# What determines if the All Ords is up or down today?



## imaginator (26 July 2006)

It seems that the media is setting the confidence or fear of the public every day. 

See a few weeks ago, when the US rate rose, 1 week before on a day the fell tumbled "because of worries of rate rise". Then the next 2 days it shot up. Then 3 days before rate actually rose, the news said people were scared again. BUt 2 days before the rate rose, it went up. And on the day of the rate rise, it went up.

And in Australian side, when they announced rate could rise on Tuesday, stocks went up because USA went up. BUt on Wedmesday, even when USA went up, the news in Australia says "Australians panic over rate rise" right in the morning. It made the All Ords tumble.

Anyone agree with this?


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## Knobby22 (26 July 2006)

Market commentators know as much as you or me.
Their reasons for why the market goes up and down are just guesses and fill.
The market is more complex than this.
They are commentators, so they have to say something.


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## swingstar (26 July 2006)

Traders determine it. Ask every single trader who participated today and you will have your answer. The underlying theme will be fear. Why is anyone's guess and the majority won't necessarily be related to any one occurence (like commentators will have you believe).


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## Smurf1976 (26 July 2006)

IMO the market does whatever it wants then the media just picks an explanation which appears to fit with whatever the market did today.

If the market falls today then it was due to the inflation figures.

If the market went up then it was because some commodity became more valuable or perhaps John Howard's birthday.

If the market goes nowhere then it was because investors were undecided about what is going to happen in the middle east.

...

If I lose weight then my fitness plan, exercise etc must be working.

If I gain weight then just apply some seasonal adjustment, hedonics or whatever and it becomes a weight loss... And if there's still any gain then that's muscle not fat.


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## imaginator (26 July 2006)

but what is the 'thing' that traders fear?
The news of that day, which the traders know will affect public fear/greed of the market. Hence this morning's stupid news release that "Australians panic over rate rise and fuel rise", it makes trader weary becuase they know the puiblic will be selling today and not follow trader's footings to push the price up.
Australians panic? I didn't panic. I think "concerned" is a better word the stupid media


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## Realist (26 July 2006)

Maybe.... (bear with my rant for a moment)

Maybe the market and all shares and all investors and traders revolve around one thing.

A future PER of about 15 for each company listed.

Each company whether it is making a profit now or just struck gold, or is digging blindly for something, each company is worth their future earnings per year times about 15.

A company that is making fantastic earnings now with a poor outlook has a PER lower than 15 - because in the future people don't think it can make the PER of 15.

A company that has just struck gold is worth a PER of 15 times it's profit when they start selling their gold in 5 years time.  

A company that is digging for anything but found nothing has a chance, a very small chance of finding something they can sell, and then they are worth about 15 times 1 years profit from that. Divided by the chance of actually finding anything - hence penny miners.

So overnight when gold goes up, interest rates go up, uranium mining is approved, war in middle east, oil goes down - it just changes peoples estiamates of companies future earnings..

I'm sure some genius could do a very good mathematical equation to work out what the ASX will do depending on all the factors.

Except one!   Market sentiment - sometimes based on no facts at all people wear rose tinted glasses and buy ridiculous stocks for ridiculous prices, some times they hide in the corner ignoring absoulte bargains.  And no-one can ever predict that.  Peoples emotions can not be predicted and the market therefore can be estimated reasonably accurately but never exactly.

At the moment it seems people are a bit scared.


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## redandgreen (26 July 2006)

Realist said:
			
		

> Maybe.... (bear with my rant for a moment)
> 
> Maybe the market and all shares and all investors and traders revolve around one thing.
> 
> ...



forgive me for asking but was CQT @44.5c as per your post on another thread an absolute bargain???


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## Realist (26 July 2006)

redandgreen said:
			
		

> forgive me for asking but was CQT @44.5c as per your post on another thread an absolute bargain???




 

You are having a go at me for buying CQT?     

why are you having a go at me?     

I mean you posted this...



