Black Monday

[fish]

I simply do not understand why people are not taking more interest in the gentailers-the chances of the sp going up must at least equal the chances of going down-and in the meantime great dividends-annoucements are due out soon.

[K1W1G0LD]

Welcome to the realworld worrywarts, major corrections happen about once a decade , like business and company corrections ...................all cyclical ..................c'est la vie ..........................the sky will not fall.

[skid]

Welcome to the realworld worrywarts, major corrections happen about once a decade , like business and company corrections ...................all cyclical ..................c'est la vie ..........................the sky will not fall.

Thats a great outlook for living your life--but lousy for your bank balance

Meanwhile Bull..Cash is not a great growth commodity at this stage ,Its true,but in times of turmoil its a very good commodity for preserving wealth...Its the stuff you buy those shares with,so if shares go down,the value of that cash(lol)goes up in terms of what you can buy.
Everyone is looking for growth,but there is more than one way of achieving this.
In an indisputable bull market(pardon the pun) then growth is a pretty good strategy..but when things look dicey it is not so silly to think defensibly..(that defense can turn into an offense if one plays his (or her)cards right and sells and buys at a bargain later.

So we have 2 camps going on here with the market being the wild card.

Im mostly in cash atm as the prospects of finding a good share in this environment seem to be running against suitable odds and my warts (if I had any) would not be worried at all.

[xafalcon]

1 - NZ shares been rerated over the last few years. NZ market PE now higher than global average (so says AMP Capital). Any reversion to the mean will probably impact nz to a greater degree than other markets

2 - Dividend growth in NZ has been significantly higher than earnings growth (sustainable?)

3 - The beta of the NZX over global shares is about O.6% (monthly) . Global shares go up/down 1% NZX goes up/down 0.6%

4- Trends take much longer to play out then one thinks.

5- some have seen it all before

Just 5 things I have noted lately - don't ask me what it all means except that if world markets collapse the nzx will be affected to some extent.

TheNZ sharemarket make-up has been heavily skewed towards yield stocks in recent years by thegovernment sale of the power companies & air NZ. This causes/heavily contributes toseveral of your observations above. Especially

2 - Power companies pay out from fcf, allowing higher dividends

1 - As a result of 2. I can't see any lowering of average P/E unless the power companies lower their dividends.

3 - The NZ market is less exposed to volatile commodity and tech sectors thanmany other major markets, with heavy weighting towards reliable cashflowbusinesses with captive markets, so reduced SP volatility expected

The problem is that in times of caution, the NZ market still gets sold off even though business fundamentals haven't changed - the same amount of electricity will be sold at the same price regardless of what's happening in the world, the same number of houses and commercial building will be built, people will still travel to NZ on holiday and to live, the NZ economy is still one of the best developed markets in the world, the government is stable and moderate and pro-business, NZ FTA's coming into effect and increasing income.

However the basic heard mentality seems to trump all "real fundamentals". August 2015 was the same. It's just the depth and duration which is uncertain

[skid]

TheNZ sharemarket make-up has been heavily skewed towards yield stocks in recent years by thegovernment sale of the power companies & air NZ. This causes/heavily contributes toseveral of your observations above. Especially

2 - Power companies pay out from fcf, allowing higher dividends

1 - As a result of 2. I can't see any lowering of average P/E unless the power companies lower their dividends.

3 - The NZ market is less exposed to volatile commodity and tech sectors thanmany other major markets, with heavy weighting towards reliable cashflowbusinesses with captive markets, so reduced SP volatility expected

The problem is that in times of caution, the NZ market still gets sold off even though business fundamentals haven't changed - the same amount of electricity will be sold at the same price regardless of what's happening in the world, the same number of houses and commercial building will be built, people will still travel to NZ on holiday and to live, the NZ economy is still one of the best developed markets in the world, the government is stable and moderate and pro-business, NZ FTA's coming into effect and increasing income.

