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12-02-2018, 07:05 PM
#4061
Originally Posted by Beagle
Current PE around 14, not sure if you can trust 4 traders mate, although I note their average concensus target is $4.18, so toss a coin to get a clear crystal ball. PS-I think you'd have to admit there isn't much you would touch with a barge pole at the moment. PPS-Are these not the same analysts that had Air on a concensus value of $2.10, even when it was over $3?
Last edited by couta1; 12-02-2018 at 07:07 PM.
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12-02-2018, 08:10 PM
#4062
Originally Posted by couta1
Current PE around 14, not sure if you can trust 4 traders mate, although I note their average concensus target is $4.18, so toss a coin to get a clear crystal ball. PS-I think you'd have to admit there isn't much you would touch with a barge pole at the moment. PPS-Are these not the same analysts that had Air on a concensus value of $2.10, even when it was over $3?
You make valid points Couta, albeit imho in regards to a quite unique approach to investing/profiting (and what comes across as supreme upside confidence in spite of mounting evidence), however it would be good along the way to acknowledge hard earned long time experience and expertise, not to mention the propensity to share that unselfishly.
Maybe the summary could be put simple as, we cannot treat the market as an endless bull and when the tide appears to be turning it is prudent to re-evaluate ones investing/trading strategy. Whether it is or not reverting, slavishly following proven bull market methods are not necessarily the best strategy for potential alternate realities which the 'market' has not experienced for around a whole decade. Like institutional memory loss.
Some move to mitigate risk quickly or apparently early, or soonish, or maybe depending on, or a bit later if, but don't let it get to oops. Oops at a portfolio level (missing a bull or a bear) hurts bad, really really bad, like way worse than making a poor decision buying a single share and having it turn to custard.
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12-02-2018, 08:50 PM
#4063
Originally Posted by Beagle
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.
Yes I was a bit disappointed but really Fridays rally on SP500 was also very muted.When the mood changes not so many wish to become bargain hunters
A shock like we've just had on the global markets usually isn't nothing, and the impact can be quite prolonged however at this point I will take a sanguine view of the near future as a consolidatory phase which could be as I said quite lengthy say a few years or more.
I still think there's a reasonable possibility that we are now in a counter trend phase meaning that after this phase there might still be one last final upward leg.
This period we've now entered into is likely to have many characteristics of a bear market but is merely part of a larger pattern that is still bullish on bigger time frames.
So its not time to give up, its time to conserve energy, plan your attacks more carefully, accept that winning just got harder but do it anyway.
On Percy's recommendation I just bought an e-copy of The Zulu principle. It is an excellent work despite being written in the early 1990's. I will go back to it a lot over coming months.
For clarity, nothing I say is advice....
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12-02-2018, 09:15 PM
#4064
Originally Posted by couta1
Current PE around 14, not sure if you can trust 4 traders mate, although I note their average concensus target is $4.18, so toss a coin to get a clear crystal ball. PS-I think you'd have to admit there isn't much you would touch with a barge pole at the moment. PPS-Are these not the same analysts that had Air on a concensus value of $2.10, even when it was over $3?
TBH its not a stock I follow mate. After the regulatory fiasco a while back I think anyone investing needs to seriously consider regulatory risk going forward and yes as you know I think the caliber of AIR analysis has been weak.
Now I've reached the conclusion there's a probability that we're either very close too or right at a market peak in terms of PE and my risk assessment of the market has changed I'm going to need to do a lot of work around what stocks I believe will do well in this new environment. I've gone to 75% cash while I work on a new strategy but my preliminary thinking is low PE companies with a needs based business should significantly outperform the market e.g. OCA. Super growth shares like ATM should also do well. SUM other companies are very good value too based on their past record of strong growth. REIT's trading below asset backing like ARG might also do okay, approx. 9% gross.
Agree Peat there's a chance that this bull has some leg up left but with this it now nine years old from the finish of the GFC widely regarded as the bottom of the cycle in March 2009 its increasingly looking unsteady on its aging feet. I might move back to a slightly higher invested position if the extreme volatility subsides over the coming weeks and that will be on a case by case basis on their merits as companies report but I will be looking for deep value and a sustainable and defensible business model in a bearish market as the cornerstones to any moderate re-deployment of cash reserves. I'll be leaving fancy pants tech companies with their creative valuation methodologies for others to enjoy.
Last edited by Beagle; 12-02-2018 at 09:22 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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12-02-2018, 09:22 PM
#4065
Originally Posted by peat
On Percy's recommendation I just bought an e-copy of The Zulu principle. It is an excellent work despite being written in the early 1990's. I will go back to it a lot over coming months.
Thanks for the reminder, just ordered one online. Have meant to buy and read this for a few years now, just never got around to it. Cheers.
Where the market is going to from here? PE's are high but if this low interest rate environment stays then I think high PE's are here to stay too. If interest rates do go up we should and would get a PE squeeze. NZ? finding it hard to find places to park money comfortably but holding cash is so difficult too. Not selling out yet, but not putting any new cash in either so any extra now accumulates as cash rather than reinvesting into equity.
Last edited by blackcap; 12-02-2018 at 09:24 PM.
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12-02-2018, 10:09 PM
#4066
Member
Interesting day, more red today than expected with the slight recovery in the US on Friday.
NZX has had a large increase in foreign ownership over the last 5 years. I wouldn’t be surprised if there is a bit of a ‘risk off’ approach by foreign demand that views our market subject to higher volatility. Today’s result could be a pointer to that, would be wonderful to see the data of who was selling today.
