You need to register separately on the Chart Forum
- see Chart Forum Help
Edit Profile Profile Help Help
Forum Rules Forum Rules Advanced Help/Instructions Advanced Help
Search Last 1|3|7 Days Latest Posts Latest Posts
Search Search Forum Tree View Tree View
   
Trade the Bollonger Band Squeeze

Archive through July 30, 2010

Chart Forum » Hilarius' Hall Of Fame » Our Daily Bread » Archive through July 30, 2010

««  «  Previous  Next  »  »»


Author Message

Top of pagePrevious messageNext messageBottom of page Link to this message
jaded
Member
Username: jaded

Post Number: 248
Registered: 03-2010

Rating: N/A
Votes: 0


Sunday, July 18, 2010 - 05:19 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



ody,
the problem with Abbot is that he comes across as a school boy 'sport type' who got to be a Prefect.[This is Private School boy analysis]
Anyway Abbot WANTS to be seen as what the yanks call,a Jock ie Sport is reaaaly Important to Image.

Ody,such a persona don't go down well with the Modern Woman,let alone any thinking segment[a minority] of the Electorate.
BUT,Ody the ones such Image DOES go down well with?Most of them do NOT Vote!!!

So,that's what I see Abbot's problem is.He's a blessed Rugger Bugger who appeals to they who can't be bothered to vote and is a real turn off by his very Nature of the Political/Do Vote Classes.

Ody,it's NOT so much his religious 'angle',he's a macho wanna be who never grew up[he's quite short,too so that gives him a problem amongst d'Big Boys,too!!]

so,ody don't push the religion angle with Abbot.He's a Dill full stop!!


" Hear what you Say...
But see what you Do!"

Sir Zelman Cowen c 1970.

Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5258
Registered: 10-2006

Rating: N/A
Votes: 0


Sunday, July 18, 2010 - 06:59 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Please take into account that this poll is early, and based on a small (though possibly representative) sample. It IS the first poll since the election was announced, however, and it must be an uncomfortable piece of news for Gillard and her supporters. An impression which one gets is that a quite large group of people like Gillard personally, but that this does not (at present) translate sufficiently into votes for her party, while vice versa comparatively few people like Abbott, but are even so increasingly willing to give his party their vote. If this change-around is real, and if it were to continue, Gillard would obviously lose.
-----------------------------------------------------------

Julia Gillard's election call may have backfired, with poll showing Labor's support slipping

* Joe Kelly
* From: The Australian
* July 18, 2010 6:09PM

VOTER support for Labor has slipped since the election was called, putting the parties level on two-party-preferred support, polling shows.

The polling, conducted by Galaxy for the Nine Network after Julia Gillard went to the Governor-General on Saturday, puts Labor and the Coalition on level pegging, each with two-party-preferred support of 50 per cent.

Before the election was called, Labor led 52 per cent to 48 per cent.

The Prime Minister is still ahead of Opposition Leader Tony Abbott as preferred prime minister by a margin of 55 per cent to 32 per cent, but this has not translated into support for the Labor Party.

The poll shows primary support for Labor at 38 per cent, down one percentage point on a Galaxy poll conducted just prior to the election announcement, and down three points on when Ms Gillard ousted Kevin Rudd as prime minister on June 24.

The Coalition's primary vote, however, has increased to 44 per cent - up from 42 per cent before the election was called.

Support for the Greens is running at 12 per cent while the other minor parties and independents remain at 6 per cent support.

However, the poll shows Ms Gillard is considered to be more in touch with voters than Mr Abbott by a margin of 56 per cent to 28 per cent and more trustworthy by a margin of 46 per cent to 35 per cent.

In a surprise result, the poll suggests the unmarried Ms Gillard better understands the needs of Australian families by a margin of 52 per cent to 36 per cent.

The poll surveyed 800 people across Australia.







Top of pagePrevious messageNext messageBottom of page Link to this message
billt
Member
Username: billt

Post Number: 11
Registered: 02-2010

Rating: N/A
Votes: 0


Sunday, July 18, 2010 - 07:01 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



POG (XAUUSDO)

Some might say that the recent price action in POG (XAUUSDO) is reflecting the shift in market sentiment between those favoring an inflationary scenario and those favoring a deflationary scenario. Others might suggest that the price action is a more cynical attempt to support the fiat money regime. Others might say we are having a POG 61.8% retrace – like we have been doing for yonks!

For those who have not read Alf Field’s ‘Concluding Commentary’ have a read!

http://www.gold-eagle.com/editorials_08/field041809.html

With the unbridled creation of new fiat money, it does seem possible that when “government fiat money is rejected by the people that gold and silver will have to re-enter the national and international monetary systems”. There may well be a “massive transfer of wealth from fiat money and financial assets into tangible assets”. The top tangible asset might well be the precious metal.

Even if you don’t believe any of that, with out TA hats on what are the charts saying about POG?

Since God was a boy, the price has rarely been below its 200 day MA – is there any other asset that has delivered that performance, and has tripled in value in the past 6 years? It is interesting to note that the below 200 day ma period occurred between August 08 and January 09 when there was a flight out of everything – including gold. However during this period the POG only came off 10% whilst stock markets were in free fall. From the start of the October 2007 market collapse to the March 2009 low, Gold actually went up in value 20%.

Perhaps Rudy you could do an EW analysis on POG (XAUUSDO)? I recall you said recently we are soon to enter into a final ‘wave v rally’. Perhaps Mr Elliott might add some technical focus to the discussion?

In respect to ETF Gold, the XAUUSDO value is one issue. I feel, like Alf, we are headed higher – Rudy might offer an EW target?

The real issue for ETF Gold in my mind is the AUDUSD component. If the EW analysis target (supported by P&F) that the S&P may pull back to 900, think back to the last time the S&P fell back sharply through 900 – it was October 08 and the Aussie Battler was at 64cents. Whatever the end value, if the markets pull back to those levels the AUD will not be in the high 80cents!


Top of pagePrevious messageNext messageBottom of page Link to this message
jaded
Member
Username: jaded

Post Number: 249
Registered: 03-2010

Rating: N/A
Votes: 0


Sunday, July 18, 2010 - 07:59 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody,
Channel 9 is 'boof head' territory.It's Polls are... well..irrelevant.
Ody,one must be au fait with the Modern World as it's 'developed' since the 1970's.
Chanel 9 is Reactionary.It's culture,it's angles are Reactionary and Irrelevant.
It's boof head,male,down d'Pub based.Seeing as these are who they 'sampled',Ody their Polls are Irrelevant.
Ody,9 is who brings us d'Worm!![along with a host of Footy based Commentary]
Ody,9 network is BLOKESY,extremely so.
Now I realise Ody that not only are you from Sth Australia but you are a Sophisticated European.You may not realise how different Australia is now compared to say 40 years ago but you just have to realise that Macho Oz thinking is Passe.
Please do not under estimate the Female Voice and Angles Political.
Probably best I leave it to say Cat_Lady to comment/give you Ody/Eugenio the WORD

but Abbot and all that drivel years ago about how he was a Repentent Sinner[who had a Love Child etc]and THEN it all came down to it weren't his!!??

Ody,Abbot is a WOOZZZZ-Oh I've sinned[am one of you.hoi polloi] but I've Repented but hold on I ain't actually really sinned[had a love child]
Ody this Soap Opera in the Women's Weekly etc??
It didn't endear our Tony to d'Women Vote!
no siree Bob!

Ody,ya gotta have an angle on the Irish Catholic Mind Set and Abbot don't get a look in!!

So 'Anticipate' a Labor Victory instead of hoping this Dill/Clown will win.

IMHO.


" Hear what you Say...
But see what you Do!"

Sir Zelman Cowen c 1970.

Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5259
Registered: 10-2006

Rating: N/A
Votes: 0


Sunday, July 18, 2010 - 11:32 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



jaded: Galaxy = Newspoll

And Newspoll is the most reliable organisation in the country, as demonstrated over many years. You should check your facts before you jump to all sorts of bizarre conclusions. The work of the people who do the polls has nothing to do with where those polls are published. Newspoll is published in The Australian, and you may not like The Australian any more than Channel 9 (for which I too certainly have no liking), but the fact remains that Newspoll is the best, by far.

A Galaxy poll like this, as I pointed out, is limited in value only, but not for the strange reasons that you mention. The ones to pay real attention to are those which are published in The Australian. Those are the ones which, in addition to internal polling by the parties, drive the actions of the politicians who read them.


Top of pagePrevious messageNext messageBottom of page Link to this message
bridog
Member
Username: bridog

Post Number: 148
Registered: 06-2009

Rating: N/A
Votes: 0


Monday, July 19, 2010 - 07:34 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio, or is it Eugenius? I can only shake my head about how prescient you were selling up on Friday.

I took some profits last week when AND spiked up 8% and when KGL hit 10c, but am in a quandary about what to do today.

I think I’ll choose not to panic sell, but follow my own game plan. We certainly live in interesting times with stock markets developing bipolar disease, driven apparently by traders and their computers with a one day or less game plan, reacting to each piece of often conflicting news.

When I look at my portfolio, the only stocks I can see that appear to directly correlate to the US market are a couple of financials and one other. There are plenty that depend directly or indirectly on the health of Asian economies, but hey, the wellbeing of Australia depends on the same.

I find it ironic that the US$ appreciates at a time when it seems likely that they will need to print more money, likewise with the Euro.

It used to be that the BRIC economies and currencies along with the rest of Asia were considered unstable and inferior to the USA and Europe.

Now the reverse is the situation.

I think in Australia we can live with that. Also our stock picking on fundamentals should reflect this new situation, for now anyhow. So for companies with US or European operations or which are dependant on same for any significant business, I’m going to sell and/or avoid.

Starting today . .


Cheers


Old enough to know better . . .

Top of pagePrevious messageNext messageBottom of page Link to this message
breaker_1
Member
Username: breaker_1

Post Number: 227
Registered: 10-2009

Rating: N/A
Votes: 0


Monday, July 19, 2010 - 09:37 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



bridog,

Old enough to know better, to young to resist


When one door closes another door opens; but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.

Alexander Graham Bell





Top of pagePrevious messageNext messageBottom of page Link to this message
eblode
Member
Username: eblode

Post Number: 1425
Registered: 11-2002

Rating: N/A
Votes: 0


Monday, July 19, 2010 - 11:12 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Bridog,
I intentionally sent you that message on Friday in the vague hope that you might unload some duds in your portfolio. Normally I hesitate to offer that advice in fear of being wrong. This time I was spot on. Such are the vagaries of our business. Will be buying back DWS,PMV when the time is right.

Eugenio (aka Eugenius, lol)


Top of pagePrevious messageNext messageBottom of page Link to this message
billt
Member
Username: billt

Post Number: 15
Registered: 02-2010

Rating: N/A
Votes: 0


Monday, July 19, 2010 - 04:09 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



At times it is easy to be cocooned here in Australia. We worry politically about seemingly minor issues, when the western world is on the brink.

"We’re in a world of rotating sovereign crises. The market seems to become obsessed with one idea at a time, and then violently swings towards another. People thought the euro would break-up. Now we’re moving into a new phase because we’re hearing alarm bells of a US double dip." …HSBC

The US Fed minutes warned of "significant downside risks" and a possible slide into deflation, an admission that zero interest rates, $1.75 trillion of QE, and a fiscal deficit above 10pc of GDP have so far failed to lift the economy out of a structural slump.

According to the US Federal Deposit Insurance Corp, 288 state-chartered banks have failed nationwide since Jan. 1, 2008. Check out the list:

http://www.fdic.gov/bank/historical/bank/index.html

http://www.fdic.gov/bank/individual/failed/banklist.html

Currently nearly half of state-chartered banks are on the regulators’ list of troubled institutions. North Carolina’s 86 state-chartered banks are on N.C. regulators’ list of troubled institutions, up 74 percent in less than a year and a grim record that underscores the strain of the multiyear downturn.

It is hard to see where any sustained US stock market rally will come from?

Any thoughts guys?


Top of pagePrevious messageNext messageBottom of page Link to this message
bridog
Member
Username: bridog

Post Number: 149
Registered: 06-2009

Rating: N/A
Votes: 0


Tuesday, July 20, 2010 - 01:23 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio,

Thanks for that advice on Friday, its just that the overnight sell of on Wall st changed the ball game. I'm very glad you were able to lock in your profits.

Here's one for your petty cash/gambling money:

AXM Update

Positives
1 They have a resource of 3 million oz gold
2 They are producing ~ 20,000 oz per qtr

Negatives
1 Cash costs have been higher than the PoG
2 They’ve run out of cash

Maybe
1 Last quarter the POG was up and maybe they have reduced cash costs
2 The appointment of a high profile Chief Operating Officer maybe a positive

The share price reflects the negatives and it has become a daytraders toy.

