2008 - where to from here?

[sideshowbob]

Hi guys.. I've been a long time reader but with the recent downward trend ive become compelled to write my first post.

I currently have $10,000 in BNB, $20,000 in BHP which I purchased in December.
and I have lost around $5000 in total.

I would like to get out within the next 12 months due to some other commitments.

So what would you guys do...?

I've thought about my options here...

1. Get out now
Bite the bullet now... accept a loss of $5000.
and just leave the rest in a bank for the next 12months.

2. Play it cool!
try to tough it out for a mini rebound and then get out
Hold out until something good happens and maybe take back some of the loss
Wait for February with BHP?

3. Fight back!
Sell BNB and BHP shares and look at something else over the next 6-12months...

Question 2.

What are some stocks that look good in light of the recent activity.
Gold, Oil... which stocks? STO? ORG? LGL?

I would really be thankful for any ideas and advice.

Thanks fellas.

 

[vishalt]

Last time I got out of BHP it doubled

I'm going to ride it out, I'm in the same situation as you, also you might want to consider opening an account to just short those shares while they're going down? I cant see bhp or babcock going bankrupt.

 

[lioness]

Hi guys.. I've been a long time reader but with the recent downward trend ive become compelled to write my first post.

I currently have $10,000 in BNB, $20,000 in BHP which I purchased in December.
and I have lost around $5000 in total.

I would like to get out within the next 12 months due to some other commitments.

So what would you guys do...?

I've thought about my options here...

1. Get out now
Bite the bullet now... accept a loss of $5000.
and just leave the rest in a bank for the next 12months.

2. Play it cool!
try to tough it out for a mini rebound and then get out
Hold out until something good happens and maybe take back some of the loss
Wait for February with BHP?

3. Fight back!
Sell BNB and BHP shares and look at something else over the next 6-12months...

Question 2.

What are some stocks that look good in light of the recent activity.
Gold, Oil... which stocks? STO? ORG? LGL?

I would really be thankful for any ideas and advice.

Thanks fellas.

Depends if you believe in the 5th Elliot wave. If you do hang in there, if not sell asap as this may be going lower.

 

[Garpal Gumnut]

Hi guys.. I've been a long time reader but with the recent downward trend ive become compelled to write my first post.

I currently have $10,000 in BNB, $20,000 in BHP which I purchased in December.
and I have lost around $5000 in total.

I would like to get out within the next 12 months due to some other commitments.

So what would you guys do...?

I've thought about my options here...

1. Get out now
Bite the bullet now... accept a loss of $5000.
and just leave the rest in a bank for the next 12months.

2. Play it cool!
try to tough it out for a mini rebound and then get out
Hold out until something good happens and maybe take back some of the loss
Wait for February with BHP?

3. Fight back!
Sell BNB and BHP shares and look at something else over the next 6-12months...

Question 2.

What are some stocks that look good in light of the recent activity.
Gold, Oil... which stocks? STO? ORG? LGL?

I would really be thankful for any ideas and advice.

Thanks fellas.

Depending on how you view the market over the next 12 months, and remember your opinion would be as valid as the next at present, you need to stay in or take a loss.

Should you take a loss it can be offset against capital gains in the future.

Selling BHP is always a brave move.

gg

 

[dhukka]

The biggest problem is your time frame limitations so I would be inclined to sell on the next rally. Don't worry, there will be another rally, even if we are in a bear market, they are characterized by short sharp rallies. the following comes from Hussman Funds which gives a good summary of what to expect in bear market.

Allow for "clearing rallies" without speculating on them

It is crucial to recognize that the market downturns associated with recessions are never one-way movements. The basic feature of bear markets is that they maintain the hope of investors all the way down. The stock market often “rides the Bollinger band” lower, becoming more and more oversold, but will then unpredictably clear those oversold conditions by producing explosive advances that are “fast, furious, and prone-to-failure.” The 2000-2002 bear market, which took the S&P 500 down by half and the Nasdaq down by more than three-quarters, included three separate 20% trough-to-peak advances in the S&P 500, and many more 5-7% rallies. We did capture a portion of those, but "clearing rallies" are always prone to failure, so we could remove only a fraction of our hedges. Unless we observe a very broad improvement in market action, that sort of trade would require more modest valuations than we see at present. Generally speaking, when valuations are stretched (on normalized earnings) and both market action and economic measures have turned negative (as they have now), you can expect that “buying-the-dip” will result in a brief feeling of genius and success followed by profound regret

 

[ROE]

Hi guys.. I've been a long time reader but with the recent downward trend ive become compelled to write my first post.

I currently have $10,000 in BNB, $20,000 in BHP which I purchased in December.
and I have lost around $5000 in total.

