The Top of the market is Looming?

[TimeISmoney]

Most of us know how markets work by now, what you've got to ask yourself is how most stocks will continue to increase profits with what's going on around the world.

The market makers always make things look dandy until the last minute, FOMO and bang, all your money is gone.

 

[rederob]

Most of us know how markets work by now, what you've got to ask yourself is how most stocks will continue to increase profits with what's going on around the world.

The market makers always make things look dandy until the last minute, FOMO and bang, all your money is gone.

I admit to not understanding what you mean.
Markets are complex.
Is there a specific type of market you are tallking about, or are you just generalising on the key roles of supply and demand in economics?

 

[ShareSuccess]

There is an old saying which may relate.....

"A fool and his money are soon parted"​

 

[divs4ever]

There is an old saying which may relate.....

"A fool and his money are soon parted"​

have seen some smart , but over-confident folks lose the shirt as well ,

 

[Smurf1976]

You are describing Mercantilism, it only makes sense at face value, not in reality.

As with anything, if the facts change then so will my opinion but I'll raise the following:

Fundamentally the economy is physical not financial.

The reason you can purchase a service is because someone applies a combination of their skills and labour, and usually at least some use of purchased goods, in order to provide that service. They're not doing it for free, and they have expenses in providing it too.

The reason you can purchase a car is because someone else manufactures cars, someone upstream of that produces steel and aluminium, someone upstream of that mines iron ore, coal, bauxite, and so on. A long chain of companies and individuals are involved with making that car.

Even for intellectual property, the author, band or whoever wrote the code isn't giving it away. It might cost nothing to replicate it, but it took a lot of time, skill and effort to create in the first place and they want payment for that.

Now what's stopping any random poor country from just buying everything they want and hey presto, now they've got the same as everyone else? If the flow of funds out of the country isn't a problem then logically they'd do exactly that.

I'm not following the logic here....

 

[TimeISmoney]

I admit to not understanding what you mean.
Markets are complex.
Is there a specific type of market you are tallking about, or are you just generalising on the key roles of supply and demand in economics?

Stock markets, mostly Australian. How will companies increase their profit margins with Trump continually looking for ways to punish any country that he thinks is aiding China or ripping them off?

For e.g. look at the garbage the US is going on about buying US beef, why the hell would we want to buy US beef?

Like I said, there will be stocks that will do well by what's happening on the world stage, but it could all turn at the drop of a hat.

Large Intso's control the market; there's no reason for iron ore stocks to go up, the IO price is at its lowest in years, yet IO stocks are going up. I've seen IO miners go up and down over the past 1 year with no logical reason, just pumps from the big money.

At the end of the day, if stocks aren't turning increasing profits, what are they really worth, or what's a promise worth?

 

[Dona Ferentes]

so a looming top , eh?

With structural, longer-term themes occurring, the US is not going to subsidise the world as much as before and made it clear it’s not prepared to bankroll the world – and the world will need to adjust.

Artificial intelligence will continue to be disruptive, and it's a challenge to spot the opportunities and beware of pitfalls.

Ageing populations are changing economies. China demographics have passed an inflection point. Western nations have pushed out their inflection points by increasing immigration, but that’s not as politically viable as it once was.

More negatives than positives

 

[rederob]

Stock markets, mostly Australian. How will companies increase their profit margins with Trump continually looking for ways to punish any country that he thinks is aiding China or ripping them off?

For e.g. look at the garbage the US is going on about buying US beef, why the hell would we want to buy US beef?

Like I said, there will be stocks that will do well by what's happening on the world stage, but it could all turn at the drop of a hat.

Large Intso's control the market; there's no reason for iron ore stocks to go up, the IO price is at its lowest in years, yet IO stocks are going up. I've seen IO miners go up and down over the past 1 year with no logical reason, just pumps from the big money.

At the end of the day, if stocks aren't turning increasing profits, what are they really worth, or what's a promise worth?

