One for the bulls! - Aussie Stock Forums

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  1. #1

    Default One for the bulls!

    Im so sick of hearing, this is like 1929, this is like 1987, etc, etc.

    So heres a bullish article, where the author argues that after 7 years of underperformance, DOW up about 14% in total over 7 years, the bullmarket in US stocks is just beginning.

    And i agree - the DOW has JUST broken all time highs. Does every1 know what happened to our markets when broke all time highs in mid-2004?

    THose Yanks have alot of catch up to do

    April spike could trigger major market move
    Dow's breakout follows seven years of significant underperformance

    By Michael Ashbaugh
    Last Update: 5:43 AM ET May 1, 2007

    CINCINNATI (MarketWatch) -- With the strong April rally, the U.S. markets reached several important technical milestones.

    Among them:
    The Dow industrials notched all-time highs, also clearing the 13,000 mark.
    The S&P 500 and the Nasdaq broke decisively to six-year highs.
    And perhaps most importantly, the Russell 3000 spiked to all-time highs along with the Dow.

    Admittedly, the strict technical significance of Dow 13,000 is debatable. In many respects, it's just a big round number. Nonetheless, the milestone casts an interesting light on how the U.S. markets are positioned historically.
    Consider that it took seven years to move the 1,000 points from Dow 11,000 to 12,000.
    By comparison, the index required just over six months to run the next 1,000 points from Dow 12,000 to 13,000.

    And while its most recent 1,000-point rally may sound like a big move, it amounts to just an 8.3% return -- a strong six-month rally, but not off the charts.
    Given the extended seven-year consolidation phase that preceded its breakout, the U.S. markets may still have significant upside.
    To illustrate that point, consider that the Dow industrials closed December 1999 at 11,497.

    That means the April 27 close of 13,120 represents a 14.1% total return across seven years and four months, for a surprisingly meager annualized return of about 1.8%.
    By way of reference, if the Dow had returned 10% annually over that same span -- December 1999 to present -- it would've ended April at about 26,300.

    So while the U.S. markets may feel extended -- and they are by many measures -- this isn't the time to get defensive. If anything, the April rally could serve as a launching pad for a significant market move.
    These next three charts add color to the longer-term backdrop.

    That means coming into December 1999 the Dow was extended historically, and perhaps needed a long-term consolidation phase for time to catch up with price.

    Nonetheless, the initial point still holds. The Dow has posted a seven-year annualized return of about 1.8%, and despite its sharp April rally, the index may still have significant room to run.

    The S&P 500's story is slightly different. Unlike the Dow, it hasn't broken to all-time highs making its technical backdrop less bullish.
    Yet from the standpoint of long-term returns, the S&P peaked in March 2000 at 1,552.
    By comparison, it closed April 27 at 1,494.

    That means over the past seven years, the S&P has posted a 3.7% negative total return. If it had returned 10% annually from March 2000, the index would currently hold around 2,900.

    And the Russell 3000 represents the tie breaker.
    This benchmark is a more comprehensive index encompassing about 98% of all U.S. market capitalization.
    As the chart illustrates, it's also spiked to all-time highs, lending credibility to the Dow's April breakout.

    Put another way, this isn't just the Dow 30 stocks that are breaking out. The U.S. markets as a whole have made a significant move.

    Also consider that if the major benchmarks are adjusting price to match time -- that is, compensating for being stuck seven years -- it may not matter how bad the economic news gets.

    Strange as it sounds, an upcoming rally -- assuming one occurs -- could be a data-independent means for the markets to match historic return rates.
    In the end, only time will tell whether the April spike kicked off a major market move. But if it has, the Dow could easily reach the 15,000 mark -- that's another 14.3% above current levels -- without being historically extended from the standpoint of long-term returns.

  2. #2

    Default Re: One for the bulls!

    Refreshing nizar! That 1929 thread was oh so yesterday

  3. #3

    Default Re: One for the bulls!

    One thing everyone tends to forget about the DOW is mostly made up of Multi-National company's and isn't particularily reflective of the American Market/Economy, but more the international Market/Economy.

    This is why the DOW looks much better than the S&P500 and the Russell 3000 which are more reflective of the health of the American Market/Economy.

    Saying all this, the analysis of the DOW etc with the devaluation of the US Dollar factored in makes the American Indexes look less than spectactular...
    "Don't Fight City Hall when you can BE City Hall"
    G. Edward Griffins

  4. #4

    Default Re: One for the bulls!

    Quote Originally Posted by Kimosabi View Post
    Saying all this, the analysis of the DOW etc with the devaluation of the US Dollar factored in makes the American Indexes look less than spectactular...
    But a devaluted US dollar represents a great buying opportunity for us to buy the worlds biggest companies.

  5. #5

    Default Re: One for the bulls!

    Don't forget the impact of the falling USD.
    I feel there is a two fold positive for the DOW

    1 - the earnings of a lot of companies with large overseas revenues will be positive > higher EPS once translated back into USD

    2 - the falling USD might also have a benefit of attracting funds that are trying to protect against the devaluation by investing the funds in the hope that the market keeps going up.
    Similarly it may attract capital on the basis that these companies are better value now.

    Just remember that the only ones actually up on the DOW since the 2000 highs are US investors. Anyone investing funds from outside of the US is still down because of the devaluation of the USD.

    Let's see what happens if the dollar strengthens or if it decisively breaks down below 80 on the USD Index.

    I personally wouldn't invest in the US just because they have been promoting a strong dollar for so long at the expense of the economy.
    Never argue with an idiot. They bring you down to their level and beat you with experience.

