When to re-enter the market? [Archive] - Page 2

Hoop

20-05-2008, 11:52 AM

I'm still fighting my poor media crusade, and it's effect on the general population and to investors alike.....Sorry guys

People and some expats from overseas have ask me if NZ economy has caved in as from reading the NZH and other NZ bits and pieces on the net all they read from NZ is "Doom & Gloom". My reply is that NZ has turned down faster and more sudden than people have anticipated (because they originally thought NZ was bulletproof) but the economy is still fundamentally sound and is still growing abeit at a much slower pace.
They mentioned the property market has down-turned badly. I responded the sales figures have fallen by half but the property market has remained surprising solid dropped 1 or 2 or 3 % depending on who you talk to.
That drop is bugger all viewed market-wise.

People are anticipating it to fall, but this is hearsay not yet fact and there's a chance it may not. It may happen now or in the near future.. or it could years away or never....who knows the future for certain.

So whats going on at the moment????????? and who do you believe????????????????

To get some sort of answer perhaps look at a market that assumes life in 6 months time ..the stock-market is a good example

The NZ stock-market is arguably in a bear market phase but on a quick glimpse of the NZX50 half of these stocks have their price charts pointing in the right direction. Yes, 25 NZX50 stocks are gaining ground. Not bad for a country that supposedly has its economy on the ropes and is in a downward spiral.

Question: Who's right Mr Market or the NZ media?

I'll mention the 25 NZX50 stocks that are pointing upwards... you guys do the rest of the homework and figure it out.
WBC
VCT?
TPW
TLS
SKL
SAN
RAK
POT
NZX
NZS
NZR
NZO
NPX
MFT
KIP?
IMP
IFT
GPG
GMT
GFF
FPA?
CEN
APT
ANZ
AMP

When to re-enter the market???
Any one of you who bought these stocks recently and ignored the media's gloom and doom would agree entering the market lately would have been a good idea.
...and these are just the boring NZX50 stocks to boot :)

Disc: In careful mode Cash 65% Equities 35% after all we are still in a bear stockmarket phase and there is genuine bad news out there which is a potential threat (some of it not reported recently) . PRC PPP LMP GPG

Halebop

20-05-2008, 02:59 PM

They mentioned the property market has down-turned badly. I responded the sales figures have fallen by half but the property market has remained surprising solid dropped 1 or 2 or 3 % depending on who you talk to.
That drop is bugger all viewed market-wise.

Hoop in the interest of accuracy - that "surprisingly solid" performance is the median of actual sales, not the median of values. If 6 months ago several median $350,000 Auckland Houses sold for the median $350,000, that was the reported median price achieved. If now, on half the volumes, a bunch of houses previously "worth" $420,000 sell for the median $350,000, the reported results are indeed stable, but are far from solid.

That the median is close to where it was is I suspect a statistical fluke or a representation of median debt servicing ability rather than median value.

peat

20-05-2008, 04:07 PM

and most of you here use Volume as a technical indicator of stock markets, so why wouldnt you apply that to the housing market

Hoop

20-05-2008, 09:55 PM

Hoop in the interest of accuracy - that "surprisingly solid" performance is the median of actual sales, not the median of values. If 6 months ago several median $350,000 Auckland Houses sold for the median $350,000, that was the reported median price achieved. If now, on half the volumes, a bunch of houses previously "worth" $420,000 sell for the median $350,000, the reported results are indeed stable, but are far from solid.

That the median is close to where it was is I suspect a statistical fluke or a representation of median debt servicing ability rather than median value.

Halebop you've read my 7 myths post :D.. are you twisting figures around to verify your beliefs? ;) I have not seen the distribution curve statistics so I can't comment whether the median figures frequencies are askewed above the 50% level. ....you maybe right I just don't know.

Maybe the low volume has askewed the data values and the median figure is deemed unreliable, again I don't know.

My point is .....we all know property prices have been overvalued for years...like some share-market stocks that seem to defy gravity for a long period of time. Sometimes it is a reversal of sentiment that triggers a change....and the media feeds off that sentiment and spreads that sentiment throughout the masses (not always towards the majority of public thinking unfortunately). The today's web poll on NZH proves my point, only 34% polled think property will fall....a minority. (Disc: I voted for a fall :(, an opinion not based on fact just my emotive feeling).

The present sentiment on property is media pessimistic at the moment and makes re-entering the property market a larger than normal downside investment risk.

Peat's post points to TA of the property market and asks the question why don't people and/or investors use TA when purchasing property investments..a damn good question. Does this show that many people allow emotional factors as well as other factors to decide in buying a property?

Emotions run high in times of changing market phases...Am I a believer of the Dow theory and buy and sell on herd behaviour?.... you betcha...However to be able to do that I have to be focused, not run with the herd, and rely and act on facts, and be able to identify twisted facts and beware/ignore those.

Presently we are gravitating towards the emotive doom and gloom period which within Dow theory means the bear market is maturing into its next phase cycle.

Identifying mass behaviour is important as an investment indicator. Many opportunities can be found within a Bear market, an example being a stock which has be slaughtered for no good reason by an over pessimistic group of investors. The old adage still rings true in general terms... Buy in times of gloom.

For a better humorous insight to how investor behaviour and emotion of the time can influence stock markets read this article Stock Market Gloom and Doom - “Granville's Golden Rule” Versus Conventional Wisdom (http://www.marketoracle.co.uk/Article3489.html)

Hoop

Halebop

20-05-2008, 10:24 PM

Halebop you've read my 7 myths post :D.. are you twisting figures around to verify your beliefs? ;) I have not seen the distribution curve statistics so I can't comment whether the median figures frequencies are askewed above the 50% level. ....you maybe right I just don't know.

Hoop that you don't know is what I'm referring to. The "solid" comment is based on an unknown despite the "hard" REINZ statistic provided. The distribution itself perhaps a bit of a moot point as we a talking median in any case. What we don't know is what that very same property was worth 1 to 12 months ago. It might have been $300,000 in which case performance has been very strong. It might have been $400,000 in which case performance has been weak. But in truth the reported median tells us nothing, as is I suspect, its intention. Now if we had a basket of values instead, that might hold a little more credence, particularly if it wasn't dependent upon my local real estate agent for provision.

Depending on your time frame I'm all for buying in gloom but property tends to have a long gloom period so I wouldn't feel the need to rush.

peat

22-05-2008, 07:18 AM

sell your house and short the dow

well maybe not quite the house and best not to jump in too soon, but certainly looking like a short very soon

the house would've been good! dumbass not so dumb

the gartleys initial profit objective would be 12300 so theoretically another couple of down days? (see my earlier pic)

Dr_Who

22-05-2008, 09:13 AM

I have concerns for the global market.

Concerns of high energy, commodities, inflation and high interest will send the global economy into a recession.

duncan macgregor

22-05-2008, 11:36 AM

Nitaa

22-05-2008, 12:00 PM

I got out the market, to chicken to even trade tiddlywinks on dead certainties. Been told whats wrong with you man, we are doing better than ever by some. It was obvious to me looking at the charts in dec that the market had turned.
The question is when will it turn back?. My fundamentalist reasoning says that we are into a deepening recession, leading up to a market collapse at the end of this year. If i am wrong then all i missed was opportunity not money. So far right on the button with the deepening recession which only leaves the collapsing market at the end of the year to be proved right again. Macdunk
Duncan... am i reading it right? i think this is the first time you have ever used the word FUNDAMENTALS as being your decision to stay out of the market. Have you changed your time line theory (patent pending) and now become a fundamentalist? How times have changed

Fundamentls. Just because the global economy is getting worse, FUNDAMENTALLY, this makes other stocks or business even more appealing. Debt collection sounds like one industry that has merit. look at resource stocks. fundamentally at the beginning of the year they look good. now the commoity prices are heading in to a bubble. Unfortuntaly for the average joe that bubble may end up being the bubbles of all bubbles.

Halebop

22-05-2008, 01:35 PM

...Debt collection sounds like one industry that has merit...

Debt collection can result in more work rather than more money. Watch cash flows rather then reported profits because these businesses surprise on the downside just as markets turn really nasty.

Belumat1

22-05-2008, 03:57 PM

What I think :
http://bp3.blogger.com/_6nTmMn9wzb4/SDTsfiBj0bI/AAAAAAAAAIk/Nt9z4B0rqeQ/s1600-h/nz50+index+short+time+Elliot+%26+Gann+analysis++22 +may+08.JPG
and
http://bp0.blogger.com/_6nTmMn9wzb4/SDTsfyBj0cI/AAAAAAAAAIs/zE_n6G97408/s1600-h/nz50+index+short+time+Elliot+alternative+count++22 +may+08.JPG

as I wrote on my personal Blog.

Bye
Thank you

tim23

22-05-2008, 07:54 PM

I got out the market, to chicken to even trade tiddlywinks on dead certainties

Duncan - can you post these dead certs so I can make some money?

duncan macgregor

23-05-2008, 07:15 AM

I got out the market, to chicken to even trade tiddlywinks on dead certainties

Duncan - can you post these dead certs so I can make some money? TIM you and i both know you are already investing in one of them. When the whole market is inclined to tumble down its best to stand clear the bad is inclined to drag the good with it. Macdunk

tim23

23-05-2008, 12:36 PM

Thanks Duncan - you hit the nal on the head, I'm an investor mostly not a trader so a bit of fluctuation in the NOG share price is not too much of a concern, any other dead certs though?

duncan macgregor

23-05-2008, 12:47 PM

Thanks Duncan - you hit the nal on the head, I'm an investor mostly not a trader so a bit of fluctuation in the NOG share price is not too much of a concern, any other dead certs though? You would have to invest in Australia to find them TIM, the NZ dollar has dropped 11% since i did from a year and a half ago. Macdunk

tim23

23-05-2008, 05:40 PM

Good move that am just planning my annual Sunshine Coast August break, it gets a little dearer this year!

Hoop

05-06-2008, 09:30 AM

Reserve Bank sees little to no growth for 2008. Economy has weaken more than previously thought. ....possilble weak recession???
Interest cuts may happen later this year.

Overall NZ economy looking gloomy. Not be good news for the NZ Equities overall. If interest rates do fall later NZ$ related stocks look like a bet further down the track. At the moment the favourite stocks are still in the energy/commodity sector.

The Official Cash Rate (OCR) remains unchanged at 8.25 percent. Reserve Bank Governor Alan Bollard said: "The global economy is currently experiencing significant increases in oil and food prices. These price increases are occurring at the same time as activity is weakening in many economies in response to the global credit crisis and slowing housing markets. In New Zealand, this confluence of factors is producing a challenging environment of weak activity and high inflation. "We project annual CPI inflation to peak at 4.7 percent in the September quarter of this year. Although much of this reflects higher food and energy prices, underlying inflation pressure also remains persistent. Nevertheless, we do still expect inflation to return comfortably inside the target band over the medium term. This is based on the expectation that commodity prices stop rising, inflation expectations remain anchored, and weakening economic activity contributes to an easing in non-tradable inflation. "The outlook for economic activity is now weaker than in our previous Statement. We project little GDP growth over 2008, and only a modest recovery thereafter, largely reflecting a weaker household sector. Government spending and personal tax cuts will provide some offset to this lower growth but will also add to medium-term inflation pressure. Consistent with the Policy Targets Agreement, the Bank's focus will remain on medium-term inflation. Provided the economy evolves in line with our projection, we are now likely to be in a position to lower the OCR later this year, which is sooner than previously envisaged."

Dr_Who

05-06-2008, 11:21 AM

These comment has me not investing in the NZ for now.

The economy faced "the uncomfortable combination of rising inflation and weak economic growth" - often referred to by economists as stagflation.

Dr Bollard said that in contrast to past economic contractions "we are projecting a relatively long period of low growth".

Hoop

05-06-2008, 11:38 AM

Yes Dr Who
The currency market has reacted to the bad news but.....
Equities are in a state of denial ( NZX50 up 0.4%) thanks mainly to the rises of NZ$ afffected stocks FPH, Rak etc
I don't think this bad news has sunk in yet.

If this was the USA that kind of announcement by the FED would see a 2% drop on the S&P for sure.

peat

07-06-2008, 09:18 AM

the gartleys initial profit objective would be 12300 (see my earlier pic)
smashed thru that....

Footsie

07-06-2008, 09:38 PM

i feel the equity markets are now at the mercy of crude and commodity hedge funds

we need the price at the pump to fall to restore confidence.. that may be some time away

shasta

07-06-2008, 09:52 PM

i feel the equity markets are now at the mercy of crude and commodity hedge funds

we need the price at the pump to fall to restore confidence.. that may be some time away

Footsie

There does seem to be a lag between the high oil price & the so called alternatives, that are meant to become more viable the more the oil price increases.

To date we really haven't seen much activity in this sector (Alternative Energy).

I'm looking at Alternative Energy more & more, as you say, how long will consumers "accept" paying $2+ a litre at the pumps...

With no real alternatives, oil prices are seemingly one way...

Footsie

20-06-2008, 04:04 PM

NZ market looks ugly

We've lost the March lows

3200 next support and below that 3,000

SHORT NZDUSD

SHORT NZX

Lizard

20-06-2008, 04:57 PM

Footsie, I agree with your targets. But my view is that we are the only market close to becoming a "buy" out of the main ones I watch. A panic day in the target zone and I think you can buy hard and have a couple of months to make up your mind if that was the ultimate low!

Footsie

20-06-2008, 08:13 PM

agree short term traders can buy on the next big down day

long termers should still be cautious

bull....

22-06-2008, 11:33 AM

Hi Footsie ,

I agree to 3400 was big support , selling probably pick up now.
I see on this website www.nzinvestmentdaily.com they had a article on support at 3400 and were picking 3150 - 3200 as a short term target.

dumbass

22-06-2008, 02:46 PM

agree short term traders can buy on the next big down day

long termers should still be cautious

i would tend look at it the other way and wait for a rally and sell into it

the trend is your friend

i know its a cheesy one but have learnt the hard way so many times its etched on my brain

Dr_Who

22-06-2008, 07:44 PM

i would tend look at it the other way and wait for a rally and sell into it

I agree.

The fundamentals are not showing any signs of a recovery anytime soon. Interest rate remains high, inflation remains high, oil and commodities remain high, economy is in dog crap, falling $NZ dollar will push up inflation. The only thing saving our behind is high dairy prices.

Why buy when the fundamentals are looking sick as a dog? I ve been saying this to my broker for over a year now.

Footsie

22-06-2008, 09:20 PM

Thats why i say long termers be cautious

but traders can buy the dips and sell the rallies

Bear markets are characterised by waterfall sell offs and snap back rallies

we are in a waterfall sell off...... so you wait and buy the snapback rally

My guess is that the next wave of bearishness is building steam and will reach a crescendo sometime within the next 2 weeks.

The trick is to buy on the panic day....
ie if the index fell to 3000 and looked like it was going straight to 2,000 you buy
V V Hard to do, but becomes easier with practise

dumbass

22-06-2008, 09:39 PM

AMR

22-06-2008, 10:41 PM

just dont get why you would trade in that direction

yeah my look like a blow off panic sell but trading that bottom ?

you just never know if theres another one coming up the next day defying your diverging

oversold indicators

i would study the dow not the nzx for direction

From my limited time in the markets, I've seen a huge black candle followed immediately by a huge white candle of equal size as a sign of a pullback rally. Volatility is very high though, expect the usual stops to be hit.

trendy

23-06-2008, 01:32 AM

Question of when to re enter = 2010. Keep your cash in term deposits, with NZ banks offering 8% you can't bet that in todays market. The housing crisis in the US doesn't peak until 2009 when the bulk of the 3 and 5 years ARMs reset. Keep in mind by that time the FED will have had to raise rates due to inflation.

The FED rates are only low now to help the banks through the credit crisis they are borrowing from the FED at 2% and lending it back out at +6%.

Situation is now worse that this time last year and going to get worse. Earning season starts next week and the numbers are going to be sobering.

I'm in the energy business here and the US consumer is going to see multiple double digit increases in their utility rates for electricity and gas in 2008. God forbid anyone in the US who uses oil for heating/hot water (which is most northeast rural areas and older homes) as the heating oil price is unregulated by the states vs' electricity/gas.

Unless global energy prices for oil and LNG drop by 50% immediately the damage is already done.

Hoop

23-06-2008, 12:31 PM

i would tend look at it the other way and wait for a rally and sell into it

the trend is your friend

i know its a cheesy one but have learnt the hard way so many times its etched on my brain

We just had a bear market rally ...hands up those who sold in that one;).

dumbass

23-06-2008, 12:51 PM

yep i certainly did

and am expecting a rally after one more low on dow in the next week to

close shorts wait for another rally and sell into that.