> redandgreen    Re: CDU - Cudeco Limited
> 
> likewise, I bought into today encouraged mainly by comments late last night by an analyst from Macquarie Bank on SKY NEWS that seemed to think that the drill results could easily see the price again @ $10
> I was fully expecting that the shares would rally today.... they didn't so I decided to buy.






I'd rather buy a few more CQT (I bought most cheap on July 18) at 44.5 cents than CDU at $3.50.

Please explain why you are having a go at me about CQT?  And why CDU is a better buy at $3.50 than CQT at 44.5 cents.


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## redandgreen (26 July 2006)

Realist said:
			
		

> You are having a go at me for buying CQT?
> 
> why are you having a go at me?
> 
> I mean you posted this...




 I am not having a go  but yes I did buy CDU (not at $3.50 and I note you  conveniently the  deleted my complete post, a harmless punt, nothing more.
I have found your mindless "ramping" of certain stocks recently as reminiscent of  the "ramping" that went on in the dotcom era.
You are purchasing on "momentum" nothing more and I say good luck to you.
If trading was that easy we would all be very, very rich...


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## wayneL (26 July 2006)

Realist said:
			
		

> Maybe.... (bear with my rant for a moment)
> 
> Maybe the market and all shares and all investors and traders revolve around one thing.
> 
> ...




Furure PER 15??

I think investors should go do some hard thinking about what "value" is.

It ain't PER 15. That's quite expensive. No risk premium whatsoever.

Gimmmeeee 7-9 future PER I *might* be interested.


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## Realist (26 July 2006)

redandgreen said:
			
		

> You are having a go at me for buying CQT?
> 
> why are you having a go at me?
> 
> ...




Well I did ramp CQT I admit, not for self gain though, more for fun. I have more than 10 times the amount I have in CQT in BHP and RIO. No ramping there, I just sit and wait, don't even watch. am hoping for a special divvie from BHP soon!

I am willing to post what I buy on here, not to ramp it, people can criticise all they like - I hope they do, I'd rather be criticised and learn from my mistakes than lose money.

you seem against CQT - any reason??

Serious question : what is the difference in CQT and CDU in your eyes, not price difference but companies and results so far how do they compare?



> Furure PER 15??
> 
> I think investors should go do some hard thinking about what "value" is.
> 
> ...




That is the point though Wayne, if you can buy a stock for a certain price that works out under a future PER of 15 you've done okay. 

You need a margin of safety thoguh so you need to buy something at a certain price that your calculated future PER is well under 15 of course.  15 is a break even, leave your money in the bank scenario really. However a lot of companies don't even get to make a profit so a PER of 15 is not to be laughed at.  The ASX average current PER is 15.8 from memory.


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## redandgreen (26 July 2006)

I prefer not to comment on either stock.  
As far as both are concerned they are  both interesting punts. nothing more nothing less.
It is impossible to get any idea of value or what is driving the momentum other than directors buying  in CQT's case and drilling results in both that few can interpret, 
I normally steer clear of these "opportunities" leaving them to the day traders.


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## wayneL (26 July 2006)

Realist said:
			
		

> That is the point though Wayne, if you can buy a stock for a certain price that works out under a future PER of 15 you've done okay.
> 
> You need a margin of safety thoguh so you need to buy something at a certain price that your calculated future PER is well under 15 of course.  15 is a break even, leave your money in the bank scenario really. However a lot of companies don't even get to make a profit so a PER of 15 is not to be laughed at.  The ASX average current PER is 15.8 from memory.




What happens when interest rates rise and/or growth rates fall? :batman:

15 won't look very reasonable at all


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## Realist (26 July 2006)

redandgreen said:
			
		

> I prefer not to comment on either stock.
> As far as both are concerned they are  both interesting punts. nothing more nothing less.
> It is impossible to get any idea of value or what is driving the momentum other than directors buying  in CQT's case and drilling results in both that few can interpret,
> I normally steer clear of these "opportunities" leaving them to the day traders.




I totally agree, both are complete punts really.

CQT's drilling results look good so far, But when they actually start producing a profit is a long way off and they do not have much money so the share price will be dilluted to buggery by the time they do make a profit I suspect - if a profit ever happens that is.

