Was today a strange day or was it just me?????

[malachii]

I seemed to have an incredible day- almost every stock I follow pretty closely (about 25) had a down day and broke major support levels!!!!!! I've never seen anything like it. Anybody else have this or am I the only one?

Malachii

[tech/a]

Pretty similar 8 of Ten fell.
Not suprising support levels taken out after 3 days in the negative.

Support is just a level which price stopped at and reversed in the last move or moves.Its not set in concrete they are broken all the time.
According to statisticians around 50% of the time.Ive never tested the % figures though.

Pretty normal------- this is the correction we had to have.

Im sure it will have an upday sooner than later.

tech

[malachii]

I agree with what your saying tech. I've just never had a day where so many broke levels that have held for months!!

I'm looking forward to see what happens tommorow and next week.

[stefan]

Does the fact that we have lost 3900 today put even more pressure on the market? I would think that it can't be a good sign. But that's just a guess.

Tech, why do you think that the market will recover rather than go down further? When I look at what's happening out there then there's little that would make me think it's only temporary and that the general trend is still towards 4000.

Looking forward to your reply.

Happy trading

Stefan

[Mofra]

Perhaps the question should be can the market justify holding the gains of the past few months? Personally I took some losses & profits today and am now holding a fair portion of my portfolio in cash.

Given that I'm uncertain about the market at the moment, I may not buy until the picture/direction is a little clearer

[tarnor]

stock picking thread is looking pretty sick also :)

[tech/a]

Stef.

From a Fundamental veiw firstly and not being a funnymentalist im sure youll have more + and - on the Fundamental side than I do.
(1) Lowest un employment in many years.
(2) Low interest rates remain.
(3) Oil seems to now have found its high.
(4) The AU$ is strong but not over the moon requiring restraint.

Now some tech stuff.

Remember when I said most dont know when to holdem and when to foldem.
When I see or hear people selling after or during a week of sell off I know they arnet taking big profit.FEAR.

They reckon you cant go broke taking a profit.
Want a bet!!

[stefan]

Tech,
Excellent chart there. Thanks. I always like those comments you put in there. Yes, I know there are still some good fundamental points supporting a strong share market. What worries me for tomorrow is that usually a Friday tends to be rather sluggish as traders don't want to commit for the weekend. Not always the case but I think for the last couple of Fridays that was pretty much it. So now we lost 3900 and given that there are some uncertain points in our economy I'd say we have to wait for a recovery until next week. Now this is just a personal feeling and it may well be wrong as we have seen bottom fishing on some stocks today already. So it may start to turn around.

We'll see.

Happy trading

Stefan

[tech/a]

Stef

Id say I trade differently than 97% of traders here.
As you can see I dont care what happens tommorow(unless it comes off 200pts)or last week.
I know my portfolio wont increase in value every week infact it wont increase in value every month (although it has for over 12 mths!).

I used to trade like the 97% here and not only did I do very poorly(down 20K in 6 mths up to 15K in another 3 down to 8K in another 6 months blah blah) but I went nuts trying to predict TOMMOROW!

Now it takes me 10 mins a day ( I spend too much time talking to you guys!) and I dont have to repeat my results.Sanity returned.I actually dont look at my portfolio until Friday---Yes I have alerts on the work computer but thats only gone off 4 times this year.Contrary to opinion I have a life!

I wont stop trading UNLESS.
My historical Peak to Valley Drawdown is exceeded.
Even if Im bearish----cause while my Peak to Valley Drawdown parameter is intact I am within the limits I know

[Dwib]

I wont stop trading UNLESS.
My historical Peak to Valley Drawdown is exceeded.
Even if Im bearish----cause while my Peak to Valley Drawdown parameter is intact I am within the limits I know

Hi tech/a,

Don't know if you have the time but could you explain by what you mean Exceeding your Peak to Valley Drawdown?

Dwib.

[stefan]

A few thoughts, unrelated to any postings. Please take it as a brainstorm towards investment. It is not ment to pick on any member of this forum. It's just a a rundown of what I've experienced over the years to explain why I ended up becoming a long term investor.

This may well become my longest posting ever, so feel free to skip it ;)

I'm not spending so much time on this board to get to 1000 postings ASAP. I'm here because I came along when it just started out and I liked the idea and the bloke who runs it (never met him). I thought it deserved my attention and my postings because that's what a new board like this one needs. Active posters who keep it alive. For me there is no problem when 99% of postings are not related to successful trading. Mostly because I'm not a day trader and as such do not care what tomorrow has in store or what hot tips are around. But if other members are discussing it, then I will participate if I feel like.

When I was a daytrader I almost went mad. I spent hours and hours in front of level II screens on the NASDAQ and in chat rooms trying to find a quick gain. After 2 years I had to realise that this would not be sustainable. There were good days and bad days and overall it never added up substantially. Would I have calculated my hourly rate based on the time spent researching and trading, I would have been better off working a late night shift. Not to mention the social impact when you come home from work only to spend hours trading the market. God bless my wife who took it all with ease.

Then I started looking at it in a different way. Why spending hours and hours on end trying to make a quick profit when you may just as well hold a few shares you know a lot about for a year or even longer with a much better result? Sure, still no guarantee for a profit but there is no such thing and at least you have your life back. So I started changing my strategy and today I'm holding around 6 stocks in a portfolio with longterm goals. I had to keep a high risk stock to satisfy my "need for speed gambling soul". I leave it up to the reader to guess which one. ;)

I do not trade most of the days I spend here. I hardly sell anything but do accumulate on pull backs like this one. It may be risky to average down but there is one big advantage I found in my way of trading. If you know why you put your money into a company then the risk of a substantial loss is minimal. If you know what a company is worth, then you know when to buy. I always found it rather amazing when people scan boards for hot tips and put their money into stocks they only just heard about. The only way to achieve long-term success in the market is by investing and not by gambling. You can however still have a gamble if you don't mess with the rest of your investment.

Anyway, there is room for all sorts of trading. Daytrading may well be a successful way to make money but not for me. It does not fit into my way of life anymore.

I'm running a business and doing so requires my attention. When I finish up work I have NO interest whatsoever to spend time searching for hot tips. I do read a lot about the companies I have my money in (including their respective industry sectors) but that's it. When I see a post about a new company that catches my interest I do my homework and read up. Mostly it will not lead to an investment. I must admit it has a lot to do with how Warren Buffett put it. You don't need to bat constantly to hit a high score. You just need to make sure the ones you hit are worth it.

Easy said, I know. However, I found that the time you spend finding your favorites is well spent while the time you spend trying to follow hot tips or quick runners during the day is not. It just adds up too quickly and you get lost. There are too many stocks out there. You need to focus and stick to what you know. If you chase stocks, then that's what you do. Chasing something that's already running as fast as it can. Good luck catching it.

If you have 20 stocks or more on your watchlist then you can't possibly follow them seriously enough to trade them successfully. It happened to me too. You hear about this stock and that one and you add them to your list. They start running in all sorts of directions and you catch yourself frantically trying to follow them.

