Are we in a bull market? - Aussie Stock Forums

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  1. #1

    Question Are we in a bull market?

    Hi Guys,

    I have been thinking about this for the last month and what I have seen so far is more a recovery of the sharemarket than a real bull market. What I mean is that there are some shares still pretty cheap with P/E under 20. I only believe that the resource sector is overvalued and that there is a lot of potencial this year.

    Any thoughts?


  2. #2

    Default Re: Are we in a bull market?


    How is a bull or bear market defined.
    Over what period.Is it the index making successive new highs or new lows.
    Is it only during a period where the index is at all time new highs or lows?

    Is it when advancers are constantly higher than decliners or vice versa.

    Ive yet to see a definative description.

    However currently ALL suggested criteria I have mentioned are being met so personally this is very bullish.

  3. #3
    stefan's Avatar
    Join Date
    Jun 2004

    Default Re: Are we in a bull market?

    What I mean is that there are some shares still pretty cheap with P/E under 20
    A bull market wouldn't have much to do with P/E ratios. I would put P/E ratios into the "bubble" basket and not as an indicator of a bull market. As Tech has put it, there are several indicators to consider but for Australia the market is VERY bullish. We're hitting one record high after the other, high earning expectations by investors and lots of money is flowing into the market. Winners constantly outperform losers.


    Happy trading


  4. #4
    Rotaredom wayneL's Avatar
    Join Date
    Jul 2004

    Default Re: Are we in a bull market?


    The bulls have it for the moment...in Oz at least.

    Yeah... the yanks are bullish too, just not as much as here.

    I'm still a bear, but no use fighting the current eh? Happy to run with the Bulls


    Global: An Unprepared World.

    Stephen Roach (New York)

    Globalization is a wonderful subject to debate. Basically, that's
    all I've been doing for most of the past two weeks first at our
    own MacroVision exercise and more recently at the World Economic
    Forum in Davos. In many respects, these were two of the most
    intellectually enriching weeks I have spent in a long time. Yet as
    I now decompress and ponder the experience, I am left with a nagging
    sense of concern. As I see it, investors are largely unprepared for
    some big changes coming in the global landscape in 2005.

    This potential disconnect is most evident in the debate over the US
    and China currently the twin engines of global growth. America's
    imbalances are widely recognized as both worrisome and
    unsustainable. There is a minority that believes in the new
    paradigm of the fungible global saving pool that the allocation of
    capital, consumption and production now flows seamlessly to its
    destinations of highest return or comparative advantage. In its
    simplest sense that translates into a world where China produces,
    America consumes, and the rest of the world gladly pays the bill and
    goes along for the ride. But with global imbalances expanding at an
    accelerating rate, even advocates of this point of view are starting
    to have second thoughts. America's deficits are now being framed as
    a problem that will come to a head sooner or later. The hope of the
    global consensus is that it will be later.

    As I have noted ad nauseum, macro is not particularly good on these
    issues of timing in making the distinction between the proverbial
    sooner or later. But my suspicion is that 2005 will be a critical
    year in being able to make that distinction. I rest my case mainly
    on the likely behavior of the Federal Reserve. At present, the US
    central bank is running an utterly absurd monetary policy of
    maintaining a "zero" real short-term interest rate a nominal
    federal funds rate of 2.25% that is basically equal to the core CPI
    inflation rate. That will undoubtedly change this week, but not by
    much. When the dust settles after what is likely to be yet another
    "measured" tightening of 25 basis points, the real short-term
    interest rate will only be fractionally in positive territory. This
    is well below what most believe to be a "neutral" position for the
    Fed's key policy lever somewhere in the 2% zone in real terms.
    Which, of course, says there is a good deal more tightening to come
    if the Fed is serious about containing the inflationary and
    speculative risks it cited in the minutes of the December FOMC

    This could be a recipe for a flash point that has a lot to say about
    the "sooner or later" aspect of global rebalancing. Last year's Fed
    tightening was inconsequential all it did was lift short-term real
    interest rates from negative territory to zero. This year's Fed
    tightening is likely to be a very different animal taking the
    policy rate from zero toward a large enough positive number that
    deals with the very risks the Fed, itself, is now citing. For
    financial markets, the zero real federal funds rate is the candy of
    the carry trade allowing investors and speculators to borrow short
    and pocket the spread anywhere else on the yield curve. In 2005, the
    Fed is going to take the candy away. This points to a likely
    unwinding of a multitude of carry trades that have driven spreads on
    risky assets to unbelievably low levels. Those include high-yield
    and emerging market debt, investment-grade debt, and the "refi trade"
    that has underpinned consumer equity extraction from increasingly
    overvalued homes.

