Your ideal stock

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Archive through October 14, 2004 peterloh 25 1 14-Oct-04 04:53 pm

Archive through October 12, 2004 peterloh 25 1 12-Oct-04 08:42 pm

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peterloh

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Post Number: 805
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Tuesday, November 30, 2004 - 01:57 pm:

HC,

We did have three years of depressed market, and since then we are one and a half years from the bottom.I would deem it as the 2nd year of a bullish run. I also accept minor retracement on the way will happen as in any market, so I am still bullish as long as the corporate earnings still hold up.This is only my opinion as I try to intrerprete it from past experience. The rate of growth may not be as boyuant as before, nevertheless growth will continue at a slower pace.

The DOW has been trending between 9800 to 10400. Only last week did it break out from this range and went above 10400.We actually haven't seen a sustain recovery in the States. Interest is still very low in America and I do not anticipate any increase in interest rate in Australia , even if there is any increase it would be moderate.

Sometimes our past experience do cloud our judgement. I am speaking from my understanding of the market as I see it in relation to the past not influence by personal involvement.Also corporate Australia seems to be travelling smoothly and have to find ways to deal with their excess funds. If acquisition is not an option currently then a share buy back off the market is an efficient way to deal with this.Only a big sale like T3 in TLS will take a lot of the excess fund from the market. However to make T3 attractive in think the government will do it in tranches and by instalment warrants.

You are well come to give your opinion, so that we can at least have a different perspective how we look at the market as a whole.At least your views always cause me to look at things from a different angle.I do have great respect for Weinstein's views and probably adopted a few ideas of his. However from where I sit, and my own research and my closeness to the industry, I have the opportunity to look at perspective from both the individual traders and fund managers. Even fund managers have different views depending on their style of investing and the different philosophy they hold.

PL

PL

-------------------------------------------------
Disclaimer: Please note that comments made in this column is mainly for the interpretation of charts in technical analysis. It is not made in my professional capacity and should not be taken as advice.In my professional capacity I am only allowed to give advice on certain managed funds authorised by my license dealer.Any share discuss is for general interest and should not be relied on to make an investment decision.It is likely that I may own the shares that we discussed as a trade or as an investment. Please consult your stock broker or financial adviser in regard to your personal situation.

holycow

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Post Number: 425
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Tuesday, November 30, 2004 - 04:24 pm:

Peter,

Here is one, but I have to say this is done in a hurry so it probably is quite leaky because no serious research has been done and most is from memory...

I am at the moment struggling with the following issues:

1) is there a direct relationship between the US market and ASX? If there is, how strong is the relationship??

2) is there somewhere we can check out these data - the total capitalisation of ASX, and what is the ratio between the total market value as measured against the GDP? What is the "traditional" ratio? And what is the current value as measured against the past trend?

I am sure Merrill or Goldman has these kind of data because I have read them before (by Merrill Lynch);

3) I believe the Australian econ at the moment is riding on the commodity boom due to China and the East Asia economies; and because of the "new demand" there is a likelihood that the current commodity cycle would be longer than the past, but still, regardless I think commodity's demand/supply is cyclical - there will come a time that the cycle ends.

Right now, there is a "general market belief" that China will be going through a short/mid term correction (no estimate, but if I were to suck my thumb real hard, I would give a number like 10-15%) - the question here is how big will the impact be in the Aussie export and the overall economy?

4) I start reading "analyst" in news saying the market is peaking and will be correcting soon - how much correction is considered a "correction"? At 20% or more is considered a crash! Will a 10-15% intermediate correction severe enough for everyone?

5) Bull:bear market ratio is about 1.5:1, ie, the bull market is about one and a half times longer than the bear market - the bear market in 02'03 and the bull market we have in '03'04 - are they reaching a similar ratio?

6) There is a distinct volume/price divergence since end of October - does this bother you? And what does it mean?

7) Have you noticed the volatility of the market? Especially the leaders/bigcaps, does it bother you?

8) there are more "unnecessary worry" but I really don't want to paint myself into a corner...

Cheers.

HC

"... if you've got a chart, I have an opinion!"

peterloh

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Post Number: 807
Registered: 03-2003

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Tuesday, November 30, 2004 - 06:16 pm:

HC,

I am only a simple person, with a simple solution. Risk is how I take it and manage it.Everyday we face with some sort of risk and to go somewhere we have to take a calculated risk, eg a person buying a first home. If this person think that he/she would lose job or fall sick or another will never take the first step.So the idea is to have some reserve, have some insurance and go for it. Probably I over simplified things, as I said I will take the chance with my eyes wide open.Unless I take the chance I will never have the gain.

Now coming to some concerns of yours, I will try to answer them to the best of my ability and from my own understanding.

