Bear.asx

[winner69]

Not looking too good at the moment

But then we should be happy - BEAR best use is as a hedge against falling markets ... and markets are sure rising ..... getting close to recent or all time highs in many instances

http://www.directbroking.co.nz/directtrade/dynamic/quote.aspx?qqeg=AU&qqsc=bear&QuickQuote=Go+%3E%3E

[JBmurc]

Yes thinking ASX might make it to over 5600 but could well see a major drop not long after this next movement ....as you say a good hedge ...thinking if our house sells to put 100k into BEAR.asx also thought mid-low $17's would be good entry after opening at $24 couple years ago ....Cycle wise the General markets are due for a major correction....

[JBmurc]

BEAR.asx--$17.65 maybe I'll get my position in the $16 ?? first need the house to sell ....Home Buyers do seem to be holding back locally of late outside the lower price market

[Skol]

Bear isn't very liquid, could be bad news, as few as 10,000/day, not for me.

Equities aren't in a bubble, the occasional correction maybe, but onwards and upwards.

[JBmurc]

Bear isn't very liquid, could be bad news, as few as 10,000/day, not for me.

Equities aren't in a bubble, the occasional correction maybe, but onwards and upwards.

Yes a lower volume day today still going from the chart in front of me BEAR looks to have an average volume much higher than today's

still think a pretty major correction is coming for Equities IMHO Sept-Oct

[JBmurc]

Bear isn't very liquid, could be bad news, as few as 10,000/day, not for me.

Equities aren't in a bubble, the occasional correction maybe, but onwards and upwards.

Yes a lower volume day today still going from the chart in front of me BEAR looks to have an average volume much higher than today's

still think a pretty major correction is coming for Equities IMHO Sept-Oct

[JBmurc]

September/October? Going on history are we there JB? Crazy thing trusting in history ;) ;) ;)

Remember that BC called for a crash in February... then March... pretty sure he's still waiting for it, along with the pickup in "seasonal demand" for gold (ain't looking pretty at all right now; hope you're building homes rather than buying up SOC and GOR stock!!!)


Just a Gut feeling this Bull trend isn't going to grow another leg up but instead hit a ceiling and have a major correction ...Geo-poltically we live in very interesting times ...

Not buying more SOC or even have GOR shares ,but would be loading up on ELM at these levels

Can't build till we sell >>

[winner69]

Things must be going gang busters in Australia as BEAR sinks to 1745

Is a 52 week low

[Bobcat.]

I have a small parcel of Bear.asx as insurance (better than cash in the bank) and fully intend to buy more as she slides towards 1700.

But then tonight's GDP figures for the USA may put an end to this slide.

[JBmurc]

Yes not a bad place to have some funds ...along with EPTMAG.asx / Gold.asx be a good place to hide out on another melt-down

9-12 months talking of true affects of the end of Q.E ....increasing rates in the states -CNBC

[winner69]

And then Argentina defaults the next day and Portugals biggestbank looks to be in trouble yet again! Looks like a short term BEAR buy with a long term watch may be on the cards today!

Wonder what the good news for tonight will be?

[Daytr]

This could start to perform. I haven't looked into this, but are they basically an option play on equity markets?

[JBmurc]

This could start to perform. I haven't looked into this, but are they basically an option play on equity markets?

from the Betashares website on BEAR

the futures contracts held in the Fund. For example, if the Fund's portfolio exposure is -105%, and the S&P/ASX 200 index goes down 1% that day, the Fund would be expected to go up approximately 1.05% that day, before fees and expenses. The Fund is actively managed and the portfolio exposure will change on a daily basis, affecting returns over time.

[Daytr]

Thanks JB, I had a look on their site, but I thought they were a bit vague to be honest. From what you posted it suggests they are just short the index.

[winner69]

The old BEAR still taking a horrible beating as it heads to 16 bucks something

All the bad things in the world that has been pointed out here makes you wonder if punters think too much

Buffett advice - Ignore politics and macroeconomics when picking stocks.



Good advice

[Beagle]

How quickly the world turns. Broken through its 200 day MA, and looking strong :-)

6296

Nice hedge and as discussed I agree the Aussie economy is going down the toilet. Looking for a good entry point.

[baller18]

Do you think it'll hold this time KW?
It has broken through the 200ma many times, but continues to fall back into the downtrend channel... Back in dec 2013 and Jan 2014

[BFG]

Think the focus should be on the ASX rather than BEAR and it's TA. Secondary uptrend on ASX now well broken and looks ready for a test of the lower primary since it is now in proper correction territory (>-5%). Look for a lower high and lower lows to confirm a new downtrend channel formation.

[Beagle]

http://www.theaustralian.com.au/business/markets/is-the-sharemarket-headed-for-a-correction/story-e6frg916-1227077865816?nk=0d996d085b314faa9d2bb0c0da5061a2

Sharemarket headed for a correction...Is a correction due on both sides of the Tasman ?

I honestly am starting to wonder if the N.Z. market is also vulnerable...BEAR investment provide some sort of hedge for Kiwi stocks, what do you think KW ?

[BFG]

Umm, this is the BEAR thread. If you want to talk about the ASX then go to the ASX thread and discuss.

Considering BEAR is an inverse correlation of ASX200 and is directly linked to its fortunes, I thought this would have been pertinent no?

