ALL ORDS went nowhere for 7 YEARS!

qldfrog said:

but not good for gas or coal and as we are huge net exporter there, we are getting hit a big way

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The oil price is nowhere near low enough yet to compete with coal. The coal price has certainly dropped, but that's due to market dynamics with coal itself and not because of a fall in the oil price. Oil at present prices is still around 5 times the price of coal so not really competing against it.

I'd just rather see accurate reporting, that's all. Most commodities seem to be falling in price, some quite significantly, and yet there's a media obsession with iron ore and oil. There's not much being said about the fall in the price of copper, for example.

At the risk of needing to put the tin foil hat on, I think there's a bit of reluctance on the part of the media and indeed anyone to really join the dots. In 2015 we've got too much of practically everything and prices are falling. It's not just iron ore, electricity or oil, it's just about everything that we've got more than enough of right now. Joining the dots, that's because the "real" economy hasn't grown anywhere near as much as most assumed it would, thus making a lot of the recent investment in supply (of just about everything) unnecessary.

Smurf1976 said:

Joining the dots, that's because the "real" economy hasn't grown anywhere near as much as most assumed it would, thus making a lot of the recent investment in supply (of just about everything) unnecessary.

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I would not dispute that: with manufacturing gone, IT gone, automation and outsourcing starting to hit backend white collars/back office and a will to reduce public service, where can you find activity for australians or americans/europeans, not mentionning the huge influx of migrants be it here, in the US or Europe;
There is a limit to the number of health and safety, or governance officers you can "create" as is the number of hamburger flippers required in a society.
The usual answer is to pretend that new jobs will be created that we do not even envision etc etc
yet we start from a base where globally 1/3 of people are already unemployable/assisted, not from a full time employment base as in the 70s.
So if we remove an extra 1/3 of the jobs I doubt the remaining workers will be able to support the rest of society and no one will be willing to fund government deficits anymore.
And we obviously need less of everything, we are contracting

I am optimistic for the share market here in the second half of 2015, not so much for the economy of western society

I recall hearing someone, an economist (from the US I think) basically saying that for an extended period we'd have the "muddle through economy".

No real growth, but no outright collapse either. Just "muddle through" for an extended period. Whilst he was referring to the US, I think much the same could be said of Australia. Take out the now bust mining boom and we've indeed been muddling through for quite some time and that's reflected in the ASX.

qldfrog said:

but not good for gas or coal and as we are huge net exporter there, we are getting hit a big way

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Smurf1976 said:

Take out the now bust mining boom and we've indeed been muddling through for quite some time and that's reflected in the ASX.

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Yes but 3 years ago when this thread was started we were in the middle of the mining boom and yet our market wasn't going anywhere at that time either. As that article I posted before says, being ranked 44 out of 76 global exchanges is a pretty poor performance. Are we really doing that badly compared to the rest of the world?

let's not forget the influence on the ASX of foreign ownership:
last year was a year where any foreigner with a bit of a clue would have run away if only not to be hit by the 15% and going currency depreciation.
It is actually amzing that the asx did not fall further, probably only thanks to the mandatory super investments
"stockmarket bubble by law"

The Newzealand Stock Market seems to be smashing us. I wonder if ASX will have its 'real' bull run over the coming decade.

Bill M said:

Yes but 3 years ago when this thread was started we were in the middle of the mining boom and yet our market wasn't going anywhere at that time either.

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A lot of the ASX companies aren't involved in mining however, and of those that are in mining not all are actually running a real, profitable mine. So only a certain % of stocks directly benefited from the mining boom, any benefit to the likes of TLS or WOW being very indirect and more a function of the economy overall (consumer spending). OK, mining boom probably added to consumer spending, but it's still a very indirect linkage for things like retailers and banks.

Right now however, I'd argue that the AUD is likely to be a bigger influence going forward. So long as the AUD remains relatively over valued and trending down, Australian stocks (or indeed any asset in AUD) aren't overly attractive for foreigners.

Adding to that in the short term, domestically we have quite a bit of political turmoil. I'll avoid commenting on that here, leave that for the political threads, but regardless of anyone's personal viewpoint it seems fair to say that the current environment, both political and the underlying financial aspects, is creating a lot of uncertainty with regard to both near term future policy of the present government and how long the government itself will last.

Nobody could really say with any certainty what personal or company tax rates we'll have in 3 years' time, or even 6 months time for that matter, whether or not there will be changes to CGT or dividend imputation, whether or not we'll have a carbon tax (in whatever form) reintroduced. Etc. There's a huge amount of uncertainty at the moment. Without commenting politically, it seems clear that something has to change financially but there's no clear direction as to what the changes will actually be or when they'll happen. Add in rising unemployment and the general decline of economic growth, to the point that the "r word" (recession) is being thrown around quite a bit, and that's not exactly encouraging optimism in the future.

