NZSX50 - Good News!

[noodles]

Good points KW. How will NZX perform on monday. It could go either way. There could be a ton of $$$ hunting for a "safe haven" or there could be a very sharp selloff.

Was the utility dominated and high yield NZX a safe haven during the GFC? Don't kid yourself. The NZX is NOT a safe haven. US government bonds or cash is the most likely destination for safe haven funds.

I think the most likely outcome this week is that markets are higher next Friday than last Friday as there appears to be "capitulation" everywhere. But I could be wrong. Who knows what the computer algorithms are programmed to do in situations like this. We have no precedent in history.

[Beagle]

The NZ index is a gross index and will be supported by the dividends being paid, especially in a continuing low interest rate environment. Also the NZ $ is falling, which is helping offset the declines in dairy prices (dairy has only been our biggest export earner since 2010, before that it was tourism). Unlike Australia where commodities make up 65% of export earnings, NZ is not so dependent on one export for revenue and exports like tourism/wine/forestry/wool etc will increase to compensate for the dairy decline. Whereas Australia is so over leveraged to commodities that the decline is ripping through the economy at both State and Federal levels. The NZ Index is also not dominated by a small number of companies like Australia (Four Banks, BHP/RIO and Westfield/Woolworths).

Going against that, is the fact that NZ could just be at the start of the downturn, with the bounce off the 200 day MA merely being a dead cat bounce, and a downtrend will shortly resume which will break the 200 day MA. At the end of the day the market is driven by fear/greed, so if everyone panics and starts selling out based on the depressing news from overseas, then it will become a self fulfilling prophecy.

The point is to make sure you have a plan, and that you act on it when the time comes. Its those that just shut their eyes and hope for the best, that suffer most - waking up a year later to find that half their portfolio has disappeared, and another five years after that, that they still havent gotten that money back. So remember, its not just about the initial drop that kills your returns, but the many long years it normally takes to get back to where you were (see Nasdaq - 15 Years!! Australia was still about 15% off its pre-GFC high BEFORE this fall - they could be waiting another decade to get back there as well).

A successful investor doesnt just know about how to make money, they also know how to protect the money they have made.

Nicely said KW. I will do a little cautious weeding in my garden this week. If I've held it for a while and it hasn't grown and at the minimum hasn't been paying me decent dividends, (in effect it's bearing no fruit of any kind), then it's a weed. Long term prospects might be good but my attitude is focus on the short to medium term in this volatile market.

[Baa_Baa]

There have been some discussing this likelihood for months now, of a downturn.

They put their plan in place quite a while ago and are "well positioned" for a negative market outcome in the short to medium term. For my part, despite some incredulous comments at the time, I'm happily out of almost all large/mid caps at a very nice profit and all are currently well below my exit price .. we are geniuses in a bull market (except one or two who shall remain nameless).

It's not too late to have a plan, but it might soon be too late to act on it. Just depends on how much you value your capital, and what insights you place importance on.

Best of luck to all, it's a new phase unfolding and still time to revise strategies.

Jmho of course, dyor, etc etc.

BAA

[Hoop]

Was the utility dominated and high yield NZX a safe haven during the GFC? Don't kid yourself. The NZX is NOT a safe haven. US government bonds or cash is the most likely destination for safe haven funds.

I think the most likely outcome this week is that markets are higher next Friday than last Friday as there appears to be "capitulation" everywhere. But I could be wrong. Who knows what the computer algorithms are programmed to do in situations like this. We have no precedent in history.

There has been some High Frequency trading algo gone insane history..there's been a few flash crashes,,2010 flash crash was the most insane and Wall St (which does a lot of HF trading) has now got fail safe measures installed.
...so there is some precedence but only in a bull market cycle correctional environment...I guess the next bear market cycle when panic and fear waves become prevalent (for humans and robots alike) it will be good tests as to how good these modern fail safe measures are..eh Denis ...

It has to be mentioned..that the Bull Market cycle is deemed to be alive until confirmation that it has died ...This latest event could be the healthy 10+% correction the market has been waiting for, to help free up available money and give this old Bull some future momentum and a new lease on life.

It is very difficult to tell the ending of the last phase Bull cycle and the beginning first phase Bear cycle. Reversions of the cycles can take months to
play out.

[nextbigthing]

There's a bit of talk about high divvy stocks not being safe havens.

Take stock x paying a 10% divvy. Financial crisis hits and it gets really hammered and can now only pay 5% (based on original purchase price) for a couple of years. Then it eventually recovers back to 10%. Shareprice does something like go from $1 to $0.5 during crisis then back to $1 and beyond in the recovery.

I get that you could sell at $1 before, wait a bit and buy in at $0.5 and make huge gains when it goes back to $1. I get that. But for a reasonably passive investor who just wants a fair return, doesn't have to sell and has time on there side, why not just ride it out? You'd still get 5% worst case. My point being surely good yielding divvy stocks are a haven if you have a passive strategy and no sell or time pressure.

PS) I'm not advocating this strategy, obviously the bigger gains are to be had by selling and buying back more, cheaper. I'm mearly pointing out that holding isn't the end of the world.

[see weed]

Been sitting on 60% cash for the last few months now waiting for a decent correction. AIA, EBO, FPH top of my shopping list.

I would like some Spark...$1.50c, maybe a bit of CEN....$3.20c, some more ATM.....30c and THL......$1.10c. And while we are there,a truck load of AIR....86c-$1 just like last time.

[noodles]

There's a bit of talk about high divvy stocks not being safe havens.

Take stock x paying a 10% divvy. Financial crisis hits and it gets really hammered and can now only pay 5% (based on original purchase price) for a couple of years. Then it eventually recovers back to 10%. Shareprice does something like go from $1 to $0.5 during crisis then back to $1 and beyond in the recovery.

I get that you could sell at $1 before, wait a bit and buy in at $0.5 and make huge gains when it goes back to $1. I get that. But for a reasonably passive investor who just wants a fair return, doesn't have to sell and has time on there side, why not just ride it out? You'd still get 5% worst case. My point being surely good yielding divvy stocks are a haven if you have a passive strategy and no sell or time pressure.

PS) I'm not advocating this strategy, obviously the bigger gains are to be had by selling and buying back more, cheaper. I'm mearly pointing out that holding isn't the end of the world.

Just make sure the balance sheet is strong. If they have a drop in profitability, it may mean they may need to rebuild the balance sheet with a deeply discounted rights issue at the worst time.

[IAK]

I would like some Spark...$1.50c, maybe a bit of CEN....$3.20c, some more ATM.....30c and THL......$1.10c. And while we are there,a truck load of AIR....86c-$1 just like last time.

Sounds good to me. I'll add them to the list might even grab a couple of dairy farms as well lol ��

[bull....]

Was the utility dominated and high yield NZX a safe haven during the GFC? Don't kid yourself. The NZX is NOT a safe haven. US government bonds or cash is the most likely destination for safe haven funds.

I think the most likely outcome this week is that markets are higher next Friday than last Friday as there appears to be "capitulation" everywhere. But I could be wrong. Who knows what the computer algorithms are programmed to do in situations like this. We have no precedent in history.

this isn't the gfc for starters otherwise all stock categories would have negative returns and that isn't the case.
rotation is occurring and nz and us utilities and treasuries are proving safe havens

I guessing nz may fall 1% today hardly a panic

[Beagle]

What KW said + Good REIT's like GMT with very low debt and long leases are not subject to the open bank resolution.