I would like to get out within the next 12 months due to some other commitments.

So what would you guys do...?

I've thought about my options here...

1. Get out now
Bite the bullet now... accept a loss of $5000.
and just leave the rest in a bank for the next 12months.

2. Play it cool!
try to tough it out for a mini rebound and then get out
Hold out until something good happens and maybe take back some of the loss
Wait for February with BHP?

3. Fight back!
Sell BNB and BHP shares and look at something else over the next 6-12months...

Question 2.

What are some stocks that look good in light of the recent activity.
Gold, Oil... which stocks? STO? ORG? LGL?

I would really be thankful for any ideas and advice.

Thanks fellas.

Your time line is way too short for investment. I hold stock for three years before I decided it's a good or bad stocks.

if you look at historic graphs any stock can move up or down 30% in any given year in a normal market... so what you see is not un-natural as we are in a down turn and stock get hammer a little harder than it used to.

 

[sideshowbob]

thanks fellas for the advice.

the article on rallies in a bear market was certainly something I was wondering.
Will there be a rally for me to wait for?

I remember selling BHP last year at $28.. after everyone was saying the market is going to go bear. And one day in December I couldn't take it anymore... so I bought back in at around $44...

My plans were always long term 3-5 years... but then of course plans change when you're 25.

Shorting....
Can somebody tell me the basics of carrying out shorting... on Commsec.
Is it easy to do.?

 

[tcoates]

sideshow,

Shorting is selling the stock before you own it. ie sell first and buy back later. How you decide what to short sell is ???? And if you go to the commsec site you will also find information on short selling here...

https://orders.comsec.com.au/ClientAccess/ShortSelling/Initial/InitialAbout.aspx?TYPE=T#b

re commsec... I have looked into it already. My understanding is that you can either do what they try "term short trade" or "day". The differences between the two is that with a term short trade the min order is $25000. For day short trade there is no minimum - but then you would you really want to short the stock itself for less than one day if you are trading less than $25000 - consider the brokerage costs before you even make a profit.

Now I am/have not mentioned options or cfds etc. - they are a different kettle of fish. Though I did receive an email from commsec re trading options just the other day - one of the new features they are introducing soon.

Tim

 

[Buffettology]

I would say avoid shorting all-together!

Just my opinion.

You will defiantely get a rally coming on! I would not sell currently, though the market will probably take a hammering, just dont look at the money you have "lost", until its had its rally! You only loose once you actually sell!

 

[Aussie2Aussie]

thanks fellas for the advice.

the article on rallies in a bear market was certainly something I was wondering.
Will there be a rally for me to wait for?

I believe the answer is no, there will be upticks but more of them will be matched by heavier downward pressure.

Businesses like BNB are the ones with the most exposure to interest rates...they are essentially a mountain of debt requiring refinance; requiring positive and growing dividend stream from assets held and assets whos value grows - all very hard to do in this years climate.

BHP is reliant on commodity prices, some of those will do well this year but others will struggle. Slowing economic growth affect negatively commodity prices. BHP are also going through a takeover, paying a lot of money that may cost more to service in the future. Take overs tend to distract management and merging the businesses will cost substantial dollars for the first few years.

This year is one for cash, put the $5k down to bad timing and put it aside for future capital gain offsets.

 

[DionM]

If I read your post right, you want to sell $30k worth of stock for $25k and lose $5k? So getting your $25k is going to cost you $5k.

I've got about $70k worth of 'core' stocks (excluding my flirtations with explorers ... for better and worse), currently down about $10k, that I accumulated over the last 4mths of last year. While it pains me to see that, selling it now is not an option - why would I sacrifice $10k when I can afford the loan repayments and I bought them as a long term prospect. While it is painful to see the drop in value, I am more pee'd off about the fact I could have got my shares for cheaper, than the drop in value ...

 

[Real1ty]

If I read your post right, you want to sell $30k worth of stock for $25k and lose $5k? So getting your $25k is going to cost you $5k.

I've got about $70k worth of 'core' stocks (excluding my flirtations with explorers ... for better and worse), currently down about $10k, that I accumulated over the last 4mths of last year. While it pains me to see that, selling it now is not an option - why would I sacrifice $10k when I can afford the loan repayments and I bought them as a long term prospect.

Are you prepared to wait years for those shares to "possibly" get back to break even again?

I am not saying this will be the case but if we are in or enter into a bear market, it will probably go for years, if historical data is anything to work off.

I was about to list the reasons why those companies might not be the same when we start to rise again, but there are just too many to list.

Really it just comes to personal opinions and at the end of the day it's your money but you almost sound like you believe it is a "given" that they WILL get back to break even.....

