# What's happening to the ASX lately?



## zac (12 July 2011)

Its been a roller coaster of a year, and I know there are many issues affecting the ASX.
Is it the Carbon Tax that caused the huge drop today and yesterday?

Im looking at investing in an ETF that deals with the Aussie Index so am keen to buy when the All Ords hits around 4500.


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## tothemax6 (12 July 2011)

*Re: Whats happening to the ASX lately*

Apart from the economic homicide refered to as the 'carbon tax', asx is prob falling because EU and US are increasingly being seen as effed (such as latest US jobs report). Personally not interested in aus equity until the actually relevant economics, the china construction bubble, play out.


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## Garpal Gumnut (12 July 2011)

*Re: Whats happening to the ASX lately*



zac said:


> Its been a roller coaster of a year, and I know there are many issues affecting the ASX.
> Is it the Carbon Tax that caused the huge drop today and yesterday?
> 
> Im looking at investing in an ETF that deals with the Aussie Index so am keen to buy when the All Ords hits around 4500.




Why not wait for 3000 and save yerself all the worry and recrimination.

A 5 year chart of the XAO.

4500 is reasonable though, 4400 to 4500 was support this time last year.

gg


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## zac (12 July 2011)

*Re: Whats happening to the ASX lately*



Garpal Gumnut said:


> Why not wait for 3000 and save yerself all the worry and recrimination.
> 
> A 5 year chart of the XAO.
> 
> ...




I certainly dont see it going to 3000, so not sure if that was a tongue in cheek comment. It barely got that low during the GFC.
Ive been watching it of late and with all the issues that have been going on around the world, it hasnt in the last few months hit under 4500.
Having said that, who knows whats around the corner, so 3000 could just happen.


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## tech/a (12 July 2011)

*Re: Whats happening to the ASX lately*



zac said:


> I certainly dont see it going to 3000, so not sure if that was a tongue in cheek comment. It barely got that low during the GFC.
> Ive been watching it of late and with all the issues that have been going on around the world, it hasnt in the last few months hit under 4500.
> Having said that, who knows whats around the corner, so 3000 could just happen.




Greece
Italy
Spain
Portugal
USA

3000 looks high!


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## BrightGreenGlow (14 July 2011)

Currently typing out a QSuper investment switch to cash. I see the DOWJ bailing big time and YES the ASX will follow on sentiment alone.

The world cannot just keeping printing money and hoping this will all go away. We need this depression, the US needs it. I see it as a WHEN not IF scenario.

Labor has only made us lose the current gains due to their uncertain nature, poor policy and growing negativity that is very much warranted.

There will be blood in the streets very soon.


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## nioka (16 July 2011)

What's happening?.. What I see is a further corrupting of the system.
 Extracts from an article by  Joseph L. Schaefer

"Market Profile: Schizophrenic or Merely Manic-Depressive (And What's an Investor to Do?) 
 about: BHL, BLW, BSV, EVF, EVV, HPS, HYFXY.PK, JTP, LYSDY.PK, MINT, PDT, PPR, RWM, SBB, SDRL, SEF, SHY, VTA DOWN 5% in the first 86 days of the second quarter!
UP 4.6% in the final four days!
And most recently: Rising convincingly 4 days in July, then plunging just as convincingly the next 3 days, then roaring ahead yesterday based on some words spoken by the Chairman of the Federal Reserve, “full of sound and fury, signifying nothing”!

Is it any wonder individual investors are deserting the stock market? The shift from 75% individual / 25% “institutional” in the 1950s to 76% institutional / 24% individual today is more worrisome to me than any piece of news about the Euromess, China, or our own leader's inability to sit down and hammer out a simple compromise to the deficit reduction talks. (I call it “deficit reduction” rather than “lifting the debt ceiling” because the former implies actual action on the root cause of the problem, the latter merely political jockeying to see who takes the credit for kicking the increasingly heavy can down the road.)

It isn’t only that institutions are today the 800-pound greedy, boorish gorillas in the investing game. It is the type of institutions as well. As recently as the 1970s, “institutions” were comprised of bank trust departments, a few partner firms on Wall Street that guarded their capital well, a handful of mutual funds, and pension plans administered according to “prudent man” principles, most offering something as daring as maybe 60% blue chip stocks and 40% bonds.

In 1970, there were approximately 360 mutual funds with $48 billion in assets. Today, there are some 8000 mutual funds in the United States alone, with combined assets of more than $12 trillion – roughly the size of the US annual Gross National Product! 

One mutual fund alone, the Vanguard 500 Index Fund, has more than $100 million in assets, double the number of every mutual fund in existence in 1970. John Bogle of Vanguard believes he has done the retail investor a favor by sponsoring index funds. That may be true – but he has also created the most liquid casino in the world and other institutions are the bettors who daily take the most advantage.

Add to this that “mutual funds” themselves have changed. We can now buy a 3x leveraged gamble on the market itself or on most sectors that comprise the markets. We can specialize, not just to the level of, say, technology, but specifically, the Internet; not just the Internet, but a small subset of the Internet. This creates – volatility. What’s an investor to do?

