Bargain hunting?

[wayneL]

whats a swing trade? combination of day trading/buy & hold?

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

N.B. The article suffers from cognitive bias and is largely a load of old cobblers, but gives the general idea of what swing trading is.

 

[-merry]

ahh... didnt realise it was a joke.. haha my bad... my portfolio is bleeding.... owwwww

 

[Nick Radge]

Sorry for my slow reply.

My point in this debate is that everything being discussed, and has been over the last year or so, has been priced into the market already. We must undersstand that there are a lot more smarter people out there - and I mean no disrespect to anyone here as it goes for me just as much - but these people think years ahead of the pack.

The reason why so many stocks have had staggering trends is because people have already realised the true potential of China and India. They know what is occuring and have done so for a long time - that's WHY prices are where they are now. If there was more upside scope in China and therefore the knock-on effect into Australia then it would be being priced in accordingly. The market is effeicient enough to do this, although this is a simplified explaination because efficiency runs thorugh a lot of stages and hands.

This does not mean we cannot go up into the future but to do so will mean we need to operate at a different paradigm to what we already do. We need something new to shift to that new level. At this stage ist clear that there is nothing new ou there. If there is nothing new out there, then prices will fall back or re-adjust. A change in economic policy, global policy, whatever, I don't know what the next driver will be. But until there is one, we won't keep travelling this same "china blah blah blah" path. It may well be that the new paradigm is in fact a negative one. A credit crunch, but something unexpected that comes from left field or one that only a small handful really knew about before. I do not subscribe to this US collapse crap. Its been around for 8-years now. You speak to bond traders around the world and they're not concerned. That said, if the current paradigm changes, then it becomes a different story and you'll see the shift. A new paradigm maybe a change in Japanese policy or culture toward US treasuries or a new global currency haven. But its clear than the US$ is still a safe haven as a US bonds.

Not sure I'm making sense. My point is its just not as simple as everyone makes it out to be. If it were people wouldn't be wondering why they bought RIO considerably higher than current levels...

 

[Surly]

Nick,

In a crash such as this what is your opinion on the split between sells based on changed fundamentals as judged by these smarter people and sells based on people preserving profits / panicking / hitting a stop / margin calls or something other than a decision made by the smarter people you mention?

cheers
Surly

 

[Spaghetti]

Well I am not happy.

There is a problem in the world yet the extent of the problem is not being disclosed. People are reacting with blinkers on, second guessing, who really knows anything? I find it all very unprofessional. I do not know who to blame but blame must lie somewhere.

The problem with sub-prime mortgages has been known for sometime. Why wasn't the extent of the problem disclosed then, why not even now?

If this problem was occuring on an individual share level the ASX would be jumping up and down demanding transparency and full disclosure. What is the point of small time disclosures when we allow big time errors to go unchecked?

This to me shows a weakness in the system and it is hard to even trust the markets when this type of thing occurs and the only response you get it, ....we may know the fallout consequence by end of qtr?

It is not good enough to be honest. Is this a top notch market or a third world crap hole?

 

[-merry]

The reason why so many stocks have had staggering trends is because people have already realised the true potential of China and India. They know what is occuring and have done so for a long time - that's WHY prices are where they are now.

if that was the case, why are people suddenly deciding to short now? the growth in China is long term and has only started 1 year or so ago... it's still got a couple more years to run... why short so early?

 

[brettc4]

My point in this debate is that everything being discussed, and has been over the last year or so, has been priced into the market already. We must undersstand that there are a lot more smarter people out there - and I mean no disrespect to anyone here as it goes for me just as much - but these people think years ahead of the pack.

I am well aware that you have been in the game much longer than I have, but I cannot agreen with this statement.

Firstly, yes there may be a lot of smart people, but I do not believe anyone has a model that contains enough information to price everything into the market, all future earnings are estimates and therefore bound to be wrong to a degree, so the current price can have no bearing on what will occur in the future.

Secondly, even if there are a few people out there with this, the rest do not have it, so the majority are running on fear or greed, or are following the trend. They have not priced anything in, they are just trying to profit on the move, which moves the price away from what the smart guys think it should be. How much it moves away depends on how fearful or greedy people are.

Thirdly, I cannot imagine the smart guys would have a consesus on price. They would all think it should be different.