However the basic heard mentality seems to trump all "real fundamentals". August 2015 was the same. It's just the depth and duration which is uncertain

Thats one of the pitfalls of globalization--Other countries can stuff up even your own fundamentals,especially if you are commodity based.
We are lucky at this point its food items rather than natural resources like Australia---''we all thought Chinas demand would go on forever''-but they are looking to create a domestic economy that produces for itself so nothing is certain--it will take time though.

[stevevai1983]

Thats one of the pitfalls of globalization--Other countries can stuff up even your own fundamentals,especially if you are commodity based.
We are lucky at this point its food items rather than natural resources like Australia---''we all thought Chinas demand would go on forever''-but they are looking to create a domestic economy that produces for itself so nothing is certain--it will take time though.

Some big pictures:
Chinese people born after 1980 have huge difference with their parents in terms of spending.
Our parents they suffered "dark age" especially the "cultural revolution" (true true dark age...), they are extremely conservative about spending.
Their saving rate is insane: basically save everything only spend minimum amount of money.
However in my generation, our saving rate drops significantly. We like to spend and enjoy our lives.
People born after 1990 spend even more money. It's the trend.
Also during the past 25 years, lots of family became middle class, the ability to spend has increased dramatically.
so here is my guess: after 10 years, when 1980 generation dominates the country, china's consumption/demand will boom...

[BIRMANBOY]

Yes I agree with your post, however I don't believe it will take 10 years for the "boom". Its been trending well up for years

GDP annual growth for China data from World Bank 1996 to 2000 was 9.5%, 2001 to 2005 was 7.8% 2006 to 2010 was 7.7% 2011 to 2015 was 7.3% So even though some people are saying China is going to be a huge factor in a slowing economy, the reality is that this is a very small reduction going from 7.8% down to 7.3 % and over 16 years. World population is still growing, growing affluence and looser purse strings from new generation should ensure more spending and growing need for consumables. Also add into this a similar situation in India and actually any drop in markets etc , I believe will be fairly short in duration. Money will keep flowing and excess money will be mopped up by share markets. A forward looking person might be looking at buying up some dirt cheap miners etc. in Au and sitting on them for 5 years of so.

Some big pictures:
Chinese people born after 1980 have huge difference with their parents in terms of spending.
Our parents they suffered "dark age" especially the "cultural revolution" (true true dark age...), they are extremely conservative about spending.
Their saving rate is insane: basically save everything only spend minimum amount of money.
However in my generation, our saving rate drops significantly. We like to spend and enjoy our lives.
People born after 1990 spend even more money. It's the trend.
Also during the past 25 years, lots of family became middle class, the ability to spend has increased dramatically.
so here is my guess: after 10 years, when 1980 generation dominates the country, china's consumption/demand will boom...

[stoploss]

Yes I agree with your post, however I don't believe it will take 10 years for the "boom". Its been trending well up for years

GDP annual growth for China data from World Bank 1996 to 2000 was 9.5%, 2001 to 2005 was 7.8% 2006 to 2010 was 7.7% 2011 to 2015 was 7.3% So even though some people are saying China is going to be a huge factor in a slowing economy, the reality is that this is a very small reduction going from 7.8% down to 7.3 % and over 16 years. World population is still growing, growing affluence and looser purse strings from new generation should ensure more spending and growing need for consumables. Also add into this a similar situation in India and actually any drop in markets etc , I believe will be fairly short in duration. Money will keep flowing and excess money will be mopped up by share markets. A forward looking person might be looking at buying up some dirt cheap miners etc. in Au and sitting on them for 5 years of so.

Birmanboy that looks to be trending down to me ? although still a number ( if real ) that most countries would love to have

[BIRMANBOY]

Picky picky..Yes but a very small drop over the afore mentioned 15 year period. I should have said that the trend has stayed up. Happy now? Real? World Bank...as real as any number I suppose.

Birmanboy that looks to be trending down to me ? although still a number ( if real ) that most countries would love to have

[stoploss]

Picky picky..Yes but a very small drop over the afore mentioned 15 year period. I should have said that the trend has stayed up. Happy now? Real? World Bank...as real as any number I suppose.

yep as real as those S&P AAA rated CDO 'S ...........