients are exposed to stable public sector spending, discount retailers targeted at the lower end of the market, IT sector that reduce cost and improve operational efficiency, and businesses protected by regulations/patents serving as barriers to entry.

Now back to the original subject:

Europe is bleeding!
http://finance.yahoo.com/intlindices?e=europe

And DOW opens low
http://money.cnn.com/data/markets/

And I am hoping for more blood... time for bargain hunting!!!! hehehehehe

[MrDevine]

DOW down 211 this morning. Bargain hunters lining up on the ASX if it follows suit.

MrD

[SEC]

quote:Originally posted by SEC

To call this the end of the correction is too soon - it happened too quick. ASX200 target 5500. A second downward fall in this correction will be more protracted.

SEC


So is Phase II of the correction now starting to occur? The catalyst this time being the possible bankrupties of some US subprime lenders. Will this explode to cause a US (and hence global) recession? About as much chance that the spectre of US hyper-inflation in mid 2006 would cause global recession (the catalyst for that was annual inflation coming in 0.1% over expectations in mod-May 2006). The market panicked for months afterwards, and is panicking now. Bargains will soon be forthcoming on the ASX.

In the meantime I took advantage of the deadcat bounce occurring and I sold some underperforming non-core holdings in the last week. I'm always weary of doing this since my last lot of underperforming non-core sales were ERA and RIN![V]

SEC

[OneUp]

SEC you're a legend. It's uncanny how well you predict these market movements.

"The stockmarket has predicted 9 of the last 5 recessions."

[SEC]

quote:Originally posted by OneUp

SEC you're a legend. It's uncanny how well you predict these market movements.

"The stockmarket has predicted 9 of the last 5 recessions."


[:I] Yeah well we'll see if the ASX200 bounces off 5500 or not in the next few weeks. But I reckon you're correct re the recession remark, the stockmarket is predicting yet another false recession.

SEC

PS Loved your work on VSL, another underperforming non-core stock I sold far too early. The market was valuing its intellectual property at zero for a long time.

[tommy]

[/quote]

So is Phase II of the correction now starting to occur? The catalyst this time being the possible bankrupties of some US subprime lenders. Will this explode to cause a US (and hence global) recession? About as much chance that the spectre of US hyper-inflation in mid 2006 would cause global recession (the catalyst for that was annual inflation coming in 0.1% over expectations in mod-May 2006). The market panicked for months afterwards, and is panicking now. Bargains will soon be forthcoming on the ASX.
SEC
[/quote]

I think we are in for the second ditch for sure, but whether or not this is a mere correction or the beginning of something worse should become clearer when the US economy releases more figures this week. What concerns me the most is that ASX has been doing relatively well (in terms of bouncing back) compared to other markets overseas.

Perhaps the super funds with loads of dough having to put their money somewhere have served as a "buffer" from the impact of volatility in overseas markets?

Anyway, I am still staying away from the market for the moment (I only have one holding...RFG, rest is cash) because a little bit of uncertainty is enough to tip the balance in the market.

Another 1000 points shaved off the ASX and perhaps I'll consider buying back... we'll see. Totally agree with SEC mate that more bargains should be on the way

[:p]

[SEC]

quote:Originally posted by tommy


Anyway, I am still staying away from the market for the moment (I only have one holding...RFG, rest is cash) because a little bit of uncertainty is enough to tip the balance in the market.

Another 1000 points shaved off the ASX and perhaps I'll consider buying back... we'll see. Totally agree with SEC mate that more bargains should be on the way

[:p]


I'm one of these silly people who think cash is not king and will refuse to convert wholly (or near wholly) to cash... even in a bear market, let alone a correction. From memory I believe cash has only outperformed other investments (bonds, property, shares) once in the past 20 years (someone please refute this for the Australian market if they can!!!). On the other hand I'm never 100% invested in shares and have spare cash to invest if the stockmarket selloff gets too stupid. Flexibility is the key, one should never be (near) 100% in a single investment class.

1000 points shaved off the ASX Tommy? Hope springs eternal, especially for those unwisely fully cashed up...

SEC

[tommy]

hi SEC

Oops I cannot believe I made a MASSIVE typo, err... I meant another 100 (one hundred!) points off the ASX[xx(][:0][:X][|)] Silly me, I had too much to drink tonight... burp.

And yeah, I hate cash too because, as you say, shares and other asset classes can outperform inflation and interest rates easily in the long run and the opportunity cost is often too high (for my risk profile, anyway).

If Australia does fall into a deflationary cycle and end up with almost-zero interest rates like they did in Japan, I would borrow like there is no tomorrow and buy assets overseas[}:)]

[SEC]

Tommy, didn't think it was your style to hope for a 1000 point drop in the ASX but am a little surprised you decided to sell out of some big gainers like TRS and SAI (both are decent sized companies and well run co's - albeit a bit illiquid - that are on my watch list)- I mean, what has USA subprime lending got to do with these two????

If anything, I tend to keep the multi-baggers ahead of the others in times like this...

SEC

[tommy]

quote:Originally posted by SEC

Tommy, didn't think it was your style to hope for a 1000 point drop in the ASX but am a little surprised you decided to sell out of some big gainers like TRS and SAI (both are decent sized companies and well run co's - albeit a bit illiquid - that are on my watch list)- I mean, what has USA subprime lending got to do with these two????

If anything, I tend to keep the multi-baggers ahead of the others in times like this...

SEC


Hi SEC

I sold out of SAI and TRS a while ago when I decided to be a bit more aggressive in my investing style (way before problems in USA), after gaining more confidence in my stock picking skills... smaller cap companies with more growth potential in the tech sector. Ahh, I suppose I am getting more greedy nowadays[:o)]

I will post a list of "worth a watch" companies that are being ignored by the market at large in this field soon as I am getting totally bored of staying out of the market for a few weeks and I have nothing better to do apart from running my own business and researching bargain growth companies other than ADA, ASZ, ITD, ELX and ISS[:I]

That said, both SAI and TRS are recession proof companies with their own merits and definitely worth holding for the long term investor due to their proven track record and excellent management.

[Halebop]

quote:Originally posted by tommy

I sold out of SAI and TRS a while ago when I decided to be a bit more aggressive in my investing style (way before problems in USA), after gaining more confidence in my stock picking skills... smaller cap companies with more growth potential in the tech sector. Ahh, I suppose I am getting more greedy nowadays[:o)]

Tommy you're just doing what the market as a whole does at the back end of a bull run... gains an appetite for both risk and higher returns. Unfortunately only one of those two is perennial. Risk does not equate to higher returns, despite 2 short years of Uranium explorers and leveraged buy outs telling us otherwise.

[Flying Goat]

Halebop,

Actually pretty much all of the shares on Tommy's list are profitable businesses with good positions in niche markets, have been growing earnings yet still trade on price earnings multiples well below that of their industry peers. Tommy's investment strategy, in so far as I have followed his posts, has no connection with uranium speculators nor leveraged buyouts!!

FG

Note this post was with reference to Tommy's list of ADA, ASZ, ITD, ELX and ISS

[soulman]

Another quick bounce. I think I might just have to pick my price for each stock on it's merit instead of relying on All Ords hitting 5550.

[Flying Goat]

quote:Originally posted by soulman

Another quick bounce. I think I might just have to pick my price for each stock on it's merit instead of relying on All Ords hitting 5550.






Exactamundo!

[ananda77]

Halebop:

and [gold] would suffer a meltdown just as badly. If there is less liquidity out there because of a financial meltdown, I don't see lots of gold being the solution.

...correct, we see that right now; the dive in the markets causes liquidity problems for over-leveraged traders and the profitable gold pays the bills; -a temporary phenomenon-

...not to forget:

-during bull markets, only a minority of people holding gold and gold stock portfolios; but with serious economic problems and geo-political tensions becoming more apparent, gold as always will be the safety resort;

...are we seeing the beginning of a world wide exodus out of the USD$???

-the US needs 75 billion/MONTH foreign cash to finance the deficit; tonight's data forcast expects an inflow of 65 billion for January; consequently the deficit can not be financed unless the Fed is either sending interest rates up north (that hurt's unbearable) or the USD$ takes a further dive

-with lower interest rates on the not too distant horizon, the falling dollar will support gold

...as for the All Ordinaries:

-technically, there is a window of opportunity to test 6021...

Kind Regards

[ananda77]

Do you really [have] a kilo of gold buried under your back shed anyway? (Halebop)

<center>:):):)</center>


...select your category:

<center>Richard Russell On
Gold And Bull Markets
From CMIGS.com
3-14-7

Richard Russell has been editing his Dow Theory Letters since 1958 and brings great wisdom to the markets. Here are his thoughts on bull markets and the ongoing gold and silver bull market from his March 13, 2007 Remarks, which come with a subscription to Russell's Dow Theory Letters, $250 a year.

Russell deals primarily with the stock market, but he became a gold bull in 2000, the timing of which illustrates Russell's insight into the precious metals markets. He was also a gold bull in 1970s. For more about Russell's Dow Theory Letters, visit www.dowtheoryletters.com.

There are four kinds of gold or non-gold people (1) They know nothing about gold and never even think to ask. (2) They know a little about gold, but can't afford to buy any. (3) They trade small amounts of gold, but as soon as gold moves up or down 5 dollars or more, they sell it or are stopped out. (4) the so-called "gold bugs," the small minority who understand gold and money and adhere to a policy of accumulating gold.

I'm in category number 4. But let me give you my reasons.

The great majority of investors don't understand bull markets or the concept of the primary trend. When the primary trend of an item turns up -- whether it be stocks, commodities, agriculturals, precious metals -- we call that a bull market. There are small, medium and large bull markets. Once the primary trend of a category turns bullish, there's no way of knowing beforehand, how big the coming bull market is fated to be -- nor exactly what path the bull market will take.

We do know that in major bull markets there are psychological or sentiment phases. The first phase of a bull market is the accumulation phase. This is the early phase where informed investors accumulate an item because they know the item is underpriced or that the item is underused or simply not understood.

The second phase of a bull market, usually the longest phase, sees the professionals, the funds, the big money, the smartest of the public, taking positions in the item. The second phase tends to be characterized by many reactions, corrections, adverse news events that cause the public to dump the item.

The third phase of a bull market is the speculative phase, Here we see rising volume, the wholesale entrance of the public, accompanied by news and endless hype by the Wall Street "experts." People who wouldn't touch the item during the first and second phases, are now enthusiastic buyers. The third phase sees systematic distribution by the early first phase buyers. Third phase buying can easily turn to hysteria and madness. Towards the end of the third phase, we see hints of the beginning of the next primary bear market.

Question -- Do all bull markets progress as described above?

Answer -- Almost all major bull markets do. It's a judgment as to whether an ongoing bull market is fated to become a major bull market or not. There's no definitive answer to that question.

Now I want to talk about the current bull market in gold. This is a bull market that began in August 1999 with gold priced at 252 an ounce. Gold is the most emotional of all items -- loved by much of mankind, hated by certain elements including governments and central banks. Because gold is real money, and because gold is collected, traded and accumulated by millions of people the world over, gold bull markets tend to be BIG bull markets.

The gold bull market that started in 1999 has already taken gold up 291% to a high of 734 recorded in May of 2006. But what's so interesting about the ongoing gold bull market is that neither the public nor the funds have entered the picture. In fact, most people really have no idea that gold is in a primary bull market, this despite that fact that since 1999 gold has consistently outperformed the Dow and the S&P.

I believe that the gold

[tricha]

Whats changed in OZ or China, nothing.

Just a bunch of Skitzo sheep [V][V][V]in the market, ASX is on its way to 7000!:)

The fundamentals are intact. The metals you drive the ASX through the roof.
There are billions upon billions waiting to enter the market before June the 30th under the new super rules.

Live Spot Prices

SPOT PRICE IS OPEN
Price: US$/lb


Copper March 15,05:10
Bid/Ask 2.9282 - 2.9350
Change +0.0862 +3.03%
Low/High 2.8420 - 2.9418
Charts

Nickel March 15,04:39
Bid/Ask 21.1298 - 21.2659
Change +0.4536 +2.19%
Low/High 20.6763 - 21.2659
Charts

Aluminum March 15,04:49
Bid/Ask 1.2518 - 1.2540
Change +0.0195 +1.58%
Low/High 1.2323 - 1.2586
Charts

Zinc March 15,04:35
Bid/Ask 1.5019 - 1.5110
Change +0.0454 +3.11%
Low/High 1.4566 - 1.5110
Charts

Lead March 15,05:08
Bid/Ask 0.8793 - 0.8838
Change +0.0227 +2.65%
Low/High 0.8566 - 0.8929
Charts

Uranium Mar 09, 2007
Ux U308 price: 90.00
Change from
previous week +5.00

[JBmurc]

Its Not China we've got to be worryed about it's the USA inpending Realestate crash that will effect there populations massive spending power which in turn will hurt China's manufacting which in turn hurts there econmony's growth

[Bel]

You can spend so much effort worrying about the sky falling on the head you fail to notice the caltraps under foot.

As little investors we should (IMHO) stick to worrying about the little things. Worrying about the sky falling on ones head is just fear and conquering fear and greed is the true key to success in the sharemarket.

Once again, IMHO.

[Wossname]

Australia carries $521B in net foreign debt. Nearly all is private debt, and a lot is household debt. About 80% is apparently overseas borrowings by banks. Our net foreign debt is growing, despite the resources boom. Debt is a liability if a credit squeeze eventuates.

[tricha]

We have this so called BRIC, Brazil, Russia, India, China and you can add the former Eastern Bloc countries who are all going off [:p]

Around 3 Billion people. Maybe the mighty USA will not be so mighty anymore and so what.
China is getting to the stage when they will say USA [?][?][?]

The $US will get lower until their balance of payments corrects and if if keeps doing it gradually........all will be great, maybe not so great to the US population but maybe it is someone elses turn to have a day in the sun.

It wasn't that long ago Russia was screwed, now look at them :)

So maybe as Bel says - "As little investors we should (IMHO) stick to worrying about the little things. Worrying about the sky falling on ones head is just fear and conquering fear and greed is the true key to success in the sharemarket"

Anyway while the metals are going off, its opportunity time.

Take PEM for an example, a quality company, Share price $3.84 - $1.30 cash in the bank.
Intrinsic value of their share is only really $2.54, values their mining assets at only 504 million. Cheap as chips!
Own the 11th biggest Zinc mine in the world and have other quality mineral plays.

And JBmurc - "about it's the USA inpending Realestate crash that will effect there populations massive spending power which in turn will hurt"

Wouldn't you say the NZ property is market is in the same boat[?][?]

I'm sticking with the minerals boom, cheers [B)][}:)]

[OneUp]

quote:Originally posted by tricha
China is getting to the stage when they will say USA [?][?][?]


I'd say the 30% of the Chinese economy geared towards exporting cheap consumer goods, much of that to the USA, will not be so relaxed about what happens to their major customer!

[JBmurc]

And JBmurc - "about it's the USA inpending Realestate crash that will effect there populations massive spending power which in turn will hurt"

Wouldn't you say the NZ property is market is in the same boat

-Yes- do you want a cheap new Queenstown home;)

[Wossname]

For those who think that the USD could sink into oblivion without undue disturbance to the world economy, there is an article which provides a different viewpoint, titled:

"What Would Happen If The USD Collapsed?"

It can be found at http://www.prudentsquirrel.com/Pubnews.php

A brief quote:

"If the USD collapsed to zero tomorrow, the entire world economy would stop cold, and the total loss to world wealth would be something like $2200 trillion over a period of ten years."

[ananda77]

Halebop:

...I don't totally agree with (t)his inference that consumer debt is augering fiscal armageddon - for that to happen "systemically" asset values and cash flows must also implode.

Lyndon LaRouche:

"The amount of indebtedness outstanding is greater than could ever be repaid, so the system is hopelessly bankrupt," said leading economist Lyndon LaRouche at the opening of his March 7 webcast from Washington, D.C. Leading nations now must agree to replace that bankrupt system with the "New Bretton Woods" monetary reform LaRouche proposes, and issue new productive credits to replace the masses of collapsing debt—before a complete collapse of the dollar and monetary chaos make that impossible.

Greenspan:

Greenspan expects some spillover from subprime mortgages

By Rex Nutting
Last Update: 2:29 PM ET Mar 15, 2007

WASHINGTON (MarketWatch) -- Former Federal Reserve Chairman Alan Greenspan said he expects to see some spillover from the subprime mortgage meltdown into the broader economy if home prices fall, according to media reports. Speaking to a fixed-income industry group in Florida, Greenspan said the turmoil in the subprime market is no small matter. So far, there has been little impact on consumption, but he noted problems in collateralized-debt markets have already surfaced. "If prices go down, we will have problems -- problems in the sense of spillover to other areas," he said.

some background material:


A Moment of Truth Has Arrived

<center>http://www.larouchepub.com/pr/2007/070221moment_truth.html</center>


The Empire of the Hedge Funds

<center>http://www.globalresearch.ca/index.php?context=viewArticle&code=FRE20070311&articleId=5045</center>


The Global Financial System Is Burning at Both Ends

<center>http://www.globalresearch.ca/index.php?context=viewArticle&code=GAL20070318&articleId=5101</center>


...are we getting the drift:

<center>-financial reform- versus -war-</center>



Kind Regards

[OneUp]

Greenspan also noted there was no evidence of such spillover yet.

"Some spillover" at any rate certainly does not mean armageddon and doesn't mean that the US economy won't produce positive growth.

LaRouche likes the sound of his own voice. He's run for President of the USA eight times, and the Heritage Foundation has said that he "leads what may well be one of the strangest political groups in American history." He's regarded by many as an extremist and conspiracy theorist.

Does anyone take LaRouche seriously?