Hoop

23-06-2008, 01:41 PM

Good on ya Dumbass...good proven bear market strategy.

dumbass

05-07-2008, 04:00 PM

talking of timing, dow at a very interesting trendline juncture

green trendline from all time high has been breached but failed to rally higher and is now being tested

red line current rally is now being tested

good time to watch and see which way market breaks

my opinion would very much lie in the bear camp and for the sharp decline that i believe is coming soon there needs to be a large degree of optimism in this bear rally.

often the japanese currency has a inverse relation to equity markets
yen crosses show some key trendline breaks indicating an increasing risk aversion enviroment

bullish for yen , bearish for nzd and other carry trades and equity markets

just hope everyone is very cautious in current enviroment

updating action from 20/5 chart

priced rallied off up trend line hit the 61.8 retracement to the point

double top printed and then crashed

down trend line in play with a steeper secondary trend line in play

all indicators screaming over sold

HOWEVER when the market runs with such strong momentum indicators become pretty much redundant

the only help in identifying a bottom will come from sentiment , volatilty indicators and some key candlesticks

VIX index reading a rather subdued 24 really needs to break at least 30 for a volatilty extreme

COT data indicating no extreme short positioning

so it looks like were going much lower , yes there is a chance of a decent short cover rally but really this becomes another opportunity to giddy up your short positions

big number targets become a theme, close to 11000 then my pick which is 10500

Billy Boy

12-07-2008, 11:29 AM

Hoop and others predicted 11,000 on the DOW to be point of interest ... DOW went below and bounced back above but still lost over 1 percent. Is it over?

The pair hold or guarantee more than $5 trillion worth of mortgages. That's roughly half of the $9.5 trillion debt of the United States. The fear is that a failure of one or both would wreak havoc on the nation's financial system and the broader economy.
http://biz.yahoo.com/ap/080711/fannie_mae_freddie_mac.html

Methinks not. Poor americans.
Can the Fed let them go broke ?? Me thinks not. :(

trendy

12-07-2008, 11:30 AM

Check out the DOW forum

http://www.sharetrader.co.nz/showpost.php?p=211984&postcount=36

Dr_Who

12-07-2008, 03:02 PM

Lizard

24-07-2008, 04:41 PM

Below reposted from May:

http://h1.ripway.com/Phaedrus/NZSXbuy55.gif

This chart served its purpose admirably, giving re-entry signals on 2/4/08, just 4 trading days after the (current!) low of 27/3/08. You really couldn't get much better than that.

With hindsight, the only change I would make to this chart would be to delete the Inertia indicator. You can easily see that it is too slow and way out of synch with the other 9 indicators.

NZX50 at 3270 looks to me as though it might trigger a few of those indicators again on the close. Phaedrus, I know you were going to abandon this thread, but I am wondering if you are still sticking with these indicators or whether you have now modified them to the somewhat steeper short-term downtrend (in which case I guess they triggered earlier in the week) or whether you will now hold out for a signal on the longer term trend?

trackers

24-07-2008, 04:47 PM

So where is the fed getting all these extra capital to bail out these jokers? Printing more money or issuing more foreign debt? Sounds like the US are digging themselves a long term grave. Who here is long on the US market?

LOL... They're printing $800billion:

http://market-ticker.denninger.net/archives/525-RED-ALERT-RAPE-BY-CONGRESS-IMMINENT.html

Bill also includes finger printing of all MORTGAGE people, and now ALL credit card purchases are to be reported to the IRS

America's going down the plughole imo

Phaedrus

24-07-2008, 08:07 PM

Here is an update of the March NZSX50 chart for you Liz. You can see that the majority of the featured indicators have signalled an end to the most recent "Caution" period, allowing buying again according to this system.

This may (possibly!) come as good news to those that have been buying this week.

http://h1.ripway.com/Phaedrus/NZSX50buy.gif

Lizard

24-07-2008, 09:20 PM

Thanks for that, Phaedrus. It is nice to be up on the FPA I bought at $1.84, but since I bought some at $2.23 at end of May, I can't say I have much to brag about. The GPG I bought at $1.36 have barely moved.

I am guessing this run will fade out and retrace in the next few days and probably back into caution zone, so not surprised at your careful choice of words. Longer term, I'm still hopeful that the low we saw on the NZX will not be substantially exceeded.

So far the "balanced portfolio" approach has been pretty up and down and I estimate would be about 5% better off if I'd had 100% cash in bank all year. :o

tim23

24-07-2008, 09:35 PM

5% and some I would have thought?

AMR

24-07-2008, 09:39 PM

So far the "balanced portfolio" approach has been pretty up and down and I estimate would be about 5% better off if I'd had 100% cash in bank all year. :o

Maybe MacDunk was right...I'm finding myself in the same situation!

Lizard

24-07-2008, 09:45 PM

5% and some I would have thought?

That's total across cash, debentures, bonds, property trusts, NZX, ASX, overseas investment trusts...

Portfolio lost a massive 7% in March quarter, regained it all to about mid-June only to lose most of it again and end only 1% recovery in June quarter. Am up about 2.5% in July. Figures excluding dividends and interest (needed for income).

I find it hard to trade heavily as I haven't yet figured out how to manage the emotions and adrenalin and the family all get sick of me pretty quickly! I have another smaller portfolio where I carry out a limited number of short to medium term trades when I feel lucky/bored/tempted...

This works for my age/stage/circumstances, but am still testing it through a bear market!

Serpie

24-07-2008, 09:55 PM

Maybe MacDunk was right...I'm finding myself in the same situation!

MacDunk was right (to a point) but MacDunk can make that call because of the lessons he's learnt throughout his investment life. We've got to learn those lessons ourselves, and the quickest way to do that is to get the crap kicked out of you on a semi-daily basis.

I'm well down for the year, but my knowledge has (I hope) increased dramatically, so it's a price that I don't mind paying.

Please dont tell MacDunk that I agreed with him on something.

Dr_Who

25-07-2008, 07:45 AM

SOoooo... RB lowers rates and hammers the $NZ, yet the retail banks keeps retail rates the same. We've been dealt a two edge sword. Inflation to go over 5.5% and retail interest rate to stay high.

Lizard

05-08-2008, 10:11 PM

Dug the excerpt below out of a post from 4 May this year.

Here is a 5 year chart of the XEJ (Australian energy sector).
Do you see any evidence of the Dow's malign influence here? Is there any sign of the current market "weakness"?
http://h1.ripway.com/Phaedrus/XEJ54.gif

Have been poring over Yahoo charts of various ASX component indices this evening, trying to decide if there is a changing-of-the-guard/sector-rotation being signalled here or not? Definitely energy and materials have taken a pummelling in recent days. Less obvious is whether industrials, consumer staples, property and financials are showing any signs of perking up. My chart reading pretty weak and they all look best upside-down today! Any comments appreciated.

Mick100

05-08-2008, 10:35 PM

I saw something in my portflio that I hadn't seen before

My agricultural stocks held up today - out of six - two up , two down and two even

everything else in my portfolio was down being energy, materials, precious metals, uranium and mining services

I think uranium will have another run soon too but nothing happening yet.

Footsie

06-08-2008, 08:32 AM

Dow rallies 330 pts.... AMEN

The Great Gold Guru

06-08-2008, 09:23 AM

Footsie .... do you trade in UK stocks ? Can I ask you if you do where you have found the best deals ?. I can only find people with huge minimum fees like GBP50 per trade and then only on un-certificated with the associated annual mgmt fees. Just want to buy a few really beaten down FTSE100 stocks and a few FTSE250 listed property stocks trading at 60p in the pound of NAV.

I own a few BP,Tesco and Vodafone but have had these for years from my OE in the UK so no current relationship with any UK broker.

Cheers for your help.

Hoop

06-08-2008, 11:39 AM

Dug the excerpt below out of a post from 4 May this year.

Have been poring over Yahoo charts of various ASX component indices this evening, trying to decide if there is a changing-of-the-guard/sector-rotation being signalled here or not? Definitely energy and materials have taken a pummelling in recent days. Less obvious is whether industrials, consumer staples, property and financials are showing any signs of perking up. My chart reading pretty weak and they all look best upside-down today! Any comments appreciated.

The updated chart looks different now from that of 4 May 2008 posted by Phadreus... The steep medium (6 month)term uptrend line broken (unsustainable so no surprise) and the index is presently sitting on its key support line...today may see that key support busted.

The very long term uptrend is still intact, but looks to be under threat if the key support breaks
Note the increasing volatility in the momentum

Footsie

06-08-2008, 11:52 AM

Gold Guru

i just use my NZ broker

bro only becomes an issue if yuo trade frequently.

alternatively you could use the likes of CMC... $10.... per trade... but be careful as its margin

Lizard

06-08-2008, 03:44 PM

The updated chart looks different now from that of 4 May 2008 posted by Phadreus... The steep medium (6 month)term uptrend line broken (unsustainable so no surprise) and the index is presently sitting on its key support line...today may see that key support busted.

The very long term uptrend is still intact, but looks to be under threat if the key support breaks
Note the increasing volatility in the momentum

Thanks Hoop! I would still like more thoughts on whether we are seeing a rotation on the ASX - perhaps I need to start a thread over on the ASX forum. NZX, I feel fairly confident as to choices, but ASX I feel a bit lost until I've resolved where resources are going to go... quite a few of my small cap industrials seem to have bounced an amazing 15%ish over there today. All good, but given the tendency for 10-20% spreads on these things of late, it could all go pear-shaped tomorrow if the money rotates back out...

Footsie

06-08-2008, 04:27 PM

LIZ...i know what you mean...
re aussie small caps

pleased to say tho that the positions i buoght in ANZ and CGF last week are looking good now :)

Crypto Crude

05-09-2008, 01:29 PM

I know this sounds incredibly sick... Its actually such a relief to see the markets down and not up...
Falling markets are better than crashing markets...
If we see rallying markets, then the downside scope opens up...
we will not get away from a recession, so whats it to be... DOW falls of 100, 200, 300 points... or a rally followed by 1000, 1500, 2000 point falls?
heres an explanation of my thoughts at this link...
http://www.sharetrader.co.nz/showthread.php?t=6114&page=6
:cool:
.^sc

Lizard

05-09-2008, 01:48 PM

Listening to the futures traders, there seems to be alot of whipsaw out there at the moment and a fair bit of frustration. This feels like something that could lead to another clean-out on the Dow and ASX, with flow-on to NZ.

I am thinking more turbulence next few weeks, with a low in mid-late October to coincide with US quarterly reporting. But of course will try and play it as it comes.

Would be interesting to see an update of the chart that started this thread (eod today). I'm not sure if any of the triggers have fired a "get-out" signal yet, but the goosebumps on my arms have been signalling for the past 3 days.

duncan macgregor

05-09-2008, 02:44 PM

MacDunk was right (to a point) but MacDunk can make that call because of the lessons he's learnt throughout his investment life. We've got to learn those lessons ourselves, and the quickest way to do that is to get the crap kicked out of you on a semi-daily basis.

I'm well down for the year, but my knowledge has (I hope) increased dramatically, so it's a price that I don't mind paying.

Please dont tell MacDunk that I agreed with him on something.Serpie Macdunk was dead right when he said downtrend this year leading to a crash after the olympics. Why fight a losing battle when its easier to get out the market, then buying the road kill later. My eight% in the bank plus exchange gain is right out in front of what you lot are doing. It was pretty obvious that the market would downtrend, at least it was for me. It is also obvious that the worst has still to come. I reckon another four weeks left before it all hits the fan when China gets back to full production as the northern winter hits. Macdunk

Hoop

05-09-2008, 03:09 PM

3320 (in round figures or thereabouts) is an important NZX50 index number at the moment..seems to be a short term uptrend line, a 11 month downtrend line and a support line all intersecting to this point..........and at this moment the NZSE index is at 3322..scary stuff. Hope the tide doesn't go out as I'm swimming with no much on:(
Looks as if the bear market rally has ended in the USA (see Forex thread)

Year of the Tiger

05-09-2008, 03:09 PM

Serpie Macdunk was dead right when he said downtrend this year leading to a crash after the olympics. Why fight a losing battle when its easier to get out the market, then buying the road kill later. My eight% in the bank plus exchange gain is right out in front of what you lot are doing. It was pretty obvious that the market would downtrend, at least it was for me. It is also obvious that the worst has still to come. I reckon another four weeks left before it all hits the fan when China gets back to full production as the northern winter hits. Macdunk

Hmmm, 4 weeks eh? That puts it around the week the 6th - 10th October. I can see the ST Auckland get together on Sat 11th on College Hill is going to be one great do...

Let's see, will we all be toasting macdunk for the early warning, or will we be taking the pi$$ out of him cause it still hasn't happened.... :D:D:D

Lookin' forward to it...;)

YOTT

dumbass

05-09-2008, 04:03 PM

mighty impressive performance by the nzx today in the face of some serious headwinds.

Crypto Crude

05-09-2008, 04:59 PM

mackdunk-
1...Serpie Macdunk was dead right when he said downtrend this year leading to a crash after the olympics.
2...Why fight a losing battle when its easier to get out the market, then buying the road kill later.
3...My eight% in the bank plus exchange gain is right out in front of what you lot are doing.
4...It was pretty obvious that the market would downtrend, at least it was for me.
5...It is also obvious that the worst has still to come.
6...I reckon another four weeks left before it all hits the fan when China gets back to full production as the northern winter hits. Macdunk

Hey mackdunk...
you are the lone warrior...
1... Crash after the olympics?... your kidding right? 300 point fall on the DOW is most welcome as ive pointed out...
2... It would be very esy for me to sell if the DOW rallied to 13,000 points... Id start dump trucking the lot... down at these levels we are much more safe of a big crash...
3... Not me mackdunk, My only losing position all year is CTP, and CTPOA...I did also lose 500 NZ dollars on FAR...
Completely sold the last of my LMPO's the other day... sold some at 4.2,2, a few at .9.... and a few trades, sold 3.2 and rebought at 2.6...
Im way up on yah...
4...you are on game mackdunk.. your silly little resource stocks stood no chance... At least you spotted that... MRE 6 bucks to 1 buck..
MCR, SMY, PEM and all the rest of them...
Oil has still done reasonably well... and Im now full up on one stock...
you tell me theres been a crash when CUE falls, or two weeks after a possible Cobra fallout...
5...A downtrending market is no hassle what so ever...
In a market crash I will get wipped out... in a downtrending market, I will perform...
6... Thats good to know... keep us updated on your views, and let us know when your back in the game...
your mate... shrewd...
:cool:
.^sc

Phaedrus

12-09-2008, 08:46 PM

It would be interesting to see an update of the chart that started this thread. I'm not sure if any of the triggers have fired a "get-out" signal yet, but the goosebumps on my arms have been signalling for the past 3 days (since 2/9/08)
Here is an update for you Liz - You can see that it has been "business as usual" since July and that the market indicator consensus remains positive.

Turn the central heating up a bit or wear that lovely fluffy cardy your Mum knitted for you!
http://h1.ripway.com/Phaedrus/NDXbuy2.912.gif

Lizard

12-09-2008, 10:00 PM

Turn the central heating up a bit or wear that lovely fluffy cardy your Mum knitted for you!

I can see you're still not familiar with the potent bearish divergence of the "goosebump indicator". I'll put a chapter on it in my next book. :p

h2so4

13-09-2008, 09:14 AM

I can see you're still not familiar with the potent bearish divergence of the "goosebump indicator". I'll put a chapter on it in my next book. :p

Are there any other physical indicators we should be looking at that may indicate whether we have bought or sold well?:)

fungus pudding

13-09-2008, 11:25 AM

Are there any other physical indicators we should be looking at that may indicate whether we have bought or sold well?:)

Today's price?

h2so4

13-09-2008, 12:44 PM

Today's price?

No! No! I mean like throwing up or something when you know you have bought a good share?

lakedaemonian

13-09-2008, 01:07 PM

No! No! I mean like throwing up or something when you know you have bought a good share?

For me it includes symptoms such as:

nausea
despair
gnashing of teeth
pessimism
optimism
excitement
euphoria

Sort of like getting married, but in reverse.

Financially dependant

13-09-2008, 03:41 PM

For me it includes symptoms such as:

nausea
despair
gnashing of teeth
pessimism
optimism
excitement
euphoria

Sort of like getting married, but in reverse.

Post of the week:D

moimoi

13-09-2008, 05:57 PM

Post of the week:D

seconded!!

Footsie

15-09-2008, 10:13 AM

how can you have buying permitted when you are 100% cash?

trendy

15-09-2008, 10:24 AM

Phaedrus

15-09-2008, 02:17 PM

How can you have buying permitted when you are 100% cash?
Look at the title of the thread, Footsie. "When to re-enter the market" (after cashing up completely at the end of November 2007). The system proposed here prohibited buying when the Index went under 4250 and mandated selling everything when the Index hit 4050. It had buying prohibited for 5 straight months as the Index fell away and totally out of the market for 4 months until the Index rallied above 3480, allowing buying for a short period. There have been two subsequent "Caution" periods when buying was again proscribed for a week and then a month as marked on the chart.