As previously posted, this is a double or nothing bet. The June quarter report is a week away, and if they have managed to turn the ship around, the share price will show significant appreciation.

The Bollinger bands on the chart are in a narrow range and could be a prelude to some explosive activity, one way or the other. Watch for an increase in volume.


Old enough to know better . . .

Top of pagePrevious messageNext messageBottom of page Link to this message
bridog
Member
Username: bridog

Post Number: 150
Registered: 06-2009

Rating: N/A
Votes: 0


Tuesday, July 20, 2010 - 09:30 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio,

I have manual stop losses set for today on:
ANZ, GXY, MTS, PMV, SEK, TOL.

Only bought Galaxy on friday after it started to look up.

Cheers

Bridog


Old enough to know better . . .

Top of pagePrevious messageNext messageBottom of page Link to this message
bridog
Member
Username: bridog

Post Number: 151
Registered: 06-2009

Rating: N/A
Votes: 0


Tuesday, July 20, 2010 - 05:00 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio,

Portfolio still intact . . the only one in the red was GXY and didn't drop low enough to trigger a sell.

Todays gains = nearly yesterdays losses. Sales yesterday were LGL, NCM and CSL.

Added OZL today.

Cheers

PS Go AXM


Old enough to know better . . .

Top of pagePrevious messageNext messageBottom of page Link to this message
bridog
Member
Username: bridog

Post Number: 152
Registered: 06-2009

Rating: N/A
Votes: 0


Tuesday, July 20, 2010 - 05:30 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Bill,

I agree with your last post, the US, UK and Europe can be considered to be stuffed, not Armageddon, just not investment quality. The only bright spot is Germany and it could be argued thats only because the Club Med countries have trashed the Euro.

The past is in the West and the future is in the East. Beware of stocks of businesses depending on the West.

Thats the way I'm seeing it anyhow . .

Bridog


Old enough to know better . . .

Top of pagePrevious messageNext messageBottom of page Link to this message
billt
Member
Username: billt

Post Number: 20
Registered: 02-2010

Rating: N/A
Votes: 0


Tuesday, July 20, 2010 - 05:54 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



hi Bridog

I tend to agree.

Unfortunately the contagion effect from US & Europe onto the XJO will give traders very few opportunities to play your favorite aussie stocks in a positive manner.

As I feel there are more downward moves than up to come, I am now focusing on the bear etf's.


Top of pagePrevious messageNext messageBottom of page Link to this message
bridog
Member
Username: bridog

Post Number: 153
Registered: 06-2009

Rating: N/A
Votes: 0


Wednesday, July 21, 2010 - 12:22 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio,

Got stops worked out and in place for tomorrows activities, tightened up a couple.

Cheers


Old enough to know better . . .

Top of pagePrevious messageNext messageBottom of page Link to this message
rdumas
Member
Username: rdumas

Post Number: 3665
Registered: 11-2006

Rating: N/A
Votes: 0


Saturday, July 24, 2010 - 10:30 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Is there anybody out there?

I was going to be spending some time with some special people today but there has been a change of plans so I've got a bit of free time again.

As discussed on my EWW thread, the US and Australian markets should continue with their respective short term rallies until possibly later this week. I continue to believe that the current up move will be pretty devastatingly brought to an abrupt end in late July/early August but in the mean time those who are 'swift of foot' can take advantage of the up moves.

The chart below shows the S&P500 working its way up to the UBB as it did during the last rally which peaked at 1131.23. The %R and the UBB gives us some idea of the level that the index is targeting. At this stage the technicals and the EW counts are supporting each other.




The following chart of the XJO shows a similar scenario. I suspect that by the time that Monday trading has finished, the XJO will have pushed up the UBB and the %R indicator will be nearing its overbought territory. As with the S&P500, the XJO will have a goal of reaching its previous peak of 4622.





I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5260
Registered: 10-2006

Rating: N/A
Votes: 0


Saturday, July 24, 2010 - 04:21 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Sorry for not posting ...

I have been otherwise engaged. I must say, too, that the market does not currently inspire me with much interest. Sure, there will always be some bullish days, but it has for quite some time been obvious that stock markets ought to go down, on all the available evidence, rather than up, and that is what they are on the whole showing themselves inclined to do. Even if focusing on shorts one would have to be brisk and pointed, for there is just enough variation to make longer-term shorting (so to speak) not a terribly secure proposition either, as yet, though one feels that in general bearish views have continued to firm (never mind what my be the odd positive week).

The elections will not help our market either, or at least not until they are over. At the moment it would be hard not to place money on Gillard, and that's what I'd personally do if I had the inclination. Most likely her lead will hold and she will win, even though many can see she will not be a good prime minister - which, however, does not lead enough people to favour Abbott either.

The female vote is not helpful to Abbott, and the male vote is not strong enough to compensate for that fact either. Neither should it, for that matter, for to vote for Abbott simply because he is a man would be no less foolish than to vote for Gillard because she is a woman. I add here that in most of the spheres that interest me and where I respect what people do my vote is for women, and I have far more female friends than male ones ..... but the one area where I feel that male judgement and knowledge does seem clearly superior is that of economics. This may, of course, simply be because fewer women have concerned themselves with the area. To me, the primary thing that I want from any government, in addition to national security, is economic competence, and I truly think Gillard has none, while Abbott would at least have more.

But even with Abbott the country would probably face a share market either bad or uninspiring for many months to come.

There is, moreover, a degree of uncertainty about events which makes this market very hard to pick with exactitude. Personally I am very happy to be out of it, though I shall go to some trouble to see whether I can't find the odd small stock that might be worth having - until I do, I shall not post on such, however!


Top of pagePrevious messageNext messageBottom of page Link to this message
eblode
Member
Username: eblode

Post Number: 1426
Registered: 11-2002

Rating: N/A
Votes: 0


Saturday, July 24, 2010 - 05:18 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody,
I'm beginning to feel the first signs of a recovery. Low interest rates in the USA, plus a good reporting season so far, deflation, and a general mood of optimism creeping back in the market. With Rudd gone and a new reporting season coming up with positive results, I feel this will continue to improve market sentiment further. I'm holding top quality shares, no duds, no prayers needed type of shares, just bread and butter old timers which will survive any setbacks. ( AMC, BHP, CEY, FWD, MMS, NVT, ORL, RHC, WOW) Even so I do feel that this may be our northward path towards 5000 end of the year.

Eugenio


Top of pagePrevious messageNext messageBottom of page Link to this message
eagle
Member
Username: eagle

Post Number: 40
Registered: 02-2010

Rating: N/A
Votes: 0


Sunday, July 25, 2010 - 12:18 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi - have been holidaying in Europe the past month - thought I'd pass on these comments from a mate in a London based fund.

* No-one knows with confidence where market is going (obviously doesn't use Rudy's EW approach)
* Most funds are high in cash (holding onto dividends and inflows etc) and when they do buy it is on a trade basis. Tending to hold their core stocks as they are worried if they out of the market that it could jump and they lose out on comparison basis with their competitors.
* He focuses on retail stocks and says can't see anywhere in the world that will grow from consumer spending - doesn't expect consistent growth from his core retail stocks but does think dividends will hold ok.
* Despite his focus on retail stocks, he and his colleagues in the London investment community are puzzled by Australian Gov't actions (specifically resource tax). They also don't know much about anything going on in Australia (my comment) - their media doesn't report much on Australia. I thought BBC global coverage had deteriorated from when I lived there 10 yrs ago.
* Thinks UK gov't has done right thing for bond market in slashing expenditure but thinks it may be short term gain. Reason is no-one there feels confident coalition gov't will last and hence policies may have their severity reduced. Then bond market will get nervous about UK debt outlook again.

As an aside I asked people where they thought global warming/emissions trading was going - very low response of knowledge/interest in UK, some USA friends, and in Europe (Switzerland, Italy). I mentioned it as being an issue in Rudd's demise - they seemed surprised that we were that far down that track.

Despite the media doom and gloom re sovereign debt even 'smart' people seem unaware of the scale of the issue. One 'smart' English mate was shocked when our fund manager friend explained to him the level of the problem. Most seem to think it is a Greek and Spain issue. Ireland they see as stuffed (could be a English view influenced by local rivalry etc).

London property market (the 'smart' friend who didn't know debt scale but does follow property) - had gone down and then got a spurt up - lot of money coming in from Russia and Middle East. Had boosted the middle/upper end of the market again.

Finally - no love of bankers when we spoke to anyone who didn't work in the City of London. View was gov't should tax bank/ers harder.

Now to catch up on all your posts of the last few weeks...


Top of pagePrevious messageNext messageBottom of page Link to this message
jaded
Member
Username: jaded

Post Number: 255
Registered: 03-2010

Rating: N/A
Votes: 0


Sunday, July 25, 2010 - 06:29 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody,I get the feeling you are in need of 'inspiration' to churn out advice and insight.

So here's my angle for you to get ya teeth into.

What Institutions,in all your experience,do you follow?
Follow as in that these Institutions seem to have a Handle on your Philosophies/Understanding of Mechanics in the Share Market?

Now we both agree that Institutions,in general,are very flawed.Classic is those that merely buy the Index and 'Grade' themselves by comparing their performance against some Index.

However,we both are aware of Institution Funds that weight their Investments and are known to at least perform better than the Index[whichever Index they weigh in against]

So,Ody to set you off-
Perpetual chases Dividends.It's a 'widow'n'orphans' Fund that pays at or near Term Deposit Rates.
Argo is similar.

Now,Ody you and I 'favour' Washington Soul Patterson.They are a Long Term,Invest in Superior Management[or better CONTROL Management]Fund.

In my sphere of Min Cap Shares,there's a couple who turn up on Register-Acorn for example.Mobs like Bank based Institutions can be really detrimental.

Anyhow,Ody Wash ya Soul is IN my latest pick-AQR.
AQR has a relatively Small Shares on Issue.Sub Holders are all Directors with the Major holder Director recently selling to Wash Soul a 'top up' bringing Wash Soul to just under 5% hold.

Ody,I'm trying to elicit from you some comment/approbation to Daily Bread Readers who are naive investors for having a GO on Non Star Endorsed Shares as per Lincoln but still have a place in a Portfolio.
Further that one can 'conservatively' invest,based on Who else is In,to get onto such 'chances'.

Please Ody,confirm who else Institutional you 'back'?

I realise I'm only talking $10grand,say and you Ody are concerned with putting $100grand+ into the Market and can't see Modern Times as favourable for such Put ya Money Down
but,me?I'm a small time/micro individual share 'Chancer'.
$10 grand making 8% in a month?is Bread'n'Butter

and frankly,predictions of 5% drops based on Waves next week ain't a problem to moi.Indexes ain't my concern.
I don't buy/play shares in ANY Index.It frees me from worry but don't add much to my conversation down d'BarBquew/Social Gatherings with Know Not Muchs.

Sorry I become Obscure and maybe Disparaging.

Ody,what INSTITUTIONS do you admire and give you confidence when they are fellow shareholders?


" Hear what you Say...
But see what you Do!"

Sir Zelman Cowen c 1970.

Top of pagePrevious messageNext messageBottom of page Link to this message
bridog
Member
Username: bridog

Post Number: 154
Registered: 06-2009

Rating: N/A
Votes: 0


Sunday, July 25, 2010 - 11:30 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Jaded, you make me laugh . . Wash ya Soul! Love it! I’ve had them in my portfolio for some months waiting for them to give me New Hope (which I also hold)! Thanks for AQR message recently. Put it on my watch list right away and been waiting in vain (so far) for a retrace as you suggested.

Ody, Rudy, I cannot feel as bearish as you both do. While I accept the ongoing problems resulting from sovereign issues in the US, UK and Europe, I am coming around to thinking that the GFC is misnamed, it should have been called the W(for Western)FC . Looking at it, I don’t see that there was any banking or sovereign crisis in China, India, Korea, Japan (other than the usual), Malaysia, Thailand, Phillipines, Russia, Australia, or Africa and South America for that matter. Whats that . . 2/3s or more of the worlds population (including the ones I’ve missed) and must be on the way to half the worlds economy and growing fast.

By and large our trading partners are not in the West, we sell to and buy from the Eastern countries. You may argue that the East’s main business is selling to the West and this will be reduced. That may be so, but it could be that trade within the Eastern community will pick up offsetting this.

I like to look at things which could go well, and frankly I see plenty.

There is no indication that our coming reporting season will not “go well”.

At some point I reckon the ASX will decouple from Wall Street, as the two now have little in common.

In the meantime I note that the XJO actually lags the DOW and S&P 500. These US Indices have breached their 150 day ema, while the XAO and XJO remain well short of 150 day ema. The fundamentals do not support this divergence which could only be due to unduly bearish investors in Australia or a repatriation of overseas capital or a mixture of both. Fundamentals must eventually win. ASX could “go well” and catch up.