[OneUp]

quote:Originally posted by ananda77
Lyndon LaRouche:

"The amount of indebtedness outstanding is greater than could ever be repaid, so the system is hopelessly bankrupt," said leading economist Lyndon LaRouche at the opening of his March 7 webcast from Washington, D.C. Leading nations now must agree to replace that bankrupt system with the "New Bretton Woods" monetary reform LaRouche proposes, and issue new productive credits to replace the masses of collapsing debt—before a complete collapse of the dollar and monetary chaos make that impossible.


Greenspan also noted there was no evidence of such spillover yet.

"Some spillover" at any rate certainly does not mean armageddon and doesn't mean that the US economy won't produce positive growth.

LaRouche likes the sound of his own voice. He's run for President of the USA eight times, and the Heritage Foundation has said that he "leads what may well be one of the strangest political groups in American history." He's regarded by many as an extremist and conspiracy theorist.

Does anyone take LaRouche seriously?

[winner69]

ananda ... I thought you would have linked this by now from one of your regular sites

Velkomin to the United States of Foreclosure


http://www.informationclearinghouse.info/article17338.htm

[ananda77]

...sweet...

<center>http://img.villagephotos.com/p/2004-12/905046/LazearonMortgages.gif</center>

...sweet, sweet

<center>http://img.villagephotos.com/p/2004-12/905046/PaulsononGlobalEconomy19032007.gif</center>

...inspiration

...sorry to be a pain, but as far as I understand it, backed by rising real estate prices and megatons of borrowed money, consumer spending soared, creating huge corporate profits

However, borrowed money does not translate into a strong economy but only into an eventual recession...it's a bit like the AMEN in the church...

Kind Regards

[winner69]

Great chart on page 2 of this report
http://www.ampcapital.com.au/K2DOCS/site_corporate/C1D1A1CA-CBC2-414C-8A70-D96D73C95E12/OINo8.pdf?DIRECT

Fed tightening cycles usually end in financial crisis .... have a look

Or conversely it should read ... Fed tightening cycles LEADS to financial crisis

[Skol]

Was reading an article in Hong Kong the other day by Marc Faber who reckons that when you've got japanese housewives playing the carry trade or more correctly the currency market, because that's where the risk is, it's all likely to end badly.
With the trillions of borrowed money around the world in hedge funds, subprime mortgages, carry trade and private equity, and the property market it's only a matter of time until something goes badly wrong.
Very good article by James Grant in the latest Forbes magazine called "Buy the Yen now".
In the event of things going awry, in the last few years the yen has always appreciated as the carry trade has unwound and traders seek protection.

[Wossname]

quote:Originally posted by winner69

Great chart on page 2 of this report
http://www.ampcapital.com.au/K2DOCS/site_corporate/C1D1A1CA-CBC2-414C-8A70-D96D73C95E12/OINo8.pdf?DIRECT

Fed tightening cycles usually end in financial crisis .... have a look

Or conversely it should read ... Fed tightening cycles LEADS to financial crisis




Hi Winner69,

I agree that it is a great chart. Dr Oliver presented it apparently to illustrate that the US Fed had a history of saving the USA economy from hard landings by lowering interest rates when an economic crisis loomed.

However, it seems odd that Dr Oliver didn't seem to notice that the plot also shows that, since about 1980, the tolerance of the USA economy for interest rate spikes has reduced markedly, and that the lows to which interest rates have had to be dropped after crises in order to cause recoveries is trending toward zero. In other words, the power of the US Fed to produce recoveries by increasing the level of liquidity has been waning for years, and may be approaching zero.

This is consistent with the observation that US debt levels have trended upwards to unprecedented levels since the early eighties. Likewise, average household savings rates have been deteriorating over much the same period, until they are now negative. Liquidity, including lowered interest rates, is an excellent economic stimulant up to a point, but it can't revive a debt-riddled corpse.

I don't know when ever-accumulating debt will superimpose a crisis on the shorter-period trends that Dr Oliver discusses, but surely it must. I'm not aware that Dr Oliver identified cumulative debt as an issue in his article, or offered reasons to discount the adverse potential it seems to present. Thus, I didn't find his article convincing.

[tricha]

Boo

Just a bunch of Skitzo sheep in the market, ASX is on its way to 7000!

[Wossname]

quote:Originally posted by tricha

Boo

Just a bunch of Skitzo sheep in the market, ASX is on its way to 7000!


T, if your bullishness were absolute you wouldn't even be reading this thread, much less bothering to post. You wouldn't care less about being invested long and heavily on banks and discretionary retailers, you'd be leveraged to the hilt, and you'd be sure - without any doubt - that precious metals were for losers. It's tempting to adopt unmixed optimism of that kind, because it doesn't involve any thought. However, assuming that we're both too sensible - good for us - what is it about risk management that gives you the heebs?

Isn't risk management about recognising any threats and their likelihoods, developing appropriate avoidance and coping strategies for our personal needs and styles, and then getting on with life? Could some part of that process be profitably discussed here? Maybe the nature and timing of possible interruptions to base metal price rise trends caused by any corrections to global debt-based imbalances? That issue's an enigma for me.

To get back to your assertion about the ASX heading for 7000, I suspect that you are right. However, I don't know when it will get there, or what detours it will take along the way.

[ananda77]

tricha:

...this info is just for you...and may the ASX hit 7000 soon -you know by now what a SHORT of guy I am-

<center>http://img.villagephotos.com/p/2004-12/905046/LearFinancial1.gif</center>
<center>http://img.villagephotos.com/p/2004-12/905046/LearFinancial2.gif</center>
<center>http://img.villagephotos.com/p/2004-12/905046/LearFinancial3.gif</center>
<center>http://img.villagephotos.com/p/2004-12/905046/LearFinancial4.gif</center>
<center>http://img.villagephotos.com/p/2004-12/905046/LearFinancial5.gif</center>
<center>http://img.villagephotos.com/p/2004-12/905046/LearFinancial6.gif</center>
<center>http://img.villagephotos.com/p/2004-12/905046/LearFinancial7.gif</center>
<center>http://img.villagephotos.com/p/2004-12/905046/LearFinancial8.gif</center>

Kind Regards

[tricha]

Sorry Ananda - I think you must be spending to much time reading http://www.kitco.com and getting posioned by all those gold bugs who have been predicting a USA crash for the last ten or so years [V]
The unfortunate thing is one day they will get it right[V] but which day [?][?]ten years from now [?][?]

Just for all those doom dayers and goldbugs we will move onto positive information and make hay while the sun shines [8D][8D][8D]


BHP Says Metals to Firm for Decades on Asian Demand (Update1)

By Millie Munshi and Cris Valerio

March 26 (Bloomberg) -- BHP Billiton Ltd. Chief Executive Officer Chip Goodyear said prices of copper, nickel and other metals will remain high for several decades as demand from China and India climbs.

``I'm excited about what we'll see over the next several decades as 2.5 billion people in China and India and other parts of the developing world enter the world economy,'' Goodyear said yesterday in an interview in Santiago. ``Is China and India the next reason for a multidecade increase in commodity prices? We're positive about that.''

Metals prices surged to records in the past three years, boosting mining company profits, as construction soared in China, the world's fastest-growing major economy. Nickel, used in stainless steel, has more than doubled in the past year on speculation supplies from mines will trail demand. Melbourne- based BHP is the world's biggest mining company.

``The real driver in China is 15 million people a year moving from a rural or agrarian economy to an urban economy,'' Goodyear said. ``We don't see that ending for a long time. People are striving for a better way of life.''

Shares of BHP fell 10 pence, or 0.9 percent, to 1,109 pence in London. Before today, they had gained 13 percent from a year ago.

Citigroup Inc., the biggest U.S. bank, raised its 2007 nickel forecast and boosted its first-half copper forecast this month and said a ``super cycle'' will keep prices elevated as supplies lag behind demand.

`Super Cycle'

``We expect that this super cycle will continue for a while,'' Diego Hernandez, president of BHP's base-metals unit, said in an interview yesterday in Santiago. ``We think that demand will continue to stay strong for many years.''

Constraints in nickel supplies will also keep prices high and may surprise some investors, Goodyear said.

``We're at a point in time where there is just no additional nickel supply,'' he said. ``It's difficult to see new supply, and demand continues to be quite good.''

Nickel has soared 28 percent this year as China, the world's largest user of the metal, expanded its stainless-steel industry. Inventories will probably be ``tight'' through to 2010, helping support prices, Macquarie Bank Ltd. said today.

``China's import demand for nickel will continue to grow strongly,'' Jim Lennon, Macquarie's head of commodity research, said today at a conference in Noumea, New Caledonia.

BHP is working to complete construction at the Ravensthorpe nickel mine in Western Australia, which might be one of the world's biggest.

`A Year Away'

``We are probably almost a year away from actually turning a product on the marketplace'' from Ravensthorpe, Goodyear said.

Steel use will climb to a record 1.2 billion tons this year as Chinese consumption increases, the International Iron and Steel Institute said in a report on March 26.

``Steel demand is good,'' Goodyear said. ``As a result, the additives to steel are also seeing strong demand.''

Prices for copper will also remain high on increased consumption in China, Goodyear said.

``We're seeing continuing good demand out China, certainly in the area of copper,'' Goodyear said. ``In the last couple of months we've seen significant increases in demand.''

Copper prices in New York rose today to the highest in more than three months as stockpiles dwindled. Prices have rallied every year since 2

[SEC]

quote:Originally posted by SEC


quote:Originally posted by OneUp

SEC you're a legend. It's uncanny how well you predict these market movements.

"The stockmarket has predicted 9 of the last 5 recessions."


[:I] Yeah well we'll see if the ASX200 bounces off 5500 or not in the next few weeks.


New ASX200 record high today - this 7% 'correction' is officially over. I didn't get my 5500 target this time and have lost out on buying oppurtunities as a result. Even legends get it wrong - occasionally[B)].

SEC

[soulman]

Yes, the recovery was faster than expected. The interest rate concern also didn't eventuate and this is an election year where the budget is just around the corner. Interest rate usually stay on hold in an election year so who knows. The CPI for the Mar QTR will be the telling factor.

[tricha]

Wossname -"T, if your bullishness were absolute you wouldn't even be reading this thread, much less bothering to post. You wouldn't care less about being invested long and heavily on banks and discretionary retailers, you'd be leveraged to the hilt, and you'd be sure - without any doubt - that precious metals were for losers. It's tempting to adopt unmixed optimism of that kind, because it doesn't involve any thought. However, assuming that we're both too sensible - good for us - what is it about risk management that gives you the heebs?
Isn't risk management about recognising any threats and their likelihoods, developing appropriate avoidance and coping strategies for our personal needs and styles, and then getting on with life? Could some part of that process be profitably discussed here? Maybe the nature and timing of possible interruptions to base metal price rise trends caused by any corrections to global debt-based imbalances? That issue's an enigma for me.

To get back to your assertion about the ASX heading for 7000, I suspect that you are right. However, I don't know when it will get there, or what detours it will take along the way."
.................................................. ....................



As far as the ASX ploughing up to 7000, people have till 30th June to top their super up, some are even selling rentals to do it!
Talking to a few people, they are waitng for this big correction to top up big time.
We have had it, the closer to the end of June the bigger the panic as Greed sets in.
This mining boom is accelerating and billions of upon billions of profit is being pumped into the OZ resource companies.


This is my risk management Wossname in a nutshell.
.................................................. ....................
CURRENCIES
Dollar makes gains on payrolls report

PrintE-mailDisable live quotesRSSDigg itDel.icio.usBy Ciara Linnane, MarketWatch
Last Update: 1:31 PM ET Apr 6, 2007


NEW YORK (MarketWatch) -- The dollar rose against the other major global currencies Friday, rallying after the March jobs report showed the U.S. economy adding far more jobs than expected.
The report raised the prospect that the Federal Reserve's next move on interest rates may be a further hike rather than a cut.
The dollar was quoted at 119.30 yen, compared with 118.71 yen late Thursday, while the euro stood at $1.3373 against $1.3426. The euro hit a two-year high against the dollar on Thursday.
The British pound traded at $1.9650 compared with $1.9706. The euro fetched 159.54 yen against 159.31 yen late Thursday. See live currency rates.
Foreign-exchange volumes were light with the U.S. stock market closed for Good Friday.
Job growth showed surprising strength last month, the Labor Department said. Nonfarm payrolls expanded by 180,000, higher than the 168,000 projected in a survey of economists by MarketWatch.
The unemployment rate also ticked down to 4.4% from 4.5% in February, running counter to expectations that the rate would remain unchanged.
The 4.4% jobless rate matches the lowest seen in six years, set in October. The last time the unemployment rate was lower was in May 2001.
Average hourly earnings increased 6 cents, or 0.3% to $17.22, matching economist expectations. Earnings are up 4.0% in the past year.
"Strong employment growth indicates the economy continues to expand, despite the drop in new housing construction, slower productivity growth and tepid retail sales," said Peter Morici, a business professor at the University of Maryland and a former federal trade official.
The numbers are c

[Wossname]

Hi Tricha,

There are no unmixed blessings in business. Each advance contains seeds of destruction, and each reversal contains seeds of renewal. The populace that you characterise as being in a frenzy to invest in superannuation has actually got limited spare cash, as follows:

1. Home loan affordability remains in a down trend, the RBA index value having fallen by about 45% since the mid 1990's. Refer to graph at http://www.rba.gov.au/ChartPack/graphical_summary.pdf for more detail.

2. Australian household debt to disposable income ratios, and loan interest to disposable income ratios, stand at historically and globally high levels, at around 150% and 11% respectively. (http://www.rba.gov.au/ChartPack/graphical_summary.pdf)

3. Here, as in the USA, household saving rates are zero or negative. (http://www.rba.gov.au/ChartPack/graphical_summary.pdf, http://research.stlouisfed.org/fred2/)

4. There's usually a ceiling for interest rates above which the ability of mortgagees to repay their debts drops rapidly. It's easy to overshoot this ceiling value disastrously when raising interest rates, causing downturns. Yet the RBA is under increasing pressure to raise interest rates because of the very boom that you describe. This pressure continues despite three interest rate increases last year. How long can Aussie battler mortgagees in Western Sydney and Northern Melbourne hold up?

5. In recent years there has been an increasing trend for Australian banks to source loan capital offshore. Thus, Australia's net foreign debt had risen to $521B as at the end of December 2006, and continues to increase despite the resources boom. This insidious debt liability whiteants the supposed security of Australia as a high yielding investment destination.

6. The very fact that superannuation has been made so attractive may reflect desperation on the part of our government to encourage saving. We've a great resources-based national income, yet we've spent all of it and more, and we've an increasingly aging population.

7. Our resources boom may have a great future, but it's unlikely to advance at the current frenzied rate without any pullbacks. The Chinese economy is showing obvious signs of a need to consolidate. The USA economy is overly dependent on continued spending by over-extended consumers, and is also overdue to consolidate. The global oversupply of easy credit continues to overwhelm the better judgement of investors, creating unstable bubbles in many key sectors and markets. Risk margins are at historical lows, and leverage is extreme. With our net foreign debt, Australia may be vulnerable to a slowdown if another contagious capital flight develops in the global economy.

Sure, it's possible that nothing may happen for quite a while. But is it wise to bet one's capital on that, boots and all? What's wrong with a little insurance?

[tricha]

Well Wossname, we must be from a different planet.( Victoria or NSW, I guess)

Extract from todays WA News , WA Skills Crisis to Worsen

State vacancies to hit 23,700 as experts warn of more shortages in booming resources sector.

.................................................. ...................

In the next 3 years about 20 billion to be spent in this state on resource projects.

Just down the road from where I live, Collie coal expansion 420 million, Boddington gold mine 2000 million.

Every day in the paper, boom, boom , boom!

My brothers lives in Northern Queensland, the same.

Tasmania is starting to go off.

South Australia the same.

My prediction, BHP will be $40 by the end of August.

Wossname - "What's wrong with a little insurance?"

Probably BHP, diversified, OIL, Iron Ore, NICKEL, COPPER, URANIUM, COAL, ALUMINIUM, GAS, etc, yes the worlds largest diversified mineral company [:p][:p][:p][:p]

Cheers [B)][}:)]

[Wossname]

Hi Tricha,

I'm not denying that there's been a massive boom in the resources sector, and that income from it is growing fast. Go BHP!

However, astonishing as it may seem, there's been an even bigger boom in spending. Despite our exploding income, our net national position involves very large, and increasing, debts. This isn't some future threat. It's already happened. Check out our debt position at the Reserve Bank of Australia's website, or check the data published by the Australian Bureau of Statistics. Ordinary aussies are hocking themselves to the eyeballs for expensive real estate, flash four wheel drives, the pokies, or whatever. Spending is at binge levels, and it threatens to drag us down. Didn't you ever watch "Hot Auctions" on the box? Ever see young couples committing themselves to mind-blowing mortgages that require dual incomes for approximately forever?

What use is it having a massive income if we blow the lot, and more besides? How can anyone expect to have a bright financial future if they don't save anything? And how can we expect to maintain our standard of living relative to other nations if we keep bumming so much dough off them?

[tommy]

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5NoUHjv_uX0&refer=home

China's Economy Surges at Faster Than Expected 11.1% (Update1)

By Nipa Piboontanasawat


April 19 (Bloomberg) -- China's economy grew at a faster than expected 11.1 percent pace, powered by exports that have inflamed trade tensions and increased the risk of overheating.

Spending on factories and real estate accelerated in the first quarter, the statistics bureau said today in Beijing. The median estimate of 24 economists surveyed by Bloomberg News was for growth of 10.4 percent from a year earlier, the same as in the previous quarter.

China's government, concerned the boom may turn to bust, may raise interest rates or allow the yuan to appreciate faster to curb runaway investment in property, factories and the stock market. The China Banking Regulatory Commission today cautioned that a trade surplus that almost doubled to $46.4 billion in the first quarter may trigger a rebound in bad loans.

