# Let the bargain hunting begin



## ROE (8 October 2014)

http://www.theage.com.au/business/m...ive-investors-dump-stocks-20141008-3hi2s.html


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## crypto (8 October 2014)

My ASX game is looking pretty ordinary today


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## Wysiwyg (8 October 2014)

> In a note to clients the analysts flag that the Aussie sharemarket looks “relatively” oversold after plunging more than 6 per cent since its recent high (probably a bit more now), *while global shares have dropped only 3 per cent lower over the period*.




DAX = about 10% fall
FTSE = about 7.5% fall
ASX200 = about 9.3% fall
S&P500 = about 5% fall


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## KnowThePast (8 October 2014)

I've certainly increased my buying activity this month, and will continue to do so if prices keep coming down.


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## DeepState (8 October 2014)

KnowThePast said:


> I've certainly increased my buying activity this month, and will continue to do so if prices keep coming down.




Are there a set of characteristics that you are focussing on KTP?  Or are you acquiring across the board (ie. to your existing portfolio in proportion)?


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## KnowThePast (8 October 2014)

DeepState said:


> Are there a set of characteristics that you are focussing on KTP?  Or are you acquiring across the board (ie. to your existing portfolio in proportion)?





I forgot who said it, but my favourite saying to describe my investment approach is: "Small is beautiful, especially if it's ugly".

At the moment, I am buying all the remaining new stocks that meet my filter. I've topped up on one (NWH), and may continue to top up on others, if ASX continues dropping.

I don't usually top up when an individual stock goes down, because I do expect a poor-ish hit rate in my stock picking. But when the decline is across the board, and I have plenty of cash available, that's a different story.


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## galumay (8 October 2014)

I moved a bit soon - with the benefit of 20/20 hindsight, i entered the market about a week ago with significant cash from my SMSF. I am not losing any sleep over it tho', all entries were into companies that had been on my watch list for some time and i was happy to pay the price i entered at so its no good wringing my hands about lost opportunity.

I might have waited longer and then the market bounced and then the hindsight says I should have entered at the original point, no sense trying to time the market to the last few %, especially when I am a long term investor.

I reckon there are some great opportunities out there now, KTP mentions NWH and thats one i have in both my personal portfolio and SMSF, its great value at current prices I reckon, low debt, plenty of work on the books, good management and despite what people outside the industry think, mining companies and downstream producers all continue to use significant numers of contractors alongside their FTE's - and will do so right thru the commodity cycle.

NVT is another i see that has dropped to a point where its worth considering if you dont already hold, BRG and SGH have also moved into more price ranges for entry. I guess there are plenty more opportunities out there too if you hunt around.


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## pixel (8 October 2014)

Can any of you guys see the possibility of a drawn-out slide with only small temporary relief rallies? And can you visualise what such an event might do to an averaged-down portfolio?
I don't know how the future may pan out; but I'm one of those traders afflicted with a memory. Current/ recent market behaviour reminds me vaguely of a lengthy period that started about 7 years ago.

Weekly ASX S&P200 Now:




Weekly ASX S&P200 Then:




I got lucky in late 2007 when I, for one reason or another, liquidated most of my holdings and took a long holiday across Tasmania. In March 2008, I listened to the soothsayers and, being rather optimistic by nature myself, got back into the market. Look what happened 2 months later! That was about the only May justifying the old-wives ditty, "Sell in May. Go away." And about the only May I did so too. And switched to Guppy's "Bear Trading" strategy. 
It wasn't till a full year later that I felt safe enough to be fully invested and Long again.

Repeat: I'm not predicting anything. Merely comparing two chart segments, the first one, and the outcome of which I still remember quite well. Sometimes, history rhymes...


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## galumay (9 October 2014)

pixel said:


> Can any of you guys see the possibility of a drawn-out slide with only small temporary relief rallies?




As I see it, its one of the infinite number of possibilities for the future of the market! As my dear old Dad used to say, "Son, things will either get better, get worse or stay the same." - he was rarely wrong. 

Its precisely why I dont beat myself up about buying positions a week before the current low point, its more important to buy shares in companies that are reasonable value at current prices, and meet my criteria for fundamental financial data. I have no way of predicting the future so unlike those who do I am somewhat limited in my approach.


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## ROE (9 October 2014)

before the fall, I found nothing of value but since the correction some stock trade at price I am willing to pay for long term outlook (10 years+) ... I actually sold a fair bit of stock before the fall so some of them I just get back cheaper

even though it is not cheap or bargain, it is a price I am willing to pay to hold long term and if need be I add more if the price keep sliding .... it hard to know where is the bottom so I start biting a little when I see the price is ok and average down.

that has always been my theme and I will continue to do so...Trading my surplus capital for passive income stream.

I mostly buy cash flow +ve business so it doesn't bother me too much about daily price movement knowing
I get my dividend comes Reporting season and it will be in business many years from now

and when it get hot, it is not if but when I start selling down and repeat the process.


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## Bill M (9 October 2014)

galumay said:


> Its precisely why I dont beat myself up about buying positions a week before the current low point, its more important to buy shares in companies that are reasonable value at current prices, and meet my criteria for fundamental financial data. I have no way of predicting the future so unlike those who do I am somewhat limited in my approach.




Same here galumay, I can not see or second guess the future, nobody can. What I do see is good dividend paying stocks that have been and most likely will be around for a long time that are going to fit into my super account very well and that will be for the long term, more like for the rest of my life. Buying 7 to 8% grossed up dividends for the rest of my life at todays prices will look pretty good in 5 or 10 years time. 



