Archive through April 05, 2008

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eblode

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Post Number: 728
Registered: 11-2002

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Thursday, April 03, 2008 - 09:47 am:

Captain Chaza,

If anyone on this site has a more realistic approach to current conditions it's ODY. His realistic appraisal of market conditions are first class and I would be loath to confront him as recklessly as you do.
Keep sailing away from our sunny shores.

Eugenio

dug

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Post Number: 3024
Registered: 07-2005

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Thursday, April 03, 2008 - 10:09 am:

cat_lady,
be very sceptical of these "Horror" stories about Opes clients losing everything.
Your one yesterday for example.Houses,Investment Properties weren't possible to use as collateral for Opes Loans.Your friend of a client would have had to have Margined at the Top of ABC for example to have suffered such a disaster,I think anyway.
FoC[Friend of Client]would have to have been caught solely,wholly or at least mostly in one Share that plummeted.

This I reckon is ditto for Business Spectator's "Dark Corner" clown.Lot of people have been doing Creative Writing Courses cat_lady.
Lot of people[myself included] are welded to Polonius' Never a Borrower or Lender be and thus take vacarious pleasure in dancing on the woes of their fellows.
and a lot of people like to embelish a Morality Tale by gaining credibility by using A friend told me so it must be true.
Urban Myth Making,cat_lady.It goes around.
cheers.

Even 'til Jaded.

Dig for the sake of it.

ody

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Post Number: 2286
Registered: 10-2006

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Thursday, April 03, 2008 - 11:41 am:

THE BERNANKE ANALYSIS/PROGNOSIS

Thanks so much, Rudy for supplying all that very useful material - both that which you got from elsewhere and our own excellent comments.

The general scenario is not disimmilar to what you, others, and I have regularly written about for several months.

THE ONLY DIFFERENCE I CAN SEE IS THAT, EVEN GOING BY HIS OWN WORDS (ALWAYS CAGEY, CAUTIOUS, UNDERSTATED, "REASSURING" - OR IN SHORT: UNRELIABLE) THE SITUATION IS *MUCH* WORSE THAN I HAD THOUGHT, THOUGH I WAS (I FELT) PESSIMISTIC ENOUGH.

Needless to say I completely agree with you that all this means that people like you and I should avoid this market and not think of moving into it until matters are much safer.

As it happens, I have just renewed one of my deposits, this time for 6 months, at the rate of 8.20%, which is quite satisfactory, tax-free. In he event I decide to move into the market well before then, I can do so because one other account is just short of maturing within 3 months now, and the final one is monthly. I could use that if necessary AT ONCE, paying only a $50 fee, and cannot imagine I'd want to use more money to invest with for quite some time yet. And the others are well-spaced this way, as far as I am concerned. For example, they would allow me to invest two-thirds within 3 months. Not that that is likely to happen, but I like to keep my options (reasonably) open.

I'll not soon be back to e.g. 80% exposure; I would not be surprised if I didn't expose more than 30% by the end of this year (if that), and I am in no hurry at all. It is obvious, recession or not, that we are facing a significant decline in the US and thus in the world economy, and that a lot of bad results that are already more or less known/solidly guessed at are still to be divulged, while others are certain to be "in development".

If one had any recent doubts about being bearish, this post of yours would have removed them. Many thanks.

dug

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Post Number: 3026
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Thursday, April 03, 2008 - 12:28 pm:

Mr Lunch,
Do you have any thoughts yet on how to exploit the 700 Opes Shares debacle?
I'm going to set up in Systems a Thread to be called
The Vultures Circle.
catchy title hey?
Anyway TAW is one I've found today that illustrates "Happenings".Check the just after 10am Open Ditch in Course of Sales as well as the comeback.
Also see the 11amish announcement explanation.It's worth it just to see the Director's name
Wolf Marx
it's true mr lunch.Wolf Marx
ohhh it's pretty symbolic,I reckon.
I'll set up the Vulture Thread later today for methods of picking amongst d'Rubble.
cheers.

Even 'til Jaded.

Dig for the sake of it.

cat_lady

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Post Number: 438
Registered: 10-2006

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Thursday, April 03, 2008 - 12:36 pm:

Dug
the rather poetic article much derided on the warm porker place, seems to be based in fact. the author was interviewed on lateline last night.
transcript here:
http://www.abc.net.au/insidebusiness/content/2007/s2206451.htm
as to the story the client told us? well, he's not normally much into sensationalising, I can only presume, wasn't told, that the guy was leveraged to the hilt and probably got hit due to using cross colateralisation.
gotta get back to work or I'll have to fire myself.

cat lady

Without my morning coffee I might as well be a dog

mrlunch

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Post Number: 306
Registered: 09-2006

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Thursday, April 03, 2008 - 12:54 pm:

Dug - indeed, there's a bit of that action going on. Have a look at DES for another example.

