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  1. #251
    Advanced Member BIRMANBOY's Avatar
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    Ok I can see that...historically speaking where has the "smart" money gone in the interim? Govt bonds? Even lower than term deposits so doesnt seem right. Where would you (or others) "park up"?
    Quote Originally Posted by Hoop View Post
    Money doesn't pour out of the Market because someone buys the shares being sold ... so its the transfer of monies smart money v dumb money....with an evaporation effect when shares are swapping owners in a downtrend...where is the sale money parked?? ..look for the markets that have reverse correlation with that of the Equity market and those markets will be your answer.

  2. #252
    Advanced Member BIRMANBOY's Avatar
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    Where do you live FP? I'll send "the boys" over to deliver a few extra 'King size comfees" I know its pretty safe but makes me nervous having too much cash/assets etc sitting in the house. I know there are Safety Deposit boxes etc..but I hate to see non working assets.
    Quote Originally Posted by fungus pudding View Post
    No problem to buy two or three extra mattresses.

  3. #253
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    Quote Originally Posted by BIRMANBOY View Post
    Ok I can see that...historically speaking where has the "smart" money gone in the interim? Govt bonds? Even lower than term deposits so doesnt seem right. Where would you (or others) "park up"?
    Depends Birmanboy....Yeah.. Govt bonds... doesn't seem right atm..eh? Thats the market for ya..when there's a financial instrument in high demand (more buyers than sellers) you would naturally expect that instrument's fundamentals to gravitate to the extreme boundaries.

    During uncertain times the flight to safety is the obvious survival instinct behaviour. Factors such as risk become magnified..which affects fundamentals to the point that you question what's going on??

    Many people think using "normal" conditions as their parameters...so to them it seems illogical behaviour.....If only they realised that in the real world their "normal" Textbook parameters conditions are fleeting moments in an environment that operates either too much one way or too much the other way.

    I must confess earlier this year when I was "60% out" of the stockmarket I parked half of my cash in the multicurrency account cash in US$ earning zero % it seemed at the time to be a good idea my logic was when the NZ stockmarket falls so does the NZ$ currency..The theory has it that overseas equity investors cash up and sell their NZ$ thus flooding the NZ currency on to the Currency market............yes it logically was a good plan....but.....in hindsight it wasn't... it happened to be the Australian $ paying 4.8% (the highest currency % rate) back then.
    I eventually converted them back from US$ to NZ$ without too much of a loss in time to catch this latest NZX rally + NZ$ appreciation..... luckily.
    Last edited by Hoop; 25-10-2012 at 12:22 PM.

  4. #254
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    Quote Originally Posted by David B View Post
    Well I'm stockpiling cash so when (if) the crash comes, I'll be in like a robber's dog!
    Great news....when the crash comes and my stops get busted .....I have a buyer

  5. #255
    Advanced Member BIRMANBOY's Avatar
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    Its interesting that these conditions (either new highs or lows) do put excessive demands on the investors psyche. At moment I am feeling anxious that all my hard won (but unrealized gains) may be stripped away before I can even appreciate them,..sort of like winning a Porsche and then getting a phone call saying..sorry theres been a terrible mistake and your ex-wife (who doesnt even like cars) is the real winner.

  6. #256
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    Love those last two posts...a bit of "that's life" humour has made my day

  7. #257
    Speedy Az winner69's Avatar
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    hoop - from chartoftheday their PE of the S&P since well before you were born

    PE still trnding down .... we still in a seclar bear market then
    Attached Images Attached Images
    Last edited by winner69; 27-10-2012 at 12:26 PM.

  8. #258
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    To drop from a PE of 15 to a PE of 8 assuming earnings constant, prices need to come back 47% if I am right in my maths.
    15/1 to 8/1 7/15 = 47% drop in P
    If earnings are starting to drop with a global slowdown say 20% then to get to a PE of 8 your dropping your price by 57%.

    Pretty scary stuff if we ae headed back to a PE of 8 as well as an earnings slowdown. Low interest rates should be able to bouy the markets though as the reverse of an 8PE is 12.5% even a PE of 15 is 6.7%

    I had a look at us interest rates to see if there is a corelation between interest rates and PEs as you would expect higher interest rates would mean lower PEs. This is the best i could come up with
    http://observationsandnotes.blogspot...e-history.html
    The rise in PEs in Winners graph sort of matches the fall in interest rates since the 1980s. Interest rates can't really go much lower as they haven't been this low since 1940.
    Doesn't really help me decide where to invest though.
    Last edited by Aaron; 29-10-2012 at 02:18 PM.

  9. #259
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    Is NZ's stock market in a bubble? NZX was about 2500 in 2009 but now it close to 4,000.

  10. #260
    Speedy Az winner69's Avatar
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    Just for you Aaron (and for Hoop) a chart of the Aust 90 day bill rate v earnings yield of the All Ords (esrnings yield being the inverse of the PE)

    Tell me what you think might happen over the next year or two

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