"How can you have buying permitted when you are 100% cash?"
Very easily. You must realise that the green "buying permitted" periods are just that - buying is permitted, not compulsory. You could easily choose to stay with 100% cash even though buying was technically permitted, if you couldn't find anything you wanted to buy. This very point was covered in the post that began this thread.

There have been some excellent buying opportunities during this major correction, with some stocks having now risen over 40% from their lows in just a couple of months. Think how soul destroying it would be to watch that sort of thing happening and not have any funds available to take advantage of the situation. This is one of the reasons why I claim that selling is more important than buying. For the average ST punter, there can be little or no buying without prior selling.

lakedaemonian

15-09-2008, 02:58 PM

DO NOT REENTER MARKET. Major issues with financials here. Lehman's will be declared bankrupt tonight.

Merrill Lynch being bought by Bank of America tonight.

Washington Mutual are next along with Citi heading for BK.

I wouldn't touch the US market with a 10k long barge pole.

IF Lehman goes bankrupt...I'd expect it's derivative counter party toxic waste to be ring fenced.

Lehman's counterparty exposre is approx. 2/3 trillion

Merrill Lynch counter party exposure is >1 trillion

AIG counterparty risk is > 1 trillion

Same as with Bear Stearns earlier this year it's cheaper to brush it under the rug with an acquisition or merger than a total bankruptcy which would drag everyone down together when those counterparty agreements instantly come due.

Go back to 97-98....Long Term Capital Group...same thing....just immensely bigger and more complex.

The US Fed was RIGHT HERE 10 years ago......the big players stepped i then too...with the exception of Bear Stearns....which was coincidentally.....the first to die earlier this year.

The next week will be interesting.....and if it's not very interesting it will be soon enough.

Just my 0.02c

But jumping into US markets this week could prove to be much more of a gamble than an investment

Lizard

15-09-2008, 05:39 PM

I can see you're still not familiar with the potent bearish divergence of the "goosebump indicator". I'll put a chapter on it in my next book. :p

So Phaedrus, I'm guessing maybe 4-6 of your indicators triggered today. Are you ready to concede to the goosebump indicator this round? :D

warthog

15-09-2008, 07:15 PM

Go back to 97-98....Long Term Capital Group...same thing....just immensely bigger and more complex.

For those who care about accuracy, it was - ironically - Long Term Capital Management.

And it wasn't the same thing. With LTCM the other banks and brokers were clients rather than the competition. Many of the volatility positions that LTCM had were with those who bailed them out. So it made sense in many ways that a group bale-out was not only appropriate but desirable. There was still some grumbling amongst the banks about who was more exposed to LTCM but they all realised the extent to which the LTCM situation could unwind them all.

Lehman in contrast has been recognised as sick for some time. Even Bear was a relative surprise in comparison.

Phaedrus

15-09-2008, 07:51 PM

5 out of 8 indicators have triggered now, Liz. For me, that's enough to mark the start of another "Caution" period.

Only a very brave man or a fool would bet against a woman's intuition!

Of course, what we need here to make it all properly scientific is a standardised GBI oscillator (Goose Bumps Indicator). I am working on a provisional formula which must, of course, compensate for variations in the ambient temperature. This is not the final version, but for now I am using :-

GBI = [Ambient Farenheit temperature / (Number of goosebumps per square inch X Average height of goosebumps in millimeters)] x 100

You will have noticed that, as befits my uncertain age, this is a hybrid Imperial/Metric indicator. It oscillates between 0 and 100, with the trigger line at 50. Any readings higher than 50 constitute a presumptive postive GBI, signalling Caution. Traders or others wanting a faster reacting, more sensitive trigger could apply a 5 day simple moving average to the GBI and use that as the trigger line instead of the fixed threshold at 50. I am currently engaged in research into the height variation of GBs and have been fascinated to discover that some are much larger than others. Because of this interesting and unexpected finding I may be forced into using the median rather than the average GB height for the calculation.

This post should really be in the "Investment Strategies" forum, I guess. It probably deserves its own separate thread in any case.

bermuda

15-09-2008, 07:59 PM

Lizard

15-09-2008, 08:42 PM

Of course, what we need here to make it all properly scientific is a standardised GBI oscillator (Goose Bumps Indicator)... ... I guess. It probably deserves its own separate thread in any case.

Nice work Phaedrus :p.

If I get an unforgiving minute or ten spare, I might dig out Malcolm Gladwell's "Blink" and start a scientific debate on the precise parameters in which intuition might (or might not) be worth listening to. But, as you say, another thread... :cool:

Hoop

15-09-2008, 09:56 PM

Hoop might be suffering from horripilation, piloerection and pilomotor when the NZX opens at 10.00am :( :o

Definition Goose bumps quote Wikipedia "...........The reflex (http://en.wikipedia.org/wiki/Reflex) of producing goose bumps is known as horripilation, piloerection, or the pilomotor reflex......."

duncan macgregor

16-09-2008, 07:50 AM

What has to be remembered is its that time of year to expect false signals. End of one financial year, start of another, with all the tooing and frooing that that creates. The American economy is in deep trouble, about to get worse, creating uncertainty in our markets. I am quite happy sitting in the sidelines getting my 8.5%, plus i expect another 8.5% in exchange rates in 2008. I would rather miss out on a few bob taking the risk at the moment than try and get out later in the year, when the markets all tank. Macdunk Thats what i said in april predicting the markets to crash after the olympics. Its all coming to pass guys the markets are about to crash. Macdunk

STRAT

16-09-2008, 08:39 AM

Only a very brave man or a fool would bet against a woman's intuition!
.That could very well be the quote of the year :D

Footsie

16-09-2008, 08:54 AM

phaedrus

you are missing my point.....
you say 100% cash.... then buying permitted..... then caution ...then buying permitted ...then caution and so forth

If I followed your strategy and went to 100% cash , then 100% invested when the "buying permitted" was allowed, what do I then do when we go back into caution? back to 100% cash? you dont state that.

Your strategy seems to be mixing both short term and long term trading on one chart.
Long term traders should still be 100% cash if we use TA.
whereas, short term traders could have been in and out of this market 3-4 times this year using your TA.

I agree with your analysis but just think it is confusing re short and long term.

lakedaemonian

16-09-2008, 10:33 AM

For those who care about accuracy, it was - ironically - Long Term Capital Management.

And it wasn't the same thing. With LTCM the other banks and brokers were clients rather than the competition. Many of the volatility positions that LTCM had were with those who bailed them out. So it made sense in many ways that a group bale-out was not only appropriate but desirable. There was still some grumbling amongst the banks about who was more exposed to LTCM but they all realised the extent to which the LTCM situation could unwind them all.

Lehman in contrast has been recognised as sick for some time. Even Bear was a relative surprise in comparison.

Aren't they ALL clients/customers of each other via direct/indirect counterparty exposure?

Aren't they ALL, for lack of a better analogy, rooting each other and carrying the financial STIs to prove it?

Hasn't a group bail out just occured?

http://www.guardian.co.uk/business/feedarticle/7797938

Isn't the underlying reason WHY these bailouts, buyouts, and efforts to ring fence the problem over the last year to AVOID an ugly unwind of their derivative positions?

I'm trying to read into your post but all I'm seeing is an argument over semantics.

I'm not trying to pick a fight, and maybe I'm just "seeing what I want to see", but I see lots of things analogous to the 97-98 LTCM bailout.

What I find MOST frightening......is how LITTLE coverage there is in Mass Media about the underlying derivative problem.

If total exposure for Bear, or Lehman, or Merrill is only in the low-mid double digit billions each, why are they not allowed to fall? Why is everyone "in the know" going absolutely batsh!t?

Which brings us back to the LTCM analogy......

What am I missing here?

trackers

16-09-2008, 10:41 AM

Goddamn America, always ruining it for the rest of us lol... :(

Crypto Crude

16-09-2008, 12:05 PM

mackdunk-Thats what i said in april predicting the markets to crash after the olympics. Its all coming to pass guys the markets are about to crash. Macdunk

Mackdunk,
Its not after the olympics yet... the para-olympics are still on...
:cool:
.^sc

duncan macgregor

16-09-2008, 12:08 PM

Mackdunk,
Its not after the olympics yet... the para-olympics are still on...
:cool:
.^sc Dont get impatient SHREWDY I only said starting to crash its still coming. Macdunk

Phaedrus

16-09-2008, 12:32 PM

Phaedrus, you are missing my point......

If I followed your strategy and went to 100% cash....
Good move - doing just that would have saved you a lot of money by getting you completely out the market before the big slide really got under way.

....then 100% invested when the "buying permitted" was allowed....
Just because buying is permitted does NOT mean that you MUST go to 100% invested - or indeed invest anything at all if you can't find suitable candidates.

.....what do I then do when we go back into caution?
Same as you always do. "Caution" generally means (1) Tighten all stops. (2) All Sell signals are to be acted on. (3) No buying.

....back to 100% cash? - you dont state that.
That's right, I don't state that! Why? Because "Caution" zones do not mandate Selling. The stocks that you are holding either will or will not trigger their own sell signals if/when/as the market weakens. Since we are in "Caution" mode, any Sell signals are acted on without question. If you are really lucky, the stocks you are holding might continue rising in spite of the general market weakness, so no sell signals would be generated and you would not do any selling at all over the "Caution" period.

"back to 100% cash" could well be the eventual end result if the market stayed in Caution mode long enough and you progressively sold the stocks you were holding if/when/as Sell signals were generated.

Your strategy seems to be mixing both short term and long term trading on one chart.
Since this is designed as a "Medium-term" strategy, that's probably not too surprising.

Long term traders should still be 100% cash if we use TA.
If they have been totally out of the market all this year and more, they could hardly be called traders. Active investors, perhaps? Certainly it would be quite easy to design a re-entry system suitable for use by long-term, conservative, very risk-averse investors, but that was never my intention. The penalty inherent in such a system is that it must necessarily be quite slow in eventually signalling re-entry. What I have presented here is a "Goldilocks" compromise, but one size cannot fit all. It will be too active for some and too inactive for others.

....whereas, short term traders could have been in and out of this market 3-4 times this year using your TA.
Three times. All year. I call that medium-term. Three times a day, a week, a month - that's short-term in my book. In any case, refraining from buying for 5 months or more at a time is hardly the action of "short-term traders" surely?

Everyone has their own preferred level of trading activity. How you or I choose to classify it is not important though eh Footsie?

lakedaemonian

16-09-2008, 12:39 PM

Dont get impatient SHREWDY I only said starting to crash its still coming. Macdunk

I prefer to use the term "VERY slow motion train wreck"

It's interesting to learn the average person's perspective on their perception of events like the 1929 Crash and Depression.

Many seem to think the market crashed once one day, then it was into the soup lines the next, then things got better.

I've read a good timeline from 29-33 and I'm thinking our instant gratification culture with it's time compressed TV and movies might lead people to think bad news may be just a single event....as opposed to a long slow downward spiral.

I've even found myself caught offguard at the actual length, debth, and glacier like speed of that crisis

Footsie

16-09-2008, 12:51 PM

phaedrus... you should have been in a debating team

I think the chart works for you...as its your system

not necessarily for others with different agenda

Phaedrus

16-09-2008, 01:27 PM

No system can be all things to all people, Footsie.

bermuda

16-09-2008, 01:40 PM

Carnage!

Looking at some of the biggest percentage fallers today there must be margin calls firing right, left and centre ... All good for me who has just reconfirmed my credit lines in NZ and are getting ready for some serious bottom feeding.

Well done Belgarion and also the same to you McDunk. Some real bargins to be had as margin calls get made .

warthog

16-09-2008, 02:03 PM

No system can be all things to all people, Footsie.

Buy low, sell high!

warthog

16-09-2008, 02:08 PM

Aren't they ALL clients/customers of each other via direct/indirect counterparty exposure?

As far as the hog knows, lakedaemonian, it's a matter of extent i.e. with LTCM they were all deeply bound up in the compounded low-volatility bets of LTCM. Even with LTCM there were parties that felt that they did not have the exposure that others did and therefore didn't want to pay. Yes, it's all a bit academic but there are differences.

KiwiBear

16-09-2008, 02:25 PM

Was only thinking after Phaedrus's last graph post, and my own hunches watching and the news. It's looking like a big one's coming soon!
With the US financials still in the mire and more to come out of the closet, while Bush and his merry men are all hands at the printing press!!!

Sooner than expected

Dr_Who

16-09-2008, 03:14 PM

Fed maybe come out with a rescue plan for LEhman tomorrow follow by a dead cat bounce?

macduffy

16-09-2008, 03:42 PM

Fed maybe come out with a rescue plan for LEhman tomorrow follow by a dead cat bounce?

I thought I saw Bernanke on TV this morning specifically ruling out any Fed rescue plan.
Maybe I dreamt it - maybe it's all just a bad dream!

;)

warthog

16-09-2008, 05:14 PM

Fed maybe come out with a rescue plan for LEhman tomorrow follow by a dead cat bounce?

Nope. Won't happen.

bermuda

16-09-2008, 11:18 PM

In 1987 I didn't see it happening.

This time I have seen it coming ( like every day ) but never acted.

Next time I will be old and wise enough to be a MacDunk and stay out of it.

Hoop

16-09-2008, 11:23 PM

Oh dear... something has spooked the FTSE100 this last hour. 5100 support broken.

NZX recovery tomorrow is looking slimmer by the minute

5,053 Change: -151.00 -2.90%

http://www.marketwatch.com/charts/int-basic.chart?symb=UK:UKX&sid=123797&time=1&startdate=&enddate=&freq=9&comp=&compidx=aaaaa%7E0&uf=0&ma=&maval=&type=2&size=1&lf=1&lf2=&lf3=&style=1013&mocktick=1&rand=212272286

Hoop

17-09-2008, 08:53 AM

Good news Wall St recovered and Morgan Stanley pre-announcement after market shows they were well above analysts predictions ...so that may help the Globial markets short term amongst the gloom.

Most of the factors are now pointing to the final phase of the bear market.
Listed some main factors below

Commodity prices/equities reverse correlation disconnect
most investment areas show broken charts
gloom and doom
capitulation (the dreaded c wave) in progress????***
Interest rate dropping
lack of available money
Company failures
Av P/E Ratios below 10 (not yet)****

From the short term perspective ..what will happen today on the NZX????
Relief I expect as a bounce (dead cat?) has occurred.

UPDATED CHART FROM LAST NIGHT
The FTSE100 was heading for a disaster but turned late in the day then collapse again

http://www.marketwatch.com/charts/int-basic.chart?symb=UK:UKX&sid=123797&time=1&startdate=&enddate=&freq=9&comp=&compidx=aaaaa%7E0&uf=0&ma=&maval=&type=2&size=1&lf=1&lf2=&lf3=&style=1013&mocktick=1&rand=82984566
THE LATE RALLY ON THE DOW THIS MORNING
This may help the markets today.. Globally ???

http://www.marketwatch.com/charts/int-basic.chart?symb=$INDU&sid=1643&time=1&startdate=&enddate=&freq=9&comp=&compidx=aaaaa%7E0&uf=0&ma=&maval=&type=2&size=1&lf=1&lf2=&lf3=&style=1013&mocktick=1&rand=295661568

Hoop

17-09-2008, 09:19 AM

LOL - Just checked my day trade with AIG - What a gem! ... I love insurance companies. Risky? Maybe, but US insurerers are pretty heavily regulated and while AIG is probably hurting I see little chance of them going out the back door anytime soon. If a huge, heavily regulated US insurance like AIG goes belly up then you aint seen nothing yet!

Agree ...Lehman nuked the market.,,AIG shudder to think

Breaking News ...Fed looking to prop up AIG.

Tok3n

17-09-2008, 09:30 AM

As in Telecom? :)

Time to get into property trusts again?

Or still too early?

Hoop

17-09-2008, 10:02 AM

Hmmm.... just discovered something

My #376 post chart updated itself last night because when I posted it when it was at 5053 and in steep freefall....most have copied an interactive chart.

..Hmmm ...interesting

Footsie

17-09-2008, 10:31 AM

craic

17-09-2008, 10:38 AM

Hour ago spoke with senior ML staff member in London - he had just arrived home after a very long day and he was not a happy chappie. Bank of America takeover will probably not happen until the new year but there will be a lot of redundancies. Lehman have about 5,000 in London walking the streets and there are no vacancies anywhere. Its going to be a long hard winter in the northern hemisphere. This crisis will take as long time to go into reverse.
My own situation is that I intend to move everything into TEL, AIA,CEN as safe havens that pay good dividends - then get out in the garden and start growing a lot of potatoes and beans, I might even start brewing my own.

