# The top of this cycle for ASX 200, cash is king?



## kahuna1 (21 January 2010)

Well ...

Maybe its time for a change and was wondering if there was any interest in this sort of a thread here ? Have run a very similar thread for many years .

Basically we will talk about macro economics and not too much on  indivdual shares and more about the overall market.

What I mean by market is the market risk ... the overall risk of the market and its cycles and the fact that if the market is going down in any normal cycle correction of say 8-15% the fact is that 85% of shares go DOWN as well. Picking these cycles when the overall market has peaked ... the ASX 200 has peaked ... vs buying willy nilly has proven to be a very valid tool for me over the years. Of course the ability to pick these cycles is not one I have concluded I can really teach very well .... with something of the order of 27 years full time experience in the markets each and every correction has its own foundations.

Sometimes these are driven purely technically ... others by market exhaustion and others driven by the macro side .... others driven by the usual greed or fear.

Anyhow feedback appreciated ... on the thread or send me a PM.

Yes its me :} Before you ask !! The real one.


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## The Once-ler (22 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*



kahuna1 said:


> Yes its me :} Before you ask !! The real one.





I reckon I'll soon pick if your the real kahuna1 from what you post.

So how come you will post here if your going into funds management and will be limited by what you can say? 
Isn't that why you are making just one last post on the other thread on the other forum?

That other thread is an amazing lesson about the stockmarket. I just wish I'd took all your advice from the start. Could have made millions. If you post here, or on the other forum, it won't make any difference to me, as I'll read what you have to say where ever you post.


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## Pivotonian (22 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*



The Once-ler said:


> I reckon I'll soon pick if your the real kahuna1 from what you post.
> 
> That other thread is an amazing lesson about the stockmarket. I just wish I'd took all your advice from the start. Could have made millions. If you post here, or on the other forum, it won't make any difference to me, as I'll read what you have to say where ever you post.




Please excuse my ignorance, but why should I care who is "the real kahuna1"?


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## Bigukraine (22 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*



The Once-ler said:


> I reckon I'll soon pick if your the real kahuna1 from what you post.
> 
> So how come you will post here if your going into funds management and will be limited by what you can say?
> Isn't that why you are making just one last post on the other thread on the other forum?
> ...




Maaaaaaaate !
Based on time lines eg you on this site since 2005, big k 2004 and the years he has been on the other forum and guessing you the same if you didn't make your Millions by now you never will !!!!!!!!!!


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## kahuna1 (22 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Interesting as always views ....

Its never been about me , why if I could and can pick these cycles and advised people via 2,700 ish posts on another site would I bother event to in the first place ?

One lives one life as they must and its been a journey for me either way. Eventually I tried stopping people put their heads into meat grinders .... tried to stop the devoted faithful in the latest penny dreadful taking all their funds and getting hurt.

Same prior to the GFC ....did the same thing pre dot com on another site only to discover who really owned it.

As a gent pointed out yes I am going in another direction and one I intend to take for the next 20 years of my life. The reasons for my switch will be varied but it comes down to whilst I posted and posted for free sharing 27 years of experience to others .... and helped them make the site what it was .... go there ... send me a PM ....  they sadly removed that function without even a hello. If I spent an hour on my long and detailed posts there all mostly original material .... I think at least I deserved something other than what happened.

Anyhow will say bye bye there either way ... but was wondering the question I asked .

Many fall outside the cracks and some other form of a view is all I will be expressing from time to time and not on as regular a basis as I have in the past. Just will be commenting about macros and cycles and when I believe the cycles are changing.

As to millions .... I think if you know who I am or my objectives and why i took a break it was nothing to do with my own fate but that of others which brought me back to posting at all and what has made me decide to go in this new direction. It doesn't mean from time to time I may not take the time as I have in the past and share a view ....

That was the question .... nothing else.

Stay cool 

Mark


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## BradK (22 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Welcome mark. Used to read your posts on the other forum. 
You think we are at the top of this cycle? 

Brad


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## kahuna1 (23 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Oh dear,

Here we go again .... Yet another fail at that crucial point for us ....  The retracement of the high vs the low and 50% of the total move seen over the last few years from the absolute high to the eventual low. The high being the 6,851 on the ASX 200 seen late 2007 vs the low earlier this year of 3,073 . The technical and very important chart point remains still untested and still intact at 4,963. On another technical point a much larger one also remains intact and that was a 20 year one and the 33% retracement from the low vs the high was also a point very similar to the other one and it was 4,969 on the top.

Neither was tested in any way shape or form of late and we failed to get there. Big picture if I was purely technical is that the rally remains totally intact and the target and eventual target is still this point the 4,963 - 69 levels. Past experience and 27 years of it and studying these technical side sin great depth again suggests until tested at least most of the time ... And I mean 90% of the time the eventual move is to test them. Of some concern is that for a second time failed in this region without breaking it ....

Ho hum .... On that note. Similar technical sides for the USA but it tested and broke the 50% retracement level and went well through there and with last nights drubbing has fallen well below this level vs actually well and truly breaking it.

So from the US side its more of a worry if one was purely technical ... But thankfully I am not.

On the downside there well there are supports the whole way down and 4,600 on the ASX200 followed by 4,500 and the 4,300 levels are all MAJOR supports the bigger of the three 4,500 . 
Whilst we are obviously in the midst of yet another mini correction I am not too sure how long it remains intact and for now is just a great buying opportunity for me. 

Funny thing about these macro driven corrections more than anything else the violence visited upon the market at times is extreme and illogical but a week or two latter we go what was all that about ? We certainly appear as though we test at lest the first levels of support on the ASX 200 at 4,600 ... But beyond that I don't think longer term for fundamental reasons the bottom is where we are going. Eventually they will test our top and the USA will bounce like a rubber ball back above its own 50% retracement level of 1,121 and go off on its merry way.

Its normal for the market to advance then retreat and a correction of 2/3/4/5% ensues in the middle of the big picture. What started this ball rolling was simply put ... Bank bashing and the fact is if they split banks in the USA and remove them from the proprietary trading sides if one thought out the process longer term it means something positive ... Not negative as the market reacted off the bat. What it would involve would be banks splitting and forming 2 or 3 or more companies from what they are now and the sum of the parts is usually more than the final total. For the USA on their banking side the prices of these assets is not like ours at all time highs but still on the main in tatters so if they say to a big bank there they have to spit eventually it means a positive thing as opposed to the initial reaction. Not going to happen overnight but over the course of 2010 if that the way it goes buying a bank and then getting a pretty vanilla bank and shares in an investment house and shares maybe in a hedge fund eventually vs overseas valuations for these things as opposed to where the valuations of the parts sits in the USA I suspect means they go UP ... Not down in value.

All besides the point at this stage and the USA looking sick ... No so worried unless something changes in a large way and our market despite this having very little to do with our banking side following lockstep in response to the moves in overseas equity markets.

Most recent excuse of the day is that China may raise rates ? Well a few months ago the estimate for the Chinese GDP just released was up 9.6% well out if comes and was it 10.6% or 10.7% ? .... DER .... Its stronger and a positive for the global economy ... Especially their larger trading partners and we are the export hub for them so its not a bad result and any move in rates given the levels of GDP along with some pretty strong credit growth via lending and a CPI at the higher end of expectations to me is expected either way. In essence its noise but the sum of the noise is that its growing STRONGER than expected and the rest is just noise.

Anyhow we shall see where this correction takes us. Markets have a funny habit of doing the unexpected and for me at least the eventual target of the rally in 2010 is somewhere in the region of 5,250 to 5,400 with me favouring the latter in the latter parts of 2010.

My move my own personal one came down to many things and giving for free some other view on the market cycles has been rewarding over the years but I have reached a conclusion after the GFC being my fifth major correction in my 27 year career and its went along the lines of needing to do more and be involved on an individual basis with the course and fates of peoples lives. 

My views back in November 2007 were very stark and diametrically opposed to the common view being fed to the average person. To encapsulate it ... it was at 6,750 at the time I doubted we got to 7,000 and I viewed with 25 years full time experience at the time the set of circumstances we found ourselves in to be the worst I had ever seen and was of the view we fell and fell very hard. The exact line I used was about this not being a mere market cycle but a long term turning point and remaining fully invested in the market I suspected would lead to a very large chance you saw long term destruction of your assets and capital by being fully invested. Basically get the hell out of dodge. This view did not change till we were closer to the bottom and then the view changed along the lines to the fair value of the market was 5,000 ish and we went to a vast premium and at that point we were at a vast discount and either the world ended tomorrow or it was time to take the plunge.

Here and what is driving my decision is the fact that I honestly believe as I said at the time we would eventually go back to around fair value ... At the time when I wrote the other piece we were at 3,200 and here we are essentially back near what for me implies fair value at this stage and I don't see this changing much as time goes on. What does scare me ... Not the fact we may fall well below this fair value point or actually go the other side of it ... My move was and is driven by the long term view the market over the coming 10-15 years will look very similar to those in the 1965-1985 period and be sideways as such and for someone investing the markets back in 1965 was lucky to have the same amount intact after inflation in 1985. 

I believe we are in for a long term prolonged period unlike the 1985-2007 period but one where things rally fail and basically we end up not much changed over inflation. For someone as I am in my mid 40's and in the peak period of savings if we cant and don't get a decent return on our savings for retirement at the end of the journey we should be with a nest egg at least 10 times our yearly earnings if not more, but with this scenario without making something out of wise and long term strategy unless we were to save OVER 20% of our salary its not possible to see this happening. Hence my decision as such ... Having been a relic of the market and I mean this in a nice way most new things are not so new when you started in 1983 and my own next 20 years will be spent helping those who need help and accept they need help and I will give them my best which is pretty good. Overall objective is to outperform the ASX 200 by a fair margin with as little risk as we can over the years. Sounds fine but if you are like me say at 45 with a stash in super but still 20 years till you retire. Long term performing 5% over the ASX will see you with 2.65 times MORE at the end and the objective of taking 10% on average would see you with 6.72 times MORE than you would have got. Its nice to dream of making a killing in some penny stock and being able to retire ... But to make any return is about RISK and taking risks and trading those risks around ones objectives.

Actually having an objective is also very nice but that's another story. My own mission for the next 20 years is to comment on the macros and cycles from time to time ... Not sure in what form at this stage ..... And my other mission. Do suspect the next 20 years will make the last 20 appear very different. Things over the last 10 years from the Dot Com fiasco to 9/11 to the AUD crash and recovery to new post float highs to the GFC have been interesting but suspect from here ... Where we are basically fair value at 5,000 on the ASX 200 over time yes it gains with inflation but seeing it behave as in the past 10 years let alone 20 years I suspect a pipe dream. In the end it will come down to buying low risk stories with high confidence of them coming true and then having the brains to sell the same stories when they come true and the market which was paying 70 cents in the dollar for a story worth a $1- is willing to pay $1.30 cents in the dollar and because you got the story right the value is now $2- and you take all or at least some of your money and buy into the next 70 cents story.

Sounds like fun to me, my journey either way !! 

Take care

Mark


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## Nero64 (23 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Hi Mark, 

Thanks for posting. It sounds like you genuinely want to share your knowledge and experience with this forum. 

So you're saying this minor correction will see us down to 4500-4600 and then see us up to 5400. However longer term say 2-3 years away we might retrace below the 3073 mark?



> Used to read your posts on the other forum.




Brad what is the other forum that you speak of?


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## nomore4s (23 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*



kahuna1 said:


> In the end it will come down to buying low risk stories with high confidence of them coming true and then having the brains to sell the same stories when they come true and the market which was paying 70 cents in the dollar for a story worth a $1- is willing to pay $1.30 cents in the dollar and because you got the story right the value is now $2- and you take all or at least some of your money and buy into the next 70 cents story




um, how is that any different to share trading anytime in the last 100 years?


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## kahuna1 (24 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Nothing different about stocks for the last 100 years :}

Not a thing !!

Having been around for 27 years now its always the same old ...  same old  .... nothing changes.

For me nothing could be further from the truth but its a difference and ability to accept at times you are wrong and completely wrong and what you do that differentiates the results.

What I thought was pretty clear about this thread is CYCLES and MARKET cycles as opposed to anything else. If the market is going down and correcting as it does periodically being able firstly to identify WHEN the market is likely to stall and correct is something which is OF VALUE. Reason being is that in any old normal correction the 8-15% sort of one that happens about every 9 months or of late even closer .... The sad fact is that in a normal correction about 85% of ALL stocks go down and normally during these times the ones that perform BETTER over the 12-24 month period actually fall MORE than the market average during the fall and it is quite often they fall 2-3 times the markets correction.

Its nice to say nothing has changed in 100 years and the ability to pick shares that will perform is paramount to any investment strategy longer term. You buy rubbish you end up with rubbish in the end. You pay $1.50 for something worth 50 cents the market is the great leveler on these issues. 