  6. #6
    Stop_the_clock's Avatar
    Join Date
    Apr 2006

    Default Re: One for the bulls!

    ...I am so sick of hearing about these typical Bull stories...we all know the market has topped.


  7. #7

    Default Re: One for the bulls!

    Quote Originally Posted by Stop_the_clock View Post
    ...I am so sick of hearing about these typical Bull stories...we all know the market has topped.

    One more for you, my friend

    Livin's easy in a white-hot boom

    Christopher Webb
    May 6, 2007

    HOT Money. Funny Money. Serious Money. Money of all hues continues to fuel the white-hot boom that is being played out on the stock exchange.

    There is so much money around from superannuation funds, private equity funds, hedge funds, takeover merchants and from companies handing money back to shareholders that share prices are going up faster than ever before.

    They seldom suffer any big fall. This is a market that just keeps going.

    Whatever happened to the mini-panic that gripped punters little more than two months ago when the Chinese Government tried to slow things down a bit, and the US sub-prime mortgage market got the jitters?

    Some money men then got a bad case of the jitters and started trimming holdings, causing the Australian market to lose about 6.5 per cent of its value.

    But the fear factor was short-lived. The fall was short and sharp and the market promptly threw off the blues and resumed rising.

    Anyone who bought shares during that sell-off has made 11 per cent on their money.

    The sheer weight of cash has propelled the Australian sharemarket up by 125 per cent in just four years, which means that anyone with their money spread across the big stocks has pocketed gains of more than 30 per cent a year.

    It's been an easy money game that has required no particular expertise; the trick has been just to own shares and to sit tight. The old maxim "Don't confuse brains with a bull market" was dreamt up to describe markets like this.

    How easy has it been? Ask those 379,322 punters who put their hands up for Telstra paper late last year.

    They put up $2 for the instalment receipts and they are now fetching $3.39 a $5.7 billion bonanza in just a few months.

    The easy money gains from the stockmarket over the past few years have spilled over into other areas such as paintings and property, where anecdotal evidence suggests stockmarket-rich parents are stumping up hundreds of thousands of dollars for their children to use as deposits on inner-city properties.

    As bull markets go, this one has been extremely rapid; the previous time the market doubled it took nearly a decade.

    And new highs keep coming, with the Australian market making it daily into virgin territory, while the US market as measured by the Dow Jones Industrial Average also keeps hitting new highs. The music keeps playing, but for how much longer?

    The bulls reckon it will keep going. They point to record company profits, low interest rates and economic growth across the planet.

    They argue that some bull markets are long-term affairs and that this is one of them.

    They say look at the market after the Korean War when the bulls were charging for nearly a decade and the market appreciated three-fold.

    The bulls believe that the big takeovers, others being played out and others in the pipeline will provide investors with money that will be directed back into the sharemarket. They argue that huge amounts from superannuation funds will continue to flow into shares, further underpinning and propelling prices.

    When they look at America, the optimists see low inflation and continued profit growth, although not as strong as it was.

    What about the bears, the people who think that Australian share prices are too high?

    They think that The Market That Won't Go Down is showing all the signs of a mature bull market.

    They point to the big money that has been thrown at some company directors who have had little or no experience investing Other People's Money.

    Another sign of a hot market is the exploration sector where some money-raising is being conducted by con-men who are experiencing little difficulty raising millions on the back of the minerals boom.

    Some of these spivs have black marks against their names from crooked behaviour during the last boom. Yet they are having no trouble raising big wads of money from suckers. Again.

    The bears are saying that industrial shares are expensive and that companies will not live up to the optimistic valuations now being placed on shares. They point out that punters are now throwing money at new companies that a couple of years ago would have had trouble raising one cent.

    And then there's derivatives, the fancy futures and options contracts that American investor Warren Buffett has described as "potentially toxic material".

    He has been warning for some time about the systemic problems that could result from the enormous growth in the use of derivatives.

    Other bearish factors include the chance of bad economic news in the US, higher interest rates, a terrorist attack, natural disasters or something right out of left field, such as a bird flu epidemic that sweeps Asia.

    The more extreme, older bears remember previous panics and claim that when this bull market cracks, it will crack like no other.

    They reckon that many people looking after Other People's Money have never seen a wholesale panic. They were still at school when the market fell more than 20 per cent in one day in October 1987, and wound up falling more than 40 per cent.

    Right now, though, the bulls are in charge.


  8. #8
    Calliope's Avatar
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    Jul 2008
    Sunshine Coast

    Default Re: One for the bulls!

    Bulls 1 -Aussies -0. Ole!

    A Spaniard and an Australian were injured on Wednesday on the second day of the San Fermin bull festival in the Spanish city of Pamplona, organisers said.

    The Australian is aged 18 and comes from Melbourne while the 20-year-old Spaniard is from the northern city of Saragossa, a spokesman said. Both were taken to hospital.
    Attached Images

  9. #9
    nioka's Avatar
    Join Date
    Jul 2006
    Northern N.S.W.

    Default Re: One for the bulls!

    Quote Originally Posted by astroboydivx View Post
    But a devaluted US dollar represents a great buying opportunity for us to buy the worlds biggest companies.
    Pity we couldn't afford to buy back some of our own!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
    Try and think outside the square

  10. #10
    really really good looking
    Join Date
    Nov 2009

    Default Re: One for the bulls!

    Holy Awesome Bumped Thread Batman!

  11. #11
    explod explod's Avatar
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    Mar 2007
    The Bendigo gold fields, Victoria
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    Default Re: One for the bulls!

    How did we let this thread go away without some ho hum ho hum Wonderfull being a cup runneth over bull but it dims the glasses.

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