``China needs to raise the cost of capital -- it's still way too cheap, and that means investment is too strong,'' Stephen Green, senior economist at Standard Chartered Bank Plc in Shanghai, said before the release. ``Add asset-price inflation pressures, and you have a recipe that is worrying Beijing again.''

China's benchmark CSI 300 stock index fell 4.7 percent after the announcement, amid speculation that faster than expected growth may prompt a rate increase as soon as today. That's the most since the 9 percent one-day plunge at the end of February that triggered a global equities rout.

Consumer prices climbed 3.3 percent in March versus a central bank target of 3 percent for 2007. That's the highest inflation rate in more than two years.

Factories, Property

Urban investment in factories and real estate jumped 25.3 percent in the first quarter from a year earlier, accelerating from 24.5 percent for all of 2006.

``Given 60 percent of investment is financed internally, to really cool the economy they need to cool profits,'' said Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong. ``The easiest way to do that is allow yuan appreciation -- China's goods become more expensive and profit margins start to get squeezed.''

Trade tensions include World Trade Organization complaints by the U.S. and lawmakers' claims the yuan is kept weak to make exports cheap. The currency, allowed to move 0.3 percent against the dollar each day, has gained 7.2 percent since a decade-long peg was scrapped in 2005.

Treasury Secretary Henry Paulson last week called on China to let the yuan strengthen. China limits gains to protect exporters and jobs. The textile industry says it loses 8.2 billion yuan of annual profit for each percentage point gain.

$1.2 Trillion Reserves

China's foreign reserves grew by $45 billion a month to $1.2 trillion in the first quarter, double the average monthly increase of the past three years, according to calculations by HSBC Holdings Plc.

The jump may be partly explained by Chinese companies bringing home the proceeds of initial public offerings and banks unwinding their foreign currency positions, according to Qu Hongbin, chief China economist at HSBC in Hong Kong.

Last year, Chinese banks and companies raised nearly $51 billion via overseas share sales, almost double the $27 billion raised in 2005.

``The fact that Chinese companies have been rushing to bring in foreign currency and banks are unwinding their foreign currency positions shows that expectations about renminbi appreciation have increased significantly over the last few months,'' Qu wrote in a note.

Retail Sales

Retail sales grew 15.3 percent in the first quarter from a year earlier, the statistics bureau said.

``Exports and investment cannot carry on rising at the current rate,'' said Mark Williams, Asia economist at Capital Economics Ltd. in London. ``China has to boost consumption, balance growth and remain active in keeping liquidity steady.''

Surging overseas sales provide cash for stock market

[pago]

tommy,a timely post,investors a bit nervous as we hit late april /early may to see if the sharp correction in 06 repeats in 07.as an aside,12 months ago,mcr sp was .78c.igo was 2.84.now mcr 3.34,igo is 5.74.the may/06 correction was sudden and sharp.from my records the market went balistic in the first/second week of may,unsustainable,and corrected.many investors are aware of this and of the usa economy issues.i expect some caution over the next 4/6 weeks,if the market takes off,look out,any views? cheers pago.

[Flying Goat]

Hi,

Anyone seen Asia in late trading today? Hmmmm.

http://finance.yahoo.com/intlindices?e=asia

FG

[tommy]

quote:Originally posted by Flying Goat

Hi,

Anyone seen Asia in late trading today? Hmmmm.

http://finance.yahoo.com/intlindices?e=asia

FG


Hi pago and FG,

Yeah, I sold off all my holdings this afternoon apart from my long-term holdings RFG and CXG and short-term spec-play USA in order to have enough cash just in case things turn sour... prefer to have profits locked in than losing paper gains as I hate losing money[:I]

Worth keeping an eye on overseas markets before buying, as panic sellers can cause nasty stop-loss triggers having a domino effect... which is of course what I am waiting for (called bargain hunting[}:)]

Keep an eye on US:
Premarket: http://money.cnn.com/data/premarket/index.html

After opening: http://finance.yahoo.com/indices?e=dow_jones

And of course Europe:
http://finance.yahoo.com/intlindices?e=europe

[moimoi]

tommy....do you tend to trade quite short term?

cheers
Moi.

[tommy]

quote:Originally posted by moimoi

tommy....do you tend to trade quite short term?

cheers
Moi.


Hi moimoi,

Yes and no, depends on the stock,the sector and general market sentiment at the time.

That said, I do not really have long-term holds (long term for me is like 12 months!) so most of my holdings are medium-term (less than 12 months).

In the face of market volatility though, I buy in and sell out of a stock much more frequently because I prefer to collect profits and cut losses short.

For me, holding a stock for a certain period of time must justify the opportunity cost so if I determine that there is a better opportunity around the corner, I don't hesitate to switch to cash. And if there is a stock that is more likely to fall than rise over the coming weeks, and if there is another stock that is likely to do the opposite, I do tend to jump ship[}:)] I don't "win" all the time but at least I consistently lock in profits this way... only problem is CGT though[xx(]

[tricha]

Go smell the coffee, the US will be the #3 economy in the world soon, I think.

Russia's economy 'picks up pace'

Russia's oil and gas sector is still the main driver of economic growth
Russia's economy has accelerated during the first three months of this year, the country's Economic Development and Trade Minister German Gref has claimed.
Mr Gref estimated that the economy expanded at an annual rate of 7.9% in the first quarter of 2007, up from 7.7% in the previous three-month period.

Strong demand, and high prices, for oil and gas have been drivers of growth.

However, other parts of the economy were not performing as well and may present future problems, analysts said.

"There is still a lot of momentum in the Russian economy but it shouldn't be overestimated," said Gianella Christian, an economist at the Paris-based Organisation for Economic Co-operation and Development (OECD).

He warned that once you discounted the effect of oil and gas exports, then Russia was growing more slowly than some of its neighbours, such as Kazakhstan.

Production

Even so, Russia's mineral-rich economy has still been showing signs of strength.

According to the Federal State Statistics Service, industrial production also rose sharply in March, up 7.9% year-on-year - beating market expectations of 5.6%.

Manufacturing output was 14.5% higher at an annual rate for the first quarter of 2007, steered by food processing, construction materials, and transport and power machine-building.

There also has been an improvement and a positive trend in investment levels, analysts said.

"The main feature of the first quarter is a new wave of economic growth acceleration," said Minister Gref.

Russia's economic performance has helped underpin its currency, and analysts said that while the rouble has appreciated, its strength to date has not proved a major obstacle to the competitiveness of domestic manufacturers.

President Vladimir Putin wants the government to press the central bank to intervene more strenuously in the foreign currency market should it appear that the rouble is strengthening faster than Russian industry

[OneUp]

quote:Originally posted by tricha

Go smell the coffee, the US will be the #3 economy in the world soon, I think.


Russian GDP (using Purchasing Power Parity) is around US$1.5 trillion. United States GDP is around US$12 trillion.

That's an awful lot of catch up.

Don't personally think the US will be ousted even from top spot for 30-40 years, because Chinese growth will slow as it grows. (High growth rates are easy from a low base).

[tricha]

Time will tell Oneup

Was not that long ago Russia was a banana republic, now the US is heading that way. Every dog has its day in the sun [8D]

Actually I fogot Europe, makes the US #4 in the future.

Oil and Gas and minerals is what will make Russia.

[OneUp]

Hi Tricha,

I will agree with you on Euroland, if we count that as one economy.

In fact, the EU is already the world's largest economy.

GDP $14.5 trillion (again in PPP) vs $12 trillion for US.

[tricha]

Absolut-advance - "Start of the May correction? So goes the saying Sell in May and go away...."

Sell in May, this year could be positively completely different.Why[?]

1 - Election year, interest rates are on hold and the Government is already signalling tax cuts in the budget. More money to spend.

2 - Where are all those billions of dollars going to go before 1st July if its not into the share market, as I have mentioned before people has stacked up piles of cash to put into the sharemarket on a correction and greed \panic will take hold closer to that magical date.
The advertising regarding, the Govt allowing a once only chance of a million dollars topup into your super is everywhere, tax free!;)

Time will tell as always [B)][}:)]

[pago]

hi trish,i can see a correction within 1 /6 weeks,if its 5% .ok.if its 10% the resource sector will prob recover over a few months or longer,the correction is going to happen,cheers pago.

[soulman]

I hope so pago. I am looking for quality cheap stock and there are none at the moment. Although, before the correction come, I would like to sell some QBE first.

[tommy]

http://www.chinadaily.com.cn/china/2007-05/07/content_866624.htm

China's equity bubble is building, may burst
(Chinadaily.com.cn)
Updated: 2007-05-07 10:30

China's all-time high equity market needs "cool water and cool heads" after taking a 7-day Golden Week breather, otherwise the stock bubble runs the danger of a quick bust, experts said.

Since its nine-percent correction in late February, the Shanghai A-share equities have now moved back up more than 40 percent, and no letup is seen on the horizon, buoyed by a series of successful initial public offerings as the ranks of investors swell at over 200,000 a day. There are now more than 91 million accounts held at brokers or mutual funds.

Xia Bing, director of the State Council's Development and Research Center's Finance Department, warned at a recent CCTV talk show program, that the stock market bubble is building. He and a string of other economists suggested investors take extra caution before jumping onto the bandwagon.

And, analysts at BCA Research put it in a recent note to its customers: "We have no doubt if China's market continues to spike up, the stage will be set for a very violent drop."

In late April, the People's Bank of China ordered the ratio of commercial banks deposits at the central bank be raised to 11 percent, but the measure failed to dampen the bullish market. The surge has continued. Many economists are anticipating another interest rate hike in May or June to stonewall the soar.

Some critics argue the way the mainland IPO market is being run systematically fans the irrational expectations of a huge number of novice investors with the promise of easy and quick money, storing up trouble ahead.

It is widely believed that mainland investors are mostly momentum-driven and ignorant of valuations, but they can see the IPO market is serving up a bargain. While stocks in the A-share market trade at stiff premiums to Hong Kong, dual-listed equities often continue to list at a discount in the mainland.

The situation is due to the influence of the powerful China Securities Regulatory Commission (CSRC) which micromanages new listings, sets final pricing of IPOs and subsequent fund-raisings as well as deciding who gets to list, analysts said.

For example, Bank of Communications recently listed at 7-20% cheaper in Shanghai than in Hong Kong, following a similar practice for China Life Insurance and Ping An Insurance.

In most other competitive markets, pricing is a commercial compromise based on what companies think they can get and what investment banks think the market can take.

A standard move these days is for the CRSR to force companies to set a lower price on their IPOs in the hope of a strong stock market performance. This has undoubtedly contributed to the general market euphoria. The average price-to-earnings ratio of Shanghai and Shenzhen markets is now over 50.

In the absence of traditional measures to cool the market such as significantly raising interest rates, another solution the authorities, in the hope to achieve a stronger and more stable market, are eyeing to bolster the stock market is by adding more quality companies to soak up excess liquidity.

The authorities have inspired mainland companies to list on domestic bourses rather than Hong Kong's, it has further encouraged overseas quality companies, such as the venerable HSBC Holdings to list A-shares in the mainland.

[COLIN]

Sounds like NZ 1987! Scary.

[ananda77]

...yes, we're very close

...buying frenzy on equities and other asset classes on the back of a cheap (highly inflated) US-dollar, BUT

...it just does not make sense to invest in the US-equity markets or elsewhere as rampant inflation just about squares any gains for foreign investors

...China Bubble - India Bubble - Australian Commodities Bubble - Housing Bubble - Credit Bubble - Inflation Bubble

<center>-it will be one huge Bubble bursting when the cork comes off-</center>

PS: short-term loading up on the US-dollar probably a good idea...and bonds and, of course, PRECIOUS METALS

Kind Regards

[kura]

quote:Originally posted by ananda77

PS: short-term loading up on the US-dollar probably a good idea...

Kind Regards


I would have thought the opposite regards the USD ?

[ananda77]

kura:

...the emphasis here is on "contrarian short-term strategy"

...a correction in international markets (very likely) will dry up excessive liquidity and support the US-dollar or,

...how likely is it at present, that the Federal Reserve facing a weakening/recessionary economy would cut interest rates further to provide even more liquidity to prevent it???

...a steep US-dollar decline and very negative sentiment makes -a short-term recovery more likely

Kind Regards

[tricha]

Wossname - "I'm not denying that there's been a massive boom in the resources sector, and that income from it is growing fast. Go BHP!

However, astonishing as it may seem, there's been an even bigger boom in spending. Despite our exploding income, our net national position involves very large, and increasing, debts. This isn't some future threat. It's already happened. Check out our debt position at the Reserve Bank of Australia's website, or check the data published by the Australian Bureau of Statistics. Ordinary aussies are hocking themselves to the eyeballs for expensive real estate, flash four wheel drives, the pokies, or whatever. Spending is at binge levels, and it threatens to drag us down. Didn't you ever watch "Hot Auctions" on the box? Ever see young couples committing themselves to mind-blowing mortgages that require dual incomes for approximately forever? "
Well, what do u make of the budget tonight, sounds like billions upon billions surplus and its coming our way, how many more billions of $ ready to enter the market [?][?][?]

It's out there, NZ eat your heart out[:p]

Actually this budget will probably put another 100,000 Kiwi's on a plane to OZ.

Ramifications Please[?][?]

[Year of the Tiger]

quote:Originally posted by tricha



Actually this budget will probably put another 100,000 Kiwi's on a plane to OZ.

Ramifications Please[?][?]



Was it Rob Muldoon who reckoned it would probably increase the intelligence level of both countries?
[^]

YOTT

[kronos]

Frightening talk.

Advice to a novice required:

Holding nickel and uranium stocks is it better to sell up now before the impending 10% correction and buy in again at lower prices OR weather the stockmarket storm confident in the knowledge that the demand for these commodities will see them climb strongly. My time frame is to the end of the year.

Kronos.

[George]

Billions to be spent on infrastructure - would that be good for the likes of TOL? They hit all time high yesterday.

[tricha]

George - "Billions to be spent on infrastructure - would that be good for the likes of TOL? They hit all time high yesterday."

Could be if thats your forte [:p] excellent point;)

Kronos - "Holding nickel and uranium stocks is it better to sell up now before the impending 10%"

Crystal ball stuff, 10% where does that come from [?][?][?], but 10% off the top stashed away is isn't a bad thing either.

Cheers [B)][}:)]

[ananda77]

<center>...Game On...</center>

Liquidity Boom Decouples US Equity Markets from the US Economy
source:http://henryckliu.com/page133.html

"Are We Headed For Another Great Depression?".
My talks with Elaine Meinel Supkis
By Mike Whitney
source:http://www.informationclearinghouse.info/article17667.htm

Kind Regards

[moimoi]

well ananda....reading Mr Liu makes one feel like building an Ark in the back yard...impnding doom is upon us....

is this something you actively believe and what have you been doing to protect yourself from it.?

ie: have you sold all and cashed up?


cheers
Moi.

[ananda77]

[b]moimoi:[b]

...yes, debt:asset = 1:3 and currently working it to 1:4

-(getting really not virtually richer every day)-

market exposure: 10% of total assets (NOW)

...now look at that:

<center>http://investmentscore.com/editorials/will_the_dow_crashkdu</center>

Kind Regards

[wns]

The video is talking about the DOW losing ground against gold and other investments... including the Aussie and NZ dollar.

The way I see it, I've got inflation (at 2-3% pa) and taxes eating away at my purchasing power, but unlike the USD our dollar is holding up OK.

I'd be interested to see a chart of the price of gold in Aussie dollars & and NZD? That's more relevant to most people here at ST.

[Wossname]

Hi Tricha,

Didn't see your post until just now.

Tricha: "Well, what do u make of the budget tonight, sounds like billions upon billions surplus and its coming our way, how many more billions of $ ready to enter the market"

Reply: It's admirable that the Oz government budget is in surplus. Wasn't it about $11B or so? However, my concern was that Oz personal housing debt is over $600B, with over $500B of net foreign debt. The net foreign debt represents a significant national risk exposure to interest rate rises in countries we're in debt to. For example, Japan is a key lender, and Japanese interest rates are under pressure to increase. I would expect Oz banks to feel the pressure of any such credit squeeze, along with Oz borrowers and consumption-dependent businesses.

Tricha: "Actually this budget will probably put another 100,000 Kiwi's on a plane to OZ. Ramifications Please."

Reply: Er...um...a seriously long take-off run...?:D

[tricha]

Wossname - "Reply: Er...um...a seriously long take-off run...?"
:D

Can the last one left, please turn the lights out! Maybe NZ could be aretirement village ;)

Tax cuts in Australia lure Kiwis
Email this storyPrint this story 5:00AM Sunday May 13, 2007
By Miles Erwin


Dr Andrew Montgomery is heading to Australia in frustration. Photo / Chris Skelton
The latest round of tax cuts in Australia will attract even more Kiwis across the ditch - and there's much less chance they will ever return, say economists.

Last week, Australian Treasurer Peter Costello announced AU$31.5 billion (NZ$35.7 billion) worth of tax cuts across the board, as well as childcare, spouse support and solar heating incentives. These moves make Australia a much more welcoming environment for cash-strapped Kiwis.

"The impression I do have from energetic, ambitious and younger professionals and others is that versus Australia, the New Zealand environment is not as good a place to be," Chapman Tripp tax partner Craig Elliffe said.

According to figures compiled by David Farrar of Kiwiblog, New Zealanders will pay far more tax than Australians, no matter what they earn.

People earning up to $30,000 pay more than double the tax in New Zealand than they do in Australia. A person on a salary of $50,000 would pay $1770 more tax here than there.


Advertisement

AdvertisementJason Walker, director of Hays Recruitment, said he expected far fewer Kiwis would ever return from Australia, as the standard of living gap continued to increase.

"If it continually improves overseas, there's less incentive for them to come back."

Walker said the Australian Government was acutely aware of the downsides of the Australian lifestyle, mostly the drought and water shortages. And it's working hard to keep financial incentives for people to stay.

"So they're looking at making it a lot more attractive to young families to stay."