Like TAW, its overall chart is quite ugly. But all of a sudden record volume today with a bounce back. I can't resist record volume - today's volume in DES is close to 10% of the company!

I'm in on DES with a small-ish position, unfortunately not near the lows of the day (so far). 17 million shares in in a "special block sale" which I'm reading as fire sale to someone who's pretty sure 7 cents is a good deal. Furthermore there is a bid in for 15 million shares at 7 cents (amongst others).

I think there are better than even chances of the stock staying above 7 cents, and heading up at least a bit. Ideally to test the downtrend around 12 cents.

Of course the risk lies in the fact it is an ugly looking stock in a downtrend. Record volume though... hopefully the buyer is clever.

The good thing is there isn't someone wanted to sell - it is a forced sale, and someone is willing to buy. Not like the seller knows something we don't.

DES - Opes Action

PS - anyone else find the 651 width restriction on images annoying? Has everyone got a bigger monitor these days? Colin?

rdumas

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Post Number: 1291
Registered: 11-2006

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Thursday, April 03, 2008 - 02:12 pm:

Hi Ody,

I'm glad that you liked the article. Whilst I am a believer in being positive in life, when it comes to investing in the share market I like to be sure that my positive thoughts and those of the markets are founded on fact rather than pure sentiment.

Whilst I am sure that there is a huge opportunity to make money in short term trading on these sort of rallies, I am not interested in moving in and out of the market within a few days or at best, weeks.

resillent1

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Post Number: 412
Registered: 10-2006

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Thursday, April 03, 2008 - 04:05 pm:

Rudy, Ody

I think that last article Rudy posted is just Blah, Blah, Blah. Full of detail, but no substance. All trees no forest.

The Federal Reserve is spreading the time frame on asset devaluation and may even be able to halt it. Inflation and the devaluation of their dollar is good for America at least short term. – They and many of their citizens have net debt positions and inflation helps to strengthen their balance sheet and gives a boost to their exports.

A problem only arises when foreigners start to react to US inflation/dollar devaluation and sell US treasuries, which would push up the yield and cause real pain to their debt position. Whilst US treasuries are the benchmark for the risk free rate, most assets price worldwide will act inversely to the yield, so you can expect foreigners to be somewhat accommodating to the Federal Reserves action.

If the fed can’t control things and treasury yields go through the roof, then I would rather own real assets than financial assets.

Why are you so concerned that central banks won’t be able to control things yet you are happy to be 100% in cash that is backed by nothing but faith? Your worried about the gross value of CDS but have you given a thought to the net position of your banks CDS exposure.

Will central banks be able to handle the issues? Will they allow controlled asset devaluation or press for renewed appreciation? Will foreign holders of US debt continue to sit back? The answers to all complex economic questions require prediction.

I think the point the Capt. was making is that prediction is opinion not fact. If we don’t have fact about the future, is it better to act on what you see now (short term) and manage the position as the longer term unfolds. An approach that is just as valid as, waiting for more clarification before taking on risk.

ody

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Thursday, April 03, 2008 - 11:09 pm:

Resillent - just a few notes

1. Until very recently, the Fed managed to keep share markets down because its actions carried no credibility - they were hesitant, late, too minor, etc. Or that is what the market seemed to think. With the gross support given to Bear Stearns (very irresponsibly, I feel, and unfair to ordinary taxpayers) it managed to provide a "warm inner glow": if it was prepared to bail THAT out, then we could count on its support no matter what. So the US market went up, using the Fed as a prop the way an old man like myself uses a stick (to lean on). I think that what Americans are practising, and what the Fed is encouraging, is self-indulgence. Ultimately that can only be self-destructive.

2. As for acting on the present: speaking personally, that is what I am doing. I see the present as unattractive for an investor (except in deposits more than 8% tax free). An awful lot of hassle. I also - as any investor does - look toward the future. If I see or hear a train coming, even if it is still some distance away, I am not going to be in its way. Most people who are acting as though we have a real turn-around to me do not seem to judge either the present OR the likely future well. It may be theoretically "valid" to expose oneself to what one sees to be risk, "as a fact", right now, but I'd rather not. It is no less "valid" to wait until there is some more evidence of risk getting smaller. History shows that it almost always does, and is worth the wait. The long-termers who would buy shares now to keep for years are not banking on current risk, but longer-term improvement. So am I, but I in the meantime avoid the current risk.

3. As for banks - yes, in theory you have a point. I think the risk of one's losing one's deposit in a bank like WBC (possibly the least exposed to risk) is small. I agree, however, it is real. That is why I don't put all of our money in banks, but also make use of the more reputable credit unions. I even rotate! I do believe also in holding "real" assets other than shares, and own them - a good house (I COULD live in something more modest, though what we have isn't "grand"), and collectibles - the latter is a category that doesn't seem to get discussed here, which is why I don't do it either. But I believe in it. Though in a real downfall collectibles also suffer.