Tomorrow, barring World War III breaking out overnight, the XJO should go within spitting distance of 4500, and will certainly breach the recent high of 14 July. This and the fact that volumes have picked up leads me to think that the market may “go well”.

I have been actively trading in the last two weeks, selling CSL, LGL, NCM, TOL and WOW, and buying RHC, GXY, SEK, OZL, BHP, PAG, CMJ and AVO.

I have a long list to buy tomorrow (at a price), and some on my stop loss list also.

While it seem to me that things may “go well” for now, I am ready to take quick action on any stocks that stop performing.


Old enough to know better . . .

Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5261
Registered: 10-2006

Rating: N/A
Votes: 0


Monday, July 26, 2010 - 12:10 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



jaded and bridog:

Good posts, both of them. I did enjoy reading them, and agreed with quite a bit of what I read, but am (a) a bit behind as I haven't kept a close eye on matters during the weak past, and (b) am suffering from an unusual lack of interest in share markets currently. I suppose that must indicate that I am more bearish than both of you - but I can also see that, of course, there would have to be some real possibilities for making money somehow, even in share markets (there certainly are good deposits on offer). I shall try to get a firmer intellectual grip on events, and comment further later on.


Top of pagePrevious messageNext messageBottom of page Link to this message
jaded
Member
Username: jaded

Post Number: 256
Registered: 03-2010

Rating: N/A
Votes: 0


Monday, July 26, 2010 - 08:41 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



bridog-i bought 10,000 AQR on Friday at 50 open because I thought it would break out.I,too tired of waiting the retrace to say the low 40's.
I see 46 cents as Support and also positive Assay Reports coming out weekly.Did you read the last one,bridog?Weren't the pictures 'interesting'?


I think a return to 70c+ is plausible.Only problem is a Placement is a real possibility.Cash Quarterly comes out this week and think it will show insufficient cash on hand for Progress in Analyzing all these core samples.

I use the 21 day simple MA to get some idea of possible Placement Price.I also do not agree that a share price ALWAYS retreats to Placement Price.Often does but NOT Always.Depends on who qualified in their case as Sophisticated Investors.

bridog-keep me informed about Copper on Kitco but it's the Molydendium that sparks AQR.

happy trading.


" Hear what you Say...
But see what you Do!"

Sir Zelman Cowen c 1970.

Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5262
Registered: 10-2006

Rating: N/A
Votes: 0


Monday, July 26, 2010 - 11:06 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Coal, iron ore, and base metals

Simply for orientation, I felt that the survey below was useful to me, and it may be to others. I am more interested in the facts recorded than the opinions/assessments, for myself, but take those on board too.

The emphasis is heavily on bulks (not doing too badly, as I understand it) and base metals (which have fallen very badly). Not a word on rare earths, about which we read so much elsewhere. Or, for that matter, on gold.

On that metal: I am glad I got out when I did, and believe that my reservations were probably justified.

jaded and others may have comments to contribute a propos of what appears below.

It will take me a while to get myself organised ...
----------------------------------------------------------

Material Matters: Pressure For Thermal Coal Prices, Bottom For Iron Ore
FNArena News - July 23 2010

By Chris Shaw

While still bullish on thermal coal over the medium-term, Deutsche Bank suggests current market conditions could easily deteriorate enough over the next quarter to bring about a modest correction in pricing.

The main reason this is possible in Deutsche's view is related to Chinese growth, as a slowing in the Chinese economy overall is expected to translate into a deceleration in Industrial Production (IP). As this measure is strongly linked to power production and consumption, the broker expects a corresponding weakening in thermal coal demand in the near-term.

On Deutsche's estimates there is scope for power consumption growth to fall from more than 20% earlier this year to closer to 6% in year-on-year terms by the fourth quarter of this year. In addition, the current quarter is typically a weak one for coal imports for China, which largely reflects seasonal factors.

This combination leads Deutsche to suggest thermal coal prices are likely to come under pressure in coming weeks, with scope for a correction of around US$10 per tonne.

In contrast to thermal coal, Deutsche suggests the bottom may have been seen with respect to the iron ore market, as steel market news has slowly turned more positive. The latest example was the stabilising of steel prices and mills increasing their offers over the past week, an outcome the broker suggests was a surprise to many in the market.

In terms of Chinese steel prices, Macquarie notes the rise recorded over the past week was the first since mid-April, though this is believed to be more the result of trader activity than a real demand recovery.

In Macquarie's view it remains a little too early for any real recovery in Chinese steel demand thanks to the summer slowdown. Any demand improvement is more likely to come in mid-August to early September.

Paper markets appear to support the view iron ore prices have bottomed, Deutsche noting prices for the fourth quarter have moved higher in recent sessions as sentiment in China in particular has improved thanks to an announcement of a stimulus related to building low income housing.

As well, Deutsche notes Shanghai steel charts continue to look positive, so as long as prices can continue to strengthen there the broker expects iron ore prices will also move higher.

As RBS points out, Chinese bulk commodity imports have been much more resilient than have base metal numbers through the first half of 2010. Even after falling for the past four months, iron ore imports for China are still 4% higher year-to-date. Chinese net coal imports have also stayed robust, being up 94% year-on-year over the first half of 2010.

In the base metals, RBS notes from the record levels recorded in 2009 imports for all metals except copper have fallen back to more normal levels so far this year. As examples, net refined imports of aluminium are down 95%, zinc 76% and nickel 54%, while copper import numbers have remains relatively resilient falling by just 13% year-to-date.

This decline in base metal imports in recent months has largely been offset by increased Chinese refined metal production, leading RBS to suggest there has not yet been a significant enough erosion of the large unreported base metal stockpiles the Chinese accumulated in 2008 and 2009. The broker's view is these need be eroded before the base metal markets enjoy genuine pricing tension.

The fact Chinese copper imports have remained at reasonable levels is a good sign in Macquarie's view, particularly as demand for the metal is expected to increase in coming years thanks to infrastructure projects such as a rural power grid build out.

While some indications this could consume as much as 1.75 million tonnes of copper appear excessive, Macquarie sees it as a positive for copper demand regardless, meaning these infrastructure projects offer continued upside risk to Chinese demand for the metal.

Generally, Macquarie notes apparent copper demand in China is estimated to have risen by 8% over the first four months of 2010, while real consumption is estimated to have risen by almost 20%. Globally, real demand for the metal is estimated by the International Copper Study Group to have risen by 13-14% in the first half of the year.

Such numbers suggests strong supply/demand fundamentals heading into the latter part of 2010, though not everything is in the metal's favour. Chinese property sales have fallen in recent months and construction is set to slow, while Chinese demand for the metal via imports is expected to moderate in coming months given seasonal factors. There should also be a slowing in demand in other countries through the end of August in Macquarie's view.

While this should be enough to see the market move into balance in the latter months of this year, Macquarie expects the copper market will tighten again in 2011, its forecasts calling for the price to reach US$3.80 per pound by the second quarter of next year.


Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5263
Registered: 10-2006

Rating: N/A
Votes: 0


Monday, July 26, 2010 - 12:20 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



jaded: which institutions?

I shall say something about this aspect first, jaded, as it is one which you very rightly raise.

If you feel at a time like this, as I do, that you'd have difficulty running anything like a "portfolio" of shares of your own choice, or even to manage two or three stocks successfully, then this may well be due, as it is in my own case - a person who only invests "long", never "short" - that you feel either uncertain about the market or more negative than positive. And that actually is my own sense, pretty well. Or I should qualify this: I do NOT feel uncertain to the extent that I think the market can in the short to medium term rise significantly. Rather, I feel that we may well have a market going sideways in which I cannot perform, or one going down.

I think the latter remains most likely, despite bounces here and there: but I add to this that I do not feel, personally, that we shall inevitably get VERY severe falls of the type projected by either Prechter or other EW analysis which is less pessimistic than his but still sees a very, very significant collapse. The reason why I don't think that that is very likely (at least not for a while) is that I feel that by now there is quite sufficient bearishness in markets for them not really to panic. I don't see much growth either, and reasons for disappointment, but not a catastrophe that's unexpected. Prices can certainly still go down, and probably often will, but I do not foresee a disaster like 2008. (For one thing we aren't at as high a level as we were at the beginning of that year.)

But even so, I certainly do not see myself as moving into the market with confidence in the expectation that prices will go up - or at least do so sustainedly. And although there will be exceptions, I find, in looking at what shares have done, that many that looked promising at some point or other have gone down since, and others may be subject to falls yet to come. So individual stocks, to go long in, don't much appeal to me. After all, one can get well over 6% even for 6 months on deposits, right now.

But what if one did want to be in share markets in case one is wrong, or even if simply to take advantage of possible FALLS? Suppose that one does not feel secure about choosing one's own shorts, as well as longs?

Then, I would suggest, the best choice at the moment would not be our beloved Soul Pattinson (SOL), which has gone down some 10% over three months, and which may suffer further or at least do little else than stagnate. No - in my view, the best choice would be a very flexible manager adroit at performing in flat or down markets as well as those going up, and with a proven record to prove it.

Though I don't like the term "absolute return fund", I still cannot think of anything better for what I think would be needed. And in this area I feel that, in Australia, the safest long-term performer would probably be Platinum. Indeed, they are world-class as independent, non-index performers. They have at least two funds that would be worth considering. There is the "normal" Platinum International Fund, which over the years has had a good record - FOR A FUND MANAGER - in down markets, and that is to my mind a hugely important factor. When Kerr Neilson was still with BT before he started his own business he, with others, rescued that company's performance by his understanding of how to avoid a rout, and his record in playing markets at all times has remained very strong.

The Platinum International Brands Fund has a stronger record (though a shorter one): Platinum really seems to excel in this area. In any case: this is a manager which knows what it is doing, and rarely (and only temporarily) makes mistakes of any real significance.

Would I choose Platinum under ALL conditions? No: because my own record since the beginning of the 2003 bull market and after has produced better results. The reason for that is not just my playing the market well during the bull phase (or 2009), but my making more money during the bear phase by being in strong deposits AND AVOIDING THE SHARE MARKET. Though Platinum has done much better than most other funds, it still did not do WELL during the weak periods. Its relatively good performance is more a matter of not falling as much as others than that it did better than someone with deposits.

And there is my problem: I very much doubt that many listed or unlisted funds will actually during a bearish - or even flat - period do better than one can do by simply staying in strong deposits.

Another "absolute return" fund I'd consider would be K2, which has done well (as a fund): but it too does not really convince me that it will outperform me.

When I make these comments about what I see as good fund managers I do NOT mean that they don't do a good job in what they do - whether it is, say, SOL or Platinum. Rather, I think that they prove that being in the share market during weak periods is not a sensible policy. Platinum DOES short the market, and it is not afraid of being in cash. Even so, as it essentially does remain a share fund (as of course is SOL, which is persistently long), it is vulnerable, and its record shows that it does not exit the market as much as it should, or compensate for losses by gaining enough in shorts.

My own investment style is "absolutely absolute"! I don't compromise with the share market in any way: if I see it as unsuitable for an investor who goes long to the extent that I might make less, per year, than I do in deposits (and in interest rate securities), then I stay away. So far that has paid me very well indeed. I am not dogmatic on the issue, however, and will look further. There are, of course, always some fund managers who do actually make gains in a weak market: but then the problem is "for how long?" and "with what risk"? Still, I shall try to find someone truly exceptional.

As you will see from this, I very clearly do NOT think in institutional terms. Nor am I guided at all by Stock Doctor or any other investment organisation. Even when I do select stocks and they happen to be star stocks, I select them on my own criteria first of all: I never START with SD's star stocks list, as I know there would be many of their stocks that I wouldn't want. I make my own choices. If they coincide with SD's star stock choices, that's fine, and reassuring - but only because I like the stock in the first place, not the other way round. I pride myself on my independence, because that has served me very well, and over a long time. Which does not mean, of course, that I don't make mistakes: actively buying something that I shouldn't, or staying out to an extent which may be exaggerated. But it is an overall performance over the years that interests me, and as such I am not unhappy at all with what I have managed to do. Over the period I mention I have been very clearly in the black EVERY year, and not that many people can claim that.

If the current period depresses me, it is not that I am losing money. On the contrary, in AUD terms I am MAKING money, and substantially so. But - and I think this is the real reason for my "depression" (not entirely too strong a word) - I should love to continue to use my stock picking skills, and find that this is not a market where they appear to be of much use. What puts me off is that I wouldn't be surprised if this continued for a lengthy period. I don't see anything like the 2009 rally on the nearby horizon. If I did, THEN I'd be in. But who knows ... I do keep an eye on stocks that interest me, and I might find something, even now. And I shall look at the stock you mentioned, along with others.


Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5264
Registered: 10-2006

Rating: N/A
Votes: 0


Monday, July 26, 2010 - 12:34 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



ETF GOLD

Rudy and others: I continue to be negative on this. When I sold I did so, of course, because I thought it was the wrong stock to hold on to. There are two major reasons, to my mind, why it is not much sought.

