Is a Bear Market starting to play out on the NZX ?

[JohnnyTheHorse]

Fantastic chart winner.

It doesn't matter how serious you think corona virus is. The fact is that there are some very serious imbalances in economies and markets worldwide. The virus may just be the grain of sand that makes the pile collapse.

[Beagle]

Looking at this chart from AMP Capital NZX could easily ‘correct’ by 50%

Earnings don’t support a PE of 32

Experience says when markets ‘correct’ nearly everything goes down ...even the cheap undervalued shares

All speculation anyway

Something you and I have been chatting about by PM and email for well over a year now eh mate. Markets are far too stretched and are looking for any excuse for a major correction and they have found a very, very good one. Interesting poll result...an overwhelming 95%+ of people believe we are at the very least in for a serious correction ! The vast majority of those believe we are in for a bear market, more than 20% drop.

Interestingly in less than 10 trading days the S&P 500 is down 12% and both the Nasdaq and Dow down just under 13%. Fastest correction in the history of the US market EVER.

[Beagle]

P/Es have been ridiculous for years. Remember when the NZ market was cheap back in the 90s-early 2000s when many companies were trading on P/Es under 10 and even the super growth stocks were considered expensive if they went over 20 P/E.

Some of the ones now are on P/E of 60. Which implies they would need to lose more than half their value to be a fair price in a bear market.

Again low interest rates have an influence though, which is why we will probably not see those sort of drops.


I think there could be a quick rebound to all this, the public will be hanging out for some shopping/spending/partying once this virus is out the way. Cancelled holidays will be rebooked and we will all feel lucky to be alive.

I remember those days very well...like they were yesterday. You could buy good quality companies on late single digit PE's.
I think you are right that when the rebound comes it will be very quick as people will spend and enjoy life when they feel completely safe again, happy just to be alive...but my sense is that day when the consensus view it is safe is many, many months down the track, perhaps more than a year. In the meantime, batten down the hatches, stock up one's larder and storehouse properly with plenty of long life food and other necessities and prepare for the lockdown. Covid 19 is here and I am absolutely certain the first case will not be the last.

[Balance]

Now that there is a case in NZ, the real panic on NZX will start on Monday.

Brace yourself.

[Beagle]

Now that there is a case in NZ, the real panic on NZX will start on Monday.
Brace yourself.

I think the supermarkets will be incredibly busy this weekend like nothing anyone on here has seen before. Set the alarm early and get in before 7.30 to avoid the massive crowds and invest in an ample supply of long life food. I knew this was coming so we have done several massive shops already.

[Crypto Crude]

I told yah weeks ago it was already here in New Zealand...
No surprise at all really...

.^sc

[winner69]

For health and safety reasons I think the NZX should not open Monday and stay closed for at least a week

[couta1]

For health and safety reasons I think the NZX should not open Monday and stay closed for at least a week

All markets should be shut down for at least a week, settle the nerves of the Lemmings.

[winner69]

All markets should be shut down for at least a week, settle the nerves of the Lemmings.

That’s what I was thinking

[winner69]

All markets should be shut down for at least a week, settle the nerves of the Lemmings.

Also give them time to go out and buy heaps of provisions for the bunkering down ....and maybe get a haircut so one doesnt to get too shaggy over winter