NZSX50 - Good News!

[clip]

"Are you Eric Panneflek?? Or do you work for or with PGM Capital?"
"yeah, copy and paste"

glad we cleared that up :P

[BlackPeter]

On a different note, this sort of thing worries me....
http://www.forbes.com/sites/gordonch...h-transfers-2/

Interesting find, though not really good news (thread title). Not quite sure, what it could mean? Hopefully just highlighting the inefficiencies of a huge bureaucratic central planning system, potentially combined with some corruption (check : http://www.globaltimes.cn/content/83...l#.UuXDWBA5S00 ).

Wouldn't make a lot of sense to think a country like China with an incredible growth rate and huge foreign currency reserves is running out of cash ... it couldn't be too hard to just print a little bit more (hey - the US are doing that now for years - and they have neither the foreign currency reserves nor the economic growth rate China has).

[000831]

mmm, yes. I presumed that to mean, YES I am Eric Penneflek and therefore YES I do work for PGM Capital. (as I said, it appears to be a kinda random blog to copy and paste otherwise)

So 000831= Eric Panneflek for now...

Got that all wrong. RANDOM Paste for the answer

[000831]

Interesting find, though not really good news (thread title). Not quite sure, what it could mean? Hopefully just highlighting the inefficiencies of a huge bureaucratic central planning system, potentially combined with some corruption (check : http://www.globaltimes.cn/content/83...l#.UuXDWBA5S00 ).

Wouldn't make a lot of sense to think a country like China with an incredible growth rate and huge foreign currency reserves is running out of cash ... it couldn't be too hard to just print a little bit more (hey - the US are doing that now for years - and they have neither the foreign currency reserves nor the economic growth rate China has).

China got that issue since this June. Not surprise

[Hoop]

Interesting how a topic resurfaces...and looking similar
No point reinventing the wheel and posting another lot of dialogue.....so below is a copy of my post#313 written on 23rd June 2013 from Investing Strategies and Secular Bear Markets thread ...

What is relevant to this NZX50 thread is that the CAPE is going down UP while the NZX50 index is going up....proving the point that dropping PE's don't always relate to sharp downturns in the share prices....what is happening here in NZ is similar to that of AORDs between 2003-2007 when the rise in the E in PE was faster than the P... (see bottom chart) EDIT: 28/01/14... ERROR.. CAPE is not falling its slowly rising... the forward PE is falling... see post #1390

Also...I should mention that beware of analysts saying the Stock Market is not overvalued when referring to the CAPE or PE mean value........PE mean value means nothing!!!!! All markets are in differing phases of their secular cycle.......we (NZX50, S&P 500 DOW Europe) are experiencing a secular bear cycle,,, that means the Annualised PE or CAPE is in a downtrend.....

At a very mature secular bear market period (downtrending PE values) a PE ratio of 10 could be considered too high and overbought....just how the opposite end the mature secular bull market period (uptrending PE Values) a PE of 22 could be considered too low and oversold......see bull/bear chart below

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I read in MarketWatch today an article 7 ways to spot a market top...not much help really but there was a Shillers PE Ratio Table listing various Countries which a I found of interest as long as you didn't read the dialogue..."Keep in mind, some markets are dirt cheap for a reason." ...I guess the Author meant Greece but no comment on USA ...so I'll add it "Keep in mind, some markets are expensive for a reason." (See the first table below.. I've jazzed it up a bit )

Normally a Secular bull dies somewhere around the CAPE 25 area (see chart 2nd figure below))
That 25 area sometimes doesn't work according to theory when the market gets irrationally overheated as was the case in 1929 and 2000 when the CAPE went to dizzy heights........Just to show how overly cooked the 2000 USA market was the Secular bear is now 13 years old and the CAPE has fallen only to around the area where previous Secular Bulls die.....As Secular markets are measured by distance and not by time this Secular Bear has still got some distance to travel...in actual fact is going the wrong way at the moment due to very low inflation.


Interesting also are the CAPE for NZ and Australia (both in Secular bear cycles)...
With NZ at 13, USA at 23 one might think therefore the USA market will take a bigger hit with the next downturn.....no, it doesn't work as simply as that.