Now consider that the other “institutions” have radically changed, as well. When Wall Street partnerships began to go public, suddenly they were playing with Other People’s Money. And there was just so much of it. Why not swing a little? 

Then bankers suddenly lost prestige and decided they needed some fun in their lives, too, so Sandy Weill bought himself (for only $100 million of Other People’s -- Citicorp’s shareholders’ – Money) the repeal of Glass-Steagall. Pension fund managers' bonuses became tied to performance, not capital preservation and reasonable growth, so they threw their lot in with the branksters, as well. (Brankster: my term for the brokers, bankers, and gangsters that now run Wall Street, banking and, more and more, the best politicians that money can buy.) So what's an investor to do?

Of course, this doesn’t even begin to describe the harm caused by the newest financial legerdemain, the hedge funds that take 20% of your profits in the good times and share in 0% of the losses in the bad times. Again, what’s an investor to do?

I’m glad you asked. I can’t speak for you, but here’s what we are doing for our clients in this crazy upside-down view of how money should be managed for value and growth:

Sadly, we have had to recognize that in a wild and wacky gorilla-dominated market where long term is close-of-market and no positions are carried over the weekend, buy-and-hold as we confirmed old Value Investors know and love it, is dead. I hate to write those words. Deep research, informed analysis and prudent acquisition of unpopular companies when their prices are cheap has been our stock-in-trade for nearly four decades. 

Then, in 2007, as all these gorillas decided their minions needed not just penthouse apartment in Manhattan, a McMansion in the Hamptons and a Bentley to get them to and fro, but a helicopter to avoid the hoi polloi on the streets below, took ever-increasing risks with Other People’s Money (read: yours, if you own a mutual fund, have a pension plan, leave money in your margin account, etc.) The result was the gorilla-induced fiasco of 2008-2009. 

The market rebounded, of course, but most investors did not. We Value Investors clung to the idea that securities selected for their quality, value and future growth prospects would still do well. They have not. What the gorillas need are 30,000 tons of bananas (apologies to Harry Chapin.) They don’t care about value. They care only about two things: price and liquidity. Because of this, we have had to think more defensively  And we must think more short-term. That part really hurts."

The stock market is no longer about investing. It has become a casino where there are few real rules and the house takes whatever cut they decide is warranted to sustain their lifestyle.

This is the biggest threat to Capitalism there has ever been and is a system that plays right into the Chinese communist game. Something to really be alarmed about.


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## Tyler Durden (16 July 2011)

BrightGreenGlow said:


> Currently typing out a QSuper investment switch to cash. I see the DOWJ bailing big time and YES the ASX will follow on sentiment alone.
> 
> The world cannot just keeping printing money and hoping this will all go away. We need this depression, the US needs it. I see it as a WHEN not IF scenario.
> 
> ...




I switched mine to cash in March this year, not because I 'predicted' any sort of downward movement of the market, but I just thought super is supposed to be there when I retire, so it should accumulate, not lose friggin' money (which there is a chance of).


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## Tysonboss1 (16 July 2011)

Tyler Durden said:


> I switched mine to cash in March this year, not because I 'predicted' any sort of downward movement of the market, but I just thought super is supposed to be there when I retire, so it should accumulate, not lose friggin' money (which there is a chance of).




depends how old you are, inflation will take most of the interest your cash earns, if retirement is years away, you may aswell buy assets.


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## nioka (16 July 2011)

Tyler Durden said:


> I switched mine to cash in March this year, not because I 'predicted' any sort of downward movement of the market, but I just thought super is supposed to be there when I retire, so it should accumulate, not lose friggin' money (which there is a chance of).




Of the three main investment types cash runs a poor third. Property and the stock market are about equal 1st and second. 

I know I say the stock market is corrupted but it is a case of "know your enemy" and work around the system. Just don't let the corrupt part take you down. There is still the opportunity for sound profitable investment. The main thing with stocks is not to be in a position that you have to sell by a certain date. The volatility of the market  makes the timing critical, both when entering and leaving. Buy when the lemmings are active and sell when there is euphoria. Esaier said than done but working with fundamentals helps.

Thats my opinion and the basis of my provision for the future.


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## BrightGreenGlow (17 July 2011)

In the short term 1-2 years I see the asx lose ground therefore cash is far better and then dumping it all back into assets when you feel better about the market trend would be a smart idea - in saying that this is just my little opinion.


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## zac (17 July 2011)

BrightGreenGlow said:


> In the short term 1-2 years I see the asx lose ground therefore cash is far better and then dumping it all back into assets when you feel better about the market trend would be a smart idea - in saying that this is just my little opinion.




What do you base that on? I know its your opinion and not having a dig, just curious.

This year already has seen some testing issues come up. The ASX has struggled to get under 4500.
Some Analysts still think the All Ords should get to 5500.
Im not so convinced.
I do think there are some interesting times to come. 
With the Baby Boomer generation hitting retirement age and their assets/investments sold/traded etc, it must make some form of impact on the countries financial health.


