NZSX50 - Good News!

[winner69]

MAC, what happens in 12-18 months time when it has run its course?

[MAC]

Some pain Winner for generation X at the top of the interest rate cycle and for a few years that follow, but I don’t think it will be the hard landing the professional gloomer's make a living from portraying, how would they sell papers.

Household Debt.jpg

[robbo24]

Looks like Jesse Colombo from Forbes is the latest to bring up the elephant in the room: http://www.forbes.com/sites/jessecol...d-in-disaster/

I know for the past 10-odd years, many have been calling a house price bubble, but for how much longer will NZ's cheap credit inflated house prices survive? Then what will happen to that mountain of debt householders accumulated during period of historically low interest rates? If there is a resultant avalanche, where will the stock market end up?

Jesse is so smart. He says that if China and Australia bubbles pop then NZ bubble will pop too. What a visionary. Wow.

[Bjauck]

The wealthiest generation in human history are just about to start selling down those 3, 4 and 5 bedroom suburban homes and go looking for more suitable retirement dwellings and/or aged care facilities when the time comes.

Not all of the cash raised from selling ones previously family home finds its way back into the property sector, some goes to retirement savings and living expenses, a nice overseas trip, perhaps some will even leave the kids a sports car.

Baby boomers are now aged 54 through 69, tick tock ………………..

So true...that demographic bulge is approaching the golden years. Babyboomers are heavily invested in real estate and underinvested in financial assets (even when compared to AUS, USA and UK). The signs are not good for the property market. Hwever, if/when the property market approaches long-term valuation multiples in an orderly way, maybe it will not be all bad news for shares and the financial markets generally if downsizing boomers convert their real estate gains into an income earning portfolio and some wealth is transferred to younger mortgage-encumbered householders.

[Hoop]

So Hoop, in the absence of a blatantly obvious catalyst such as a major country going bankrupt for example, how does a chartist tell whether it's a healthy correction or the start of a proper bear cycle?

Where are we in your opinion? My 'charts' suggested its another correction (I'm not a chartist, this is simply what has been happening and I appreciate that won't go on in this pattern forever) Winners chart suggested we're well overdue for a bear cycle that hadn't started yet, and I think your chat seems to suggest we're in a decent bear cycle?

I think your chat seems to suggest we're in a decent bear cycle?...The chart above is the NASDAQ chart..Its more ugly now but it isn't in a bear cycle (yet)..

how does a chartist tell whether it's a healthy correction or the start of a proper bear cycle?...The 11 year weekly chart below shows 2 bull cycles and one bear cycle....A healthy correction is a 10% correction it hurts but it creates available money by "stopping out" disciplined investors...A unhealthy correction is the 5% or less type as these corrections aren't big enough to create enough available money and the bull market eventually exhausts itself...The OBV tells the story ...see the OBV topping out just before the double top formation in 2007....also see the orange arrow at the beginning of this year as available money is exhausted but the question is... could this be due to the Govt floats? or due to unhealthy corrections? money leaving for a better market? or a combination of factors?
Correction or Reversal? (new bear market cycle)...Each discipline have their guidelines..a chartist discipline is usually the breaking of multiple indicators all at the same/similar time (ducks lined up in a row) ....Normally technical break down begins around the 7 or 8%..so closely watch and apply confirmation methods as the correction proceeds but becareful of the B wave this is a short relief rally...

A tell tale sign is a failed rally to create a new record high after the ending of the correction"s ABC wave. Its commonly accepted by the media that a drop of more than 20% is deemed a bear market cycle...Technically a drop of 20+% would nearly always break all the indicators...

Winners chart suggested we're well overdue for a bear cycle that hadn't started yet......The lifespan of a cyclic bull market cycle averages about 3.75 years but its not uncommon for a bull cycle to live to be older than 6 years and its not uncommon to have 2 bull cycles with a mild short lived bear cycle in the middle ....The law of averages suggests that we are overdue for a cyclic reversal...back to bear cycle...

At the moment the old Bull is healthy...

[Cool Bear]

Many thanks Hoop, for your informative post and chart above. Much appreciated.

[Xerof]

Jesse is so smart. He says that if China and Australia bubbles pop then NZ bubble will pop too. What a visionary. Wow.

rubbished here as well

http://www.stuff.co.nz/business/indu...nalysts-bubble

[winner69]

We (NZ) should be proud to have a high dollar ....a sign of success I reckon

May it keep going up (maybe even back to the days when I got 1.40 odd US dollars for my little old 1 NZ dollar)

[Hoop]

My next post relates to this 27year old wannabe but until then lets look at some quick glance 1yr chart comparisons...Yes there are some equity trend flattening but no big corrections after each exurbant steep climbs but that's what you should expect from old age Equity bulls...Aussi is the exception it doesn't show up on this chart but its post 2008 equity melt down bull died a couple of years ago, followed by a short shallow bear cycle and now back as a younger bull.. you will notice that the AOrd equities has the bigger corrections and lacks the contiuous steep climbs. The DOW shows this too but its due to only having 30 stocks in its index and any one or two unperforming stocks can make a difference.

Currency charts speak for themselves...and yes I agree with Winner69 ...over an established long term periods a high currency signifies good and stable economic health...

[Hoop]

In my opinion Forbes online has gone downhill in quality reporting...shame really...Its following the likes of Matchwatch adding drama to attract the online masses...

First of all...I have an open mind and crashes do happen...so I will not discount a crash happening in the near future...but as for Jesse Colombo I will never credited him as a seer for it.. he's written a very simplistic one sided article on a very serious subject which can cause serious consequences.

He is also presented no chartist skills as he used charts in a biased manner..
example


New Zealand’s housing prices have doubled in the past decade, forming a property bubble:....Counter argument NZ housing prices trend has decelerated from doubling in the previous 6 years to increasing 12% nationwide in the last 6 years due mostly to 2 centres Auckland and Christchurch..

Counter reasoning: the housing bubble was far larger back in 2007 (see chart)...Using Jesse Colombo chart logic the NZ housing bubble should've burst back in 2007/2008...

My Personal Opinion: I do realise that there more downward negative pressure being applied recently to the property market with the adding with the cyclic bottoming of interest rates to the other negative factors, new restriction to enter the market, to the already lessening trend of household income, changing demograghic profile, etc. There are more negatives than positives now..

I think the duogenerational secular bull market (50yrs) has now reached its limits and I wouldn't be at all surprised to see a secular bear market begin from here ...but ending in a crash is not the only option....since 2008 (see chart) there seems to be a slow orderly market re adjustment (degassing)...The RBNZ have gently applying the screws (as other countries have done) it was a risk in my opinion but backed with hindsight it seems to be working with having positive results and not the feared negative crash catalyst effect...

Enough time spent on this Jessie guy..except to say that this article argument is forum grade stuff (apologies to ST) .......

Jesse Colombo has responded on 21st April defending his argument