(1) Above all, investors selling off shares and other assets (including gold) want the comparative safety of liquidity, and are firmly focusing on obtaining strong yields to compensate for the gains they will not be making in growth assets.

(2) Although some countries (and partly all) need to fear inflation as well as deflation (the two can co-exist, in different countries, but also in one and the same economy) the major fear is now deflation than inflation, and there is always a tendency for gold to be viewed with some scepticism when deflation is feared - or at least until they have their liquidity and yield problems/fears under control.

So for the time being, at any rate, I think I did the right think in getting out before further falls occurred (and I think there may be more). At this moment I would not recommend its purchase - there are just too many doubts, and the situation is more complex than it was earlier.

In fact, palladium or silver might be better. Gold does not only not produce a yield, but has limited use in industry of any kind, even though when, seasonally, Indian brides buy it always goes up a bit.


Top of pagePrevious messageNext messageBottom of page Link to this message
jaded
Member
Username: jaded

Post Number: 257
Registered: 03-2010

Rating: N/A
Votes: 0


Monday, July 26, 2010 - 01:02 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody,I'm not trying to find a Fund to invest in but to find Institutions/Funds that can be an Indicator of good Prospect Companies by the Institution being on the Register.

Do you follow?Are there any other Funds like Washington Soul who invest in possible Goers outside of the ASX 2/300?

I agree with your 'assumption' that we may be in for a sideways move for months and years.But I contend that will be reflected in the ASX 2/300.
Those Indexs even the Top 20/50 that Institutions insist on only Investing In for 'safety' reasons,credibility etc.

I still reckon that during such a dull Market Blue Chip wise that smaller companies will breakout on the path of becoming Tomorrow's Blue Chips or at least 'respectable' even if this respect is gained by these having a PE Ratio Fundamentally!

That's why I'm in AQR.Soul topped up their stake at 25cents buying Not on Market but from a Director.
Directors are the Majority Shareholders which is a 'good sign' of commitment.

However Major Director Holdings do have a DrawBack.This can prevent All Shareholder Rights Issues on a one new share for x number old/held.
Why? because the Directors may not have the ready cash to participate so they'd rather hit Sophisticated Investors to raise capital/ dilute that way.

Anyhow,AQR only has about 100million odd shares on Issue which in Minor Companies is relatively low.
Like some explorers can have a Half even a Billion Shares on Issue yet have an Under $100mil Market Capitalisation.
So many Shares on Issue that they find it difficult if not impossible to get any sustainable price rise happening.

So I doubt you'd find Soul on any of these shares Register.

Ody,I can see you're Depressed.I'm suggesting that you may 'perk up' if you come adventuring in the Small/Mid Cap shares of the Market.The trader term is 'dipping your toe in'

happy trading.


" Hear what you Say...
But see what you Do!"

Sir Zelman Cowen c 1970.

Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5265
Registered: 10-2006

Rating: N/A
Votes: 0


Monday, July 26, 2010 - 01:20 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



IMPORTANT ADDITION:in general, if money is going to be made on stocks anywhere, it will probably be in Asia - and I explicitly do NOT mean just China and/or Japan. That would mean finding stocks there, and rather than going for the indices or trying to do the finding oneself, one should then probably use managers like Platinum and K2. I think there is a good chance that they, knowing these markets (particularly Platinum) would do better than most of us trying to find the winners on our own market, as I think that, if there is wind in the sails in Asia, markets in Asian countries will do better than in Australia, which still has a tendency to follow "the leader", and which has nothing like the potential for building and manufacturing that Asian countries have. Now on to replying to jaded ...
------------------------

jaded: stocks outside the majority

For sure, I have made most of my own money (other than as a "worker") by investing in smaller companies, so I am with you there. And even in a flat/declining market there will be those that go against the grain, though the whole matter becomes a great deal riskier, as there is no wider market to support one. I am not really one for "dipping my toe in" when I think there is not a clear reason for doing so! But I do understand your post, and respect it. No - of course I didn't think you'd want a fund for yourself, but I considered some because even as "indicators" they are not without their problems. And this involves even what may be "conviction buys" of what are perceived to be cheap shares. Certainly your considerations are interesting. I shall be in touch again. Cheers in the meantime.

(Message edited by Ody on July 26, 2010)


Top of pagePrevious messageNext messageBottom of page Link to this message
market_mad
Member
Username: market_mad

Post Number: 418
Registered: 09-2009

Rating: N/A
Votes: 0


Monday, July 26, 2010 - 01:48 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Ody,

Re Platinum - finding winners or losers in their case as they are technically a hedge fund.

Cheers
MM


Top of pagePrevious messageNext messageBottom of page Link to this message
rdumas
Member
Username: rdumas

Post Number: 3667
Registered: 11-2006

Rating: N/A
Votes: 0


Monday, July 26, 2010 - 02:06 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Ody,

As I wrote on my EWW thread, the wave count that I had on ETF GOLD was invalidated this morning and hence the likelihood of a rally up past the previous high becomes questionable. I haven't had the time to come up with a new count at this time.

Whilst I still remain bullish for gold in the long term Andrews cycle analysis has ETF GOLD heading south in the medium term (perhaps for a few months). The shorter time period has a strong possibility of a move up and I will be monitoring that very closely this week as it may give me an opportunity to make some additional money in a short period of time. Anyone who is in ETF GOLD currently would probably be best advised to take any rally as an opportunity of exiting their positions as a negative pattern should be coming in the medium term.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5266
Registered: 10-2006

Rating: N/A
Votes: 0


Monday, July 26, 2010 - 02:12 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



MM: Patinum

You are right: they try to find winners or losers no matter in which direction the market as a whole seems to move, and whether they go short or long, or use particular derivatives, and that is what I like, in theory.

In practice, although they do short, I think their performance shows that they have done so only with limited success, and have too often kept stocks that were going down (or, conceivably, got their shorting wrong). I note here that it is in down markets that to my mind they have performed poorly (certainly much more so than I for example have).

My key points are that (a) they are better than an average fund, while (b) they are still in my experience not good enough in that they - even if less so than others - tend to lose money by relying too much on the share market.

And this, even outside the property mania, is to my mind an Australian disease. This country seems to feel that you must be in one or more "growth" markets at all times: typically the attitude of a gambling nation. The truth is that Australians greatly underrate risk: they borrow FAR too much, and they subject FAR too much of their money to both property and share markets.

The wiser attitude would be that of a business-man or business-woman who tries to size up the magnitude of each risk before committing money. If one acted that way, rather than with blind confidence in the merit of growth markets, one would exclude quite a lot of very real risk and hugely increase one's chances of gaining by buying into risky assets only when the risk is comparatively small.

Australians very rarely do this. After Americans - and I am talking statistics here - they trust the share market, even in their super funds, far more than ANY other nation on earth to make them wealthy. And the typical catch-cry here tends to be that "you must be in it" rather than "how much money can I make OR LOSE by being in it?"


Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5267
Registered: 10-2006

Rating: N/A
Votes: 0


Monday, July 26, 2010 - 02:16 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy: ETF GOLD

It looks as though we are largely in agreement. With variations, one might of course make money even in the very short term, but all in all this at present does not seem to be a very safe proposition. I feel no urge to go back in.

In fact, I'd rather look for a "real producer": a business that is actually making things, so to speak, or selling them (whether services or goods - most businesses sell something or other to make money!). In particular, I'd be interested in businesses that if anything profit from periods when people avoid all sorts of expenses but MUST make some, or choose some for "therapy" purposes. I shall look in that direction - though even then not with great conviction ...


Top of pagePrevious messageNext messageBottom of page Link to this message
billt
Member
Username: billt

Post Number: 27
Registered: 02-2010

Rating: N/A
Votes: 0


Monday, July 26, 2010 - 07:13 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



ETF Gold

The negative sentiment around gold seems increasingly widespread. The war between the Deflationists and the Inflationists continues.

The Continuous Commodity Index (CCI) is approaching the top of its trading range that has held for the most of this year. Once again this gives some hope for the Inflationists and Gold Bulls.

As POG begins to seek resistance off the bottom trend line, perhaps it might be a touch early to sound POG's short term decline. Be greedy when everyone is fearful?

If either of Rudy’s 3 EW Scenarios, or indeed Rudy’s fellow Musketeer Andrews EW option prevail, the $AUD will be under serious pressure which will spike the ETF - any increase in POG will be a bonus.

Deflationists may win - but how does that scenario pay back USA's Massive Debt?

USA Economic Update!

Great news! (not)

The US FDIC announced seven more bank failures on Friday, bringing the totals to 103 so far this year and 270 since 2007.

America’s total debt is expected to exceed $14 trillion next year. Each American’s share of that debt totals just short of $50,000. If the Fed was honest and put all the figures on the table, the Yanks are in debt over $100 trillion due to the unfunded financial obligations for Social Security, Medicare and Medicaid – that’s a cool $350,000 for each man, woman, and child.(not counting the Mexicans!)

Uncle Ben quite rightly suggests the US economic recovery is “Unusually uncertain”!!

US consumer confidence, US retail spending, US consumer spending, US labour market are all looking less than rosy.

Taxpayer support for the 'financial system' increased by $700 billion over the past year, bringing the total to around $3.7trillion - but I guess a few trillion here or there is loose change compared with the overall debt level.

So with that piece of information, (along with Ody's many posts) it's an interesting time to review your investment strategy!


Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5268
Registered: 10-2006

Rating: N/A
Votes: 0


Tuesday, July 27, 2010 - 12:15 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



A general market survey by Rudi Filapek-Vandyck, Editor of FNArena

I found this not at all uninteresting for its general view of the market. He appears to believe that in general the market has been, and will be, moving sideways - broadly in a 4000-5000 band, where both 4000 and 5000 are, however, extremes. Within that wide range (though not so wide if it continues for a long time), he sees us currently as moving from one dominant band, 4200-4600, to another, viz. 4500-4800, and he gives quite good reasons why this micro move up (within a sideways trading market) may be occurring.

The idea of a sideways moving market is not generally a popular one: most like to see a market either going up or going down, without paying attention to the fact that there are actually not infrequently periods during which a market SEEMINGLY moves up or down significantly, while in fact (in a non-technical sense of the word) it is zig-zagging along. I believe that much of what we have seen IS sideways movement, ultimately, and although I am bearish rather than bullish, I even so think that markets are currently going up and down within such a narrow range that the terms "bulls" and "bears" in such a context have only limited validity: there have been several moves up and down which have seemingly supported bulls and/or bears, while in fact not much has been happening for quite a long time.

I do not imply that I have a very strong view that the market will actually continue to trade in the rather uneventful way it has now done for many months: but the possibility is worth paying attention to, I feel. Particularly in a climate where one can see a number of competing factors within the world economy which work in opposed directions. Honesty bids me to add that personally I see more negative ones than positive ones, but I cannot deny that I am not quite as bearish just now as I have sometimes been, although I still cannot see the possibility of a sustained and sizeable move upwards.

I add also, with real conviction, that to me a sideways market is just not good enough: not easy enough to make money in, and better left to go sideways. Of course, as there is a real possibility of further decline, that would also keep me out of the market. The only thing that would really bring me back in in a more than tentative manner would be a move up over several months in a significant, reasonably substantial way. Which is to say that most probably my own gains will continue to be somewhere between 7-8% per year, as has been the case since October last, and as was also my situation during 2008.

During the period December 2008 - October 2009 I made quite a bit more, but I find that rate of return (7-8%) perfectly satisfactory, especially as I expect that at some future time I'll again make perceptibly more, but not less. And in most of the years since early 2003 I have made far more, on an annual basis. So I have absolutely no cause for complaint. I believe that most investors aim far too high, and paradoxically often then end up with disappointing results.

I am not implying that I may not buy the odd thing here and there while we are going sideways, but on the whole those periods don't appeal to me. I add, too, that, of course, if you make 7.5% in one year, and do the same again the year after, you in fact gradually increase the size of your cake. (This remains the case even though we live on our capital, since we don't remotely spend 7.5% per year of that.)
----------------------------------------------
[Here is Rudi's piece:]

Market commentators tend to stick to a relatively short term horizon, which is why we're reading that Australian equities have now risen to their highest level since the previous peak in June. However, take a longer term view and a completely different picture emerges.

In August last year, the ASX200 rose from near 4000 to 4489. July this year has seen the index approach 4200 and subsequently surge back to 4486 on Monday.

With less than one week left before we move into another August, what happens over the next 36 days is going to determine whether equities will have made any gains since the FY09 reporting season.

Now you know why I have been suggesting since last year ownership of major banking shares in Australia for investors with a longer term horizon does not look like a bad idea. In August last year, CommBank ((CBA)) shares were oscillating around the $45. This time around they are above $50 - and there would have been dividends too.