4. I think we are living at a time when assets are generally being devalued as a result of deleveraging. From what I can see this is on the whole still continuing, though I may be too gloomy - it IS possible that (a) we have in effect reached the bottom, and (b) that there is little more risk likely to come our way. I don't believe that (b), at least, is right, but I admit at once that I may be wrong. And it is, I think very possible that the share market will not sink lower than it already has done. However, it is also very possible - likely, I feel - that any significant rally will be punished with a fall of some substance, even though not necessarily the way it happened on 22 January.

5. For the most part these are, indeed, opinions, as distinct from fact. I don't think any investor, whether short- or longer-term does NOT act on opinion. One tries to get hold of as many relevant facts as one can, but then JUDGES - inevitably. What else can one do? The future is usually not a fact until it is known - an that is certainly so in the case of investment. So whether one buys in the expectation that a share will go up tomorrow or waits because one feels that there still is a lot of GENERAL economic/financial risk that can quickly (or even for longer) unsettle markets is surely a matter of forming an opinion either way?

It's dull, of course, this attitude - I'll grant you that. But I think that if one sought excitement just now by taking a strongly positive view of the share market (I don't short stocks) one might be looking for the wrong thing - either negative excitement, or sideways trading, in essence. Or I should add: this is what I feel would be the likely outcome over a slightly longer period, even if we had a rally in the meantime. My own assessment, wrongly or not, is that the rally is not likely to be one which I find impressive/safe enough to bother, as I don't trade in terms of weeks - I want at least some months of a good uptrend. The fundamentals, I feel, are for the most part negative: earnings in general definitely declining, companies still imploding or disappointing, markets volatile, inflation fairly strong, the credit crunch by no means over, still a negative mood on the part of many people (not that many people are seriously interested in being in the share market). Et cetera.

Not the sort of reaction you are looking for, I fear!

But if even Bernanke admits all sorts of negatives then I DO feel encouraged by Uncle Ben. I don't believe him when he speaks "reassuringly" - he has been hoodwinking us for too long now.

ody

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Post Number: 2288
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Thursday, April 03, 2008 - 11:13 pm:

DUG AND MRLUNCH

Ah - there is some real initiative and gutsiness at work. Aussies getting stuck in with true daring! I am enjoying it - a coward, watching vicariously.

I hope you'll succeed. Partly even because I detest companies like Opes.

ody

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Post Number: 2289
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Thursday, April 03, 2008 - 11:17 pm:

Resillent - Have a look at Colin's "Fear remains high", and you'll see why I fear I might be right to fear.

I am not WB: I fear when others fear, because I fear what their fear will do to me.

stocky

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Registered: 10-2003

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Thursday, April 03, 2008 - 11:21 pm:

"a few words" is a bit of an understatement...

eblode

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Post Number: 729
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Thursday, April 03, 2008 - 11:36 pm:

My earliest impressions when I first came to Australia in the early 60's was the casual way in which Directors and Accountants of fallen companies were dealt with. I remember the first case in which a group of Directors had swindled the public. They weren't harshly treated but given such lenient sentences that I felt it really encouraged rather than dissuaded others to do the same. How different from the way commercial crime is acted upon in the United States. If the heads of Opes Prime ever came before American courts I can assure you they would tremble. I can recall in the 80-'s when junk bond "king" Ivan Boesky was convicted for "racketeering & securities fraud". He was sentenced to 10 years hard labour at Levenworth Penitentiary and fined 3 million dollars! To try and reduce his sentence he dobbed his buddy Michael Milken. I remember his trial. He stood before the court in chains, minus his toupee, crying like a baby when he heard his sentence of 10 years hard labour and a 2 million dollar fine. We had the Enron scandal in 2001. Enron,a blue chip energy stock went from $90. to .50cents. The SEC collared all the leading men,(and women). Andrew Fastow,Financial Officer, got a 24 year jail sentence and a 26 million dollar fine,,Jeffrey skilling,CEO 10 years hard labour 3 million dollar fine, even Paula Rieker for inside trading got 10 years and 1 million dollar fine. Richard Causey,Chief Account Officer got 7 years and 1.25 million fine.The fines were tailored to their wealth. Whatever they had was stripped from them and left them penniless. The accountancy firm of Arthur Anderson, the 5th largest accountancy firm in the world was ruthlessly made bankrupt by the government as an example to any other firms that may have ideas. This is the way that the Security Exchange Commission treats those connivers that fleece the public. Believe me, no company is game enough to take them on without remembering those past executives. The Government of the United States has truly taken the advice of Niccolo Machiavelli (1469-1527) when, in his epic book The Prince, he advises rulers that if they have a choice of ruling by love or ruling by fear, choose fear every time. Believe me Opes Prime's Directors would of thought long and hard before they played their schemes in the USA.
Eugenio