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## Julia (17 July 2011)

zac said:


> With the Baby Boomer generation hitting retirement age and their assets/investments sold/traded etc, it must make some form of impact on the countries financial health.



Could you explain why you are assuming baby boomers reaching retirement will en masse cash out their Super investments?
Why would they not leave satisfactorily performing investments in place in order for these to provide a tax free pension income?


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## zac (17 July 2011)

Julia said:


> Could you explain why you are assuming baby boomers reaching retirement will en masse cash out their Super investments?
> Why would they not leave satisfactorily performing investments in place in order for these to provide a tax free pension income?




I dont know what they will do, but some economists have raised it as a possible concern.
ie selling of investments, houses etc to fund their retirement.
I wouldnt expect that it would be a huge massive sell off but just more supply as such.


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## Tysonboss1 (19 July 2011)

zac said:


> What do you base that on? I know its your opinion and not having a dig, just curious.
> 
> This year already has seen some testing issues come up. The ASX has struggled to get under 4500.
> Some Analysts still think the All Ords should get to 5500.
> ...




I think that the sharemarket is finally returned to normal and is trading around fair value, So i Believe we have equal chances of seeing both significant rises and falls based on setiment.


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## zac (19 July 2011)

Tysonboss1 said:


> I think that the sharemarket is finally returned to normal and is trading around fair value, So i Believe we have equal chances of seeing both significant rises and falls based on setiment.




Im not sure about the normal bit. I think theres a lack of confidence hence drops.
I get the impression that when confidence comes back, ie some normality that prices will rise with the newfound confidence.
So theres good and bad in that.
Im trying to find some bargains but while fear is still in vogue.


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## Garpal Gumnut (19 July 2011)

Chartwise the XJO has been a little like the ole Dook of York. It's gone up and down again. The latest effort at breaking out of the trading range, looks as if it has failed. If I were a fundamentalist I'd be shooting myself. As a chartist, I'll wait and see. 

This is a monthly of the xjo over ten years.

gg


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## Tyler Durden (19 July 2011)

Garpal Gumnut said:


> Chartwise the XJO has been a little like the ole Dook of York. It's gone up and down again. The latest effort at breaking out of the trading range, looks as if it has failed. If I were a fundamentalist I'd be shooting myself. As a chartist, I'll wait and see.
> 
> This is a monthly of the xjo over ten years.
> 
> gg




We're a long way from support, no?


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## Tysonboss1 (20 July 2011)

Tysonboss1 said:


> I think that the sharemarket is finally returned to normal and is trading around fair value, So i Believe we have equal chances of seeing both significant rises and falls based on setiment.






zac said:


> Im not sure about the normal bit. I think theres a lack of confidence hence drops.
> I get the impression that when confidence comes back, ie *some normality that prices will rise with the newfound confidence.*So theres good and bad in that.
> Im trying to find some bargains but while fear is still in vogue.




And suddenly confidence is back with a tit bit of good news and the market heads up again, But that ok, next week or next month their will be somthing else to worry about and the manic depression market will return and we will head down again, or we might not.

This is what I mean by normal, it is normal for the market to flucuate. sustained rises and sustained falls are both abnormal and unhealthly.

Just on the part of your quote i highlighted, do you believe that the market can only be considered normal when it is consistently rising.

To my thinking the market is "Normal" when the prices of shares are trading around the underlying value of the companies the represent, and then offcourse when something is exactly "fair value" their is always the chance that they will face significant rises based on euphoric speculation and significant falls due to pessimistic speculation.


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## Tysonboss1 (20 July 2011)

Garpal Gumnut said:


> If I were a fundamentalist I'd be shooting myself.




this market is kinda what you want as a fundamantal investor, You want there to over the top pessimistic selling, thats when you have the opportunity to buy the businesses you have been researching for months at prices that will make them great investments.

to be honest all this uncertainy throws up lots of opportunities for me to make investments,


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## skyQuake (20 July 2011)

Tysonboss1 said:


> this market is kinda what you want as a fundamantal investor, You want there to over the top pessimistic selling, thats when you have the opportunity to buy the businesses you have been researching for months at prices that will make them great investments.
> 
> to be honest all this uncertainy throws up lots of opportunities for me to make investments,




But that is at the risk of ignoring bigger macro picture? Eg, today is eve of the Make or Break euro summit, Obama negotiations with republications over the debt ceiling.
Things can get a lot cheaper (or more expensive!) very quickly


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## Tysonboss1 (20 July 2011)

skyQuake said:


> But that is at the risk of ignoring bigger macro picture? Eg, today is eve of the Make or Break euro summit, Obama negotiations with republications over the debt ceiling.
> Things can get a lot cheaper (or more expensive!) very quickly




I suppose a good fundamental investor is not ignoring big macro events, We just take look at the big picture and make an assessment of how the individual companies operations will be affected.

If I believe there will be little of no effect on the companies real cash earnings, and the current price is attractive based on the margin of safty principle I will take a position.


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