Item 1. There has always been a positive correlation between DOW and XAO. However recently this relationship is not as strong as we go our own merry way. We seemed to be more independent nowadays properly due to our stronger economic situations, especially from the building boom in the last 3 years, the recent commodities/resource boom and better corporate returns.Now the infrastructure, industrials and commercial has taken over from the residential which has tapered off.We hope this will continue for a few more years, a soft landing then.Hopefully Reserve Bank is not gun ho and leave interest alone for a while in case there is a softening in the market.

Item 2. ASX capitalisation is very small compare to the US market.Any one of the top half a dozen shares in DOW is more than that of our total ASX capitalisation. Will write a bit more on relationship of GDP and market value on ASX later on.

Item 3. In short will China have a hard or soft landing! We dont stopped all together, a slow down in growth definitely, China will certain try to prolong till after the Olympics.China is actually coming off a very low base and playing catch up providing all the basic necessities like a decent home, whereas there were none before. It is a growing economy and not a mature economy. Also China in time will need not be as dependent on world economy because of its own huge market. A lot of economic activities is self generating and not because of overseas demand. The real danger from my point of view is overquick development in capital city like Shanghai.Whether there is sufficient demand from this oversupply. Building infrastructures and Olympics preparation is a creation of tremendous activity in itself.Development phase will not be even all over the country. Certain areas will suffer after the Olympics like Peking, unless they have other activities to keep it going.Where are they going to deploy the capital and labour force in the future.If GDP growth is 12%, a reduction of 15 % will still gives it 10%, I dont see any real problem.Hopefully by then I hope US and Europe together with Asia to have fully recovered. Asia ex japan seems to be travelling nicely and will continue to lead ahead of Europe and the US.

Item 4. I hope any correction is less 10% less than 8% is acceptable, hope we dont have to see it till the second half of next year.The first 6 months are normally more bullish.

Item 5. Normally we have four good years and a negative year. The last 10 years have changed.We had 7 good years before the 3 depressed years in the share market, so I hope we are playing catch up now and we have not overshoot.

Item 6. I am not concern about that for the moment. Will write a bit more on this later on.

Item 7. The market is more volatile nowadays, with absolute return fund managers. With derivatives and more CFDs trading the market will be more volatile. I also see constant rebalancing by fund managers. It is harder to distinguish between value and growth shares from now on.Investors are demanding better returns than bench marking. Thus we see a growth in boutique fund managers that is based more on stock picking than bench marking. So volatility does not bother me any more.I am more concern with the earnings growth and whether this can be sustain. Buying back shares does help to a certain extend as it will reduce supply and provide increasing returns for the remaining investors and will help to support price.Volatility is also caused by automatic stop loss.

Item 8. A way to reduce worry is not to be fully invested and to have diversification. Hedging is another solution, so insurance is a way to reduce the risk but it comes with a cost. I know someone in the Forum has successful hedged as he only trades CFDs.He has greater exposures and greater gains but not without risks.He manages his risk by shorting the index. I am not so sophisticated, so my way is to reduce my exposure.

Having said all that, the compulsory superannuation, low interest enviroment, continuing good corporate returns will sustain the share market.Supporting the market should be ongoing domestic and global economic growth and continue low inflation.Concerns will be a higher US interest rates, continued volatile in oil prices and potentially a slowing of earnings growth domestically and in the US. We dont have to wait long for the upcoming AGMS which will provide further insights into the outlooks of many Australian Companies.

PL

holycow

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Wednesday, December 01, 2004 - 06:44 am:

Peter,

Thanks for the response. That's quite reassuring.

At the moment, I really do not wish to press on my points because frankly it works against my own interest and secondly I think this is the second time I think I am being seen by others as spoiling the party - response like this is frightening to me because back in 2000/01, I was whacked umpteen times until I was scarred for life - so I reckon if I were to worry about sky falling down, I think I will take it off line.

I am at the moment compiling a list of what/why matrix just for my self-actualisation but I really hope I am wrong this time. I have to admit I have the tendency of being an early bull/bear which in my view is always better than being a cornered bull. But then this is just me.

Incidentally, I think there is a need to be clear of our reference to timeframe - in this case for example, I am looking at the intermediate correction which can be anything between 3 to 6 months; in a longer time frame, I am with you - I AM BULLISH!

Cheers and have a good day.

HC

"... if you've got a chart, I have an opinion!"

peterloh

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Post Number: 810
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Wednesday, December 01, 2004 - 08:21 am:

HC,

When a market reaches an all time high there is always a chance that it will retrace.What happens to be on our side is the first 6 months of the year tend to be more bullish. Is it due to Christmas spending and activities during this period? May be so.January is normally a good month for the share market and the best month in the past was not January but April.If there is any retracement I hope it is less than 8%. I am only using the past as a guideline and the past is no guarantee that the future results to be the same.It is always good to be cautious and not overconfident with our dealings.On the other hand being too pessimistic will inhibit our progress.

I notice ,HC, you place a lot of emphasis on short term approaches.I like your chart analysis.You mentioned you had some problems in 2001 but did you use the same approach that you are doing now?From our discussion ,I notice that you have a cautious approach. If anything I do not think you will be burn this time but probably you wouldn't have derive all the benefits that you would have if you have taken an all out approach when in a bull market.