Phaedrus

17-09-2008, 12:49 PM

In the midst of the doom and gloom and headlines like "Top stock plummets to 16 year low" it is easy to overlook the fact that quite a few "second string" NZ stocks have performed pretty well over the last couple of months. (This chart includes todays latest prices - some may be different by the Close.)

http://h1.ripway.com/Phaedrus/Percent917.gif

duncan macgregor

17-09-2008, 03:07 PM

Thats all very nice PHAEDRUS if you only look for the good bits leaving out the bad. I would think most investors in this forum are not like you and I, but longer term buy, and hold investors. The only company in that lot excluding dividends to not be losing money in the last 12 months is DGLwhich is running about level. Remember last year at this time the market was still trending up, Stu your top share in your chart was trading at $4-60 today its $3-39. Granted the market will turn about, and some of those companies will become good buys, but right now we are in a downward spiral. I feel the worst has still to come people who lose to much wont return its best to look reality in the face and see it as it really is at any stage in the cycle. Macdunk

trackers

17-09-2008, 03:59 PM

Phaedrus

17-09-2008, 07:36 PM

"Thats all very nice PHAEDRUS if you only look for the good bits leaving out the bad."
Wouldn't that be the aim of most people?

"I would think most investors in this forum are ......longer term buy and hold investors."
I'm not so sure. A comprehensive survey would be interesting!

"The only company in that lot excluding dividends to not be losing money in the last 12 months is DGL...."
Dunc, you can't assume that most everyone here went down with the crash fully invested. Well before the big slide gathered momentum there were plenty of posters disclosing the fact that they were cashed up to a greater or lesser extent. How much those stocks lost when you were out of the market is therefore not relevant - except to say that the further they fell, the better! Since their lows, all those stocks have been making money - not losing it! Look at the spectacular percentage gains in just 2 months!

"Remember last year at this time the market was still trending up, STU the top share in your chart was trading at $4-60 today its $3-39."
Right. And it recovered roughly half of its plunge in just 10 weeks!

"Granted the market will turn about, and some of those companies will become good buys..... "
See, Dunc,I reckon that the chart gives the lie to that. I am of the opinion that most of these stocks may have already bottomed. They have already turned around. They have already been "good buys". Maybe these stocks will again fall to their old lows, presenting another equal opportunity, but somehow I doubt it.

"I feel the worst has still to come ......its best to look reality in the face and see it as it really is at any stage in the cycle."
But Dunc, that chart IS reality. Some stocks really have been doing fabulously well amidst the general gloom. Do you really believe that the worst is yet to come for these stocks? Because I don't. Time will tell though eh?

Lawso

18-09-2008, 11:20 AM

Great discussion! Many thanks, Phaedrus & Dunc. Good on yer, Ph, for drawing attention - midst all the gloom - to some of the gainers.
What to do now? It's up to each individual's analysis and/or hunch. But I can't see ood NZ stocks like CEN, AIA, yes, even TEL falling much further, while the US housing drop is probably now fully factored into FBU's sp.
Great buying opp's now IMO.

craic

18-09-2008, 11:45 AM

I have moved everything into AIA,TEL,CEN,TPW. My net value looks pretty sick but the dividends will be fine. Some of the stuff I got rid of may not survive. Its just a matter of sit back and wait. My biggest worry is my second eldest in London with a young family waiting for the other boot to drop at ML

bull....

18-09-2008, 01:51 PM

Dont know why anyone would want to invest in telecom - declining share price , declining divs

why buy for div now when you can wait for much lower prices and possibly get the same div.

macduffy

18-09-2008, 02:03 PM

I have to agree with bearish bull.
With more than an even chance than these stocks will go even lower, I'm waiting for a " bend in the trend " before I spend my bank.

;)

lakedaemonian

18-09-2008, 02:31 PM

Where are the sellers? [grumpy face] ... C'mon people, y'all know the meltdown is gonna continue for years ... isn't having your money tucked away in a nice safe kiwi bank earning 8% interest a far better idea? ... I mean, you'll sleep better ...

Your track record isn't exactly stellar....as quantified by others here in the past.

I'm on record here as being in cash or "cash-like" as I refer to it for quite some time........the past year has shown I've been both prudent and probably lucky in keeping my powder dry and taking a capital preservation strategy.

In the past year most investors in most asset classes would have taken losses.

Maybe you could post some of your long-term acquisitions AT THE TIME, so we can see how they perform........daytrading success, or referencing past trades is easy to fabricate.

The condescending sarcasm and zen-master-like comments would be more palatable if you actually had a proven successful track record.....just sayin' :)

Lawso

18-09-2008, 03:49 PM

Why so nasty, lake d? It's this kind of cr*p which has been turning me off ST lately - my faith restored only by the occasional intelligent discussion as between Phaedrus and Duncan (above).

Phaedrus

18-09-2008, 05:35 PM

What to do now? It's up to each individual's analysis and/or hunch. But I can't see good NZ stocks like CEN, AIA, yes, even TEL falling much further, while the US housing drop is probably now fully factored into FBU's sp. Great buying opp's now IMO.
Great buying opportunities to be sure, Lawso - but aren't they still getting better? I happen to agree with you that there may perhaps not be all that much downside left for some stocks, but why buy when they are still falling? There's no hurry - right? So, What to do now? Nothing.

Here are 4 maxims that I believe are worth sticking to regardless of the method you use to select stocks for investment :-

Don't buy any stock in a downtrend. Ever.
Never add to a losing position. Ever.
Don't average down. Ever.
Cut your losers and let your winners run.

h2so4

18-09-2008, 06:07 PM

Great buying opportunities to be sure, Lawso - but aren't they still getting better? I happen to agree with you that there may perhaps not be all that much downside left for some stocks, but why buy when they are still falling? There's no hurry - right? So, What to do now? Nothing.

Here are 4 maxims that I believe are worth sticking to regardless of the method you use to select stocks for investment :-

Don't buy any stock in a downtrend. Ever.
Never add to a losing position. Ever.
Don't average down. Ever.
Cut your losers and let your winners run.

All sems a bit American to me..."stocks"....shares mate shares. As for the maxims, well all that seems to negate the whole purpose of buying shares. Whats the point of buying when everyone else is???????

duncan macgregor

18-09-2008, 06:49 PM

All sems a bit American to me..."stocks"....shares mate shares. As for the maxims, well all that seems to negate the whole purpose of buying shares. Whats the point of buying when everyone else is???????i can see you have a lot to learn. The whole purpose in investing is to increase your wealth. take another look at what PHAEDRUS tells you with an open mind. Macdunk

h2so4

18-09-2008, 07:15 PM

i can see you have a lot to learn. The whole purpose in investing is to increase your wealth. take another look at what PHAEDRUS tells you with an open mind. Macdunk

OK dunc. I didnt know I wasnt doing that.

lakedaemonian

18-09-2008, 10:56 PM

Why so nasty, lake d? It's this kind of cr*p which has been turning me off ST lately - my faith restored only by the occasional intelligent discussion as between Phaedrus and Duncan (above).

I'm not trying to be a pain in the ass.......but Belgarion has an interesting past here.

If I make a mistake......I could care less as long as I learn from it...I assume the same goes for most other posters here.

While I've been far often more right than wrong in the past few years in my personal investment choices(and admittedly lucky)....I'm always trying to learn both here and elsewhere...and always trying to keep in mind that the more I learn the less I know in some respects.

I think the previous political windup arguments are now in the past......I would hate to see it infect the rest of the forum.

I'd love to hear about Belgarion's investment purchases and sales....writing without ego I don't have to like the guy to learn something..........but I'd rather read the dripping sarcasm from someone with a documented history of investment success or valuable lessons learned

lakedaemonian

18-09-2008, 11:03 PM

I agree with you Macdunk, most of the investors on this forum certainly are not like you... The rest of us actually participate in the sharemarket from time to time, instead of just talking about it :)

But sitting on the sidelines IS participating in the sharemarket...in a way.

I feel a bit like a B side player staying fresh and warmed up on the sidelines......cheering you fellas on and waiting for an A side player to be carried off the pitch in the meat wagon...for a chance to get in the game and score the winning try!

It's sort of like participating :)

lakedaemonian

18-09-2008, 11:13 PM

If we are in a 70's style bear... which i think we may well be....

then we are in the last throws of this down cycle... which would be followed by a major rally into 2009, then another sell off - then a rally

then perhaps in 2010-12 a big sell off once again as oil spikes again.

all in all in 5 years, the index could be around the same level but with 30% swings in either direction .

when people are only getting 6% in the bank next year on their term deposit... they will switch back to divided paying stocks.

I think you present a good probability outlook.

I agree with the long term sideways trading.....it's the opportunities within the sideways movement that I'm still uncomfortable with.

What I find challenging is going from a "invest forever" outlook to a once in a lifetime market timer outlook(with strong results thus far), to the possibility of long-term trader short term investor with investment horizons measured in months instead of decades.

What are your feelings on putting more focus on commodities and moving away from equities for the time being?

If we are seeing a 70's style bear, wouldn't commodity opportunities offer better returns and less risk than equities?

duncan macgregor

19-09-2008, 06:09 AM

But sitting on the sidelines IS participating in the sharemarket...in a way.

I feel a bit like a B side player staying fresh and warmed up on the sidelines......cheering you fellas on and waiting for an A side player to be carried off the pitch in the meat wagon...for a chance to get in the game and score the winning try!

It's sort of like participating :)You are right in a way sitting on the side lines waiting on the tide to turn is sensable investing. Its like rowing a boat out to go fishing you row the boat with the tide its much more fun and less effort. When you predict as i do, an honest opinion of how i see the tide running with companies or indeed the market in general. you can expect all the blue one eyed brigade to get up in arms.
I picked the market dead right two years in a row, one year fully invested in nickel stocks this year right out of it. My next punt after the crash, which is only in its early stages is oil and uranium. I feel uranium will come into its own when the price of oil is or will double.
Macdunk

Laxmi

19-09-2008, 06:53 AM

Great buying opportunities to be sure, Lawso - but aren't they still getting better? I happen to agree with you that there may perhaps not be all that much downside left for some stocks, but why buy when they are still falling? There's no hurry - right? So, What to do now? Nothing.

Here are 4 maxims that I believe are worth sticking to regardless of the method you use to select stocks for investment :-

Don't buy any stock in a downtrend. Ever.
Never add to a losing position. Ever.
Don't average down. Ever.
Cut your losers and let your winners run.

This is great advice, but lets face it, who follows it all the time?
For example, say you followed NOG. I daresay that if you followed this company from the beginning, averaging down could well have formed part of your long term investment strategy if you believed in this company.
As for picking the bottom. Although it is possible, how many investors can say they have managed this. It is a bit like a hole in one.

macduffy

19-09-2008, 08:59 AM

This is great advice, but lets face it, who follows it all the time?
For example, say you followed NOG. I daresay that if you followed this company from the beginning, averaging down could well have formed part of your long term investment strategy if you believed in this company.
As for picking the bottom. Although it is possible, how many investors can say they have managed this. It is a bit like a hole in one.

I don't think that Phaedrus has ever claimed to be able to pick the bottom. The important thing is to avoid being invested at that time!

;)

Phaedrus

19-09-2008, 09:17 AM

This is great advice, but lets face it, who follows it all the time?
Nobody. None of us is perfect. I can tell you this though - When I follow these rules I make money. When I don't, I don't.

I daresay that if you followed (NZO) from the beginning, averaging down could well have formed part of your long term investment strategy if you believed in this company. Sure it could have - this doesn't mean it was a smart thing to do though!

As for picking the bottom. Although it is possible, how many investors can say they have managed this. It is a bit like a hole in one. Why are you talking about trying to pick the bottom? I never mentioned it. What's more, anyone following those simple rules can be assured that they will never, ever buy at the bottom. If you restrict your buying to rising stocks, you will always be buying above the bottom. By definition.

h2so4

19-09-2008, 09:47 AM

I couldn't disagree more. But then I am a bottom feeder. Bottom feeders like feeding at the bottom of cycles are the risks are dramatically reduced ... Imagine this sp movement:

day 00: 1.50
day 05: 1.25
day 10: 1.00
day 15: 1.25
day 20: 1.50

The bottom is day 10. Is this the time to buy? How would you know it was the bottom?

Phaedrus would be buying on the uptrend which could be signalled on day 15 but only confirmed on day 20. So lets say Ph buys at about 1.25 through to 1.50 and gets an average price of 1.375. In any event, using the TA approach, the average price would never be below 1.25. ...... Has Ph done it right?

What about a fundie? What would they do? Let's say they evaluate the risk/return profile and decide anything under 1.25 is a good buy. They start buying on day 5 and finish buying on day 15 but buy larger parcels as the sp drops below 1.25 (inverted pyrimid / averaging down and spending more in $$ terms as the price falls / call it what you will). ... The fundies average price? ... 1.175 or below.

So which is best?

The fundie makes a greater profit but takes more risk. Is this you?
The TA makes less profit but takes less risk. Or is this you?

I have a significant tolerance for risk as I'm effectively managing my pension fund (and have been since I was 18). My pension fund has long term horizons and I simply won't need the money for another 15-20 years or more.

From a previous post, Ph is in another camp. Correct me if I'm wrong Ph but I seem to remember that you are a full time sharetrader and this is your main source of income. Hence, Ph's approach has to be risk adverse as any hit to his capital directly affects what he can eat for dinner. My approach does not affect what I have for dinner as I'm not dependant on any income from my capital.

So ST'ers - which camp are you in?

Others frequently call me foolish and warn me about my well documented risky plays. But those who have been on ST for 6 years or more (when the markets were in a trough/slump) will remember me as the ultra-bullish, highly leveraged, contrarian madman who was bottom feeding in both low-risk and high-risk plays.

Well - guess what? The madman is back!

Hi belgarian

I have one footsie in your camp but shares are 99% art and 1% science (charts,graphs and spread sheets). I commend you managing your own pension fund, beat those Harvard brains anyday. What do they teach in those business schools anyway?

Heres to your investment success.
cheers
H2

Stranger_Danger

19-09-2008, 09:51 AM

"I have a significant tolerance for risk as I'm effectively managing my pension fund (and have been since I was 18). My pension fund has long term horizons and I simply won't need the money for another 15-20 years or more."

For that statement to be true, you'd have to have started off rich, presumably by inheriting money.

Explains a lot......

Phaedrus

19-09-2008, 10:52 AM

I am a bottom feeder. Bottom feeders like feeding at the bottom of cycles as the risks are dramatically reduced Dream on Belg! You might like to think of yourself as a bottom feeder, but sadly, the reality is quite different. Your modus operandi is to find a down-trending stock, buy high, start a "pyramid" and average down.

I have a significant tolerance for risk... No, it's more than that. You have a total disregard for risk. Even catastrophic losses fail to have any influence on you at all.

You (Ph) are a full time sharetrader and this is your main source of income. No, the sharemarket is my sole source of income.

Hence, Ph's approach has to be risk adverse as any hit to his capital directly affects what he can eat for dinner.... I'm not dependant on any income from my capital. Dividends cover all my basic expenses, Belg. I can assure you that any hit on my capital does not affect whether I eat or not!

Others frequently call me foolish and warn me about my well documented risky plays....those who have been on ST for 6 years or more will remember me as a madman who was in...high-risk plays. Well - guess what? The madman is back! (and practicing what he preaches!) Yes. The same disastrous "inverted pyramid" approach!

H2SO4, you might like to study this (http://www.sharetrader.co.nz/showthread.php?p=185442)example of Belg's technique in action before you drink to his "investment success".

h2so4

19-09-2008, 11:17 AM

H2SO4, you might like to study this (http://www.sharetrader.co.nz/showthread.php?p=185442)example of Belg's technique in action before you drink to his "investment success".

Well at least he admits it wasn't one of his better plays? I dont exactly know how he puts a value on his picks, but I'll give him the benefit of the doubt. I have an open mind you know.:rolleyes:

AMR

19-09-2008, 11:22 AM

Well at least he admits it wasn't one of his better plays? I dont exactly know how he puts a value on his picks, but I'll give him the benefit of the doubt. I have an open mind you know.:rolleyes:

Hi sulfuric acid, picks aren't terribly important, money management is.

h2so4

19-09-2008, 11:25 AM

Hi sulfuric acid, picks aren't terribly important, money management is.

and your point is?

AMR

19-09-2008, 11:28 AM

and your point is?

Point being in an uptrending market like 2001-2007 you could have chosen your stocks by biffing darts at a board and as long as you kept some form of stop losses and let your winners run you would be up.

h2so4

19-09-2008, 11:35 AM

Point being in an uptrending market like 2001-2007 you could have chosen your stocks by biffing darts at a board and as long as you kept some form of stop losses and let your winners run you would be up.

Thanks amr, such great advice, I'll remember that for the next uptrendy market.
cheers

kura

19-09-2008, 11:36 AM

Gee Phaedrus, arn't you being a touch cruel to bring up FTX in your link ?