- Quick excursion... -
Look what happened to the Australian market. 2 years ago nobody was looking at it. In fact, There is an old newspaper page on top of my freezer to protect it from whatever stuff I put on there and it says "Who want's to buy shares?". It goes on about the bearish market and how everybody is better off buying property. It is further proof to my point that you will not get anything useful out of newspapers, TV or other medias. They do not tell you how things are, but they rather tell you what you want to hear. After all they are after market shares and they will do anything it takes to get their audience. They have to keep them happy or they will switch channel or buy another paper. So better tell them what they want to hear. Why tell them that properties are over valued when so many readers just bought their 2nd and 3rd investment? Better show and glorify those who "own" 30 or 100 properties on a current affair or today tonight. Because that's the stuff people want to see. They want the comfort that they did the right thing.

Right now you can buy many books about people who built a 100 million dollar property portfolio in just a couple of years. They try to tell you that you can do it as well. Unfortunatelly now is not the time to do it but the guy who wrote the book is not going to tell you that. He just wants to make money out of his book. In 2005 you will see books about people who built a 100 million dollar share portfolio in just a couple of years. And so the stories go on and on. Traders are getting hammered with those sort of things and they try to follow by frantically jumping in and out of stocks chasing the big one. The only one who wins is the broker who's happily making money each time a trade is made. Whether the trader will lose or win, the broker will profit.
- End of excursion ... -

Having stop losses and that sort of thing in place is important. It does however not lead to success. It only prevents you from suffering a big loss from which you may never be able to recover. If you have to constantly sell because stocks hit the stop loss, then something is seriously wrong with your investment. Now setting a stop loss is much more complicated than just putting up a % figure. Which brings me back to my way of investing. If you know the current and possibly the future value of a company then you can set a stop loss but there should be no need for it. If a stock is falling there are two reasons for it. It's either not worth the money or it's being dumped because the market is nervous. Now if it's not worth the money then I should not have bought it at that level and following my strategy I therefore should not hold it. If I do then maybe I was wrong which can be quickly evaluated and rectified. If it turns out that I'm wrong then the stock needs to go. But hardly ever will the fundamentals of a company change overnight. Remember that I'm not talking days or weeks here.
In case the stock gets sold because the market is nervous then I will happily buy more, knowing that this is a temporary dip from which I can profit because basically nothing has changed except that the market is a bit shaky.

This is where the theory comes from that holding on to an investment in a down market rather than selling it will pay off. It only ever works if your investment actually has something to rely on. Otherwise holding a loser will never turn into holding a winner.

Remember that the reason you're doing an analysis in the first place is because
you're trying to protect yourself from overpaying, not to justify your surplus of enthusiasm.

The market is a strange beast and hard to predict. But what's not so hard is to know why you put your money in a company. The stock market is a longterm thing. If you try to make a quick profit then that's possible but it is against the fact that solid gains take time.

Now how do I pick a company for my portfolio?

First of all it needs to be in a growth phase.
Why? Because I for myself found that most companies who are passed their growth phase tend to be too expensive. It's a personal thing really.

It needs to have solid fundamentals backed by some achievement by management in the past.
Even a company in its growth phase can have solid fundamentals and a reasonable management behind it.

And most importantly it's price earning ratio needs to be reasonable.

Now I know Warren Buffett is doing a similar thing but this guy never had the guts to tell me his formula ;). So I decided to keep it simple for a start, following his way of thinking. There are many websites out there who explain it more detailed than I do here. Remember this is not magic science or my very own theory. I just found that is one works for me and that's all that matters.

Suppose I'm interested in a company that earned $10 per share over the last twelve months. Assume I expect the company to grow for the near future, so that its earnings will grow at a rate of 10% annually for the next 10 years; then, I make no assumptions about earnings after that, but just expect the company to stay at the same size from then on.

Now it's about finding out how much each year of profit in the future is worth to me in the present. I take a rate of 15%. The idea is that earnings of $1.15 next year is only worth $1.00 to me right now, since I could invest the $1.00 in a fund and do nothing expecting it to grow to $1.15 in one year's time. (Don't worry too much about the % figure. You can put it to whatever you like. It depends on your greed and how much you want to make out of your investment to make it worthwhile.)

So, $10 per share growing at 10% annually will grow to about $26 in 10 years. Easy, really. BUT: More importantly I need to know what $26 ten years from now is worth NOW assuming that I want to make 15% out of it. This happens to be $6.42.

Well, look at the amount of text I've put in here. I need to stop for now. Maybe I get back to it at some stage but I think it explains a bit more where I'm coming from and what sort of investor I am. I don't intend to elaborate on it too much. It's just an extract of what I believe is a reasonable way to invest. May others exist and you have to find one yourself. I know there's still a part missing but I have to run and you can find out yourself which is much more interesting than reading my 10000 lines.

Just remember this:
YOU NEED TO KNOW WHY YOU PUT YOUR MONEY AT STAKE.Best is to have a wife or a friend who thinks it's all just a waste of time and wants you to explain why you did what you just did. It will teach you a lesson or two. Because it's easy to justify something to somebody who is willing to believe you but it's quite a different story if the person is reluctant to accept your arguments.


I wish you all a nice weekend.

Happy trading

Stefan

[tech/a]

Dwib.

Not a one line answer purely as I would have to explain what it is and how it comes about and then go into why its important to your trading and then how it can be misleading with open positions and how to overcome that.

Im sure as we work through other issues on other threads this will come up and be explained.

In the meantime a Google search may come up with some definitions for you.

The short answer is.
The amount of Profit or capital sacrificed from the peak of a tested period to a valley where profit gaining resumes its upward trend.(Thats my description and its not so elegant).

If over a tested period of say 10 yrs I have a maximum P to V D/D of $15000 within that test period and Im trading the same Positions sizing in the tests.
All of a sudden I have a P to V Drawdown of $17000.
Somethings not right.
Has never happened but if it did Id be out of that trading methodology.
Happened to the Turtle Traders I believe.

tech

[malachii]

Stefan

I've reread your last post 4 times - wise words for a friday afternoon!!!

Malachii

[tech/a]

Stef.


Thanks for the insight.

Would you mind if I commented on a few points (well actually quite a few).Only as a constructive look at how you could improve your method.

One Question.(well again quite a few).

When you pick a stock do you.
(1) Know it will "Eventually be profitable"
(2) If so how?
(3) Do you average down then if the stock moves against your initial entry price.
(4) At what point do you stop averaging down.
(5) At what point if any do you cop a loss?
(6) At what point do you take a profit (Ive seen evidently a 600% profit not taken).If ever.
(7) Other than MUL have you ever been wrong (actually your werent wrong and possibly may not be wrong yet)just in efficient.(in my veiw)
(8) What over a time would make a stock in your portfolio out of favour and the position closed?

tech

[stefan]

Tech,

Surely I don't mind your questions.

But I should probably mention this:
My current investment is based on the following plan:
- Not generating income (except for a very small part held in my company name)
- Long term focused (8 years to go)
- Low maintenance

I'll explain. I'm currently running my business and it's creating enough money to keep me going so my investment does not need to create an income. I do save money in an ING account at the highest possible interest you can get in a cash account. (yes, citibank may offer slightly more but that's not the point). This cash is what I live of. This is to insure that I do not have to touch my investment at the worst possible time.

The time frame is based on my plan to become independent in 8 years. By that I mean my investment will have grown to an amount that will allow me to live happily ever after. (Not saying that I'm unhappy. Just an expression.)