First, stock markets are not a good indicator of any nation's economic situation.
In nations with their own stock market, a very small number of companies are responsible for moving the dial, so to speak. In our top 5 by value 3 are banks while the others are BHP and CSL. Only CSL stands to be significatly affected by Trump's tariffs. You will find that the next 5 by value are similary unconcerned by tariffs.

So regarding your first point, Trump and his tariffs are mostly irrelevant to our listed company's profits.

Regarding IO prices, take a trip to China and see the ongoing infrastructure development (non-commercial properties) and you will quickly see why the bottom of the IO market won't fall any time soon. Next, China's BRI is adding to steel demand in developing countries at a rapid rate. And finally, increasing levels of global electrification and robotics are propping up demand.

I don't understand your last comment. Companies list to achieve a viable financial operating base, and support this with a business plan that outlines their proposed profitability. A small number of companies are speculative from the outset (principally in the mining sector) and investors take a risk on that basis.

The fact that any particular company is not profitable (or offering dividends) today does not imply its situation cannot change. I joined ASF almost 20 years ago to share the views and experiences of real people - not pumpers and dumpers - who could explain why they considered a listed company was heading in one direction or the other.

 

[Smurf1976]

Artificial intelligence will continue to be disruptive, and it's a challenge to spot the opportunities and beware of pitfalls.

As with the internet or before that other examples eg cars, electricity or sound recording, the hard bit is foreseeing not just the obvious uses but the eventual consequences.

Eg it wasn't hard to foresee the internet being used for banking, share trading and weather forecasts, indeed some of that was online before the internet as such (Viatel for those who remember.....). Foreseeing music streaming was far less obvious, and I sure don't recall anyone at all foreseeing the likes of Facebook until it happened.

Same with AI. There's some low hanging fruit with routine office work but in the long term ?

 

[TimeISmoney]

First, stock markets are not a good indicator of any nation's economic situation.
In nations with their own stock market, a very small number of companies are responsible for moving the dial, so to speak. In our top 5 by value 3 are banks while the others are BHP and CSL. Only CSL stands to be significatly affected by Trump's tariffs. You will find that the next 5 by value are similary unconcerned by tariffs.

So regarding your first point, Trump and his tariffs are mostly irrelevant to our listed company's profits.

Regarding IO prices, take a trip to China and see the ongoing infrastructure development (non-commercial properties) and you will quickly see why the bottom of the IO market won't fall any time soon. Next, China's BRI is adding to steel demand in developing countries at a rapid rate. And finally, increasing levels of global electrification and robotics are propping up demand.

I don't understand your last comment. Companies list to achieve a viable financial operating base, and support this with a business plan that outlines their proposed profitability. A small number of companies are speculative from the outset (principally in the mining sector) and investors take a risk on that basis.

The fact that any particular company is not profitable (or offering dividends) today does not imply its situation cannot change. I joined ASF almost 20 years ago to share the views and experiences of real people - not pumpers and dumpers - who could explain why they considered a listed company was heading in one direction or the other.

You have to factor in many changes in the markets, contracts can go for years or get delayed but in long run it's about how profital a company is and if it's not it finally catches up to it. People speculate and when the company fails to produce the SP drops and if it's early stages of its life it will make nearly imposssible to capital raise.

If you follow sectors of the market, you'll see different movements at different times, not talking about ASX in total.


Have a look at the price line and that's factoring in losses from inflation and improved mining processes over the years. Speculate all you like the facts are there in front of you. Have you also got a crystal ball to tell us when the next industrial boom will start?

 

[ShareSuccess]

Well all i can say is......Go Twiggy, make me some more Money

 

[Value Collector]

1. As with anything, if the facts change then so will my opinion but I'll raise the following:

Fundamentally the economy is physical not financial.

The reason you can purchase a service is because someone applies a combination of their skills and labour, and usually at least some use of purchased goods, in order to provide that service. They're not doing it for free, and they have expenses in providing it too.

