Black Monday

[Beagle]

https://www.cnbc.com/2018/02/09/mark...her-warns.html

Whiplash a good adjective for it. Interestingly if you vote in their poll you'll see 66% of respondents think this whiplash will continue for weeks, 7% are undecided and just 27% think the worst is over.

[tzbang]

Kind of a oddly loaded question though.. they ask 'Do you think the market tumour could last weeks?'Do I think it could? Well.. sure it could. This doesn't mean that I think it will.. but yes it could so I will tick that box.

[couta1]

https://www.cnbc.com/2018/02/09/mark...her-warns.html

Whiplash a good adjective for it. Interestingly if you vote in their poll you'll see 66% of respondents think this whiplash will continue for weeks, 7% are undecided and just 27% think the worst is over.

So Ms Hooper reckons the market will end up 10% by the end of the year aye, gotta love that turmoil.

[tipsy]

Damn, another down day, whats that like 6 in a row now.

[couta1]

Damn, another down day, whats that like 6 in a row now.

No working out why certain stocks are getting hammered, core infrastructue divvy payers bearing the brunt. My two best performing stocks are complete opposites, yet both are holding up well, A2 high beta/PE growth stock versus HLG low beta divvy stock, the only thing they have in common is both are expecting good reports coming up.

[Beagle]

Damn, another down day, whats that like 6 in a row now.

Since April 2012 when the average historical PE on the NZX was just 13.5 we have been in a rising trend to where its now a whopping 22.5, (10 year average is just 16.6).
Its easy to make good gains when the market has expanded its PE by 67% over the last 6 years but much harder in a market where the market PE is contracting.
I expect a reversion towards the 10 year average PE to slowly unfold over the next two years. Lots of good stocks as well as the not so good could simply be ground down to the point where it becomes extremely frustrating to own them. Further, I note the NZX hasn't retraced nearly as much as many overseas markets with large parts of the European markets and Asia as well as the U.S. down 10-11% since recent market high's and this despite the fact that our market is one of the highest in the world. I continue to expect companies like ATM to perform well in a secular bear market because of their explosive earnings growth but companies with quite modest earnings growth on a PE of more than the market average of 22.5...good luck with them !

Worth noting that our market was down today on the back of a reasonably good Friday on the U.S. markets where the Dow rallied ~ 330 points. I see that as a bad sign and I am very cautious regarding expectations going forward.

[RGR367]

Damn, another down day, whats that like 6 in a row now.

I was more looking unto the stocks I was able to buy last week for comparison as of today. For IFT and SKO, I'm up by 5 cents. TGH down by a cent. NZK up 1 cent but got walloped by AIA being down by 20 cents. Time will tell of course whether I blew up my funds big time and/or gut feel was wrong. And yeah, I used ML funding those buy orders.

[BlackPeter]

I bought more CNU last week and find the % drop a bit odd for a core infrastructure stock with no profit downgrades, it hit a 52 wk low on Friday. On a pretty good PE as well.

Hmm - forward PE of 20 (@3.94 - last week) and no growth at all (well, unless you ignore the minus sign at the beginning). Sure - it is a quite safe investment unless the government or the commerce commission does something stupid (which - of course - never will happen until it does), but it just feels a bit too dear in a time of PE contraction ...

Why do you feel it odd for CNU to drop?

[Beagle]

http://www.4-traders.com/CHORUS-LTD-...80/financials/
Analysts are forecasting declining earnings and on a PE of above 21 for FY19. I wouldn't touch it with a barge pole.

[winner69]

Using Beagles numbers of NZ50 having a PE of 13.5 as at April 12 and a PE of 22.5 now (say at end of Jan) these numbers might highlight what effect the PE expansion has had.

From April 2012 to January 2018:

• NZ50 up from 3555 to 8442 - up 138% or 17.6% pa
  
  
• Earnings (eps) over this period have grown by just under 7% pa
  
  
• Of the increase in the NZ50 30% has come from earnings growth and a whopping 70% from PE expansion.
  
  
• If the NZ50 was still valued at a PE of 13.5 it would have been 5060 as at Jan18 - some 40% lower than what it was
  
  
• If the NZ50 was valued at Jan18 at its long term average of 16.6 it would have been be at 6225 - some 27% lower than what it was

What Roger is saying in his above post is that this PE expansion has made us a lot richer (hasn’t been all due to our superior stock picking skills) and that if the market reverts to an average (normalised?) PE there is is heaps more pain to come than we have experienced last week

I don't know whether it will happened but it has happened in the past

Probably not exact numbers but only shown as to the quantum as to what may happen ...and it is quite significant ....and all this can happen while earnings continue to grow, its all about market sentiment and what a ounter wants to pay for a $ of earnings