Now to your points:

(1) Know it will "Eventually be profitable"
All of my stocks already are profitable or cash flow positive when I put my money in. Yes, MUL is not but that's because it is my high risk gamble and has nothing to do with it. Being in a growth phase doesn't mean it's making a loss. In fact, if a stock is not making money, how am I supposed to find it's real value? Very difficult as I can only base my calculations on what has not yet eventuated and that is highly risky. I do occasionally put money into a turn around stock like ERG where I can see signs of a recovery. BUT only small amounts and with 3-5% stop loss in place. No averaging either way and probably not to run with it for the whole time frame of 8 years.

(2) If so how
An strong indication that the currently positive cash flow will turn into profit.

(3) Do you average down then if the stock moves against your initial entry price.
YES. If the stock moves lower than my entry price then I will buy more in almost any case as long as my valuation doesn't show weakness or errors. It happens mostly with stock that I just added because it is not my ultimate goal to buy at the bottom. If therefore the price goes lower I will keep adding mostly small amounts depending on the price I have to pay per share.

(4) At what point do you stop averaging down.
Mostly when a stock would exceed a threshold related to my total investment. I can not say that this is 15% or 20%. It can however be pretty high as I'm only holding very few stocks. For example HDR has reached a threshold which in that case is above 20%. I now have no more money to invest into it otherwise I would break the balance as HDR would become too much of a heavy weight in my basket. HOWEVER, if HDR starts climbing back above my average entry price, it is very likely that I may decide to buy more. I do NOT believe that there is a golden rule like "no more than 15% of a single stock". In fact I found that to be rather stupid. If a stock starts doing what I was looking for, why wouldn't I start putting more money into it. Important point is that I do stop averaging down but I may start averaging up regardless of what I already have.

(5) At what point if any do you cop a loss?
I will cop a loss at the "point of no return" which is when something unexpected happens that will significantly impact my initial valuation. There is always a chance that things go wrong. For example a new source of renewable energy may be discovered next week which will have a major impact on my oil shares. Should the stock impacted by this new fact fall or already be below 15% then I will cut it. Why? Because I do not believe that something will eventually recover just because time is your friend. But I do believe that the new investments will enable me to cover my loss quicker than holding on to the dog IF I'm still able to invest which depends on the fact that money is available. You have made that point yourself a few times and I'm very much supporting it. If you don't cut your loss then it will turn into a cancer. Growing slowly making everything else in your basket pretty worthless. We know how hard it is to get a constant return over a few years. With a cancerous stock in your portfolio it becomes just plain impossible. Check point 7 for an example.

I do allow for a rather big loss at times as long as my analysis is holding up,which is based on the long time frame I have in mind for my investment. Anyway, I've mainly set it to around 15% because that's what I regard as possible to make up with other investments. If it's set higher then I have a real problem reaching my goal because lots of money would flow into fixing this hole. If it's lower then I would have to dump too many shares just because of temporary pull backs. I will however consider my position in each case. If my smallest investment turns sour I would obviously not be as concerned if the rest is already making more than up for it. Nevertheless. I will cut a stock if I don't feel comfortable holding it.

(6) At what point do you take a profit (Ive seen evidently a 600% profit not taken).If ever.
Interesting point. Yes, I will take a profit but because I have some very specific goals I'm actually tending to hold on to my shares. I do hold some shares in the name of my company which I treat slightly different because I use them to create an additional income. I have however not sold anything in the last 12 months except for a loss on JHX. It is not based on % gain or any other number. I tend to hold stocks during their growth phase if everything goes to plan. This will ultimately mean that I may not always exit at the very top. However, that is not of a concern to me. My concern is to reach my goal in 8 years.

Clearly I have to state that I do hold some stocks which I regards as indefinite holdings.

(7) Other than MUL have you ever been wrong (actually your werent wrong and possibly may not be wrong yet)just in efficient.(in my veiw)
I have been wrong 2 times over the last few years. One was AMP. I have entered it at 4.60 I think and I sold it for 4.85. Anyway, I know I made 25 cents per share out of it which resulted in a spectacular net gain after tax of $1000. The reaon why I sold is because I did not trust my fundamentals. For me AMP was undervalued and attractive to buy based on a few fundamentals. But for the rest of the world AMP was about to die. Papers were full of bad news, brokers were calling foul seeing no end to the disastereous performance. News story after news story was about how people lost their savings and how bad it may still get. So I cut it short and headed for the exit.It shot up to $6 a few days or weeks later because NAB was trying to buy it out. Obviously not the whole world thought it would die...

The second time was with JHX where I got caught by surprise in the asbestos claims. Bad research? Maybe. I have cut my loss on this one based on the fact that when the asbestos story hit, it was already trading below my entry price and averaging down seemed like a foolish idea considering you never know how long these sort of scandals stick around. Not to mention that I considered this a growth stock in mid 2003. I just got it plain wrong.

(8) What over a time would make a stock in your portfolio out of favour and the position closed?
Keep in mind that I have a very specific time frame of 8 years to go. I'm guided by my ultimate goal of financial freedom at 45. I know I would need to elaborate on that but I won't. Basically this is the expectation my investment has to live up to. I have a goal and to reach this I need to perform accordingly. If a stock turns out to be falling behind (even though it still returns a profit) it will fall out of favour. I need to keep up the pace to reach my goal. I have certain criterias on which I chose my investment and over time things may change. More interesting opportunities may come along, enabling me to grow quicker by investing into other areas. This is why I spend considerable time reading about the company I invest in and the environment they are in.

Tech, I know I would need to explain a few details to make it more obvious and understandable but for now I've typed enough. A few spread sheets would obviously help to explain what sort of limits I have in place and what targets I try to reach. But in the end it comes down to a few simple points. It's all a number game and a matter of having a goal and a plan how to get there.

To all newbies:
If you know how to use a spread sheet then I suggest you put your trading idea to the test by using it. I found it especially helpful to do a reality check. You can always have an idea of making 4500% in 5 years but once you see what sort of figures you have to fill in to get there, it will get you thinking.

Have a nice weekend

Stefan

[tech/a]

Stef.

Thanks again.

Just a couple of comments and I really mean them in an effort to help you reach your goal.

(1) Your basically a buy and hold investor.

(2) It appears that you are basing your "Plan" on the nett gain on your portfolio in 8 yrs time (Or whatever period).This means that your beliefs "May" cost you the opportunity of taking what many would see as very sizable profits. (600% or 500 or 400 is an anualised return of 60% over 10 yrs).Bet youd like ING to pay you that sort of interest.!!
PLUS you get the opportunity of investing those funds into another long term prospect.

(3) While I see your methodology (Trading Plan) Admirable truth of the matter is that in 8 yrs time you may have 8 yrs of No return or very little.As your hypothosising what "Should" be your results.You dont know,its a quantified investment decision----not PROVEN.(More on this later.)
Time is not a replenishable resource so really to become financially independant we dont get many chances if adopting (and quite rightly) a long term veiw


Let me give you an unrelated example as you touched on one of my main investment stratagies.

Property.
You said that now isnt the time to invest-------great to hear---- people like me love to take advantage of lower prices and fear of loss while thinking out of the Square(A buy and Hold stratagy in property right now IS a good idea its the TIMING thats wrong!!)

To the example.

I have 2 options.

(1) Buy an Esplanade Property for $600K and subdivide it into 3 small villa blocks and sell at $295K each (a known value for Money Sale price).There is a huge hint on how to make This market pay!!!!

OR.

(2) I personally think that I could build a magnificent 3 Story dream home on the site with in my veiw a potential sale price in 5 years of $2.5 Million. Know one can tell me exactly the cost of building and there has never been a property like this offered for sale.