ROE said:


> before the fall, I found nothing of value but since the correction some stock trade at price I am willing to pay for long term outlook (10 years+) ... I actually sold a fair bit of stock before the fall so some of them I just get back cheaper
> 
> even though it is not cheap or bargain, it is a price I am willing to pay to hold long term and if need be I add more if the price keep sliding .... it hard to know where is the bottom so I start biting a little when I see the price is ok and average down.
> 
> ...




What is with ya ROE, you love starting these threads (I like them), remember the "A great day to deploy capital" thread. I bought a few back then too, prices went well north from that time. It's all about buying future income for myself now, might go lower, might go higher but 7% current divies are hard to say no to. At todays prices even an ETF like VHY will pay you 6% gross distribution and you don't even have to monitor or pick the stocks with that one.


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## kingink (9 October 2014)

I bought into a couple of companies just before the dip yesterday... Hoping for the bounce back, but honestly I believe in what I bought so I'm not too fussed. Fingers crossed. Hahaha


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## rimtas (9 October 2014)

pixel said:


> Can any of you guys see the possibility of a drawn-out slide with only small temporary relief rallies? And can you visualise what such an event might do to an averaged-down portfolio?




Yes, there is such a possibility, and it is greater now than ever, I can visualize it for you.
I do not know how to average down in this scenario, but people doing so only keep it doing while they are optimistic about the prices. At some point in the slide(usually in the middle), optimism shifts to pessimism and averaging down ends, the pain of keeping accumulating losses increases each day and finally they give up by selling everything close to a bottom or by switching off their laptop and trying to forget that they have an active (red)portfolio.

This scenario could last about two years from now, the level of bottom is not predictable at this stage, and even if it could be, it doesn't has any value for todays investor who is all in.


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## kid hustlr (9 October 2014)

All ords @ 1000 seems a little farfetched...


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## galumay (9 October 2014)

kid hustlr said:


> All ords @ 1000 seems a little farfetched...




Well it could be 7500 too, put a prediction wherever you like! To paraphrase my old man, it will either be higher, lower or exactly the same in 2016.


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## McLovin (9 October 2014)

kid hustlr said:


> All ords @ 1000 seems a little farfetched...




If the All Ords is at 1,000 then we have bigger problems than where the All Ords is.


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## rimtas (9 October 2014)

kid hustlr said:


> All ords @ 1000 seems a little farfetched...




I just used a long term 100 year trendline to determine that level, that's it, pure TA.


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## rimtas (9 October 2014)

galumay said:


> Well it could be 7500 too,.




Yeas, it could be. When someone starts a question about stock market with words " can it go (up or down)...", the answer is always YES.   Stock markets can be predicted only to probability basis, which can never ever be 100%.  Probabilities can shift  between 20/80, 50/50, or 80/20 or whatever ratio you would like.


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## rimtas (9 October 2014)

McLovin said:


> If the All Ords is at 1,000 then we have bigger problems than where the All Ords is.




Yes you are absolutely right. Stock market is a leading indicator, telling where the economy is heading. If ALL Ords crash to 1000, economy will collapse in response.

If it heads towards ATH, economy keeps improving greatly.


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## rb250660 (9 October 2014)

We need the Elliott Wave people to tell us where it's going...


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## galumay (9 October 2014)

rimtas said:


> Stock markets can be predicted only to probability basis, which can never ever be 100%.




Predicting the future in things like markets has about a zero probablility statistically, humans are reasonable at predicting nice stable things like sunrises, other than that the record of fortune tellers has not been great!


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## TPI (9 October 2014)

ROE said:


> before the fall, I found nothing of value but since the correction some stock trade at price I am willing to pay for long term outlook (10 years+) ... I actually sold a fair bit of stock before the fall so some of them I just get back cheaper
> 
> even though it is not cheap or bargain, it is a price I am willing to pay to hold long term and if need be I add more if the price keep sliding .... it hard to know where is the bottom so I start biting a little when I see the price is ok and average down.
> 
> ...




Hi ROE, just wondering if you are still shorting banks like CBA, or have you bought back into bank stocks with this correction?


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## rimtas (9 October 2014)

galumay said:


> Predicting the future in things like markets has about a zero probablility statistically,




You are very wrong at this point, markets can be predicted because they are operated by humans. Humans can be predicted because their behaviour hasn't changed for million years.
And about statistics... I give you one example-imagine you go with me for lunch and I have ordered two chickens, and you none, just water. So statistically on average we both had a very nice lunch eating on average one chicken per person and drinking half the bottle of water each, despite the fact that I had two chickens and you only water. 
Statistics is a Lie especially in stock markets and economy.


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## galumay (9 October 2014)

rimtas said:


> You are very wrong at this point, markets can be predicted because they are operated by humans.




Good luck with that! Funny how almost no one has been able to do it with any degree of accuracy or certainty over reasonable time frames.


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## rimtas (9 October 2014)

galumay said:


> Funny how almost no one has been able to do it.




It is not funny that almost no one is making money in trading. Money is made by only those who's forecasts are right. 
 Many people are claiming that they do not forecast markets, but when you hit a BUY button you immediately forecast that the markets will rise from there.  When you averaging down, you forecast that markets will _soon_ turn,_ before_ you run out of money. 

When you sell, you forecast that the prices will drop. It I simple as that. I am not talking about economists and analytics who "forecast" markets every day, they are just herding, depending on a move. Yesterday, when ALL ORDS made a temporary bottom, all mass media people were shouting that correction is imminent. Look what is happening today. A linear thinking, reaction to the market.


