Australian (ASX) Stock Market Forum

How low can the All Ords go?

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i dont think anyone can accurately call a low yet.

even though many think the market is oversold due to fear/panic

the fundamentals of company profits have just not been seen yet.

I expect the big companies to be profit squeezed.

I have 90% cashed out gradually since January.

various brokers and financial planners are STILL telling me and others to hold or even buy.

I even had the indignity of my panelbeater ringing me to say yesterday is the big day to buy.

I muttered about recession in USA, Europe and Japan, and told him i would'nt.
 
awg said:
i dont think anyone can accurately call a low yet.

even though many think the market is oversold due to fear/panic

the fundamentals of company profits have just not been seen yet.

I expect the big companies to be profit squeezed.

I have 90% cashed out gradually since January.

various brokers and financial planners are STILL telling me and others to hold or even buy.

I even had the indignity of my panelbeater ringing me to say yesterday is the big day to buy.

I muttered about recession in USA, Europe and Japan, and told him i would'nt.
Click to expand...

LOL! My brother-in-law wouldn't know a FPO share from a latte but we had him sending us emails telling us "Now is the time to hold, don't panic, it'll be alraight." :D
 
MS+Tradesim said:
LOL! My brother-in-law wouldn't know a FPO share from a latte but we had him sending us emails telling us "Now is the time to hold, don't panic, it'll be alraight." :D
Click to expand...

yeh the amount of mates that want me to help them with share trading, that go two days ago yeh it hit the bottom im gonna buy in yada yada yada, then i tell them to buy when i buy. 2 day up move and they think they are messiahs of the market...

meanwhile they dont even have a broker...



oh and the answer to this thread is...

how longs a piece of string?
how deeps a bottomless pit?
 
I recently cashed out the last of my Managed Investments via my Wrap fund.

Everything is now in my SMSF...I pay a flat $600pa for my considerable 6 figure balance...no more rip-off % fees for dud advice ever again.

I said to the FP,,bye the way, what have you done personally ( now I am finished he can answer that, and he said he had been buying for F sake!

On a slightly different note..a good friend who knows my interest in the market was asking me my opinions at a function several weeks ago..usually I prefer not to talk about it much, especially as I have been pessimistic for some time, but because he is a great guy, and was asking very specific questions, I said if you really want to know...the OTC derivative market has collapsed,(I explained), the bailout is like p!ssing in the ocean, the economy is in for a big recession ( if we are lucky)...I am cashing out completely, and credit may soon become very hard to get, many people will loose their jobs, house prices down 20-40%, and it will hit us like a tidal wave...and people just have no idea whatsoever about the coming sh!tstorm...meanwhile, quite a few people had started listening in...and the response was as I expected...hey mate, the sun is shining..what are u worried about...thats bullsh!t etc (not from him), but the gathered crowd.

I said "I have never so hoped to be wrong in all my life"
 
[QUOTE=YOUNG_TRADER;350230]Interesting, in response to this the RBA will no doubt cut interest rates and I can tell you what that does, it makes people like me with lots of cash in high interest savings accounts go hmmm yield is dropping was 8% guarnateed now 6.5% I think, if it gets to say 5% I will start looking for stable earning stocks with good dividend yield, may also start looking at getting back into property,

Food for thought

Also how/what will drag the All Ords below 2500? BHP $10? RIO $30? CBA $10? NAB $7?

I would say 3400 is what I would have thought as an all time low target

I am still a firm believer in the industrialization of over 2Billion People[/QUOTE]


All fair points.

I think China is starting to show that the pace of it's industrialization is entirely dependent on Western consumption at this point: the tail doesn't wag the dog. They (and India) will industrialize but in the meantime I don't have the stomach to ride the rollercoaster all the way down, for who knows how long.

As for interest rates, even zero is unattractive if you're losing money on yield and capital depreciation. So property looks bleak for some time IMO, we need huge adjustments in p/e ratios first because opportunities for capital gain are not going to be there for quite a while. Borrowers just can't ante up again and again in waves when the credit supply isn't there. And with the first wave of boomers moving into retirement, thus adjusting from being net spenders to net savers, I can't see borrowing getting to previous levels for a long time. People in their 40's and 50's are in their peak earning and borrowing years. People in their 60's earn very little and hardly borrow at all. Demographics play a key part in economic cycles.