The biggest difference between the two countries is the Australian Government's willingness to work to attract and keep talent, said Walker.

"One of the positive things about the Australian Government is they tend to work with corporates on how to do that. But we don't tend to have that here in New Zealand.

"They've still got incredible skills shortages - they've got companies going out to agencies saying they'll pay them double just to find people. The Government has seen that happening, and they're trying to do whatever they can to make Australia a more attractive place to live."

And the gap could widen further still. Mark Goldsmith, a tax partner at Australian firm Gilbert and Tobin, said the Australian cuts were conservative, compared with the country's surplus. He said the Government could have gone further, and there may be more tax cuts after the election, as both major parties supported them.

"If the economy continues to chug along like it is and they continue to run surpluses, I think we will be in line for potentially more tax cuts."


Doctor has no choice but to head to Oz

Dr Andrew Montgomery has had enough of New Zealand - he's heading to Australia after years of trying to help the health system.

Despite earning $140,000 in New Zealand from his medical work and plant business, he's sick of our health sector and is heading for the better lifestyle in Australia. He's doing a month-long stint in Alice Springs and unless it's hell on Earth he's taking his family with him.

He said he could earn up to $8000 a week in Australia if he wanted - and that's before the latest round of tax cuts. "It was looking pretty before and now it's looking even prettier."

Montgomery is disillusioned after establishing a business in New Zealand. With his wife he built up a successful plant-growing business, employing 20 people. But he says the tax rigmarole has forced him to give up on his dream. He blames the Government's tax policies. "Doing business here is so frustrati

[ratkin]

It's the last thing I want to do. If I won lotto tomorrow I wouldn't leave. But I'm compelled to do it solely so I can fund myself and my children

Nonsense, hes just a typical greedy doctor. To claim he cant manage on 140.000 a year is just ridiculous. Good riddence, alice springs best place for him

[COLIN]

Australia has a lot of appeal, but .........................what about the flies and the snakes?!!!!!!!!!!!!
I seem to recall reading somewhere - perhaps in Bill Bryson's book "Down Under" - that most of the ten deadliest species of snake in the world come from Australia!

[denpal]

quote:Originally posted by COLIN

Australia has a lot of appeal, but .........................what about the flies and the snakes?!!!!!!!!!!!!
I seem to recall reading somewhere - perhaps in Bill Bryson's book "Down Under" - that most of the ten deadliest species of snake in the world come from Australia!


NZ has its advantages; it is a property investor's paradise: no stamp duty, no capital gains tax, no land tax.................the good doctor is wrong in that respect even if he gets more salary.

I have heard of a new ATO incentive for rich Kiwis who emigrate to Aus; the deal is that you don't pay tax on your NZ income........got this from a very well off contact but yet to confirm.

So, keep your NZ property investments and run your ASX investments from NZ, pay NRWT only; sounds good to me. Only problem is I don't want to live in Australia even for more dollars!!!!!

[tricha]

Hmm, got to wonder [?][?][?]

No tax cuts again for the workers, means the govt is ripping them even more! Every year wages go up and the govy rips more [^]

Australia is the new America and gives the poor Kiwi a head start in life.[:p]

Rakin - "Nonsense, hes just a typical greedy doctor. To claim he cant manage on 140.000 a year is just ridiculous. Good riddence, alice springs best place for him"
Life in WA

Rakin u call it greed, well if he stayed in NZ I would call him stupid :(

30,000 Kiwi's live in the Goldfields!

One of the planners at work is taking a job at Port Hedland for 200K a year for looking after 8 staff.

Belt fitters up there earn 140K.

Lollypop men on the road gangs can earn 70K +

If u r young and fit, u would be mad not to live in Australia.

Make your $ and come back to NZ to retire, unfortunately a lot of Kiwi's get trapped here, have children here and the cycle continues, where are their children better off.

With the new tax cuts h;)ere for example $6000 tax free and the rest up to $30,000 @ 15 cents.

Expect the amount of Kiwi's to OZ to accelarate!

.................................................. ....................
Migration fall a double-edged sword
Email this storyPrint this story 5:00AM Saturday May 19, 2007
By Owen Hembry


Falling net migration could take the pressure off housing only to turn the heat up on wages, says the National Bank.

Statistics New Zealand said seasonally adjusted net permanent and long-term migration totalled 140 people in April.
The latest migration rate was down from 630 in March, continuing a weaker trend of 520 and 410 people in February and January respectively.

Net migration numbers had been more than 1000 a month between June and December last year.

[FarmerGeorge]

I realise this is a little off topic but from the perspective of someone 'young and fit' and still in NZ at university I tend to agree with the general consensus above. I am in the commerce department and know very few high level Kiwi students here interested in going out to help build our economy. Anyone performing at a high level will go (although not just to Aust.), those already with kids or who aren't up to scratch stay here and those in the middle tend to try their luck across the ditch.

[Ricky99]

I disagree. I'm in my 30's univesity qualified and quite happy to stay in NZ. I invest on the ASX rather than the NZX and reckon that with any level of intelligence you can still make a good life here. Yes you need to be targetted in what you are doing and just not rely on govt handouts

[FarmerGeorge]

Apologies Ricky I didn't mean to insult the intelligence of Grads who do stay, simply report what I see at university day to day.

[tommy]

http://www.smh.com.au/news/business/it-isnt-super-holding-shares-up/2007/05/20/1179601242922.html#

It isn't super holding shares up

Malcolm Maiden
May 21, 2007
DEUTSCHE Bank market strategist Tony Brennan and his colleague, Tim Baker, uncovered a surprising statistic when they tested the theory that Peter Costello's new, generous tax regime for superannuation will propel the ageing bull market higher.

They analysed quarterly financial accounts for the economy - the balance sheet companion to the Australian Bureau of Statistics' national income and expenditure accounts - and discovered that, contrary to popular belief, Australian super funds aren't supporting this market, and haven't been for some time.

The conventional wisdom is that Peter Costello's new super rules will boost super contributions that can now be drawn down tax-free from age 60 onwards, in the short term particularly, because a one-off contribution of up to $1 million is possible until June 30.

Super funds have about 30 per cent of their assets in the Australian sharemarket, according to the ABS. They have received about $100 billion of new money in the past two years and it's generally been believed that they are directing about 30 per cent of their new money into shares and will continue doing so.

Brennan and Baker say, however, that the financial accounts reveal that no net new super money has gone to shares in the past two years and that, as the market has risen, the funds have actually been sellers.

When you think about it, this makes sense. Between mid- March 2003 (the week before America's invasion of Iraq began) and the end of 2003, the ASX 200 share index rose by 22 per cent. It went up another 22.7 per cent in 2004, by 17.6 per cent in 2005, by 19 per cent in 2006 and by 11.3 per cent so far this year, for a total gain of 133 per cent. Shares have been rising in value much more quickly than have other assets the funds own, including property, fixed interest and cash. If the funds did nothing when that is happening, shares would account for an increasingly large proportion of the total value of their portfolios. Instead, new money has been directed elsewhere and shares held are being sold, maintaining the value of shares in the super asset pie at 30 per cent.

According to the "weight of money" theory that is a core assumption of the bull market, super funds are one of the wellsprings of a river of cash that is overwhelming the market's ability to supply shares, particularly as takeovers and share buybacks reduce the stock. So two questions are raised: roughly $40 billion a year of new money is coming into our sharemarket: if super funds aren't the source, what on earth is? And where on earth are the super funds sticking all the dough they have been collecting?

In a follow-up report issued at the weekend, Brennan and Baker dissect the quarterly ABS data again and conclude that foreign investors are the key source of new money, along with "other financial intermediaries", including hedge funds and private equity investment consortiums.

The Deutsche duo acknowledge that some of the super fund money being diverted from shares is getting there indirectly, by way of super fund investment in private equity consortiums and their takeovers. But they say the statistics don't support an argument that the indirect flow is significant and say rising foreign investment in Australian shares has been the key.

Rising overseas buying of Australian shares is part of the globalisation of share investment, and globalisation of share investment also helps explain where new Australian super money is going. Brennan and Baker conclude that, in the past two years new, net Australian super inflows have been directed into foreign shares, as well as fixed-interest securities, alternatives such as hedge funds and private equity, and cash.

But hedge fund money usually has a short-term horizon and hedge funds and private equity funds are supported by heavy debt loads. Private investor support, meanwhile, is flat and, while the flow o

[steve fleming]

hmmm....interesting read Tommy.

So if Superfunds are net sellers in a bull market, will they be net buyers in a bear market (in the interests of maintaining their portfolio weightings)??? And thereby providing support in a falling market??

[tommy]

Hi Steve,

I was a bit gobsmacked reading this article too, because I never have considered super funds to be "automatic regulators" that mitigate market volatility...

I suppose it's all about diversification across asset classes, but then again, if the super sector has a lot more money than before as a whole (cake of the pie increases), then more money would proportionately be allocated to each asset class (the size of each slice of the pie would also naturally increase).

[ananda77]

game on_continued: the game goes mainstream

As China tightens, Dow rallies
Why the Dow didn't fall 416 points this time
source:http://www.marketwatch.com/news/story/china-tightens-dow-rallies/story.aspx?guid=%7BA9BEF799%2DDA90%2D4BF3%2DBDDE%2 D68249486ADCF%7D&dist=TNMostRead

<center>http://img.villagephotos.com/p/2004-12/905046/TheBears.gif</center>

[Huang Chung]

US futures looking strong again tonight.

Sell in May and go away....

Well, not this year by the look of things.

I can't even see a lot of tax loss selling happening this year, as the market has been so strong.

Maybe the sell off will happen at the start of the new FY, as people delay crystalising their gains in order to defer the payment of CGT for 12 months.

Sell in July, 'cause the taxman is neigh [?]

[Crypto Crude]

HC....
aed closed at 7.25 .... ouch mate, ouch....
[:p]
.^sc

[Huang Chung]

Hey Shrewdy!

No 'ouch' here my friend.

Got back in at $5.04, after some of the risk was removed with the latest drilling and flow testing.

I only lost 8c between exit and re-entry, which to me was a small price to pay for the reduction in risk. Still happily holding.

Good call with your NWE...you stuck to your guns, and its paying off for you.

Cheers. H.C.

[Bel]

Long time holder of AED, exciting times ahead. Still intending to stick to my plan and sell after first oil but having to fight the greed factor.!
Currently AED is my first 6 bagger. YaY

[Skol]

There's going to be some ripe pickings shortly. Shanghai index up 130% in 2006, up 50% so far this year. Chinese must be kidding. The bears will be on the prowl and I'm 50% cash awaiting the inevitable.

[pago]

hi ,just in case you havent noticed,the markets and commentators/investors are getting a bit nervous out there.its timely,a pull back now is good,most indicators show its overdue.better a correction soon then a major later,cheers pago.

[Skol]

Alan Greenspan warned a conference in Madrid that Chinese stocks would suffer a "dramatic contraction".

[tommy]

Is this now start of a regular correction or major nosedive?
El cheapo stocks up for grabs[:p]

Any chartists able to see how low the All Ords will go this time?

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Axao&draw.x=0&draw.y=0

I think down to around 6000 would be nice... wishful thinking?

Asian markets bleeding apart from Shanghai, while Nikkei is getting slammed by 1.5% after DOW's fall by 1.2%:
http://finance.yahoo.com/intlindices?e=asia

All my stocks are in da red today apart from ASZ and RFG... not sure yet whether to collect profits and lighten my exposure to share market for a heavier cash position....mmm

[Flying Goat]

Hi Tommy,

Yeah. Good day for making low ball offers on small caps.

FG

[tommy]

Hi FG,

Yeah, small caps tend to be more susceptible to stop-loss triggers due to small trading volume so I am waiting to see more bargains. Current undervalued stocks include what you and I already hold (ADA, ITD, ISS). Others that are worth watching on any weakneess are FSA, UXC, ASZ, DEX, and KLM, SWK, RFG and of course, TRS:) (some of which I hold so please DYOR!)

[tommy]

quote:Originally posted by Skol

Alan Greenspan warned a conference in Madrid that Chinese stocks would suffer a "dramatic contraction".

SMH article


Greenspan issues warning as Chinese stocks run hot


Joao Lima and Simon Kennedy in New York
May 25, 2007

FORMER US Federal Reserve chairman Alan Greenspan says he is concerned Chinese stocks might undergo a "dramatic contraction" after its main stock index jumped more than 90 per cent this year.

The benchmark CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, rose to a record 3938.95 on Wednesday. The index more than doubled last year as investors bet corporate profits would be boosted by the world's fastest-growing major economy.

"It is clearly unsustainable," Dr Greenspan told a conference in Madrid by satellite. "There is going to be a dramatic contraction at some point."

China last week increased the amount it lets the yuan move against the dollar and raised interest rates to restrain economic growth and a swelling trade surplus. The changes came ahead of two days of meetings in Washington between Treasury Secretary Henry Paulson and his Chinese counterpart, Premier Wu Yi, aimed at smoothing trade frictions.

Dr Greenspan's comments contributed to the first decline in US stocks in four days. The Dow Jones dropped 14.30 to 13,525.65 after earlier reaching a record. Chinese stocks also declined in US trading on Wednesday.

Dr Greenspan, 81, continues to move financial markets with his utterances since he retired from the Fed in January 2006 to return to his previous career as an economic forecaster. His February 26 comment that a recession in the US is possible this year contributed to a short but sharp global sell-off in stocks that started in China and reverberated around the world.

Chinese shares have since resumed their climb, prompting concern among some investors and regulators that a sudden collapse may ensue should the Chinese Government succeed in its efforts to cool the economy.

"The Chinese have lost control of monetary policy and now it has reached the stockmarkets," said Nouriel Roubini, chairman of Roubini Global Economics in New York. "There's a bubble, and eventually it's going to collapse."

Dr Greenspan said the global financial system remained resilient. "I am not worried about the system overall, but I am worried about some parts," he said. "I am concerned for example about China."

The People's Bank of China on May 18 announced it would let its currency rise or fall 0.5 per cent a day, up from 0.3 per cent. The central bank also raised interest rates for a fourth time in the past year and ordered banks to put aside more money as reserves.

China's practice of limiting the yuan's gains has sucked in overseas capital, contributing to $US1.2 trillion ($1.45 trillion) in reserves and fuelling a property and stockmarket boom. China has little room to raise interest rates to damp its economy, because higher borrowing costs would only attract more money, Mr Roubini said.

[tricha]

Is this just a small correction over or is it the start of something else???? Smell that coffee!

Packer its time for a comeback, miss your extremely informative posts, Cheers [}:)]

[b]A BLAST FROM THE PAST

Packersoldkidney -" Bargains about. Don't get hooked in to picking up trash. Some things are getting smacked for good reason.

This isn't like the Dotcom bubble - but there sure are a lot of companies out there who have been riding on the coat-tails of others, not to mention on some very dodgy geological credentials. When it comes out in the wash we will wonder why certain co's were valued ten times what they are actually worth - and how the hell did they get a broking house to put a value on that one that high? But quality is quality, and there is still some of that about.

I got a pasting this morning, but I'm not the type to sook, so I'm back in to catch a bounce or two! (famous last words)"


China's share-buying binge could get ugly Saturday, May 26. 2007



Hamish Macdonald for the Sydney Morning Herald

May 26, 2007

Lin Yuan is one of China's heroes, claiming to have turned 8000 yuan ($125) into a portfolio worth more than 1 billion yuan over the past 18 years.

The maverick China economist Andy Xie, who was sacked by Morgan Stanley last year for disrespectful remarks about Singapore, holds up maotai as an example of the irrational share-investing mania sweeping China.

In the Chinese magazine Caijing, he notes investors are piling into Kweichow Moutai because of "urban myths" about fortunes being made. This is backed by a suspect "analysis" that as maotai is the "Chinese brand" served up at official banquets, demand will keep growing as more and more prosperous Chinese buy it.

Xie points out that China's fondness for maotai is a holdout from a worldwide trend away from hard liquor. "When doctors tell government officials to stop drinking maotai, just watch its price then," he says.

But is China's rush into maotai and other stocks a threat to global or regional health, or at least its own? Could it start another Asian financial meltdown, almost 10 years after the last one?

Certainly the May 18 triple-whammy move by the People's Bank of China, the central bank, reflected very deep nervousness in Beijing. The restraints on the yuan were loosened, interest rates lifted, and bank reserve requirements raised.

The stockmarket bubble has now pulled in so many of the emerging middle class - the number of trading accounts has risen to nearly 100 million - that a crash will be a political problem.

Riots by villagers in the rural hinterland or the coastal factory zones can be isolated and suppressed. Widespread discontent in the big cities by investors losing their life savings could be much harder to handle.

It could unravel the tacit bargain between the Communist Party and the urban populations, trading off political freedom for rising prosperity.
The political risk is so big that it is actually helping pump up the sharemarket bubble. With the party's next five-yearly congress coming up in October and the Beijing Olympics in August next year, many speculators calculate the leadership will not allow a bust.

So the actions by the central bank governor, Zhou Xiaochu, did not turn off the drinks for very long. It was only after the former US Federal Reserve chairman Alan Greenspan expressed concern this Wednesday that the market has paused.

If, or rather when, the market enters a big correction, worse than the one-day 8.8 per cent fall on February 27 that caused contagion here and elsewhere, the effect on Chinese domestic demand could be extensive.

<

[tommy]

China down 3%, market in Asia bleeding

http://finance.yahoo.com/intlindices?e=asia

Reason:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aFvX7W9LaMNw&refer=home


China Stocks Fall From Record After Transaction Tax Tripled

By Zhang Shidong and Alexander Ragir

May 30 (Bloomberg) -- China's stocks dropped from a record after the government tripled the tax on securities transactions, halting a rally that's made the shares Asia's most expensive.

