# Should I be Scared?



## ENP (5 August 2011)

About all the media hyping up things in the newspaper?

I've only been following the markets and shares for about the last year. Does this stuff normally blow over? Or is it really bad this time?

What normally happens next?


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## tech/a (5 August 2011)

What are you scared of?
How does it affect you?
Super?
Trading?
Life in general--mortgage etc?
Your job?


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## Tysonboss1 (5 August 2011)

ENP said:


> About all the media hyping up things in the newspaper?
> 
> I've only been following the markets and shares for about the last year. Does this stuff normally blow over? Or is it really bad this time?
> 
> What normally happens next?




Markets fluctuate it just the way it is, and always will be.

What is important is your own situation, and it is important for you to keep your head and examine the facts in a rational and dispassionate way.

re examine your investments and think about each individual company/property/bond and how they are likly to be operating 3 - 5 years from now. If you think they will be fine, don't panic.


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## skc (5 August 2011)

ENP said:


> About all the media hyping up things in the newspaper?
> 
> I've only been following the markets and shares for about the last year. Does this stuff normally blow over? Or is it really bad this time?
> 
> What normally happens next?




Please do all your scaring in the official scaredy cat thread.

https://www.aussiestockforums.com/forums/showthread.php?t=23227&p=649970&posted=1#post649970


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## wayneL (5 August 2011)

skc said:


> Please do all your scaring in the official scaredy cat thread.
> 
> https://www.aussiestockforums.com/forums/showthread.php?t=23227&p=649970&posted=1#post649970




And open up your boxes of cash for bargain buying... don't tell anyone though till the market is up 20% ::


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## craft (5 August 2011)

Should I be Scared?

Don’t Know – what does your trading/Investment plan say?

You do have a plan don’t you.

It does contemplate and plan for what is really only a fairly minor market movement so far, doesn’t it.

So, should you be scared?


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## Tyler Durden (5 August 2011)

Tysonboss1 said:


> Markets fluctuate it just the way it is, and always will be.




I never followed the markets pre-GFC, but surely back then you wouldn't have days when it would drop 170 points in one day?!??!


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## Julia (5 August 2011)

craft said:


> Should I be Scared?
> 
> Don’t Know – what does your trading/Investment plan say?
> 
> ...



A fairly minor movement?   What do you consider would be a major movement?

What is your own plan?  Any thoughts about capital preservation?  Stop losses?

What about the scenario where someone's trading/investment plan is simply inadequate?

We keep seeing the admonition "stick to your plan".  Well, fine, if you already know your plan is foolproof.  I suspect some of those people posting in panic today have no such  plan.


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## craft (5 August 2011)

> A fairly minor movement?   What do you consider would be a major movement?



 The last similar consolidation in our market was 87 and the the first real pull back after 87 was 18 months and 30%. The second Pull back in 74 was 18+ months and 40%+



> What is your own plan?  Any thoughts about capital preservation? Stop losses?



  I'm one of your dreaded fundamentalist. I'm interested in an income stream that justifies the purchase price based on very realistic/pessimistic assumptions. No stop Losses, No thoughts directly of capital preservation, all focus is on the cash flow and getting that right - If I get it wrong I get burnt. I truly like a down market because my only controllable variable is the buy price and over the long term the dividend component of the yield is important. 



> What about the scenario where someone's trading/investment plan is simply inadequate?



Be scared!



> We keep seeing the admonition "stick to your plan".  Well, fine, if you already know your plan is foolproof. .



 No one knows their plan is fool proof, that is why we continually pay attention instead of being permanently on holiday  and that’s also generally why we love the game.



> I suspect some of those people posting in panic today have no such  plan



 Enjoy the emotions if you can afford to gamble the money - otherwise get serious and put some serious work into what you are doing and plan how to control the risks. - you probably worked hard for that money.


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## Tysonboss1 (5 August 2011)

Tyler Durden said:


> I never followed the markets pre-GFC, but surely back then you wouldn't have days when it would drop 170 points in one day?!??!




yes, there was boom and bust cycles before the gfc many of them, And no recent falls are not the biggest in history, many larger % falls.


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## McLovin (6 August 2011)

Tyler Durden said:


> I never followed the markets pre-GFC, but surely back then you wouldn't have days when it would drop 170 points in one day?!??!




% wise the falls could be that size or bigger. And don't remember in the '87 crash the market fell 500 points (25%) in one day.


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## nioka (6 August 2011)

No one should be scared. They should be excited. This really is the time to accumulate. This is a time when you can increase the NUMBERS of your favourite stocks by trading one for another without the complication of capital gains tax. There will be opportunities now that have been absent for the last year or more.

All you need to do is carefully examine the fundamentals, look ahead and think outside the square.


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## notting (6 August 2011)

Hmmmm. Outside the square, outside the square, outside the square.
Is there a listed company that makes adult dypers in Australia?


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## cynic (6 August 2011)

nioka said:


> All you need to do is carefully examine the fundamentals, look ahead and think outside the square.




Are any of the fundamental approaches still valid in the current climate? 

Is the market actually going to respect the fundamentals? 

P.S. I've looked ahead and had a sneak preview, what I saw wasn't pretty! So I'm not just scared - I'm @#$%ing terrified!


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## Wysiwyg (6 August 2011)

nioka said:


> All you need to do is carefully examine the fundamentals, look ahead and think outside the square.



You must like being in the red and that aint no BUL.