Stocks for yield will be there when we reach the bottom. p/e ratios rise as price collapses, but prices collapse further as earnings plummet. It's a vicious cycle and it's only just started. Inventories rise as demand falls, the weak go bust and get swallowed up by the strong, production is adjusted and we return to profit as the system resets. This takes years.

If we move from AO 4000 to AO 2500 then I suspect we see all the blue chips down about 1/3 from where they are now. So BHP would be $15-$18. That would've sounded crazy in June this year.
 
white_goodman said:
oh and the answer to this thread is...

how longs a piece of string?
how deeps a bottomless pit?
Click to expand...
If you have a piece of string, I will measure it for you, seeing you are not up to it.
And a bottomless pit is a "whole", which we can unitise as one.
 
What are the chances of most stocks taking a dive of say 20-40% over night or do we watch it go down in increments each day and then one day say well that how it all work out?
 
awg said:
the response was as I expected...hey mate, the sun is shining..what are u worried about...thats bullsh!t etc (not from him), but the gathered crowd.

I said "I have never so hoped to be wrong in all my life"
Click to expand...

Yup, people are idiots.. and it until it personally effects *them* they don't believe it is possible. :banghead:

Even spending a little time trying to understand the credit markets in basic detail, you'll have more of a clue than half of the managers, junior bank managers, and wanna-be investors out there who just go on recent prior history. Even 1987 will not be an accurate indicator of what may be coming.

All signs point to the end of at least a 25 year cycle here - 4000 was a very significant break of a long-term trend than began in the early 80's. All bets are off as to where this could lead. Take the rule-book and tear it up I say :)

I think 3500 will be reached within the next 6 months on the All Ordinaries, which will take us back to the start of the bubble in 2003. Earlier I had targets of 4800 as being significant, but that's all gone without too much trouble. You can't really be too bearish in this market - as even the most bearish targets are being met.
 
I've just scanned this thread back to July. Apart from a couple there don't seem to be too many posters "having a go" at the thread title recently. Maybe that's an indication of the difficulties in predicting just what is going to happen next?
On other general threads there seems to be some element where posters are now starting to talk of getting back in.
In looking at "How low can the all ords go" am I right in thinking that many are seeing 3500, or thereabouts, as a resonable target?
 
Hi Rick
Yep its the million dollar question and every answer is just a guess really.

To say that we are in unknown territory is really an understatement as the widespread magnitude of this financial turmoil has never been seen before as has the emergency response from the fed and other agencies worldwide. What happens when you inject a couple of trillion dollars into the worlds broken economies????????


So who knows..........but my feeling is that your guess is pretty close to mine (3600) and I base this on the fact that the worst of the uncertainty may be behind us as this sub prime slowly unravels which means the fear index may subside markedly to be replaced by caution that will lead eventually to cautious optimism, then to greed down the track.
Warren Buffet has been buying with his own money(which he has plenty) and he is not trying to get the bottom spot on just near enough is good enough.

Mr Buffett stressed that he could not predict how the market would ride out its roller-coaster days in the short-term.


He said "what is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over."

Good investing :)
 
Having heard several comments about the exacerbation of the current mess which will occur with the unravelling of the Credit Default Swaps, and having very little knowledge about the derivatives market, I've been looking for some info on this.

I found this article, though a few months old now, helpful and thought others might also.

Posters who have a good understanding of what is likely to happen with these CDS's might like to offer some suggestions about what they think will happen here? Last figure I heard was that the likely value globally of this is around $10 trillion.
 
Ten months ago I thought 5000, Three months ago I thought 4200, Today can't see drop by only another 5-600 pts. IMO, lot less than 3000. Just on data from US alone worth 500pt drop . They still have min. 2-3% unemployment rise, housing getting worse, manufacturing worse, retail worse,consumer confidence worse. Now on to $597 trillon of derivatives floating out there. Better not go there. Only 5-600 pts to go?
 
