NZSX50 - Good News!

[000831]

Asian financial crisis, the only thing I would say. Phillipine dropped by 6%, Thailand dropped by 4%.
The two countries should lift up interest rate immediately to stop foreign investment run away. More like 1997.

[iceman]

Here is an interesting excerpt from Tony Alexander commenting from the Fieldays at Mystery Creek. It gives an interesting insight into where our farmers stand in todays economy. Thought it was somewhat relevant for the discussion on this forum :

"Few borrowers appear aggressively concerned about interest
rates apart from wanting some indication as to
the proportion of their debt they
should get fixed, for what term, and when. Farmers tend to take a longer
horison for such fixing than city folk who think an 18 m
onth fixed rate is managing one’s risk. Farmers tend
toward the five year term if not seven, and I have
been reminding all and sundry that this year deals mature
for the many farmers who signed up ten year fixed rate
s back in 2003 when rates fell sharply on the back of
a cut in the Federal Reserve’s funds rate to just 1%.
I am suggesting thinking about fixing 5 – 7 years for half
one’s debt and not trying to pi
ck when fixed rates will rise (looking to fi
x just days before they do) because in
this very uncertain world we cannot pick when the
next big upward jump in
fixed rates will come.
But while some farmers have asked about fixed versus
floating, their queries hav
e been outnumbered three
to one by those who have asked instead about where to in
vest their money in order to get a decent return.
Most of those asking appear to have funds on term
deposit currently and want a
higher yield but are not
prepared to chase the sort of pr
oducts which caught so many people
out back in the 2000s when the chooks
came home to roost for so many crooked and poorly run finance companies.
I am not offering advice but simply
note that there is massive uncer
tainty still around the world and that
sharemarkets, exchange rates, and fixed interest security
prices will experience very
high volatility in coming
years. Volatility by definition means risk so in order
to manage that risk while
seeking better returns they
should really speak with the so
rt of people like our private bankers who focus on such things. "

[Hoop]

We're going for another run (you heard it here first from the Moose!)

http://www.marketwatch.com/story/us-...?siteid=yhoof2

Yes as the S&P500 and the NZX50 are in sync (oscillations in line) at the moment I would assume today will be an up day.....
If it is an up day.... it will be another successful test off the 4400 and be a buy signal with very tight stops....this is positive news for the bulls as it strengthens the 4400 support area. (the bull market correction end point area).

The TA target (4400) has been reached (that 70% chance is now 100% chance) (see my Post/chart 27th May)...however I need to see more than one buy signal before I buy back in. My investment discipline is more cautious than some...

The fear and risk of a correction may be slightly lessened today which will bring the bulls out to play...however all the bearish signs are still present.

Disc..85% cash

[Cool Bear]

No, wait a few more days, Hoop. Could be the dead cat bouncing.

On the other hand, the recent drop may just be a correction but has it finish correcting? May be a few more days/weeks yet.

[Hoop]

wait too long ans the boat might have left. drop was on speculation QE will end soon; its not. time to buy.

Start buying Hoop

ahhhhh. the Exuberance of Youth

[Merc]

Recession, recovery, boom, bubble, bust, recession... The cycle repeats

My guess is 2011 and 2012 were recovery. Where are we now? Boom? And how long does this part of the cycle usually last?

Still looking for the answers in historical charts.

Relating this back to the property - there are always good buys in any market but strategy changes in line with the cycle. Just have to figure out this share cycle before too enthusiastically throwing money at it

[Hoop]

You guys are assuming that the business cycle, economic cycle and the Equity cycle go in sync together....I have some bad news if you assume that....Research has proved there is a poor correlation between the economic cycle and the Equities cycle.

[Merc]

You guys are assuming that the business cycle, economic cycle and the Equity cycle go in sync together....I have some bad news if you assume that....Research has proved there is a poor correlation between the economic cycle and the Equities cycle.

So where do you think we are in the share cycle?

[Hoop]

So where do you think we are in the share cycle?

Using TA discipline cycles don't matter you sell on the sell signals ..like now

However I do make it a hobby to try and figure it out....using past history and probabilities... One thing that most investors ignore is the fact that PE Ratio movement is the primary driver of any sharemarket...PE Ratios are also cyclic and the best way to track it is to "annualise" so to knock out the volitity "noise"...This past decade most annualised PE Ratios around the 1st world countries are trending downwards and company profits have to rise just to keep the sharemarket index at a flat line...therefore the Dividends tends to increase as the investors demand more for their investment $ This is typical behaviour of a secular bear market cycle....We have been in a secular bear market cycle for 13 years and the cyclic bull market cycles don't rise up into exuberant heights investors are more conservative with less speculating attitudes.

Unfortunately investors spend too much time concentrating on the secondary and tertiary drivers...day by day economic news drives the market only fleetingly and therefore it is called "noise"..ST forum is mostly "noise"...the more important market physics are ignored.

So where do I think we are in the share cycle?

Working of probabilities ....the current NZX50 bull market cycle is 4.25 years old and has risen 83% If it is in a secular bear market cycle then probably close to its top....Its a probability..this time who knows it may have already ended or it could go on for months years..

.however the risk v reward is very high....its always is when you arrive late to the party....As Sparky said we did all our buying years ago when the share were cheap
.
.


Unfortunately the data is hard to find on NZ stockmarkets....and not long enough period
.................................................. .................................................. .................................................. .................................................. .......
The USA markets data below 1871--2013 showing Bull market cycles

Source: Shiller (2013)
Look impressive ...huh!
Now you all going to assume that...hey ..when the economy comes right it will go up even more so NZX50 +83% still have room to travel as it is still below the average.
In relation the Wall st 104% is low too.....right?
WRONG!!!.....remember reading the bit above about secular bear market cycles
Below I have colour coded the table into Bull markets within secular bull and bear market cyclesBull markets are muted affairs inside secular bear cycles...and the 2009/20?? bull is looking rather advanced and above its average rise at 104%...since that table was made the S&P500 has risen to +148%

[Merc]

Thank you Hoop, very, very interesting and just the type of info I'm looking for.

Yes I had caught onto the fact that the party is well underway, it was a lack of cash and other interests taking up my time that prevented me joining it earlier.

It is guesswork as to whether the party will take a breather in an orderly manner or take off into the rowdy stage where it will inevitably crash and burn.

I think my answer is don't throw cash at anything in sight but seek for the nuggets of gold amongst the noise and take care whilst learning the fundamentals - thus being in a position to maximize returns in the next cycle.

My first step a month back was to download all NZ shares into a spread sheet, work out what sector they were in and compare PE ratios (time consuming and there are no doubt easier ways but it was a brilliant aid to understanding). 2 or 3 sectors stood out better than others and one or two companies in each of these looked interesting. Some of the anomalies turned out to be penny dreadfuls, one looked like a nugget of gold (and I bought into it). Time will tell if it really is gold. Several others appeared worth another look and I've taken a punt on one of them