Want to know some other examples to compare with?

Shares of BHP Billiton ((BHP)) in August last year were jojo-ing between $36 and $39. This month the band seems to be between $37 and $40.

CSL ((CSL)) shares traded between $32-$34 back then, which is exactly what they seem to be doing this month.

QBE Insurance ((QBE)) shares were trading above $20 back then, on Monday they fell below $17.

One share in Wesfarmers ((WES)) back then cost $26. Today it costs more than $30.

There are individual stocks that have done very well over the period. Goldminer Perseus ((PRU)) is one of them (up 160%). ResMed ((RMD)) is another example (up 40%). Even shareholders in Harvey Norman ((HVN)) would still be sitting on gains if they had bought prior to late August last year.

In general, however, and as shown by the examples above, most investment portfolios are likely to have generated small profits at best since August last year. On a six-month horizon most portfolios would be staring at a loss.

Such is the nature of sideways moving markets; both bears and bulls have on a regular basis the opportunity to tell investors "I told you so".

"Moving sideways" over the past eleven months has translated into the ASX200 visiting both 4000 and 5000, while spending most of its time in between 4500-4800 up until March this year and in between 4200-4600 post April.

As such we have had two trends since August last year. One is the sideways channel in between 4000 and 5000. This channel remains in place today and I believe it is to remain in place for a while to come.

The second trend consists of two smaller channels inside the larger channel, suggesting the underlying trend has been for a gradual change to a lower secondary channel (4200-4600 instead of 4500-4800).

I believe that what we are experiencing right now is the switch back from the 4200-4600 channel into the 4500-4800 channel.

Viewed upon from the broader channel, this will still look like a sideways moving market. Viewed from a micro-level, however, this might well take the appearance of the next bull market rally.

Several observations underpin such a scenario:

1.) Risk appetite was low, investor sentiment was negative and technicals looked very ugly earlier this month, but all three seem to be improving rapidly which creates the possibility of a self-feeding process

2.) Experts of all ages, experiences, styles and reputations are rapidly turning bullish. The latest names to add are Dennis Gartman and Bob Farrell.

3.) While the overall trend in economic projections and earnings expectations remains (mildly) negative, there now seems to be a genuine possibility that Europe might surprise to the upside. Within this context, I note European equities have rallied first and are currently the global outperformers (who'd have thought?)

4.) Several markets and indicators that used to be on a steady trend downwards, appear to have found a bottom these past two weeks, including spot iron ore prices, the Baltic Dry Index, Shanghai equities, base metals, but above all... the EUR/USD.

5.) Renewed weakness for the US dollar in particular should bode well for risk assets of all sorts and shapes. As I have stated repeatedly over the past years, currency markets are at the forefront of direction changes. The fact that the US dollar stopped falling last year and actually made a come-back in 2010 has been a major contributor to equities remaining within a broader sideways channel.

Don't be surprised if the market bulls will use this scaling up into a higher secondary channel as their moment of "I told you so". If my analysis proves correct, however, all we are doing is upgrading the intermediate channel to where we were prior to March this year.

What I am essentially saying is that I don't think the bears will no longer have their "I told you so" follow-ups in the months ahead. Europe might be offering the surprise from left field this month, growth in Asia is still rapidly losing momentum (not unexpected) while the US is still likely to remain caught in between lower than anticipated growth, little (if any) momentum in consumer spending and a sluggish labour market.

To put it differently: financial markets have started pricing out the prospect of a double-dip in the US economy, but they will still have to account for the deceleration to a slower pace of growth in the quarters ahead.

This story was originally written and published on Monday, 26 July, 2010.


Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5269
Registered: 10-2006

Rating: N/A
Votes: 0


Tuesday, July 27, 2010 - 07:54 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Interesting and informative piece from Bloomberg to the effect that risk appetite are returning. Signs of recovery found (though the role of monetary and fiscal stimulus in this is not mentioned):
-----------------------------------------------------------

U.S. Stocks, Copper Advance as Dollar Declines on Housing Data

By Stephanie Borise and Nikolaj Gammeltoft

July 26 (Bloomberg) -- U.S. stocks rose, erasing the Dow Jones Industrial Average’s 2010 loss, and copper advanced to a 10-week high as the dollar fell after new home sales beat estimates and FedEx Corp. boosted its forecast.

The Dow climbed 100.81 points, or 1 percent, to 10,525.43 at 4 p.m. New York time. The Standard & Poor’s 500 Index gained 1.1 percent to the highest level since June 18, driven by homebuilders and transportation companies. Copper futures increased 1.2 percent, while the dollar weakened against all 16 of its most-traded counterparts including the euro and yen.

Sales of U.S. new homes rose in June more than forecast following an unprecedented collapse the prior month, a signal the worst of the slump triggered by the end of a government tax credit is over. FedEx joined United Parcel Service Inc., the largest package delivery company, in lifting its earnings forecasts. Both are considered harbingers for the economy.

“I’m more optimistic,” said Traxis Partners LLC’s Barton Biggs, who added that he doubled his equity holdings this month after slashing them in half. Biggs returned 38 percent in 2009, triple the industry average. “I’ve definitely changed my mind to the degree of risk out there,” he said.

U.S. companies are beating forecasts, and analysts see the biggest two-year earnings increase since 1995. More than 83 percent of S&P 500 companies have exceeded the average analyst profit estimate since July 12. S&P 500 profits may rise 35 percent in 2010 and 17 percent in 2011, according to forecasts tracked by Bloomberg.

Homebuilders, Shippers

Homebuilders in the S&P 500 rallied 3.6 percent, led by Pulte Group Inc. and Lennar Corp., and copper gained after sales of new U.S. homes increased 24 percent from May to an annual pace of 330,000, figures from the Commerce Department showed. The rate was the second-lowest in data going back to 1963 after May’s downwardly revised 267,000 pace.

The Dow Jones Transportation Average jumped 2.6 percent to the highest level since May 14 after FedEx said higher demand for international express shipments prompted it to raise its earnings forecast. FedEx rallied 5.6 percent in U.S. trading. UPS climbed 1.9 percent. The company said July 22 that the U.S. economy will continue to recover.

Mutual funds, pensions and endowments are spending more on stocks than at any time since the start of the bull market, just as individuals grow the most pessimistic in a year.

Institutions pushed equities up to 68 percent of their holdings in July, the highest level in 15 months, from 63 percent in April, a Citigroup Inc. survey showed. The ratio of bullish to bearish respondents in a survey by the American Association of Individual Investors has fallen to 0.68, the lowest level since July 2009, based on a four-week average.

Diverging Opinions

The last time money managers and individuals were this far apart was in March 2009, before the S&P 500 began its 63 percent rally, according to data compiled by Bloomberg.

European stocks climbed for a fifth day as stress-test results that showed the majority of the region’s banks are adequately capitalized pushed financial companies higher. The Stoxx Europe 600 Index rose 0.5 percent to 257.12, the highest level since June 21.

Allied Irish Banks Plc and Dexia SA rallied more than 5 percent, leading a gauge of banks higher. BP Plc gained 4.6 percent as two people familiar with the matter said the company plans to name Robert Dudley to replace Tony Hayward as chief executive officer. GlaxoSmithKline Plc lost 1.3 percent after a report that the U.K.’s largest drugmaker may be interested in buying Genzyme Corp.

Copper Stockpiles

Copper climbed to a 10-week high as shrinking inventories and rising home sales signaled improving demand. Stockpiles monitored by the London Metal Exchange have slumped 7.7 percent in July, the biggest monthly decline since June 2009. Copper for September delivery gained 1.2 percent, to $3.223 a pound. Earlier, the metal touched $3.238, the highest level for a most- active contract since May 13.

The dollar fell 0.7 percent to $1.2993 per euro. Sterling rose to a three-month high against the dollar after the U.K.’s major banks passed European Union stress tests. The dollar dropped for a third day against the euro on reduced demand for the currency as a refuge.

“Risk appetite appears to be returning,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage. “There’s definitely a welcome upside surprise to data.”

Corn fell to the lowest price in three weeks, soybeans dropped the most since June and wheat declined for a second session on signs that rain is reviving U.S. crops threatened by dry weather earlier this month.

To contact the reporters on this story: Stephanie Borise in New York at sborise1@bloomberg.net; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net.


Top of pagePrevious messageNext messageBottom of page Link to this message
cat_lady
Member
Username: cat_lady

Post Number: 716
Registered: 10-2006

Rating: N/A
Votes: 0


Tuesday, July 27, 2010 - 11:14 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



hi eugenio

GXY

standing slightly singed but smirking. bought some at 95 cents. sold at open today for 1.15. wish they woz all that easy.

cheers
cat lady


Without my morning coffee I might as well be a dog

Top of pagePrevious messageNext messageBottom of page Link to this message
billt
Member
Username: billt

Post Number: 28
Registered: 02-2010

Rating: N/A
Votes: 0


Tuesday, July 27, 2010 - 04:39 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



hi Ody

Not sure if you caught this piece in the Faifax papers today by Ambrose Evans-Pritchard (SMH 27 July)


"Ebay is offering a well-thumbed volume of "Dying of Money: Lessons of the Great German and American Inflations" at a starting bid of $699.

The crucial passage comes in Chapter 17 entitled "Velocity". Each big inflation — whether the early 1920s in Germany, or the Korean and Vietnam wars in the US — starts with a passive expansion of the quantity money. This sits inert for a surprisingly long time. Asset prices may go up, but latent price inflation is disguised. The effect is much like lighter fuel on a camp fire before the match is struck.

People’s willingness to hold money can change suddenly for a "psychological and spontaneous reason" , causing a spike in the velocity of money. It can occur at lightning speed, over a few weeks. The shift invariably catches economists by surprise. They wait too long to drain the excess money.

"Velocity took an almost right-angle turn upward in the summer of 1922," said Mr O Parsson. Reichsbank officials were baffled. They could not fathom why the German people had started to behave differently almost two years after the bank had already boosted the money supply. He contends that public patience snapped abruptly once people lost trust and began to "smell a government rat".

Some might smile at the Bank of England "surprise" at the recent jump in British inflation. Across the Atlantic, Fed critics say the rise in the US monetary base from $871bn to $2,024bn in just two years is an incendiary pyre that will ignite as soon as US money velocity returns to normal."

The full article ends with the question "will Central Banks go too far and risk losing control over their printing experiment as velocity takes off" !!

Ody - I know you were not there in 1922 but I welcome your considered thoughts on how this almighty printing experiment will end? How will the Americans pay the $100 trillion debt? Is Prechter's EW Count a reality?

Bill


Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5270
Registered: 10-2006

Rating: N/A
Votes: 0


Tuesday, July 27, 2010 - 07:33 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Bill, - Dangers of money supply

That is a fascinating post, Bill - and no, I had not seen the material, as I have been doing different things all day long. The amount of extra money the Americans have been printing is absolutely frightening, I do agree, and in essence it would indeed create a major problem if people started to behave in such a manner as to make that problem come true. (I know this is oddly put, but I think that this is how it is: a great deal depends of the psychology of the masses.)

What seems certain is that behaviour in handling this crisis (supposedly) has been highly irresponsible, and has set up a potentially very dangerous situation. One cannot rule out an absolute horror scenario. Currently my feeling remains that people are actually holding their money rather than spending it, and one hopes that their restraint will not lead to a complete distrust of what they are holding! But I'd have to agree that the situation is obviously quite unhealthy.

If one does NOT hold money, what does one do instead? Obviously, if the money is all ploughed into assets, and if new asset bubbles are thus created, those bubbles could become extremely explosive, so I doubt that there is any wisdom in holding assets that might become absurdly over-priced and then get sold off aggressively. And I don't think that ultimately gold would be a protection either.

But as for a solution? I wish I could say, but I don't have any ... Clearly, money printing should stop, and one would hope that nevertheless people will keep using it ...


Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5272
Registered: 10-2006

Rating: N/A
Votes: 0


Wednesday, July 28, 2010 - 01:04 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



EW, astrology, etc

[This post is double-posted: I wrote it for the Elliott Wave thread, but as I do not want to remove myself in any way from Our Daily Bread I thought it might be of interest here as well. Apologies to anyone who accidentally reads the same post twice. I do not intend to post on the EW thread with any frequency - I know too little about that approach for me to be able to practice it - but I do take account of it, as a "peruser".]

I cannot really keep up with all the posts here [on the EW thread, - Ody], I must admit, but I do glance through them. I would agree with you, Bill [who also posts on ODB, - Ody], that the "astrological" approach cannot readily be ignored for the reason that you mention. That is, I personally very much doubt that the stars or planets have a deep influence on human affairs or on how the share market behaves, and would need very potent observations (to use Starboard's appropriate language) to persuade me that they do. However: horoscopes and astrology are a preoccupation with a great many people, and it would be very odd if that preoccupation did not feed into their attitude to markets. Similarly, I am not really convinced that we feel in our blood/bones/guts/subconscious or whatever that a particularly Fibonacci number has been arrived at and that therefore we move - as in a dream - into a different direction on the share market.