Still for a punt I think the odds are slightly better than other punts.  I'll hold and hope simple as that.  I'll risk losing some money in the hope this is a 5 to 10 bagger, the upside potential is good enough for me to hold. Unfortunately I did not buy many in the first place, so I decided instead of taking profits to pump even more money in at what I deem to be a reasonable price considering their results so far, it could be a stupid mistake or I could have a real winner, I'll wait and see (and pray).


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## Knobby22 (26 July 2006)

Realist.

Plenty of stocks under 10. I suggest Symex sym 6.9 and Magna Pacific  MPH 5.5. are OK buys. Both pay dividends too.

15 is only a good price if growth is very good.


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## Realist (26 July 2006)

wayneL said:
			
		

> What happens when interest rates rise and/or growth rates fall? :batman:
> 
> 15 won't look very reasonable at all




Agreed.


But interest rates, inflation, growth rates etc. all average out over time to warrant a yield of 6% being just adequate.

If you can get much over 6% from a bank account then that is where you should have some of your money, the higher the interest return the greater proportion you should have there. This year you should have more in the bank and less in shares than last year.


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## Realist (26 July 2006)

Knobby22 said:
			
		

> Realist.
> 
> Plenty of stocks under 10. I suggest Symex sym 6.9 and Magna Pacific  MPH 5.5. are OK buys. Both pay dividends too.
> 
> 15 is only a good price if growth is very good.





Well I'm guessing SYM and MPH must have announced future earnings will be down?  A profit warning or something.  

So investors calculate future earnings against the current price and they value it less, so the current PER may be 5 or 10 but they are bargaining on future earnings being lower not higher.  

Companies with good future earnings have a high current PER and companies with poor future earnings have a lower current PER.  Again the pass mark is around 15.

Try and find a company with excellent future earnings prospects and a lowish current PER - you wont!!


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## wayneL (26 July 2006)

Realist said:
			
		

> Try and find a company with excellent future earnings prospects and a lowish current PER - you wont!!




Not at the moment.

You will in the future... after all the shoe shine boys have been flushed from the market.


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## Realist (26 July 2006)

Actually both SYM and MPH have had recent profit downgrades.




> Not at the moment.
> 
> You will in the future... after all the shoe shine boys have been flushed from the market




Correct, that will happen, and that is the time to buy of course.


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## wayneL (26 July 2006)

Realist said:
			
		

> Actually both SYM and MPH have had recent profit downgrades.
> 
> 
> 
> ...




Yes indeed!

Meanwhile :hide:

(Just had to have an excuse to use that emoticon  )


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## Joe Blow (26 July 2006)

Realist said:
			
		

> Well I did ramp CQT I admit, not for self gain though, more for fun.




Realist, I'll be frank - ramping is not something I wish to encourage around here. Whether it is for self gain or fun the point is, it is still ramping. Many ASF members come here to avoid the kind of rubbish that goes on at other forums and I understand why they do. Ramping is ugly, self-interested and is a scourge that afflicts stock market forums the world over. Trust me, it irritates many more than it amuses, as funny as it may seem to you at the time.


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## Knobby22 (26 July 2006)

Realist said:
			
		

> Well I'm guessing SYM and MPH must have announced future earnings will be down?  A profit warning or something.
> 
> So investors calculate future earnings against the current price and they value it less, so the current PER may be 5 or 10 but they are bargaining on future earnings being lower not higher.
> 
> ...




They are my two worst stocks from last year.Both bought under PEs of 10 and both coming out later with surprise profit warnings. The point is evident.


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## Joe Blow (26 July 2006)

wayneL said:
			
		

> (Just had to have an excuse to use that emoticon  )




I've been looking for an excuse to use this one. Perhaps this is what I should do to rampers?

 :burn:


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## Realist (26 July 2006)

Knobby22 said:
			
		

> They are my two worst stocks from last year.Both bought under PEs of 10 and both coming out later with surprise profit warnings. The point is evident.