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## nioka (6 August 2011)

cynic said:


> Are any of the fundamental approaches still valid in the current climate?
> 
> Is the market actually going to respect the fundamentals? QUOTE]
> 
> ...


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## tech/a (7 August 2011)

Nioka

Would you mind posting those you are buying millions of--- when you buy them.
Id just like to share your joy!!
As time passes.


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## Billyb (7 August 2011)

nioka said:


> No one should be scared. They should be excited. This really is the time to accumulate. This is a time when you can increase the NUMBERS of your favourite stocks by trading one for another without the complication of capital gains tax. There will be opportunities now that have been absent for the last year or more.
> 
> All you need to do is carefully examine the fundamentals, look ahead and think outside the square.




You're right, behind every crisis there is opportunity, but timing is important. Just look at the 08 GFC-if you had bought (and then held) stocks at the bottom of that, or even index funds, or even gold after the Lehmann Brothers collapse, you would have done very well. I think portfolio management is important right now though - can lose a lot of money if too much capital is in the wrong asset classes and that can wipe out any gains that's made after the recovery.
Different kettle of fish for traders - horses for courses.


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## craft (7 August 2011)

It looks like there is a bit of argument here that you shouldn’t be scared to buy value at the moment.

Well that’s what I try to do and let me spell out to any Beginner that there are some aspects to that approach that you should potentially be very scared about. 

The first problem is that if you are wrong about the true value you will have lost a lot of money before you correct your mistake.  You have to be very good at business analysis before you will be making good judgements. A superficial understanding and a valuation formula is not adequate for good business analysis.

The second Problem is that no matter how good your business analysis is, the future is unknowable so you will never be 100% correct. You had better look to some form of risk management to deal with this reality.

The third problem is that even if your analysis is right and the future unfolds as you expected, you can still sustain MASSIVE drawdowns in the interim (markets don’t always respect value in the short term) and you had better be able to deal with that.

Price stops can get you out of very dangerous markets and give you a chance to fight another day, there is no equivalent to price stops when you buy/hold based on perceived value (Ignoring price action) and that makes the approach very risky as you will be deep in the doo before you realise any shortcoming.


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## Calliope (7 August 2011)

What scares me is the absence of any competent economic leadership in the western capitalist world. Just cast your eyes over this lot and despair. 

Europe; Merkel, Sarkozy, Berlusconi. Zapetro
Great Britain: Cameron
America: Obama
Australia: Gillard

Everything they decide seems to get their economies deeper in the s**t.


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## addison (7 August 2011)

what happens to the bargain hunters who move in to buy cheap in a crisis if the crisis worsens and prices drop further?

i cant go short with my broker, so ive cashed out, and will wait a little bit, that way i dont have to be scared at all


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## cynic (7 August 2011)

addison said:


> i cant go short with my broker, so ive cashed out, and will wait a little bit, that way i dont have to be scared at all




Okay, so I can see that you've taken sensible measures to eliminate your exposure to the market.

However, these unfolding events and their impact on the western economies, still give ample cause for fear.

Our society is just coming to the realisation that squillions of dollars of perceived wealth was simply an illusion. 

Can you imagine the extent and severity of the likely repercussions that will inevitably ensue?

Can you name even one major entity in Australia that can be guaranteed to remain solvent in light of what's happening?


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## addison (7 August 2011)

cynic said:


> Okay, so I can see that you've taken sensible measures to eliminate your exposure to the market.
> 
> However, these unfolding events and their impact on the western economies, still give ample cause for fear.
> 
> ...




no i cant, all all of what youve said IS scary, my suggestion that by cashing out and waiting is merely in terms of a strategy for being in the stocks market, in terms of society in general, the impact upon jobs, lending, you name it, hell yes its a worry, and much more than any of us can doing anything much about, save trying to keep our money as safe as we can


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## nioka (7 August 2011)

Calliope said:


> What scares me is the absence of any competent economic leadership in the western capitalist world. Just cast your eyes over this lot and despair.
> 
> Europe; Merkel, Sarkozy, Berlusconi. Zapetro
> Great Britain: Cameron
> ...




Obama is doing OK. Its the likes of Sarah Palin that are the problem there.

Gillard , well at least we are still AAA. (And while we have her at least we don't have Abbott). Every cloud has a silver lining.


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## Wysiwyg (7 August 2011)

nioka said:


> Obama is doing OK. Its the likes of Sarah Palin that are the problem there.



 Well not her really when you consider ....

All the world's a stage,
And all the men and women merely players;

and the stage offers great wealth to those who play it well.


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## communique (7 August 2011)

Due to the impending downturn tomorrow, would I be right in assuming that the aussie dollar will be heading south as well?


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## IB12 (9 August 2011)

ENP said:


> Should I be scared?




Yes.


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## James58209 (9 August 2011)

communique said:


> Due to the impending downturn tomorrow, would I be right in assuming that the aussie dollar will be heading south as well?




Compared to what? Are we still using the U.S. dollar as the standard point of reference to rate the value of our dollar against? Of course the answer is "Yes, we are", but we may need to question this in the near future.

The value of the Aussie dollar is closely tied to our interest rates. There is talk of the RBA decreasing the Official Cash Rate soon, and the Commonwealth Bank has already cut fixed mortgage rates. Lowering Aussie interest rates will put downwards pressure on the Aussie Dollar, because there will be less demand from overseas investors wanting to buy Aussie Dollars in "carry trades", i.e. borrowing money overseas at low interest rates to invest in Australia to earn a higher yield.


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