[Beagle]

I still remember that super impersonation you did of a bear after a few wines, very impressive GRRRRRR :D

P.S. Seriously, I think you are on to a good thing with this.

[noodles]

Well, all the stars are aligned for a big correction on the ASX. QE ending in the US (rates to rise?), banks falling, commodity price rout, end of resources investment boom, rising unemployment, China property market implosion - I find it hard to find any positives, other than some Australian shares exposed to US $ earnings might hold up, but even then a market correction is going to compress the P/E faster than earnings can rise. Bought some US$ as well. Lot of sell signals firing at present, so am cashing up and paying the bank back. Might move more cash to US$ in preparation for the US recovery. Looking for other options....

Hard to argue with your analysis. However, interest rates are still very accommodating in AUS. Don't fight the fed ... blah,blah,blah

Other options:
1. You could turn to the dark side and consider selling short.
2. I reckon there is still value in some small-cap NZX plays.

[Beagle]

CASH works for me, over 50% at present, just got to avoid driving anywhere near Jaguar dealers. We are incredibly fortunate in N.Z. to be able to get circa 4.5% in on call savings accounts, in many countries overseas they can only dream of such returns on cash holdings.

[mark100]

I'm over 60% cash now. I hate holding cash but it could be a difficult few months coming up and I'd rather protect the bounty of the past few years than see it slip away. I can't see rates being cut further in Australia given they are worried about overheating property prices

[Beagle]

Maybe they think the Bear is capable of doing its own roaring today :)

[stoploss]

Hmm, where have the liquidity providers disappeared to? Normally there are standing orders of 30k - 35k on both buy and sell side, but today - nada. Maybe BEAR is at a point where its travelling under its own steam, or maybe the HFT boys have packed their bags and gone on holiday.

Volatile start , they just held fire till everything was relatively steady .... Gee Chinese tariffs on coal, they know how to put the boot in !!!!!

[stoploss]

I am a bloody genius LOL

Will today be a blood bath on the markets following the US performance? Hmm, things about to get interesting .....

Nice work .

[BFG]

I am a bloody genius LOL

Will today be a blood bath on the markets following the US performance? Hmm, things about to get interesting .....

What's our correction timeframe here? The median 8 months/15%? Or are you banking on something deeper due to the untenable position Oz is in?

[BFG]

Bah humbug, the US pulled out of that 3% slide just before close. Bet there were a few sick stomachs on Wall St today though, that was one heck of a ride!

Europe had a shocker though. What will Asia do?

I'm reading test of10% correction level with failed breach equalling a sucker rally with lower high ahead setting up for a new test of that level. Thoughts?

[Daytr]

Ebola is all over the news. Amasing one or two deaths in the West & suddenly its out of control.
What is alarming however is how the cases in the West have been handled to date & its a modern version of the keystone cops.
There is no way the aid workers should have been brought back to the US & Spain as the risk was too high & I said that at the time.
Sentimentality needs to be taken out of decisions like this.
I would suggest we are about to see a much bigger response to this threat as it is now impacting the West & economic sentiment & its money that talks.

I have been advocating a large correction for some time & this is probably the first real indication of it. We have had some reasonable corrections over the last year or so, but only to bounce back to record levels. Is this time different? Free money for longer in the US doesn't seem to be having the same effect as it did. What is the Fed to do? If they are smart they will let the markets dictate rather than try & re-inflate the balloon. There is a record amount of cash on the sidelines & this will be the buffer for equities & some of that money will enter when they see value. Lower energy prices is also going to help & it will put more money in people's pockets to spend on other things. So I think we see lower in the US equities unless the Fed pulls out the rabbit & the hat. Australia although is being hit hard by commodities & the completion of the building phase of a lot of the projects that has underpinned the economy. The property market I think is the barometer. In the 1980s when the property market got belted, it was partly lead by the Perth market & obviously also the Sydney market. If we start seeing the very over priced Australian property market unravel, watch out Australian equities as they will head a lot lower than just a correction.
One of the biggest employment growth sectors during the Rudd/Gillard government wasn't the resources sector, it was health. I understand Abbott is taking a knife to that budget as well, so things could get very sticky indeed.


Anyone else got thoughts on the broader economy & its impact on the ASX?

[stoploss]

Hi Daytr,
Personally I think think the correction has only just begun in OZ . There is a generation that has never seen a property price correction of a decent magnitude. Over the GFC the govt basically spent 80 Bio to prop
everything up .... so all they learnt was no worries when times get bad the Govt will bail us out ...... This time and look at those mining service companies at the moment ....., they have no money in the kitty . My pick is the RBA will be lowering interest rates as the next move not a hike as every economist seems to pick .

[mark100]

Hi Daytr,
Personally I think think the correction has only just begun in OZ . There is a generation that has never seen a property price correction of a decent magnitude. Over the GFC the govt basically spent 80 Bio to prop
everything up .... so all they learnt was no worries when times get bad the Govt will bail us out ...... This time and look at those mining service companies at the moment ....., they have no money in the kitty . My pick is the RBA will be lowering interest rates as the next move not a hike as every economist seems to pick .

I'm not that bearish despite being 70% cash at the moment. House prices may have boomed in Sydney and Melbourne the past 2 years but everywhere else they haven't done much. Where I live I reckon they are down around 10% the past 2 years. Mining sector is shrinking but in many respects that is good. Mining pushed up the currency and and hurt manufacturing, ag, tourism etc. I reckon in 12 months the AUD will be another 10% lower. That will give a decent boost to other sectors. In my view mining simply paid a lot of $$$ to a small pool of workers. It's a good thing to see this fall back.