Disc: took a chance yesterday, and purchased some bank shares on ASX, time will tell if I got in too early.

macduffy

19-09-2008, 11:40 AM

Gee Phaedrus, arn't you being a touch cruel to bring up FTX in your link ?

Disc: took a chance yesterday, and purchased some bank shares on ASX, time will tell if I got in too early.

Well, I for one don't mind being reminded of the FTX saga. I never held them but was often tempted. A salutary lesson!

;)

Phaedrus

19-09-2008, 12:43 PM

Bad stock picks (mistakes) aren't all that important. Everyone makes them. It's what you do next that's important. You need to acknowledge the fact that you have made a mistake and SELL, limiting the financial damage. You can always buy back in again when the stock stops falling. Buying more shows that you have not accepted that you have made a mistake. You consider that you are right and the market is wrong - and we have all seen where that sort of arrogance can lead.

duncan macgregor

19-09-2008, 01:04 PM

BELG, I must dissagree with you on FA investors buy in cheaper than TA investors. look at all the times an FA investor buys in on the way down. Nobody other than a fool tries to pick bottoms or even attemps to, the success to win ratio is less than fifty fifty. What you gain on the roundabout you have lost more on the swings.
The TA investor by the very nature of it buys on the way up, ands sells on the way down. I would lay odds belg that you would have saved yourself at least one third of your wealth if you had a running stop loss on your investments so far this year. I never buy a share under the thirty day moving average, and have a five to 15% running stop loss depending on my own feeling for the market, and profit in hand. A good example of the folly of not having a sell system is one poster that i have numerous goes at on sharechat, who is averaging down losing money hand over fist, bleating on about dividends. If you advocate that method of fundamental investing then i will expect you to be jumping out the window from a great height very shortly. Macdunk

h2so4

19-09-2008, 01:30 PM

It seems we have another TA v FA?

Traders seek to profit from short-term swings in the markets, value investors buy and hold shares for many years or forever. For traders, there is no tomorrow, for value investors, there is no today. The two should never cross, each views the other as speculative or ignorant.

For sure we all make mistakes,but when it happens it is crucial that we make the right decision, regardless of what has happened or what the outcome might be. Selling is one option.

"You're right because your facts are right and your reasoning is right — that's the only thing that makes you right." "Graham Dodd"

Nobody likes losing money, but, it happens.

duncan macgregor

19-09-2008, 02:07 PM

[QUOTE=belgarion;224074

See my logic above with regards bottom picking! Your suggestion that I'm a fool is most irritating.
Quite wrong! I have been out the markets, except for very short trades lasting hours or days, in NZ, UK and the US for the last two years. There have been exceptions, but with regards the NZX, that I've posted, but as a rule Ive been very circumspect! - the current meltdown has been telegrapghed for anyone with a brain for the last two years! Doubt me? Ask Buffet! Doubt me further? Look at some of the "anti-american" posts that I've become famous for! Doubt me further? Look at the US finacial forums. Doubt me even more? ... (i'm not wasting my breath!)

The fool knows the price of everything but the value of nothing ... Dunc, why not try to establish the value of something rather than being like Ph whose definition of value is what his chart says. Ph is a follower - not a leader. Leaders become famous - followers seldom become famous, they become average members of society, with adequate wealth that they have sneaked from the market without contributing anything. ... Are you saying that you're a leech Dunc? I have a scottish name and I wear mine with more pride than you! (Sad about HBOS - hope the Scot in the name survives!)[/QUOTE] Belg I never said you were a fool I said it is a foolish thing to do bottom picking.
You very well know Belge that i have been predicting a downtrend leading up to a crash and have stayed out the market this year. For a person calling a trader a leach is getting a bit over the top from someone who then states he trades himself. Leaders get the chop followers can make a run for it Belg.
If you are so proud of your Scottish name why not be a man and use it instead of hiding behind some silly non-de-plume. I invest to make money nothing else comes into it. If i ever feel guilty about it, i will go about giving bibles away, and start hugging trees.
The price of anything is in the eye of the beholder the market is the beholder in the investment world not som stupid PE ratio. If you dont beleave that go to an art auction or sell a house. Macdunk

Placebo

19-09-2008, 02:12 PM

Far be it from me to comment on your personal habits Belg, but there is no need for bottom picking, as we have now invented toilet paper.

For deeper cleaning of more persistent clags, you might try a small brush though this, like Phaedrus, may irritate you.

Good luck. Nothing smacks like a nice clean crack. ;)

Crypto Crude

19-09-2008, 02:54 PM

Trading/investing Should not be all about TA, or all about FA...
It should be about a combination of the two...
Ive recently discovered this important idea, after being a total FA nut, and pretty much a TA basher in the past...
Ive come to realise that its a mixture of the two that would make me the most successful (investor/trader) that I can become...
I say this because I can find the great stocks(well, I think I can) (but I never time the entry under strict TA rules)...

If I was pure TA, then I would have been stopped out of pretty much every position id ever gotten into, (under mackdunk rules)
on a couple of ocasions that would have been a good thing, on many/most ocasions that would have been a bad thing...

Id pretty much say, listen to Phaedrus carefully and loosen the strings to suit your own investment style...(ie, perhaps not as tight on the rules- for me anyway)
And from what I can gather---> dont listen to Mackdunk on TA, because his TA skills suck... instead, listen to his general theme and overview...
:cool:
.^sc

STRAT

19-09-2008, 03:01 PM

, they become average members of society, with adequate wealth that they have sneaked from the market without contributing anything. Hi Belgarion,
Interesting statement. If I didnt know better I would think you are implying there is some degree of nobility in loosing money on the Share Market. :eek:

Surely that is all that can be construed from the opposite of "without contributing anything"

Placebo

19-09-2008, 03:11 PM

Belg - those pompous pills are working a treat. What sort of doofus says "methinks"? Do you know it is 2008?

I am, however, regretting my earlier post. Am now stuck with persistent mental image of American-hating Belg lifting up his Burqua over his squat toilet while trying to get at himself with a toothbrush... eeeuuuwwww...

Ladies: Please do not try this at home.

duncan macgregor

19-09-2008, 03:17 PM

Hi Belgarion,
Interesting statement. If I didnt know better I would think you are implying there is some degree of nobility in loosing money on the Share Market. :eek:

Surely that is all that can be construed from the opposite of "without contributing anything" STRAT, Dont you pick on my mate BELG he reckons he is Scottish for petes sake, educated in NZ. We all have our investment styles as i told our other good mate SHREWDY when he was trying to entice me to buy CUE at 22c. I told him at the time i would when my limited TA skills told me it was a buy. It turned in to a bye bye and now he blames my limited TA skills for not going down like he is. My other very staunch FA mate snoopy has been telling me to buy TEL since it was $7-00, or there abouts telling me how stupid i was not to have FA skills like the other jump out the window club. I BLAME PHAEDRUS FOR ALL THIS HE BRAINWASHED ME. See you all at the AUcK meeting Macdunk

STRAT

19-09-2008, 03:28 PM

STRAT, Dont you pick on my mate BELG he reckons he is Scottish for petes sake, educated in NZ. We all have our investment styles as i told our other good mate SHREWDY when he was trying to entice me to buy CUE at 22c. I told him at the time i would when my limited TA skills told me it was a buy. It turned in to a bye bye and now he blames my limited TA skills for not going down like he is. My other very staunch FA mate snoopy has been telling me to buy TEL since it was $7-00, or there abouts telling me how stupid i was not to have FA skills like the other jump out the window club. I BLAME PHAEDRUS FOR ALL THIS HE BRAINWASHED ME. See you all at the AUcK meeting MacdunkI took a peek a bit further back through the thread and realized Belg was implying that somehow the method one uses to choose, enter and exit a stock some how makes the difference as to whether they should be considered to be parasite or not:eek:. This could be considered to be bending the truth to the standard of the American Financial Reporting System or that which enabled the Yanks to invade Iraq on the moral high road but Im sure Belg has a big smile on his face when he reads and writes this stuff ;)

bull....

19-09-2008, 03:37 PM

Here are some quotes from some great traders and investors

"I haven't met a rich technician" - Jim Rogers.
"I always laugh at people who say "I've never met a rich technician" I love that! Its such an arrogant, nonsensical response. I used fundamentals for 9 years and got rich as a technician" - Mary Schwartz.
"Diversify your investments" - John Templeton.
"Diversification is a hedge for ignorance" - William O'Neil.
"Don't bottom fish" - Peter Lynch.
"Don't try to buy at the bottom or sell at the top" - Bernard Baruch
"Maybe the trend is your friend for a few minutes in Chicago, but for the most part it is rarely a way to get rich" - Jim Rogers.
"I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms." - Paul Tudor Jones.

I think the above sums it up pretty well find your own approach as theres no right way and wrong way lol

Placebo

19-09-2008, 04:05 PM

Anybody else hear harps?

Belg and MacDunk are blood brothers... like the Winston Peters and Bryan Henry of sharetrader.

This is really beautiful! :D

duncan macgregor

19-09-2008, 04:08 PM

All true dunc. Father's scots and has relatives in sheep stations in the deep south. Mother is too with a great highland name. I'm 3rd gneration kiwi but everyone of my family goes back to their roots every few years. While in the UK I travelled to Scotland and caught up with some highland (and lowland) rellies. I bought a "family" kilt when in Edinburgh and wear it with pride when companies do's or christmas do's or award do's require a skirt.

If you're wearing a kilt - I've no doubt we'll meet :) - even though I'll not know you as McDunc and you'll not know me as Belgarion. I will look forward to it BELG. I did a fair bit of rooting about my good self in the past, never felt inclined to hide my name ever.
The Macgregors name is the only name that the govt anywhere in this world passed a law that anyone pertaining to the name of MACGREGOR be exterminated MAN WOMAN AND CHILD. I am to proud of my name, with to much respect for my heritage to ever change it. You might dodge tax inspectors libel court cases etc but MACGREGOR will hold their head up high and never change the name. That being said Belg FA is the initials for exactly what it is. Macdunk

STRAT

19-09-2008, 04:33 PM

. I did a fair bit of rooting about my good self Never mind FA ( F#$k All probably ) I would like clarification on this bit :eek:

STRAT

19-09-2008, 04:42 PM

You do know me better STRAT :) ... You were around six years or more ago,

But yes - I think there is Nobility in loosing money on the sharemarket - But only as a leader, never as a follower like the TA's. While Ph (still!) hasn't responded to my post about buying on value (rather than buying on history), I remain convinced that buying shares with ..

a) a clear understanding of their underlying value (not their day to day share price) and,
b) a clear understanding of the management's strategy for growth (again, clearly not shown in their shareprice when markets are tanking!)

... will result in long term gain. THe crunch is how you get a "clear understanding"!

Being a leader, ie a FA, requires an acceptance that you'll fail from time to time. Ph, as a TA and follower, fails seldom. This results in him being a pompous prick that has herds of follwers who think Ph is the route to riches. Ph creates sheep. Ph shears them ... and to a lesser degree ... so do I.

To be successful a leader has to succeed more than than they fail. In my chosen field, IT, my "success ratio" is greater than 4 out of 5 by my peers measures. In the sharemarket, by $$ value it is similar but it has taken a few years of hard knocks, some very hard, to get to this point. Most of these years were when I was young and thought I knew it all. Today, I acknowledge I know squat ... but more than I did when I was young.

Yes STRAT, there is nobility in failure ... but not if you do it over and over again ... You do it once and learn. You can even do it twice or three times. You'll survive as a leader only if you can fail just one time out of five. Case in point - try Mao - he's a great example.Hi Belg,
I wasnt around 6 years ago. I joined this site in 96.
I enjoy your posts immensely but you are laying it on a bit thick I reckon
Share Investors and Traders are parasitic in nature TA and FA both. There is no point of difference. Neither contributes anything other than their cash when they get it wrong. The money ends up in the hands of some other parasite who got it right.

duncan macgregor

19-09-2008, 04:46 PM

Never mind FA ( F#$k All probably ) I would like clarification on this bit :eek:YOU are starting to sound like my indoors STRAT. carefull mate you might drop us all in it. Macdunk

STRAT

19-09-2008, 04:51 PM

YOU are starting to sound like my indoors STRAT. carefull mate you might drop us all in it. MacdunkSorry Macca, I have absolutely no idea what that means but some CRC on the hinges might do the trick

upside_umop

19-09-2008, 05:09 PM

Belg, I think I hear a challenge coming on.

Would be interesting to see an active competition between FA and TA..maybe you guys could sign upto the comp run by the NZX next year, using your ST names.

I tend to agree with P here however, he has never claimed at picking the top/bottom and he has emperical evidence to support his trading indicators.

MacDunk and P have one thing in common - they're here to make money from stocks and they dont care what the company does, something that TA has an advantage over FA. I would argue its impossible to become fundamentally knowledgable of every company out there, and learning the techniques employed by the company which give them their competitive advantage, because that is, after all what differentiates them from the norm to be outperformers.

You talk about compound interest. Doesnt that make entry/exit points all the more important then?

Also, you claim TA investors are 'leechers,' and dont add anything. Don't they try help create that thing called EMH, which I might add, doesnt really exist fully in any given form anyway.

One thing I have noticed with TA, is that it easy to miss entry points. I have seen numerous graphs with entry points on a trendline break, but the entry point fails to recognize that no volume was traded even close to that point.

Phaedrus

19-09-2008, 06:39 PM

What a glutton for punishment you are Belg! You're dead but you won't lie down!

Never mind hypothetical figures, here is a worked example using actual trades, comparing your performance with that of a technical approach. I have used only the magenta datapoints because these are the only ones where we can be sure that you actually bought, as opposed to expressing the intention to buy later. I appreciate that there may well be more entry points, but the six used here will illustrate the general principles involved and the sheer folly of averaging down.

As I understand it, your "pyramid" scheme involves spending increasing sums of money as you continue to average down. For this example, I have assumed an initial stake of $10,000, incrementing by $2000 each trade so that the last entry here was with $20,000, giving a total investmnet of $90,000.

http://h1.ripway.com/Phaedrus/BelgAvDn.gif

The chart illustrates the usual trendline-break and OBV entry points. While these Buy signals were spread out over nearly a month, the actual entry prices were very similar, with an average of less than $1.65. Three $30,000 investments made then would now be worth a total of $109,636 giving a profit of $19,636.
$90,000 invested incrementally by averaging down as you did would now be worth a total of $67,407 - a net loss of $22,593. Quite a difference!

http://h1.ripway.com/Phaedrus/BelgSS.gif

You and others that favour "averaging down" concentrate on the Blue figures in the spreadsheet (the average cost/share). See how well this works! See how the average price you paid reduced every time you bought and was eventually halved! This made things look a lot better, but what you should really pay attention to are the red figures in the last column. See how your total losses escalated as you averaged down, throwing good money after bad.

How much better off you would have been had you sold out when your initial HBY investment dropped by, say, 15%. You would have lost just $1,500! Even if you had sold instead of buying more way back in April 2007, you would have lost only $2,000.

They're called stop-losses Belg.

Try them - you might like them!

h2so4

19-09-2008, 07:00 PM

Hey Phaedrus I thought you would have been too busy trading your way to a fortune today rather than wasting your time posting this stuff? What gives?

kura

19-09-2008, 07:52 PM

Hey Phaedrus I thought you would have been too busy trading your way to a fortune today rather than wasting your time posting this stuff? What gives?

He certainly does his research (That must have taken a while to do)

I took a quick 10% gain on the Oz bank shares I purchased yesterday, pity I didnt have a punt on MacQuarrie up 40% in one day, unbelievable stuff, with majors having price fluctuations like some speccy explorer.

While I will trade in this market, I'm not confident that the worst is over, so not a long term holder of anything.

ratkin

19-09-2008, 08:11 PM

Its rather spooky , stalking by chart.

In my opinion its very bad form to highlight another posters (real time ) buy decisions , by somebody who never discloses what he holds and always posts with the benefit of hindsight.

Note Mr P has the only TA entry point at 1.65 . Then look at where belg was Aquiring , im sure that in real time most traders would of jumped in there and lost money. However the trendlines conveniently move to give a lovely looking chart with only one entry.

How about a contest , Belg against mr P both giving their buy recommendations in real time. Contest one year duration

LKSteve

19-09-2008, 08:38 PM

A Quickie before I switch to watching the Warriors. The current euphoria in global equity markets is laughable. Banning short-sellers is akin to saying 'no party poopers allowed, we only want party animals around here'. The Fed rides to the rescue again & the US Government bans anyone likely to crash the party. The bottom line is that this is the 'deadest cat bounce in history'. This market is headed for a crash, in the words of Sony's marketing people "Like No Other". The currency printing presses are running hot, watch out for the explosion. Come on the Warriors. . .

warthog

19-09-2008, 09:39 PM

How about a contest , Belg against mr P both giving their buy recommendations in real time. Contest one year duration

The hog is partial to fresh strawberries but let's not forget a few chopped dates or figs in the morning muesli!