The CSI 300 Index fell 110.61, or 2.7 percent, to 4057.68 as of 10:30 a.m. in Shanghai, after initially tumbling as much as 6.3 percent. The measure has almost doubled this year, the best performance of 90 global benchmarks tracked by Bloomberg, as an influx of new investors stoked demand. China's brokerage accounts this week topped 100 million for the first time, according to the China Securities Depository & Clearing Corp.

Stamp duty on share trades has been increased to 0.3 percent, effective today, ``to promote the healthy development of the securities market,'' the finance ministry said on its Web site. The central bank this month raised interest rates for the second time this year, encouraging people to save rather than invest in stocks, and brokerages were ordered to make investors sign a declaration acknowledging risks when opening accounts.

``The government is doing something real to curb speculation and prevent the market from overheating,'' said Li Xuewen, who manages about $284 million at Invesco Great Wall Fund Management Co. in Shenzhen. ``If the market doesn't cool down, more measures to stem the gains will probably follow.''

Based on yesterday's closing price of 64 yuan, investors now have to pay 192 yuan ($25.1) in tax when buying or selling 1,000 share of Citic Securities Co., up from 64 yuan before the increase. Citic Securities, the nation's biggest publicly traded brokerage, has the biggest representation in the CSI 300.

A record 455,111 accounts to trade mainland shares and mutual funds were opened on May 28, China Securities Depository & Clearing said yesterday. More than 20 million accounts have been opened at brokerages so far this year, four times the amount in all of 2006, according to the clearing house.

Expensive

The surge in new investors has made Chinese shares the most expensive in the Asia-Pacific region, with the CSI 300 Index trading at 48 times earnings, according to Bloomberg data.

The CSI 300 Index tripled in the past year, prompting central bank officials, former U.S. Federal Reserve Chairman Alan Greenspan and Li Ka-shing, Asia's richest man, to warn of the market's imminent collapse. The index, which tracks yuan- denominated A shares, yesterday rallied to all-time high, its 11th record this month.

Within the region, Taiwan levies a 0.3 percent tax only on share sales, while Japan, Australia and Thailand don't tax transactions at all.

China started to levy stamp duty in 1990, and initially set the rate at 0.6 percent. This is the eighth time the government has adjusted the rate of the tax.

The last time the government raised the tax was on May 10, 1997, when it was lifted to 0.5 percent from 0.3 percent. The Shanghai Composite Index rose 2.3 percent after the announcement.

`Few Breadcrumbs'

``The stamp tax is the latest gesture by the Chinese government to warn investors,'' said Phil Chen, who manages $154 million at Grand Cathay Securities Investment Trust Co. in Taipei. ``The trouble is, Chinese investors probably won't care if a few breadcrumbs are dropped in the transaction as they have such extraordinary returns on their investments.''

China has been trying to curb speculation in the market for months. A government crackdown on investments with borrowed money on Feb. 27 sent the CSI 300 Index down 9.2 percent, the biggest one-day rout in 10 years. That slump triggered a global sell-off that wiped out more than $3.2 trillion of stock market value. The CSI 300 recouped all its losses within a month.

``Investors are concerned that there may be more macr

[Viking]

From the last experience in Feb, wonder what the effect will be this time. Whether China will be the start of a correction period which send shockwave across the world or else~

We might know about it this afternoon when China opens~

[nelehdine]

I reckon China will bounce hard ... Wall Street up 100+ today, no problems mate, so much money around the world looking for a home at present, any sell off will just be HOOOOVVVEEEERD up. Buy quality stocks in Oz like ANZ,BHP,MBL,QBE,TOL,WOW and some mid cap commod stocks, you won't go wrong for rest of the decade ...

[Viking]

That is quite true, Nelehdine~
I was also pondering about the Wall Street movement~ really went the other way copmpare to the rest in Asia-Pacific region yesterday.

Wondering if Wall St want to make sure the China will not be the new world order, and stamp its authority that NYSE is still the financial centre of the world :) but that's just my childish imagination :)

[Mick100]

looks like the bubble in china is deflating in an orderly fashion - other markets unaffected so far

Chinese Stocks Tumble 8.3 Percent
Monday June 4, 5:29 am ET
By Joe Mcdonald, AP Business Writer
Chinese Stocks Tumble 8.3 Percent, Biggest 1-Day Drop Since February Plunge


BEIJING (AP) -- Chinese stocks plunged Monday following government efforts to cool a market boom, recording their biggest one-day drop since a late February drop that triggered a global market sell-off.
ADVERTISEMENT


The benchmark Shanghai Composite Index tumbled 8.3 percent to 3,670.40, falling for the third time in four sessions since the government raised a tax on trading last week. The index had dropped 2.7 percent Friday. The Shenzhen Composite Index for China's smaller second market fell 7.9 percent to 1,039.90.

It was Shanghai's biggest decline since Feb. 27, when the market slid 8.8 percent, triggering selloffs in Hong Kong, New York and London.

The index has dropped 15 percent since last Tuesday's record high of 4,334.92.

Beijing has been trying to cool a boom that by last week had pushed up Chinese stocks more than 50 percent so far this year. The rally has attracted millions of first-time investors who are pouring their savings into the market.

Drops in Chinese prices last week caused brief declines in markets in Tokyo, Hong Kong and elsewhere.

Most other Asian markets shrugged off Monday's plunge in the Chinese mainland. Shares in Australia, South Korea and the Philippines rose strongly to record highs. Tokyo's Nikkei 225 index edged up 0.08 percent, while Hong Kong's benchmark idex was up 0.6 percent.

Beijing keeps its markets largely isolated from global financial flows. Most Chinese shares are off-limits to foreign investors and financial controls prevent most Chinese from investing abroad. Also, analysts have been warning of a possible Chinese correction for weeks, reducing the element of surprise for investors abroad.

Philippine shares appeared to be benefiting from the sell-off in China as some foreign investors shift funds to elsewhere in the region, said Lawrence de Leon, an analyst at Accord Capital Equities Inc.

"A lot of money is going out of the China equities and are moving into other Asian markets, among them the Philippines," he said.

Even with the declines since last week, the Shanghai index is still up more than 37 percent since the start of the year, after rising more than 130 percent in 2006.

The surge has been driven by strong corporate profits and an influx of money from Chinese investors, who have opened millions of new trading accounts and are dipping into theirs savings and mortgaging homes to buy stocks.

Authorities have warned that the new money could be fueling a bubble and they say novices could be hurt by a sharp fall in prices.

,

[tricha]

Is this just a small correction over or is it the start of something else???? Smell that coffee!

Packer its time for a comeback, Where R U, Cheers [B)][}:)]

[skinny]

The BIG news is that US long term bond rates are FINALLY back near normal levels, i.e. at over 5% around US nominal GDP growth. This is still the *key* benchmark interest rate in the world from which other longer term rates are priced off - from NZ and Oz longer term rates, to corporate lending rates, to rates on junk bonds etc. In general, as this rate rises other longer term rates go with it and spreads on more risky asset classes rise even more. With this normalisation one can plausibly argue that the price of credit is no longer obviously cheap, with obvious implications for asset prices.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aUxn196Wk1Yw&refer=home

[slam]

Funny how the boards go quiet on down days/periods;)
Cheers
Slam

[Viking]

Slam, I guess we were all bleeded a bit the last few days...[xx(]

[shane_m]

mate its coming -70 other day and -50 today...bring it on...

[Cooper]

quote:Originally posted by skinny

The BIG news is that US long term bond rates are FINALLY back near normal levels, i.e. at over 5% around US nominal GDP growth. This is still the *key* benchmark interest rate in the world from which other longer term rates are priced off - from NZ and Oz longer term rates, to corporate lending rates, to rates on junk bonds etc. In general, as this rate rises other longer term rates go with it and spreads on more risky asset classes rise even more. With this normalisation one can plausibly argue that the price of credit is no longer obviously cheap, with obvious implications for asset prices.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aUxn196Wk1Yw&refer=home


Good post Skinny, cheers.

[tricha]

Skinny - "With this normalisation one can plausibly argue that the price of credit is no longer obviously cheap, with obvious implications for asset prices."

Yes it was an excellent post Skinny!

Are global market bubbles set to blow?

http://news.bbc.co.uk/2/hi/business/6748803.stm - The problem for investors and consumers watching events unfold over the next few months will be determining whether the commentators have got it right or wrong, and if it really is time to head for safety before things blow up in their faces.

Greed or Fear [?][?][?] Nothing like parking a bit off the top for a while ;)

[whiteheron]

I only follow mining/resource stocks because I consider that they will remain strong for the forseeable future

The influence of the USA, although still important, is slowly but surely diminishing over time so the world economy is becoming less reliant on the US economy being strong
Strong performances from China, India and others are compensating (plus) for a mature US economy which now has limited room for expansion (except for fighting wars) and they can not keep that up indefinitely or they will eventually go broke

Looking at the BIG picture we have an increasing number of people desiring a diminishing and finite amount of resources which are becoming more and more expensive to produce eg pretty much the vast majority of high grade easy to extract minerals have been or soon will be exhausted
There are now added risks and costs from the likes of remoteness of new discoveries, country risk, stringent and time consuming government and native title approvals,general cost increases etc etc etc --- the list goes on and on

The time taken from initial discovery to first production can be up to around a decade

The above and many other factors will mean a continuation of demand exceeding supply for some time to come with prices for base metals holding up well I believe

I like companies that are up and running and producing (or very close to producing) with low to average cost structures, companies that will not be wiped out even if prices for metals pull back significantly
I try to steer clear of high cost producers as they are the first to suffer significantly on a downturn

So are global market bubbles set to blow ?
I think not, especially not in the mining and resource sector

[STRAT]

quote:Originally posted by skinny

The BIG news is that US long term bond rates are FINALLY back near normal levels, i.e. at over 5% around US nominal GDP growth. This is still the *key* benchmark interest rate in the world from which other longer term rates are priced off - from NZ and Oz longer term rates, to corporate lending rates, to rates on junk bonds etc. In general, as this rate rises other longer term rates go with it and spreads on more risky asset classes rise even more. With this normalisation one can plausibly argue that the price of credit is no longer obviously cheap, with obvious implications for asset prices.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aUxn196Wk1Yw&refer=home
Hi Skinny, What do you recon about this? FN ARENA NEWS - 13/06/2007


Economists of the ilk of Nouriel Roubini and Morgan Stanley's Stephen Roach have been pushing the line for at least a couple of years now that the US current account deficit, which has been creeping up consistently in the twenty-first century, is unsustainable. The world cannot continue to finance the US' insatiable appetite for consumer exports, and eventually something has to give. What is likely to give is the value of the US dollar.
"The US dollar is akin to the promissory note of a defunct finance company", says M.R. Venkatesh, a charted accountant from Chennai, India.

Is M.R. an authority on such matters? Not, indeed, a globally recognised one, but M.R. does have the capacity to encapsulate the problem in pretty simple terms - an achievement that often eludes macroeconomists. And it is simply the factual evidence that is damning.

"Put modestly, Americans have been living way beyond their means, consuming much more than what they could possibly afford and, in the process, borrowing far beyond their capacity for too long."

The reason the US has found itself in this position is, to a great extent, a result of the rise of China and other Asian emerging economies and their decision to keep their exchange rates pegged at low levels against the US dollar as a result of the region-wide currency collapse that occurred in 1997. However it must be remembered that China still represents only the third largest surplus on the other side of the US current account ledger. Germany is number one and Japan number two.

When the Chinese economy began to accelerate the balance of currencies actually suited both parties. China was able to fuel a manufacturing surge that employed vast numbers of its peasant population, and the US was keen to voraciously consume whatever cheap exports came its way. But like any drug, it is often foolish to think that a little bit will do and the habit will never get worse. The trade imbalance with China has become much worse.

If you buy a car from a dealer financed by the a loan from that same dealer - a transaction that occurs every day of the week in Australia - the amount you owe is fixed and as long as you can make the interest payments everything is sweet. What is unlikely to happen is that you would buy another car the next, year, and then another, without having disposed of or paid off the first. This would probably lead you into bankruptcy eventually were the car dealer not diligent with its credit assessment.

The US is buying affordable export goods from China on credit. China lends the US the money to do so by buying US Treasuries. The money it lends represents the receipts from the sale of the goods. This seems like a fair arrangement, except that the amount of goods bought on credit never falls - it just rises year on year. And China is not the only country exporting goods to the US. The spark for the whole transaction lies in undervalued foreign currencies - those which make the exports appear cheap in the first place. And the US is hooked on a consumption drug.

In mid May the US na

[ananda77]

The US crisis: It's Official: The Crash of the U.S. Economy

Neither Perlstein nor Samuelson gets to the bottom of the crisis, though they, like Conway of the Carlyle Group, point to the end of cheap credit. But interest rates are set by people who run central banks and financial institutions. They may be influenced by “the market,” but the market is controlled by people with money who want to maximize their profits.

Key to what is going on is that the Federal Reserve is refusing to follow the pattern set during the long reign of Fed Chairman Alan Greenspan in responding to shaky economic trends with lengthy infusions of credit as he did during the dot.com bubble of the 1990s and the housing bubble of 2001-2005.

This time around, Greenspan’s successor, Ben Bernanke, is sitting tight. With the economy teetering on the brink, the Fed is allowing rates to remain steady. The Fed claims their policy is due to the danger of rising “core inflation.” But this cannot be true. The biggest consumer item, houses and real estate, is tanking. Officially, unemployment is low, but mainly due to low-paying service jobs. Commodities have edged up, including food and gasoline, but that’s no reason to allow the entire national economy to be submerged.

So what is really happening? Actually, it’s simple. The difference today is that China and other large investors from abroad, including Middle Eastern oil magnates, are telling the U.S. that if interest rates come down, thereby devaluing their already-sliding dollar portfolios further, they will no longer support with their investments the bloated U.S. trade and fiscal deficits.

Read the full article here:
http://www.globalresearch.ca/index.php?context=va&aid=5964

[MrDevine]

Ananada, is it in the worlds 'interest' to let the US Economy crash? Wouldn't it be better to slowly bleed it out until another economy say China dominates the market. International states I am sure will be unwinding positions in the US but on a long term basis. Market players in the US will know this is going on, and will be fighting a rear guard action I'm sure, perhaps reinvesting overseas.

Please tell me though, what has happened with all that money Greenspan and Bernake have printed, its gone somewhere, Private Equity anyone?

Mr D.

[MrDevine]

I do agree there have been crashes in the past – how belly up do you want it to go MoSteph? Does anyone want a worldwide Depression like the 1930's? People banging on about a crash, are like rubber neckers at a car wreck. If you keep saying it, it will happen, eventually eh?

Playing Devils Advocate, this is good –

Champagne Cheaper Than Vinegar = Bubble: Mark Gilbert (Correct)
By Mark Gilbert

(Corrects spelling of champagne brand in fifth paragraph.)

June 14 (Bloomberg) -- Jeremy Grantham, chairman of Boston- based investment firm Grantham, Mayo, Van Otterloo & Co., suggested earlier this year that the world was witnessing ``the first truly global bubble.'' Here are seven more bubbles for investors to ponder.

Economy, Business, First, and Now Scooter Class

Wealthy air travelers used to turn left rather than right when boarding an airplane. For a while, the lucky few climbed the stairs to the second deck for their unlimited free booze, lay- flat beds and personal DVD players.

These days, you are nobody without a VIP pass to the private apron at the airport, although for now you can still get by with a NetJets Inc. account rather than your own $20 million Cessna Citation X. Private planes even have their own slang; jet setters talk about ``taking the scooter'' to their villas and yachts.

It's not just Hedge-Fund Guy and his trophy wife demanding splendid isolation from cattle-class rubberneckers eyeing their chocolate-dipped strawberries. Revolution Air, a charter company, will fly more than 20 U.S. kids to summer camp this month, at about $8,000 a hop, the New York Post reported last week.

You know there's a bubble when the stewardess is serving Kool-Aid rather than Cristal, and the scooters that kids are using on holiday have wings and engines, not kick plates and T- bars.

Skullduggery?

Take a life-sized platinum skull that looks eerily like Hedge-Fund Guy. Stud it with 8,601 diamonds weighing 1,106.18 carats. Give it a snappy title such as ``For the Love of God'' and, as long as your name is Damien Hirst, you have a recipe for turning $20 million of materials into a $100 million windfall.

``You have to get the price right, or it will come back into the market,'' Hirst told Bloomberg News reporter Linda Sandler. ``A lot of people buy things and flip them.''

You know there's a bubble when artists are trying to set their prices so high that there won't be a secondary market for their work.

Vinegar Versus Champagne

If Hirst designed a vegetable display, it would look like the shop window at the just-opened Whole Foods Market Inc. branch in Kensington, one of London's ritziest shopping areas. Analysts at JPMorgan Chase & Co. calculate that Kensington could contribute as much as 1.8 percent of the food retailer's total sales. Whole Foods said last month that second-quarter revenue was $1.46 billion.

It's a food-porn cathedral dedicated to organic this, natural that and locally produced the other. On a Monday afternoon, the place was packed with gym-buffed yummy mummies driving designer pushchairs and doing battle in the produce- crammed aisles with trolley-dragging wealthy retirees.

The zeitgeist-defining product among the free-range bananas, organic spring water and corn-fed soup is a 60-year-old Vecchia Dispensa balsamic vinegar, costing almost $200 for a triangular 100 milliliter bottle stoppered with red wax seals.

You know there's a bubble when an overgrown U.S. chain store can sell antique vinegar to Britons at 32 times the price of Nicolas Feuillatte champagne.

All Hail Emperor Ho

Stanley Ho, the Hong Kong entrepreneur who made his billions running casinos in Macau, last month paid HK$13.7 million ($1.8 million) for a chair, beating Christie's International's presale estimate of HK$12 million.

It was a rather special chair. Emperor Kangxi graced the gilt-incised brown lacquer throne when he ruled China between 1662 and 1722. Still, Ho could have picked it up for just $43,700 when it sold in 1994.