What I can say with certainty, though, is that the market DOES act on Fibonacci numbers, and the reason for this happening, I believe, is nothing mysterious or to do with deepseated psychology, but market observers KNOWING that Fibonacci numbers represent potential turning points, so that the belief in the significance of such numbers turns into a tangible reality with great frequency. Even during the last year or so I have noticed that more and more analysts, and in many countries, mention Fibonacci numbers in this way and base forecasts on them. So, whatever one might think about the intrinsic importance of those numbers, it would be stupid to ignore them in a view of what is likely to happen. Prophecies can, and do, become self-fulfilling. That, to me, is the bottom-line.

I am even prepared to go further and to state that I think it is POSSIBLE that we are unconsciously guided by Fibonacci numbers, but whether we are or not pales into insignificance when we observe that markets clearly pay CONSCIOUS attention to them. I do not know enough about any correlation of markets with horoscopes and the movements of heavenly bodies, but it would seem to me a priori likely that there would certainly be people - possibly many - whose actions are influenced by such factors.

So, as starboard stresses, it would fundamentally be unscientific to close one's mind to matters: ultimately the evidence, one way or another, is what counts, and not what might be anyone's theory as to what is likely or unlikely.

I add to this, though, that none of these various approaches have to my mind - and in my observations since 1983 - a convincing track record of getting things right. As Rudy very commendably points out quite regularly, at many times more than one possible path lies before us: what any methodology can only do is to try to map out the various possibilities in a way that is truly helpful to know about. No forecaster, however, can tell the future with absolute conviction, and the trouble with people like Prechter seems to me that he is far too confident about his own readings as the only correct ones. Hence he is at times very right, and at others very wrong. With Rudy this problem does not arise, as he is far more willing to consider various alternatives. To my mind that is a very justifiable endeavour, and so long as e.g. astrologists have the same openmindedness, I have no desire whatever to discourage them.

As I still regard Our Daily Bread as the thread to which I am "bound", I shall double-post this statement there. I hope this won't be minded.


Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5273
Registered: 10-2006

Rating: N/A
Votes: 0


Wednesday, July 28, 2010 - 01:19 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



A fundamental overview by Greg Peel of FnArena

As share markets are difficult to read at the moment, and economies hardly less so, anything may be worth knowing. Peel in his survey today started with some T/A considerations which I did not think helped me much, so I paste in below his comments on fundamental events which to my mind do need to be paid attention to:
---------------
Back in the real world, last night saw a very positive earnings report from chemical producer DuPont (Dow) which featured both Street-beating numbers and upgraded guidance. This has been the trend for the past few days of the earnings season, but then along came US Steel (Dow).

US Steel doubled its revenue in the second quarter but still managed to make a loss given high iron ore and coal prices (damn that BHP) and an unfavourable currency along with weaker steel prices. Management forecast an uncertain third quarter before an expectation of some improvement in the fourth. Shares in US Steel fell 6.5%, offsetting DuPont's 4% gain.

Offshore companies also had mixed results. BP made a substantial loss, although no one was surprised. But if European commercial banks are struggling at present, and requiring stress tests, clearly European investment banks are in better shape. After solid results, Germany's Deutsche Bank rose 3% while Switzerland's UBS rose a whopping 9%.

On the US economic data front, there was good news from Messrs Case and Shiller. Their 20-city house price index rose 1.3% in May on a month-on-month and seasonally adjusted basis despite May being the month new home sales numbers fell 36%. The twelve month gain in the Case-Shiller is now 4.6%.

But the Richmond Fed announced its manufacturing index fell to 16 in July from 23 in June (zero neutral) while the Conference Board announced consumer confidence fell to 50.4 in July against an expectation of 51, and down from 54.3 in June. This is not a 50-neutral index and the best way to gauge it is to note that the period 2004-07 averaged a reading of 98.

The result for the Richmond manufacturing index corroborated the trend in July which has seen all of the New York, Philadelphia, Chicago and Dallas Fed districts note a slowing in activity – not a contraction, just weaker expansion. On Monday night the US national manufacturing PMI will be released and if it is decidedly weak, it could be the data point that determines the 200-day MA of the S&P is again too hard a wall to penetrate. On the Friday night prior, we will learn the first estimate of second quarter GDP. Expectations sit around 2.5% growth, so any variation could well be a trigger either way (even though the first estimate is usually wildly inaccurate).

In the meantime, Wall Street sat balanced in space last night given the various pros and cons noted above.

There were some interesting moves last night, however, elsewhere in the markets. I have been noting recently that for stocks to rally investors have to move out of the safe havens of US Treasuries and gold and back into risk assets. I have also noted that it's this time of the year gold will usually consolidate at a lower level.

Last night the US Treasury's auction of US$38bn of two-year notes saw muted demand at record low yields. The Treasury is gradually winding down its bond sales from huge levels over the past couple of years to fund fiscal incentives but lower supply did not translate into higher demand. The benchmark ten-year yield rose five basis points to 3.05%.

There was little movement in currencies last night. The US dollar index was steady at 82.16 and the Aussie ditto at US$0.9025. But gold fell US$20.50 to US$1161.60/oz. Silver topped gold's 1.7% fall by falling 3%.

Technical players were once again in the frame, with a fall through US$1175 triggering a fresh wave. We can bring up 200-day MAs again and note gold's is at US$1144, but I would not be surprised if we saw gold take a good look at the old high of US$1030 before the Asian buying seasons begin in September.

That's on the assumption we have no more major scares between now and then. Gold would also be supported were the Obama Administration to decide to renew fiscal stimulus in light of a now stumbling economy, perhaps by reinstating tax credits for new home buyers or even extending the expiry of the Bush income tax cuts.

Base metals did little more than take a breather last night, with the biggest falls being lead and zinc at 2%. Oil dropped US$1.48 to US$77.50/bbl with the consumer confidence release a major driver. Oil has again showed that its wall of resistance is the US$80 mark.

The SPI Overnight was a bit more positive after a couple of lacklustre days in the physical market. It rose 19 points or 0.4%.

Tonight in the US sees durable goods orders for June, while earnings highlights include Boeing (Dow), Comcast, ConocoPhillips, Newmont and Visa.


Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5274
Registered: 10-2006

Rating: N/A
Votes: 0


Thursday, July 29, 2010 - 12:10 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Further signs of the US "recovery" (stimulus induced, remember?) faltering ...

The trouble with the global economy is particularly its lack of true clarity, and especially the problem of an absence of consistent news. It does seem clear, though, that even when the odd piece of good news comes through it usually isn't long before something negative follows to warn us. And there does seem, in general, a tendency towards a slowing down and a reluctance to spend. This must be carefully observed as a general economic phenomenon, even if share market players show less aversion to risk. So long as the economic news does not show credible improvement, but rather the opposite, markets will be held back.
------------------------------------------------------

US durable goods orders fall

Published 11:25 PM, 28 Jul 2010 Last update 11:25 PM, 28 Jul 2010

Reuters

WASHINGTON - New orders for long-lasting US manufactured goods unexpectedly fell for a second straight month in June, posting their largest decline since August, further evidence economic growth cooled in the second quarter.

The Commerce Department said on Wednesday durable goods orders fell 1.0 per cent after a revised 0.8 per cent drop in May.

Analysts polled by Reuters had forecast orders increasing 1.0 per cent in June from May's previously reported 0.6 per cent fall.

"The number was weaker than expected and it could add to the idea that the economy is slipping into a double dip recession," Robert W. Baird & Co. chief investment strategist Bruce Bittles said

US stock index futures turned negative on the data, while Treasury debt prices rose. The US dollar extended losses versus the yen.

Data ranging from consumer spending to manufacturing have suggested the recovery from the longest and deepest recession since the 1930s took a step back in the past few months.

The government is expected to report on Friday that growth slowed to a 2.5 per cent annual rate in the April-June period from a 2.7 per cent pace in the first three months of the year, according to a Reuters survey.

Durable goods orders had been expected to rise based on the fact that Boeing Co received 49 orders for civilian aircraft in June compared to only five in May.

But non-defense aircraft orders tumbled 25.6 per cent in June after falling 30.2 per cent the prior month. Overall orders were also pulled down by bookings for computers and electronic products, which saw their largest decline since October.

Orders for machinery recorded their biggest decline in 14 months, while those for primary metals fell by the most since March 2009.

Durable goods orders are a leading indicator of manufacturing, which in turn provides a good measure for overall business health.

Manufacturing is leading the economy's recovery from the most brutal downturn since the 1930s as businesses replenish inventories drawn down to record lows during the recession, but has shown some signs of exhaustion in recent months.

New durable goods orders excluding transportation fell 0.6 per cent last month after increasing 1.2 per cent in May. Analysts polled by Reuters had forecast new orders excluding transportation gaining 0.3 per cent from a previously reported 1.6 per cent increase.

In a positive sign, non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 0.6 per cent in June after increasing an upwardly revised 4.6 per cent the previous month. Markets had expected a flat reading.

Durable goods inventories rose 0.9 per cent, increasing for the sixth straight month. Shipments, which go into the calculation of gross domestic product, fell 0.3 per cent in June after sliding 0.7 per cent in May.

Unfilled orders were flat after increasing 0.3 per cent in May.

Separately, demand for loans to buy homes rose for the second straight week to the highest level since the end of June, but hovered just above 13-year lows, the Mortgage Bankers Association said.

Home purchase loan demand increased 2.0 per cent last week, but rising mortgage rates saw applications for refinancing falling 5.9 per cent.


Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5275
Registered: 10-2006

Rating: N/A
Votes: 0


Thursday, July 29, 2010 - 02:38 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Australian investors turning bearish

LATE ADDITION: to the extent that the market yesterday suddenly turned upwards (and is echoing that tendency today), the rise is of course due to the feeling that interest rates will not be taken up on Tuesday. That view may well be correct, but there is still an argument for a rise in September, and the banks are keen to keep rates high simply because they must attract depositors and because overseas the cost of money remains high. So I set little story by a "low interst rate" rally.

[Written earlier ....] The following is a very informative article by Adele Ferguson (to my mind one of the country's best financial journalists) from the SMH.

I find the piece extremely important because it is based on what investors actually think, so that we get far more direct information than we usually do from the conjectures of fund managers etc who say what THEY think investors will do, and who are usually inclined to be as bullish as possible in what they say as, of course, they want investors to buy shares. Most investors tend to go long, so hence positive predictions are favoured by the financial industry. It is not only often deceitful, but its forced optimism is virtually second nature.

To my mind the behaviour of the share market over several months, combined with observable sentiment and many bad tidings, does not at all support the optimism of bullish commentators, and this survey of investor attitudes confirms what I have been expecting and deducing from what I have seen, viz. that there is a marked lack of investor confidence in this country at present. The huge outflow of funds abroad a few months ago (and not yet coming back), and the huge amount Australians have ploughed into cash, deposits, hybrids, etc, also look like confirmation of lack of share market enthusiasm in Australia.

It does not really matter whether Australians are "right" or "wrong" in their assessment: to any investor who is a would-be seller, as I think any sensible investor should be, a question must always be whether there would be ready purchasers for what one would buy. At current the answer to that question is at least doubtful.

Assuming there will not suddenly be a marked turnaround, what sort of thing might we expect??

To my mind it is possible that the market will actually continue to rise a little, up to around 4600, where its previous critical turning point (downwards) was. I very much doubt that if it goes beyond 4600 it will be set for a significant rise such as e.g. 5000, or at least in the shorter term: people would really need to get far more confident to go for 5000, and for that they would need a considerable amount of time, unless some dramatically good news made them change their outlook entirely.

I think, as well, that even 4600 (+) is by no means a guaranteed level in the short term. To my mind 4500 is an extremely strong point of resistance, to which the market would quickly return if it started to worry at all above that level. So although it is certainly possible we'll see 4600 or more for some time (notably if Gillard loses), it still remains the case that sentiment does not seem to favour any marked rise at all, and I think that even the pattern of which we have seen so much, of frequent rises following frequent falls, will on the whole favour the falls more than the rises.

I am still not quite in the same camp as those who see a truly HUGE fall as imminent, although I could see the justification for one. The world is living very dangerously, so some trigger or other could readily send us (say) 20-30% down. But, while I do believe we shall see more of a decline, or at best sideways trading, I think we'd need somewhat more evidence of yet worse economic conditions than those known or suspected, or a yet more negative investor attitude, before a big rout would really be "on". There ARE, after all, also a number of positive developments, though it is difficult to know what they are truly "worth" in an environment where in most countries low interest rates, and in very many large stimulus packages, still cloud the issues.
------------------------------------------------------
Investors see a glass almost completely empty
July 29, 2010

(Adele Ferguson, SMH)

IF THE earnings season got off to a rocky start with 50 per cent profit downgrades from the insurance companies QBE and IAG, as well as disappointing quarterly sales figures from Harvey Norman and Woolworths, then the true test lies ahead.