Laxmi

20-09-2008, 12:00 AM

The bottom line is that this is the 'deadest cat bounce in history'. This market is headed for a crash, in the words of Sony's marketing people "Like No Other". The currency printing presses are running hot, watch out for the explosion. Come on the Warriors. . .

Cmon. The worst is over. The entire financial world is undergoing a huge shakeup, but all the toxic debt is now taken care of thanks to the US FED and other global reserve banks.

How much have the Asian and European markets increased in the past few hours?

ratkin

20-09-2008, 06:13 AM

Might end up being a winning week on the DOW

Phaedrus

20-09-2008, 09:37 AM

Its very bad form to highlight another posters (real time) buy decisions, by somebody who.. always posts with the benefit of hindsight.
Hindsight? Absolute nonsense! My criticisms of Belg's real time buy decisions are in real time too! Here, for example, is what I posted just 4 hours after Belg told us he was continuing to average down with FTX :-

Belg, FTX has been in a downtrend for a year. It is still in a downtrend - making lower highs and lower lows
On Balance Volume is essentially flat and there is no hint that any accumulation is occurring.
Do you really think that this stock is about to take off?
Do you think it has stopped falling?
It's only 2 days since you were agreeing with Footsie that "a sub 30c share price is still on the cards"
I don't think those are speculative $$$ you are holding - I think they are gambling dollars!

Look at where Belg was Aquiring , im sure that in real time most traders would of jumped in there....
Quite wrong I'm afraid Ratkin. Here again is my real time response, posted on 25/4/07 just hours after Belg first began "Aquiring" HBY to average down :-

You think a top-up might be in order Belg? You mean you already hold HBY? I can only assume you now want to average down.
Aaaarrrggghhhhhh!!!!!
Alas, technically there is nothing at all to show that the downtrend has ended or even slowed so I fear your losses are set to continue for a while
yet. Buying now does offer an opportunity to add to them.
See how HBY is still making new (4 year) lows.
See how the On Balance Volume continues to fall.
Observe how far apart the +DI and -DI indicators are.
Note the strongly negative slow Stochastic oscillator.
You don't really want to buy right now - do you?
The red arrows mark Sell signals.

Ratkin, take a really good look at those technical observations and tell me if you still stand by your assertion that "most traders would of jumped in there". I think not!

...Trendlines conveniently move to give a lovely looking chart......
They don't move. You conveniently ignore the facts, Ratkin. Look closely and you will see that the trendline featured here (http://www.sharetrader.co.nz/showthread.php?p=135947)in April 2007 still appears, unmoved, on this latest (http://www.sharetrader.co.nz/showthread.php?p=224140) chart.
It was nearly obsolete by then because the downtrend was accelerating, necessitating steeper trendlines. As marked.

Lizard

20-09-2008, 09:51 AM

Here again is my real time response, posted on 25/4/07 just hours after Belg first began "Aquiring" HBY to average down :-

I think Ratkin was referring to the September 2007 point (this post of Belg's (http://www.sharetrader.co.nz/showpost.php?p=164865&postcount=78)) which you have labelled "acquiring" on your chart.

It looks to me as though OBV had turned up and the tentative accelerating downtrend line that would have been in place there would have broken shortly after Belg said he was acquiring. That trade would probably then have failed - at the price of brokerage and spreads. The only indicator on that chart which would suggest staying out is the MA on the OBV which I haven't noticed being used much in the past.

Btw, you forgot to mention that Belg also wrote "with tight stops" when he was "acquiring"... play fair :p

Hoop

20-09-2008, 10:41 AM

Cmon. The worst is over. The entire financial world is undergoing a huge shakeup, but all the toxic debt is now taken care of thanks to the US FED and other global reserve banks.

How much have the Asian and European markets increased in the past few hours?

Beware...huge market manipulation has just occurred...all market network systems are out of sync due to sudden change.

Systems Theory
Manipulation and direct regulation into a free market disrupts the communication (information) flow through networked market systems...expect localised bubbles to form,............ so invest and divest accordingly.

Phaedrus

20-09-2008, 10:58 AM

Liz, I interpreted Ratkins phrase "look at where belg was Aquiring" in a general sense, rather than as referring to a single specific post - Belg was, of course, acquiring HBY over an extended period of time. Of all his HBY buys, there was only the one where he mentioned stops. I've tried very hard to convince him of their value, but of course their use is quite incompatible with the basic concept of averaging down that he advocates and uses.

ratkin

20-09-2008, 12:26 PM

Hope i havent started a war.

Lizard is right , i was referring to where the word aquiring was written on the chart. I might be wrong but at that time it looked like the stock might of been starting to rise , just like it was when the 1.65 purchase was made.

Also when i refered to hindsight it wasnt meant to mean the time it took you to critisise belgs buy decisions , it was meant to refer to the chart itself .

I assume you only printed it because it showed averaging down in a bad light. If the chart had gone up up and away then i doubt you would of been so keen to use it as an example.

I think many users might become scared off from posting their decisions when there is a chance that a year later you might dredge them up and inform the world how stupid they were.

h2so4

20-09-2008, 12:47 PM

Systems Theory
Manipulation and direct regulation into a free market disrupts the communication (information) flow through networked market systems...expect localised bubbles to form,............ so invest and divest accordingly.

Do you understand that stuff???It sounds like someone farted in my bath.:)

Corporate

20-09-2008, 01:22 PM

man you two can go at it! I say lets see a real time contest

winner69

20-09-2008, 01:58 PM

And for Ratkin: Hold AIG.US bought at open today. Why? Not telling. Pearls before swine and all that. Figure it out for yourself.

Brave move Belg .... under water already I note but could easily be $20 soon eh

warthog

20-09-2008, 02:15 PM

I assume you [Phaedrus] only printed it because it showed averaging down in a bad light. If the chart had gone up up and away then i doubt you would of been so keen to use it as an example.

Just a friendly observation Ratty: if the chat had gone up up and away, it's likely that Phaedrus and others would have had their buy signals triggered at a lower price than the series of successive "averaging down" buy-ins, which is exactly the point is it not?

I think many users might become scared off from posting their decisions when there is a chance that a year later you might dredge them up and inform the world how stupid they were.

Everybody makes mistakes, and as somebody far more erudite than this old hog observed, there's nothing like financial risk [or calamity <-hog's words] to bring oxygen to the brain.

Phaedrus

20-09-2008, 02:17 PM

"And still you don't address the issues that I raise about fundies "making the market" but TAs being followers."
Belg, I have always described my system as "trend-following". I don't see this as raising any issues that need to be addressed! It is really silly of you to try and divide market participants into 2 separate and distinct groups (the FA "goodies" vs the TA "leeches") when in fact most all of us use both approaches to some extent at least.

"Why don't you repost your spreadsheets with more realistic details."
I don't have any details. Those were notional figures that I hoped would approximate your system and be somewhere near the ballpark. The amount invested per trade might have been a bit on the high side given that your average FTX trade was less than $8,000. Supply details if you want to, Belg, but there is really no need. The falacious principles of averaging down remain the same regardless of scale or detail.

"Answer the question - you had a caution period when I was buying HBY ... DID YOU BUY?"
Did I buy when you were buying? No.
Did I buy HBY when I was in "Caution" mode? No.
Did the Caution period preclude my buying HBY at around $1.65 as per the chart signals? No. In fact, waiting for the Caution period to end before buying HBY would have resulted in rather better entries at $1.60.

"I assume you only printed (the chart) because it showed averaging down in a bad light." (Ratkin)
YES! Dead right! It was a text-book example, providing yet another salutary object lesson in the folly of averaging down. I would be very interested in seeing any chart that somehow managed to show averaging down in a good light!!!

"If the chart had gone up up and away then i doubt you would of been so keen to use it as an example."
I would have been quite happy to use it - as an example of averaging UP. That's a GOOD thing to do. It's averaging down that is bad :- Buying in a downtrend. Not cutting your losses. Adding to losing positions. Not using stoplosses.

I'm trying to illustrate how foolish it is to average down. It's just unfortunate for Belg that he has provided such good case studies of this practice.

h2so4

20-09-2008, 02:56 PM

Here's my "averaging down" method, (after I have put a valuation on my wonderful business), for all to see. I'm not sure if it is a pyramid or a sky scraper????

1 I have a definite price in mind and decide how much to commit. (% of my portfolio) For this example I'll use 20%.

2 Then I begin buying in 20% bites maybe once a week. So on $5000 its $1000 per week for the next 5 weeks. This way I can capitalize more if the price drops and it prevents me from being arrogant in the belief that I'm always right and the market is wrong.

Do I fit into your neat little definition Phaedrus?

Lizard

20-09-2008, 04:09 PM

Okay, I accept the "don't average down" argument has merit. But I also think the "T.A." figures would probably seem more realistic to those of us who have attempted to find the T.A. entry if it made allowance for a few more costs:

1. either the losses incurred (including brokerage, stops and spreads) on a failed trade or had an average entry closer to what you really would have had to pay to buy 3 days volume of HBY once the most conservative indicators fired.

2. In addition, take into account the value of the time required to monitor all the charts you might be following to pinpoint a buy signal, and the time that would be required to monitor and adjust orders so that they actually had a chance of getting filled (or the higher price that might have entailed if bought immediately out of available depth).

3. The cost (and likelihood) of holding sufficient cash available on the day the opportunity presents. Murphy's law says you will have invested most of the cash you'd been holding in anticipation for 3 months just two days earlier and that the alternative trade would then fail about the time HBY hit $2.10...

Mostly the hazards of illiquid stocks - I think those that love them will often give up on trying to apply T.A. to them in practice!

STRAT

20-09-2008, 04:17 PM

h2so4

20-09-2008, 04:59 PM

Yup ........................:D

I was asking Feedus, you Wally???:p

Phaedrus

20-09-2008, 05:11 PM

Do I fit into your neat little definition Phaedrus?
Yup............................:D

h2so4

20-09-2008, 05:14 PM

h2so4

20-09-2008, 05:43 PM

Yup............................:D

Thank you for clarifying that P at least I know which side I'm on.

What you failed to realise, was that in the example, if the sp had moved up then I would have still been buying my $1k per week, provided the sp didn't breach my own "valuation"

TA traders don't rely on "valuations" just intersecting lines on historical sp graphs and that is how they know if the sp will move up or down. And the confusing thing is, they don't know which line they are supposed to be using, check out any ST thread where a TA trader has posted his analysis. There is the bicircumferencial line and the ozitoantypull down line and if things don't work out the classic new phase porabola. But then there is always another day, no need to rush in, don't get your panties in a twist because I'll get it right next time.

What a load of BS.

I'm not a fan of TA, trendy up or trendy down is not for me, but I have an open mind you know:rolleyes:

Lizard

20-09-2008, 05:50 PM

I'm not a fan of TA, trendy up or trendy down is not for me, but I have an open mind you know:rolleyes:

For Your Eyes Only (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1181367) ;):D

ratkin

20-09-2008, 06:02 PM

Lizard has hit the nail on the head. The TA people always give perfect examples yet in reality , real time decisions are rarely as clear cut.
Plenty of failed trades. Brokerage costs , data costs , software costs , tax etc

Also to be considered is that Phaedrus is a trader preserving capital while belg (although mixed up ) is i think a long term investor (or maybe a trader who didnt sell?)

Im a long term investor and dont use any stops , if i had, had stops in place this week i would of been kicked out of about forty different stocks. It would of costs thousands in commision and i would have had to chase my way back in at the cost of thousands more commision.
Sure i have had a couple of disasters over the last year , however the amount loss would add up to less than the cost of brokerage and slippage if i had been using stops. Not to mention dreaded trading tax

I suspect most trend traders are all at sea in this market , being flicked in and out of trades by their stocks while this market is in its manic state.

macduffy

20-09-2008, 06:04 PM

For what it's worth from an investor with over 40 years' worth of experiences ( not to be confused with 40 years' experience!).

If one is investing for the long term with a diversified portfolio one can afford to ignore TA and invest on the basis of FA ( I mean, Fundamental Analysis, not the other!) and still achieve a satisfactory result.

If one is trading, or investing short term, whatever one's definition is of "short term", then one would be ill advised to ignore TA ( Technical Analysis).

;)

Hoop

20-09-2008, 06:06 PM

Quote:
Originally Posted by Hoop http://www.sharetrader.co.nz/images/buttons/viewpost.gif (http://www.sharetrader.co.nz/showthread.php?p=224229#post224229)

Systems Theory
Manipulation and direct regulation into a free market disrupts the communication (information) flow through networked market systems...expect localised bubbles to form,............ so invest and divest accordingly.

h2so4 Quote ..."Do you understand that stuff???It sounds like someone farted in my bath.:)"

Yup........................:D

Snoopy

20-09-2008, 08:29 PM

For Your Eyes Only (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1181367) ;):D

Interesting paper Lizard thanks. A quick and dirty summary of the trading rules that have been shown *not to work* over and above pure chance as taken - starting from p8 of the report - are as follows:

1/ 'Trailing Stops' when used in partnership with 'Leading buys'. (A 'leading buy' is when you wait for a share to advance a certain percentage before buying in.)

2/ Moving average buying and selling. That includes the special case of a single price moving above or below a long term moving average.

3/ Support and Resistance. Buying or selling solely on whether a share has gone above or below an existing trading range.

4/ Channel Breakouts. This is kind of like support and resistance, except that the support and resistance lines are increasing with time, not horizontal.

Taken at face value that looks like curtains for Mr P and T/A then. But did any of you note the set of rules that the research paper said was *not* tested? These were the rules that required extra data over and above straight share prices. Namely trading *volume* data.

IIRC, Mr P places great emphasis on volume data, particularly spikes, when he uses T/A. Also Mr P does not use trailing stops, moving average buying and selling and the concept of support and resistance level in isolation. He uses all of the these techniques *together*. The paper specifically noted that while Trailing Stops/Leading buys, moving average buying and selling and support and resistance buying and selling do not work, they do not rule out some combination of these techniques working.

In summary, I don't think the authors of this paper have dealt a mortal blow to Mr P yet.

SNOOPY

discl: do not use T/A

h2so4

20-09-2008, 09:43 PM

For Your Eyes Only (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1181367) ;):D

Well how about that? Make sure it goes in the book Liz and also that other thing, about the... well you know what?:):):):):):):):D

ratkin

21-09-2008, 08:01 AM

How can you be a trend trader when you are buying during a downtrend?

winner69

21-09-2008, 08:13 AM

Interesting paper Lizard thanks. ......

In summary, I don't think the authors of this paper have dealt a mortal blow to Mr P yet.

It appears as if the researchers only used MSCI indices (rather than individual stocks). As they say there is some 'value' in doing this research as (quote) 'portfolio managers could apply technical trading strategies to time their entry into stocks within markets as part of a top-down investment approach.."

Rather like Phaedrus's approach tracking say the NZX50 to give him his can buy, take caution and no buy allowed periods. He then applies TA to the individual stocks.

Intuitively one would think that indices are 'better behaved' than the individual stocks that make up the index. It is at the individual stock level that TA has benefits and that researchers do not address this.

Snoopy doesn't know if Mr P has been dealt a mortal blow .... I know he hasn't been dealt a mortal blow .... ironically it seems to support his approach

h2so4

21-09-2008, 08:55 AM

In summary, I don't think the authors of this paper have dealt a mortal blow to Mr P yet.

SNOOPY

discl: do not use T/A

I'm working on it;)

Lizard

21-09-2008, 09:12 AM

I'm working on it;)

1 Samuel 17:33

Lizard

21-09-2008, 09:16 AM

Seriously though - the article belongs in the "that's fairly interesting" pile, but nothing more. When I came across it, it led me to start the "Testing, testing" (http://www.sharetrader.co.nz/showthread.php?t=6240) thread.

h2so4

21-09-2008, 09:53 AM

1 Samuel 17:33

Is this a biblical reference? Heaven forbid, you of all people.:D

Lizard

21-09-2008, 10:12 AM

Is this a biblical reference? Heaven forbid, you of all people.:D

Yeah, but I am mischievously enjoying the image of ST readers unsettling their spouses by rummaging through the cupboards in search of an Old Testament... :p

h2so4

21-09-2008, 11:34 AM

Yeah, but I am mischievously enjoying the image of ST readers unsettling their spouses by rummaging through the cupboards in search of an Old Testament... :p

Bad girl!!!???. If they were smart they would google it.:)

h2so4

21-09-2008, 11:55 AM

duncan macgregor

21-09-2008, 03:41 PM

I am afraid that was my last post. I am finding this whole forum business a bit ..well... weird. No offence guys, its me not you, and 99 has a list of things to do that aren't getting done.

I wanted to have one more crack at Phaedrus but it looks like he's not going to show.

I have enjoyed posting and reading your comments.

I may just lurk a bit and update my portfolio when I make any changes but I don't think that will be very often. The brokers don't make a lot of money from me.