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## DJG (9 October 2014)

rb250660 said:


> We need the Elliott Wave people to tell us where it's going...




Preferably with common sense..



rimtas said:


> You are very wrong at this point, markets can be predicted because they are operated by humans. Humans can be predicted because their behaviour hasn't changed for million years.
> And about statistics... I give you one example-imagine you go with me for lunch and I have ordered two chickens, and you none, just water. So statistically on average we both had a very nice lunch eating on average one chicken per person and drinking half the bottle of water each, despite the fact that I had two chickens and you only water.
> Statistics is a Lie especially in stock markets and economy.




That could potentially be the rationale behind averages I suppose.


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## Smurf1976 (9 October 2014)

rimtas said:


> Stock market is a leading indicator, telling where the economy is heading. If ALL Ords crash to 1000, economy will collapse in response.



The economy collapses as an actual response to the All Ords falling?

Or the economy was going to collapse anyway, the markets foreseeing this and thus leading with a fall in the All Ords?

As a general rule, I think it's the latter. The market tends to lead the "real world" but to a large extent is just foreseeing, not causing in most cases (collapse of broad share indicies being a possible exception to that rule due to the wealth effect).


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## cynic (9 October 2014)

rimtas said:


> It is not funny that almost no one is making money in trading. Money is made by only those who's forecasts are right.
> Many people are claiming that they do not forecast markets, but when you hit a BUY button you immediately forecast that the markets will rise from there.  When you averaging down, you forecast that markets will _soon_ turn,_ before_ you run out of money.
> 
> When you sell, you forecast that the prices will drop. It I simple as that. I am not talking about economists and analytics who "forecast" markets every day, they are just herding, depending on a move. Yesterday, when ALL ORDS made a temporary bottom, all mass media people were shouting that correction is imminent. Look what is happening today. A linear thinking, reaction to the market.




Some very large assumptions being made here!. 

I've known plenty of people to hit a buy or sell button despite their perception of market direction!

Furthermore, I've also known of traders that were able to make healthy profits without forecasting market behaviour. 

In fact I would even go so far as to suggest that those rare traders succeeding in this game are probably those that place little  emphasis on forecasting.


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## sydbod (9 October 2014)

pixel said:


> Can any of you guys see the possibility of a drawn-out slide with only small temporary relief rallies?




Yep, that looks about right.

a peak at very end of October
a bouncy ragged drop with bottom in the second week of December
a climb to a lower peek around very end of December and then
a low in the first week of February.
from then on it is all a dogs breakfast.

These Tarot Cards have NEVER been wrong ... but then again, this is the first prophecy they have made.


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## rimtas (9 October 2014)

cynic said:


> I've also known of traders that were able to make healthy profits without forecasting market behaviour.





They forecast unconsciously. They will never hit a BUY button if their forecasts in their minds were bearish. At least minimal analysis is done before enter, which outcome is a forecast for a rising stock/market and thus the BUY button follows. It does not need to be done publicly.


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## rimtas (9 October 2014)

Smurf1976 said:


> The economy collapses as an actual response to the All Ords falling?




Yes. ALL ORDS are people. When people turn pessimistic, they sell shares(which is instantly recorded on market and you can see it). Also they turn to a self preservation mode, decreasing their spending, postponing a further business expansion plans, downgrading on a living standards(later in the bear). All of this are recorded later in a companies results and in the statistics and economy overall.  Then governments step in to take measures to prevent a further crash, usually after the bottom has been set. Government actions are a very good indicator of a large market peak/bottom, because they are the last to react to the trend of market mood. 

One good example is situation now with realestate market and investor activity overall-when data about soaring investor loans entered the system, RBA decided to take measures(I must notice that this decision was made right near the peak). Markets are already in downtrend for a while, and by the time RBA releases its first package of "improvements" to lending for investors, markets will be even more lover.   Later, everyone will be saying tat RBA has hurt the REIT market and it crashed, which is not true. RBA just reacted(last) on the top to a soaring trend, in afraid it will soar further. 
It is just an example, other government institutions also join the party at the end. Remember how government was spending money in 2007, it just assumed that a "new era economy" has started.

 Herding is a very, very powerful thing when it comes to masses and people at the top. It also has a forecasting value of a larger trends, you just need to know where to look.


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## cynic (9 October 2014)

rimtas said:


> They forecast unconsciously. They will never hit a BUY button if their forecasts in their minds were bearish. At least minimal analysis is done before enter, which outcome is a forecast for a rising stock/market and thus the BUY button follows. It does not need to be done publicly.




Again, you're making very large assumptions! 

Analysis and forecasting are by no means synonymous! 

Furthermore, there are traders that simply don't allow their opinion/perception of market direction to influence their trading decisions for the simple reason that their edge has nothing whatsoever to do with their forecasting ability!


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## So_Cynical (9 October 2014)

rimtas said:


> or by switching off their laptop and trying to forget that they have an active (red)portfolio.




True that, i switched off my laptop in like june 2008, turned it back on again in Oct/Nov to throw everything i had left at 3 gold stocks, and then sold out of 2 of those gold stocks in Feb 2009 with profits of around 30% - just in time for the ASX200 market bottom, then threw it all at.

Suncorp ($4.70) 
Computershare ($7.10)
Energy Developments ($1.25) 
Iluka ($2.95) 
VRL ($ 82c)

Just to Name a few, ah the memory's looking back at the old trade confirmation emails.


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## rimtas (9 October 2014)

cynic said:


> Analysis and forecasting are by no means synonymous!