To put this I suppose into perspective I will talk about three stocks that I bothered mentioning on the thread on another site during the first two corrections back in 2005. I liked them in varying ways but all three were very large and well diversified .... And having identified value and their stories being excellent even if one part of the story and conclusions I reached was not correct ... During these corrections of 8% and 10% the stocks in question fell between 20 and 25 % .... CSL was one of the stocks and back early 2005 the story was exceptional for CSL and during the first correction ... Market correction these cyclical things I like to look at it went from a peak of $34.85 to a low of $27.25. This was PRIOR to the stock being spilt 3/1 so the stock in reality over the next 2 years QUADRUPLED but during this correction what happened ? The market overall got hammered by 8% or so ... CSL went down 21.8%.Same sorts of stories I had at the time with BHP and WPL and over the years.

Over the years I suppose I have spoken about 100 of the top 200 stocks and each stock I believe not only has its own cycle but one in relation to the market. One I talked about a lot has been BHP and loved it at $20- and below but up near $50- in 2007/8 not amused and back down there loved it ... Now not so much. On the other side outside resources JBH loved it and loved it with a vengeance $3-5- not too amused above $10- and it went to $17- whilst the story got better during the GFC but it fell from $17- to $6.87 late 2008 and love again.

Cycles and value and valuations all play a part in everything but buying into a market in the midst of a massive correction as opposed to waiting till it hurts for either the value to cause you to act anyhow or the market corrects to a level that it is clear its stopped or likely not to go much further sounds nice .... 

Going back to CSL in 2005 it was a decent stock even then but emerging as what it is today and a market leader in its industry. The difference being is that the stock TRIPLED and QUADRUPLED in that two year period from 2005 to 2007 and  even in the midst of the GFC the lowest point it got to was 3 times the entry mid 2005. 

Cycles.

Oh well just a new thread and new ideas for this site and the fact is for me at least have decided either way to embark on a hands on thing for my next 20 years either way. Having worked for institutions for the larger part of my adult life .. I am happy with this new direction and journey I am about to embark on.  Most people who trade eventually the numbers are something around the 80-85 % mark that loose money over time and not that interested in traders or the latest get rich fad. They don't need advice or help because sadly they already know it all !. Me with a CV and list of experience and results that back it up .... 

As I said its always a learning experience and without ultimate discipline and objectives clearly set out in the end they are a statistic. In this age of Internet paying 0.1% per trade vs a lot more for a full service broker is not a route many take. The difference is having to run your latest idea by someone before you act !! The difference is having a whole organizations research behind you vs your own. The difference is having someone whilst you are watching other things or off working with an eye on things for you and at times giving you some very unpleasant advice to get out or take some profits. 

The list goes on and on.  It has to be said the difference between a good advisor and a very poor one is something you have to work out. Ask them about their experience :} 

Enough ... This is my journey either way and about to embark on it.

On the market and cycles longer term as the gent asked. Well I suspect at some stage we get higher well over this 50% retracement mark latter in 2010 . Obviously the action overnight out of the USA is negative and will be negative on Mondays open. This right now short term noise and suspect we stop somewhere in the 4,500-4,600 region either way. Longer term nothing is going to change and the onward march of things in 2010 I suspect continues and the biggest plus is the fact that many cannot change the course of things during the year. USA cannot possibly cut spending this year and seriously cannot raise rates. Sad fact on the economic side with 10% unemployed and 17% plus underemployed they have seen more people loose their jobs this recession than the total of the last 3 recessions. Second whilst their are some glimmers of light and longer term the fall in the US dollar makes them very much more competitive and they must take advantage of this with both hands on the tiller we have some background stuff going on which lead me to suspect the road to eventual recovery will be long and hard. One is that they cant keep spending this way and its not enough just to raise taxes they need to slash spending in 2011 and onwards.

 Second is Obama is in trouble and politically he landed in a total mess and as such the prospect of raising taxes or cutting spending or even raising interest rates when he is slipping in the polls just is not going to happen. This for me underpins the whole rise we have seen of late and if its business as usual or should I say UNUSUAL with rates at zero % this underpins the current market I suspect for 2010. Late in 2010 I do suspect there are three things which will stop it in its tracks and they are the ones mentioned above. It will be much clearer that unemployment and underemployment is stubborn and even if they get some new jobs the numbers sitting on the sidelines will just come back into the labor market and the numbers will not improve much. Secondly the time for the cutting of spending or raising of taxes, both which need to happen sometime soon will be looming over the market and thirdly with such poor underlying fundamentals via the real economy the corporate numbers and future outlook late 2010 will not be that good.

But I suspect its all things ahead for now at least ignoring this blip in the market the underpinning of things via out of control spending and zero rates continues onwards into 2010 and the sad fact that Obama has inherited a mess and with falling polls will leave him with two choices either bite the bullet or play to the voter and its always the second especially when he is already in trouble with some reforms I am unable to see him with the votes or political will to do anything other than the course now set.

Of course this may change in 2010 as it unfolds ... These goal posts have habits of moving over time. I focus on the USA but other countries have similar but different stories  some are worse like the UK.

Do love the line used by Gordon Brown in the UK budget statement of 2007 where he said " We will never return to the old boom and bust" . Oh how times change.

Predicting the future with all this going on is difficult but my best guess is we rally for the main part of 2010 and get to the 5,250 if not the 5,400 level on the ASX as the year unfolds. Form there given the negatives mentioned I suspect we run into a brick wall and have some pullbacks latter in the year which will I suspect be one correction and recovery followed by another leaving us at best not far from where we are the 4,700 mark by years end. The positives are huge and so too the potential negatives given we are a million miles from where we visited less than 12 months ago. I cannot see things closing with anything like the gains seen in 2009 and its a stretch to see them being able to hold onto the gains I suspect we see sometime during 2010 as the year unfolds.

Anyhow just a view ... 

Take care

Mark


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## Sean K (24 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Mark, thanks for the upddate. kennas


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## jet328 (26 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Very interested in a cycles type thread K1. Your 2007 call saved my life-savings. 

Up until 2005 I'd always invested in managed funds through my financial advisor. Managed funds were a logical choice, the advisor recommended them and they were the experts doing this stuff all day compared to me reading the business section in the paper for 5 mins a day.
In 2005 the managed funds started to annoy me as 1. they seemed to be underperforming the index quite a bit and 2. they were really tax inefficient (ie. for a 10% gain, 9% was coming as income & 1% as capital gain) for a LT investor.

The FA & I both concluded that as my portfolio, income & experience had grown it was time to go with direct share investment. To cut a long story short, I entered 2005 with a 55% geared margin loan. 55% was very conservative as we weren't going to anywhere near the maximum they allowed you of 75%, 90% is common if you were buying a property and the market would need to crash 30% just to get a small margin call. It was also going to save me tax.

By late 2007(I was a bit of an expert at this stage) I'd been reading your entertaining posts for nearly 2 years and was amazed by your depth of knowledge and uncanny predicting ability. However, I was always big enough to admit that I definitely didn't have this ability and 'trading' wasn't for me, I was a LT investor. When you made that call at 6,750, I thought you were being way over the top and didn't understand the implications of the emerging BRIC countries  , maybe we got a bit of a correction but I was a LT investor and it wasn't worth selling for all the CGT. 

Luckily a few months later, one of your posts and some hard thinking made me realise I was hoping instead of looking at the facts, didn't want anyone to turn my money making machine off, didn't want to take any losses and taking in only positive news. Took the loss and learnt some valuable lessons.

It makes your stomach churn, thinking about being 55% geared June 2008 onwards. Would have been a complete wipeout. I remember buying OXR at $3.40, compared to the low of $0.40.

A big thanks from me K1, learnt heaps over the last few years from your posts


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## kahuna1 (26 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Hi Jet328,

Many thanks for those kind words.

It is always with amazement I look back at some of the moves and views I shared and what actually happened. You mentioned one stock OXR .... Well for me I also had a lot of pets and what was and is lost on most is that there is not only a cycle for the overall market but also the underlying shares and commodities or products they rely on. Fortunately having been around for so long I seem to have developed a tail like a cat in a room full of rocking chairs. It however is confounding and frustrating when someone expresses a view differing with the masses or supposed experts views.

Covered a few on this new site but classics and turnaround which astounded and confused many were the oil views a bull on the other site for many years even to the top suggesting it would go to US$150- but when it got there ... After being bullish realizing that either the world imploded or it went down and down to somewhere near half. Little did I know how hard or fast it would fall other than to sit on my hands as it unfolded.

Hard if not impossible to fall in love at times with stocks and for me having been around since 18 and with 27 years now in its been lessons learnt the hard way as most must. Sadly cant convince or teach this other than those who in the end decide they need advice eventually take it. Even I need and take advice and it sometimes comes in the form of a smack in the head vs my own conclusions regarding any sort of investment or asset class. Sometimes its all right to ride things up on the wave of hysteria but one ALWAYS must be looking for the exit. 
Never a uranium fan and the single event which sent the spot price upwards was the flooding of a mine, Cigar Lake, which was almost ready to open and provide 8% of the world supply. Nothing like this to send prices to levels never seen before but my view longer term after this event was unchanged and we fell to sub US$50- levels by 2010. Didn't mean I could see the hysteria and what was in reality happening where hedge funds cornered the tiny spot uranium market and were able to take it 10% at each weekly auction for a period. Hopping on the elevator was fun but risky and I remember sharing a ride for 25% over the course of a month for 5 different stocks but always it was a small proportion of my funds and always recognised as risky on my own part.

Life takes us in cycles and for me its back into the managed side. After starting age 18 as a trainee dealer and ending many years latter as chief dealer of one of the worlds largest banks and then going out on my own its back inside the institutional environment for me but with a difference .... I serve my clients and no one else and whilst I enjoyed my time outside the structured side ... I never really left the institutional side having been involved with large fund managers for many years as well as one of the larger private traders on the outside. 

One problem a gent covered on this why the hell would I be going back ? As reader know its pretty lonely being your own boss and only having interaction with a screen most of the day. For me my outlet was giving some general advice for free on various topics and over 10,000 pages of original content .... But in the end I have decided to go the institutional route but not really. In the end I will be working for myself and my clients as opposed to being paid by the institution itself. Life goes round in cycles. I suspect it will be a lot more rewarding than having a discussion with some nameless person via a chat site and trying to stop them buying the worst shares I have ever seen. For me being performance driven my benchmark other than performing for my clients will be beating the ASX 200 index by a decent margin over time and being involved on a personal basis with each of my clients.

Cycles and peoples lives are like individual shares and the overall market or currency or commodity cycles. For me its not full circle but back inside the institutional side but without the political stuff which I have and had little interest in even when I reached the top :}

Wish there was some formula I could impart onto people and get them to pick these cycles and overall rules to get better performance overall out of their investments and obtain their investment objectives and goals. Have devoted some time to this issue and why when I loved a share and its long term prospects say as I did SLX did I sell the lot at just under $10- only to see it a week latter at $13.50 and then take some flack only to be able to re enter the stock well under $3- during the GFC ... Same for so many from my other pet AQA to the IGO story to big boys like BHP which didn't amuse me first time at $50- or WPL near its highs and then get back into them lower.

Not suggesting we see a correction like we just saw anytime soon ... Loosing over 50% from the peak to the low on the ASX was hopefully a once in 20 year event. What I do feel very strongly about however looking forward is that we see some pretty wild swings even going forward as opposed to looking back the last 10 years. This is a very big statement given what we have seen in the last 10 years. Not thinking we see a 50% plus event again but I do suspect some of these corrections I have talked about in the past and dwelt on for many years which usually are 8-15% we see similar tops and bottoms but the scope of these corrections will not be of this order but I suspect we will see MORE larger corrections of the order of 25-33% over coming years than in the past. 

Being fully invested in any asset class when it corrects 25-33% as opposed to being only partially invested or defensively invested near the peaks in shares with less volatility to the market moves basically speaks for itself. My own course over the GFC was well spelt out elsewhere but when the advice of the largest fund managers for 2008 was the market goes up 15% ... My own view and backed with my own money was we went down and down 35% if not more. As a result post GFC and two years or so on from the peak the market is down 30% ish and even my own super is UP 65% . 

Sadly don't see things getting any easier as time goes on. Having been around for so long and being able to read between the lines the sad fact about some of the companies I asked for an opinion on their accounts were something at best I would call interesting. I do remember the gent who came back to me time and time again belligerent about his views on various things and he was always reminding me of my view on his favorite stock and as it hit new highs he reminded me time and time again. Sadly Babcocks is not around any more and I do hope some things I said maybe gave him pause to question things. 

In the end there is no substitute for diversification. One never knows everything and diversification is ones protection against this. Other thing is there is no substitute for quality and as always my favourite stocks have not one thing going for them but 2/3/4/5 different factors and any one of them is worth 25% to the stock so if you get two three or more right your laughing. Last thing I will impart is knowing your own risk appetite and objectives. If you only have a small appetite for risk you NEVER should be holding an investment rated as speculative or highly speculative. Actually knowing this and your objectives and then building something of beauty around this is what investing is about, not much else.

