# Downturn



## clowboy (31 March 2005)

Whats stocks do people think would hold up best in the event of economic downturn?

The west implied that stocks such as CML where "imune" for the most part.


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## DTM (31 March 2005)

Leightons for my money.  Whilst everything else has been dropping, they have been steadily going up.  Seen as a defensive stock during hard times.  Some one with good fundamentals might be better at explaining it.  My opinion was only formed from an article itn the Australian financial review.  Of course it could be a contrarian indicator if it was mainstream news.  

Enter at own risk.


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## RichKid (31 March 2005)

DTM said:
			
		

> Leightons for my money.  Whilst everything else has been dropping, they have been steadily going up.  Seen as a defensive stock during hard times.  Some one with good fundamentals might be better at explaining it.  My opinion was only formed from an article itn the Australian financial review.  Of course it could be a contrarian indicator if it was mainstream news.
> 
> Enter at own risk.




I'm a bit concerned about Leighton's management and accounting practices. Not quite as robust as I would like, see some of the articles in the papers around the last reporting period. Chart also tells a story. If they can pull their act together it'll all be different and it'll crash through resistance.

Westfield (WDC) is probably one stock that'll do well, they have powerful  connections, market (near monopolistic) power and have done well in all conditions in the past. Also diversified globally. Just a bit expensive atm imo for short term/med term trading.


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## mime (31 March 2005)

clowboy said:
			
		

> Whats stocks do people think would hold up best in the event of economic downturn?
> 
> The west implied that stocks such as CML where "imune" for the most part.




??

CML would be hit very hard in an economic turn as it relys on consumer spending which drops off when things are bad. 

Usually gold is the go when things get tough.


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## doctorj (31 March 2005)

When the going gets tough, discretionary spending falls as does new investment.  If its coupled with high interest rates, then expect reduced construction and therefore demand for resources to make steel.  Banks suffer because of the low uptake of credit.

Good defensive plays include things that people have to buy irrespectvie of market condition, such as food.  As mentioned above, gold is a good defensive play as well.


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## reichstag911 (1 April 2005)

USD having a multi-month rally - Gold is cactus (for now)


http://finance.groups.yahoo.com/group/investorsexchange


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## kooka1956 (1 April 2005)

During bad times food,entertainment, and gambling stocks are likely to go up. Each of these items take peoples minds away from their money problems. Regards KOOKA.


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## wayneL (1 April 2005)

kooka1956 said:
			
		

> During bad times food,entertainment, and gambling stocks are likely to go up. Each of these items take peoples minds away from their money problems. Regards KOOKA.




....and booze.


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## money tree (1 April 2005)

debt collectors do best


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## mime (1 April 2005)

money tree said:
			
		

> debt collectors do best




Isn't that the banks?


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## The Barbarian Investor (2 April 2005)

Theres a 'listed debt collection company' from memory isn't there??


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## chicken (2 April 2005)

Mine is food...BPC falls into this catogry...when the market fell it went up...but as I was invested in 1986..saw what can happen..people just got out at ANY price..I feel should we have a situation like that...anything you hold will only be worth what people will pay I know I lost a lot of money then..but its only numbers..and after a Negative situation its positive at present...just enjoy the ride..but put a little aside....and dont gear to high..you might losse the lot..and then you will never rise above the ashes


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## retroaugogo (2 April 2005)

The Barbarian Investor said:
			
		

> Theres a 'listed debt collection company' from memory isn't there??




Credit Corp is the pick of the bunch.Good fundementals.Very thinly traded though.


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## Smurf1976 (2 April 2005)

How about Salmat (SLM). They are the dominant distributor of what is commonly called "junk mail". They seem to have most of the major chain contracts and regularly get work from everyone from Coles Myer and Woolworths down to small business and community groups.

They are close to a national monopoly in this industry. There is one major competitor which is primarily a priniting business (prints much of the material delivered by Salmat). Not sure what the code is but they are called PMP Print. They consistently lack major delivery contracts and at one point nearly found themselves with no contracts at all. Australia Post and News Limited have also (unsuccessfully) tried to compete with SLM.

On one hand SLM can't really grow at the expense of competitors but my thinking is that in any downturn businesses would be more likely to increase spending on advertising, especialy the cheaper forms such as "junk mail". SLM would presumably gain most if not all of this work given their present success. This is the key point though, more junk mail being delivered. If business cuts advertising in this form instead of increasing it then SLM will suffer greatly. Any experts on advertising on this forum able to comment on that one?

SLM's major problem at present seems to be getting workers (technically they are self employed contractors) since pay rates in the industry are terrible. This problem is not presently critical though and ought to go away if the economy turns down. 

As for the share price, my TA skills are limited but it was rock solid over the past couple of weeks and is strongly up in recent months.


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## Smurf1976 (2 April 2005)

retroaugogo said:
			
		

> Credit Corp is the pick of the bunch.Good fundementals.Very thinly traded though.



Do they have any listed competitors?


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## ghotib (3 April 2005)

Smurf1976 said:
			
		

> How about Salmat (SLM). They are the dominant distributor of what is commonly called "junk mail". They seem to have most of the major chain contracts and regularly get work from everyone from Coles Myer and Woolworths down to small business and community groups.




Except that with a bit of luck those bloody letterbox stuffers will be banned shortly after telemarketing goes (yesterday would be good), and then where will SLM be? Did you see a report in the SMH on Friday about attitudes to direct marketing? Junk mail is less hated than telemarketing, but it's still right down there with the tax office.

Ghoti (cranky oldtimer)


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