Yes they are synonymous. First you analyse and the outcome is a forecast. Based on that forecast you make trading decisions. 
 Even those following technical trades  always are  forecasting-let's say someone follows MA200 and buys when prices are above and sells when they are below.  That is the forecast, but discussion already gone to the level when I must abandon it for a simple reason-I suspect on the other side of the screen is a person with little knowledge about how the human brain works. SEEya mate. 
Must go to check whether ebola virus is a real threat here because someone has just been hospitalized in the area where I live. Maybe soon trading will become the last thing to bother of.


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## cynic (9 October 2014)

rimtas said:


> Yes they are synonymous.



No they aren't - check your dictionary!!!


> First you analyse and the outcome is a forecast. Based on that forecast you make trading decisions.



No! I certainly do not do this!!


> Even those following technical trades  always are  forecasting-let's say someone follows MA200 and buys when prices are above and sells when they are below.  That is the forecast, but discussion already gone to the level when I must abandon it for a simple reason-I suspect on the other side of the screen is a person with little knowledge about how the human brain works.



Yet more hasty and ill considered assumptions!


> SEEya mate.



Bye bye!


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## galumay (9 October 2014)

as entertaining as this discussion has become we should probably drag this one back on topic! 

Seems the bargain hunting season was very short! I am already happy that i tipped my purse in when I did, missed out on a little of the potential but over the length I hold it wont matter one iota.


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## pinkboy (9 October 2014)

galumay said:


> as entertaining as this discussion has become we should probably drag this one back on topic!
> 
> Seems the bargain hunting season was very short! I am already happy that i tipped my purse in when I did, missed out on a little of the potential but over the length I hold it wont matter one iota.




Yes, me too.  Had $70k in wages to pay on Monday, so things were tight....so was unable to cash in this week.  Same as you, Im just accumulating for the long term, so no matter the entry point really.  Just would have been nice to capitalise on this weeks little dip.


pinkboy


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## herzy (9 October 2014)

pinkboy said:


> Yes, me too.  Had $70k in wages to pay on Monday, so things were tight....so was unable to cash in this week.  Same as you, Im just accumulating for the long term, so no matter the entry point really.  Just would have been nice to capitalise on this weeks little dip.
> 
> 
> pinkboy




Feel free to ignore me if you think my comment inappropriate, but I'd be wary of investing in a way that impacts your cash-flow. No matter how good your investments, insufficient cashflow brings many unstuck! (i.e. being forced to sell at the wrong time due to wages needing to be paid). I'd advise making sure you have a buffer in cash to avoid being forced to sell at a less than ideal time.


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## herzy (9 October 2014)

I bought into NAB relatively low (but not the bottom), which I'm happy with considering the 3 dividends I'll get in the next 13 months, totalling around 10% yield (plus franking credits). Longer term with a p/e of 12 it's not looking too bad either. 

I was hoping IMF or AAD would get a bit cheaper, as they've both had great runs lately - but no such luck.


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## Faramir (9 October 2014)

I missed out yesterday. I was waiting for CCP to drop more. CCP went up today. Now it is out of my range. BOQ - I was expecting it to go lower. I am starting to change my feeliungs about BOQ. I can't describe what it is but I no longer have the urge to buy it. I can't explain why? There are other shares to consider but I decided to hold off. I can't explain why? Is this 'Beginner's Hestitation'?


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## herzy (9 October 2014)

Faramir said:


> I missed out yesterday. I was waiting for CCP to drop more. CCP went up today. Now it is out of my range. BOQ - I was expecting it to go lower. I am starting to change my feeliungs about BOQ. I can't describe what it is but I no longer have the urge to buy it. I can't explain why? There are other shares to consider but I decided to hold off. I can't explain why? Is this 'Beginner's Hestitation'?




What is your rationale for buying CCP and BOQ?

What entry price were you looking for? Why?

How long were you planning on holding for? What price would you sell at?

If you have a think and reply here, some experienced members will be able to help you solidify your conviction.


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## galumay (9 October 2014)

Faramir said:


> I missed out yesterday. I was waiting for CCP to drop more. CCP went up today. Now it is out of my range. BOQ - I was expecting it to go lower. I am starting to change my feeliungs about BOQ. I can't describe what it is but I no longer have the urge to buy it. I can't explain why? There are other shares to consider but I decided to hold off. I can't explain why? Is this 'Beginner's Hestitation'?




I think CCP were at their lowest earlier in the week, i got some at $9.24, i have had the on my watch list for quite a while and was just waiting for a drop like this to get a piece of this company.

Sometimes hesitation is your subconcious, go back over your research and see if you really want to own a piece of BOQ. If you understand the business and want it then a few cents either way is neither here nor there.


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## rimtas (9 October 2014)

At this stage BOQ looks bullish to me and it is not late to enter. I expect it to rise towards $13.5-14 area in the coming months. Only the brake lower 11.46 will turn this scenario very bearish  so at this stage profit/loss ratio is not very good-by buying now you take a risk of almost $0.70 with an expected min profit of $1,5. Is it worth?


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## Faramir (9 October 2014)

Hi Herzy

I normally like to announce my target/purchase price after I brought them. So it is okay that I do not mention it. I don't think anyone would mind because my opinion/target is just a beginner's opinion.

CCP - Great company, good cash flows. Hope to hold long term.
Reasons are stated in this thread:
https://www.aussiestockforums.com/forums/showthread.php?t=3338&page=27&highlight=ccp

BOQ - Great bank, looking to hold long term, todays profit announcement was expected. 
Reasons stated here:
https://www.aussiestockforums.com/forums/showthread.php?t=955&page=5&highlight=boq
and here:
https://www.aussiestockforums.com/forums/showthread.php?t=28300

As I said, I am changing my feelings about BOQ and I can't explain why. If I could , I would tell you right now.