Enough rambling from me back to the study :}

Take care

Mark M


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## explod (26 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Have just had a good read through your thread K1 and like the approach very much.   Too late for this ole black duck to make comment this evening but looking forward to the discussions.


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## kahuna1 (29 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Howdy,

well what a day that was. What a week and the doomsayers are out in force. Every side we seem to be getting smacked from and if its not an internal issue its an outside one and as such we closed today below the first support I had and suspected we got to on the ASX 200 and actually closed below it. From here there is fairly Major supports all the way down and the big one is not far away at all at 4,500 then another couple about 2% lower than this and whilst technicals are nice its with a grain of salt at times they should be used.

having mentioned some of the factors as to why despite zero interest rates I suspected we ended 2007 basically unchanged at 4,700 on the ASX 200 but thought we rallied over the course of the year and fell back latter in the year its interesting that some of the factors already have been wheeled out already in a steady diet of bad news.

One thing I will say is that the underlying and core reasons I suspect we actually do rally still remain very intact and alive despite many crying yet again the end of the world. Today listening to the financial news in the background one caller who is ALWAYS bearish was wheeled out time and time again predicting we went down 25% from the recent peak so in other words he was seriously calling it to go to 3,900 ish. As always I am amazed these people are given any credibility as it was the very same person when the ASX 200 hit 2,000 was predicting it went to 1,000 and when it high 3,000 it went to 1,500. The high as we know was actually 6,853 on the ASX 200 before we had the correction.

This said I cant rule out anything with 100% conviction but I can point out a few things. What has changed in recent trading days taking us back down to test these supports ? Well on any basis we had a massive rally and some consolidation either Way was in order. the only news of note I took great notice of in the last week was the US fed clearly signalled they are not about to change their interest rate policy anytime soon. conversely and absurd as it is despite anaemic growth over here the RBA is touted to act yet again. I still am of the view they made a mistake in raising so aggressively in the first place and my view given the obvious fragile nature of the markets they may even pause with next months expected rise much to the surprise of many. On the domestic front the proposed new changes to resource rents and taxes again weighing on the commodity sector for now. 

Externally China as strong as 20 men again and with rapid rises in real estate and a GDP growth number out of the box well above anyones call from a few months ago has taken steps to tighten lending and is likely to act maybe on interest rates and the currency ... but again this has to be taken into perspective of the big picture and growth there was MUCH stronger.

Other negatives wheeled out over the last 10 days .... hmmm Greece and its debt but yet again they will i suspect flood the country with credit and eventually this threat will pass. USA side its clear Obama is in trouble and looking like a one term wonder and as such he cannot turn off the taps and its actually a positive for the markets rather than a negative and the debt levels are something to worry about in the future and not right now. His proposal of spanking the banks and their proprietary trading sides and taking the risk off the table will i presume when someone actually thinks about it be a positive thing not a negative thing and it will involve Banks splitting into 2/3/4 different entities but no one thought hey the sum of the parts might actually be worth more than the whole right now and the market like the lobotomised dog it is only took the negatives.

Lots of other negatives wheeled out and frankly not too much of great note.

Certainly the market will go where it has to and whilst I suspect we find a base and they actually look at the big picture rather than the negative aspects of recent events the bottom line is .... things are cheap and cheap in anyones language. Banks recently crushed around the globe are now basically guaranteed via the govts and closing prices today for some of the banks here with none of the problems of overseas and fully franked dividends of 7% or more equate to a return of 10%. Same for old telstra and whilst not a fan of them their franked dividend and I suspect limited downside even if the wheels fall off again. Similar bargains speckled around the whole index from Listed investment companies paying decent dividends and records of the dividends going back many years trading at 75% of NAV or NTA .... same for some infrastructure ones in similar straights who have sold assets of late or done issues and their debt levels are positively low vs 2 years ago ....  on the larger side some great companies with great pretty much locked in outlooks and improved EPS ect ect again selling at very low multiples and also great dividends.

Maybe we get there as the pet caller of the market was going on about today but then again maybe his current brave prediction is worth about as much as it was each year for the last decade barr one.

Either way building seeming of beauty and with a decent underlying income and in this case a very good one diversified over many sectors and buying things for massive discounts is always for me the way to go.

We shall see however if they can keep up with the negatives and cause full scale panic. I suppose given China's record they do something over the weekend and if the USA is sick again tonight it will be perfect timing to enter the fray as the lemmings jump early Monday.

Have fun

Off to do more study for me ... tonight may be fun and if chian acts the old margin call selling on the open should set the fur flying. Either way not too fussed.

Cheers

Mark


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## kahuna1 (30 January 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Ho Ho Ho ...

And down she goes yet again.

US numbers out last night and they were actually good and for once I believe them ... US GDP is up 5.7% for the quarter and down the market goes. On one side the numbers are positive and actually show the US is recovering to some extent but there always is a problem with number and in the case of the USA and their playing with seasonal adjustments for so long and NOT reporting the real state of affairs they cloud the actual and real state of affairs over there.

Way back in mid 2007 everything was being reported as rosy and out comes a number late 2007 that on first release was reporting the US economy was growing at an astounding rate similar to what we just saw up around the 5% number ... and off we went to the new highs and highs of the cycle back then for the ASX 200 it was 6,853 but underlying these numbers was some just awful assumptions and never seen before seasonal adjustments and clearly late 2007 there was serious trouble in the financial side ... even the next number was almost insane reported as growing strongly despite the fact at the time oil was going nuts and being a very large import into the USA a negative as a drain via higher imports and it should have been a big negative as the price of oil to the consumer via petrol prices had nearly doubled at the time ... but they seasonally adjusted any inflation out of the equation and taken all the negatives off the board and despite the imminent crash of quite a few financial companies they reported the number as yet another massive positive and the end of the correction was heralded and we had one of those insane bounces early 2008 ...

We go forward now two years latter and trying to sift the real state of affairs for the US economy has become not much easier to call ... the largest single gain in 6 years in a quarter was just reported and .... its a matter of trying to work out what it really means.

Well after the buggering and never seen adjustments of 2007 and 2008 late 2008 and 2009 eventually they had to report the reality and we saw some massive downward one off adjustments to GDP and employment and other statistics which had been skewed to an insane absurdity .... so here we are .... 

In short they fire bombed their results and reported the actual worst of the worst and the GDP gain has to be viewed as such off this very low base they have and whilst it is a positive and a positive we should make NO mistake about ... NONE the US is recovering and whilst the headline number looks insanely strong its merely a statistical aberration out the other way and whilst the number and underlying facts show the USA is growing and clearly growing its off the fire bombed base they ended up at mid 2009 ... so in reality the headline number looks great ... the sad fact is VERY different.

Market today is reacting I suppose to the possibility that some of the stimulus may be withdrawn over the coming year and the proposed plans to further stimulate things in the USA will not happen .... however the GDP result whilst clearly positive and clearly showing the effects of the US dollar depreciation and the stimulus taking effect is coming off a base that is at bedrock. Bottom line as the US fed said yesterday and its view is unchanged on US rates for a very good reason and that being this time around the economy lost so many jobs its going to take a long time to even approach where they were in 2003. They lost more jobs than in the last 3 recessions put together and the road to recovery is going to be a very very long one. 

So as such this unemployment issue I have been prattling on about is not going to go away anytime soon and with 2-3% of the workforce just giving up and headline unemployment in the USA going from 5% to 10% ... any real recovery and sustained recovery is going to take 12 months if not even longer. They basically need 500k new jobs a month for 18 months i suspect even to get back to just the 7% unemployed which still leaves them well short of the 5-6% unemployed they were mid 2002. I just noticed they revised all the official estimates going backwards for unemployment going back to 2003 ..... UPWARDS .... the actual reported numbers from 2007 were all under 5% .... except for the Dec number which hit 5% ... so the last one two years latter added 5% unemployed and another 2-3% who had given up looking for a job. 

Either way .... whilst positive, the GDP,I doubt they change a thing and  the problem with economics right now is sifting through the rubbish and coming out with a real picture and whilst the GDP number is positive and good if not great positive the USA cannot and will not act to change a thing because even with numbers like this the US unemployment number at the end of 2010 is likely still to be 9.5% still unemployed vs a 5% number two year prior to this. As the numbers show strength more will re enter the workforce and the number will stubbornly stay high. The US fed is aware of this and as is the Govt and as such the knee jerk reaction of doomsayers predicting the taps might be turned off anytime soon are ... at this stage unlikely to happen and so unlikely its almost absurd given the real state of even the reported underlying numbers.

So where does this leave us ? 

I suppose they test these supports some more .... is it 4,500 ? Or the next one at 4,340 ish on the ASX 200 ... in some ways this has been a correction and qualifies for a cycle and correction vs the high either way given where we will open on Monday. Given what I suspect is the real underlying picture and its factual the state of the unemployment in the USA and the actual numbers needed to get it to improve are again factual as opposed to being an opinion its a matter of when they take hold with the market and realisation that rates are not about to go up ... the economy will be allowed to grow at this pace for some time before they lift a finger and as such the fates of the companies on the index will go up ... not down ...

So yet again we are trading one way and the clear direction going the other. 

Nothing new in this and we shall see where it all ends. Quite happy with some pets I have and being given a franked dividend so high and the real possibility of in the future the chance of a decent capital gain is one I quite like vs the other choices. 

One thing I didn't mention about weighing our market down is the old drag from the interest rate side and there have been some quite astounding deals around for the last few months as banks and big banks are prepared to pay over the top for deposits and one bank was offering 6.8% for 12 months only to now be offering 8% for 5 years. With such a great deal being offered on one side its proving irresistible as it should to some to take the choice of decent safer returns vs investing in the market right now. 

Interesting how steep our yield curve is .... but in reality if one looks over the ocean the yield curve in the USA is just as steep and 3 months near zero and 5 years 2.3% higher when one equates this back to a corporate or in this case bank over here our cash at 3.75% and likely 4% .... vs 8% for 5 years ... is an astounding deal either way being offered by one of our larger banks. Hence the lack of ability for the market to make any headway upwards when funds are being drained out of the system this way. Conversely on the other side being offered a fully franked dividend of 7/8/9% from the very same sorts of sources effectively I suspect is a much better deal longer term given the rosy outlook for earnings these companies have at present for 2010/11/12. 

As per normal a tale of two cities and its heaven for value investors even now ..... and as to constructing something which will be fairly safe no matter what happens ... golly gee getting 8% for some of your assets and 7/8/9% fully franked for other parts with some good prospects for capital growth ... the pickings havn't been this good for many years even when we hit the lows last year the other side of the equation was the sad fact a lot of companies had massive question marks over the size of their debt or leverage and everyone was thinking the end of the world. Now for the decent ones they have either sold assets or paid down debt and reduced the risk to below levels seen for the past 10 years and in the meantime I think we all now realise the world doesn't end anytime soon.

Monday and next week will be interesting with yet another negative lead from the USA and some move out of China tonight or tomorrow a real possibility  its a matter of picking the best overall mix and going with it. If you lock into something mixed between the two options and just sat on your behind for the next 24 months the reality is we would have to fall further than we did in sheer panic in 2009 to come out behind and as we creep lower the equation and risk reward is just getting better and better whilst in reality we went to the brink and stared over the cliff 2008 and early 2009 and where we are now in 2010 is 200 metres away from the cliff vs back then.

good luck and back to study for me

take care

Mark


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## kahuna1 (2 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*



kahuna1 said:


> despite anaemic growth over here the RBA is touted to act yet again. I still am of the view they made a mistake in raising so aggressively in the first place and my view given the obvious fragile nature of the markets they may even pause with next months expected rise much to the surprise of many.




I wonder if I get  a gold star ?

Not really but it was somewhat obvious they were thinking about not acting but only one person was calling a halt today of the economists polled.

We have I suspect found some sort of a base here after the madness of yesterday when people were literally throwing money away as the bears and end of the world callers came out in force.

Goes without saying what the USA does we follow but was impressed with Obama's budget and whilst reversing the Bush tax cuts which at best were idiotic he managed to spend half of them on new programs .... which is not great but a very big step in the right direction to get the USA out of this maze.

Interesting some of the falls of late have been led by various sectors in the USA and yesterday it was the tech side which dragged the US markets down ... over here the small ords and smaller ordinaries especially the resource side which has been torched. At the other end of the market the big players with massive well  diversified portfolio's have been left alone both in the rise the last 6 months and so too the retracement.

Usual rules ... none of it new.

Still remains to be seen if this is the actual base and with the scardy cats out rattling their tins around one never knows. Lots of air time to the usual bears at the moment ... and does anyone seriously think the EU can put one of its limbs to one side in the name of Greece ? I dont think so even for a short period of time and as such things are actually getting better not worse on the overall picture and likely outcome ... but in the meantime the market of late has been a one way street of selling.

Of course the usual caveats on this view and some ugly stuff out there but its an aside right now. Biggest one I suppose of a concern is the big Mutual funds now fully invested with near zero cash and if there is any serious sorts of redemptions as we saw in 2008 it will be like a millstone around the market as they dont have the cash to pay the redemptions and are forced to sell to get the cash. Some of the action over here yesterday was of this sort of things as some wishy washy investors pulled their money and there was no choice left for the fund manager other than to sell and cash up to meet his clients needs.