You know there's a bubble when a gambling mogul drops a

[ananda77]

MrDevine:

...apologies, but cannot answer your questions in any way satisfactory, because:

-there is simply no ONE answer to anything
-anyone can find all answers to anything if so desired
-do not want to bore anyone with my personal perpective

...what can be said is that, I am prepared for the worst case scenario -if it will ever happen-

Kind Regards

[ananda77]

...correction now most likely arrived after the Dow's weak close

Kind Regards

[soulman]

If we are doing another turnaround after midday, I'll be suprise. The market has done that the last two days and it shouldn't happen again, will it???? It can't go up everyday this week, could it?

The mild correction has already gone last week.

[tricha]

U.S. Stocks Decline on Mortgage Concern; Bear Stearns Falls

By Eric Martin


Bear Stearns headquarters, New York June 22 (Bloomberg) -- U.S. stocks plunged, capping the worst week for the Standard & Poor's 500 Index since early March, as concern intensified that banks will be saddled with losses on mortgage bonds.


Whats Monday going to bring for the ASX [?][?][?]

Still one week left for tax loss selling, but also one week for super top ups.

The Australian economy is booming and not exposed to a housing crash, so is it business as usual [?][?][?]

Maybe down 40 points, depending what happens in Asia I guess.[?]

[Skol]

I saw a chart the other day about the subprime mess. It's going to get a whole lot worse later in the year. Not only are interest rates trending up but there are a significantly larger number of mortgages to be reset at a higher rate later in the year rather than earlier.

[steve fleming]

quote:Originally posted by tricha



Still one week left for tax loss selling, but also one week for super top ups.

The Australian economy is booming and not exposed to a housing crash, so is it business as usual [?][?][?]

Maybe down 40 points, depending what happens in Asia I guess.[?]



Window dressing week coming up for the ASX - so large/mid caps should do OK, don't know about the specs but.

Also Tricha, I'd say a lot of those super inflows are still sitting in cash management accounts at the moment. There is no requirement for super funds (whether professional or self managed) to be immediately fully invested by 30 June. Those fund will continue to enter the ASX over the next financial year.

[soulman]

Some say that the Future Fund are entering the market, hence the turnaround late in the day.

[tommy]

http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/09/100121737/index.htm


Has the bull market run its course?
Investors got skittish as bond yields rose in June. But top strategists say there are still opportunities to be had in 2007. Fortune's Katie Benner reports.
FORTUNE Magazine
By Katie Benner, Fortune reporter
June 26 2007: 6:17 AM EDT

(Fortune Magazine) -- Oh, what a glorious first half it was for the stock markets this year! Share prices shrugged off recession warnings, they brushed off the subprime loan meltdown, and they scoffed at the Shanghai stock scare. By June 4 the S&P 500 index was up 9.4 percent for the year.

Then came the market equivalent of kryptonite - inflation! rising bond yields! - and the markets staggered before regaining form. As the second half of the year begins, stockholders are skittish, so we decided the time was right to consult Wall Street's top sages and pose the question on every investor's mind: Has the bull market run its course?

Not just yet. At least, that's the consensus of the strategists we interviewed. The market will inevitably slump, they say, but that's unlikely to happen in the second half of 2007. "Don't panic," says Wayne Lin, an investment strategy analyst at Legg Mason. "There doesn't seem to be much out there to cause the market to tank in the next couple of quarters."

It's easy to see why investors are nervous. Six years of ultra-low interest rates have been a tonic for corporations, private-equity funds, consumers and, well, pretty much everybody other than income investors. Companies have lavished buybacks on their shareholders, and stocks have been propelled by a burgeoning wave of mergers and acquisitions. So couldn't a rise in borrowing costs bring the party to a halt?

Surprisingly, Lin argues that rising rates and yields on longer-term Treasury bonds are healthy signs. "Rates have been so low for so long, in part because there was a lot of worry that the U.S. economy would tank and that the Federal Reserve would have to cut interest rates [to stimulate growth]," he says.
Fortune 40: Stocks to retire on

Yes, rates have risen, but only modestly (to 5.1 percent for the ten-year bond as of mid-June). And the crucial point, according to experts, is that they're not about to soar. The Fed isn't likely to jack up rates substantially this year, say six strategists interviewed by Fortune.

(Heck, it seems as if only minutes ago everybody was expecting a cut.) And even if bond yields float higher, the strategists say, there's still plenty of room before there is real hurt put on the stock market. "We need to go to a 6 percent yield on the ten-year note to present an initial obstacle [to share prices]," says Quincy Krosby, chief investment strategist at the Hartford.

The surging rates and fears of inflation are blinding investors to the fact that the change is occurring for a happy reason: Economic growth is picking up. That could boost corporate profits and support stock prices. "People will buy equities in anticipation of production. They're a leading indicator of growth," says David Malpass, chief global economist at Bear Stearns. "Many stocks have been held back by overstated concerns about a slowdown in the U.S."

The combination of economic growth and relatively stable interest rates should ensure that two stalwart trends of recent years - buybacks and buyouts - roll on a while longer. Moreover, international markets remain strong. Finally, there's one nonfundamental factor that could help stocks, says Michael Metz, chief investment strategist at Oppenheimer.

"Alternatives to equities are not all that attractive. Real interest rates are below historical norms, and they're heading higher, and that makes bonds relatively unattractive. The residential real estate market is no longer an option and commercial real estate is way overpriced." It all adds up to a bull market for stocks - at least for a little while longer.

Many investors remember how rising interest rates increased the cost of capital and killed th

[Skol]

Some blood on the floor today all right. Amongst the carnage I decided to buy some CSR, boring share, but holding its own and highest volume for at least 12 months. Volume and share price been moving up recently and technically looking very good.

[tommy]

quote:Originally posted by Skol

Some blood on the floor today all right. Amongst the carnage I decided to buy some CSR, boring share, but holding its own and highest volume for at least 12 months. Volume and share price been moving up recently and technically looking very good.


Is this the start of a correction or something more sinister?

The shaky US market and the resulting volatility in Asia/Europe is surely raising alarms among investors in OZ land too, who seem to be locking in their profits or executing end-of-year sell off to minimize their tax bill despite healthy state of Australian economy... 1.9% drop on All Ords is quite a dive!

I'm not convinced to get out of the share market yet, all my stocks are already undervalued and don't wanna miss the gravy train... or am I being too greedy? For me it's time to buy more and accumulate but then again I must be the only psycho doing that[}:)]

[Skol]

On my watchlist the ones that took the biggest dives were the ones that had racked up the biggest gains recently. eg MCC AWB MND

[clearasmud]

nono tommy you're not the only one.
I've been buying today (COI and INL)
My stocks are off 2.5%

Clearasmud

[tommy]

Hi all,

Good on ya clearasmud, I am hoping the market isn't gonna crash on monday or something, otherwise I'm gonna be caught with my pants down[:0][xx(][|)]


quote:Originally posted by Skol

On my watchlist the ones that took the biggest dives were the ones that had racked up the biggest gains recently. eg MCC AWB MND


OUCH... hope you sleep well tonight mate, ASX tomorrow will still probably be influenced by the DOW tonight, fingers crossed.

[Skol]

Might be something to do with the hedge fund debacle that's going on at Bear Stearns. Someone described it as a bunch of people watching a house fire hoping it doesn't spread down the street. Always had my doubts about the hedge fund industry since the LTCM disaster a few years back when the so called intelligentsia, including a couple of Nobel Prize winners caused such a financial disaster the Federal Reserve needed to bail them out. Always been at the back of my mind that the next real big correction could be a string of hedge fund losses. The average hedge fund return seems to be about 10% pa according to the WSJ so why pay these dudes the outrageous fees they demand? In the last few years I'd be ashamed to admit I'd only made 10%.

[OneUp]

quote:Originally posted by tommy
I'm not convinced to get out of the share market yet, all my stocks are already undervalued and don't wanna miss the gravy train... or am I being too greedy? For me it's time to buy more and accumulate but then again I must be the only psycho doing that[}:)]


Hey mate, I remember you made a similar comment about the same time last year, when the market was suffering from tax loss selling & overseas worries. Buying more turned out OK in the end.

[tommy]

quote:Originally posted by OneUp


quote:Originally posted by tommy
I'm not convinced to get out of the share market yet, all my stocks are already undervalued and don't wanna miss the gravy train... or am I being too greedy? For me it's time to buy more and accumulate but then again I must be the only psycho doing that[}:)]


Hey mate, I remember you made a similar comment about the same time last year, when the market was suffering from tax loss selling & overseas worries. Buying more turned out OK in the end.





Hi Oneup,

I know but you know I am inherently a complete chicken when it comes to reading the market... I always wonder "is this da beginning of a crash?" I normally sell off when I start losing sleep, but at the moment, I am sleeping like a log so I must be comfortable with my holdings... absolutely no science behind my decision making, but what da heck, nothing is more absurd than market behavior!

[tommy]

http://www.cnbc.com/id/19446307

Stocks Open Lower Amid Weak Economic Data, Subprime Jitters
By CNBC.com | 27 Jun 2007 | 09:35 AM ET

Stocks opened lower after the government said orders for durable goods were much weaker-than-expected last month and subprime concerns continued to weigh on global markets.

"The market seems like it can't get out of its own say," said Joe Benanti, a trader at Rosenblatt Securities. "The 10-year yield is drifting back towards 5%, so you would think the equity markets might take some solace in that and start to rally a bit, but here we are. We're off again."

The Commerce Department said durable goods orders for May declined 2.8%, a much bigger decrease than expected. It was the biggest drop in orders since January. A decline in orders for civilian aircraft contributed to the weakness. Analysts surveyed by CNBC and Dow Jones expected a decline of 0.8% from a 0.8% increase in April.

"I think this is a data point that the Fed is going to pay a lot of attention to, but I don't see the Fed changing their policy on interest rates," said Eric Thorne, portfolio manager at Bryn Mawr Trust Wealth Management.

The Federal Open Market Committee starts a two-day meeting on interest rates, with economists expecting the overnight lending rate to stay at 5.25%.

Subprime concerns also continued to weigh on investor sentiment.

"I think the market is reasonably valued and interest rates are okay for this market level, but a lot of the subprime mess is still to be played out," said Vince Farrell, managing director of Scotsman Capital. "You're going to have a lot of back and forth for a while."

Treasury prices rose, sending yields lower.
______
http://www.bloomberg.com/apps/news?pid=20601087&sid=aySi9vdWbuB8&refer=home

Fed Splits With Staff Over U.S. Economy's Speed Limit (Update1)

By Scott Lanman

June 27 (Bloomberg) -- Federal Reserve policy makers disagree with their own staff economists, and a growing chorus on Wall Street, who say the U.S. economy can't expand as fast as it used to without pushing up prices.

The split, signaled in the minutes of May's Federal Open Market Committee meeting, may reflect debate over whether a slowdown in U.S. productivity is permanent. ``Many'' FOMC members were ``somewhat more optimistic'' than lower-ranking officials about the economy's speed limit, the records showed.

Policy makers, who meet today and tomorrow, are probably more confident that productivity -- a gauge of employee efficiency -- will rebound as economic growth picks up. A lower potential pace of expansion might force the central bank to keep interest rates higher than would otherwise be the case.

``The basic difference is that the FOMC is somewhat more skeptical'' that the trend has changed, said Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York, who formerly worked at the Federal Reserve Bank of New York. ``It's ultimately going to mean a bigger monetary policy response down the road if they do make a mistake.''

A year ago, most economists said the potential economic growth rate was about 3 percent. It may now be 2.5 percent, according to Lehman Brothers Holdings Inc. and JPMorgan.

Recent papers by Fed economists imply that the central bank staff sees potential growth of about 2.5 percent a year, said Kasman's colleague Michael Feroli. Feroli worked at the Fed from 2003 to 2005.

Reluctant to Estimate

While some policy makers won't give public estimates, Kansas City Fed President Thomas Hoenig stuck to the 3 percent figure in a June 6 speech in Cody, Wyoming. Michael Moskow, head of the Chicago Fed, said in April that his bank estimates the speed limit is ``just a bit under 3 percent.''

The debate may resurface today when Chairman Ben S. Bernanke and his colleagues gather in Washington to discuss monetary policy, the economy and the Fed's strategy for communicating with the public.

Economists surveyed by Bloomberg News unanimously forecast that the Fed will leave its benchmark lending rate at 5.25 percent when the mee

[Viking]

Been bleeding in the last few days~ handing back some of the gains we received recently~ [B)][B)]
See how it goes in the market today~ when it opens~

[steve fleming]

There is now only a 25 point differential between the FY08 earnings yield for the Aussie MSCI Index (6.5%) and 10 yr govt bond yields (6.25%).

This differential is now in line with the medium term average over the last 15 years....and probably is a pretty good indication of the market being currently at fair value.

[Skol]

There's going to be some drama over hedge fund losses related to the subprime meltdown in the US with the Fed predicting US$100b in losses. These have already extended to Aust with Basis Capital reporting large a large downturn (14% in June I believe) and attempted seizure of some of their assets and investors in NZ yet to discover the extent of their exposure.
2 funds in the US have 91% and 100% losses.

[ratkin]

Here comes the crash.
Footsie just had biggest single one day fall since march 2003.
Private equity money drying up, interest rates going up everywhere, debt problems surfacing , could this be the decent correction we need? or something more

[Flying Goat]

Yeah just woke up to see carnage in the US markets too. About time!

[mamos]

WAM Capital faces correction
July 27, 2007

LISTED investment company WAM Capital is braced for a substantial correction, despite posting a 92 per cent increase in pre-tax operating profit yesterday.

Chairman Geoff Wilson said he had moved to holding 26 per cent of WAM Capital's portfolio in cash, based on the difficulty in finding buying opportunities in a market with stretched valuations.

The lift in cash, up from an average of 17 per cent during the year, means Mr Wilson is not expecting to make sufficient returns from investing the cash on the stockmarket.

"We find it really hard to find value. We're in the fourth year of a really strong bull market," he said yesterday. "The risk is there will be a major hitch some time along the way."

Mr Wilson said stock prices had increased more sharply in the past year, and the increases in the industrial sector had been based on a rise in price-earnings ratios rather than rises in underlying profits.

He nominated increasing interest rates and the knock-on effect of the subprime housing market as risks for the stockmarket.

WAM Capital invests predominantly in small- to medium-sized industrial companies, meaning its profit of $34 million was achieved without the benefit of direct investments in the booming resources sector.

Mr Wilson said the key contributors to WAM Capital's performance during the year were domain name manager Melbourne IT, accounting services business Reckon, phone services company Reverse Corp and debt collector Credit Corp.

The company declared a final dividend of 8c, payable on October 26, taking the full-year dividend to 16c. The stocks closed up 3.5c to $1.90.

http://www.smh.com.au/news/business/wam-capital-faces-correction/2007/07/26/1185339165393.html

[trendy]

Some good weekend reading.

http://www.informationclearinghouse.info/article18051.htm

Trouble in Hedgistan: “Its gonna get a lot worse”

By Mike Whitney

07/21/07 "ICH" -- -- Two columns of black smoke can be seen rising over Wall Street and disappearing into the ice-blue New York sky.

Terrorism?

Not quite. The plumes of smoke are all that’s left of two major hedge funds which blew up just weeks ago leaving nothing behind but a few smoldering embers and a mound of black soot.

The compiled assets of the Bear Sterns High-Grade Structured Credit Strategies Fund—nearly $20 billion—have vanished into the miasma of cyber-space where they will soon be joined by $1.4 trillion of other, equally worthless, Collateralized Debt Obligations (CDO).

If you look carefully, you can almost see the mangled and bloodied bodies of the CDOs, the CSDs, the RMBS and the other shaky debt-instruments being pulled from the wreckage and tossed unceremoniously on the bonfire.

Is this how it all ends? The first whiff of trouble in the housing market and then—in a flash--all the funds in “Hedgistan” begin teetering towards earth?

“No Value”-“No Bids”

According to Bloomberg News, Bear Sterns announced last week that there’s “little value left” in one of its funds and “no value left” in the other.

Nothing, nada, zippo.

The news was like a bucket of cold water dumped on the stock market leaving slack-jawed traders shuddering in trepidation.

What does it all mean?

Does that mean that the entire hedge fund empire—which is built on a foundation of dodgy loans and quicksand---may be headed for the crapper?

No one really knows. But a pall has settled-in over downtown Manhattan where gloomy-looking men in pinstriped suits are waiting for the other shoe to drop.

Y’see, the hedge fund industry is based on the bizarre notion that one does not have to produce anything of value to make boatloads of money. You don’t even need assets any more---just a risky loan that can be transformed into an investment grade security through the magic of “securitization” a sprinkling of Wall Street snake oil.

Abrah Kadabra---presto-chango!

It’s like taking shards of bottle-glass and selling it as the Hope Diamond. Who’s gonna notice?

The only catch is that--now that these toxic CDOs are going to auction--there are no bids. That’s a bad thing.

“No bids” means that $1.4 trillion of shaky investments have no discernable market-value. The CDOs were graded “mark to model” which translates into “mark to fantasy”. It means that the investment bankers and hedge fund managers got together over Martinis one night and pulled a number out of a hat.

Now no one wants to buy them. They’re worthless.

The skydiving hedge funds just pulled the CDO rip-chord and nothing came out but confetti.

Aaaaaaaahhhh!

And that’s just half the story. There’s trillions of dollars in derivatives riding on these shaky CDOs. That’s enough to bring down the whole market in a heap once interest rates rise or liquidity dries up. Now it’s just a matter of “when” now, not “if”.

This illustrates an important point, though. It shows what it takes to be a good hedge fund manager:

Take a shabby sub-prime mortgage; chop it into “investment”, “mezzanine” and “equity” tranches. Bundle it with other equally suspect mortgage backed securities (MBS). Decide (arbitrarily) what the CDOs are worth Tell your banker. Leverage at a ratio of 10 o 1. Take 2% “off the top” plus salary for your efforts. Buy a summer home in the Hampton’s and a Lexus for the wife. Wait for the crash. Then repeat.