Lots of experience contributors have given me so much feedback already in the short time I have been here. I even said thank you:
https://www.aussiestockforums.com/forums/showthread.php?t=28819&highlight=demi+gods


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## Faramir (10 October 2014)

rimtas said:


> At this stage BOQ. Is it worth?



This is something I can't explain. At current price: no. Long term: no? I feel I need to do more research.

Galumay, I was on volunteer patrol on the beach on Monday (Public Holiday). I would have been tempted or even hit the buy button for CCP if I wasn't on the beach.


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## herzy (10 October 2014)

Hi Faramir, 

Glad to see you've had positive experiences on the forum. I was basically getting at what Gaumay said - if you're holding for the long term, a few % make very little difference. I wouldn't sweat the 10c you lost on CCP if you're hoping to gain $2 down the track. 

That said, of course you should do what feels right for you. If you think it'll dip further, or it's over priced, of course - don't buy. If you're not convinced BOQ is a good buy, then don't! As ROE often says, the great thing about the market is that it always gives you more and new opportunities. Never worry about what you missed out on, just look for the next one and wait for the right one. 

All the best


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## pinkboy (10 October 2014)

herzy said:


> Feel free to ignore me if you think my comment inappropriate, but I'd be wary of investing in a way that impacts your cash-flow. No matter how good your investments, insufficient cashflow brings many unstuck! (i.e. being forced to sell at the wrong time due to wages needing to be paid). I'd advise making sure you have a buffer in cash to avoid being forced to sell at a less than ideal time.




Herzy

Thanks for your concern.

My current personal cashflow buffer is my mortgage offset account of my PPOR.  My PPOR is completely paid off, and the cash buffer is about ~65% LVR.  So the funds what I used to pay into my mortgage ($2,000/week) generally go straight to my 'play money' account.

Over the past month, we have experienced a very large job, so me, being the conservative I am, just holding back on those funds just making sure we get through ok.  The Client is a Blue Chip mine, and they pay on time, every time - so I know the cash is coming.  Again, being the conservative I am, I have no business debt, and rely purely on cashflow of the business - so I plan whats coming in and going out generally 60-90 days ahead ayway - so I feel I know what Im doing.  I will then revert back to punching into my play money account.

It was just very unfortunate this little dip happened when I didnt have much 'free' money available.  I could have used some offset funds if I wanted, but I dont feel that I need to incur interest at this time.  Who knows, I might have a bit in 30 days and 90 days and the market might be dipped again - who knows?

My stategy is to accumulate, not buy and sell generally - so when I purchase, it is in the view longterm.  I will only use funds that I can afford to leave untouched.

Hope that makes some more sense?


pinkboy


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## qldfrog (10 October 2014)

well if you were looking for "bargain", you will probably be happy today!!!!
personnaly not that keen to invest in any share today, I was initially expecting the plunge in december but it came earlier and i do not expect the trend to change untill next year
bargain cash for me.
Not ready to jump back yet


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## rb250660 (10 October 2014)

Let the *pain* begin.


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## herzy (10 October 2014)

pinkboy said:


> Herzy
> 
> Thanks for your concern.
> 
> ...




No problem. Sounds like you've definitely thought things through - all the best!


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## McLovin (10 October 2014)

rimtas said:


> At this stage BOQ looks bullish to me and it is not late to enter. I expect it to rise towards $13.5-14 area in the coming months. Only the brake lower 11.46 will turn this scenario very bearish  so at this stage profit/loss ratio is not very good-by buying now you take a risk of almost $0.70 with an expected min profit of $1,5. Is it worth?
> 
> View attachment 59772




So, if I understand correctly, the All Ords is going to 1,000 but BOQ will buck the trend?


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## KnowThePast (10 October 2014)

McLovin said:


> So, if I understand correctly, the All Ords is going to 1,000 but BOQ will buck the trend?




This made my day


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## rimtas (10 October 2014)

McLovin said:


> So, if I understand correctly, the All Ords is going to 1,000 but BOQ will buck the trend?





Yeaaaa...some people just can't see time frames on a two different  charts, and even like to to think that market will go(if) to 1000 in a straight line and overnight. A classic example of ordinary linear thinking.


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## McLovin (10 October 2014)

rimtas said:


> Yeaaaa...some people just can't see time frames on a two different  charts, and even like to to think that market will go(if) to 1000 in a straight line and overnight. A classic example of ordinary linear thinking.




If I was making such ridiculous assertions that the market *might* get to 1,000 I'd be putting my money as far away from any risk asset (especially anything to do with banks!) as possible. Clearly you have impeccable timing.


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## galumay (10 October 2014)

Bargain bin is on again today!!


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## herzy (10 October 2014)

galumay said:


> Bargain bin is on again today!!




Mine aren't really getting much cheaper

I bought NAB already, and it hasn't dropped enough to average down. 

I would like to see SGH (I like their recent acquisitions), BRG, CCP, AAD and IMF a bit cheaper...or at least, I feel like they could get a bit cheaper...


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## pinkboy (10 October 2014)

herzy said:


> Mine aren't really getting much cheaper
> 
> I bought NAB already, and it hasn't dropped enough to average down.
> 
> I would like to see SGH (I like their recent acquisitions), BRG, CCP, AAD and IMF a bit cheaper...or at least, I feel like they could get a bit cheaper...