Do you think my little statistics on the months of the year helps? Anyway as I said before, the upcoming AGMS will give an insight on the outlook of many Australian companies.

Have a good day.

PL

peterloh

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Wednesday, December 01, 2004 - 12:46 pm:

HC,

The shares are playing musical chairs and windows dressing!
Today is your turn,tomorrow is Jr, day after is mine. That is how the share price goes. At the end of each month we put on our best clothes or we do some window dressing.

PL

dogalog

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Wednesday, December 01, 2004 - 02:03 pm:

And the institutions shut up shop and the market,ohHHHh dat MARKET.Xmas/NEW YEAR its at least a little bit more FREEeee.

i got like in ya last post ploh like an inkling that ya might just be divulging "secrets"-
HOLY COW!!
am i right,garrron tellusss.

always d'pleasure peter,
jr

peterloh

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Wednesday, December 01, 2004 - 02:57 pm:

PL has no secrets, JR. The information is from media and partly from my own deduction.Probably it is common knowledge to many people.

Yea, when fundies are on holidays, the market is quiet, at least you got that right.When they return from holidays, the action is on again.

My private forest is on fire. My wife just call, houses nearby in Rumbalara is on the standby for evacuation.

So, there goes my forest walk.I have to walk on the foreshore now, which will be very warm.

I dont know whether I am doing the right thing by HC. I am probably confusing the poor fella. Anyway it is just my 2 cents worth, and he gets another point of view.

PL

peterloh

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Wednesday, December 01, 2004 - 03:07 pm:

A big part of the money from NCP must have got into TLS because of its weighting. Even the dog barks now.It wags its tail.

holycow

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Wednesday, December 01, 2004 - 04:34 pm:

Peter,

I think I have a good idea about what I should do after today. I need to check out a few more things before I do another "walkabout" - it's time to do some serious listening, thinking and planning. So I "might" cut down my posting as time will be a wee bit short on me little hand...

With regard to stock rotation, I think the hint lies in the diminishing volume and the volatility of the leading stocks. My view all these while has been when the index is hitting all time high repeatedly, there are always two schools of thought - the very bullish and the very bearish. Every pundit in the market would become so polarised in their market view that there don't seem to be any middle ground...

Here is a story...back in 2000/01, the bullish masses were so adamant of their outlook that I can still remember Warren Buffett's report to his shareholders in this vein..."I have let you down... because I don't understand hitech..." or something like that - just imagine, WB eating humble pie! At that time, many were coining new economic paradigm as the reason why the market has got more legs, and they even referred to WB by saying his idea was out of time. Many were convinced the party would go on...

This time? Quite different I have to say because ASX is a much smaller market and it's a fact that the commodity is hot. There is one observation I do detect is there is almost a similar kind of complacency I have come across like before - may be not that strong or loud but nonetheless I still "feel" it. A simple example is there isn't a lot of posts in this forum talking about market correction in any "serious" manner - no one is worried. Would I be fair to say there is an assumption that after a short market correction, the rally will continue? :-)

Anyway, currently I have no idea where the immediate market direction would be. If there is any objective assessment, I would refer everyone to Colin's trading note - he probably has the most objective view of us all here.

There is however this observation/thesis (meaning: this could be wrong), that is, the swings in the indices are more than likely caused by a small(er) group of stocks, which is quite different comparing to the "broader internal make-up" a few months back. I don't have proof to this claim but if I am right that would make the various indices less than reflective of the sector/market and hence they are giving us a wrong picture of the market.

Of course I could be completely wrong. And if that's the case then by all means laugh at me. I can take that. :-)

Cheers.

PS: since I am not comfortable with my current position, I guess I will have to do something to remove or reduce that discomfort. I will be watching my equity/cash ratio quite tightly from now on.

HC

"... if you've got a chart, I have an opinion!"

peterloh

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Post Number: 822
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Wednesday, December 01, 2004 - 05:20 pm:

HC,

Just had my first mouthful of grass on OST today. Thanks for waking me up. I dont like to be fried, fried I did today. All along I have been playing with other peoples money. Now I learn how i feel it is with my own money.

During the tech boom, being an old timer I never touched these high tech shares. My broker then, because I never was any good on the computer because I always have people working for me, suggested that I made some easy money.(I only trade on line now.) Within a few months I lost 50ks all my profit gone in one go by my lovely friend.The most important thing I learn is to remain focus and vigilant. If it does not work moves on.

You will notice I am quite cowardly on the small ones, and I am not any good on them, besides charts wont help you with them because they can be manipulated easily.Today, I always cut off the bad ones first, if I do anything and let my profits run.So I dont average down, always try to average up.Look at all the money I save by getting off early, dont cry over them, you will notice they didn't work before, the chances are they won't work now.

During a conversation with claudius, like with you, last year I decided no bottom drawer for me.The satisfaction was last financial year there were no tax losses that I coul