I reckon in 18 months the lower dollar combined with 2.5% interest rates will have things moving along quite nicely. Also the population growth in Aust is one of the fastest in the western world. I personally don't thing that is a great thing but for GDP growth and the stockmarket it's a good thing.

[Daytr]

[QUOTE=mark100;512001]I'm not that bearish despite being 70% cash at the moment. House prices may have boomed in Sydney and Melbourne the past 2 years but everywhere else they haven't done much. Where I live I reckon they are down around 10% the past 2 years. Mining sector is shrinking but in many respects that is good. Mining pushed up the currency and and hurt manufacturing, ag, tourism etc. I reckon in 12 months the AUD will be another 10% lower. That will give a decent boost to other sectors. In my view mining simply paid a lot of $$$ to a small pool of workers. It's a good thing to see this fall back.

Property prices have boomed for almost 20 years in Australia, not just the last two!
The main reason for this is immigration & that can't be discounted going forward or Chinese money either coming in.
However compared to most place around the world Australian property prices particularly in the major centers or state capitals are well over valued.
However it has been that way for some time, so who knows when it will correct. There are though some fairly bruising implications going on in the Aussie economy right now that could be a catalyst.

I reckon in 18 months the lower dollar combined with 2.5% interest rates will have things moving along quite nicely. Also the population growth in Aust is one of the fastest in the western world. I personally don't thing that is a great thing but for GDP growth and the stockmarket it's a good thing.

[Daytr]

KW, you could be basically describing NZ as well, as the same is happening here. Substitute Dairy for mining & NZ is facing similar issues.

[mark100]

A structural reset needs to happen - its happened in the US and most of Europe. Wages and Property prices need to come down to make businesses more globally competitive, and in some cases, simply viable. I think its already begun - the artificially high wages that were caused by the mining sector soaking up large amounts of labour and trades is now in reverse, which should flow through to the prices urban companies pay staff. Just need the commercial property market to come off the boil and lower costs for business owners. Putting limits (or enforcing the ones that already exist) on foreign investment would help - at the moment the only people building houses and buying commercial property are the Chinese. Either Australia agrees to sell everything to foreigners at prices too rich for Australians or they do what Canada and the US have done and shut it down before Australians truly do become the "poor white trash" of Asia.

Energy costs is the third problem - electricity and gas cost too much in Australia, and is out of step with other economies despite being awash with coal and gas resources.

If things don't reset, Australia will just stagger along with more and more companies closing down or moving offshore. Which is not good for employment long term, especially in a country that relies on immigration to keep its growth rate up - all those immigrants need jobs to come to.

The Govt is counting on infrastructure spending to hold up the economy, but if the market believed that was going to happen, LEI and JHX would be roaring - but they are both in firm downtrends.

Agree in some respects. Aust really needs to get it's productivity growth back up. I can't see non mining wages falling, it's just too hard to implement. Instead I think we will become more competitive with a lower currency. For most of my life (mid 30 years) the AUD has bought around US$0.70-0.75. And just to be a bit cheeky, if we are looking for the 'poor white trash' of Asia I'll mention nominal GDP per capita of US$60k for Aust versus US$40k for NZ. Maybe NZ is too far away to be part of Asia...

[mark100]

[QUOTE=mark100;512001]
Property prices have boomed for almost 20 years in Australia, not just the last two!
The main reason for this is immigration & that can't be discounted going forward or Chinese money either coming in.
However compared to most place around the world Australian property prices particularly in the major centers or state capitals are well over valued.
However it has been that way for some time, so who knows when it will correct. There are though some fairly bruising implications going on in the Aussie economy right now that could be a catalyst.



Well I think the boom started in 2000/2001 when interest rates were cut a lot in response to US recession / Sept 11 attacks etc. During the 90's property didn't do much. I bought a flat in 2001 for the same price the seller paid in 1994.
Part of the high prices are due to construction costs. Where I live it is not currently possible for an investor to buy land and pay all costs associated with building a duplex and then sell for a profit. It works for a builder (just) but not an investor who has to pay a builders margin. So you could say our high prices are due to construction costs (and associated regulation)

[Daytr]

I arrived in Aussie in 1997 & the property market was just starting to take off then in Sydney, so I suppose that's my reference point.
Anyway my point is the Australian property market has ben running hard for a very long time & really only took a breather during the GFC.
It could be propped up though by Chinese buyers as Australia is a tiny market comparatively.
Personally I think Australia needs a very big correction in property values for its on going economic health.

[mark100]

I arrived in Aussie in 1997 & the property market was just starting to take off then in Sydney, so I suppose that's my reference point.
Anyway my point is the Australian property market has ben running hard for a very long time & really only took a breather during the GFC.
It could be propped up though by Chinese buyers as Australia is a tiny market comparatively.
Personally I think Australia needs a very big correction in property values for its on going economic health.