According to the latest Investor Pulse, a joint venture between the market research group Colmar Brunton and BusinessDay, in a survey drawn from 2000 investors, expectations are highest for the mining, banking and energy sectors.

When asked to rank which sectors are likely to post the best performance, mining came first with 52 per cent of those investors surveyed. A distant second was financial companies with 18 per cent, and energy was further back on 13 per cent. The so-called defensive sector, including consumer staples, health and telecommunications, have failed to win the confidence of investors, with few expecting a good result.

Put simply, Australian investors are expecting two-speed profits. But overall, investor sentiment entering profit season is bearish, with 57 per cent expecting earnings to generally disappoint this profit season and a significant majority of 53 per cent expecting dividends to be cut. This sentiment would not have been helped by IAG's decision to cut dividends in half, as well as the building materials group Alesco, which announced yesterday it had cut its full-year dividend after a $124.3 million full-year loss, compared with a $12.8 million loss the previous year.

Looking forward, investor sentiment is similarly cautious about where the overall market is headed. Fifty-five per cent expect the market to be at the same level in six months. And the 17 per cent expecting the overall market value to rise by 5 per cent or more are more than cancelled out by the 18 per cent expecting a fall of 5 per cent or more.

What is suppressing investors' animal spirits? When asked for the the most significant influences over the sharemarket for the next six months, investors displayed an usually high anxiety about the global economy: 37 per cent ranked the unknown pace of the Chinese slowdown just ahead of 36 per cent who worried that the US could head into a double-dip recession.

Either Australian investors are overly pessimistic (and if the global economy stabilises we will witness a big bounce on stock values), or they are being realistic about the risks facing global growth.

In terms of the expectations for specific stocks in the latest profit season, there are three clear winners. Expectations are highest for BHP, with 21 per cent of investors looking to the big Australian for the highest profit growth. Seventeen per cent elected Rio Tinto and 16 per cent the Commonwealth Bank.

Wesfarmers continues its rise in investor sentiment, pipping rival Woolworths for sixth place, and Origin outperformed Woodside.

For the overall market, 62 per cent of investors expect earnings per share growth of 5 per cent or less. Only 11 per cent expect EPS growth above 5 per cent. There is also very little faith in any expansion in the market's overall price/earnings multiple. Brokers estimate that the market is trading on a multiple of 11 times forward earnings versus a historic average of 14. Yet 41 per cent of investors expect the multiple to remain where it is or to fall as low as nine. Only 12 per cent are bullish enough to estimate expansion.

It is easy to see the source of this dour sentiment. Seventy-one per cent of investors see the recovery in the Australian economy slowing. Moreover, when asked to define the key themes for the coming profit season, by far the strongest response went to reduced debt at 36 per cent. The next highest, at 20 per cent, was cost-cutting, which predominated over revenue increases at only 12 per cent of investors.

These themes are not typical of a post-recession recovery in which pent-up demand is unleashed upon a corporate sector made lean by cost-cutting in the downturn. Rather, they look similar to the stagnation afflicting other Western nations. Despite official rhetoric that the Australian economy was exceptional after the global financial crisis, investors expect much the same outcome: low economic and profit growth.

(Message edited by ody on July 29, 2010)


Top of pagePrevious messageNext messageBottom of page Link to this message
starboard_tack
Member
Username: starboard_tack

Post Number: 397
Registered: 04-2003

Rating: N/A
Votes: 0


Friday, July 30, 2010 - 10:46 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Bill and Ody,

Bill's post on velocity of money has sent me searching for more information to help me understand. I came across the following site by John Maudlin:
http://www.safehaven.com/article/10084/the-velocity-of-money

Here is an excerpt:
"Now, let's introduce the concept of velocity of money. Basically, this is speaking of the average frequency with which a unit of money is spent. Let's assume a very small economy of just you and me, which has a money supply of $100. I have the $100 and spend it to buy $100 of flowers from you. You in turn spend $100 to buy books from me. We have created $200 of our "gross domestic product" from a money supply of just $100. If we do that transaction every month, we would have $2400 of "GDP" from our $100 monetary base.

So, what that means is that gross domestic product is a function of not just the money supply but how fast the money supply moves through the economy. Stated as an equation, it is P=MV, where P is the Nominal Gross Domestic Product (not inflation adjusted here), M is the money supply and V is the velocity of money. You can solve for V by dividing P by M.

Now, let's complicate our illustration just a bit, but not too much at first. This is very basic, and for those of you who will complain that I am being too simple, wait a few pages, please. Let's assume an island economy with ten businesses and a money supply of $1,000,000. If each business does approximately $100,000 of business a quarter, then the Gross Domestic Product for the island would be $4,000,000 (4 times the $1,000,000 quarterly production). The velocity of money in that economy is 4.

But what if our businesses got more productive? We introduce all sorts of interesting financial instruments, banking, new production capacity, computers, etc., and now everyone is doing $100,000 per month. Now our GDP is $12,000,000 and the velocity of money is 12. But we have not increased the money supply. Again, we assume that all businesses are static. They buy and sell the same amount every month. There are no winners and losers as of yet.

Now let's complicate matters. Two of the kids of the owners of the businesses decide to go into business for themselves. Having learned from their parents, they immediately become successful and start doing $100,000 a month themselves. GDP potentially goes to $14,000,000. In order for everyone to stay at the same level of gross income, the velocity of money must increase to 14.

Now, this is important. If the velocity of money does not increase, that means that (in our simple island world) on average each business is now going to buy and sell less each month. Remember, nominal GDP is money supply times velocity. If velocity does not increase, GDP will stay the same. The average business (there are now 12) goes from doing $1,200,000 a year down to $1,000,000.

Each business now is doing around $80,000 per month. Overall production is the same, but divided up among more businesses. For each of the businesses, it feels like a recession. They have fewer dollars so they buy less and prices fall. So, in that world, the local central bank recognizes that the money supply needs to grow at some rate in order to make the demand for money "neutral."


From these simple examples it is obvious to me that the velocity is important. I, for one, have reduced the velocity of our personal money flow a little. What if we all did by a lot? Of interest to me was that the GDP would reduce if we all did, assuming that no other change (like increasing money supply) occurred.

The next thought that occurred to me was that, with all the convoluted financial instruments from our credit bubble, the GDP increased radically. Now, when we hear that the US debt is heading towards 100% of GDP (93% as at 28th July), it really gets frightening. Looking at Maudlin's first simple example, it would be equivalent to debt of $2400 with a monetary base of just $100!

I would like to take these ideas further, but alas have run out of time for a while.

Regards,
Starb'd


"The pessimist complains about the wind;
The optimist expects it to change;
The realist adjusts the sails."

Top of pagePrevious messageNext messageBottom of page Link to this message
jaded
Member
Username: jaded

Post Number: 258
Registered: 03-2010

Rating: N/A
Votes: 0


Friday, July 30, 2010 - 10:58 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



bridog-get any AQR?or did the stars get in ya eyes?

Seems there was a leak yesterday bringing a Trading Halt this morning.Talk of a "Material Capital Raising" that may be a Joint Venture with some Major[not a piddling Placement to Sophisticated Investors]

Copper seems to be in 'fashion' so it may be true.Remember AQR also resulted high levels of Molydendium,too.
Eagerly Sought Moly for High/Top Grade Steel Making as in for Infrastructure.Copper is for Power Lines of course just like what the Chinese and Indians will use for Expanding their Grid.

but am I suppose to get Star Gazing Guidance or a Wave Count before I commit more?

Ody,we have a Starry Member who posts here for years.He doesn't divine on the Indexes but on Penny Shares.

His star picks have won our weekly comp many times and his predictions are often True and Correct.

However,I see some 'tricks' in his Act.
a]he makes multi predictions in many shares and then pulls up the 'winners' on his time predictions.

b]The Predictions run-on this date this astrological phenomnae is 'ordained' as a maybe good/bad/indifferent effect on the share. and he strings out dates for say over 3 months.
"Trick" is,Ody that he is often 'predicting' on highly volatile shares such as Oil Explorers.
These are known to give Upgrades/Announcements sometimes 3 times a week on all aspects of their hole drilling.

Do you follow that such a class of share gives multi dates and multi result levels so as to gell with a Star Prediction?

anyway,I'm an Aquarian.Not like all the Not[Aquarians]'desperate' for outsider guidance.
How does it Work?is my quest.

Got any experience,Ody in Joint Venture Minor with Major shares?

regards


" Hear what you Say...
But see what you Do!"

Sir Zelman Cowen c 1970.

Top of pagePrevious messageNext messageBottom of page Link to this message
breaker_1
Member
Username: breaker_1

Post Number: 233
Registered: 10-2009

Rating: N/A
Votes: 0


Friday, July 30, 2010 - 01:04 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Jaded,

Got some 27/7 at 48c


When one door closes another door opens; but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.

Alexander Graham Bell





Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5276
Registered: 10-2006

Rating: N/A
Votes: 0


Friday, July 30, 2010 - 03:17 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Several enjoyable posts here!

Thanks, guys, as a reader: I am happy to receive what you give, even though I haven't much of my own to offer. jaded, I was very much fascinated and intrigued by your account of "investing (not dancing) with the stars" on the part of that investor. Rest assured I do follow your reasoning, and am not surprised by what happens.

What follows will be boring to share market investors in that it excludes investment in shares proper, but it does describe an alternative way of handling money so that it is (reasonably) protected and will still make money for one. This applies particularly to super funds - but with modifications it is not irrelevant to capital-management generally. I add that currently I have no faith in property investment either, including property trusts. As for residential: the signs are that that asset class is now indeed beginning to suffer, and I'd predict prices will more often fall than rise, or at least will stabilise rather than go up.

I've been looking as to whether I should pick any shares or any funds, listed or unlisted, but have decided against that step because I feel safer with what I have right now, "boring" though that is.

Actually it is not altogether boring for people interested in finance rather than just shares. There is a degree of fascination in deciding which deposits to have, when to buy them, and how long to keep them for. However, I have decided to keep about 11% in cash at call (yielding 4.5%), and in addition 25% in interest rate securities, which are very strong yielders and to an extent can also secure a capital gain (which in general they actually already have done), while the remaining 64% is in high-quality deposits, with the highest proportion attracting 8% for 5 years, but others terminating at a range of dates well before then. The interest rate securities as a group return a yield of 8.5-9% (for a retiree not paying tax and receiving grossed up dividends) and their face value is usually not at real risk, but they can temporarily lose ground on the market. The deposits produce a yield, as a group, of well over 7%. It would be reasonable to say that the amount outside the 11% at call will return a yield of close to 8%, all in all, as things stand. It could even be more than 8%, by a little, and it is very unlikely to be more than a tiny percentage below it. For what I firmly believe to be a very dangerous economic and financial climate, this would be to my mind - and I believe would prove to most people - a very good return. And I am conservative NOW: when I think upside is better, I shall certainly use it.

(I add, though, that regular returns of some 20-30% per year such as could easily be obtained during the 2003-2007 period will probably not be obtainable - certainly not for so long a stretch - until matters change drastically. And such profits may well become extremely rare, as unrestricted asset bubbles will be harder to achieve.)

Should I be able to keep my situation constant, my wife and I would be exceedingly comfortable, and grow richer every year, even including current inflation and expenses. Of course, even with this ultra-conservative set-up there are no guarantees. The Australian dollar could well fall in value, and I have not protected myself against that event, or sought to exploit that potential weakness. That's a very real drawback of the whole arrangement. Issuers of the interest rate securities or deposits that we have could default, though that is unlikely, and there is a measure of protection in all cases. The most likely (temporary) decline would be in the market value of interest rate securities, but they can also go up further (some are below their face value), and the issuers are such that the face value is not ultimately under serious threat. Indeed, in the case of banks it is quite possible that they would in some cases offer one a "step-up", i.e. a higher rate of return at maturity.

Have I locked myself out of the share market(s) should it/they go up? Not really. I can certainly use some of that 11% cash without getting into any difficulty. Also, I can sell interest rate securities on market. So, even in the unlikely event of my wanting a slice of the action pretty quickly I can certainly obtain it. I cannot do it for all of our capital at once, but the earliest deposit to mature will do so in January, and I doubt that I'd want to move into the market in a big way any time before then. Indeed, I should be amazed if I were to desire truly significant entry before that time. For that matter, I don't think I shall soon once again expose almost all of our capital to the share market the way I did during much of the bull market of 2003-7.