    This underscores a potentially critical moment of reckoning for the
    US economy and for a US-centric global economy. Extraordinary
    monetary accommodation has been the glue that has held a post-bubble
    US economy together these past five years. But the easy money has
    given rise to an asset-driven saving and spending mindset. That
    development, in conjunction with an unprecedented shift in the
    federal government's saving position a budget that went from
    surplus to deficit has pushed America's income-based saving
    position to record lows: The net national saving rate has averaged
    just 1.5% since early 2002. Lacking in domestic saving, the rest is
    history a US that has to import surplus saving from abroad to grow
    its economy, and run massive current-account and trade deficits to
    attract the foreign capital. And, of course, Japan and China have
    led the charge in financing this asset-dependent spending binge
    because they couldn't stomach the alternative.

    Like in 1994, 2005 is likely to be the year when the Fed finally gets
    "real" on real short-term interest rates and the carry trades they
    have spawned. But unlike the case in 1994, more than a decade later,
    the US has been transformed into an asset-dependent economy that has
    given rise to massive global imbalances. To me, all this smacks of
    sooner rather than later on the rebalancing watch. Based on all my
    discussion and debates in the past few weeks, I would say that the
    world is largely unprepared for this possibility. The Fed is widely
    thought to be the world's central bank and wouldn't dare risk such an
    outcome, goes the logic. By inference, that means the world is
    perfectly content with the alternative the folly of financing
    itself on an increasingly shaky foundation of ever-risky carry

    A truly independent central bank has no choice other than to take the
    candy away. And a US-centric world will have to figure out how to
    cope with the aftershocks. The key question, in my view, is whether
    the Fed has the courage to act.

    Similarly, an increasingly integrated global economy has to find a
    much better way to cope with China. The China debate has now reached
    a feverish pitch especially on the RMB currency issue. The Chinese
    were well represented in Davos and every utterance by a Chinese
    official or banker was scrutinized by the press and the markets for
    hints of any imminent action on this front. In one of the final
    sessions at the World Economic Forum, Li Ruogu, Deputy Governor of
    the People's Bank of China, stated unequivocally that the decision
    has already been made to shift gradually to a more flexible currency
    regime. But he went on to underscore that there is no timetable for
    such an action. But, as I saw it, the message from China was sooner
    rather than later on this count as well. The operative word on this
    issue came from the senior member of the Chinese delegation at Davos
    Vice Premier Huang Ju. China, he stated, was well advanced in its
    preparation for a more flexible currency regime.

    If that wasn't a wake-up call, the next session at the World Economic
    Forum was. Literally, a few minutes later on the same stage, John
    Taylor, US Under Secretary of Treasury, used precisely the same
    language in stating that China is now taking steps to prepare for the
    shift a more flexible currency system. The emphasis on the word
    "prepare" stands in sharp contrast to earlier language, which always
    contained references to terms such as "stability" or "fixed." Those
    words were not used in Davos. I don't want to read too much into the
    nuances of language, but I think there is an important message here.
    I don't think it was an accident that both Chinese and US officials
    selected the same new word to characterize an issue that has taken on
    increasing significance in world financial markets.

    Personally, I think the Chinese currency issue is totally
    misunderstood. For starters, I can't conceive of a likely move in
    the RMB that would have any impact on Chinese competitiveness or on
    the US current-account deficit. Sure, if the peg goes, other Asian
    currencies could follow suit allowing the dollar to continue the
    requisite decline that America's current-account deficit requires.
    That would undoubtedly also trigger some diversification out of
    dollar-denominated assets by foreign investors and central banks
    only underscoring the likely of a back-up in longer term US interest
    rates that would have happened in any case. The only RMB outcome
    that would shock the markets would be an Asian-crisis-style
    adjustment. With over $600 billion of official foreign exchange
    reserves at its disposal, the odds of that are close to zero, in my
    view. China has ample resources to manage any currency adjustment it

    I do think this is a big deal for China. Over the past 26 years,
    China has made phenomenal progress largely by successfully executing
    an open, trade-oriented development model. It has relied on its
    enormous reservoir of national saving to improve the infrastructure
    that supports its manufacturing platform. And it has used this
    infrastructure, along with aggressive tax incentives and a vast low-
    cost labor force, to attract huge inflows of foreign direct
    investment. Currency stability is key for any outward-looking growth
    model. But now China is coming of age and must shift to a more
    balanced, market-oriented framework. To do that, it needs to focus
    more on stimulating domestic demand its consumption share of GDP is
    only about 55%. At the same time, China also needs a more flexible
    policy apparatus to smooth out the inevitable cyclicality of market-
    driven adjustments. That points to flexibility in terms of fiscal,
    monetary, and yes, even currency policy. The Chinese know and
    understand this, and are definitely moving in that direction. Timing
    is their business not ours. But when they shift currency regimes,
    I think it will be a very positive sign of the maturation of the
    Chinese growth miracle. I don't think the rest of the world gets
    this point at all.

    All this speaks of world financial markets that are not well
    to cope with two of the biggest issues on this year's macro agenda
    significant move in real short term interest rates in the US and the
    deeper implications of an eventual shift in China's currency regime.
    Timing is always tricky in this business, but I think the Chinese
    put it best: The time to prepare is now.

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