I think of Sydney, the inner areas anyway, of being more a global city these days similar to London / New York etc where property prices are driven by overseas money and do not resemble what is going on in the rest of the country. I disagree with the RBA adjusting interest rates or implementing any other control measures to cool a Sydney property boom. You only hurt the rest of the country and have virtually no impact on the Sydney market anyway.
Property prices are high relative to incomes everywhere but that's partly due to high construction costs. A big correction would not be good for the economy in my view. Rather a decade of flat prices would be better

[stoploss]

Well that's not going to happen - just saw this :eek2:
http://www.theage.com.au/business/visa-for-the-wealthy-fuels-house-price-fears-20141016-116u42.html

All the Aussies better book their INA trailer home soon LOL

Wonder if they will have the same problems as we have had here ...
Seems a few of the people that got in under this class here , promised big things, and it's come to very little .More hassle than it's worth in most cases.

[NZSilver]

Hi - interesting stuff above all, enjoyable reading. Whats your thoughts on market correction in NZ - both property & sharemarket? and do they often make each other occur?

Thanks in advance.

[stoploss]

Hi - interesting stuff above all, enjoyable reading. Whats your thoughts on market correction in NZ - both property & sharemarket? and do they often make each other occur?

Thanks in advance.

we have already seen a bit of a correction in the sharemarket . More than a bit if you were an investor in say PEB, XRO ...... In my opinion more to go . Certainly if people are making heaps of money on the sharemarket, they feel better about themselves , spend more and if they make a sizeable chunk possibly upgrade the house .... There were a few stories around Wellington in the last year of people pulling 500K out of XRO and moving up in the housing bracket..didn't happen to me last transaction was a sale at $ 4.44 odd ( can't win em all and I did make on that ....) If there is a sizeable correction , this can feed through to the property market although tends to take quite a while ..depends how much leverage people have in their houses etc and if the shares were on the Flexi mortgage ......

[Entrep]

Do you think the AUD will tank against the NZD as part a correction? This could be a double whammy for NZ investors.

[BFG]

How's the BEAR treating ya KW?

[stoploss]

How's the BEAR treating ya KW?
Not treating me too well , but it is a hedge of sorts on a small part of the portfolio ...

[BFG]

Not treating me too well , but it is a hedge of sorts on a small part of the portfolio ...

Yes, good to know we can hedge our portfolios eh? Going to be interesting to see the reaction of the US market to the FOMC meeting up this week. Very momentous with QE ending and guidance on interest rate rises incoming. I am expecting the rally to end as this rise has basically been predicated upon the rhetoric of one FOMC member (strategic jawboning?). Looking for a lower high and lower low confirmation to show a downward trend channel over the short to medium term.

[robbo24]

Yes, good to know we can hedge our portfolios eh? Going to be interesting to see the reaction of the US market to the FOMC meeting up this week. Very momentous with QE ending and guidance on interest rate rises incoming. I am expecting the rally to end as this rise has basically been predicated upon the rhetoric of one FOMC member (strategic jawboning?). Looking for a lower high and lower low confirmation to show a downward trend channel over the short to medium term.

Ho ho ho... The eternal pessimist. Post this disco-box mumbo jumbo when Da Fed starts to sell down Dem Bonds.

[blackcap]

Just a question for the uninitiated. Is BEAR a long term losing strategy in that over time it will trend to zero? I mean equity markets in the long term will always rise and dividends etc will eat away at a "short" position. So holding BEAR infinitely is not a winning strategy. Thus I concur that BEAR can only be used as a trading/hedge instrument?

[noodles]

Just a question for the uninitiated. Is BEAR a long term losing strategy in that over time it will trend to zero? I mean equity markets in the long term will always rise and dividends etc will eat away at a "short" position. So holding BEAR infinitely is not a winning strategy. Thus I concur that BEAR can only be used as a trading/hedge instrument?
That is my understanding of these type of instruments.

[blackcap]

Its definitely a trading instrument, and best used as a hedge. However, if we ever end up in the same situation as the Japanese, it could be a 20 year holding period :-)

Haha cheers KW. Don't think the ASX is going to do a Nikkei though :) But I get the inference. So BEAR can be used as an "index short". Good to know but Im not going to dip my toes in yet... So tempting the last few weeks to liquidate but then there is that inevitable bounce. Have some cash though sitting on the sidelines and not investing new money.

[Beagle]

Haha cheers KW. Don't think the ASX is going to do a Nikkei though :) But I get the inference. So BEAR can be used as an "index short". Good to know but Im not going to dip my toes in yet... So tempting the last few weeks to liquidate but then there is that inevitable bounce. Have some cash though sitting on the sidelines and not investing new money.

+1 for cash. I don't think we're out of the woods yet by any stretch of the imagination. Airlines now being priced like Ebola is suddenly completely beaten as a threat is one example of how irrational the current market seems to have become.

[Daytr]

+1 for cash. I don't think we're out of the woods yet by any stretch of the imagination. Airlines now being priced like Ebola is suddenly completely beaten as a threat is one example of how irrational the current market seems to have become.

I agree, I think we are likely to see large swings back & forth in equity indices for some time. Its a reflection of US markets in particular getting ahead of themselves in regards valuation vs the economy & the huge amounts of cash on the sidelines that will act as a cushion. DOW for instance looks very toppy above 17k & I'm wondering if it will actually make it back above on this attempt as its been a great short & I think some of the market is waiting to short again. As such I have gone early & shorted the DOW this morning.