Smurf1976 said:

A lot of the ASX companies aren't involved in mining however, and of those that are in mining not all are actually running a real, profitable mine. So only a certain % of stocks directly benefited from the mining boom, any benefit to the likes of TLS or WOW being very indirect and more a function of the economy overall (consumer spending). OK, mining boom probably added to consumer spending, but it's still a very indirect linkage for things like retailers and banks.

Right now however, I'd argue that the AUD is likely to be a bigger influence going forward. So long as the AUD remains relatively over valued and trending down, Australian stocks (or indeed any asset in AUD) aren't overly attractive for foreigners.

Adding to that in the short term, domestically we have quite a bit of political turmoil. I'll avoid commenting on that here, leave that for the political threads, but regardless of anyone's personal viewpoint it seems fair to say that the current environment, both political and the underlying financial aspects, is creating a lot of uncertainty with regard to both near term future policy of the present government and how long the government itself will last.

Nobody could really say with any certainty what personal or company tax rates we'll have in 3 years' time, or even 6 months time for that matter, whether or not there will be changes to CGT or dividend imputation, whether or not we'll have a carbon tax (in whatever form) reintroduced. Etc. There's a huge amount of uncertainty at the moment. Without commenting politically, it seems clear that something has to change financially but there's no clear direction as to what the changes will actually be or when they'll happen. Add in rising unemployment and the general decline of economic growth, to the point that the "r word" (recession) is being thrown around quite a bit, and that's not exactly encouraging optimism in the future.

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Surely over the next deacade the All ords will improve? overall?

Ariyahn2011 said:

The Newzealand Stock Market seems to be smashing us.

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The NZ economy in general is very healthy. Interest rates are rising whereas the most likely next move here will be a further cut, so sluggish is the Australian economy.
https://www.newzealandnow.govt.nz/investing-in-nz/opportunities-outlook/economic-overview

Ariyahn2011 said:

Surely over the next deacade the All ords will improve? overall?

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If you have a look at a ten year chart you'll see a strong bull market occurring before the GFC and since then periods when the XAO has risen well.

Just my view, of course, but I wouldn't be too optimistic about anything much happening here until there is a more stable and successful political situation, leading to public confidence which is minimal at present.

Bit of a shame isn't it.

Plenty of stocks have multiplied and are continuing up trend in the last 7 years regardless of the XAO gyrations. There are stocks starting their long term up trend now but I don't which ones they are.

Julia said:

The NZ economy in general is very healthy. Interest rates are rising whereas the most likely next move here will be a further cut, so sluggish is the Australian economy.
https://www.newzealandnow.govt.nz/investing-in-nz/opportunities-outlook/economic-overview

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I am curious as to which aspect of the NZ economy is better than the Australian economy. Both are heavily reliant on Chinese consumption and both are susceptible to slowdowns in China. Ironically, NZ's biggest trading partner is Australia (according to your link), so if the Australian economy is doing poorly then surely NZ would be feeling it too.

I suspect that the improvements in the NZD and NZX50 are partly due to the higher interest rates and restrictions imposed on property speculation. The NZ OCR is now at 3.5% (was lifted 4x throughout 2014) and the RBNZ has made moves to implement higher LVRs and holding capital requirements in regards to mortgages. The Aus OCR remains 2.5% and the RBA does not think there is a problem with housing.

NZ relies on China consumption of food,
we rely on iron/colking coal (that China do possess locally as well)
once the average chinese has bought his flat, he/she may first start to eat better beforer thinking of buying one car and join the traffic jams or a new bigger flat;
NZ can be indexed to china's consumption whereas we are indexed to China production for europe/US exports and infrastructure;
At the current stage, i believe NZ is much better placed.

qldfrog said:

NZ relies on China consumption of food,
we rely on iron/colking coal (that China do possess locally as well)

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There's also a quality issue. Coal is coal, if it meets the required specifications to run the steel mill or power station then that's all that matters. It goes into the furnace and gets burnt, where it comes from is pretty much irrelevant so far as the mill or power plant is concerned as long as they get sufficient supply.

Food on the other hand is very much subject to consumer preference and it's no secret that even the Chinese themselves have some concerns about the quality of local food. There is thus a market for good quality imports from "clean" locations regardless of China's own production (well, unless the Chinese government were to ban imports). Note the issue with baby formula - the Chinese have a definite preference for imported product from a "safe" supplier that won't likely add plastic, wood etc to it.