Nothing like this sort of action at the worst possible time and todays super-ball bounce for some was a prime example of this.

Still not out of the woods and the sentiment is very negative whilst for me .... the underlying positives far far outweigh any negative short term sentiment being touted right now. Trying to quantify this I suppose yes I am contrarian to the markets views of the consensus views but since I wasn't asked about the interest rate decision by the RBA today and what my real view was it didn't count.

So I suppose from here we take the lead from the USA and will watch the overnight action very closely from the US as the reporting season contained nothing too nasty over there and quite the opposite as did ours ... their rates are zero for 2010 I suspect and unemployment remains  stubbornly high over there .... I dont see any real change to things for some time on that front. More monetary and fiscal stimulus. Over here only having spent 15% of GDP vs 65% on saving things and in a very different state to their economy with employment not having doubled and in fact moving back down .... hence I suppose the reasons behind the RBA moves in the past along with silly housing price growth and credit demand .... but they have paused for a breath of sanity.

Trying to pop an asset bubble as the RBA is trying to prick the housing side ... but using a sledge hammer is never my preferred option. Time sadly for the fiscal side to make it painful to speculate on housing and encourage building without overheating things as opposed to charging every sector of the economy for its problems and sending the currency to the moon.

Oh well ... suspect that was it for the downside either way .... but in this case one never knows since having had to listen to every misery guts on any and every media outlet for the last few days predicting the end of the world ... problem is there is always some idiot predicting a crash .... and since it happened recently it gives them sadly more credibility than they deserve especially since some have been predicting one for decades.

yes yes ... I know I called the same crash in 2008 with some scary  accuracy but the difference is in 27 years of trading ... or at the time it was 24 years ... it was the one and only time I saw things that bad falling 35% in short order. Having been around in 1987 it was over in the blink of an eye ... dot com ... easy call and similar  but unlike the S+P we here were not tech dominated at the time .... The S+P 500 in the USA was and the NASDAQ golly it fell 75% or so .... we are being told and by some people who are not stupid some quite interesting things right now. A broad based crash from here with zero %% rates and every goverment on the planet bending over backward to ensure the opposite happens. Dot com was a sector that went nuts as opposed to the current suggestions or those at the bottom of the cycle back in march that the world ended :}

As for now ? If you seriously think its going to happen again well all is lost. Me I am very happy to buy a company with a dividend of 9% fully franked and likely even higher as the years go by :} If everyone shaves off their eyebrows and they are prepared to sell my 9% fully franked company down 25% or 33% so I am getting 12% I will use the 9% income to buy MORE. Eventually after a few weeks, months or maybe years they will wake up:}

Stay cool

cheers

Mark


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## jet328 (3 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Thanks K1, some top posts there



kahuna1 said:


> Trying to pop an asset bubble as the RBA is trying to prick the housing side ... but using a sledge hammer is never my preferred option. Time sadly for the fiscal side to make it painful to speculate on housing and encourage building without overheating things as opposed to charging every sector of the economy for its problems and sending the currency to the moon.




http://www.theage.com.au/business/rba-on-housing-told-you-so-20100201-n7x7.html

Its going to be interesting to see how this is handled as the year unfolds. There is just no way any politician is going to do anything on the demand side and seriously doubt anything happens on the supply side either. If our population is going to increase 400k+ (IIRC) per year, that's a lot of new houses that need to be built each year.

jet328's solution for gutless politicians 
-max LVR of 85% on PPOR or 75% if not (It's always going to be the taxpayer backing up the banks, why the average person should be insuring against someone with 30 properties at max max LVR.)
-FHOG only on new homes, existing just adds fuel to the fire and adds nothing to supply (currently should be called the first home seller handout)
-Plans made with the states based on population growth for land release/infrastructure
-negative gearing- losses can be added to cost base but not taken immediately. Current situation is just encouraging speculation, 100% dependent on selling higher to the bigger sucker 

Greater chance of the UK balancing its budget though


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## pixel (3 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*

G'Day Mark,

Wow, am I glad I found you here. Your thread "over there" hasn't been the same without you. Coming to think of it, it hasn't been the same once some of the more "arguamentative" members got stuck in and peddled their pet theories. But I could've lived with that if there only was a workable filter for one person's contributions. Or a watchful mod to nip nonsense in the bud (no pun intended - but on second thoughts... : )

No more rambling from me - I'll enjoy reading your take on the global economy and especially the ASX.

PS: Thanks, Bob; appreciate your e-mail


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## Gundini (3 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Agree with the complimetary postings above Mark, I find your musings refreshing!

Must admit the GFC taught me alot about Gov intervention and stimulus, and how they can save the markets. Unfortunately, it was only half way through the recovery that I worked this out. 

While I am cautious re this correction, my new knowledge tells me the Feds will keep those presses rolling. 

My economics 101 suggests this is not the best road, but is 101 right?

In desperate time we need desperate measures.

Is it not ironic we got into this mess by living on borrowed money, then, our elected learned financial gurus use the same principle to get us out of this 
debarcle? 

One thing is for sure and predictable. Somebody has to pay, some day.

Don't know who that will be, but I will probably writing grafitti on the inside of my casket!

For now, I will just go with the flow


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## kahuna1 (5 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Howdy,

Just couldn't sleep .... and then the phone calls :}

I am still in the process of transition for myself. 

It takes time and becoming a fund manager as such .

This for me is a cycle as I have been speaking about for many years on this thread.

Some of the things I talked about happening latter this year .... and my suspicion we rallied off decent economic numbers and the fact the US fed would not and could not raise rates have already peculated to the surface. My suspicion we rallied and basically ended 2010 at the same point or 4,700 by the end of the year an going up into the 5,000 plus region before falling back is not how the month of January or even February is shaping up. My concerns about a stubborn and elevated US unemployment number already on the front of everyones mind with the numbers last night and the reaction of a weaker unemployment number sending the Us market into a tailspin.

Still for me not a thing has changed for the outlook for 2010 and Obama is hamstrung between this crushing employment or unemployment numbers and falling ratings . He cant do much and his proposal to reverse the Bush tax cuts a positive one and reduces the US deficit longer term or the rate of increase ... buried in that tax hike was massive spending coming over the course of the next few years to bring things back into balance so on one hand he took 400 billion a year then spent half of it on hopefully creating jobs. Not a perfect outcome but overall positive longer term and coupled with the US not about to change rates anytime in 2010 the supports for the market despite todays drubbing are there. One cant argue with zero point zero zero rates !!

Debt and debt problems are something I have covered here for some time and this step by Obama and some other nations whilst the first step they are positive to get this problem back into the box before it all explodes.

Right now a hell of a lot of noise and its just noise and idiotic noise around about various things. A few months ago it was Dubai and its debt problems it was over in the blink of an eye. Up pops another pimple and its on the tips of everyones tongue. Seriously after 27 years out there its with amazement I watch these things at times unfold. Dubai was something of the order of 70 billion in debt and the current problem child is bigger ... yes much bigger so yes some attention should be spent there but lets get it into perspective ... its 300 billion and Greece is part of the EU and has been since 2001 .... as such its nice to try and separate it but they cant and with a mere 11 million or so vs 328 million in the rest suggesting a pimple can kill it or even derail it is absurd.

For the record 16 countries use the Euro and suggesting if say Australia twice the size of the USA vs Greece got into trouble would bring them down or give them much pause is what is being suggested by some now :} 
http://en.wikipedia.org/wiki/Eurozone

Cycles and more cycles within more cycles and the market looking at pimples is sometimes amusing.

Nothing new.

Nothing at all new .... other than the short term sentiment and end of the world view being touted right now.

What is different is that we just had one of the worst corrections of the last 60 years and this have given credibility to the downside and risks of the downside and as such credibility is being given where I suspect in the past not much would be given. As I mentioned I suspect the next 10-20 years will involve minefields like this which will be interesting and very hard to navigate even for those who believe they have been around the block a few times.

I take out of these recent times the fact the USA is going to reverse the tax cuts for the very rich. About time !! they then will reduce their budget deficit somewhat all be it increasing at this stage at a slower projected rate. They have announced increased spending to stimulate things again a positive. And the US fed is not going to act at least in 2010 I suspect. On top of this China yet again strong as 20 men and Asia outside Japan much unchanged.

The rest of it is noise ... all be it very loud noise but the next time I have some expert suggest Greece has the ability to anything other than make a decent Slovakia ... will make me scream.

Cycles and what cycles are is taking advantage of these moves in sentiment and values.

Having been around funds management and trading for 27 years and outside of being a trader of a bank its always been a committee which decides the course of most funds with a few exceptions its always amazing the decisions that go on behind closed doors and some of the idiotic courses of action people take .....

When I went bearish late 2007 and we stood at 6,750 and I did share this view very clearly this was not a small cycle of short term one we were entering but a long one and the chance of a substantial destruction of capital was the likely outcome its always done with some things in the background when I make these calls.

Continued ....


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## kahuna1 (5 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Whhops too long ... read other post first !!!


At the time I suspected given the severity of what was happening was not evident to most at the time I suspected the actual fair value of the ASX 200 was around 5,000 vs the market being at 6,750 so it was in effect trading at a massive premium to fair value. My own fair value was higher than this in months preceding this change of view but as more and more legs fell off the chair the fair value I had in my own head tumbled from 5,750 and the market only being 15-17% overvalued to 5,000 and it being a whopping 35% over the top. MY own reasoning behind this was clear as to why my fair value went down a lot ... the harder I looked at the likes of Babcock's and others the more evident was the rubber accounting and extreme debt levels ... US fudging GDP and CPI numbers ... ect ect

Anyhow ... doesn't matter why ... but as with anything we were just merely over extended at 15% or so over the top but at 30% ... its extreme ... and when we fell to 3,500 my comment coming back to this was we had gone from one extreme of being way overvalue to at 3,500- being the other side of value. The underlying value move on my own understanding of things had not moved this much ever ... in so short a period ... for an index overall and the reasons are now history and I was correct adjusting my line in the sand down and as the bodies piled up it was proven correct.

Now we are 2 1/2 years latter and lots of too and fro between ... the fair value at least for me in the market is HIGHER not lower than it was 2 years ago ... I had already accounted for the GFC before it happened and acted accordingly.

Cycles and this is the market cycle .... so right now I suspect fair value is at 5,300 vs a likely 4,500 level ... so whilst not wildly undervalue its not far away. That I see not much changing the underlying value and increasing value WHATEVER happens in 2010 and suspect the fair value will be 5,500 or more buying something at a 20% discount is always a pleasure. Given the predominance for the markets to trade at 20% the other side of fair value for the past 20 years its even a better deal. I dont suspect we go the other side of my own line for 2-3 years but it will happen at some stage .

This is the market cycle.

Now take this cycle and then apply the same principal to individual stocks. Each has its own cycle and its own value. Not talking penny dreadfuls and lets use the example of say CBA ... go back to 1990 it was floated at $4- and paid a 6% dividend fully franked. Lets wind forward 20 years and CBA still only pays a 6% dividend and as such your the same off ... NOT.

If you have been set up and reinvested using the franking credits and basically your compound your returns the return .... was and is .... you would have 2.5 times the amount of stock you owned in 1990 . Sure it still pays 6% ... inflation would mean you would need 2.2 times what you had back then .... to be even ... so $2,000 would need to be $4,400- right now inflation adjusted ... having done the exact sums the actual return the other day was you had 2.625 times your original shares and the $2,000 - would be $56,700- exactly in 2010. In other words you would be 12.9 times better off than inflation.

Now I want you to get a chart and slowly draw a line from the issue price of $4- in 1990 and leave it say at $48- right now ... I suspect its trading over the fair value by that much vs the $53- or $54- we have right now.

Now do you notice something .... I talk about cycles .... try to teach cycles and get people to tune the rubbish out ..... the share price of CBA has vastly moved around this basic fair value line. CBA yes has had some ups and downs ... but the fact that the tech sector went boom then bust had ZERO to do with them ... the previous S+L crisis in the early 1990's had little to do with CBA .... or did 911 ... it didn't change the profits of CBA much.

Now add the two together .... going more definsive when the market cycle dictates and gets too expensive and then selling when CBA or any other stock hands you a 20% or 30% over fair value .... and then buying when the opposite occurs. Gee the low of recent times for our banks vs where we are right now seems silly. 

If you add the two cycles together and are in a tax effective structure over time it really doesn't matter what the hell happens to the market. If you exited a lot or even half your CBA at the peak in 2007 and put it into a defensive stock paying a massive dividend say like TLS which only fell 15-20% at its worst and then with dividend you were only down 10% and then switched back into things that were at discounts of 30/40/50% to fair value ... meaning they were HALF price and in other words if they went to fair value it meant 100% profits ... you get my whole dedication to this thread and style over the years.