Winner...... Australia's 14 (assuming this figure is correct) down from 17 looks like a Secular Bear...eh?





The NZX50 secular bear is tending down nicely as it should do in theory...Interesting to see the PE going down and the index going up.
That happened in Aussi a few years back

[Hoop]

Nice little double top formed up on the NZX50 chart as well. May I ask our good man Hoop for some input?

NZX50 still looking good not like Wall St which is technically broken.

There is chance that there is double top in the process of forming but its too early to give us any worries that it will become a complete pattern... moosie....It's also too early to apply the percentages of a reversal happening.....but we definitely have to keep an eye on it.....especially when the Cyclic Bull is past its use by date (5 years old)

[Hoop]

Hoop, can you post up the historic CAPE you have used for NZ? I'd be really interested to see what it looks like.

Cheers.

I would be interested to see what it looks like too..but the NZX swaps and changes it's indexes frequently making secular data analysis difficult and impossible in some cases...

Finding historic data about the NZSE and figuring out which companies were eligible back then for their secular data to be used in this present NZX50 index setup is difficult..

Turmeric...I have to rely on my emails from subscripted sites or dredge Google to find bits then piece it together like a jigsaw puzzle


CAPE NZX50 ***
30th Nov 2012......13.10 (http://www.valuewalk.com/2012/12/a-l...quity-markets/)

31st May 2013......13.53 (article from marketwatch.com)

31st Dec 2013......13.88 (John Mauldin email) and also http://www.valuewalk.com/tag/cape/

*** The CAPE figures for the NZX50 can't go back any further than 2013 in its pure form unless it is adjusted....The NZX50 was formed in 2003 replacing the NZSE40 which was formed in 1992 so as one can see it's an adjusted guess that the NZX50 is in a secular bear market cycle...

Apart from Shiller's site I think Meb Faber website is the best to go to as he has extended Shillers secular work to cover global sharemarkets including NZ




You have probably noticed from my previous posts I have been mentioning Shillers CAPE but posting a forward PE chart which are two different animals..
Looking back ...It does seem that my previous post #1387 is in error the CAPE is in fact rising, not falling I may have mixed up my PE's...It seems forward PE is falling in relation to the NZX 50 index increasing..not CAPE

[Hoop]

Cheers Hoop, yeah I was a bit confused by your post on a couple fronts (The CAPE vs forward PE thing, and I also thought you were saying NZ CAPE and NZX were moving in opp directions).

I had a quick look at Shiller's PE (for the S&P) vs the S&P500 index using monthly data.

Found a positive and highly significant (at the 1% level) correlation between the two for data as far back as the 1950s; corr = 0.7117.

So I graphed the two to have a bit of a closer look from the 80s on. Attached it below. Seems to me to show pretty overwhelming evidence that the two a re pretty well positively correlated and makes me think you can put forward various scenarios depending on where you put you secular line breaks.

Not as easy on the eye as your one mate, but thought it offered a slightly different take to the second graph you posted above.

Thoughts?

Attachment 5403

Thanks for sharing your analysis figures Turmeric...Basically rule of thumb has analysts fearing the worst when the CAPE falls ...your Stats show the Equity index falls in tandem with a falling CAPE more often than not
..
That 2003-2007 Aussi anomaly proved the theoretical argument that a sharemarket doesn't always necessarily need to fall in tandem with its falling CAPE....(Wall St History shows it does fall in tandem most of the time and you turmeric have proved it as statistically significant)....and interesting to mark those cyclic reversal points you used with respect to CAPE...I said cyclic not secular as you did...Turmeric your chart shows a different and interesting aspect to CAPE/index price relationships...

My previous chart marked secular bull/bears according to the secular rules outlined by Crestmont Research...Apparently their chief rule is, a secular bear market cycle can only end when the CAPE reverses from below 10 and shows a confirmed long term up trend.

[Santiago]

Incredible how quickly sentiment can change... Nasdaq up 1.7%

[Santiago]

Though actually on reflection I reckon sentiment's pretty consistent right now- sort of like a manic depressive, up, down and all over the place. A few months of gradual incremental growth would do me fine...