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13-02-2018, 12:21 AM
#4067
Courtesy of http://aswathdamodaran.blogspot.co.nz/
https://twitter.com/AswathDamodaran
http://people.stern.nyu.edu/adamodar...tacurrent.html
http://people.stern.nyu.edu/adamodar...le/MReg18.html
Market Meltdowns: Reasons, Symptoms and Consequences
Explanation |
Symptoms |
Market Consequences |
Panic Attack |
Sharp movements in stock prices for no discernible reasons, with surge in fear indices. |
Market drops sharply, but quickly recovers back most or all of its losses as panic subsides |
Fundamentals |
Event or news that causes expected cash flows, growth or perceived risk in equities to change significantly. |
Market drops sharply and stays down, with price moves tied to the fundamental(s) in focus. |
Repricing of Risk |
Event or news that leads to repricing of risk (in the form of equity risk premiums or default spreads). |
As price of risk is reassessed upwards, market drops until the price of risk finds its new equilibrium. |
Attachment 9483
Year |
Earnings Yield |
Dividend Yield |
T.Bond Rate |
Implied ERP |
2006 |
6.18% |
1.77% |
4.70% |
4.16% |
2007 |
5.62% |
1.89% |
4.02% |
4.37% |
2008 |
7.24% |
3.11% |
2.21% |
6.43% |
2009 |
5.35% |
2.00% |
3.84% |
4.36% |
2010 |
6.65% |
1.84% |
3.29% |
5.20% |
2011 |
7.72% |
2.07% |
1.88% |
6.01% |
2012 |
7.18% |
2.13% |
1.76% |
5.78% |
2013 |
5.81% |
1.96% |
3.04% |
4.96% |
2014 |
5.49% |
1.92% |
2.17% |
5.78% |
2015 |
5.20% |
2.11% |
2.27% |
6.12% |
2016 |
4.86% |
2.01% |
2.45% |
5.69% |
2017 |
4.42% |
1.80% |
2.41% |
5.08% |
ERP slid down to 4.4-4.5% in 12/17 - 02/18
Current ERP is up to 5.08% after this correction.
Attachment 9484
How the correction stacks up below:
Attachment 9485
Seeing as this is a thread named Black Monday... 87'
Annual Returns on Investments in
|
Year |
S&P 500 |
3m T.Bill |
10y T. Bond |
1986 |
18.49% |
6.04% |
24.28% |
1987 |
5.81% |
5.72% |
-4.96% |
1988 |
16.54% |
6.45% |
8.22% |
1989 |
31.48% |
8.11% |
17.69% |
2013 |
32.15% |
0.07% |
-9.10% |
2014 |
13.48% |
0.05% |
10.75% |
2015 |
1.36% |
0.21% |
1.28% |
2016 |
11.74% |
0.51% |
0.69% |
2017 |
21.64% |
1.39% |
2.80% |
Attachment 9482
Mean global PER ratios could be skewed by a huge amount of those with TTM well over 40+ that will not be there next year.
130 NZX companies are included in this data.
Expected revenue growth over the next 2 years of 24.35%
Expected EPS growth over the next 5 years of 17.41%
Net profit margins are the highest we have seen in 20 years at 10.09%
If these expectations are not met... that is when you begin to revaluate the story of growth and we can move into a comfortable bear market.
In the meantime, the growth is there and unless you have positions too big to dump in a day then trying to pre-empt destruction is futile IMO.
A list of possible major events as long as my arm, same as every other year, but the end result does get worse over time.
Be wary... not fearful.
Last edited by hardt; 13-02-2018 at 08:43 AM.
Reason: sp
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13-02-2018, 07:04 AM
#4068
Originally Posted by couta1
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.
Choosing stocks at times like this are critical.We all have our ways but which are more likely to work?
I dont trust charts or statistics.
To me the most important is fundamental value-by that i dont mean NTA but what future earnings are going to do-or likely to do.
It intrigues me that you are thinking of buying chorus.I sold out sometime ago feeling there was too much risk from wireless
With data demand increasing so fast I feel this risk has reduced.
Could you be kind enough to summarise why you think chorus is a good buy?
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13-02-2018, 07:06 AM
#4069
If you are selling a portion of your portfolio as a risk mitigation strategy you'll regret it sometimes. If The market goes up, you'll regret selling anything. If it collapses, you'll regret not selling more.
Not fair is it
Last edited by winner69; 13-02-2018 at 07:50 AM.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
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13-02-2018, 08:24 AM
#4070
Our old mate Warren Buffett nailed the current market when he said, “It’s only when the tide goes out, you find out who has been swimming naked.”
It’s been interesting reading the posts over the last week as the USA indexes sink and while NZX follows (to a lesser extent.)
Investors new to the market, or those exposed via recent purchases at the ‘top of the cycle’, or via leveraged/margin borrowing are swimming naked, while those longer in the market are treading water with a nervous eye on the rocks.
IMHO the market is beginning to look better after the recent ‘correction’ .
Hardt – Your post #4071 gives much food for thought and endorses my theory that it is BAU (Business as Usual) after a timely correction. “Be wary, not fearful” is my mantra at the moment.
I have no borrowings/leverage and in January 2018 I was up a giddy $46k in one month then as at last friday I was down $38k . Overall in 2018 I’m still up $8k to-date.
Like Percy I’m sitting on the sidelines, not buying or selling at the moment. To me the merits of being long term (4yrs) in the market are paying off big time during this period of uncertainty. My share portfolio is currently still up 160% so another 10% fall will not effect me too greatly.
As NZ/ASX company results start coming out over the next few weeks we will get a better picture about what shares are overpriced/underpriced, and I’ll make my decisions then.
Interesting times, keep swimming and keep your heads up.
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