Congratulations; you are now a successful hedge fund manager!

Oh yeah; and don’t forget to prepare a few soothing words for the investors who just lost their entire life savings and will now be spending their evenings squatting beneath a nearby freeway off-ramp.

“We’re so very sorry, Mrs. Jones. Can we get you some cardboard-bedding to keep off the rain?”

The problems that are appearing in the stock and bond markets all sta

[trendy]

In the old days during a market upheaval you would get a run on the banks. In today's market upheaval it looks like we are seeing a run on Hedge Funds. Whereas with a bank they can get more cash not so easy with an HF that has to sell dodgy and worthleess CDO assets. Their answer is to freeze HF redemptions.

I expect us to see more HF issues next week - watch out as they are forced to sell equity assets to offset losses with CDO assets and freeze redemptions.

http://www.nytimes.com/2007/07/28/b...ml?ref=business

http://today.reuters.com/news/artic...DS-UPDATE-1.XML



http://www.nytimes.com/2007/07/28/business/28fund.html?em&ex=1185681600&en=b4afbe0293af0134&ei=5087%0A



By JENNY ANDERSON
Published: July 28, 2007
In a sign of the nervousness in the markets, the sale of a block of credit-related securities on Thursday led to speculation about the demise of a multibillion-dollar hedge fund.

The fund, Sowood Capital Management, which in January had about $3 billion under management, is down 10 percent for the year, battered by credit markets that have hedge funds, their investors and their lenders on edge. Many traders pointed to the fund, with its substantial losses, as the first significant casualty of rocky credit markets.

Sowood Capital was started in 2004 by Jeffrey B. Larson and Stuart Porter, both of whom worked for the Harvard Management Company, the university’s large endowment. Harvard seeded the fund, which invests in stocks and bonds, with a significant amount of capital, according to two people with knowledge of the fund’s operations.

Sowood Capital did not return calls for comment yesterday. Mr. Porter now runs Denham Capital, a separate private equity company.

Speculation about problems at the fund abounded yesterday because of observations by market participants on Thursday that Sowood Capital was selling positions at distressed prices, traders said. While one person with knowledge of the fund’s operations said that the rumors were overblown and that Sowood Capital had met its margin calls, the situation is a telling example of the nervousness in the market.

Already there have been several casualties among hedge funds that invested primarily in subprime mortgages — those extended to people with weak credit. But problems have now moved into the broader credit markets, which have sold off sharply and are facing significant structural problems.

Some of the securities in these markets are trading infrequently, which raises questions about whether the pricing portfolios, or “marking” positions, reflect their true value. With illiquid securities, traders cannot know the true value of the securities until they are sold. Bids and offers, or the prices in the marketplace, have been erratic, traders say.

Market participants say Sowood’s credit securities were sold at a deep discount, which some in the market viewed as a fire sale, leading to speculation that the fund was in distress.

The fund was up a little more than 1.5 percent through March, according to an investor letter, showing how quickly the markets — and a fund’s returns — can turn. Marketing documents indicate that a little less than 15 percent of the portfolio’s risk is in structured credit.

For now, the fund appears to be simply selling positions. Investors’ capital is locked up for two years and three months. The fund also has a so-called gate, meaning that once investors have filed to redeem 25 percent of assets, the fund can suspend redemptions.

But the situation is indicative of a teetering market. The debt market is essentially frozen with concerns that the following scenario emerges: a major hedge fund moves to sell a position, getting a low price or mark. The low price indicates the market is in distress, and the brokers significantly discount the collateral the funds have set aside in order to do business. At that point, the brokers issue margin calls, and the hedge funds sell to meet the calls — into a distressed market — causing investors to panic and redeem their money. And the

[tommy]

Anyone else hoping for a tsunami of margin calls and stop-loss triggers to cause a fire sale on Monday?

DOW:
http://money.cnn.com/quote/chart/chart.html?symb=djia&sid=1643&time=ytd&Submit1=Refresh

ASX:
http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Axao&draw.x=0&draw.y=0

[trendy]

The Tel Aviv (Israel) market down 4.2% today. Remember they don't trade Fridays.

http://www.haaretz.com/hasen/spages/887316.html

T.A. Stock Exchange plunges in reaction to global market losses

By Nathan Sheva, Haaretz Correspondent

The Tel Aviv Stock Exchange on Sunday reacted sharply to steep declines in the New York markets last week. All the leading indices ended the session in the red.

The TA-25 index closed down 4.21 percent to 1,089 points; the TA-100 index lost 4.35 percent, closing at 1,067 points, and the Tel-Tech fell by 4.6 percent.

Turnover stood at about NIS 3.25 billion. The bond market also retreated sharply, and long-term fixed income bonds plunged by 1.6 percent.

Real estate stocks were among the hardest hit, falling by 4.4 percent after losing 6 percent last week; Elbit Medical Imaging sank 6 percent and Alrov lost 8 percent.

"I prefer to sell stocks and stay outside until this wave passes," a senior trader in the local market said Sunday.

Stock indices dropped sharply last Thursday as well, by about 2.5 percent.

What began as concern over a crisis in the American subprime mortgages market, turned into fear of global financial crisis, and subsequently triggered losses in stock markets around the world.

Stock markets in the United States were down more than four percent last week, the worst week they suffered in four years. The crisis stemmed from fears of a credit crisis and from an expectation of mass debt forgiveness on the mortgage market.

The crisis is likely to affect other aspects of the market and to depress the American economy, which was already projected to slow down.

Losses also accompanied markets in Europe. London fell by four percent last week. Emerging markets also registered losses, with the market in India falling on Friday by 3.4 percent, and in Istanbul by 1.8 percent.

A barrel of oil rose to $77 on Friday, approaching the all-time high of August 2005. The dollar also continues to rise, as does the fear that foreign investors are responsible for some of the losses in the Israeli stock exchange.

The dollar reached a representative rate of NIS 4.32, up by ten percent since its nadir in May. The continuing strengthening of the U.S. dollar is expected to encourage the Bank of Israel to continue raising interest rates.

[soulman]

Better support than I thought. Although, it's still early days. The drop in the Australian dollar should support exporter share prices like the mining stock and multi-national coy.

[soulman]

Yes, it was early days. Now, the spanking begins. I like to see the market recover tomorrow though.

[tommy]

ASX performing quite solidly contrary to what I had expected today

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Aiss&draw.x=0&draw.y=0

and so are its Asian counterparts though still predominantly in the red

http://finance.yahoo.com/intlindices?e=asia


A dead cat bounce tonight on the DOW tonight might get some buyers back in tomorrow?

[Dazza]

i sold out on a lot of miserable stocks today about 8 companies

to fund 2 purchases in mbl and qbe

realigning the portfolio so im 33% in blue chips lo

[Mick100]

quote:Originally posted by absolut-advance

Whos struggling to find a straight out...no risk....no brainer tradable bargain.... me...

AA :(


I'm not looking.....yet
.

[Dazza]

ADY at 40-44cents

ARU at 1.80-1.90

MCR at 3.40

SMY at 3.60

BMN at 2.50

WOW at 26

MBL under 80

QBE under 30

thats my cheapies. first 2 is a definate , with the nickel companies coming in next.

i see 2h07 as a good time to be in nickel, abiet producing nickel companies that are cash cows

[clearasmud]

Check out the volitility in PSA,COI and NXS.
All good quality.


quote:Originally posted by absolut-advance

How much would you expect to cream off each of them in the next 2-3 days,Ive been playing options for more leveraged bigger gains....

few nice companies in there, but im looking for a 15% min gain in 3 days.

any fit... been looking at ADY and BMN today not sure... theres enough in dem..



AA

quote:Originally posted by Dazza

ADY at 40-44cents

ARU at 1.80-1.90

MCR at 3.40

SMY at 3.60

BMN at 2.50

WOW at 26

MBL under 80

QBE under 30

thats my cheapies. first 2 is a definate , with the nickel companies coming in next.

i see 2h07 as a good time to be in nickel, abiet producing nickel companies that are cash cows

[Dazza]

oh i c trading eh AA

well wrong person to ask then lol

as u can see ADY up 11% today so u would have been nearly there.

15% in 3 days eh mmm..

id go for MCR/IGO then
ARU could u get the 15% but it mite not

[Skol]

I bought MCC at 6.11. Not too bad I thought. Reckon this might be over sooner rather than later, Europe looks OK (so far).

[soulman]

I bought MBL and QBE as well but I bought them on Friday. Hence, I have to pay more. Others include AMP and PPT.

I am all out of cash.

Dazza, when you say you sold 8 stock today, were they sold at a profit or lost?

[Huang Chung]

Rejigged the portfolio a bit today to buy into MBL at an ave of just over $79.50 and top up on TOL at $13.98.

[Dazza]

looks like we all thought MBL was worth it :P

the 8 stocks sold were :

CBH - break even - im still bullsih on them eh 250k zinc equivalent in 2009 is awesome, id prob have a target of $1.80 during that year. but oh well.

ERNO -40%
STX -20%
ACB -28%
RNG -40%
BLR sold half of my holdings for +50%
THRO -41%
CUY sold half of my holdigns for +125%

essentially just sold the rubbish / non performing companies to buy some blue chips

only brought half full quota for MBL and QBE, i still have to buy WOW - up 3%!!

plan to have 1/3 portfolio in QBE/MBL/WOW

and the rest in the mining industry including spec/producer/exploring ones.

[Huang Chung]

I sold a small holding I had in Focus Minerals (FML) and lightened my holding in Hydrotech (HTI). Neither are on my margin lenders list of approved stock (unsurprisingly!), but they'll lend 75% against both MBL and TOL. So by repositioning, I could invest more $$.

[Huang Chung]

Dazza, I think QBE is a good choice as well. Already hold these, and nearly topped up on them today, but went for TOL instead.

As far as the big retailers go, I bought into CGJ a week or so ago at about $15.15. Wouldn't be surprised to see WES offer an all cash alternative, and I don't think the private equity players have given up all together either....

[Dazza]

tol? as in toll holdings? well managed guys i reackon, took over good nzl company a few years back.

QBE - i like

WOW - i like because they have 50% of nzl market share, own dicksmith - pretty much new zealands main electronic place to go to for 'normal citizens' by that i mean hardly any knowledge for computers.

also they have pretty much the lions share of supermarkets in australia, i went over there to visit family and realised there is just WOW there, not like nzl where there are like 6 supermarkets etc

so was fascinated

also was fascinated that CTX was pretty much the main petrol station there

here in nzl we have what 5-6 major ones

[Huang Chung]

Yeah Dazza, Toll Holdings. Big expansion into Asia underway. No question, they are supurbly managed, its just they aren't that cheap...but there again, they never are.

I think you'll find that the market shares of WOW and CGJ aren't too dissimilar. WOW is now bigger, and gaining market share from CGJ. But, when you combine Wesfarmers Bunnings hardware stores to CGJ (Coles supermarkets, Target, K Mart, Officeworks, Liquorland, Vintage Cellars), WES will actually be a bigger retailer than WOW.

CGJ have a fuel offer with Shell that is similar to WOW's deal with Caltex.

CGJ needs effective management to get back on track.

[Huang Chung]

Back to MBL for a minute, I noticed that Huntleys have them as a buy up to $88.15 and an accumulate to $100.75.

[steve fleming]

quote:Originally posted by Huang Chung

Back to MBL for a minute, I noticed that Huntleys have them as a buy up to $88.15 and an accumulate to $100.75.


Huntleys are conservative. Of the 11 brokers covering MBL, consensus price target is $112.

I don't think there would be any other ASX200 stock trading at such a discount to the consensus target.

[tricha]

Try Sally Malay Mining Ltd.

Will leave MBL for dead as a percentage gain coming up [:p]

Blood on the floor, sorry only for the wimps, bargins on the floor more like it.

Cheers [}:)]


U.S. Stock-Index Futures Rise; Archer Daniels Shares Advance

By Sarah Jones and Eric Martin

July 30 (Bloomberg) -- U.S. stock-index futures advanced on speculation better-than-expected earnings will boost shares following last week's $2.1 trillion global sell-off.

Archer Daniels Midland Co., the world's largest grain processor, climbed after reporting profit that topped analysts' estimates. Virgin Media Inc. gained after John Malone's Liberty Global Inc. said it may bid for the British pay-TV company.

Today's earnings reports helped allay concern that financing difficulties in the credit market will end a boom in leveraged buyouts. The Standard & Poor's 500 Index lost the most since September 2002 last week, while the Dow Jones Industrial Average recorded its biggest weekly retreat since March 2003.

``We could see a bit of a knee-jerk bounce in equities,'' said Nick Skiming, a fund manager at Ashburton Ltd., which oversees $1.5 billion in Jersey, Channel Islands. ``Valuations on stocks are reasonable and company balance sheets are still in good shape. Last week was a healthy correction and helped bring people back to earth.''

Standard & Poor's 500 Index futures added 5 to 1463 at 8:27 a.m. New York time. Dow Jones Industrial Average futures advanced 46 to 13330. Nasdaq Composite Index futures rose 7.75 to 1971.25.

European stocks fell, led by financial-services companies, and U.S. government bonds gained after IKB Deutsche Industriebank AG said profit will be ``significantly'' lower than forecast. The Dow Jones Stoxx 600 Index lost 0.4 percent to 371.35. The yield on the benchmark 10-year Treasury note slipped 1 basis point, or 0.01 percent, to 4.75 percent.

ADM

``We do not think this is the start of a new bear market,'' Ian Scott, London-based managing director of global equity strategy at Lehman Brothers Holdings Inc., wrote in a note to investors dated today. ``The current environment is very different from periods of `credit crunch' in the past.''

Archer Daniels Midland Co., the world's largest grain processor, gained 7 cents to $13.95 after reporting fourth- quarter profit excluding certain items rose to 64 cents a share, more than the 58-cent average adjusted estimate of analysts surveyed by Bloomberg.

Virgin Media climbed $1.25 to $25.95.

Goodyear, Amazon

Goodyear Tire & Rubber Co., the largest U.S. tiremaker, added 77 cents to $27.89, after the shares plunged 23 percent last week.

The stock ``offers a compelling entry point for medium- term investors who can weather near-term market volatility,'' JPMorgan Securities Inc. wrote in a note to investors today. ``We continue to see no material change to underlying fundamentals.''

Amazon.com Inc. dropped 84 cents to $83.20 after Barron's said the shares of the world's biggest online retailer were too expensive and expansion plans threaten its profit margins.

The stock jumped last week after Amazon reported second- quarter earnings that beat analysts' estimates. At the end of the week, Amazon traded around $84, about 78 times analysts' earnings estimates of $1.07 a share for 2007, Barron's said.

The S&P 500 fell 4.9 percent to 1458.95 and the Dow dropped 4.2 percent last week. Both set record highs on July 19. [b]The S&P 500 is now valued at 15.4 times estimated profit, the lowest since January 1991 when compared with actual earnings, according to Bloomberg data.

To contact the reporters on this story: Sarah Jones in London at sjones35@bloomberg.net ; Eric Martin in New York at rtin21@bloomberg.net .

Last Updated: July 30, 2007 08:35 EDT

[tommy]

Looks like we will be in the green tomorrow, DOW recovers:

http://money.cnn.com/data/markets/

The rest of the week will probably be volatile though, with key economic indicators in the U.S. due to be announced.

[Dazza]

i expect MBL to open very strong today

tricha dun worry i have plenty of SMY to be contempt with :D

[soulman]

MBL and other sold down ASX 100 stocks are going alright today. This is the bounce I see coming but it might not last. There will be volatility and I hope I can take advantage of this volatility. I just need to free some cash.

I bought MBL in my other account yesterday and sold it today. I actually hold 3 batch of MBL, with the most expensive purchase last week at $87 before it plummet $5 in one day

[soulman]

MCC and IGO proved to be a monster for trader that bought yesterday.

[Huang Chung]

Dazza...topped up on QBE today as it didn't bounce like MBL.

So blue chip acquisitions for me yesterday and today were MBL, TOL, QBE.

[Dazza]

yeah i saw QBE at 30 eh

i was like mmmmmm shall i buy shall i buy hahah

i brought my first batch of WOW eh,

sold 1/2 of PDN
1/4 of AGS
1/3 of PNA

all at gains off course

ill continue with a wait and see approach

WOW/MBL/QBE looks like a good trifecta in the next 10 years, hope to at least double my money if not 5x back

[George]

Great to see blue chips mentioned for a change on this so-called ASX thread.
The percentage gains on these can be greater than the lesser well known stocks if use is made of options, warrants or cfd's.
eg. Monday WOWXOK warrant went from 2.06 to 2.93, yesterday over 3.00 from as low as 2.50, 33% gain in 2 days. WOW is turning out to be a volatile beast so one must be strict with stops and also be ready to reverse (puts) if trend changes. Last 2 days there was nearly as much profit in shorting WOW not to mention other stocks as well.
Let's talk more about derivatives on blue chips.
George

[soulman]

MacBank suffer from the sub-prime crisis. I bought MBL because in their recent AGM, they say they were not exposed to it. Now, they said this just happen. I wished I sold out twice yesterday.

Today is a bloodbath again. And it has pushed even lower after 2 rises.

[nelehdine]

MBL down $6 .... ever been told not to try and catch a falling knife !!! OOOOUUUUUCCCCCHHHHH !!

MBL could drop another $10-$15 easily before this sub-prime thing goes away ... don't be too early to jump in , I'd be keen in the high $50's or very low $60's ... investment banking looks like hard work for the forseeable future , easily $$ have been made !!