Problem is I can really teach either of the styles and certainly over the years sometimes on individual stocks ones assumptions on fair value prove incorrect ... but thats where diversification and being a bloody scab come in.

As many know I am a fair analyst :} I love value and stories with 3/4/5/6 things in their favour are my passion ... if only two come out to be correct each are worth 20-30% each even if the rest dont happen.

Now go back to the example about CBA and sell 35% when it goes 25% over that line in the sand and then reinvest it when it goes 25% below that line in the sand drawing the fair value from $4- back in 1990 to say $48- right now. The answer whilst a great result just investing and reinvesting the dividend and you returned 12.9 times more than inflation for the past 20 years .... a conservative approach going this way and just flicking 35% of your holding in and out and in and out ..... the result is not 12.9 times not 25 times ... how about 40 times :} CBA is not a great example even ... and taking 35% of your holdings off the table at extremes is conservative !!! Try it at 50% or 66% and the outcomes are fascinating.

Of course this comes down to being able to pick not only market cycles but correctly value the underlying share. It sounds easy but its far from it ... a very very long way from it. 

With 2,000 plus shares on the ASX and I suppose 100 decent ones out of that to choose from and applying this sort of principal to the whole structure only entering when it hurts and whilst at times swimming under water only entering when the value hurts and then being totally disciplined and exiting to some extent when the converse occurs is what cycles and investing for me is all about.

An ability to totally tune out noise and stick with ones convictions overall is not many are suited to.

For me its my life and has been for 27 years .... I make no bones about the costs at times being stuck to a market screen has cost but along the way its been a great life either way. One has a few loves in ones life and passions and this one is mine.

better run US market getting crushed and its the end of the world.

If you do anything ... identify quality .... then value ... then fair value of shares. Forget the rubbish or get rich schemes ... if you buy quality at a vast discount but maintain a perspective and ability to let some of the quality to go when they are willing to pay your 125% for something you payed 75% for .... do this over 20/30/40 stocks and have 50-60 pets which will change over time but their will be a core of 20-30 of them and as the market falls out of love with sectors and decides its willing to pay an 18 P/E for one sector and only an 9 for the other ... the choice is not a hard one to make as to what is more value ? 

Stay cool

Mark


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## kahuna1 (10 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Part 2

Still lots of negatives out there and I am personally concerned about a lot of them as I have shared with readers over the years. Biggest one is I suppose the commercial real estate side and this needs and suspect will be addressed over time especially in the EU and USA but with banks being handed profits like never before to repair this mess I suspect the next 18 months will self repair some of these holes. Bottom line is the EU and BOE and US fed clearly have ALL signalled there will be NO CHANGE to the state of affairs. Clearly China is strong as 20 men again and their GDP number was 2% higher than what was expected less than 6 months ago and 1% higher than expected 3 months ago ... So of course they are going to tighten. US is actually taking small steps to get their fiscal mess into order. Small but positive ones and reversing the Bush idiocy of tax cuts for the rich was and is step one.

This said one never knows and for me its pretty simple. Buying something of quality and getting a franking credit on a 12% plus dividend and the  simple equation is we are being handed a massive premium to take on some risk here. Buying with this and the credit would have to equate to the market being 15% lower in 58 weeks time for me to even be behind.

Nothing changes only the cycles and the market is obviously still extremely nervous but not sure about what. The noise out there has been deafening but to me its been cries of wolf wolf wolf. If they had been wheeling out some of the yet to be seen commercial property loans I might have listened but this too will pass as the commercial banks of USA and EU already are making massive allowances for bad and doubtful debts against expected write-downs and two quarters from now they will have pretty much covered themselves against even this. Amazing what zero % rates can do to a banks balance sheet.

Fiscal side some of my fears about what would happen latter in 2010 as they realised the mess they were in and had to take action to cut spending and raise taxes has come to the forefront earlier than I expected but so to has some of the positives I didn't expect till latter in the year and with this I mean the eventual bouncing back of economies which hit bedrock during late 2008 and early 2009. Clearly their are signs of life and whilst one is a negative short term the fiscal taps being turned off the reality is its reducing one of my longer term storm clouds over the market for the 2010 and beyond period. For me its actually a positive overall not as the market has reacted a negative. When they announced they were going to reign in banks trading activities overseas in riskier areas I thought about it and went its not a negative but a longer term positive. Banks will split off their trading arms and shareholders will get shares in vanilla bank and then shares in investment trading bank and the sum total of the value I suspect is a lot more than the values right now. This is for US banks not ours. US banks and their prices are still near bedrock levels and splitting off two arms one which is semi toxic and then other is a money making machine eventually will sink into peoples perceptions the investment arm is about 20% of the equation and when split the vanilla bank likely will rise to the full 100% level in short order since when spilt it will smell like a rose.

Enough ....  

Still a week or two away from my last post. Suspect this was the low if it wasn't golly gee what value is being handed out down here. I do just love 3 dividends in 57 weeks and 12% fully franked and an effective 17% after franking credits vs a 6% equiv for the bank deposits. Once a few of them have reported it should actually sink in. If they are expecting something bad maybe they should not our employment situation went sour for only a few months and then reversed back as opposed to say the USA where it doubled and still remains double what it was.

Take care

Mark


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## kahuna1 (10 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Howdy,

Well my cycle of posting on sites like this is almost at an end and as such draws even closer to the conclusion. I was expecting it to be over by now but as per normal ... Paperwork is heaven and transforming oneself into a stand alone fund or someone who is going to take on individually managed accounts and getting the accreditation is something that takes time. Its almost over thankfully and drawing to a conclusion. Sat a big exam yesterday and got through it, have to say if I had just studied the course notes however I would not have even passed. Thankfully I am what I have claimed to be and it made me think and draw on the experiences learnt over the last 27 years. Have to admit I was nervous prior to the exam and when I was reading the exam I didn't have time to think or reflect. After the exam and it being marked straight away it was somewhat amazing to compare the test exams against what they actually gave me. It was about three times harder and I suppose that's one of the joys of working for a group that makes all advisors actually be registered with ASIC in their own name as opposed to other ones which rely on the parents AFSL instead.

Enough about that .... Cycles and I am sure there is no one in charge any more at the helm given the ride and rubbish we have seen the last few weeks. One down day followed by another and another and then yet another. Technically as I sometimes revert to at times like this the support levels for the ASX 200 were tested but not broken. The first at 4,600 was breached and well smashed the next one which I suspected we stopped at all along was played with time and time again and that was the 4,500 on the ASX 200 level. Below that as I mentioned a few posts ago there was and is beyond this massive support yet another at 4,340 which is 3% lower and I suspected whilst we might test the 4,500 this second level below was not really an option. 

Of course remains to be seen if this was it, the low and we have been waffling with this 4,500 level for a while and whilst technical are nice they are for me just one small part of the puzzle. Macro's and the big wide world or economics out there the second part of the puzzle and added to that is the underlying fundamentals and then sentiment.

Sentiment is what sent us down into hell nothing more. After such a stellar run off the lows and for the USA recovering over 50% of the losses from the low vs the high and for our market nearly the same result .... It was time for a correction. What I suspect is as time goes on the old bear wagon is rolled out time and time again over the course of coming years and these periodic corrections actually get worse in their scope whilst not changing the overall and clearly set course of the market.

This time it was based on what ? Greece ? You must be kidding as I said all they are good for is making souvlakia and as someone now being bombarded by news every days it more a matter of tuning out noise than ever. As many know I tended NOT to read newspapers other than once or twice a week because the amount of noise and irrelevant noise created in them is astounding. So we were worried about debt from the EU. As previously mentioned the Greeks are a whopping 2% by value of the EU economy and suggesting they could cause problems is akin to suggesting a pimple on your behind can do the same. Even the rest of the aptly named pigs ... All of them added together made 15% or the whole EU equation and as such unlikely in the extreme to be a problem because Greece is 3 times worse than any of the others in terms of threats and was and has been always a problem child in the EU. But down they dragged the market.

If I stand back I commented during the Dubai thing that 60 billion or 80 billion was involved and sent the markets into a tailspin the bottom line was clearly a pin prick on the whole equation and the total macro scheme. Having had success in drawing the market down, like the little children the market is at times and driven by media reports now predicting the end of the world the lesson learnt last time that this was and is irrelevant ... They embarked on debt problem number two and out comes the media bombarding everyone's perception on things.

If you cast your mind back to the GFC and its mayhem visited upon most it was a case of the opposite and very few voices at the top calling it an actual top ... And then it was a case of the media being totally wrong and wheeling out bears and idiotic bears who had been calling the ASX 200 down from 2,000 when it peaked at 6,853 and giving them credibility by saying yes mate you were right. How funny this is. Makes my stomach churn to see some of the economists who called the ASX up in 2008 to 7,200-7,300 still regularly on the media expousing their views. During the GFC very few were right about the scope or calling the actual tops or the bottoms. I came close but as I said at the start with 24 years of experience at the time its not possible to accurately call these cascades and my initial call of 4,300 by the end of 2008 was revised as the year plodded on downwards ..... But still the eventual ending point of 3,750 ish was a bit below my revised target. 

All an aside, trying to predict the future is how I go about investing and buying things for value and my favourite is paying 75% or less of value for a massive company or for the smaller ones lowering the boom the smaller and less diversified they are works for me.

Right now we are on the cusp of reporting season and the ASX 200 dominated by financials the first big cab off the rank is CBA. Market yesterday had its willies and drove some of the banks down over 2% during the day. Have to say it was amusing and amusing in the extreme to be handed that sort of value right now. Simple reasoning behind why we are about to be a jack in the box I suspect over the course of the next few weeks has little to do with the actual results but more about knowing the market. I doubt the results of any of the banks will be too far out of line with expectations. If arm twisted I suspect they are if anything better rather than worse than the expected. All a big aside for a simple reason. One which will drive the market for the next 6-8 weeks over all else. Banks are about to report a lot of companies are about to report and declare dividends. These big fat juicy dividends as I keep mentioning are massive especially after the drubbing we just got in the market down here. Sorry rambling the bottom line is buying a bank or one of these monsters reporting in the next few weeks will get you over the next 54-57 weeks not one dividend or two but three separate dividends and if I look at the banks and the spanking some just got at over 10% from their peaks and then look at the expected and very likely dividends ..... The equation and what they just did makes little sense.

As per normal I can only conclude there is no one at the helm of the market and its as per normal being driven by some computer chip rather than the lumps of meat we all have on our shoulders. Taking three dividends over the course of just over 12 months and them being fully franked and each of them at 4% or so adds up to 12% for holding the 12 months. Add to that franking credits and they can take the 6% they are offering via a deposit and whistle. After credits its 17% vs 6% when I compare them.

Simple stuff but lost in the sheer panic of the last few days and weeks. When I heard one bear who was talking when the ASX hit 2000 in 2002 we went back to 1,000 and same for every step along the way the same come out last week and talk about an imminent crash back to 3,850 or so I looked at the market and this little fact about to happen the next few weeks and went gee I hope he is right for the first time in a decade :}


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## kahuna1 (14 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Part 2

Nothing changes .... always some reason for us not to buy ... and when it goes up ... even twice as many reasons not to sell ... from tax issues to the usual ... its going higher .... little secret not so well known one of mine is that every stock has a 30-40% range in a year and whilst sometimes I miss some of the upside on stocks I cut down or exit ... its all besides the point if I buy a stock for 50 cents because I think its worth a dollar ... time goes on and their business goes up and the underlying value goes to $1.50 then $2.00 ... eventually it tends to become a fad if you wait around long enough and your stock you purchased for 50 cents and is now worth $2- fair value eventually trades at $2.50 or $2.60. Essentially you get 5 times or so value ...

I can hear all the noise out there at the moment about the end of the world and have to stand back and laugh .... and sadly make me cry ....

If a company has been making EPS increases of 8% every year for the past two decades and is well run and is likely to continue to do it for another 20 years .... every 8 years the underlying value of the company will double so at the end of 20 years it should be worth 5 times its value today ... buying it at 50% of the value today when its going to essentially be worth 10 times what it is today in 20 years is the real and only way to build wealth. identifying these companies is not that hard ... identifying where its value a bit harder .... identifying where the overall market has placed valuations even harder .... none of it however is rocket science for an old fart like me. It is however crucial you dont pay over the odds for any of the factors because if you pay 125% for the value and 125% on the overall markets value ... it will make the risk reward ratios look like they should ... BAD.

If you think we are overvalued on the general market right now ... the ASX 200 ... at 4,500 vs a recent high which was about 30% higher than my own value and the levels right now are 40% off the peak I would love to hear the reasoning behind it since overall the dividends and state of affairs here is better ... not worse than it was 3 years ago. this is the market cycle ...