What do you do.
Stef Your doing (2).

tech

[stefan]

Admirable truth of the matter is that in 8 yrs time you may have 8 yrs of No return or very little.NO. That would be true if I just went along, sat back with my shares and waited for the 8 years to pass. I thought I made it clear in point 8 that that's not what I'm doing. All my stocks have to perform within tight boundaries. You're again referring to MUL wich is not what you should do as it has nothing to do with it. I feel comfortable that I can reach my goals without MUL. I will eventually sell my MUL shares within a few months (My guess is the first round in about 4-5 months and the second round later in 2005). THEN I will report my performance and we will see what it looks like.

To keep it short this time:
My trading plan for these 8 years is made up of performance levels to which all my shares has to live up to. If they don't then yes, you're right I'm off looking for a better performance. Again I mentioned that in point 8.


(A buy and Hold stratagy in property right now IS a good idea its the TIMING thats wrong!!)What timing? You need to explain this a bit further. If you have a buy and hold strategy, what do you mean by timing?

Your point regarding the investment:
I would never build a mansion like that in the first place ;). Whether or not you can subdivide your block of land is a matter of council laws. If you can, then even I would go for option 1. I do however not see where you take the believes from that you will get 295K other than when you already have a guaranteed buyer for it. But then I honestly don't see the relation between my investment and this example.

I appreciate your feedback. But please leave MUL out of it. Otherwise we're not talking about the same thing and we will go on forever.

I have set my goals and I set them in a way that makes me feel comfortable. Whether or not I would be able to top it by doing something different is completely out of the picture. There always is another way of doing even more but honestly, I'm not after buckets of money that will create all sorts of other problems. I'm after a way of life that suits me perfectly fine.

I'll be out for most of next week. So don't expect anything back from me too soon.

Have a nice weekend

Stefan

[tech/a]

OK.

I accept you have goals and presume you have quantified them.
However as there is no past history(of your method) its at best a calculated investment risk.
Fine you maybe comfortable with that ---I wouldnt be ---8 yrs is a long time to wait to see if Im right!!

Re timing.

Buying and holding property is a very sound investment plan.
6 yrs ago the timing was perfect 5 yrs before that it wasnt so but compared to now property was cheap.
But 5 yrs is a long time to have capital tied up and its NOT GROWING!!
Buy and hold now and chances are very good that youll have a long wait!

The example I gave is a real example a choice I made myself.
The Property subdivided has knowns---------what Ill get and have got for 1 already.
option 2 was something I have done Build and sell later.But then building was $750/meter but now $1000/meter for average specs.Housing prices rose monthly!!
The cost to build and the projected return were only estimates and best case so because of reasons above 1 was selected.Even though profit was potentially considerably more.

Trading is very similar there is an opportunity cost if your trading an inefficient unknown in performance plan.

Re MUL.

I accept that this is your bottom draw stock and your doing your best with it.

Im not suggesting that everything I write is right and everything else wrong.
Its up to the individual to judge that.

What Iam hopefully doing is getting you and others to THINK about how and what your doing!
If your happy with what your doing then fine.
If you get something that increases your bottom line from my writings even better.

tech

[stefan]

Im not suggesting that everything I write is right and everything else wrong.
Its up to the individual to judge that.
What Iam hopefully doing is getting you and others to THINK about how and what your doing!
If your happy with what your doing then fine.
If you get something that increases your bottom line from my writings even better.That's fine Tech. I have nothing to argue against a few questions and hints.


However as there is no past history(of your method) its at best a calculated investment risk.
Fine you maybe comfortable with that ---I wouldnt be ---8 yrs is a long time to wait to see if Im right!!Hm, what makes you think that there is no past history of this method? I don't think this is anything new that I've invented. And I've not just started with it. When I say 8 years then I'm referring to what's left. As I mentioned before, I came to this conclusion a while ago and so far I'm meeting my targets with ease. It's been done before and I must say I have seen plenty of other history that made me switch to this method. I have selected this way to invest my money with very specific goals in mind. It is of course always a risk involved but that's how it is. The world has yet to see a method that works without risks in any case.

I mean even your own method (whatever it is) will have to be based on something. I don't know what makes you so sure that it works in any case or why it may be a "PROVEN" strategy. Maybe we should elaborate on this a bit. When do you call a method proven? When it has performed for a few years? When it has survived all sorts of market conditions? When it continues to return the same performance even if the market is down? How many times does it have to do that?

I'm off for the weekend. Talk to you sometime next week.

Have a nice weekend

Stefan

[tech/a]

""Hm, what makes you think that there is no past history of this method?""

The reasons and the timing and the Stocks chosen have no history of your conditions for investment.

The only time youll know or even have an idea if your trading methodology is correct will be after the effect.

While we can argue till we are blue in the face,Past history can asertain feasability of a trading method over a very long in somecases lookback period and or 1000s of tests.

In your case this cannot be done as the company has never been where it is now and thats why youve included it in your portfolio.

All methods I trade (The whole 2 of them!!) Have a proven track record that can be and is checked against live trading portfolios.I know what to expect and how to react to live action----BullMarkets/Bear Markets/Extreme price movements/months of the year/you name it ill have a stat I can compare with.
If its way out of Whack I know somethings wrong.How can I be so sure my stats are accurate-------well exhaustive testing and Montecarlo analyisis of my method/s tested over 50000 portfolios (all different) over the test period gives me a pretty good idea.(Results available happy to post and will eventually when people come up to speed and understand what Im posting.).

You have nothing specifically to compare with.No point in comparing it with another company as it isnt that company.

Anyway your happy with it!

Not saying your wrong just that I wouldnt be happy doing what you are.
As I could only guess a possible return i couldnt say If I did this with XYZ then over 50000 tests it returned a 100% success rate.

Before you ask yes I can show a 100% success rate over 50000 portfolio tests (all different) with both methods.
But thats what Im happy to trade.

tech

[Fleeta]

Stefan and Tech/a, you two are like a married couple!

I think you both have good strategies, and neither are flawless. At the end of the day if you throw 100 coins in the air, you are going to get about 50 heads and 50 tails. You are both going to have winners and losers.

Stefan's strategy of only holding 8 stocks is good, because from personal experience, at one stage I held nearly 30 stocks and seriously couldn't find the time to know what was going on which each of them (not to mention the ridiculous amount of mail I got). At least with 8, you can be all over them. Tech/a, you seem to have a very agressive strategy and want to get the best possible return. Just remember there is always a bigger fish. You may just drive yourself crazy trying to get it.

Keep up the posts guys, they are highly informative and interesting.

[tech/a]

Firstly Fleeta.

The trading I do is as boaring as hell the average hold time for a winning trade off the top of my head is over a year.
For a losing trade around 40 days I think!

Hardly aggressive (Sure you dont mean me personally!) hahaha).
Actually if you can take 100 trades and have 50 of them profitable (which doesnt guarentee a profit incidently,infact 70% winners doesnt either!).Your doing very well.

I want to know that if Im trading I can be profitable with as low as 30% winners.

See thats what its all about 99% of traders think profitability means trading 51%+ winners.

Totally and unequivically 100% WRONG.
This again goes full circle to the WHAT makes your trading profitable.

Stefan.
In all fairness you may have backtested your method and found the What over even a 100 portfolios would be sufficient.Soon Ill be able to specifically discuss it,the what.
You may have also investigated or tested every possible case in your database and hypothetically if money wasnt an issue traded everyone.
Nett profitable?-----YES ----Possible winner but only possibly!.