I have read a bit of chat of the US economy vs Europe & basically US hedge funds talking of a general short against Europe vs the US. You just have to know this is how they are positioned already & wanting the retail market to carry the load for them. I don't buy it, if anything with the rising USD we may see a bounce in Europe vs the US shortly. Where does that leave the ASX? You certainly can't get too bullish on it that's for sure.

http://www.bloomberg.com/news/2014-10-26/s-p-500-rising-at-five-times-gdp-shows-recovery-priced-in.html


Interestin

[Beagle]

Thanks for the link Daytr. We certainly live in interesting times. If we look at the average projected earnings for 2015 the S&P500 at about 17 times doesn't look expensive compared to historical average and most certainly not in the context of record low interest rates and super low bond yields forcing investors into equities. DOW does look a bit toppy but maybe you've gone a bit early with your short, only time will tell.

Anyone's guess where too from here. Europe looks vulnerable to further geopolitical influences with the DAX down about 10% from its recent high I'd say there could be more to come as Russia continues to paint itself into what appears to be an increasingly intransigent position that's affecting other European economies. How the economic effects of Ebola play out is another wild card with no forward clarity whatsoever.

[Daytr]

No but it looks expensive in comparison to the economic back drop & what is a pretty anemic recovery in the US.
The participation rate in employment is a good indicator of that as is actual wages.
Zero interest rates should actually lower rate of return expectations, hence valuation expectations shouldn't be what they have been historically & I think that is something the market is going to have get used to.
Yep stopped myself out pretty sharply yesterday on my short the DOW, but will see what comes tonight with the FED I suppose.
I suspect we will see another reasonable pull back in US equities at least in the coming days / week.

[noodles]

Wow, did you see the volume that has been going through this thing this week? Looks as though the last run was indeed a practice run, this could be the real thing :t_up:
You don't think the Chinese rate cut will send the BEAR into hibernation for a couple of days at least?

[Daytr]

KW, rate cut signals that China is in a bigger mess than people thought. Really? Not saying that China is by any means perfect & the lack of transparency means its difficult to know what is going on, including if its in a bigger mess than people thought. One thing, China is buying, everything and they have a massive government surplus, something most 1st world economies only dream about. China is making massive changes in the way it does things, particularly in the area of electricity generation, that will make them far more efficient and pollute less. One program of work installing high voltage power cable will save the consuming 150M tons of coal a year! So yes Australia is going to suffer, however its due to stupid over investment in gas, coal & iron ore & massive increases in production than weakness in China. I was involved in some of the deals to finance the massive gas projects as a commodity specialist. I highlighted four years ago that Australia hasn't the only one expanding its gas production dramatically & that there would be a gas glut with all these projects coming on stream at once. Everyone said its ok there are supply contracts in place, the only issue is they may have a contract, but its benchmarked to the Brent price & last I looked that was down over 30%!

[BlackPeter]

OPEC are doing to the gas industry what RIO/BHP are doing to iron ore. Flooding the market, pushing the price lower, in order to drive out competitors. It would be good for the Australian manufacturing industy, if only they had one left LOL

interesting ... the question is, how long are the currently low oil prices going to continue? Most shale oil production is uneconomical below US$80 per barrel, but to flush these competitors out, they need to keep the oil price down for years. Lots of things can happen during that time: world economy improving due to low oil price and increase the oil consumption, ISIL managing to set some oil fields on fire, embargo of Russian oil and gas (getting the price up for the reminder, ...). So I think we should enjoy the low oil prices as long as they are around, but I wouldn't bank on them staying that low.

[Daytr]

Its not OPEC, its the US & Canada they are the ones that have increased production of oil & they burn off an estimated billion bucks of gas a day or week or something as its not worth capturing. OPEC can easily out produce the US in a low price environment, so yes in that regard you are correct. And then there is Russian gas & you can damn well betchya Russia is selling oil directly to China.

[BFG]

I can hear a grinning cheshire cat in the background today...

ASX looking very sick today. Lower high confirmed and we are almost back to the bottom of the last leg down. Looks like correction time is confirmed and it's time to start viewing Oz as a sick man!

[Toulouse - Luzern]

[QUOTE=KW;520208] "Well its better late to the party than to never arrive at all. Hope you have been acting on sell signals in the last few weeks. And continue to do so over the next few weeks. "


Thanks KW for your posts over the years and the views you have shared.

You have been right on this call, as with many others.

Even with last weeks oil price fall and the heavy hits to Santos (STO) on Friday I was not expecting quite so much more of the same today.

The ASX200 is currently down 1.6%, and the Energy sector is down the most at -6.3% and Materials -4.4%.

STO is down another 8.9%, and others are down as well: AWE 10.9%, DLS 8.8%, LNG 23.5%, SXY 9.7%, PDN 12%, WOR 11.3% and WPL 4.8%.

All of the Indices are down except A-REIT that is plus .3%.

With such an across the board markdown it does not look great in the short term

I was lucky, I didn't like what I was seeing and exited the ASX the first week in August.

At some point in the future the contrarians may come into play again and the big question is when.

Thanks and regards

[Beagle]

interesting ... the question is, how long are the currently low oil prices going to continue? Most shale oil production is uneconomical below US$80 per barrel, but to flush these competitors out, they need to keep the oil price down for years. Lots of things can happen during that time: world economy improving due to low oil price and increase the oil consumption, ISIL managing to set some oil fields on fire, embargo of Russian oil and gas (getting the price up for the reminder, ...). So I think we should enjoy the low oil prices as long as they are around, but I wouldn't bank on them staying that low.