So NZ will keep selling food no matter what whereas Australia will only sell them coal etc as required to cover the gap between China's consumption and its' own production. Note in that context that China is by far the world's largest coal producer, they'd only have to raise production a few % to completely wipe out imports whereas the same doesn't really apply to food.

Back to the markets, confidence has a lot to do with it. I spoke to someone only this afternoon and without me mentioning anything concerning economics they mentioned job security. They're worried about their situation, and that's someone who has what would seem to be an "essential" job in the public service. I won't be too specific to avoid identifying them, but it's a compliance type job that nobody in their right mind would either abandon or outsource due to the obvious risk of corruption if there's a profit motive brought into it. But there's a review about to commence, and anyone who has ever worked in the PS knows what that means - a nice set of words and paperwork to justify a decision that has most likely already been made. Needless to say, he's not throwing money around on anything non-essential at the moment.

Now extend that to countless other workers both in the private sector and the public service. Plenty of people working for private enterprise would be a bit worried at the moment given overall circumstances and it's hard to imagine that anyone working in the PS would feel too confident right now given all the cuts going on both federal and state.

People feel insecure, they stop spending, business profits fall, more jobs are lost - that's how recessions are created.

Smurf1976 said:

People feel insecure, they stop spending, business profits fall, more jobs are lost - that's how recessions are created.

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Agree absolutely.
Which is why I suggested earlier

I wouldn't be too optimistic about anything much happening here until there is a more stable and successful political situation, leading to public confidence which is minimal at present.

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Smurf1976 said:

People feel insecure, they stop spending, business profits fall, more jobs are lost - that's how recessions are created.

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Yes, you are absolutely right. That's how recessions are created, and I mean-numbers, according to which economy is in recession. But in reality recession is a consequence. People feel insecure, they stop spending, business profits fall and so on-these kind of events do not happen overnight and they do not fall out of the blue either. It takes time for people to get from the state of confidence to the state where they feel insecure.

In bull markets, this insecurity stays until All Time Highs are reached. Below is the zone of bears, where recession can happen in economy, but it would not have any impact on markets other than bullish. Markets will climb through the bearish heads and makes anyone wonder how this can be true. But that's how markets operate-there is no logic here, only herding.

If this is a bull market(I think it is), All Bad news, opinions, articles, BRA movements, government actions and events are Bullish signals for the market overall.. When you see a consensus of people interpreting some other people actions as bearish, you must know that this is actually bullish.
They are bearish only for one reason-the dark shadow of 2008 crash is breathing a hot air in their backs, and their limbic systems just can't overcome it, forcing they neocortexes to find "logical" bearish interpretations for everything. Time and high ASX price levels will fix this in the years to come.
If you are afraid, it is better to be long.

fully agreed so i stay bullish overall on the stock market, not on anything else and definitively not on the economy

Wysiwyg said:

Plenty of stocks have multiplied and are continuing up trend in the last 7 years regardless of the XAO gyrations. There are stocks starting their long term up trend now but I don't which ones they are.

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rimtas said:

If this is a bull market(I think it is), All Bad news, opinions, articles, BRA movements, government actions and events are Bullish signals for the market overall.. When you see a consensus of people interpreting some other people actions as bearish, you must know that this is actually bullish.
They are bearish only for one reason-the dark shadow of 2008 crash is breathing a hot air in their backs, and their limbic systems just can't overcome it, forcing they neocortexes to find "logical" bearish interpretations for everything. Time and high ASX price levels will fix this in the years to come.
If you are afraid, it is better to be long.

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qldfrog said:

fully agreed so i stay bullish overall on the stock market, not on anything else and definitively not on the economy

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This is my position too. I believe markets could well power on. People are still spooked by the 2008-2009 events where a lot of them lost a great deal of money and even the slightest reversals drives them to sell everything. I go the other way and with the two decent pullbacks to the 5,100 area in the last 3 Months I purchased stocks both times.

I ignore the noise and focus on building an retirement income and to be honest I think our market is good value right now (even better when the XAO hit 5,100.) During the recent pullbacks I bought 2 high dividend yield ETF's for my super fund, both of them are paying distributions in the next few days, codes RDV and VHY. The funds both pay around 6 to 7% gross distributions and I don't have to do anything management wise. I just patiently wait for good pull backs and buy only when I think it good value.

I have given up trying to beat the market by selecting my own stocks, I mostly buy well managed ETF's now and they fit in well with my super fund.

I think the XAO will go up during 2015. Does anyone want to have a punt on where the XAO will end up by 31/12/2015?

I'm going first, I think the XAO will run up to 5,931 by the end of 2015. What do you all think?

Aussie market flat and slightly up over the short to mid term with the US powering ahead...the net 3 years will be all about the US recovery and the decline in commodities...even with the massive US debt, the story will be the growth of the US pie not the contents.

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