This is just ONE way of managing a significant amount of money at this time, and I know it works: I do know, from experience, what I am doing, and unless the whole global system goes completely belly-up I shall be among the best-protected. Others would no doubt have a significant portion in gold: I continue to feel that for the time being (as I correctly explained some time ago) gold is not likely to be particularly fashionable. Moreover, I like access to yield big-time at the present, as my call is that it will for several months be yield which investors will seek, not assets, as those, in a faltering world economy, will be at risk of deflation. But as I say, my position is flexible enough for me to be able to change my allocation fairly quickly at a to me substantial enough rate.

By way of warning to the ultra-cautious: interest rate securities are much harder to deal with than deposits, and require considerable thought and experience. I have been very successful with them because I know how they work, but some get quite confused by them, so it is highly important to do your homework. If you do, you will find them very useful.


Top of pagePrevious messageNext messageBottom of page Link to this message
cat_lady
Member
Username: cat_lady

Post Number: 717
Registered: 10-2006

Rating: N/A
Votes: 0


Friday, July 30, 2010 - 03:44 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



hi ody

interest rate securities

i know you posted quite a bit on this a few months ago, but I can't find it anywhere. like you, I've got a bit of cash on long term term deposits, and at call accounts, but am looking to make it work a bit harder and have started to investigate interest rate securities. I've dipped my toes, so to speak, into AAZPB at $82.50. any others worth a look?

cheers
cat lady


Without my morning coffee I might as well be a dog

Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5277
Registered: 10-2006

Rating: N/A
Votes: 0


Friday, July 30, 2010 - 07:35 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



cat lady: interest rate securities

That's interesting. I recently also bought AAZPB (Australand Assets Trust). I remember your dad being a fan of Australand, and I have had it several times in past years. it is essentially a sound company and a survivor, though it has had its difficulties: but of late it has improved quite a bit, with gearing now not exceeding 20%, and the emphasis greatly placed on yield return rather than expensive/risky building, leave alone financial engineering. Stock Doctor rates its health currently as "strong".

You will note that I place stress on the issuer first of all. The main thing to watch for, obviously, is not to get stuck with an issuer that might face collapse, as, although a note holder will generally receive more favourable treatment than all shareholders, one's money is not guaranteed, and not at all at the same level of safety as a deposit. Also, as you know, the price can fluctuate like a share, and will also often do so if the price of the issuer goes up, or - especially - down.

The yield is made up of 4.8% paid by Australand itself as a bonus, additional to the yield which you get from the 90-day bank bill rate, and the distribution is payable quarterly. The price which you paid is a very good one, as the face value is $100: so you have started with a very low price which very likely will creep up over time. The current yield you will get, on your price, will be well over 10% - but unfranked. A drawback is that there is no specific maturity date set: you can only exchange at a date of Australand's choice. But, of course, you can sell on market as well. I found the strong points more important than the reservations one might have, including the fact that Australand has no credit rating. (Bank notes, for example, are regularly rated A, which means that they can be bought by institutions, but also with a sense of safety by others.)

What you buy additionally will depend significantly on your personal taste/choice. If, like myself, you think that Macquarie will not collapse and will pay its lenders, then MQCPA provides a yield-to-exchange (maturity is June 2013) of just over 9% unfranked at present, but the price exceeds the face value of $101.01, currently being at $107.50. So you start by paying something that the company would not actually pay you in exchange. It seems, however, that people are prepared to pay these prices in the hope of a "step-up" (a higher rate if they stay with the note) and like the high yield as one that is "set".

In this respect it is important to realise that some yields are fixed - as is this one - while others will go up and down with interest rates in step. Where the rate is fixed, very high interest rates would undermine it: at this moment Macquarie pays very well, but if the RBA pushes rates up that would change, and the price of the note might fall.

To counteract that, a person who believes that interest rates will go up and who wants to take ADVANTAGE of that is best off with a proper floating rate security which pays a yield that is composed of a floating rate (i.e. one moving up and down with interest rates), and preferably a franked one as well.

A good example is provided by the various PERLS of CBA. I bought the most recent one, PERLS V (CBAPA), when that was issued, at the face value of $200. It has gone up to $207.50 currently. But it also does pay very well. You get the 90 day bank bill rate plus 3.40% from the CBA. And the note is franked. If the high price is an objection, you could think of buying the earlier issue PERLS III (PCAPA), which pays no more than 1.05% above the 90 day bill rate (and includes franking), and which is trading at a much lower price - about 10% below the face value. The advantage is that you don't overpay; rising interest rates would again work to your benefit; and the note is sure to rise back to the issue price. Moreover, there is likely to be a step-up margin (so a higher return) if the note is not exchanged for money or shares at maturity.

In general, the return is quite a bit more than you get on a deposit, but the risk is also greater. On the other hand, in a case like PCAPA you will very likely get a capital gain on your purchase, as well as a good yield en route. And the risk would be, I believe, virtually nil.

MORE LATER - AM CALLED TO DINNER.


Top of pagePrevious messageNext messageBottom of page Link to this message
billt
Member
Username: billt

Post Number: 35
Registered: 02-2010

Rating: N/A
Votes: 0


Friday, July 30, 2010 - 09:41 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Thanks starboard tack for your post 397...

I am not sure how much more reality I can take!

Perhaps you just buy a bigger yacht to sail away to the exotic island destination. Check out this one released today:

www.sense.beneteau.com

bill







Top of pagePrevious messageNext messageBottom of page Link to this message
ody
Member
Username: ody

Post Number: 5278
Registered: 10-2006

Rating: 
Votes: 1


Friday, July 30, 2010 - 11:47 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Cat lady: interest rate securities (contd)

In making a case for the purchase of PCAPA (as one of more notes that I find attractive) I am guided by the following considerations.

1. The issuer - CBA - is officially first-rate, with a credit rating from Moody's of AA. This will always be a great help to the note as well.

2. The price is at present $179 versus the face value (the amount the bank should - in some form - pay at maturity, i.e. April 2016) of $200. This is a significant gap. The note is trading more than 10% below its supposed "real" value, and it is extremely likely that (a) CBA will regularly pay the yield, and (b) upon maturity will at the least pay the face value, or the equivalent in shares, or - most probably, perhaps (see below!) - provide a "step-up", i.e. allow you to go on keeping the note while you get a better yield from CBA.

3. But, you may ask, what reason is there for believing that the price actually WILL go up? The most important factors are those that I have mentioned, but I also point out the following:

(a) during the last month, the price has gone up from $163 to $179 - a very considerable rise.

(b) on 18 June 2009 I bought CBAPB, i.e. PERLS IV, at what was then $184.89. My only regret is that I did not do it sooner: for the price has moved up to $193.70. Admittedly the maturity date is much sooner (not 2016 but 2012), but you can see that the price of these notes from a first-rate issuer, if well below the face value, does go up. And the argument has the more strength in that PERLS III and PERLS IV are actually similarly structured: both are franked, and pay no more than 1.05% above the 90 day bill rate. A difference is that PCAPA is not necessarily guaranteed an exchange at the reset date (2016), but it is also stated - very reassuringly - that IF IT IS NOT EXCHANGED A STEP-UP MARGIN OF 1% IS APPLIED. (I.e., your yield would go up from, say, 7% to 8%.)

--

I should point out that in all this it is important to have some view of interest rates. If we put the "normal" rate of MQCPA, which has a FIXED ("guaranteed) yield, at 10% (as I think it was set at inception, but I bought at a lower price), then - ignoring the current price - someone who bought in at the beginning would get that price throughout, and so long as Macquarie can pay the yield, on the original price, that is what one is going to get. However, if interest rates go up sharply and deposits yielding 10% a year were available (for instance), very probably the price of MQCPA would decline, for why would one not go for the safety of the deposit?? It is not the yield per se which would be affected, but the price of the units (i.e. of the note).

The so-called "hybrids", such as the PERLS, are quite different. One is not paid a FIXED amount, but a FLOATING one of X + Y, where X is the "known" quantity of - for PERLS III and IV - 1.05%, while Y will be whatever the 90 day bank bill is.

Say that the 90 day bank bill rate is 5% (I take this out of the air). If investors think that interest rates will go up over, say, a year, to 6.5% from the 5% mentioned, obviously they will be interested in buying while the bank bill rate is 5%, and this influences the price of the note. If they think that interest rates will FALL, that also influences their view. Fluctuations in investor feeling on this basis are regularly in tune with the way the prices for the notes move.

Of course there are other factors as well that impact on the price of the note: the view taken of the issuer and the share market; the measure of interest that people have in yields rather than capital gains; the inherent structure of the note (notably how much is contributed in addition to the bank bill amount); and - quite crucially - what is likely to happen to the note eventually (whether it will be swapped for money, or shares, or whether one will be offered a "step-up"). If there is no solidity of any kind about the return at maturity, the notes tend to be less popular - thus a "perpetual" note makes investors feel less secure than one where the company itself is likely to produce a firm result at some pre-set point.

One enormously important factor in favour of hybrids (with a FLOATING rate tied to interest rates), which are now the most fashionable buy as against bond-type buys such as MQCPA (with a FIXED rate), is that hybrids are usually franked. AAZPB, which you have just bought, is an exception, but that matters little so long as interest rates don't go up TOO much.

Thus, on 1 July Australand's AAZPB cost $82.96, and had a running yield of 11.78% and the pre-tax yield was therefore also 11.78%. I.e., someone buying at this price in a tax-free environment could expect a full tax-free yield of 11.78%.

Let us however by contrast consider PERLS V. The price of that on 1 July was a high $207. As a result, the running yield was "merely" 5.86%. But, due to franking, the pre-tax yield was a much higher 8.09% for someone not paying tax. That is one reason why for myself even at $207.50 (the price today, Friday) the note remains attractive, as I pay no tax at all, yet would, if I bought at $207.50, get near enough 8%. In fact, as I bought for $200, I am, of course, getting a good deal MORE. And the payments are quarterly - no long waits as with deposits.

I feel strongly, myself, that, as with other things in life, one wants/needs some diversification to spread the risk. All in all, as I have placed 25% of our capital in interest rate securities, I am using nine different notes, though two of these come from CBA - so I am using only eight different issuers. Not only are the issuers different, but the notes are not all identical in nature either. For two of them the yields are FIXED. The others are all FLOATING, as I think that over time interest rates are more likely to go up, in this climate, than down. Two of these floating notes are NOT FRANKED, but both pay a high yield anyway (as well as benefiting from rising interest rates if those go up).

As circumstances change, I may of course also - and probably would - change these holdings. But on the whole I have found them quite a satisfactory group of investments to have, in addition to the very large amount we have in good deposits (more secure, but with a lower total yield, and no room for capital gain).

A number of issuers should, I feel, be avoided unless you mean to trade very actively. The only unrated issuer I have is Australand. Most of the money in these notes we have placed with AA rated issuers, but we also do have some in issuers ranked lower, though not lower than BBB+.

I do not imply that every unrated company should ncecessarily be seen as a no-no. For example, I regard Ramsay as a sound company, though I have not looked at their notes or even the company, with enough care to feel I can really make careful judgement right now. But on the lists one finds a number of names that truly repel me, such as Elders, Gunns, Multiplex, and Paperlinx. I hope I am not just sounding prejudiced. But it is to be remembered that hybrids DO carry risks, and that the quality of the issuer IS important.

Monitoring, in any case, is as always much wiser than not being vigilant.

 
Other Threads  
Last PosterPostsPagesLast Post
Our Daily Bread » Archive through December 05, 2010ody50 05-Dec-10  01:04 pm
Our Daily Bread » Archive through October 30, 2010baysider50 30-Oct-10  01:07 pm
Our Daily Bread » Archive through October 22, 2010ody50 22-Oct-10  11:23 am
Our Daily Bread » Archive through October 09, 2010ody50 09-Oct-10  12:23 pm
Our Daily Bread » Archive through September 30, 2010bridog50 30-Sep-10  02:08 pm
Our Daily Bread » Archive through September 24, 2010billt50 24-Sep-10  06:25 pm
Our Daily Bread » Archive through September 17, 2010ehmu50 17-Sep-10  12:20 pm
Our Daily Bread » Archive through September 13, 2010paint50 13-Sep-10  03:52 pm
Our Daily Bread » Archive through September 07, 2010p3t350 07-Sep-10  07:38 pm
Our Daily Bread » Archive through August 27, 2010ody50 27-Aug-10  07:18 pm
Our Daily Bread » Archive through August 20, 2010ody50 20-Aug-10  12:56 pm
Our Daily Bread » Archive through August 13, 2010ody50 13-Aug-10  01:34 pm
Our Daily Bread » Archive through August 09, 2010billt50 09-Aug-10  05:47 pm
Our Daily Bread » Archive through July 18, 2010rdumas50 18-Jul-10  03:30 pm

Threads by Last Post Time:

First Previous 8 9 0 1 2 3 4 5 6 7 8 9 00 01 Next Last

Administration Administration   Log Out Log Out    

««  «  Previous  Next  »  »»