General.

Why the hell do I need to know this stuff???

Without it your trading BLINDLY--your putting hard earned dollars and irreplacable time at RISK.Simply to be successful CONSISTANTLY you MUST know this.
Do you think a successful business just opens its doors and the profits flow?
Why is this any different?! Why do many fail and few succeed?

Fortunately this will remain here and when traders are at that time and space in their learning curve to accept and understand that this is their next step,here it will be.Its of no use until your at that point!

tech

[stefan]

In all fairness you may have backtested your method and found the What over even a 100 portfolios would be sufficient.Soon Ill be able to specifically discuss it,the what.Tech, ok I'll wait until you get to the WHAT. Suits me well as I'm not around that much this week. I see you opened another thread so I'll stick around there.

Looking forward to WHAT you have to say ;)

Happy trading

Stefan

[stefan]

Stefan and Tech/a, you two are like a married couple!Fleeta, don't push it! :D

Happy trading

Stefan

[Fleeta]

C'mon Stefan, does the truth hurt you?

I'm only kidding - i'm just posting rubbish in order to get up to 0.30 posts per day so that I can enter the stock picking competition.

Who holds cash these days anyway? I've got 110% of my wealth in shares...dangerous I know, but until the tide turns it will stay that way.

[whisky6210]

According to historical information, the great crash of the 1930s showed a market high followed by big low then a super high followed by an even more super low.....
A bloodbath has been predicted for 2005, so I've liquidated and sitting on the fence (except for WMR)
For the brave ones amongst you....beware of tall buildings.


THE FEAR OF LOSING IS GREATER THAN THE JOY OF WINNING !

[The Barbarian Investor]

Great insights into both Tech/a and Stefan's views..enjoyed reading it immensley. Thanks for the initial post stefan ...

[el_ninj0]

I seemed to have an incredible day- almost every stock I follow pretty closely (about 25) had a down day and broke major support levels!!!!!! I've never seen anything like it. Anybody else have this or am I the only one?

Malachii

Ive been watching RTM, MGX, MXG, and AZR very closely today, all of them seemed to have strong falls in the early trading periods, and a slight come back in the later of the day. MGX had a massive fall early, which was totaly unpredictable in my opinion, but came back to 1c above open price at the end of trade, which I am also unsure as to why that happend(any comments on this would be greatly appreciated).

AZR also seemed to follow the same trend as MGX did, almost to the exact same percentages. Which was also very unusual. Can someone please explain to me how the banks can directly influence the price of the resource companies?, because to me, this makes no sense at all. If a resource company has its own announcements, own forecasts, how can the share price be influences to such a huge extent?

RTM was also hard hit today, again, in its 4th successive loss from its high of 17.5c, now down to 11.5c. Very risky, but could be a good time to buy if the results of the mine come through as positive.

MXG will be a top buy for this week, along with MAP, I believe them to be the most undervalued stocks on the market. By the way, MAP was one of the few stocks to show green today, up 3 cents. Even though comsec marks it as a sell, I think its still a good time to buy, mabey enter in at 3.16 if its reaches that low again.

Very volitile market at the moment, do your research well and best of luck to you all.

[el_ninj0]

According to historical information, the great crash of the 1930s showed a market high followed by big low then a super high followed by an even more super low.....
A bloodbath has been predicted for 2005, so I've liquidated and sitting on the fence (except for WMR)
For the brave ones amongst you....beware of tall buildings.


THE FEAR OF LOSING IS GREATER THAN THE JOY OF WINNING !

whisky, got some evidence on this bloodbath?, i'd like to know alot more aboutj it if you have some links i can take a look at?

thanks

[wayneL]

whisky, got some evidence on this bloodbath?, i'd like to know alot more aboutj it if you have some links i can take a look at?

thanks

How about a chart?

[el_ninj0]

Excellent, Thanks wayneL.

Didn't think anyone would have a chart of back in those days easily accessible. So can someone explain to me why the Dow Jones affected stock exchanges world world? Since it is intertwined to a degree, but nothing to the order of how it affected other markets.

[DTM]

The all ords have really dropped too quickly for me to think that it will turn bullish any time soon. I think that it will do two things. It will either bounce for a few days starting tomorrow before it turns back down again, or it will free fall tomorrow. If it does bounce, I think that it will give other people who couldn't get out, a chance to do so. Will be able to see better once I get my EOD data for the ASX.

I'm very bearish on the US market and think that we will follow the US. The US looks like it still has a long way down to go.

As Tech pointed out, it looks like we are in an elliot wave 5. Elliot studies were psycological studies based on greed. Greed is the main driver behind the wave 5 and there seems to have been a lot greed lately.

Happy and safe trading :)

[DTM]

Excellent, Thanks wayneL.

Didn't think anyone would have a chart of back in those days easily accessible. So can someone explain to me why the Dow Jones affected stock exchanges world world? Since it is intertwined to a degree, but nothing to the order of how it affected other markets.

:2twocents

Personally I think its because so many economies rely on a strong US. If the US stopped dead in its tracks, the repercussions on the Japanese and Chinese economies would do them in. And if it does the asians in, then there wouldn't be much that we could send overseas.

I'm not qualified enough to comment so these are just my thoughts.

[Smurf1976]

Everyone else seems to be looking at the technicals so I'll take a brief look at the fundamentals. This is more general economics than asx-specific stuff.

1. Interest rates are rising, lead by the US.

2. Pace of the above seems to be accelerating.

3. Substantial increase in oil use during 2005 is a physical impossibility since capacity is simply not there (yes I have taken account of all the new deepwater development).

4. It is somewhat controversial but in broad terms the housing market is going bad in most locations, particularly at the top end.

5. General attitude to point 4 seems to have abruptly shifted in recent weeks acknowledging reality.

6. US Bond markets moving in the direction of higher yields.

7. Bond yield curve has been inverted in recent times(!!!).

8. Consumer debt is at historically high levels.

9. Australia's current account deficit is 7.1% of GDP - not yet a crisis but uncomfortably high.

10. Reports suggest that Chinese bank loans are lacking in quality (to put it politely).

11. A shortage of skilled workers throughout many parts of the economy.

12. US stock indices remain well below 2000 peak.

13. We have just had a 2 year rise in the stock market without a major correction.

14. Aussie Dollar looks toppy.

15. War talk is back in the news, this time with Iran.

And on I could go. Point is that if you look at what is going on then it seems pretty reasonable to conclude that shares in general are due for a fall. Add in the technicals as others have done and it looks pretty convincing to me!

[wayneL]

:arsch:

[el_ninj0]

Loooks like we are headed for a rise today, since the Dow Jones is back up in action, 135 points ahead. But yer, I also think its only temporary. Im going to try and make some gains on what I can today and sell off in the afternoon, But I think it'll be a hard one to predict again.

[wayneL]

Just for a bit of fun, here is a chart of the 70's bear....a 47% decline.

A result of the first oil shock......

[wayneL]

EA warns against possible acute oil shortage

01.04.2005, 11.51


PARIS, April 1 (Itar-Tass) -- The International Energy Agency (IEA) has come to the conclusion that the world economy is facing a serious threat of acute oil shortage. IEA experts have prepared a special report, due to be published within a few weeks, in which they warn the key oil consuming countries about the need for immediately taking tough energy-saving measures, if the daily oil supply to the world market is reduced by one to two million barrels.