The reason you can purchase a car is because someone else manufactures cars, someone upstream of that produces steel and aluminium, someone upstream of that mines iron ore, coal, bauxite, and so on. A long chain of companies and individuals are involved with making that car.

Even for intellectual property, the author, band or whoever wrote the code isn't giving it away. It might cost nothing to replicate it, but it took a lot of time, skill and effort to create in the first place and they want payment for that.

2. Now what's stopping any random poor country from just buying everything they want and hey presto, now they've got the same as everyone else? If the flow of funds out of the country isn't a problem then logically they'd do exactly that.

I'm not following the logic here....

1. Yeah, I don’t get how any of that is in disagreement with what I have said or what Adam smith wrote in his economic theory.

2. Well to purchase things a poor country needs things to trade, and as Adam Smith explained in his book 250 years ago, they will be able to generate the most wealth by their labour and capital to work where it is most efficient, and trading part of that production to buy the production of others for the things they are not efficient at producing.

The way to get poorer is to focus your limited labour and capital into areas you don’t have a natural advantage in.

 

[DaveTrade]

so a looming top , eh?

@Dona Ferentes , I think that it's just a pullback that's coming before continuing higher. I try to follow the money and see money coming into a number of sectors, Tech & Finance are two of them and as you would know these sectors hold weight in the index.

 

[Smurf1976]

1. Yeah, I don’t get how any of that is in disagreement with what I have said or what Adam smith wrote in his economic theory.

2. Well to purchase things a poor country needs things to trade,

Why I'm confused, is that's also essentially my original point.

That if we assume a country is to import various things, which realistically it will if it's to be anything resembling a modern society, then it needs to export to balance that. That being so, capital and labour needs to be deployed into industries that produce something for export - just serving the local population, even if that's a strength in terms of productivity, isn't meeting the requirement to have something to sell to others.

That's not me arguing for protectionism and self-reliance. It's just saying local services aren't an alternative to producing things that are tradeable.

Back to the thread subject, I'm seeing no shortage of stocks that look to be in an uptrend. I'm buying more than selling at the moment.

 

[Value Collector]

1. Why I'm confused, is that's also essentially my original point.

2. That if we assume a country is to import various things, which realistically it will if it's to be anything resembling a modern society, then it needs to export to balance that. That being so, capital and labour needs to be deployed into industries that produce something for export - just serving the local population, even if that's a strength in terms of productivity, isn't meeting the requirement to have something to sell to others.

1. No, you were making it a point that it would better for the economy to warped in a way by government to try and make money circulate inside the country that leave its borders.

2. Obviously a country needs to export things, but what those things are should be decided by the market, not central planning. Also its ok for trade imbalances to occur at different times, they are just part of how markets develop, and are a way to balance out global wealth over time, and help economies grow.

 

[Dona Ferentes]

don't want to interrupt, but ...

‘It’s dangerous’: The ASX is overvalued so buckle up for a reality check​

David Rogers

The ASX 200 has roared back to life since its February-April swoon, setting a record high daily close of 8597.75 points on Wednesday. The trouble is, the rebound has been entirely driven by a price-to-earnings multiple expansion.

Unlike the US market, where consensus earnings forecasts have been revised up because of the ongoing boom in artificial intelligence, ASX earnings estimates have been revised down since April.

The result is that the next 12 months PE multiple of the ASX 200 has soared to around 19 times, a level only exceeded during peak fiscal and monetary policy stimulus in the pandemic.

The long-term average “forward PE” for the ASX is about 14.75 times. On that basis it’s about 29 per cent overvalued. Some will focus on cyclically adjusted PE multiples but on face value it’s expensive.

Another way of looking at it is the ASX 200 now exceeds Bloomberg’s “bottom up” derived index level (using the consensus 12-month price targets for all companies in the index). The 20-year average is a discount of about 379 index points. The physical index now exceeds that long term average by about 80 points...