If you bought them with a PER of under 10 and they came out with "surprise" profit warnings, I'd suggest many people were not surprised by this. In other words you did not know what others did.

I'd also suggest they are not bad buys, and without looking at them closely I would continue to hold, a company that makes profits and has a low average PER based on their last 5 years earnings, assuming each year was profitable could be an excellent longterm prospect.

I always look at 5 years worth of earnings not 1 for this very reason.


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## Realist (26 July 2006)

wayneL said:
			
		

> Yes indeed!
> 
> Meanwhile :hide:
> 
> (Just had to have an excuse to use that emoticon  )




Well Wayne, I fully agree we are in for a large correction if not crash, I know it, you know it, almost everyone agrees.

But no-one knows when.

The great man himself, Ben Graham acknowledged this very problem.

What do you do when the market is overvalued?

Do you pull out and wait until it crashes?

NO!!!

Because you may be right the market is overvalued, but it can remain overvalued for years and still increase. 

If you pull out and wait one year but it increases more, two years it increases even more, three years and it goes up again. Maybe 4 or 5 or 6 years. It is overvalued but still increases.

What are you going to do?  Human instinct is to admit you were wrong and you jump back in. Guess what you were right and it crashes - not only did you miss out on the gains but you caught the huge losses.

The market will correct itself, but no-one knows when, the safest thing to do is to always stay in the market, and always be incredibly careful. Always have money in the bank, and always think about undervalued stocks that pay dividends. There is no way of timing the market despite all the rumours and stories you hear. It is NOT about timing the market, it is about time in the market. The longer you are in the more chance your increases outweigh any crashes.

You are totally correct a crash/correction will happen. But neither of us know when. The smartest thing to do is to proceed cautiously. 

Pulling out and watching will only cost you money.


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## wayneL (26 July 2006)

Realist said:
			
		

> Pulling out and watching will only cost you money.




Not necessarily, but agree it is an unknown.

Hence trading. 

Haven't made an "investment" for a long time. But have traded the crap out of it though.

No sitting on hands here.


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## nizar (27 July 2006)

Realist said:
			
		

> Still for a punt I think the odds are slightly better than other punts.  I'll hold and hope simple as that.  I'll risk losing some money in the hope this is a 5 to 10 bagger, the upside potential is good enough for me to hold. Unfortunately I did not buy many in the first place, so I decided instead of taking profits to pump even more money in at what I deem to be a reasonable price considering their results so far, it could be a stupid mistake or I could have a real winner, I'll wait and see (and pray).





Yes im sure this is the Buffet and Graham investment philosophy!!!
Just buy a spec and wait and hope and pray


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## nizar (27 July 2006)

Realist said:
			
		

> I always look at 5 years worth of earnings not 1 for this very reason.




Ah yes; CQT has 5 years worth of earnings!


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## michael_selway (27 July 2006)

imaginator said:
			
		

> It seems that the media is setting the confidence or fear of the public every day.
> 
> See a few weeks ago, when the US rate rose, 1 week before on a day the fell tumbled "because of worries of rate rise". Then the next 2 days it shot up. Then 3 days before rate actually rose, the news said people were scared again. BUt 2 days before the rate rose, it went up. And on the day of the rate rise, it went up.
> 
> ...




Well for All Ords in order of the effect:

1) Australian Economy - future Interest Rate direction
2) US Economy (Dow Jones) - http://money.cnn.com/data/premarket
3) Base & Prescious Metals - http://www.kitcometals.com
4) World Events (indices) & Oil - SARS, Terror, War
5) Exchange Rates - USD tanking?

thx

MS


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## michael_selway (27 July 2006)

Realist said:
			
		

> I always look at 5 years worth of earnings not 1 for this very reason.




Yes not only this years NPAT (EPS) but forecast EPS for the next 5 years?

thx

MS


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## Realist (27 July 2006)

nizar said:
			
		

> Yes im sure this is the Buffet and Graham investment philosophy!!!
> Just buy a spec and wait and hope and pray




I play Blackjack, I bet on horses, I bet on sports, and I'll take a punt on the share market.  You gotta problem with that?