The measures, suggested by IEA, include the reduction of a working week, a ban on using privately owned vehicles, the introduction of a 90-kilometre speed limit, the reduction of public transport fare and the encouragement of staff members to work at home, using Internet.

The conclusions drawn by the IEA experts reflect their growing concern over the macroeconomic dynamics taking shape on the world oil market. According to the information of Itar-Tass, the latest studies show that oil shortage will become more and more acute within the coming few months.

As a result of it, IEA insists now on the changing of one of its basic principles. Its founding documents say that tough energy-saving measures should be taken by oil consuming countries, if oil deliveries to the world market are reduced by 7 per cent, which is now equal to six million barrels a day. IEA is going to reduce the amount to one or two million barrels.

The report, prepared by IEA, will be submitted for discussion at a meeting of ministers of energy of the IEA member countries, which will be held next month.

[el_ninj0]

EA warns against possible acute oil shortage

In the event this does happen, would it be best not to have anything in the market at the time? Or which would be the best sector to have your investments in if there is to be a oil shortage?

[Smurf1976]

If we are going to ration oil consumption then there goes the prospect of the price going to the moon.

Government intervention, socialism, is aimed at least partly at avoiding a price shock in this sort of situation.

So don't plan your strategy around a price spike that may not happen.

By the way, OPEC can't actually meet the 500kbpd output hike it is proposing unless it produces at an unsustainable rate, continuance of which threatens permanent damage to fields.

[ghotib]

If we are going to ration oil consumption then there goes the prospect of the price going to the moon.
Price of motor vehicle fuel, or price of oil, or price of something else? Whatever, rationing is not the same thing as price control.


Government intervention, socialism, is aimed at least partly at avoiding a price shock in this sort of situation.
Errr... socialism? Anyway, if we're into peak oil or even just a super spike, what kind of intervention could Australian governments do that would avoid price shocks?


So don't plan your strategy around a price spike that may not happen.

By the way, OPEC can't actually meet the 500kbpd output hike it is proposing unless it produces at an unsustainable rate, continuance of which threatens permanent damage to fields.
I've seen reports like this too. They make me think that in a year or two "high" petrol prices will seem like a really good problem to have.

I seem to be getting more bearish by the minute. Maybe I should just go to bed.

Ghoti

[ghotib]

In the event this does happen, would it be best not to have anything in the market at the time? Or which would be the best sector to have your investments in if there is to be a oil shortage?

Materials? Maybe it's time to start some serious study of oil inputs to manufacturing. I think I asked here once before if anyone knows what proportion of oil goes into plastics, rather than fuel? I don't know the answer to that, and I don't know enough about recycling and recovery for plastics to have a clue about the impact of super-high oil prices on them and on competing products. Anyone???

Ghoti

[doctorj]

It's worth mentioning that OPEC's ability to reduce oil prices as they are quoted in the media is indirect at best.

Without going into the specifics, the price quoted is generally for light sweet crude. This fuel is the easiest and cheapest to process into fuel. Oil is graded as either light or heavy, sweet or sour. It's sweetness has to do with the level of sulfur impurities and light/heavy has to do with viscosity (Light is like petrol, heavy is like tar). Most of OPEC's reserves are heavier, sourer varieties than the light sweet crude quoted in the media. This oil trades at a discount to the light sweet crude.

The good news is that heavy, sourer varieties can be refined into an endproduct of the same quality axs the light sweet crude. The bad news is that it requires significant investment to enable an existing refinery to process these more corrosive/thicker oils.

The world is refining heavy/sour oils at current production limits, or near to. New capacity to refine this oil is several years away. No matter how much more oil OPEC pump, the quoted price is going to be comparitively unscathed.

[DTM]

It's worth mentioning that OPEC's ability to reduce oil prices as they are quoted in the media is indirect at best.

Without going into the specifics, the price quoted is generally for light sweet crude. This fuel is the easiest and cheapest to process into fuel. Oil is graded as either light or heavy, sweet or sour. It's sweetness has to do with the level of sulfur impurities and light/heavy has to do with viscosity (Light is like petrol, heavy is like tar). Most of OPEC's reserves are heavier, sourer varieties than the light sweet crude quoted in the media. This oil trades at a discount to the light sweet crude.

The good news is that heavy, sourer varieties can be refined into an endproduct of the same quality axs the light sweet crude. The bad news is that it requires significant investment to enable an existing refinery to process these more corrosive/thicker oils.

The world is refining heavy/sour oils at current production limits, or near to. New capacity to refine this oil is several years away. No matter how much more oil OPEC pump, the quoted price is going to be comparitively unscathed.

Thanks Doctor J, nice informative post. It makes me think that the oil could easily hit $100 per barrel in the next two years as some analysts are predicting.

Daniel

PS Is that Patrick Ewing's signature on the ball instead of Doctor J's?

[doctorj]

Another thing to consider is that China is implementing tougher emission limits on their fuels come June or July this year in time for the Olympics.

For their refineries to comply with this, they'll either need to carry out significant upgrades or buy better quality oils. I'd expect this to put an upward pressure on Light Sweet Crude prices from the middle of the year until new production facilities come online.

PS. Pretty sure its Sir Julius...

[doctorj]

I know its bad form to reply to yourself, but I just came across this and thought it might prove interesting.