 

[DaveTrade]

don't want to interrupt, but ...

‘It’s dangerous’: The ASX is overvalued so buckle up for a reality check​

David Rogers

The ASX 200 has roared back to life since its February-April swoon, setting a record high daily close of 8597.75 points on Wednesday. The trouble is, the rebound has been entirely driven by a price-to-earnings multiple expansion.

Unlike the US market, where consensus earnings forecasts have been revised up because of the ongoing boom in artificial intelligence, ASX earnings estimates have been revised down since April.

The result is that the next 12 months PE multiple of the ASX 200 has soared to around 19 times, a level only exceeded during peak fiscal and monetary policy stimulus in the pandemic.

The long-term average “forward PE” for the ASX is about 14.75 times. On that basis it’s about 29 per cent overvalued. Some will focus on cyclically adjusted PE multiples but on face value it’s expensive.

Another way of looking at it is the ASX 200 now exceeds Bloomberg’s “bottom up” derived index level (using the consensus 12-month price targets for all companies in the index). The 20-year average is a discount of about 379 index points. The physical index now exceeds that long term average by about 80 points...

View attachment 203044

Thanks Dona, I was transposing my opinion of the US market onto the ASX. Example of posting without reading all the information available.

 

[rederob]

You have to factor in many changes in the markets, contracts can go for years or get delayed but in long run it's about how profital a company is and if it's not it finally catches up to it. People speculate and when the company fails to produce the SP drops and if it's early stages of its life it will make nearly imposssible to capital raise.

If you follow sectors of the market, you'll see different movements at different times, not talking about ASX in total.


Have a look at the price line and that's factoring in losses from inflation and improved mining processes over the years. Speculate all you like the facts are there in front of you. Have you also got a crystal ball to tell us when the next industrial boom will start?

View attachment 203003

I am not sure where you are heading as it appears to have nothing to do with the thread title.
As I said, markets are complex.
If, by way of another example, you looked at BHP as a proxy for performance against the IO price, you would be making a big mistake. BHP's margin on a tonne of iron ore is around $80 at today's prices. But BHP is pivoting to copper and potash as medium term plays that could double its share price in the next 5-6 years, while sill offering industry leading dividends. And those points are not reflecting the near term benefits of greater fleet electrification and the use of AI to optimise its business operations.

 

[frugal.rock]

Case in point, looming, hopefully not just for me.?
11.6% gain just this week. I need to be preserving gains instead of being blasé and losing them from inactivity. Meh, apathy sure is easy!

 

[frugal.rock]

From investing.com​

1. A contrarian case for buying the dollar​

It may sound counterintuitive, but BCA is getting ready to buy the dollar.

The US Dollar Index is down roughly 10% year-to-date, breaking what’s been a multi-decade uptrend. According to BCA, this drawdown is nearing key technical levels that have historically triggered strong countertrend bounces.

The dollar may be in a broader bear market regime, especially with concerns about U.S. balance of payments and rising scrutiny of its reserve status. But in the near term, it’s oversold.

“We will be buying the DXY on Independence Day,” Ntonifor wrote, citing a convergence of technical signals. The strategist noted that the DXY is approaching long-term support near 96, defined by an uptrend that began in 2008. This zone has historically marked the start of strong rallies, even during longer-term downtrends.

BCA’s momentum and positioning indicators show the dollar is “very much oversold,” with some components hitting levels two standard deviations below their mean—a rare occurrence that has preceded sharp reversals.

BCA also points out that 5-10% rallies are not unusual within the context of a dollar bear market. Whether driven by short-covering or recession concerns, these tactical bounces can offer meaningful returns.

For investors, the key takeaway is not to ignore the dollar. Even in a bearish environment, the greenback still provides opportunities—especially when sentiment gets stretched.

"These 3 trades could outperform this summer, Wall Street analyst says"

https://au.investing.com/news/stock-market-news/these-3-trades-could-outperform-this-summer-wall-street-analyst-says-3915986