Julia,

I found this article, though a few months old now, helpful and
thought others might also.
Click to expand...
Link missing?

Anyway, I will admit to being a bit ignorant of them also. (As for understanding (general public), it is probably up there with LIBOR).

Found good article on wiki that explains it quite simply...

http://en.wikipedia.org/wiki/Credit_default_swap

Tim

PS. Will skip over accuracy issues relating to wiki etc. I think this page explains it quite nicely that even I can understand (I think)

PPS. Looking around 3700 as low. Or 3500. But then, I may as well read the tea-leaves in the bottom of my cup :)
 
Muschu said:
I've just scanned this thread back to July. Apart from a couple there don't seem to be too many posters "having a go" at the thread title recently. Maybe that's an indication of the difficulties in predicting just what is going to happen next?
On other general threads there seems to be some element where posters are now starting to talk of getting back in.
In looking at "How low can the all ords go" am I right in thinking that many are seeing 3500, or thereabouts, as a resonable target?
Click to expand...

Posted a series of charts in this forum a few weeks back (couldn't find them to insert url) so just posted the last chart. The chart shows the first leg down in the bear market. The next major upwards correction and last down leg aren't shown, but the last box 3 gives you my assessment.

We are correcting the whole bull run since the mid 1970's. A 4-6 bear market would be a reasonable assessment of a correction for a 30+ year bull leg.
 

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Are you serious!!!!????!!! 1000:eek: I personally can't see how you can follow wave analysis to the extent that prices/earnings will drop from where they were 12 months ago to 1/6th of that over the next two years?

And how can you say that the market is correcting a bull run that began in the 70s?? Don't know if the chart is reliable, but the one on the ASX site that shows the Oz market back to 1900 shows a pretty steady rise over the last 100 years. Why don't you say that we are going to see a correction of that "bull run"?

IMO if Wall St falls through 7000 which I've seen predictions on regarding the whole sub-prime mess, then one could say that we will most likely move down through at least another, what, 1000 points? so my prediction would be that we would hit 3000 as a worst case low.
 
jonojpsg said:
Are you serious!!!!????!!! 1000:eek: I personally can't see how you can follow wave analysis to the extent that prices/earnings will drop from where they were 12 months ago to 1/6th of that over the next two years?

And how can you say that the market is correcting a bull run that began in the 70s?? Don't know if the chart is reliable, but the one on the ASX site that shows the Oz market back to 1900 shows a pretty steady rise over the last 100 years. Why don't you say that we are going to see a correction of that "bull run"?

IMO if Wall St falls through 7000 which I've seen predictions on regarding the whole sub-prime mess, then one could say that we will most likely move down through at least another, what, 1000 points? so my prediction would be that we would hit 3000 as a worst case low.
Click to expand...

Mate it can go very low.

gg
 
Julia.
Your topic is ignored or either misunderstood by the masses.
Its certainly not talked about in the "Kochie" type help the people understand programmes.
I'm sure that if Rudd was asked you'd get some very swift political side stepping.

I find this whole topic fascinating.Spending a great deal of time reading all I can.

The "simple" answer to your question from what I can gather is that the total exposure is a point of speculation however it is so great that if it did start causing a chain reaction of defaults due to in ability to pay from those who created these derivatives,the Western Capitalist system would collapse due to simply not having enough to cover the debt.
In other words the world as we know it would become bankrupt.

So the only solution offered up so far is to throw money at it (to those caught) from all sources (Meaning world government intervention) in the hope that eventually these derivatives will "unwind" avoiding armageddon.

Interested in others take on the situation.
 
Yes ... that is precisely my fear, although I do not know enough about the cds. For example do some of them at least have an expiry date? If not and 2009 turns out to be as bad as it currently appears...then God help us all...as the dominos such as GM in America declare bankruptcy and begin to fall...how big are the loans to that one alone? and therefore the cds covering them. I can't remember are america and britain covering their banks deposits or are they guaranteeing the whole banking system? If it is the banking system then just like iceland they will face a default...surely there has to be some sought of a soloution to this? Anyone got one?
 
The guarentees are for the next 3 yrs so I guess the economic brains feel this is the time period required.
 

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