Associated Press

Oil Contrarian Sees Bubble Ready to Burst

Monday April 4, 5:48 pm ET
By Brad Foss, AP Business Writer

Crude Oil Contrarian Believes Oil Prices Could Plummet to $28 Per Barrel As Early As Summer
Most energy analysts on Wall Street expect oil prices to remain high for the foreseeable future because of strong demand and limited supply.
Then there is Tim Evans, a contrarian who says today's crude oil prices above $50 a barrel reflect nothing more than a market bubble fed by speculation and unwarranted fear. Evans, a senior analyst at IFR Energy Services in New York, believes oil prices could plummet to $28 a barrel as early as this summer.
"I guess that makes me the lunatic fringe," Evans said, followed up by a burst of laughter.
Evans' basic message is that the world's oil supply is sufficient to meet demand, that motorists will soon show that they're not willing to pay any price for gasoline and that the market is unreasonably receptive to worst-case-scenario thinking.
The 45-year-old analyst, who earned his bachelor's degree in mineral economics from Pennsylvania State University, has led energy research at IFR, a division of Thomson Financial, for the past 10 years, following stints as a copper trader and an analyst at a mining concern. Evans writes a twice-daily technical analysis of the petroleum markets that costs $395 a month and is read by institutional investors, major oil companies, fuel distributors, traders and journalists.
Oil prices began rising above historical norms a few months before the U.S. invaded Iraq and have maintained their upward momentum since then due to rising demand, a shrinking supply cushion and market worries about everything from a hurricane in the Gulf of Mexico to pipeline sabotage in Iraq. The declining value of the dollar and increased hedge fund activity on futures markets have magnified the runup.
Rapid economic growth has largely masked the negative impact of high oil prices in the U.S., analysts say, though the airline industry has been stung, as have low-income families and those living on fixed incomes. Gasoline demand is about 2 percent higher than a year ago in spite of pump prices averaging $2.15 a gallon.
Veteran oil market analyst Peter Beutel of Cameron Hanover Inc. said Evans' outlook is not as crazy as his willingness to publicly stick out his neck.
"I don't disagree oil prices are going to drop precipitously at some point," Beutel said. "But, boy oh boy, they tell analysts to pick a time or pick a price, but don't do both. I certainly honor his bravery."
When pressed to do just that, Beutel said he could envision $28 a barrel, too -- in 2008.
Most oil analysts have steadily raised their oil price forecasts over the past two years, keeping themselves in sync with the market's upward momentum.
They back up their upward revisions with data pointing to a limited global supply cushion at a time of rising demand, particularly in the United States and China. They also cite the declining value of the dollar and they voice fears about possible supply disruptions all around the world: from labor strife in Nigeria to refinery snags in America.
Goldman Sachs analyst Arjun Murti last week raised his forecast for 2005 from $41 a barrel to $50 a barrel. The report said the market may be in the early stage of a "super spike" that sends prices as high as $105 a barrel -- the price Goldman Sachs said may be necessary to significantly curb energy consumption.
The report has contributed to a recent rise in crude futures on the New York Mercantile Exchange, where oil for May delivery settled Monday at $57.01 a barrel. Nymex futures closed at a record $57.27 a barrel on Friday.
Evans scoffed at the Goldman Sachs report, saying "the probability of reaching that price level is so small it's, like, laughable."
"Yes, $105 could happen. Texas could slide into the Gulf of Mexico. There could be a nuclear war with Iran. But you know that in a scenario like that I somehow don't think the world economy is going to be screaming for more oil."
Evans is not the only contrarian -- there are still a handful of analysts forecasting prices below $40 a barrel in the second half of the year -- but he may be the most blunt voice of opposition to the bullish market consensus. He sums up the group-think this way: "Greed makes you stupid."
Some of Evans' main arguments are as follows:
-- There is no worrisome lack of supply. With 1.8 million barrels a day of excess production capacity, Saudi Arabia can quickly pump enough oil to offset any disruptions, short of the most catastrophic scenarios.
"Oil prices have been rising for the last 18 months on hypothetical supply disruptions," Evans said. "Every time we come up with a new 'what if?', the oil price manages to go $5 higher."
-- Higher prices will eventually cause gasoline demand, which is now about 2 percent higher than a year ago, to taper off. And higher prices will lead producers, including Saudi Arabia, to pump more oil.
-- The U.S. Strategic Petroleum Reserve, which the Bush administration has been filling at an average rate of nearly 250,000 barrels a day, is nearly full. By August, the market should have that much more supply of light, sweet crude available to it.
All of these factors have been ignored, Evans said, by the growing number of hedge funds and other speculators betting on crude futures, proving only that there is demand at any price for "paper barrels."
When asked why the market would ignore what he considers to be an adequate supply situation and instead focus on everything that could wrong to disrupt it, Evans answered with a question.
"Why did people chase Internet stocks in the late 1990s, and why did they shift from looking at earnings to looking at revenues and from looking at revenues to looking at the number of hits on a Web site as a method of valuation?"

[Smurf1976]

Price of motor vehicle fuel, or price of oil, or price of something else? Whatever, rationing is not the same thing as price control.


Errr... socialism? Anyway, if we're into peak oil or even just a super spike, what kind of intervention could Australian governments do that would avoid price shocks?
Ghoti
Under IEA rules, during an emergency the Australian Government is required to limit oil consumption to a level which matches Australia's allocation.

The market continues in the context of price but physical allocations to individual countries are set by an international agreement, not traders or oil companies. This level would by definition be below business as usual consumption.

Exactly how the government would meet its international obligations (and we are a net importer so there is no "opt out" choice) is open to debate but all recognised methods of rationing are fundamentally based on socialist principles rather than capitalism. We all suffer together.

The aviodance of the market sorting it out (higher prices lowering demand) is the specific purpose of introducing rationing in the first place. The reasons why this is considered desirable are fundamentally social. High prices are socially and politically unacceptable, hence the pressure on government to "do something".

It's much like health. Australians expect socialisation of health care costs. Nobody expects to pay a million dollars for treatment even if that's what it costs. We accept restrictions (waiting lists) in order to limit the cost. Likewise we accept traffic jams to avoid the cost of new roads, standing on buses and trains to keep fares down and so on.

Looking at international historic examples, expect something like the following:

Ban all cars on Sundays, fuel coupons, shorter working week, enforce restricted shopping hours, prohibition of certain air routes where alternatives are feasible, "odds and evens" system based on registration plates, recording of annual mileage linked to some form of tax penalty and so on.

As for the price, that's a difficult question but remember that governments would be the major market player along with OPEC. Not governments directly buying oil, but government having absolute control over the level of crude oil demand.

Whilst not by any means certain, it is prpbable IMO that governments would pursue a moderate price scenario. Why triple the cost of oil to your country for a mere 1 or 2% volume increase? Governments think exactly like that with roads, water, electricity and so on so I can see no reason why they wouldn't with oil. It's very typical of government thinking on just about any subject

Personally I would prefer that the markets be left to sort it out, but history and actions to date suggest that is unlikely.

[DTM]

The all ords have really dropped too quickly for me to think that it will turn bullish any time soon. I think that it will do two things. It will either bounce for a few days starting tomorrow before it turns back down again, or it will free fall tomorrow. If it does bounce, I think that it will give other people who couldn't get out, a chance to do so. Will be able to see better once I get my EOD data for the ASX.

I'm very bearish on the US market and think that we will follow the US. The US looks like it still has a long way down to go.

As Tech pointed out, it looks like we are in an elliot wave 5. Elliot studies were psycological studies based on greed. Greed is the main driver behind the wave 5 and there seems to have been a lot greed lately.

Happy and safe trading :)

Sorry to quote myself but it does look like an elliot wave five and it'll only be downhill from here.

Shorter term trading will seem to be the GO from here on in.

[Rafa]

These posts have been very informative. Thanks.

I have a question.
What happens to property values if indeed we are in wave 5?

R.

[DTM]

These posts have been very informative. Thanks.

I have a question.
What happens to property values if indeed we are in wave 5?

R.

I think property value is more affected by economic factors rather than the stock market although property in my view, would be subjective like the stock market. ie All based on consumer confidence. I think that we are heading into a recession and property is going to drop. I have been speaking to a lot of developers who have been around a long time to see their views. They already see that there will be a property crash in about 12 months. They talked about the early 90's when houses in Mosman were selling for 4 million and the following year, it was selling for 1 million. I don't think the crash is going to be that large but a much needed correction is due for Sydney.

:2twocents

[DTM]

Forgot to add that a lot of the suppliers to Developer's are trying to get payment up front.

[Smurf1976]

I think property value is more affected by economic factors rather than the stock market although property in my view, would be subjective like the stock market. ie All based on consumer confidence. I think that we are heading into a recession and property is going to drop. I have been speaking to a lot of developers who have been around a long time to see their views. They already see that there will be a property crash in about 12 months. They talked about the early 90's when houses in Mosman were selling for 4 million and the following year, it was selling for 1 million. I don't think the crash is going to be that large but a much needed correction is due for Sydney.

:2twocents
There seems to be lots of anecdotal evidence emerging that property prices are falling. No absolute proof in terms of annual price change statistics, but the signs are becoming rather strong in some locations.

Only yesterday I noticed that a Hobart suburban real estate agent had dropped its "properties wanted in this area up to..." price by $50,000 compared to the level it's been stuck at for months. Not proof, but more evidence that prices may be slipping. Likewise the stories of 40% discounts on expensive properties in Sydney, slow sales in most states and so on.