Fair bit of debate and conjecture over the weekend on CNBC on the point you've mentioned and nobody seems to know exact numbers.
From what I could gather watching a number of commentators outlining their views on the subject there seemed to be some very loose consensus around
1. If WTI stays consistently below $80 there will be a definite impact upon new investment
2. Cash cost is somewhere around $60 per barrel as a broad average for the sector.

What's motivating the Saudi's ? I'd suggest they're just defending their market position. Russia and other producers took an obstinate position when it came to the pre-market meeting they had with selected Opec members. The Saudi's are reported to be in a superb cash position to ride out a protracted period of weakness and they probably thought if others are going to be obstinate and unhelpful, we don't have to do the heavy lifting on reducing output so why should we ? A lot of market commentators seem to be talking about oil in the $60 range for quite some time, perhaps years. Pretty sad that this is sticking it right up the Russians isn't it :D

[BlackPeter]

Pretty sad that this is sticking it right up the Russians isn't it :D

I guess this is the only thing lifting my mood when looking at what just happened to my TAP shares ... ;)

[Beagle]

I guess this is the only thing lifting my mood when looking at what just happened to my TAP shares ... ;)

This might help lift your mood slightly more http://www.cnbc.com/id/102223303 or you could buy some AIR and hedge your position :)

And this, Ruskies getting it right up the date hole, how sad never mind
http://www.cnbc.com/id/102228742

[BFG]

Yup one of those days again. Higher lows looking pretty good for it.

Hey KW, are there any volality ETFs/ETNs on the ASX? I recently found out I can play VXX.NYSE but would rather keep my money closer to home...

[BFG]

And another day.

I havent found any ETF's but you can buy A-VIX futures.
http://www.asx.com.au/documents/media/ASX_VIX_Futures_-_21_October_2013.pdf

Thanks for that

[JBmurc]

with more funds becoming available been once again looking over some new strategic investments >>> have got Property - Bullion - Cash - Shares ....now maybe some funds to be used to trade in the likes of BEAR 1:1 leverage short ASX200 and BBOZ 2:1

Get some downside Protection for the coming correction we will have >>only a matter of time

https://www.lombardiletter.com/warren-buffett-indicator-predicts-stock-market-crash-in-2017/6076/

[Joshuatree]

BBOZ my only stock in the green today, even my goldies are down.

[Joshuatree]

BBOZ on ASX. Not for the faint of heart with its leveraging but a comfort food when the market goes down
Initial Investment $10,000
Fund "short" exposure (as % of initial investment) 275%
Fund "short" exposure in $27,500

If the value of the Australian market falls by 10%
Initial Investment $10,000
Gain on short position (being 10% x $27,500) $2,750
Value of investment = $12,750
Return % 27.5%

If the value of the Australian market rises by 10%
Initial Investment $10,000
Loss on short position (being -10% x $27,500) = -$2,750
Value of investment $7,250
Return % -27.5%

[Yoda]

my speculative stocks are down 50 - 60 % . I cant see the point in selling now ...... I sold half 2 weeks ago. Should have sold all. Now i have tax and provisional tax to pay . And losses are not tax deductible on ASX . ..mmmmm

[BlackPeter]

Wow!

11118

Discl: happy holder!

[blackcap]

Wow!

11118

Discl: happy holder!

You wait till today starts... even bigger WOW I think.

[BlackPeter]

You wait till today starts... even bigger WOW I think.

I think you are right :);

[Joshuatree]

Dropped re $2 +,along with ASX ?. DOW futures - 600 last i looked, virus numbers jump in Aus. Traders banking on USA govt relief package tonite?

[blackcap]

Dropped re $2 along with ASX ?. DOW futures - 600 last i looked, virus numbers jump in Aus. Traders banking on USA govt relief package tonite?

Australia is an interesting case. If you look at their market post Oct 2009, they have really gone no where, well not like other world markets. They are trading now pretty much where they were 10 years ago, whilst if you look at the NZ market, US markets etc, they are still more than 100% higher than 2009 levels. So some may argue they have little room to move down. But I too find it perplexing.

[JBmurc]

Australia is an interesting case. If you look at their market post Oct 2009, they have really gone no where, well not like other world markets. They are trading now pretty much where they were 10 years ago, whilst if you look at the NZ market, US markets etc, they are still more than 100% higher than 2009 levels. So some may argue they have little room to move down. But I too find it perplexing.

Commodities have been weak Vs pumped tech =Apple,facebook HUGE share buybacks etc and Australia’s commodities-based economy much lower P/Es etc.....
personal think a brilliant time for Kiwis to buying up cheap good ASX companies 100k NZD = 98k AUD

As for the NZX such a safe high yielding market during a time when many investor are hunting for any yield ..staple based economy (farming,fishing,forestry etc)

[BlackPeter]

Golden Cross yesterday for the BEAR.AX - and today for the Strong Bear (BBOZ.AX). What an amazing set of hedging tools these are!

[stoploss]

Commodities have been weak Vs pumped tech =Apple,facebook HUGE share buybacks etc and Australia’s commodities-based economy much lower P/Es etc.....
personal think a brilliant time for Kiwis to buying up cheap good ASX companies 100k NZD = 98k AUD

As for the NZX such a safe high yielding market during a time when many investor are hunting for any yield ..staple based economy (farming,fishing,forestry etc)

Make that $ 99K and change .....