In the above cases they are always relatively small amounts.

I invest with relatively large amounts.

I've said it once and I'll say it again, even Ben Graham believes gambling with a small proportion of your money is wise, because it can be fun, and it takes your focus off worrying about your investments - they are best left alone.  He does not believe you will make much money from gambling. Nor do I. But it sure is fun.


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## Realist (27 July 2006)

michael_selway said:
			
		

> Yes not only this years NPAT (EPS) but forecast EPS for the next 5 years?
> 
> thx
> 
> MS





It is worth looking at of course, it is only a forecast though, a prediction, which is just as likely to be wrong as it is to be right.


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## michael_selway (27 July 2006)

Realist said:
			
		

> It is worth looking at of course, it is only a forecast though, a prediction, which is just as likely to be wrong as it is to be right.




Yeah thats where the risks come into it, so depends on the business, some companies have lower risk than others, eg Banks have relatively lower risks and have steady forecast growth of about 10% pa, see below:

WBC- Earnings and Dividends Forecast (cents per share) 
2005 2006 2007 2008 
EPS 143.3 167.3 181.9 194.5 
DPS 100.0 114.0 124.0 133.0 

EPS(c) PE Growth 
Year Ending 30-09-06 167.3 13.2 16.7% 
Year Ending 30-09-07 181.9 12.1 8.7% 

*Also there can be upside risks to forecast EPS as well as downside, results that are better than market expectations*  

You have the choose the right company

thx

MS


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## Realist (27 July 2006)

Hi Michael,

Yes banks are probably the most accurate with their predictions.


What do you think of PRG - you like it?  To me it has exactly the sort of financials and slow consistent growth I like. And for you it has the future EPS growth forecasted.


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## michael_selway (27 July 2006)

Realist said:
			
		

> Try and find a company with excellent future earnings prospects and a lowish current PER - you wont!!




What do u consider excellent? indefinite low risk growth?

GTP - Earnings and Dividends Forecast (cents per share) 
2005 2006 2007 2008 
EPS 41.7 44.8 54.0 58.7 
DPS 14.0 15.0 19.0 18.0 

EPS(c) PE Growth 
Year Ending 30-06-06 44.8 5.2 7.5% 
Year Ending 30-06-07 54.0 4.4 20.5% 

Previous Close 52 week high 52 week low 
2.35 4.20 2.29 
P/E Ratio 5.25 
Sector Diversified Financials 
Market Capital $728 million  







See the above forecasts were updated 30days ago, so not too old

But anyway GTP currently has a low PE 5.25, and good forecast growth, however risk is sky high?

thx

MS


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## michael_selway (27 July 2006)

Realist said:
			
		

> Hi Michael,
> 
> Yes banks are probably the most accurate with their predictions.
> 
> ...




it looks good actually, steady indefinite growth of about 10%pa looks like it

Agaian are there any Risks and potentila Risks with PRG, im not familar with this company. Thanks

EPS(c) PE Growth 
Year Ending 30-03-07 31.3 13.5 10.2% 
Year Ending 30-03-08 34.8 12.1 11.2% 

PRG - Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS 28.4 31.3 34.8 37.7 
DPS 17.0 18.3 20.5 21.0 

Previous Close 52 week high 52 week low 
4.21 4.29 2.99 
P/E Ratio 14.35 
Sector Commercial Services & Supplies 
Market Capital  $300 million  

Business Description 
Programmed Maintenance Services Limited (PRG) is a specialty commercial painting business. It is the market leader in the long-term painting maintenance market in Australia and New Zealand. Since 1993, PRG has expanded into a range of complementary maintenance businesses including grounds maintenance, engineering and industrial services.


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## chennyleeeee (28 July 2006)

Does anyone still remember what this post started of as? ~~~ 


CHEN


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## Bobby (28 July 2006)

chennyleeeee said:
			
		

> Does anyone still remember what this post started of as? ~~~
> 
> 
> CHEN




Good one Chen ! 

bob


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