I'll keep this brief since this is a stocks forum not a property one but if you want more info then you can check your own suburb at http://www.commbank.com.au/propertyvalueguide/

[Smurf1976]

Forgot to add that a lot of the suppliers to Developer's are trying to get payment up front.
So suppliers must be getting worried. More anecdotal evidence. :2twocents

[Rafa]

thanks for those responses. the current property market is well overpriced and should fall. But I read on this thread before that during a wave 5, the best assets to hold are "real" assets, eg gold, as opposed to just numbers in a bank account.

Is property considered a real asset, becuase if it is, and cash devalues, then property in terms of cash prices will go up!

or have i got myself completely confused here???

R.

[wayneL]

Here's what history tells us about RE prices at the end of a wave 5

[Rafa]

Amazing... that is the chart i was after...

it looks like it took the best part of 2 decades for property to come back... but shares took the best part of 4 decades.

Thanks for that WayneL... much appreciated.

[DTM]

XJO (S&P top 200) hit a high of 4030 within an hour of trading and its reversed 40 points at 12.30pm.

It doesn't look like its slowing down, could be freefall.

[Investor]

The wave of profit downgrades is now driving the fear factor across the board.

[tech/a]

Hmmm.

Ive sold out of all positions from around 10 am.

Im happy to sit and watch.
Taxman will be happy thats the downside.
But if it keeps falling that wont be an issue.

[DTM]

Here we go again. XJO down 27 points by 12pm.

Its going to be free fall again. :eek:

[Investor]

It is now down 37.3 points. Could fall below 3900 before the day ends.

[GreatPig]

By my approximation, XAO reaching 3900 or just below would satisfy the head and shoulders target fall.

Then a further drop to around 3850 would put it back near the longer term trend line.

GP

[TjamesX]

Well, wierd weird and wierder..

3 of my stocks are up, 2 are flat and one is down.... on a day like today! (I know if it was the other way around I wouldn't be posting ;))

There seems to be a lot of cyclical stocks getting hit (ie ones that relay on general demand in economy - particularly consumers - for revenues). Also most small\mid caps are getting punished.

I am waiting to add to my BHP holding (bought last week $17), whenever the market starts to calm down. I get the general feeling that good companies with good revenues are getting taken down in the mess - I think there will be some very good opportunities soon (for me I'm looking at the medium term)

Meanwhile, trigger finger on the sell button at all times ;)

and be safe in the knowledge that wherever the XAO is going - its getting closer to its destination every day :D

TJ

[Aussiejeff]

Well, wierd weird and wierder..

3 of my stocks are up, 2 are flat and one is down.... on a day like today! (I know if it was the other way around I wouldn't be posting ;))
TJ

Yup. Me 2. ;o)

I must say I feel a lot more comfortable now (even after having taken a bit of a hit) after shifting last month from higher risk/cyclicle stocks in order to add significantly to what was only a small proportion of more "defensive" utilities and energy plus cashing out the rest to a 5.5% cash management fund.

My total portfolio is now limited to APA, ORG, DUE, UTB, SGL & QGC.

The first 4 companies should provide reasonable regular dividend income and between the first three they own a major proportion of Australias gas supply network, while the two gas exploration/provider companies (no divs to date YET) have held up rather well compared to the rest of the market and look to be pretty safe bets over the longer term to me. At least that's the plan for NOW. Anything is liable to change of course.

You could say right now I'm fully gassed up! hehe.

Fingers crossed GWB doesn't throw a lighted match too close by.....

Stay HAPPY and think POSITIVE ;o)

AJ

[Stan 101]

So suppliers must be getting worried. More anecdotal evidence. :2twocents

Could you advise on some of these Suppliers? I've been in the construction industry dealing with major developers and construction players for nearly 15 years and could not imagine that becoming a reality. There is always someone willing to give credit.

[Smurf1976]

Could you advise on some of these Suppliers? I've been in the construction industry dealing with major developers and construction players for nearly 15 years and could not imagine that becoming a reality. There is always someone willing to give credit.
I was just responding to a post from DTM who said that suppliers were wanting payment up front. I don't have any info other than what DTM posted. I assume that DTM has more knowledge on the specifics than I do.

My reason for commenting was that it is my observation that when someone in ANY industry wants payment up front then there are basically two reasons for it. One is that their own cash flow is poor and they need the cash to pay their own suppliers, wages etc. The other reason is because they don't trust that the customer is going to pay.

Given the recent boom in the building industry I very much doubt that anyone needs payment upfront in order to pay their own costs. If things are that tight following a massive boom then those suppliers are going out of business real soon. I therefore conclude that the reason for wanting payment upfront is because they are concerned that customers might not pay their debts.

If this is the case then it suggests that suppliers must be very worried about the prospects of their customers and thus the building industry in general. You don't normally shut down credit to existing customers without a very good reason since they may well go elsewhere in response. They must have a very good reason for doing so.

Perhaps DTM could add some info as to where the original comment came from since that was the basis of my comments? To me it's just another piece in the puzzle that points to a marked slowdown in real estate which is my key point. :)

[DTM]

Sorry I didn't elaborate before. I was playing golf with a Developer and his suppliers and he was warning them to be careful. He had done well in the early 90's when there was a property crash and he was preparing himself to go through it again. He predicted that there will be a property crash in 1 to 2 years and was warning his friends/suppliers to start being careful.

:2twocents

[tech/a]

Smurf.

There is another reason for upfront or negotiated early settlement of credit.

Thats is that we are so busy (As developers and contractors) and our clients want the very best---with project completion NOW.

That we cannot cashflow/(dont wish to) all projects and developements there is just too much of it around..

We are in the position to offer and negotiate better pricing for both the client and ourselves BY the offer of COD OR early settlement or EFT (Electronic funds transfer).

The 30 day from end of month credit is (In our industry) just gone.
You find that contractors like ourselves can and do demand fast payment simply because demand says we can.

Rather than a negative I think youll find this a HUGE positive for the construction/building/developement industry.

Sure you can get credit but you wont get the goods when you want them at the price you want them.-----Flash cash or Electronic Transfer in front of a suppliers nose and watch the price come down------do the same to the contractor and watch your waiting/construction time deminish.

Consider this.

I keep my ears to the ground with those who sell realestate both on a used and new basis.
This is what they are finding.

Strong demand from a NEW type of buyer.

These are the people who have an IP or 2 and they are now selling and FREEHOLDING or close to it-------- their dream homes.(In Adelaide the mean average home price was about $160K and is now around $260k these people are buying OR building $300-400k homes----and there arent enough---OR they are spending $150k on renovations).

There is a sad lack of Land for developers and a sad lack of trades when youve got it.Cash and EFT will be king-------credit will fall back as a fossil.

Doom and gloom---keep it coming.

Perhaps this conversation should be in its own thread.

"The Property doom myth!"

[Stan 101]

Interesting points, all... Sorry If I sounded harsh in my last post, I didn't mean to be... I should do "friendly posting 101."

It's very interesting.... the thread got me thinking and I called a few timber and hardware wholesalers today... Seems there is a glut of 70mm and 90mm pine at the moment. These products make up approximately 15 -20K in a modern 4 bedroom home. Timber prices are actually dropping in some areas.
Haven't seen that for several years.