[Joshuatree]

BBOZ .Everyone still on this ultimate ride.? Im not game to trade it, anyone done that successfully?

[BlackPeter]

BBOZ .Everyone still on this ultimate ride.? Im not game to trade it, anyone done that successfully?

Holding some. So far they work nicely as "insurance policy" to compensate for other stocks in my portfolio dropping. Resulting in much smaller oscillations in my portfolio than what the indices do. I do see them as a hedging tool, not as an instrument to bet on falling markets.

[blackcap]

Holding some. So far they work nicely as "insurance policy" to compensate for other stocks in my portfolio dropping. Resulting in much smaller oscillations in my portfolio than what the indices do. I do see them as a hedging tool, not as an instrument to bet on falling markets.

It may work well but be careful holding too long. Last time BBOZ were at 1265 (yesterday's close) (ignoring a month ago) was about a year ago when the ASX was at 6200. Yesterday it was at 5287. There is some serious loss if you hold this instrument for a medium to long term basis.

[BlackPeter]

It may work well but be careful holding too long. Last time BBOZ were at 1265 (yesterday's close) (ignoring a month ago) was about a year ago when the ASX was at 6200. Yesterday it was at 5287. There is some serious loss if you hold this instrument for a medium to long term basis.

You are quite right and I am aware of this issue. However - I think markets are still ways in denial and I expect probably later this month or early next month still a quite significant drop, which would be good for the strong bear.

Obviously - I might be wrong and everything is honky dory from here with nobody realizing all these dead and unemployed people piling up.

If this happens, than yes, I might lose a bit of money with BBOZ, but hey - my other stocks would in this case do really well (which is the nature of hedging). Anyway, I think at this stage I better stay hedged.

[ynot]

You are quite right and I am aware of this issue. However - I think markets are still ways in denial and I expect probably later this month or early next month still a quite significant drop, which would be good for the strong bear.

Obviously - I might be wrong and everything is honky dory from here with nobody realizing all these dead and unemployed people piling up.

If this happens, than yes, I might lose a bit of money with BBOZ, but hey - my other stocks would in this case do really well (which is the nature of hedging). Anyway, I think at this stage I better stay hedged.

I have been thinking the same. Don't watch Ausi too closely but the way it's behaving this morning you could be fooled to thinking "what virus" . Surely if the world is going down Ausi is going with it ?

[blackcap]

Found it, its US based but applies to BEAR and BBOZ just the same:
Real-Life Examples
The following two real-life examples illustrate how returns on a leveraged or inverse ETF over longer periods can differ significantly from the performance (or inverse of the performance) of their underlying index or benchmark during the same period of time.

Between December 1, 2008, and April 30, 2009, a particular index gained 2 percent. However, a leveraged ETF seeking to deliver twice that index's daily return fell by 6 percent—and an inverse ETF seeking to deliver twice the inverse of the index's daily return fell by 26 percent.
During that same period, an ETF seeking to deliver three times the daily return of a different index fell 53 percent, while the underlying index actually gained around 8 percent. An ETF seeking to deliver three times the inverse of the index's daily return declined by 90 percent over the same period.

https://www.finra.org/investors/alerts/leveraged-and-inverse-etfs-specialized-products-extra-risks-buy-and-hold-investors

[DarkHorse]

David McEwan's offering a managed shorts service - in case anyone is familar and/or has any general thoughts?

[JBmurc]

Back into BBUS @ $2.51

I just get the feeling this run in US markets going end in tears sooner than later .. BBUS making a major double bottom

[Joshuatree]

Goodluck mate,I havnt been daring enuff to get back in BBOZ.Hey Peat ,you around,what is your t/a telling you,you thought a drop was close some days back.

[ynot]

Goodluck mate,I havnt been daring enuff to get back in BBOZ.Hey Peat ,you around,what is your t/a telling you,you thought a drop was close some days back.

BBOZ is looking inviting, but dangerously so.

[JBmurc]

Goodluck mate,I havnt been daring enuff to get back in BBOZ.Hey Peat ,you around,what is your t/a telling you,you thought a drop was close some days back.11754

Double bottom ..COVID cases making records etc

And Going off the USA 500 Futures S&P 500 index the Supertrend has just today broken the hourly Bull Trend that has held since late 26th JUNE

[peat]

Goodluck mate,I havnt been daring enuff to get back in BBOZ.Hey Peat ,you around,what is your t/a telling you,you thought a drop was close some days back.

yeh I still think that and am taking positions across various instruments. some have been stopped already - but I thnk the market is perfectly poised for a very sharp fall.
Last night was okay for bears, but hoping for more.

[JBmurc]

yeh I still think that and am taking positions across various instruments. some have been stopped already - but I thnk the market is perfectly poised for a very sharp fall.
Last night was okay for bears, but hoping for more.

Yes my BBUS put me up $817 for the day ... going hold for another night maybe even till next week

[Yoda]

Is BBOZ safe to buy.. they seem to own nothing and have no CEO or anything? Their disclaimer is really lose. Like ...we own nothing , we do nothing and we guarantee nothing ...!
Looking to buy some though before its too late and the world wakes up to what a mess we are in .