As for individual shares and their actual values ... I can argue till I am blue in the face about what is and isn't value right here ... one cant prove an opinion until that opinion has either been proven right or wrong over time. I will say this ... of the 70 stocks listed on the ASX 200 that interest me a lot right now ... some extreme value others middle and others even in the higher risk end ... of the 300 stocks talked about on this site and another site over the week I believe only 15 of the 70 even rated a mention. Nothing unusual in this .... one of my pets an ultra high risk spec which I loved and performed better than PDN for many years is now an ASX 200 stock having gone up 50 fold in 5 years and I doubt there are 50 posts on any chat site in the country. not talking about these stocks when I am thinking of value and exceptional value .... a portfolio of 15-20 of these things some boring but paying exceptional dividends ... others mid growth ... others with discounts to NTA of 35-40% but paying dividends of 9% plus paying off 10% of their debt a year ...interest me .... not for the flash in the pan of betting 10k on a horse and see if it wins the Melbourne cup but lower risks overall and if paying 50-60 cents in the dollar is not attractive to you ... when the $1- is likely to grow boringly but with lower risks towards the $1.50 and then $2- level over the next 5-10 years I suppose you should actually go and take your money to the horses and have a bet. 

Enough .... sorry bit tired of such negativity in the press.

If I take boring old TLS and go gee whilst not a great fan of them ... at $3.10 and a fully franked 8% yield if I was to actually go and buy a warrant for them and take the risk .... paying half of that in interest so a negative 4% that I can claim on my tax ... on the other side getting twice as many shares and 8% times two .... 16% dividend .... all fully franked .... and if I did it now and got three dividends over the next 57 weeks .... do the sums and get back to me as to what the price has to be in 57 weeks .... in 3 years assuming they pay at the same rate and I suspect its a forgone conclusion they can actually keep paying at this rate ... if I used an instalment warrant and self funding one where the dividends were payed down off the amount owing ... and I just used the credits from the interest on the borrowing I was using and then the franking credit on being paid 16% per annum hmmm ... 4% for the interest ... another 5% tax credit by dividend imputation and at the same time net paying down 12% per annum off the amount owing ... hmmm let me see ... 3 years = 36% plus another 15% via tax deductions to be applied against income or returned to you in the case .... 

Ideas and ideas like this are not suited to everyone ... but the difference between using McDonald's for investment advice or the Telegraph and using someone who can steer you into something like this is what your investment advisor should be taking you into ... TLS is not that great I know and understand the risks but try the same on other very uninteresting and boring stocks out there such as some of the banks ANZ or NAB ... or QBE or WOW or a list of others and you may appreciate where I am coming from in my frustration as to the current mania about the end of the world.

Sorry .... not suggesting this play for anyone ... just an example .... instead of putting 100% into TLS put the other half into a bank deposit for 3 years at 6.5% ... franking credits will well and truly pay for the tax owing on the 50% side and in the end you have 20% more cash on the investment side of the equation ... all tax free ... it makes the risk reward equation even more robust.

Of course if the world ends and we go back to where we were ... on paper the shares might actually fall 20% .... so what ... if you expect them to stay there over time with a yield of 10% plus ... its an interesting view .... not one I agree with but the difference between talking to someone honest and knows what they are doing and is only prepared to be a scab in regards to risk and going to ask some McDonald's employee as most of the people who now inhabit banks are in reality is quite quite different.

Sorry just thought I would share some of the reasoning behind my view as to value and why ... same for many of them out there to lessor degree's .... not something you will ever hear off your banker ... or insurance agent ... even worse an accountant who in reality has no idea about where things are going yet gets asked all the time for advice but .... what does he know ? Lawyers .. the same ...

Find someone who you can trust ... explains the risks to you ... the costs will not be cheap as your paying for a service plus advice and if you pay 1% to make 10% ... your still miles ahead. Instead most go into their friendly expert and are sold a heap of rubbish with massive fee's and performance and advice that doesn't happen once they have got your money. Go to your accountant and he will likely go gee I think you should wait ... well in that he is telling you the market is going down and he knows it ... even me who can call these things very well cannot definitely tell you this .... 

My own journey will end very soon for posting on these sites and as opposed to advising the big end of town ... large funds or banks I go and do it for the other end of town. It got too much for me being a part of a very large machine and going this is going up and why are we selling ?? ... or worse its going down its a ponzi scheme ... why are we buying using our investors funds ... the sad reality at the top is they dont care ... pay me your 1.5-2.5% to manage your funds every year and we will just buy everything irrespective of value. Being a value and growth investor with one eye on the Macros .... and working for McDonald's who didn't give a hoot about individuals or even large groups of investors .... what a waste of 27 years!!! I am home finally .... 

On China ... I note and accept your views about them .... I would point out that as opposed to Japan and what happened to it ... China actually is investing overseas to ensure its raw material supply for the next few decades unless one missed the fact that every second development here is backed either by China or some other Asian giant. Quite different from the absurdities of the Japanese market in the 1980's which saw their stock market triple in short order and the value of the imperial palace in Tokyo the 40 hectares of it was worth at the peak ? more than every piece of land in California. 

Many miss this ... China's actually investing outside its borders in fairly serious ways and whilst not as massive as it could be the 100 billion or so pledged in Australia for projects is 10% of our GDP and add this to double this number invested around the globe in other projects I cannot compare Japan in the 1980's to China right now.

Better run ... just awaiting more paper work and then my journey will be over.

take care

Mark


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## kahuna1 (14 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Forget everything .....

Forget every negative you can think of ....

Put a value on what you call fair value of the market overall. I have and do ... it changes over time usually upwards but for once or twice in the past 30 years my perceptions changed and I put the level or fair value down. right now my own fair value overall is 5,350 for the ASX 200 .... at one stage it was higher back in 2007 but clearly seeing the signs and asset prices were not realistic I put my own fair value down a lot .... from 5,700 to 5,000 and when the market was trading at 6,853 ... vs 5,700 it was less than 20 % over valued ... different story at 5,000 vs 6,850 .... it was way way overvalued. Right now at this point in time ... I believe its about 20% if not more undervalued ... on individual stocks its not hard for me to pick out a group of 70 I really really like and are valued at 60% or less of what I suspect is their full value. So on an individual basis they are almost half price. At some stage if I select very carefully IRRESPECTIVE of anything else people will be willing to pay me 100% for the stock I am now paying 50% for and usually the story before it gets to full value gets better and the $1- value is actually $1.40 by the time it gets there.

Markets and cycles tend to overshoot the mark both ways and its not until they are willing to pay me $1.25 for something worth $1.00 that it becomes very clear one should exit. If you have your tax set up correctly ... it will cost you close to nothing for this and taking advantage of other offsets via franked dividends or even a salary sacrifice at 15% the tax will see you actually using the taxation system to your benefit as opposed to what usually happens .

Either way all of it is irrelevant and buying stocks at 50-60% of their actual value works for me. sure stories change over time and for every one you get a little let down on you get three which surprise and reward you with your patience and devotion.

Number one for me is looking at the cycle on the overall market and its a top down approach to some extent but thats about as far as it goes. I know and use this approach because in any correction the numbers are chilling and 85% or MORE of all stocks loose value during a down market .... but when it gets to something idiotic the value steps in and takes over. I know its brave or stupid or whatever buying into a falling market as many have told me over the years on this thread. Even more times have I been lectured about the market is going up and its only a fool taking profits ..... 

read part 2 !!


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## Garpal Gumnut (14 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Good on you Mark, a refreshing take on the markets, but remember what happens to bottom pickers.

gg


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## kahuna1 (17 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Tee hee bottom pickers ...

the old Chinese proverb comes to mind about bottom pickers and all they get .... smelly hands.

This aside ....

My own preference and style is both bottom up ... locating value and extreme value according to the actual risk on the downside vs the potential upside ....

And the other thing I do is try and pick market cycles via a combination of macros and momentum and economics and fair value along with a list of about another 20 inputs.

One cannot be done without the other and as always I am amazed at the stupidity shown both ends of the spectrum ... both on the overall market valuations and the individual stock side. This is how we have the boom and bust cycles which have been going on for the past 1,000 years and will continue I suspect for the next 1,000 years. How we had dot com companies valued on their sales ... not their profits, or profit margins but on multiples of sales is just one of the amazing things we have seen in recent times.

On individual stocks ... golly gee ... the favourites of mine were the energy saving device that used 50% of the power and the shares went mad up 10 fold .... wow what a device and reading the fine print I found the item in question ... well it was turned off for half the day ... so DERRR of course the thing saves half the power ... stock went from 5 cents to 85 cents and back where it belongs at 1 cent right now. Oh the medical miracles from the pill to loose weight to the other which cures everything from old age to aids .... or the mineral ones that saw metal when there was 0.02% by the time the assays came back to the ones at 12,000 feet where everyone if they were mined would have to wear an oxygen mask.

research and research and valuations !!!

Buy value and buy value according to risk ....

This applies both to the overall market and its value as I mentioned I thought fair value of the market was 5,300-5,400 yet here we were a few days ago 20% lower than that.

Buying into this sort of value doesn't scare me too much.

On the individual shares buying into a bear market like this and your being handed not just the fact the market is 20% lower but another 15% for the very big ones making it 35% discount .... 20% for the mid tier ones making them at 40% discount next step on risk being handed 25% plus 20% discount about 50% of price and then the end of the growth ones at somewhere around the 60% potential upside but for this they are of course riskier.

So picking bottoms .... if you are correct and I have a fairly long track record of being able to pick both these things .... what is the real downside ?

Famous last words ... one might think .... and at times the market will try you out but if your buying something that is worth $1- for 60 cents eventually at some stage you will be paid at least the $1- and more often than not the $1- conservative price you placed on something over time becomes $1.20 and then $1.50 and as per normal everyone and everyone loves it and they pay you a premium for your ownership.

So when I saw a person getting a lot of air-time the other day and they were sprouting on about they never ever look at fundamentals I know they are not even on the same planet as me. If you use technicals and yes I use technicals more to tell me where things stop either on the top or the bottom ... but if you use them ... where do you become bullish ? we just tested a technical level i suggested we tried ... 4,500 on the ASX 200 ... it tried it and it tried it again and again and again .... every misery guts around the globe was wheeled out and suggested we implode.

Now after really and truly trying the bottom ... here we are 4% off it overall ... any stock with a bit of life in it .... such as the very cheap banks I was rabbiting on about are ... 10% in some cases off their lows .... they have still some serious upside but ... the equation of buying them into this extreme weakness left me with 35% upside .... its now maybe 25% for the better ones ... where do they become bullish for the people who dont ever ever look at fundamentals ? 

I kind of go the other way with people who ascribe to one set of rules .... I do use technicals certainly to pick these cycles ... there are brick walls everywhere some are of no importance others like the supports on the downside 4.600 was the first 4,500 the second and a decent one and the third also very decent was 4,350 ..... we clearly broke 4,600 on the ASX 200 and like the top the 50% retracement from the high to the low which we tried a few times but were unable to break we tried and FAILED to break the 4,500 level on 5 separate occasions ....

Maybe we go back there and break it but ... this is not my point. I have one eye on fair value of the market and in my eyes its still 20% higher at 5,400 ish ... so no red flag there ... the other is on the actual stock valuations and when someone is handing me a very very good risk reward .... I tend to take it. Sure the world may end but .... life will still go on and value is value. 

Not many times in my 27 years experience does this fail you ... and when it does its temporary and eventually passes ... buying something for 50% of its value and a great story in the end fails you.

Back to the book seller who sprouted they never ever used fundamentals .... I am that old I remember Bond corp and it had fantastic charts ... as did many many others .... but when I looked and scratched they like many others failed to inspire and their books were at best made of rubber .... yet if I followed technicals at times they would have been the absolutely best thing to be in .... until one day they turned out their lights.

Each to their own I suppose .... but for myself .... I tend not to wait till some chart tells me its value ... or half the upside is gone ... the risk reward is pear shaped ....  and the potential downside buying something which has already rallied 10% or 20% vs buying it at the bottom and being able and willing to identify and quantify the value and then act .... the sums are quite simple ... if you wait till its gone up 20% until technically its a buy and the likely upside is 20% ... you have 100% less upside ... 100% more downside and longer term it doesn't pay. Well it does if you identify value but ... I much prefer the first style.

Same and exactly the same applies to the topside to some extent but then it comes down to sometimes tax issues and being given the opposite on the other side .... unless someone is willing to pay me a premium to loose sell the stock I am not about to sell something for less than its worth. Funniest thing of all .... nine times out of 10 eventually someone is willing to pay you a premium for a good story !!

Enough ..... rambling from me.

Take care

Mark


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## hobomojo (21 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*



pixel said:


> G'Day Mark,
> 
> Wow, am I glad I found you here. Your thread "over there" hasn't been the same without you. Coming to think of it, it hasn't been the same once some of the more "arguamentative" members got stuck in and peddled their pet theories. But I could've lived with that if there only was a workable filter for one person's contributions. Or a watchful mod to nip nonsense in the bud (no pun intended - but on second thoughts... : )
> 
> ...