My avatar is up for sale if anyone is interested.:)

as always MY GAWD I just looked up your portfolio companies prices to see what sort of investor you are. You should pay close attention to what PHAEDRUS is telling you and get out the market real quick. Since the beginning of the year you have burned off more money than anyone i ever met. SNOOPY and MVT are only FA novices at losing money compared to you. Macdunk

lakedaemonian

21-09-2008, 04:38 PM

lakedaemonian

21-09-2008, 05:14 PM

I have been thinking about your post since you made and have done a bit of research. With the events of the last few days; the system awash with cash (once again), huge risks quarantined, etc,; a rally beginning before christmas looks good and it'll head way into 2009. But then, as you say, the breaks will come down.

With regards it being a 70s style bear market tho ... I think this very unlikely except perhaps in the US if they start addressing their structural problems with gusto ... Obama might try this but McCain is unlikely too. The two 10,000 pund gorrilas in the room should stop a 70s style bear in any countries with growing trade with india or china. Interesting tho that Japan's been 70s style for some time (perhaps the exception to the rule?).

Anyway - concur that we should stock up for the rally.

I would disagree.......as I've stated here previously.

It would be prudent to consider the possibility that we are NOT looking at several "events", but a continuing "process".

While I think it's safe to say you'll probably discount this post 100% it might carry more weight if I carefully state that I cannot take credit for this approach....I picked up on this from the good folks over at iTulip.com.

Market crash to soupline didn't occur overnight....it took QUITE some time....with lots of "good news" and "our financial system is fundamentally sound" comments in between the shockwaves.

And the thought of the thus far exposed derivatives "ring fenced" by the Fed being now safely quarantined is analogous to burying some agent orange in the backyard.....it WILL get into the ground water.

I am the eternal optimist, but I believe that in equities, there is little worth researching, and nothing worth investing in at the moment with the hollowed out NZX....I believe it represents a high risk/low reward proposition until we get far closer to the end of the chaos....which I believe is still up to several more years out.

How's the quote go?

"Be afraid when most are bold, be bold when most are afraid".....something to that effect.

In most cases I believe this is relevant, but at the moment I'm thinking:

"When in the eye of a hurricane, it's probably best to stay in the bunker....Because Hurricane Hubris is a killer" :)

winner69

21-09-2008, 07:54 PM

duncan macgregor

21-09-2008, 09:12 PM

McD I don't think the acid man has had those stocks for too long ..... he's a bottom feeding fundamentalistic you see .... and they are all heading up now He also said that he is a long term holder who buys and sells infrequently and has been in the market for some length of time. You cant have it both ways.
Macdunk.

Crypto Crude

22-09-2008, 12:07 AM

shane_m

22-09-2008, 01:03 AM

I say close the market to stop the crash like the russians.

Toddy

22-09-2008, 10:11 AM

This new move by central banks around the World, and in particular the FED of removing the ability to short sell is not a good thing In my opinion...Before an investor could stay on the market and open up a few short positions to hedge the portfolio... Now its like "your either in the market, or your out of the market"...
Short selling was first designed so that individuals could REDUCE their risk profile.... now all of a sudden its the most evil thing around...
Its the same thing over and over these days...

Its the press's fault for house prices falling...
Its speculators fault for oil prices rising...
Now its, Short sellers fault for falling markets...

Id say, its mackdunks fault for falling markets... Hes to blame... If he werent posting mad then there wouldnt be panic...haha...

come on people... Take away the ability to short sell takes away the decision for some people to remain on the market while still holding a safe portfolio... Also, by taking away the short also means that you take away the ability of the individual to be able to lock in and guarantee the risk free rate of return on the sharemarket.....this is very important tool.....
asset protection buddy.... Someday I will be into all these things, but nowadays I can risk the lot...
Yeaahhhh hhhaaarrrggghhhh....
:cool:
.^sc

Shrewd

You hit the nail on the head. Yes, short selling was introduced as another means of managing risk. However, market regulators have identified that the use of short selling has become more of a gambling game from the man on the street, and hence should be restricted. I'm sure that they will come up with a more balanced solution, for example, not being able to go short unless you can prove the hedge.

It's time for more upto date regulation to match the risks in the wild west.

Bilo

22-09-2008, 10:30 AM

This new move by central banks around the World, and in particular the FED of removing the ability to short sell is not a good thing In my opinion...Before an investor could stay on the market and open up a few short positions to hedge the portfolio... Now its like "your either in the market, or your out of the market"...
Short selling was first designed so that individuals could REDUCE their risk profile.... now all of a sudden its the most evil thing around...

Come on people... Take away the ability to short sell takes away the decision for some people to remain on the market while still holding a safe portfolio... Also, by taking away the short also means that you take away the ability of the individual to be able to lock in and guarantee the risk free rate of return on the sharemarket.....this is very important tool.....
asset protection buddy.... Someday I will be into all these things, but nowadays I can risk the lot...
Yeaahhhh hhhaaarrrggghhhh....
:cool:
.^sc

SC
Asset protection in the capitalist system is about making the right investment decisions. Backing the right industries, coys, directors, management. The way indicies, derivatives, algorithm driven share sales, lending of shares and naked shorting have been working is that they have undermined the essence of capitalism. These tools are destroying the public limited liability company. They have allowed participants to lay off bad decisions on those who made better decisions.
The requirement of matching a willing buyer and a willing seller for a known asset has been compromised. It has all facilitated manipulation and misplaced leverage.
All this is the share market equivalent of Collaterised debt obligations “CDOs” to the property mortgage market – people simply lost contact with the underlying asset. Totally dopey and SECs around the world have been asleep on the job.

IMO until they apply their shorting bans to banning derivatives and indexisation of share markets, and sort out these crazy bot driven interfaces capitalism will continue to be too volatile, even the USA won't be able to buy the mess out, and people will withdraw from public share listing. And McD will be proved entirely right in about six months with the mother of all crashes to end all crashes. IMO the answer is really very simple - these banns simply haven't gone far enough or hit the righttargets - yet.

redzone

22-09-2008, 10:44 AM

SC
Asset protection in the capitalist system is about making the right investment decisions. Backing the right industries, coys, directors, management. The way indicies, derivatives, algorithm driven share sales, lending of shares and naked shorting have been working is that they have undermined the essence of capitalism. These tools are destroying the public limited liability company. They have allowed participants to lay off bad decisions on those who made better decisions.
The requirement of matching a willing buyer and a willing seller for a known asset has been compromised. It has all facilitated manipulation and misplaced leverage.
All this is the share market equivalent of Collaterised debt obligations “CDOs” to the property mortgage market – people simply lost contact with the underlying asset. Totally dopey and SECs around the world have been asleep on the job.

IMO until they apply their shorting bans to banning derivatives and indexisation of share markets, and sort out these crazy bot driven interfaces capitalism will continue to be too volatile, even the USA won't be able to buy the mess out, and people will withdraw from public share listing. And McD will be proved entirely right in about six months with the mother of all crashes to end all crashes. IMO the answer is really very simple - these banns simply haven't gone far enough or hit the righttargets - yet.

And Helen and Co want to bring in carbon trading...geeezzz

Bilo

22-09-2008, 10:56 AM

And Helen and Co want to bring in carbon trading...geeezzz

Its called the power of the market and accountants want to "mark to market" Geez
it isn't even apples and apples - a bean counting short coming

Bilo

22-09-2008, 10:58 AM

Its called the power of the market and accountants want to "mark to market" Geez
it isn't even apples and apples - a bean counting short coming

Oh but I forgat to say:

It is in the rules!!!!
But not in the spirit of the game.

No wonder the Aussies embraced it.
Underarm lives..

Crypto Crude

22-09-2008, 01:45 PM

good post Bilo...
The removal of short selling and New Government initiative to spend 700 Billion dollars to buy up bad debts is a very interesting move... I support the idea in theory, just the whole implementation of it is quentionable... who gets paid out?... who is saved, who is not?... why do banks that have followed the rules, have to be disadvantaged by those that took on undue risks... why not Lehman? ...will other banks take on bigger risks now because they will be bailed...
what about airlines? will we bail them?
as an investor I welcome the spending spree..... we will be better off, as perhaps it MIGHT save ourselves from a rubber fisting by the market in the short/near term... but Having US Bonds, and US assets backed by sub Prime is surely a way to devalue the currency, which in turn strengthens export demand and grows the economy... So we can look at it in two ways...
The Bailout is positive...
I think the US government are onto it here... its really a win win for them... This goes alot deeper than just the money spent by the government... Probably going abit off topic here...(baby boomers, retirement etc)....

Naked shorting should definately be banned... but not short selling itself... As long as someone is prepared to loan you an asset then free market forces should be allowed for who-ever owns that asset, to do whatever they like with it...
Bilo, Is that not what capitalism is all about?
Hey If Ive got three bananas, then surely I should be able to lend you a banana... as Long as you return me that banana at some date in the future... If theres no short selling, then Its now illegal for me to lend you that banana... short selling is all around us...
You drop a doz off to your mate, and he promises to return a fresh pack next week...removal of Short selling is taking away the ability of Risk adverse investors to remain on the market, which may now force investors off the market... which is not what the FED really want...
This could backfire...

Short selling is not gamlbing if you tweak the numbers correctly...
Sure toddy, theres an element of gambling no matter what instrument you are playing (for some types of investors)...
I personally dont think its gambling...
we got to talk about abritage sometime... I think Ive got a pretty good example of how to make risk free profits (guaranteed)... I Will post later on this year...
:cool:
.^sc

macduffy

22-09-2008, 02:29 PM

Hi Shrewdy, me ol mate!
I like the sound of risk free guaranteed arbitrage profits. But let's not tell the world! How about keeping it between mates!

Cheers

;)

Lizard

22-09-2008, 03:45 PM

The issue with shorting stocks during a fragile market is about the feedback loop that is created in share prices under certain circumstances where the share price impacts the ability of the company to operate.

This happens through denting of customer or supplier confidence - and financial stocks can be especially prone to it for reasons most of us can visualise. It can also happen at any time in any type of company that needs additional capital - hence the importance of maintaining share price in the management of "development" companies and those trying to implement large acquisitions. In all these circumstances, a falling share price reduces a company's chance of survival and it can spiral into receivership unless there is a fire-sale of assets.

It could also be suggested that there is a feedback loop in the opposite direction with rising share prices - success breeds success and a rising share price gives a company a lower cost of capital for investment and expansion, as well as potential "positive vibes" with customers/suppliers by being perceived as a "good company". In the case of a positive feedback loop, there are rarely complaints (except by investors who stumped up for expensive shares just prior to a "profit glitch" interrupting the loop and halting the trend). These types of feedback loops are also unlikely to achieve the same momentum as downward ones.

I guess these are partial reasons for why trends persist.

Lizard

22-09-2008, 03:50 PM

macduffy

22-09-2008, 04:42 PM

Shrewd - I think another issue with shorting is the extent to which shares are being borrowed without the person who paid for them knowing about it and with a third party arranging the loan and keeping a fee for lending them (i.e. because they are held in custody).

Now that definitely should be illegal if for no other reason than that the shorting of those shares is intended to act to drive down the price, to the detriment of the beneficial owner.

h2so4

22-09-2008, 05:20 PM

MY GAWD I just looked up your portfolio companies prices to see what sort of investor you are. You should pay close attention to what PHAEDRUS is telling you and get out the market real quick. Since the beginning of the year you have burned off more money than anyone i ever met. SNOOPY and MVT are only FA novices at losing money compared to you. Macdunk

Is that right?

McD I don't think the acid man has had those stocks for too long ..... he's a bottom feeding fundamentalistic you see .... and they are all heading up now

He also said that he is a long term holder who buys and sells infrequently and has been in the market for some length of time. You cant have it both ways.
Macdunk.

Is that right?

Winner69 is on to it;) How does a 14% return sound in a very short time?

I only posted my tickers to keep my arrogance and confidence in balance. Maybe you should to?

Phaedrus

22-09-2008, 05:28 PM

I think another issue with shorting is the extent to which shares are being borrowed without the person who paid for them knowing about it....

Now that definitely should be illegal
People, that is the usual set-up. It's how shorting generally works. If you want to be able to short stocks, you must have a margin-enabled account. If you have a margin-enabled account, you will have agreed to allow your broker to "pledge, repledge, hypothecate or re-hypothecate without notice to me, all securities and other property that you hold, carry or maintain in or for any of my margin or short accounts....."
In other words, if you want the ability to sell Short, you agree to allow your broker to borrow any of your "long" stocks should anyone else want to short them.

macduffy

22-09-2008, 06:20 PM

People, that is the usual set-up. It's how shorting generally works. If you want to be able to short stocks, you must have a margin-enabled account. If you have a margin-enabled account, you will have agreed to allow your broker to "pledge, repledge, hypothecate or re-hypothecate without notice to me, all securities and other property that you hold, carry or maintain in or for any of my margin or short accounts....."
In other words, if you want the ability to sell Short, you agree to allow your broker to borrow any of your "long" stocks should anyone else want to short them.

I think it has been suggested that some shares held in nominee accounts have been lent without the knowledge of the beneficial owner, ie holders who had no intention of ever selling short but merely used a nominee for convenience. Will probably never know the truth or otherwise of this.

Mick100

22-09-2008, 07:45 PM

I think it has been suggested that some shares held in nominee accounts have been lent without the knowledge of the beneficial owner, ie holders who had no intention of ever selling short but merely used a nominee for convenience. Will probably never know the truth or otherwise of this.

Yes that's correct
Any shares held in a nominee (margin) account can be borrowed to short sellers with out the knowlege of the owner. It makes no difference whether you personally are a short seller or not
,

macduffy

22-09-2008, 08:09 PM

Yes that's correct
Any shares held in a nominee (margin) account can be borrowed to short sellers with out the knowlege of the owner. It makes no difference whether you personally are a short seller or not
,

But not all nominee accounts are margin accounts. Typically, overseas holders use nominees as a matter of course. If such shares are being lent without the beneficial owners' consent, to gain someone else a benefit and arguably against the interests of the beneficial ( long) owner then I can see why there is such an outcry against the practice.

kura

22-09-2008, 09:29 PM

People, that is the usual set-up. It's how shorting generally works. If you want to be able to short stocks, you must have a margin-enabled account. If you have a margin-enabled account, you will have agreed to allow your broker to "pledge, repledge, hypothecate or re-hypothecate without notice to me, all securities and other property that you hold, carry or maintain in or for any of my margin or short accounts....."
In other words, if you want the ability to sell Short, you agree to allow your broker to borrow any of your "long" stocks should anyone else want to short them.

Just to stray off the subject a touch, then the broker would also have the right to offer your shares to someone else as security for a loan made to the broker ?
If I understand rightly this is what happened with Opes Prime in Oz, where ANZ walked in and just "took" all the brokers clients shares, and sold them off to repay whatever loan the broker owed the bank.

Mick100

22-09-2008, 09:46 PM

JBmurc

22-09-2008, 11:31 PM

look's like the longs are going to have the last laugh anyway, judging by the action in the market today. Some big buyers in the market at open this morning on a couple of precious metal producers that I hold - I suspect they were covering short positions
,

Yeah it certainly was took a small long on BHP which returned me a nice 140% profit overnight also OGC with great 50% return on larger CFD long
New long with PPP good to see the Oil price up $2 atm

IMHO worldwide traders that have been major shorters of late will now lean towards sectors to go long in the greed from good profits of late will in turn start another commondity's bounce watch Gold/silver ---Oil take centre stage once again

lakedaemonian

23-09-2008, 07:07 AM

another commondity's bounce watch Gold/silver ---Oil take centre stage once again

Oil prices shoot up over $25 a barrel as anxiety over US bailout weighs on dollar

NEW YORK (AP) -- Oil prices spiked more than $25 a barrel Monday -- the biggest one-day price jump ever -- as anxiety over the government's $700 billion bailout plan, a weak dollar and an expiring crude contract ignited a dramatic rally.

Light, sweet crude for October delivery jumped as much as $25.45 to $130 a barrel on the New York Mercantile Exchange before falling back to settle at $120.92, up $16.37. The contract expired at the end of the day, adding to the volatility as traders rushed to cover positions; the October price began accelerating sharply in the last hour of regular trading, a common occurrence when a contract is about to go off the board.

Still, the rally, which shattered crude's previous one-day price jump of $10.75, set June 6, showed the intensity of emotion in the market.

The November contract, scheduled to become the front-month contract at the end of Monday's session, was trading at $108.69, up $5.94.

Crude has gained about $30 in a dramatic four-day rally that has at least temporarily halted oil's steep two-month slide below $100. At this rate, crude is within striking distance of its all-time record of $147.27, reached in July.

In other trading, gold prices shot up more than $40 and other safe-haven commodities also rallied, underscoring investors' uncertainly about the direction of the economy and their fear of more turmoil ahead.