 

[sideshowbob]

No way do I think I will break even.

Im hoping for some bounce though to get a portion of it back.

Is this a chance in the next few weeks.??

 

[Nyden]

No way do I think I will break even.

Im hoping for some bounce though to get a portion of it back.

Is this a chance in the next few weeks.??

Earnings reporting season is next month I believe.
Stocks that show growth / good earnings should go up, but to the same point - stocks that don't show these qualities, will go down

All depends on whether or not you have faith in your stocks fundamentally.

 

[DionM]

Are you prepared to wait years for those shares to "possibly" get back to break even again?

I am not saying this will be the case but if we are in or enter into a bear market, it will probably go for years, if historical data is anything to work off.

I was about to list the reasons why those companies might not be the same when we start to rise again, but there are just too many to list.

Really it just comes to personal opinions and at the end of the day it's your money but you almost sound like you believe it is a "given" that they WILL get back to break even.....

I know where you are coming from. However, over the long term, markets always tend to rise, don't they? I'm talking 10, maybe 15 years.

The companies I have invested the bulk of my money are sound companies that earn money. Some may be affected by the credit market issues, some are miners exposed to the vagaries of commodity pricing and global demand, but at the end of the day they are all fairly sound companies.

 

[Julia]

I know where you are coming from. However, over the long term, markets always tend to rise, don't they? I'm talking 10, maybe 15 years.

Dion, are you saying you'd be happy to wait 10 or 15 years for these companies to recover to the level you paid for them?
Think about what else the funds could be doing in that time.

 

[DionM]

Dion, are you saying you'd be happy to wait 10 or 15 years for these companies to recover to the level you paid for them?
Think about what else the funds could be doing in that time.

Hrm. Interesting. 10 to 15 years was my investment timeframe (bad wording on my part), I would be concerned if they took that long to recover. I woudln't expect them to take that long to recover, but thats not really based on any detailed analysis except my research into the companies before I bought in knowing they are fairly sound (again, excluding shorter term plays).

I guess my line of thinking is that provided I can cover the interest payments on the loan - the sum of my contributions, dividend payments and profits from share trading (I did make some profits last FY) then it's not really hurting me to keep them (and then I can use them as security for margin lending for example). Ideally I would like to get to a point where dividends and profits from trading pay the loan, and I was on track to do that until the last month or so ...

 

[cordelia]

I know where you are coming from. However, over the long term, markets always tend to rise, don't they? I'm talking 10, maybe 15 years.

The companies I have invested the bulk of my money are sound companies that earn money. .

Nothing is set in stone. always be prepared for the worst scenario...Certainly nobody here can possibly know if markets will rise in 10 to 15 years.

forget what has happened or what will happen..because nobody knows. Anything can happen but are you prepared for it? Are you in for the long term or the short term? If you have invested in shares for the long term then fluctuations in price aren't that crucial. However , if you have invested money that you know you will be forced to draw upon within a certain time frame then you need to assess your position.

Personally I never invest money that I am dependent upon. If my shares go down i won't have to sell them to pay for something else.....that's why i don't like leverage. especially not in this market.

If your shares have devalued in price you have three choices buy more, sell or do nothing.

If your shares have gone down they can always go down further. People get the ridiculous idea that because shares have gone down a certain amount that they will soon go up again...not so..the price can always head south.

Can you ride out the downside or are you willing to get into the positon of being forced to sell at a lower price further down the track because you have to sell when the price is not right?

Perhaps you can sell them now and buy them back when they go down further?

Believe me I have made the mistake of hanging onto shares hoping they will go up again and ended up getting rid of them right at the bottom. Its like getting in the lift at the top floor, realising its going down and hoping it will go up again. Eventually it goes all the way down and if you are lucky someone wants to go up to the floor you got on at......where's the profit?

Decide where you are going to get off before you get in the lift.....

 

[sideshowbob]

hi guys.

I decided to get out completely today.... lost hard earnt money. But I have to detach myself from the emotion and reiterate the risk I chose to take in the first place. My final analysis ...

It doesnt matter what happens in the reports coming up in February...
There has been a warning about the American recession for a while....
There has been volatility... there is a changing interest rate
And what if some really bad news comes out of china tomorrow... what will happen then.

And at the end of the day people are in a bear mood.... thats the biggest problem.

Too much risk now. ... so I got out 30 minutes ago, on a good day.
I might be wrong... but given my short time frame of 12months... I think it was the best decision.


Good luck to all of you...
And we will see what happens... this is written in stone now.

 

[evwatkins]

I just sold everything then also. Will consider buy back in near future.

had $31k

Sold for $34k

happy to take it for now