Wow. Didn't even realize I had an account over here 

K1...long time follower...never once acted on your advice...after all preachers are just preachers...result was down 80% at one time...that proverbial learning curve - painful is an understatement...but catching on pretty fast - look, I'm even stealing your post format! :...understand your reluctance to break forum rules here and over "there"...if you feel comfortable (read: brave) enough, please PM me your identity...Google has failed me, despite your warnings, which I've yet to heed

(Not) looking forward to your FINAL  post...hope you make each and every subsequent revelation a penultimate one. May your next 20 yrs come to fruition...5300 here we come...let the divvies roll


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## kahuna1 (28 February 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Howdy,


Another week passes and its still wafting around the place. For me its been another week awaiting a little piece of paper !!!

 Reporting season is out of the way and as per usual the slackers are punished and stomped on and the winners are grinner's but only for a day. What was interesting was the extent of how hard they stomped on some stocks and seeing a top 50 stock loose 10% plus is always a surprise especially when its not come out with really bad news just not beating expectations and this I suppose was the trend for the reporting season for me at least. Banks on the main did very well , others I didn't mind at these price levels some got stomped despite 9% fully franked dividends likely forever and others with NTA's of $2.50 and realistic NTA's and again dividends of 9% barely moved on good news on the reporting front. I still am of the view the overall market is cheap and its bee stock pickers heaven at the moment with the decent ones actually sneaking up over 10% off their lows which were seen in the last few weeks and heaven help them if the overall market decides its going to yet again visit higher.

On the overall market its been any and every excuse to sell it on various days. One day it was disappointment on an individual stock and several times its been the Greece thing which has dragged ours lower during the day. What the Greek problem at this stage had or has to do with how the CBA or WOW operates or the Australian economy is as usual beyond me. Technically and thats where we have to go at times like this the 4,500 level on the ASX 200 held and was tried numerous times which I suppose leads me to believe it holds. It may however be that they actually get it thru there at some stage and they feel as though thats just what they would like but for what ? With the next serious levels about 3% lower than this at 4,350 its a bit of a whoopee if they do. 

The big levels on the top is the old 50% retracement we previously touched up at 4,950 ish and as such is a long way from where we are now. Quite clearly we are range bound for the time being and its a game of little boys right now as to the short term direction. So I suppose the bottom is the 4,500-4,350 if they are really naughty to the 4,950-5,000 level for a while. Personally cant see too much at this stage to worry me on the downside and more concerned about the upside in reality. Doesn't mean they cant go fishing but when I buy a stock as I mentioned with 8-9% fully franked dividends and only paying out on average 73% in dividends with actual EPS growth and likely 11-12% fully franked dividends in 2012 ... The downside is taking a longer term perspective not something which will faze me too much either way. I will just take my lovely dividends and buy some more and at some stage if they try go a bit leveraged into weakness. Some things as per normal are becoming clearer with the passage of time. 

Number one is something I already knew and that was this recovery globally will take time and be a painful one with governments needing to cut spending and raise taxes and as such the GDP growth will be extremely weak over the next 2-3 years. This is despite the GDP number out of the USA last night at 5.9% ... As I mentioned they firebombed their economic numbers about 12 months ago so the base was so low its always going to look good on paper but when your talking about a small gain vs the adjusted losses and then adjusting that again for reality the number becomes meaningless to a great extent. One thing however is clear they are growing and the bottom has been seen and passed some time ago. 

Second thing and again nothing new is that interest rates OUTSIDE Australia will remain low and for an extended period of time possibly 2-3 years and the US fed move meant nothing. Discount rates in the past meant nothing because no one ever used them and if one did the central bank sent around a team of auditors because using the discount window as  a a means of funding meant the bank was in serious trouble. Actually allowing banks to use this window to raise funds and novate the risk between them by standing in the middle is what the central banks actually did to avert the disaster and it was needed for a time but is not needed now. 

Third thing is I still dont see inflation and havn't seen it for some time especially when I doubt the recovery will be very robust. It aint going to happen when you have 20% underemployed as we are seeing in the USA.

Number four is unemployment itself ... Same story as before and my suspicion 6 months ago it didn't move and would take years to get the USA especially back to near where it was in 2005-6 still remains. It just so happened the markets woke up to this fact before I believed they would and we had this correction.


As for the rest, its ho hum. Greece was and is a bit of a worry but there are others I would worry about more than them but they were not mentioned during this crisis so I will leave them alone for now but as time goes on I am sure the problems of the others outside the PIGS will surface and have to be dealt with. We have essentially been to hell and are coming back. China is marching on-wards and I suspect by the time the rest of the world is mainly sorted out in 2012 they will be another 25% larger and as such I am not sure their reliance on the rest of the world for exports will be that great or crucial should things slow down in the western world. For Australia this is crucial for our outlook in the next 5 years and beyond and the RBA deputy came out during the week predicting the resource boom continues for the next 20 years, not sure I am that confident but its going to continue as before. When you have a government basically making all the decision on a central basis they can and have in the past turned off the taps and sent havoc through the commodity side and suspect at some stage given the success they just had will do it again. It will be a few months of rapid advances and stockpiling of resources followed by zero people buying anything which should send shivers thru the resource side yet again. Not sure if they will pull this card because if they are seen to be doing this it may be exporting nations just the slap resource taxes on exports to that destination and tell them to get nicked. A very potentially serious game of bluff China could be playing if they try this. The Iron ore guys are seen as being greedy by demanding they dont sell to China via an agreement on fixed price but here is the bottom line. Instead of buying at the agreed price and volume of a fixed price contract what happens for every importer besides China is they stick to the agreement and price and volume. With China they look at the fixed price contract and volume and ignore it totally. If the spot iron ore price falls below the contract price they buy on the spot market and tear up the volume and fixed price contract despite the fact they have a contract. If Japan or Germany has a contract for 20 million tons and the spot price falls to half the contract price thats tuff luck but not for China.

People seem to think they are some warm fuzzy teddy bear but they are not even close. The RIO debacle in China was associated with this mess and its not in retaliation the big miners are about to go this way with all three BHP RIO and Vale being handed the same thing. A contract is a contract except for this instance and since a lot of the customers are in fact govt controlled its no use trying to get it enforced. 

Interesting world we live in.

Anyhow right now fund managers overseas are fully invested and basically dont have much spare cash to do anything about the stock market or levels and are hamstrung should we head lower and their are a few redemptions and some of the action of late has been media inspired panic which has amounted to nothing but when a fund manager has 3% of his funds pulled and he has no cash he has no option but to sell stock and at any level.

Still of the very same view the lower end we saw last week should hold ... the 4,500 ASX 200 level ... this however may break and be tested again but the next level is a mere 3 % below that ... either way happy to cherry pick some exceptional stories down here spread across the board ..... 

Better run ... see if my little piece of paper has arrived so I can depart on my own journey.

Nice weekend to all 

Cheers

Mark


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## kahuna1 (1 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Howdy,

Well every cycle has its peaks and troughs and for me that day has arrived. Its taken a little while longer than I thought, but its all good. Finally I am an ASIC licensed representative and as such I fall under very different rules as to posting on chat sites. After 10 years of trying to at times bring some sanity to insane moves its time for me at least to move to the next stage. The whole process was interesting when as I mentioned I came from the institutional side and was recognised under the wholesale side for over 25 years to actually have to get registered with ASIC as an investment advisor on the retail side in my own right took a little longer than I thought. All of it good but it was in the end a waiting game for the certificates to come via snail mail but today was the day !!!

What I suppose was interesting in this process was after looking at other shops around they actually don't get their representatives to be individually registered in their own name with ASIC as opposed to my new shop. The few weeks gave me time as well to familiarize myself with my new surrounds and learn systems and fully explore their research department along with all the other myriad of products they offer. Again all good. Must say however having now done it and then seeing others who are doing the same job but under the parents AFSL licence as opposed to being registered in their own name its going to be an interesting ride with some interesting characters out there using the same description of their services vs my own 27 years and once upon a time a Chief Dealer of one of the worlds largest banks amongst other things. Bottom line if you ever use an advisor ask their qualifications and experience would be a tip.

Number two tip, after reading and speaking to some in my new role its with dismay I am finding how some have been treated in the past and set up would be my basic conclusion. Its nice for most readers to use an Internet broker and pay 0.1% for zero advice and that is what they get zero advice. In the end if your serious about investing if someone asks you to pay 4% up front tell them to get nicked. If someone offers to manage your investments and give you advice and has appropriate experience to do so forget the 0.1% because if they select the correct investment its going to make you 20% or more so paying 0.1% for something which is nothing other than paperwork vs someone handing you an investment and reasons and correct entry will cost you. There is nothing for nothing in this world.

Tip number three goes with the above if someone wants to charge you 2/3/4% to enter some product they are not personally running and supervising RUN .....  That means if its some fund or structured product run. If they offer to run your share side and ask anything more than say 1.5% I would also run .... Depends of course on the size. Remember they will not charge you 0.1% for entry either because if they are your personal advisor and as such if something happens one would hope they give you either a heads up before it happens or call or contact you to advise what to do in their opinion after the event. Of course its not possible to predict with 100% accuracy what will happen with any share let alone the market as a whole. One would hope and what I will be doing is calling for decent entry levels and so too on the other side exits ... when maybe the position should be reduced and the money placed into another undervalued share.

Tip number 4, it goes to advice .... And now a licensed advisor but not posting in that capacity right now .... Where do you get advice ? Worst places are the usual suspects.
Accountants gee for me a nearly qualified one myself its akin to asking a vet to perform brain surgery. Its always couched advice and they go I think its a bit expensive which to me equates that they actually know the market is going down !! Quite preposterous .... Lawyers are even worse. Next is family members who are well meaning, but its the usual mantra about gambling or bricks and mortar. Worst tips usually come from friends or someone like a taxi driver :} Best place I would presume is someone who actually follows the stock and knows the company and can produce volumes of research on them. Doesn't mean they are correct but at least you will be making an informed decision and if your advisor is good he will have his own views and suggestions for entry and exit. All this doesn't come without a price and its not 0.1% ... But the cost is somewhat irrelevant if he is good and get you in 10% cheaper than you might have yourself and gets you out 10% higher the other side .... Also it goes without saying the stock itself actually has some merits and goes up !!

Last tip ... Well its basically to listen to less media. Stop reading the papers and watching the reports on TV and sift sift sift. What is relevant to any stock or market or commodity is facts and facts alone. Once you have disseminated the facts from pure fiction and opinions then you are armed with the correct weapons to make an informed decision. Doing this is something which even after 27 years of being involved in financial markets takes extreme discipline and a lot of reading/ sifting and research.

Add to this the usual ones about preservation of capital and not having all your eggs in one basket and you come close to having a chance longer term. When I read someone suggesting 6-8 stocks I really scratch my head and wonder, holding 16% in a single stock that has a bad quarter and dives 20% equates to being hit for 3.2% overall. People try and ascribe this to Buffett and his views but he is someone who has at times 200 stocks in his trading portfolio. Try a number of 15-25 stocks and we are getting closer to the maximum risk one wants to take. Stop loss is another favorite I cannot forget before I depart ..... Eat humble pie and take the bloody loss.

Anyhow time for me to depart and would like to wish all the readers and others who have contributed to the chats over the course of the past decade all the best. For me its a new cycle of my own life and one I suppose I was meant to do. As a trader who rose from being the lunch boy/ trainee dealer at age 18  to the Chief Dealer  of a very large bank my passion for the markets quite clearly is still there as strong as it was all those years ago. Thankfully I am somewhat wiser and now realise fully how little I actually thought I used to know :} I explained my reasoning for going this direction to manage individual accounts as opposed to setting up a fund previously and the bottom line is even the best performing listed fund tends to trade at 70-80% of NTA and the hoops I just jumped through for my ASIC licence are about 20 times harder for a listed fund and even an unlisted one. My bottom line after this would be to set up a fund then see it trade at 80% of NTA and then be buying my own shares back all the time for a guaranteed 20% profit. Somewhat insane to say the least to even contemplate this course. Sadly some very decent LIC's actually recently hit lows of around 60-65% of their conservative NTA. 

Cycles ... This is the end of the cycle for me and cash I suppose is king .... At times .... Economies have cycles as do commodities as do individual shares and timing these cycles is hopefully one thing maybe I imparted over the years. Buying any stock into a correction at the peak of a cycle and what happens is 80% plus of all shares fall in a correction. The biggest risers over the next 12 months usually get hit hardest during the correction !! During the GFC I suspect the number of stocks that actually went down approached 95% !! Buying a commodity based stock when the underlying commodity has peaked and is only going one direction again a waste of time and money. I spent a lot of time trying to explain this view on various commodities over the years the most on oil when it was going up and my view on the way down along with the poor Uranium boys. Individual stocks themselves have their own cycles and then we add the macro cycles of economies to the mix and hey presto we have a market. Picking any of the cycles is hard enough but identifying what cycle a stock is in then the overall market and then the macro environment and then the underlying product or sector than applying a value to it .... Is what the whole thread is and was about. Buying something that is downtrodden but owns something valuable which is clearly rising in value and likely to do so for some time and then buying the stock in question in the late stages of a downward correction you have not just one cycle pointing in the right direction but sometimes 3/4/5 and each worth 15-20% if not more.