"We're off to the races again," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill. "There's a renewed scramble for commodities because of a general weakness in the dollar."

The Nymex temporarily halted electronic crude oil trading after prices breached the $10 daily trading limit. Trading resumed seconds later after the daily limit was increased.

Why chase trading sideways at best, non commodity based equities when you get invest in the underlying commodities themselves......the new currencies!

Crypto Crude

23-09-2008, 12:30 PM

Oil makes biggest single-day price jump ever
Monday September 22, 6:02 pm ET
By Stevenson Jacobs Oil prices make biggest single-day price jump ever on bailout unease, contract expiration

NEW YORK (AP) -- Oil prices briefly spiked more than $25 a barrel Monday, shattering the record for the biggest one-day gain as unease about the government's $700 billion bailout plan pummeled the dollar and spurred investors to buy safe-haven assets...

I got this article from the main page of Yahoo Finance...
This is pretty much what I was saying yesterday... apart from the removal of short selling has impacted on this issue (I cant be sure as to what degree)... But I can be sure that removal of shorting has caused a backfire... as I said because risk adverse investors (in the face of high market risk) have had to sell their portfolios because they cannot create a hedge and therefore buying up other assets like Oil and Gold...
:cool:
.^sc

Bilo

23-09-2008, 09:31 PM

But I can be sure that removal of shorting has caused a backfire... as I said because risk adverse investors (in the face of high market risk) have had to sell their portfolios because they cannot create a hedge and therefore buying up other assets like Oil and Gold...
:cool:
.^sc

Shrewdy, my understanding is that it is only some coy shares that can't be shorted. Derivatives and commmodity markets are largely untouched. My reading of the oil market situation is that the US et als actively manipulated the price of oil down (by leaning on currency and commodity positions) but with the tropical storms the US depleted their supplies of oil and refined products which have to be replaced when their refineries are back up - in October. Bug..er we will have to buy some, Bug..er the ships have been diverted to China to replenish their strategic reserves and Olympic adjustments. And the USD regaining its trash status. Hence the record price to close out October - it could be a pattern for coming months - so as not to hype up the price for prolonged periods OR someone might think that demand hasn't reduced and supply can really keep up.

Crypto Crude

24-09-2008, 12:05 AM

Shrewdy, my understanding is that it is only some coy shares that can't be shorted. Derivatives and commmodity markets are largely untouched

Bilo,
I heard them say on Bloomberg that 800 companies cant be shorted, (On the US market) dont quote me on that...
The impact on commodity prices, is reflected in the spill over effect from sellers of positions on the sharemarket who are looking for safe havens....As for commodities being untouched, im not so sure about that... Yes first hand they are not being taken to by the Fed, or the US govt... but through sharemarket regulations is causing the spillover effect, (second hand)... To be honest, ive not really thought about it before... but it all makes sense in theory....
Thanks for your update on the oil situation... Im not sure if im being totally naive here, but nowadays I dont really keep up to date with the issues on the price of oil... I know where its headed over the long term... all the fluctuations have to take there course in the mean time....
I focus my energies on an array of oil stocks, while being conservative on oil prices... and down the line wacking the extra off the top as a bonus...
Whats your situation mate, are you getting back on the market?... fully on the market?... somewhere inbetween?...
oh, and are your investments 100% oil?
we can perform in a rising market, a falling market (when our company activities swing into action, but we can not perform in a crashing market...
I will loosely define a crash as a 1000 point Dow fall on one day...
I will call it now... we will not see a 1000 DOW point fall in the next year...
thus meaning us spec investors survive... thus meaning we perform...
:cool:
.^sc

Crypto Crude

24-09-2008, 12:07 AM

or at least mean we get the chance to perform...
:cool:
.^sc

Bilo

24-09-2008, 10:08 AM

Bilo,
Whats your situation mate, are you getting back on the market?... fully on the market?... somewhere inbetween?...
oh, and are your investments 100% oil?
:cool:
.^sc
Thans for the Interest, Shrewdy. I continue to hold NZO and PRC. Almost everything else, especially the ASX has been vicious and I am mostly out. Fantastic buying opportunities but too many and uncertainty is a market killer. Good luck with CUE it is an exciting time for them.

Oh and oil is a finite non-homogeneous, non-renewable, non-replaceable, use once only resource - not a true commodity despite being "traded" as one. If the US continue fast and loose with their currency we'll have to barter for it soon. That would stop this thread in its tracks...

Snoopy

24-09-2008, 12:44 PM

It appears as if the researchers only used MSCI indices (rather than individual stocks). As they say there is some 'value' in doing this research as (quote) 'portfolio managers could apply technical trading strategies to time their entry into stocks within markets as part of a top-down investment approach.."

Rather like Phaedrus's approach tracking say the NZX50 to give him his can buy, take caution and no buy allowed periods.

The research paper is talking about the different national components of the world MSCI index as I read it - yes. Mind you in the case of New Zealand this is only a few shares.
I see in May 2008 MSCI deleted FPA, FPH, KIP, SKT and VCT from the New Zealand MSCI index. That means the only shares left are TEL,CEN,FBU and..... Is there anything else left?

It may be an index. But when the 'index' gets down to just two or three companies, I would imagine you are dealing with quite a volatile entity, more akin to a single share.

He (Phaedrus) then applies TA to the individual stocks.

Intuitively one would think that indices are 'better behaved' than the individual stocks that make up the index. It is at the individual stock level that TA has benefits and that researchers do not address this.

See my comments of the MSCI New Zealand section being 'rather thin'. But you are right Winner. The research paper does not test T/A on individual shares. And individual shares are more volatile than indices. The researchers would say that your next statement:

"It is at the individual stock level that TA has benefits"

is a leap of faith. The problem with T/A on individual shares as *I* see it is the propensity for shares to go up the escalator but down the elevator. A 10 percent 'stop loss' is useless if the underlying share that you trade can fall seventy or eighty percent in a single session. Doesn't matter if it is only a one in fifty year 'black swan' event. Sooner or later it will happen and then you are gone as your decades of relentless charting is undone. An index doesn't swing as violently, which in this case is a good thing.

Snoopy doesn't know if Mr P has been dealt a mortal blow .... I know he hasn't been dealt a mortal blow .... ironically it seems to support his approach.

Or more correctly the paper doesn't test Phaedrus's approach.

I am puzzled by a statement on the bottom of page six of the paper though:

"Drawing on the work of White (2000), these authors suggest that rules that are the most profitable are the very rules that are the most likely to be examined over time. This means that it is important to consider the profitability of any rule in the context of the full universe of rules from which it was drawn."

I may have the wrong spin on this. But are the author's saying that T/A is not profitable because many studies do not take into account the poor T/A techniques as well as the good ones? Thus T/A 'does not work' because the losses by 'bad' T/A practitioners exceed the gains made by those T/A practitioners using the 'good rules'. Please someone tell me that I am reading this wrongly!

SNOOPY

Phaedrus

24-09-2008, 02:40 PM

I am puzzled by a statement on the bottom of page six of the paper though: "Drawing on the work of White (2000), these authors suggest that rules that are the most profitable are the very rules that are the most likely to be examined over time. This means that it is important to consider the profitability of any rule in the context of the full universe of rules from which it was drawn."
What I believe they are trying to say is that not all technical indicators are profitable but that the most profitable indicators are also likely to be the most used and thus the most commonly tested. Common sense, I would have thought!

Phaedrus

24-09-2008, 02:59 PM

The paper that Lizard coyly referenced as "For your eyes only" (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1181367)tested TA using Indices, not stocks. Much of the "research" into the effectiveness of TA is limited to indices. Since the majority of technical indicators are specifically designed for use with stocks, to purport to "test" them by using indices is quite absurd. In spite of many researchers failing to appreciate the importance of this distinction, the majority of studies nevertheless show TA to be effective. Cheol-Ho Park and Scott H. Irwin carried out a 2004 survey of other researchers results and found that among a total of 92 modern studies, 58 studies found positive results regarding technical trading strategies, while 24 studies obtained negative results. Ten studies indicated mixed results.

It is surprisingly difficult to find investigations into the effectiveness of TA as applied to stocks, but here is a recent one. Just this year Dr. Emanuele Canegrati conducted the "biggest econometric study ever made to investigate the validity of technical analysis" covering the top 40 companies listed on the FTSE Index. Quoting directly from his paper entitled "A Non-random Walk Down Canary Wharf" (http://mpra.ub.uni-muenchen.de/9871/1/MPRA_paper_9871.pdf):-
"In this paper I perform a panel data analysis to evaluate whether financial technical indicators are able to predict stock market returns. By
using a panel of 40 stocks taken from the Financial Times Stock Exchange (FTSE) observed in 2004, I test the ability of 75 amongst the most famous technical indicators used by traders to predict next-day returns. Surprisingly, results are robust in demonstrating that many of these are good predictors, supporting the validity of technical analysis.

Tables 1-6 show results of regressions. The first thing to notice is the high statistical significance of indicators. With Rogers standard errors we have 30 indicators statistically significant at 99% of the confidence interval, 11 at 95% and 5 at the 90%; only 29 indicators are not significant over this last threshold."

dartMonkey

24-09-2008, 04:37 PM

Phaedrus, while not a study as such I would've thought Bulkowski's Encyclopaedia was pretty close especially given the stat's he gives

h2so4

24-09-2008, 05:24 PM

"In this paper I perform a panel data analysis to evaluate whether financial technical indicators are able to predict stock market returns. By
using a panel of 40 stocks taken from the Financial Times Stock Exchange (FTSE) observed in 2004, I test the ability of 75 amongst the most famous technical indicators used by traders to predict next-day returns. Surprisingly, results are robust in demonstrating that many of these are good predictors, supporting the validity of technical analysis.

Tables 1-6 show results of regressions. The first thing to notice is the high statistical significance of indicators. With Rogers standard errors we have 30 indicators statistically significant at 99% of the confidence interval, 11 at 95% and 5 at the 90%; only 29 indicators are not significant over this last threshold."

Are you saying that you have a mathematical formula that beats the market?

STRAT

24-09-2008, 06:28 PM

Bilo

24-09-2008, 06:43 PM

It would seem the Yanks big bail out plan may be in trouble. Its got rather political and there is a lot of finger pointing and some corruption allegations involving those at the top of outfits previously bailed out. At best more delay and more bad times on the horizon Im thinking. So is this little rally over?

Maybe Strat some choice reading today.
I think the polis have a big stick over the city and want their pound of flesh - they will get it IMO.

Classic words from Michael West of The AGE in "The mother of all ripoffs"
While pushing through his emergency deal, Paulson says he wants to defer the debate on salaries. Someone should take him aside and tell him, "Pal, it's over''. The moral and philosophical underpinning for $US50 million salaries is gone, let alone $US10 million salaries care of government.These remuneration structures were struck on the basis of a compact with the market, that is that pay is "at risk'' and should reflect performance. That compact is finished. What is the risk if the losses are nationalised? And what is the performance?

The fancy deals and the structured finance rubbish brewed up by this crew gave the world CDOs, CDOs squared and cubed, RMBS, CLOs, ABS, CDS and all manner of noxious excuses for a fee. From the sub-prime to the ridiculous, this orgy of leverage on leverage mimicked in financial centres as far afield as Australia has whipped the world to the edge of recession and destroyed faith in the entire system.

Also in London:

Lord Turner of Ecchinswell, the chairman of the FSA, said the regulator would be asking firms searching questions about the nature of bonuses as there was a danger that traders were being rewarded for profits that turned out later to be "illusory".

Derek Simpson, joint general secretary of the Unite trade union, said the bonus system was "out of control" and the reckless behaviour of bankers was wrecking lives. "These people want ordinary people to share their pain, but they won't share their gain. If you can't regulate the bonus culture, then tax it out of existence," he said.

Meanwhile:
US Treasury secretary Henry Paulson and Federal Reserve chairman Ben Bernanke told the Senate committee on banking, housing and urban affairs that the American economy was at risk unless the $US700 billion ($830.47 billion) plan to stem the financial crisis was passed quickly.

''We need to build upon this spirit to enact this bill quickly and cleanly, and avoid slowing it down with other provisions that are unrelated or don't have broad support,'' Mr Paulson said.

Some members of Congress have concerns about giving the US Treasury a blank cheque to buy the toxic debt from troubled financial firms, however.

Senate Banking Committee chairman Christopher Dodd said the proposed package was ''not acceptable''.
''This is not going to work,'' Mr Dodd said.

''They're going to have to come back and work with us.''

Lizard

24-09-2008, 06:53 PM

So is this little rally over?

There was an odd "spring" feeling in the ASX small caps late in the day. Tentative buying creeping into some of the dormant ones. Worth watching tomorrow.

STRAT

24-09-2008, 07:01 PM

Some members of Congress have concerns about giving the US Treasury a blank cheque to buy the toxic debt from troubled financial firms, however.

Senate Banking Committee chairman Christopher Dodd said the proposed package was ''not acceptable''.
''This is not going to work,'' Mr Dodd said.

''They're going to have to come back and work with us.''Mmm,
Talk about being stuck between a rock and a hard place.

Of course if they do cough up this money/more debt sooner or later the peasants will revolt.

Where is Robyn Hood when you need him? Funny really, not much has changed in the last 500 years eh? The rich are still screwing the poor and getting away with it. :rolleyes:

STRAT

24-09-2008, 07:03 PM

There was an odd "spring" feeling in the ASX small caps late in the day. Tentative buying creeping into some of the dormant ones. Worth watching tomorrow.Bad night on the DOW tonight I reckon Liz:( but there was an odd "spring" feeling in my back yard today so at least one winter is over:D

Phaedrus

24-09-2008, 08:53 PM

Phaedrus, while not a study as such I would've thought Bulkowski's Encyclopaedia was pretty close especially given the stat's he gives
Bulkowski's Encyclopedia is an excellent reference book for chart patterns and their associated performance statistics, but it does not cover any technical indicators as tested by Canegrati.

lakedaemonian

25-09-2008, 07:01 AM

There was an odd "spring" feeling in the ASX small caps late in the day. Tentative buying creeping into some of the dormant ones. Worth watching tomorrow.

The only "spring" I see going forward is further "spring cleaning" in equities :)

manxman

25-09-2008, 08:27 AM

Interesting interview with Warren Buffet at http://www.cnbc.com/id/26867866

Financially dependant

25-09-2008, 10:15 AM

Interesting interview with Warren Buffet at http://www.cnbc.com/id/26867866

Thanks manxman, that was very interesting. "When Buffet speaks people listen" nice quote. That might be the difference between a real crash and controlled emergency landing of the Dow??

Snoopy

25-09-2008, 10:17 AM

Snoopy wrote:

------
An extract from Lizards quoted paper:

"Drawing on the work of White (2000), these authors suggest that rules that are the most profitable are the very rules that are the most likely to be examined over time. This means that it is important to consider the profitability of any rule in the context of the full universe of rules from which it was drawn."

I may have the wrong spin on this. But are the author's saying that T/A is not profitable because many studies do not take into account the poor T/A techniques as well as the good ones? Thus T/A 'does not work' because the losses by 'bad' T/A practitioners exceed the gains made by those T/A practitioners using the 'good rules'. Please someone tell me that I am reading this wrongly!

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What I believe they are trying to say is that not all technical indicators are profitable but that the most profitable indicators are also likely to be the most used and thus the most commonly tested. Common sense, I would have thought!

I have done a bit more homework on what Sullivan Timmermann and White were up to in their 1999 research Phaedrus. They were looking at trading rules based on dates. Things like is there a particular month where statistically you should be out of the market? Are there particular days of the week where the market does poorly? All the rules being evaluated against each other are effectively the same rule applied to different days or months.

However in Liz's referenced paper the rules that are being studied, namely:

1/ 'Trailing Stops' when used in partnership with 'Leading buys'. (A 'leading buy' is when you wait for a share to advance a certain percentage before buying in.)

2/ Moving average buying and selling. That includes the special case of a single price moving above or below a long term moving average.

3/ Support and Resistance. Buying or selling solely on whether a share has gone above or below an existing trading range.

4/ Channel Breakouts. This is kind of like support and resistance, except that the support and resistance lines are increasing with time, not horizontal.

not all of these rules are the same.

Now, I can't see any reason why you would expect shares to behave differently on a Tuesday compared to a Wednesday (for example). But if you have a strongly trending stock (or index component to be more accurate) -which is what a successful trader might seek- THEN you might expect quite a different trading result if you used a 5% stop loss as opposed to selling a share if it crossed below the thirty day moving average (for example).

IOW the author's of Liz's paper are not comparing like with like rules, but by contrast Sullivan Timmermann and White are. IMO the author's of Liz's paper are implying that to evaluate T/A you have to test all the universe of T/A rules together. IMO each class of T/A rule should be tested independently if they are clearly structured differently. IMO the author's of Liz's paper may have conducted a 'straw man' test.

SNOOPY