I set to buy NAB @ $31.78 (1c higher than yesterday's lowest), and go figure on open gets as low as $31.80 and goes up 1% from there.  Just wasn't to be.  Was only a small parcel anyway, so I shouldn't be worried about a few cents here and there, but I set the buy up if it got low enough to warrant a purchase.  Lets try again Monday!


pinkboy


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## Julia (10 October 2014)

galumay said:


> Bargain bin is on again today!!



If the market drops another few hundred points in the near or medium term future, will today's purchases still be bargains?


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## rb250660 (10 October 2014)

Julia said:


> If the market drops another few hundred points in the near or medium term future, will today's purchases still be bargains?




Hear, hear!


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## galumay (10 October 2014)

Julia said:


> If the market drops another few hundred points in the near or medium term future, will today's purchases still be bargains?




I sort of covered that already, I pointed out earlier that I had bought in a bit early and missed the exact bottom (where ever that ends up), but it doesnt matter because I am buying part ownership of profitable, low debt and well managed businesses, with a view to owning them for a long time and recieving an income stream for my trouble.

So if the market drops another few hundred points, or goes up 500 points next week for that matter, I will remain happy with my decision to become a part owner at that time. 

The term 'bargain' was a bit tongue in cheek and reflective of the thread title, at the end of the day falls in the market provide better buying opportunities in relative terms. 

I guess for traders and speculators who see shares as just a commodity with a variable price, then the outlook and response may be very different?


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## rb250660 (10 October 2014)

galumay said:


> I guess for traders and speculators who see shares as just a commodity with a variable price, then the outlook and response may be very different?




I fit this category and the recent volatility has been pretty tasty.


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## rimtas (10 October 2014)

Julia said:


> If the market drops another few hundred points in the near or medium term future, will today's purchases still be bargains?




The definition of a "bargain" in a traders mind is when trader is very optimistic (due to a previously rising trend). He projects that prices will rise indefinitely, so todays dip appears as a bargain. 

But lets assume that after couple of years  market will reach 2000-3000 levels. Do you still think traders will name any bargains? NO. Shares will be so expensive, that nobody wants to buy them.  They start looking for reasons-that fundamentals are bad, earnings are negative, no dividends, and thus let's say NAB pricing at $5  will be still very expensive.  That's how limbic system works. 
Financial markets do  amazing tricks in the brain-it react opposite as to the normal things, like you go to the shop  see a shoes sale of -80% and the greed immediately steps in. But when you see market drop of -80% you are scared to death and stock are the last thing you want to buy. The opposite is near the tops-all stocks appear bargains, and reasoning for this is found very quickly.  

When I hear the word "bargain" within the long rising trend, I am cautious at least, because real bargains are only when the blood is on the streets.


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## DeepState (11 October 2014)

Hi

To what extent do you think the current weakness in markets is due to:

1. Deteriorating underlying fundamentals (ie. not likely to recover for reasons of price action)
2. Re-assessment of unreasonably low required risk margin (became less expensive)
3. Moving from fair risk margin to higher than long term risk margin (markets become cheaper)
3. Re-assessment of relative value (eg. Bonds are better risk adjusted investments now)
4. Reduction of exposure driven by financing matters related to the investor (eg. available leverage is being pulled)
5. Animal spirits
6. Other (Please specify)

Thanks.  Curious about the spread of opinion given differing viewpoints which have been expressed recently.


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## rimtas (11 October 2014)

DeepState said:


> Hi
> 
> To what extent do you think the current weakness in markets is due to:
> 
> ...




I personally think that No. 5 is responsible.


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## pixel (11 October 2014)

Julia said:


> If the market drops another few hundred points in the near or medium term future, will today's purchases still be bargains?




No.
Just count the number of risers that bucked yesterday's 100-pt drop; multiplied by 3 to 10, the odds become infinitesimal.


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## DeepState (11 October 2014)

pixel said:


> No.
> Just count the number of risers that bucked yesterday's 100-pt drop; multiplied by 3 to 10, the odds become infinitesimal.




Hi Pixel

Would your response change at all if Julia said "long term" as opposed to a shorter/medium (say less than a year) time frame?

Cheers


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## galumay (11 October 2014)

DeepState said:


> Hi
> 
> To what extent do you think the current weakness in markets is due to:
> 
> ...




I am with rimtas, 5. looks the most likely to me.


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## pixel (11 October 2014)

DeepState said:


> Hi Pixel
> 
> Would your response change at all if Julia said "long term" as opposed to a shorter/medium (say less than a year) time frame?
> 
> Cheers




No, it wouldn't;
the reason: If I could buy in coming months twice as many or more xyz shares as I could at today's "bargain basement prices", it would still feel wrong - even IF they'd regain current levels in a year or two.


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## DeepState (11 October 2014)

pixel said:


> No, it wouldn't;
> the reason: If I could buy in coming months twice as many or more xyz shares as I could at today's "bargain basement prices", it would still feel wrong - even IF they'd regain current levels in a year or two.




Thanks Pixel.

FWIW, my response would have been "it depends" to both questions.  Annoyingly unsatisfying, I know.


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## pixel (11 October 2014)

DeepState said:


> Thanks Pixel.
> 
> FWIW, my response would have been "it depends" to both questions.  Annoyingly unsatisfying, I know.




LOL, of course "it depends"
It depends on Julia's premise coming true. Which I see a real chance that it does. Hence my reply.

But obviously, if the premise turns out incorrect, and if the global Markets rally from last night's Lows, any rebounding Long position will put a smile on the Holder's dial and generate many "...told youse".