Enough from me. Read some books educate yourself. Pay for advice if you will take it .... Sift those facts out.


   "We make a living by what we get, we make a life by what we give"                                           Winston Churchill

Give someone a kiss that you love and tell them you do !! Its far more important than financial matters but please do at least take note of some of the prattlings of a veteran so as you can do the best for your loved ones as you can.

END OF CYCLE (last post)

Take care

Mark M


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## noirua (1 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Howdy indeed, Not to forget that you can 'sift, sift, sift' and do all the work finding out about companies and still get badly caught out by a sudden shift down in markets, sometimes near everyone wants out and all at once.

Australia, despite being in the Far East is still strongly linked to movements in Wall Street though this reduces by the day as China gradually stands more and more on its own.

The strength of the Aussie$ in the last year or so has been very sudden and has increased Australia's presence in the World, mainly due to commodities. [some may think the ASX200 has been held back by this as foreigners have seen currency gains and see the ASX200 at the equivalent of 6,500 in the UK ] There lies a long pause for thought, as to whether this situation will continue in the next year.


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## wns (1 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Hi Kahuna1 / Mark,

I just joined ASF very recently and came across this thread yesterday... and now you're leaving / can't post here anymore.  What a shame.  I've been enjoying your insightful posts.  I wish you well in your new endeavours.


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## cartycost (1 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*



wns said:


> Hi Kahuna1 / Mark,
> 
> I just joined ASF very recently and came across this thread yesterday... and now you're leaving / can't post here anymore.  What a shame.  I've been enjoying your insightful posts.  I wish you well in your new endeavours.




Hi Kahuna as well

I am also new to this site but having read your recent posts, would like to wish you well.  I am sorry that I can't read your posts into the future.
I intend to increase my knowlege and its people like you who spend the time relating your thoughts, that help people like me.
Thanks


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## satanoperca (1 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Welcome all newcomers,

Please hail the big Kahuna, soon to be selling financial services with a free set of steak knives.

Come one, come all.

Oh Please.


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## kahuna1 (2 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Tee hee ...

I do love the free steak knives pun I used it once in a post .... along with others.

Sadly as an ASIC advisor one cannot post in that capacity other than being a general advice and even then if I were to mention a stock it could be trouble. If one is advising you one needs to know the client and their goals and needs and risk tolerances ... and objectives long and short and medium term. If I was to mumble a stock it may or may not be suited for all people and even then only in the correct proportion to the clients portfolio ....

So sadly one cannot post ... and rightly so. As one who has commented on the rules many times over the years and this goes from duties of directors to advisors themselves ..... I am not about to breach them myself.

Anyhow wishing all of you the best and a safe and profitable investing future. My apologies for only just appearing and then leaving ... rules however are rules. 

Cheers 

Mark


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## pixel (2 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Hi Mark,
and - sadly: Bye Mark.

As one of a large number of your grateful readers for many years, I find it hard to come to grips with this kind of "rules". Why can the big guns - the ones that take your money, strip their cut, then follow the index - advertise freely, whereas the few advisors really deserving of that name are prevented from even allowing their identity/ email address to become known? 

I am glad that I managed to get in touch with you *before *the curtain fell, so I'll stay in touch via e-mail or phone.

Wishing you good luck and success - I'm sure you will have both in abundance.


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## Julia (2 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*



kahuna1 said:


> T
> 
> Sadly as an ASIC advisor one cannot post in that capacity



Can you clarify what you mean when you describe yourself as "an ASIC adviser"?


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## brty (3 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Mark,

I can see you have a few fans here and a bit of experience, you keep telling us, but some of the last stuff you wrote does not go over too well...



> Pay for advice




You would/should know that 90% of professional advice in the financial sphere is useless.



> Read some books




Yes, everyone should educate themselves. Care to elaborate?? I have a library of hundreds of trading/investing books dating back over many years, most are pretty useless, or should I say only useful in certain market conditions.

brty


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## Timmy (3 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*



kahuna1 said:


> Anyhow wishing all of you the best and a safe and profitable investing future. My apologies for only just appearing and then leaving ... rules however are rules.
> 
> Cheers
> 
> Mark




Thanks for your great contributions while here, Mark.
If you wish to continue participating in the forum as a private individual you would be most welcome to.


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## Pivotonian (3 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

I'd also like to thank you for your contribution Mark.  I've been a reader of this thread since the beginning and I'm very disappointed to see you go.


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## kahuna1 (3 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Tee hee ...

Opinions vary. ASIC advisor is someone registered with ASIC and an authorised representative number. It comes under RG 146 and requirements for people in the industry. A lot however hide behind their parents AFSL and are not individually licenced with ASIC .

Giving an opinion whilst someone with an AR number is against the TOU of this site and most other chat sites hence the sad fact I cannot post.

As to the opinions regarding advisors ....  since I have 27 years of experience including Chief dealer of several units of one of the largest banks in the world .... I suggest if you think I made it from a trainee dealer to that position by being good looking or my charm you may be mistaken. If you can find a financial advisor with a very similar CV I will buy the steak knives !! 

Either way time for me to depart. I have explained my motivations for moving this direction here and other places. 

Take care

Mark


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## brty (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

ASIC Regulatory Guide 146 : Licensing : Training of financial product advisers. 



> This guide sets out minimum training standards that apply to advisers and how advisers can meet these training standards.




kahuna1...



> since I have 27 years of experience




I first started trading shares in 1980, commodities in 1981, for my own account. I must remember to include this in every post. 

brty


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## kahuna1 (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Brty,

No ...

There are rules and for a reason. It is one thing to talk about cycles and mention the odd stock ect ect. But if you are an AR holder it gives you some credibility in some peoples eyes. I accept your cynical and negative tone because I am a big boy ..... however as an AR holder it comes with responsibility .... if I was to mumble some stock and then someone was to buy it because it gave me some credibility due to the fact I have and hold an AR ... I would be doing them a disservice due to the fact they were in effect taking my comment as a recommendation about the stock and the fact is I would not know the person ... not know their financial situation ... their goals ... their risk appetite ... or their objectives.

Obviously you have some cynical bone to pick with some advisor or stock promoter from your past but this is not my problem. If I mumbled a stock or any licenced AR holder mumbled a stock it should have about 10 different caveats behind that recommendation that went to the effect they might like the stock but the stock in question was only a general opinion and a financial advisor should be consulted before you invest in any stock. Reason being is that for instance someone who is in the latter stages of life trying to preserve their capital for retirement ... the stock you mentioned may be of a higher risk and not appropriate for their objectives. They might buy 50% of their whole portfolio on this stock ... again not a good move ... and it could be they require stocks which are likely to produce a stable franked income of a decent amount and again .... a stock which is more along the lines of growth as opposed to an income is likely not suitable for them to be buying.

Sorry to spell it out .... but  over the years I have been very careful with these sorts of issues in mind.

As to the basis of this thread which was picking the market cycles .... I think I made it quite clear as to where I thought the market bottomed recently. You are quite welcome in my absence to continue calling where you think the market will stall on the top or this rise and eventually be supported on the bottom .... the cycles on the ASX 200. For myself I have been providing this sort of thread here and away with some fairly decent accuracy for over 5 years and in real time ... not calling its moves after they happened ... 

On the first one I shared here ... on this site .... as we were still heading down .... my comment was ....
"This right now short term noise and suspect we stop somewhere in the 4,500-4,600 region either way"

I think clearly we built a base there ....

You can continue the calling of the cycles for me and where it stops. I again at 4,500 did a post forget everything ect ect .... which was bullish in the extreme ....  maybe you care to share your views on the overall market and its cycles before it happens ?

Either way for me time to depart ...  


Anyhow take care 

Mark


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## Trembling Hand (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*



kahuna1 said:


> Either way for me time to depart ...




Fine let this thread die I say. It always look like a quick pump prime for some business right from the start. As it turns out you have probably achieved your goal. People now know you're a guru and have a lic to charge for this info from here. 

Good luck.

(by the way there are 3 other people with AFSL that manage to post here without all the BS you are going on with but hey that's them.)

Cheerio!!


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## Julia (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

I have to agree with brty and TH.  Always find it a bit disappointing when people use a stock forum to tout for business.
Maybe more honest to pay Joe for actual advertising space.

Nevertheless, congratulations Mark, on getting a licence after 27  years.
I hope your career flourishes.


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## MRC & Co (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*



Trembling Hand said:


> (by the way there are 3 other people with AFSL that manage to post here without all the BS you are going on with but hey that's them.)
> 
> Cheerio!!




lol.  That's what I thought!


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## kahuna1 (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Hahhaha ...

2,700 odd posts ... helped make Sharescene to the number one rated site and you think I am fishing for clients ? 

Hillarious .... view .... for 10 years on other rated sites I contributed 10,000 pages of original content and looking for clients ? 

You deserve the outcome that has obviously made you what you are.

 As for Joe ... Joe actually very kindly quoted me himself several times over the years despite the fact I was the number one rated poster at another site. Suggesting he said kind things about me in an attempt to get me to post to Aussie stock forums is about as stupid as the suggestion I spent the time to share opinions for free ... with some ulterior view to get clients at some stage in the future.

Sorry but its always amusing and confounding the way people put two and two together and come up with a conspiracy theory.

I spent about an hour preparing each of the posts over the years ...  hmm let me see 5,000 posts I suppose between various sites ... 5,000 hours ....   yes all for clients. 


I thought it might be nice to post both sites for the last few months ... 

Sadly it was this sort of stuff I copped.

Good luck Joe and thanks very much for your kind comments over the years and of course wish you all the best as I did when you were starting out on this site nearly 6 years ago. You have done a great job. Congratulations on your various awards of late. What makes a site is the actual posters as I am sure you well know and how they treat each other. Sometimes it devolves into what is below .... nothing new for me I will just log off forever .... kind of like the old joke about keeping an idiot in suspense .....

I will get back to you ....

regards

Mark


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## professor_frink (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Hi Mark,

if you were copping grief on the other forum you visited, perhaps it's just a misunderstanding with the way you are wording your posts

I'd try and draw my own conclusion but have the attention span of a goldfish and started to tune out whilst reading this thread(sorry but they are very long winded posts).

I'm sure if you are genuine people will see that over time


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## BradK (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Geessshhh... give him a break!! The stock market is a broad church. Some of your responses are embarrassing. 

Brad


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## Trembling Hand (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*



BradK said:


> Geessshhh... give him a break!! The stock market is a broad church. Some of your responses are embarrassing.
> 
> Brad




Such as?


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## BradK (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*



Trembling Hand said:


> Such as?




Questioning the motives of Kahuna, trying to make him out to be arrogant... hmmmm... why do I have the feeling that I have just painted a big red target on myself no matter what I say? 

"Shoot straight you bastards" - Breaker Morant. 

Brad


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## MRC & Co (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

I don't think your fishing for clients.

But how many years experience do you have again?  And it was one of the big banks yeh?  And you were very high up, right?

Plenty here work as professional traders and in some leading companies in all sorts of firms (from hedge funds to prop), they just don't harp on about it every post.  Kind of gets old and takes away from your posts (which may be good themselves).


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## Trembling Hand (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*



BradK said:


> trying to make him out to be arrogant... hmmmm...




Hardly. I think he's done a great job of that himself. _Please come back and educate us unwashed heathens oh strange and masterful new king._ But seriously why all the BS about "I'm here to share my greatness but sorry I gotta go." yeah yeah yeah.

Its daily someone signs up and starts banging on about their experience. Its funny the ones that stay are the ones that engage in discussion. With the others that also have experience as there plenty here.

I guess some don't like to earn it just demand it.


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## Whiskers (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*



professor_frink said:


> Hi Mark,
> 
> if you were copping grief on the other forum you visited, perhaps it's just a misunderstanding with the way you are wording your posts
> 
> ...



Ditto.



MRC & Co said:


> I don't think your fishing for clients.
> 
> But how many years experience do you have again?  And it was one of the big banks yeh?  And you were very high up, right?
> 
> *Plenty here work as professional traders *and in some leading companies in all sorts of firms (from hedge funds to prop), they *just don't harp on about it * every post.  Kind of gets old and takes away from your posts (which may be good themselves).




Ditto again... 

While I respect TH's trading ability, this also blunts my 'affection'  for him as a person. :


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## kahuna1 (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

I guess some don't like to earn it just demand it. 

Well I dont demand anything .... or sadly expect anything. I just read your views shared over time on this site I suggest you take the time and visit the sharescene.com and compare my own contributions there vs your own here and come back. 

Sad end to be treated like someone on hot copper.

Thanks guys


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## Trembling Hand (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Classic.


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## kahuna1 (4 March 2010)

*Re: The top of this cycle for ASX200, cash is king?*

Yes classics ...

U wonder why I even mentioned experience... or bothered ...  if you read back thru this thread its been the same tone served time and time again. Some of the more abusive ones thankfully have been deleted.

Its ok I will live ...  and I suppose I should not respond to goading 

All besides the point anyhow.

Wishing Joe and all on Aussie stock formus all the best.

Good luck


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