[nelehdine]

I sold all of my MBL about 2 weeks ago for $91.88. I had a friend a few years ago who bought some shares in Deutsche Bank , a very very good name in the banking world , in 2001 after he saw them fall from about 120 to 105 euro's ... the trend was nasty but he insisted that they were "cheap" as they had dropped by 15 euros and all the brokers had wonderful price targets of 130/140/150 etc ... like that meant it was bound to happen. Anyway he eventual bailed out of his holding at 80 euros and lost about 25% of his hard earned capital ... they bottomed out in the mid 60's if I recall. He could have saved himself a lot of grief, and money if he had just waited for a decent up-trend to be established , a lesson I have always recalled whenever the temptation hits to try and pick the bottom.

PS: My MBL money went half into the bank and the other half into DOM which is a gold miner in a very strong up-trend at present.

CASH IS KING for the rest of 2007 ... or GOLD if you are brave. The US is staring down the toilet, about to chuck up big time if you ask me. Gold will be $800+ within 12 months on the back of a global shift out of USD and into things of REAL value ....

[nelehdine]

PS: I have to rub it in Dazza but I sold my beloved QBE shares at 3145 a few days ago too ... again the $30 support looks to have caved in today and no matter what a wonderful business they are the stock looks like it is no doubt going to get cheaper oer the next few months ... hope I'm wrong.

[trendy]

As I stated in my post last week there is going to be a run on the Hedge Funds. Watch the stampede to the exit for redemptions....markets going to sink badly by forced asset sales

http://www.bloomberg.com/apps/news?pid=20601087&sid=as4Ljb0FH2kY&refer=home

Bear Stearns Halts Redemptions on Third Hedge Fund (Update1)

By Yalman Onaran

Pedestrians walk outside Bear Stearns headquarters July 31 (Bloomberg) -- Bear Stearns Cos., manager of two hedge funds that collapsed last month, halted redemptions from a third fund after a slump in credit markets prompted investors to demand their money back.

The Bear Stearns Asset-Backed Securities Fund had about $900 million invested in asset-backed securities, including mortgage bonds, spokesman Russell Sherman said today in a telephone interview. The fund was overwhelmed by redemption requests, Sherman said.

The fund's stumble is a setback for New York-based Bear Stearns and illustrates how the crisis in the subprime mortgage market has spread. The fund had less than 0.5 percent of its assets in securities linked to loans to subprime borrowers, Sherman said. The two funds that collapsed invested almost fully in subprime bonds. Losses have spread to banks, insurers and hedge funds in France and Australia, including one run by Macquarie Bank Ltd.

``This shows you don't necessarily have to be a subprime fund now to be having problems,'' said Bryan Whalen, a portfolio manager in Los Angeles at Metropolitan West Asset Management, which oversees more than $21 billion in fixed-income assets.

Bear Stearns shares have dropped more than 25 percent this year on concern that the drop in subprime securities will hurt its income. The firm was the largest underwriter of U.S. mortgage bonds in the past two years, ceding the title to rival Lehman Brothers Holdings Inc. this year. Lehman shares have dropped 21 percent.

Being `Prudent'

Bear Stearns has no plans to close the fund, which has $50 million in cash and gets about $13 million in principal and interest monthly, Sherman said. By suspending redemptions, the fund managers can avoid selling assets at depressed prices.

The Wall Street Journal earlier reported that the fund was up 5 percent this year through June, before its performance plummeted in July.

The fund's managers can wait until the decline in mortgage securities is over because it owes no money, Sherman said.

``We don't believe it's prudent or in the interests of our investors to sell assets in this current environment,'' Sherman said. ``The fund portfolio is well positioned to wait out the market uncertainty.''

The two previous funds, the Bear Stearns High-Grade Structured Credit Strategies fund and the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage fund both filed for bankruptcy protection in the Cayman Islands today.

`Unprecedented Declines'

The funds collapsed last month when creditors asked for more collateral after the value of its securities dropped. Bear Stearns extended $1.6 billion in credit to one of the funds before seizing its assets last week.

Bear Stearns told investors two weeks ago that they will get little if any money back after ``unprecedented declines'' in the value of securities used to bet on subprime mortgages. Bear Stearns has said it expects to lose no money on its loan.

Late payments on subprime home loans nationwide rose in the first quarter to the highest level since 2002, the Mortgage Bankers Association has reported. At least 60 mortgage companies have halted operations, gone bankrupt or sought buyers since the start of 2006, according to Bloomberg data.

The ABX index that tracks derivatives linked to subprime mortgage securities with the highest investment-grade ratings, created in the second half of 2006, has fallen by more than 6 percent last month. An ABX index tracking subprime debt with the lowest investment-grade ratings has declined 30 percent.

A fund run by Macquarie, Australia's largest securities firm, said that investors in two of its hi

[soulman]

WOW seems OK in this volatile market and with retail sales up today and interest rate decision likely to go up in early August, what else can go wrong. Plenty as it seems.

[ratkin]

This is great , today we are seeing the first signs of panic MBL down 8% BNB down 8% QBE down 4% the list goes on.
Dominoes are starting to topple, and i not talking pizza !!

[Dazza]

bugger lol

good stuff though eh nel

low 60s u reackon

mmpf

ill await be4 i top up

glad i didnt buy all that i wanted in my big 3 blues.

mind u my mining are taking a dive too

PDN getting absolutely thrashed

my #1 fav ARU is doing well :D

[winner69]

quote:Originally posted by Dazza



mind u my mining are taking a dive too




something called PRC doing well though dazza .... one of the stars today

[fihr]

What a hammering. All my positions are taking a beating. Can't believe the bargain prices out there. Mass panic right now. Looks like this might take a while to settle down. All of you who are waiting patiently are going to do really well.

[Flying Goat]

Geez, the month of August is kicking off with a bang and roar huh!

[ratkin]

I want to buy something in the next 30 min , something big and solid , any ideas?

[tommy]

Serious bargin hunting time has come... red, red, red!!!!

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Axao&draw.x=0&draw.y=0

3% shaved of All Ords, barely staying above 6000[:0]

[Flying Goat]

You might be right Ratkin, think you all need to check this out...

http://finance.yahoo.com/q/bc?s=%5EAORD&t=1d&l=on&z=m&q=l&c=

All ordinaries down more than 3% and still falling, and that following a week of strong declines....

Some of the banks are looking cheap but the poor sentiment likely to hang around longer for them. I picked up a parcel of ANZ. Cheap.

Another solid business worth looking out - who put through a profit upgrade today, yet got slammed in the panic market. It is a well managed and has great outlook is BEC. Management hold around 25% of the shares, it is a good yielder and has exposure to Ryman Healthcare style business, property development and fund management. I will start a thread on it soon...

Cheers
FG

[Flying Goat]

quote:Originally posted by tommy

Serious bargin hunting time has come... red, red, red!!!!

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Axao&draw.x=0&draw.y=0

3% shaved of All Ords, barely staying above 6000[:0]



Yeah that will be the test Tommy - perhaps if we go below 6000 we can welcome the bear market !!

[tommy]

Hi FG,

I still believe this is a healthy correction that we need for the next leg up, there is nothing wrong with the Aussie economy itself. Strong Aussie dollar has provided consumers with cheaper imports, holding inflation down more than otherwise would have been the case, employment figures are good and there is no sign of a recession.

Even if a bear market is around the corder, i don't really care because my focus is on bullet-proof stocks and techs anyway[:I]

[Flying Goat]

quote:Originally posted by tommy

Hi FG,

I still believe this is a healthy correction that we need for the next leg up, there is nothing wrong with the Aussie economy itself. Strong Aussie dollar has provided consumers with cheaper imports, holding inflation down more than otherwise would have been the case, employment figures are good and there is no sign of a recession.

Even if a bear market is around the corder, i don't really care because my focus is on bullet-proof stocks and techs anyway[:I]



Haha, yep all one needs to do is buy "bullet proof" stocks!

Sounds a bit like the optimistic illusion folks start to believe after extraordinarily long bull markets.

[Dazza]

FG - 6000 doesnt mean its bear mode yet

LT 4 year trend line is at 5600

so id say if it goes below that say near 5300 then id be worried


id like it to fall to possibly 5600 or 5800 sub then that would be good

[OneUp]

Good on ya Tommy.

If a company is cheap and it's earnings won't be affected by the factors causing the rout, but it's being sold down anyway, it's time to stump up the cash to buy more.

[tommy]

quote:Originally posted by KW

Well an interest rate rise is expected soon, so that will put further pressure on domestic stocks.

I also think if the market goes below 6000 it will trigger some selling as people get really nervous. I think someone had a chart that proposed a return to the trend line at around 5800? Can anyone enlighten?


A 10% correction would mean 6400 -640 = 5760, sounds about right to me. Much needed cleaning of the toilet:)

[tommy]

quote:Originally posted by OneUp

Good on ya Tommy.

If a company is cheap and it's earnings won't be affected by the factors causing the rout, but it's being sold down anyway, it's time to stump up the cash to buy more.


Hi One Up,

Yeah, that's my strategy too, there are sectors that are being punished for no reason whatsoever in this panic selling... in six months time I am confident that the stocks I am buying will be higher than my purchase price;)

Hoping for the fire-sale to continue until the end of this week;)

[Dazza]

wont mind telling us what those stocks are ? hehe


im just on the prowl for more QBE and WOW stocks :D
need to buy more

[tommy]

quote:Originally posted by Dazza

wont mind telling us what those stocks are ? hehe


im just on the prowl for more QBE and WOW stocks :D
need to buy more


Hi Dazza,

Bought more BLU today, and someone fulfilled my top-up orders for ISSO.

Waiting for more orders to be fulfilled on AVE.

But these stocks are not for everyone, you know I am a crazy nut when it comes to share picking/buying[}:)]

And seriously considering buying back into da good old TRS (still holding, One up mate?)

[OneUp]

quote:Originally posted by tommy


quote:Originally posted by Dazza

wont mind telling us what those stocks are ? hehe


im just on the prowl for more QBE and WOW stocks :D
need to buy more


Hi Dazza,

Bought more BLU today, and someone fulfilled my top-up orders for ISSO.

Waiting for more orders to be fulfilled on AVE.

But these stocks are not for everyone, you know I am a crazy nut when it comes to share picking/buying[}:)]



Yep, I was buying BLU today too. We must have been the only nutters doing it tho?

[Dazza]

ah , tommy and his tech shares :P

[tommy]

quote:Originally posted by OneUp



Yep, I was buying BLU today too. We must have been the only nutters doing it tho?
[/quote]

Hi OneUp,

Had no idea you were interested in BLU too, but yeah, I would like to pick up more below $2.

No brainer internet stock really, reminds me of the good old EMI days when everyone was complaining how expensive it was at 40c[}:)]

Check out the article I posted on BLU thread where Photon management calls BLU's business model "bulls**t", which I thought was hilarious (I used to invest in Photon but sold out after the placement.)

[tommy]

quote:Originally posted by Dazza

ah , tommy and his tech shares :P


Sorry dazza, couldn't help it[|)]

[Flying Goat]

Looks like yesterday's bargain hunters in Europe were a bit early...

http://finance.yahoo.com/q/bc?s=%5EFTSE&t=1d&l=on&z=m&q=l&c=

FTSE seems quickly heading to lose another 3% at this rate.

Yeah bargain hunting is great but what looks cheap.. often gets even cheaper:D

[Dazza]

Huang chung - with TOL are you buying TOL or AIO or both?

[Huang Chung]

Hey Dazza...do you wish you'd never heard of Macquarie Bank! ;)

No, I've just got Toll now. Sold off Asciano a number of weeks ago.

[skinny]

Looks like the US housing market slowdown and sub-primes woes are starting to spread in all sorts of morbidly fascinating ways. The comments about retailers in the US has me the most worried - the current global growth outlook is robust and it is fashionable to think that growth in the world can be decoupled from the US; but history suggests otherwise.

http://www.bloomberg.com/apps/news?pid=20601087&sid=avZr736O8xUw&refer=home

For the first time in a few years stop losses are now set on TSX, NYSE and LSE holdings, sigh [xx(]

[tricha]

Gerry must be in the box seat with 50% cash, a buyers dream market out there[:p]

Economic angst drags down shares

All eyes will now be on Wall Street for future direction
Stock markets worldwide have plunged after a rocky week of trading, amid fresh fears over the problems in the US housing market.
Financial problems at a US mortgage firm and losses at two funds owned by Macquarie, the Australian Bank, aggravated a sell-off across Asia.

The slump followed sharp losses on Wall Street, reflecting anxiety over future economic and market conditions.

European stocks also nosedived, with London's FTSE 100 falling 2.4%.

Analysts predict the volatility will continue until more is known about the extent of the crisis in the US sub-prime mortgage market, which offers high-interest loans to higher-risk customers or people on low incomes.

It's all fed by the so-called sub-prime fears in the US

Martin Slaney, GFT Global Markets

In addition, equity investors are also waiting for further clarity on the danger of contagion to the wider credit environment.

Higher interest rates have already increased the general cost of borrowing for consumers and companies across the board.

"It's all fed by the so-called sub-prime fears in the US," said Martin Slaney, head of spreadbetting at trading firm GFT Global Markets.

Further uncertainty has come from close-to-record oil prices and the impact of higher energy costs on inflation, which central banks have been trying to keep under control.

Flight from risk

Shares across Europe lost ground in morning trade following a loss of enthusiasm for Asian shares.

London's key FTSE 100 index had declined 152.5 points at 6207.6 by 1000 BST, with UK-listed banks bearing the brunt of a general flight from risky investment assets, such as shares.

Elsewhere in Europe, Germany's Dax-30 index dropped 156.27 points at 7427.87, while France's CAC-40 suffered slightly lower declines.

Earlier, Asian stocks beat a hasty retreat after Macquarie Bank warned that private investors in two of its funds exposed to high-risk corporate debt would lose about a quarter of their money, because problems in the US mortgage market had pushed down the value of their investments.

Japan's main share index, the Nikkei 225 was down 377.9 points, or 2.19%, to end a volatile trading session at 16,871 in Tokyo, dropping below the 17,000 level for the first time in four months.

Hong Kong's Hang Seng index sank 3.15% to 22,455.36 and dragged down shares listed in mainland China, while Korean stocks were also affected by the volatility in equity markets.

Korea's Kospi index tumbled 4% as exporters including carmaker Hyundai and semiconductor firm Samsung Electronics, which derive most of their earnings from the US, lost favour.

[skinny]

Buyers dream or just the start of a protracted bear market?

For those who have the time this Blog from Willem Buiter (ex BOE MPC member) provides a really nice (if long) account of the excessive risk taking that lead up to the hedge fund failures we are now seeing and the risks to global growth this poses.

http://maverecon.blogspot.com/search/label/Economics

[quote]quote:

The Great Normalisation

Following the collapse of the tech bubble, the past 5 years or so have been characterised by two global asset market anomalies: low long-term risk-free real interest rates and very low credit risk spreads (or default risk spreads) of all kinds. High-grade sovereigns paid only slightly lower rates than potential fiscal flunkies, both within the industrialised world (e.g. Bunds vs 10-year Italian or Greek sovereign debt) and comparing advanced industrial countries with emerging markets; corporates paid surprisingly small spreads over their sovereigns; even junk - non-rated instruments - was cheap.

Many explanations were offered. Low risk-free real rates were the result of an ex-ante saving glut driven by the high saving propensities of some of the BRICS (Brazil, Russia, India, China, South Africa - the leaders of the new industrialising countries - the acronym invented by Jim O'Neill of Goldman Sachs) and of the commodity exporters that were (and are) the major beneficiaries of the terms of trade windfall that characterises this phase of the globalisation process. In addition, Caballero has argued that in many of the fastest growing emerging markets and other high-saving countries, there has been a relative scarcity of low-risk financial instruments, because of the lack of governance and weakness as regards the rule of law in areas like contract enforcement, creditor protection and minority shareholder protection. This has further depressed the yield on securities issued by those borrowers (especially the governments of the US and the Euroland member states) that were deemed capable of committing to the rule of law and of foreswearing discretionary default.

While there may be something to these stories, there remains in my view a large unexplained 'real risk-free rate gap' - a long-term interest rate bubble, if you want - up until, say, six months ago.

The explanations of the low credit risk spreads were almost all parial equilibrium at best, spurious at worst. Many had a 'New Paradigm' flavour. Whenever you hear the words 'New Paradigm' as an explanation for why things are really different this time around, it is time to take out the bull****ometer for some careful measurements.

The proliferation of new contingent claims, especially CDOs, CLOs and CMOs, and of new financial institutions willing to issue and/or hold these claims, meant that previously illiquid bank loans and household mortgages could now be securitised and sold off. By assigning the receivables from the pool of underlying assets (say, mortgages) to 'tranches' of securities with different seniority, a pool of receivables whose average quality was 'regular junk' could support some tranches with higher credit ratings as well as, inevitably, an 'unspeakable junk' tranche. The theory was that this proliferation of instruments and institutions for repackaging, slicing up and reselling credit risk, would lower the average credit risk spread required for a given amount of fundamental default risk to be held.

Nice theory. Just two things wrong with it. First, the total amount of fundamental default risk that needs to be held could well increase when another set of financial intermediaries (issuing new financial instruments) comes on the scene. Second, there is no reason to believe that, whatever the total quantum of undiversifiable risk that needs to be held, it will be held by those best able to bear it.

First, the possibility that an increase in the number of institutions and instruments could increase the total amount of risk t

[tommy]

DOW in da green now

http://finance.yahoo.com/indices?e=dow_jones

[winner69]

quote:Originally posted by tommy

DOW in da green now

http://finance.yahoo.com/indices?e=dow_jones




Looks red to me mate

[hero]

Red green red green red green. Yep, tommy and winner69, you are both right.

[winner69]

quote:Originally posted by hero

Red green red green red green. Yep, tommy and winner69, you are both right.


but we will be OK

[slam]

quote:Originally posted by winner69


quote:Originally posted by tommy

DOW in da green now

http://finance.yahoo.com/indices?e=dow_jones




Looks red to me mate


Closed in the Green ?