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## Julia (11 October 2014)

DeepState said:


> FWIW, my response would have been "it depends" to both questions.  Annoyingly unsatisfying, I know.



Now, RY, you need to elaborate.     "It depends" isn't in the spirit of furthering the discussion.  You always have clear reasons for everything so please share what they are in this instance. 
(asking in the most polite and humble way, of course.)



pixel said:


> LOL, of course "it depends"
> It depends on Julia's premise coming true. Which I see a real chance that it does. Hence my reply.
> 
> But obviously, if the premise turns out incorrect, and if the global Markets rally from last night's Lows, any rebounding Long position will put a smile on the Holder's dial and generate many "...told youse".



"....told youse".   

Re this 







> If I could buy in coming months twice as many or more xyz shares as I could at today's "bargain basement prices", it would still feel wrong - even IF they'd regain current levels in a year or two.




My response also.  But here's where I'm hypocritical enough to refer back to RY's "it depends" above.
All I've had in the market for some time is a relatively small p/f of stocks chosen for grossed up yield, and entered when at call cash rates fell below what was acceptable.

For the first time ever I bought these stocks (overweight banks) with the intention of holding through any downturn on the basis that I don't believe any of them will not ultimately recover and - as long as dividends are not cut - the yield is about twice what would be attained in the bank.

In the event, however, I'm finding it a very counter-intuitive and uncomfortable process.

Had I been fully or almost fully invested, I'd have been completely out a couple of weeks ago at least, preserving profits and waiting for clear uptrend before re-entry.


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## galumay (11 October 2014)

Julia said:


> Had I been fully or almost fully invested, I'd have been completely out a couple of weeks ago at least, preserving profits and waiting for clear uptrend before re-entry.




I suppose thats why the market as a whole is so irrational, we are all doing different things for different reasons! If we all thought the same and used the same strategies the market would be totally stagnant!!


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## DeepState (11 October 2014)

Julia said:


> Now, RY, you need to elaborate.     "It depends" isn't in the spirit of furthering the discussion.  You always have clear reasons for everything so please share what they are in this instance.
> (asking in the most polite and humble way, of course.)




All you gotta do is ask.  

When is a stock a bargain?  One simple answer is that it subsequently makes you more money than you would normally expect or require for the risk taken.  You can whack a timeframe on that if you like.

That could happen by blind luck, or it may be because you bought in on the basis of good fundamentals (or T/A if you like) which, through trials and tribulations, remained good enough that the stock price benefited from the net outcome.  So we have a lucky bargain and an earned bargain.

Let's ignore the lucky bargain scenario.  It is trivial in the sense that we win some and lose some.  There's no skill in it.  If we 'bend the distribution' without edge, you end up in the same place or worse anyway. 

So, a market goes down in price.  There is no statement here about whether fundamentals changed or whether a market just became less expensive.  If all it reflects is that fundamentals deteriorated, it has not become more of a bargain for reasons of changes in fundamentals.  If the price declines by more than the fundamentals would suggest, it has become cheaper, but is not necessarily cheap.  

So, my response was 'it depends' because a bargain needs to be defined by price and fundamentals.  To me, if you buy a stock at a discount to valuation (beware that your estimate may be wildly different to reality), you are buying a bargain.  If it becomes cheaper, you are buying more of a bargain.  

The forgone economic benefit of delaying your purchase until the price fell further needs to be assessed considering the probabilities that prevailed at the time of the first decision (you can think of regret as pairs of decisions).  All you can do is make the best probable decision at any given time.  This goes further...

At your first decision point, you will make a guess about whether the stock will continue to deteriorate or it is about as bad as it is going to get.  You may actually choose to get set even if you think it might weaken further because you feel that the price is good enough and you would regret it if the stock price bounced in the direction of your longer term expectation...bummer!  

What happens to prices after your estimate is made is outcome.  Outcomes are just one possibility in a whole massive spectrum of them.  The difference between the subsequent price movement and your guess of what it would be is essentially luck.  The main thing to focus on there is just risk management.  Bad luck can be seriously painful and can wipe you out before it all evens out over the longer term.  Luck is just luck.  Nothing that is worthy of regret or regarding as a missed opportunity in a skillful sense when selecting stocks.

So what does all that diatribe come down to?

Buy stocks which are cheap relative to their fundamentals.  They should do better over time.  If the market should present you with an even better opportunity, take it if your risk management allows and don't regret the first decision if your analysis was sound.  Focus on what you can control.  The rest is just conversation....which I kind of like.


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## Smurf1976 (11 October 2014)

Stock markets go from over valued to under valued and back again. That's happened enough times now, with enough markets in different countries, to consider it a fact.

Without wanting to go off topic, the same could be said for politics. It swings from Labor to Liberal and back again. It has done that many times in Australia, and the same happens overseas with the only real difference being the names of the parties.

Now, using the political example it could be said that there have been relatively few occasions when the major parties did not act in a predictable manner on a major issue. Argue all you like about the detail, but as a whole the majority of policies are consistent with a broad policy agenda and thus reasonably predictable.

So why then to people change their vote? Sure, not everyone does, but enough do to bring about a change of government periodically. And yet ultimately, not much has really changed beyond some relatively minor details. That lack of a fundamental reasons to do so doesn't stop people changing their vote however.

Markets seem much the same. To some extent, things just happen. We go from a high P/E to a low P/E during a secular bear and vice versa during a secular bull. It's hard to point to a specific reason as to why, but it happens in practice.