[ynot]

Is BBOZ safe to buy.. they seem to own nothing and have no CEO or anything? Their disclaimer is really lose. Like ...we own nothing , we do nothing and we guarantee nothing ...!
Looking to buy some though before its too late and the world wakes up to what a mess we are in .

It's behaviour has similarities to a roulette wheel. One things for sure, when the shtf finally bboz is headed upwards fast.

[BlackPeter]

Is BBOZ safe to buy.. they seem to own nothing and have no CEO or anything? Their disclaimer is really lose. Like ...we own nothing , we do nothing and we guarantee nothing ...!
Looking to buy some though before its too late and the world wakes up to what a mess we are in .

Hmm ... your statement does not compute. Do you understand that BBOZ is not a company (which would have a CEO), but a hedge fund run by Betashares (https://www.betashares.com.au/)?

Have a look through their information sheets:
https://www.betashares.com.au/fund/australian-equities-strong-bear-fund/

They do as well publish as well their NVA daily (as most other ETF's do as well): https://www.betashares.com.au/fund/australian-equities-strong-bear-fund/#keyfacts.

If you wnat to know what their holdings consist of - this is the place to download the list: https://www.betashares.com.au/fund/australian-equities-strong-bear-fund/#resources

Much better information than many of the hyped up growth companies with nothing to show but a often flimsy story.

As well - quite predictable behaviour - market goes up BBOZ goes down and vice versa. Obviously - any investment into this fund is only sensible if you think the market goes down ... or just using them as a hedge (as I do).

[Yoda]

Thanks .. all very helpful. Yea, i understand they arnt a company as such, cheers. Thankyou for your time and knowledge.

[ynot]

My point about bboz volitility was its leveraged so if for example market moves up 2%, bboz moves up 4% and vice versa on the down side.

[BlackPeter]

My point about bboz volitility was its leveraged so if for example market moves up 2%, bboz moves up 4% and vice versa on the down side.

Just not sure whether "volatility" is an appropriate description and "roulette wheel" is an appropriate comparison in this context.

Sure - it is designed to move twice as fast as the index, however the movements are highly predictable (which would not be the case for a roulette wheel), but I suppose it depends how to use this instrument.

Obviously - if you use them to speculate (and BBOZ is the only instrument you are holding), than yes, it will jump around a lot. However - if you put some of your funds (say 10 to 20 %) into BBOZ to hedge you against the jumping around of the index, than they are an amazing tool to protect you against market volatility ... and while I know that (e.g.) BBOZ does protect my portfolio against volatility, a roulette wheel clearly would not.

That's the difference between speculating, hedging and gambling ....

[ynot]

True. Not exactly Roulette but one needs to be aware of the leverage. Can move with severity.

[petty]

Im struggling to get my head around the impacts of the rebalancing. I understand that during times of high volatility this re-balancing is happening more frequently.

Id like to take a position in BBUS and BBOZ. Im more the buy and hold type rather than trading daily/weekly. Does the re-balancing that these products undergo make these a traders product or is a buy and wait for next crash approach appropriate with these products?

I have exposure to US and Aus and want to hedge but dont know enough to be trading these products on a daily weekly basis.

Feedback welcome

[BlackPeter]

Im struggling to get my head around the impacts of the rebalancing. I understand that during times of high volatility this re-balancing is happening more frequently.

Id like to take a position in BBUS and BBOZ. Im more the buy and hold type rather than trading daily/weekly. Does the re-balancing that these products undergo make these a traders product or is a buy and wait for next crash approach appropriate with these products?

I have exposure to US and Aus and want to hedge but dont know enough to be trading these products on a daily weekly basis.

Feedback welcome

None of these instruments is suitable for "buy and hold forever" - unless you assume that humanity and the stock markets have from here a one way ticket to hell (and in that case it probably doesn't matter anyway what you hold).

I do hold some of them as a limited part of my portfolio (~15 ... 25%) in times of higher volatility (and yes, I think it is fair to say we are in one of these times). I don't attempt to predict the market, just smooth some volatility out of my portfolio. Obviously - it makes more sense to buy them, if I think the down risk is higher than the chance for further gains (and to sell them in the opposite situation).

[sampson]

Have been looking at these for awhile - wish I knew about them earlier in the year but went with asx GOLD as a minor (perhaps naive) experimental hedge. But quick question BP - what are the tax implications of these stocks given no prospect of dividend etc. Is tax obligatory or can it be avoided by citing that it is a capital preservation type hedge or something?

[BlackPeter]

Have been looking at these for awhile - wish I knew about them earlier in the year but went with asx GOLD as a minor (perhaps naive) experimental hedge. But quick question BP - what are the tax implications of these stocks given no prospect of dividend etc. Is tax obligatory or can it be avoided by citing that it is a capital preservation type hedge or something?

Not a tax specialist ... i.e. take this with a grain of salt.

As long as you use them as a hedge (i.e. basically to reduce capital losses you otherwise would have suffered across your
portfolio) I would not anticipate tax implications. Obviously - if you are a trader, you would just add any gains you make (or losses you suffer) with buying / selling them to the gains / losses you made with other stocks and report on the total.

I suspect if you use them not as a hedge but buy them to speculate on a falling index and make a profit from trading them, than it might be difficult to convince IRD that your intention was not to make a capital gain ...

[sampson]

Thanks BP, that all makes sense to me.