Anything involving sentiment of the masses is hard to explain in terms of "why". Try explaining "why" in terms of fashion (as in clothing)? Why is a certain colour no longer a good one? What changed? There's just one example of an entire industry that lacks any real rational basis and yet it's been around far longer than you or I.

Then there's things like broad shifts in attitude. Over the past 40 years, just half a human lifetime, we've seen a massive shift in popular opinion on the issues of (1) human health and (2) protection of the natural environment. It's pretty much a complete reversal over that time - what was "normal" and taken for granted is now considered totally unacceptable and vice versa. There are so many examples relating to both issues, that it would be easier to list what *hasn't* changed than what has. 

Markets are just another reflection of human thought. Trying to come to grips with the "why" question is largely futile in my view, the only thing that's worse being to try and fight it.


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## Julia (11 October 2014)

> All you have to do is ask




OK, thanks for detailed response.

Next question:  does it come down to this?



> The main thing to focus on there is just risk management.




Question after that:
"Surely risk management will vary immensely according to the personal circumstances of individuals"?

ie someone aged 20 will have a different take on what constitutes risk than will someone in retirement.


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## DeepState (11 October 2014)

Julia said:


> OK, thanks for detailed response.
> 
> Next question:  does it come down to this?
> 
> ...




Risk management keeps you alive for long enough so that your source of returns can shine through.  In general, someone aged 20 will have a relatively small investment balance and a massive asset in the form of expected future income.  For the most part, they can tolerate a lot of investment risk unless they are barely making their interest payments.  However, just because they can take risk doesn't mean that they will.  We all have different tolerances for risk no matter what stage of life we are at.

There are different kinds of risk.  Not meeting your realistic target objective in the long run is the key one.  But it would be unrealistic to think there aren't a whole lot of smaller risk management initiatives to keep you within your zone of comfort along the way and allow for things like liquidity where this was relevant.


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## galumay (11 October 2014)

DeepState said:


> We all have different tolerances for risk no matter what stage of life we are at.




I think thats an important fact, also I think sometimes people forget to consider consequence in partnership with risk. Which leads me back to one of Buffett's primary filters - catostrophic risk. Something might be low risk but if the consequences would be total loss of capital then he would dismiss it as a potential investment.


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## rb250660 (12 October 2014)

pixel said:


> ...and if the global Markets rally from last night's Lows...




What a flogging the indices, commodities and AUD took. More pain on the cards here for Monday. Looking pretty crook to me, interesting times ahead. My shopping list is starting to get small.


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## skc (12 October 2014)

DeepState said:


> Hi
> 
> To what extent do you think the current weakness in markets is due to:
> 
> ...




1. 20%. Iron ore, coal and the looming LNG cliff are the primary drivers of the deteriorating fundamentals. It will play out in arenas like lower government revenue and sector-specific declines, and subsequent flow-on effects (employment loss in support industries, regional property price declines, tougher tax policies etc).

2. 50%. Absolutely. I see the A-REITs as a prime example. The office sector is facing higher vacancies yet share prices are at 6 year highers while yielding <5% with little growth. It's the chase for yield gone too far.

3. 20%. Stocks are arguably still better value than bonds in absolute terms. But the difference isnt' as extreme as before - and it's always the marginal buyer/seller who sets the price.

4. Have not heard that being the case.

5. 10%. There is always a bit of that. Those who sell first, sell best. Plus the fact that with $AUD and ASX being so inter-related, it becomes a bit of selfulling prophecy. 

6. 0%. I am of the opinion that we have past the peak of growth driven capitalism. Since WWII the world economy was driven by growth, and the growth came from both productivity gains (industrial production) and population growth. While we are still seeing productivity gains, it feels like most of the easy miles have been made in the industrial sphere. New age GDP's are much more abstract and less demanding on many physical resources. Demographics will start to become a negative driver to growth, as the ratio between those working and those retired and spending continue to decrease. The growth driven economy has been fine for 60-70 years but it will now enter untested territories (although I'd also argue that Japan is the leader in this phase). 

There will be shocks in the adjustment periods that no one is seeing now, and it will happen in our lifetime pretty soon.


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## PinguPingu (12 October 2014)

skc said:


> There will be shocks in the adjustment periods that no one is seeing now, and it will happen in our lifetime pretty soon.





As someone in their young 20s having just entered the work force full time, this is a terrifying thought. Add to that the increasing automation of jobs (look at Woolies and Coles registers as an easy example) and it feels soon there will simply be not enough jobs to go round...

McDonalds automated self-order:

https://www.youtube.com/watch?v=e3J66Aub16o


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## prawn_86 (13 October 2014)

skc said:


> 6. 0%. I am of the opinion that we have past the peak of growth driven capitalism. Since WWII the world economy was driven by growth, and the growth came from both productivity gains (industrial production) and population growth. While we are still seeing productivity gains, it feels like most of the easy miles have been made in the industrial sphere. New age GDP's are much more abstract and less demanding on many physical resources. Demographics will start to become a negative driver to growth, as the ratio between those working and those retired and spending continue to decrease. The growth driven economy has been fine for 60-70 years but it will now enter untested territories (although I'd also argue that Japan is the leader in this phase).
> 
> There will be shocks in the adjustment periods that no one is seeing now, and it will happen in our lifetime pretty soon.




Quoted to highlight.

The sooner we get away from 'growth' as a defining factor of an economy the better. But since we have had it good like that for 50+ years no-one thinks it will end. It's like a multi-generational economic policy bull run. Once all the boomers are out of politics then things may slowly change, although that hasnt yet helped Japan...


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