The smart guys may try to push the price back to what they think it should be, but they have only so much money to do this with, and if the are leveraged to the hilt which some are, they may have to get out while the "dumb" people are selling the market, and therefore they too force a reduction in the price, even though they may think it is worth more.

I simple do not believe the current price has all market knowledge about a stock actually taken into account. I believe in people making judgements on limited information, and I believe in people programming machines to make judgments on limited information, and in the end, people aren't as smart as we would like to think.

Brett

 

[-merry]

I am well aware that you have been in the game much longer than I have, but I cannot agreen with this statement.

Firstly, yes there may be a lot of smart people, but I do not believe anyone has a model that contains enough information to price everything into the market, all future earnings are estimates and therefore bound to be wrong to a degree, so the current price can have no bearing on what will occur in the future.

Secondly, even if there are a few people out there with this, the rest do not have it, so the majority are running on fear or greed, or are following the trend. They have not priced anything in, they are just trying to profit on the move, which moves the price away from what the smart guys think it should be. How much it moves away depends on how fearful or greedy people are.

Thirdly, I cannot imagine the smart guys would have a consesus on price. They would all think it should be different.

The smart guys may try to push the price back to what they think it should be, but they have only so much money to do this with, and if the are leveraged to the hilt which some are, they may have to get out while the "dumb" people are selling the market, and therefore they too force a reduction in the price, even though they may think it is worth more.

I simple do not believe the current price has all market knowledge about a stock actually taken into account. I believe in people making judgements on limited information, and I believe in people programming machines to make judgments on limited information, and in the end, people aren't as smart as we would like to think.

Brett

I believe Brett has some good points. On a side note, the Dow has opened green! hooray! hopefully it continues to stay green for the rest of the day

 

[chops_a_must]

Thirdly, I cannot imagine the smart guys would have a consesus on price. They would all think it should be different.

What was RIO doing for instance? I doubt they would have made such a call if they had of thought current conditions would/ soon prevail in the longer term...

 

[Sean K]

if that was the case, why are people suddenly deciding to short now?

The 'smart money' was selling and/or shorting stocks long before the correction. Probably from Mid May, but some earlier. Check the charts of the top 100 from around then. I haven't a summary but I dare so the majority were sliding. Check MBL, ANZ, WDC, etc etc. I think the only stocks holding the index up were materials.

 

[theasxgorilla]

We must undersstand that there are a lot more smarter people out there - and I mean no disrespect to anyone here as it goes for me just as much - but these people think years ahead of the pack.

The irony is that some of the people that I think you encompass with the above comment have stayed out of the markets for the last 10 (or more) years...since they could see what was going on with the whole credit situation and the imbalances being created. Instead, they made a living out of crying wolf. They'll eventually be right...hopefully not before they're too old to relish it.

 

[ta2693]

I have adjusted my position 50%cash, 50%shares to a comfort place before yesterday's dropping. If my problem with IB and Commsec did not happen, I will not lose my sleep.
Today dow dropped down 167.45. it is not a good sign. we are more likely to have a bearish market today.

But I strongly think It is a little bit too late to sell and you have better hold it. if you want to adjust your position, wait until next bullish day.
Never sell when you are panic, Never sell when everything is too late.

 

[Nick Radge]

his is a simplified explanation because efficiency runs through a lot of stages and hands.

This is what I said above. I am not asking anyone to agree with me. I simply suggesting from my 22-years of trading, both inside and outside of institutions (no, not nut houses) that markets operate on a level that is not so obvious as is being put forward here.

Price is not so important. Example, macro hedge funds which have been around since the 60's operate on big idea's. Essentially Warren Buffet does the same. They come up with a "concept" which will be caused by a global "adjustment" in prices. They then position themselves, in a variety of ways, to take advantage of that adjustment. If I remember rightly Buffet "positioned" himself in Copper quite a number of years ago. I used to deal for Tiger Management in the 90's and they did the same thing. I remember Julian Robertson, when the Nikkei was at 22,000, saying that "...the Nikkei will fall below 10,000...". His instruction to his traders were to position themselves across the board for that scenario. Obviously they sold the Nikkei short, but they also exploited all the other area's that would be effected if/when scenario unfolded.

Think about stages and hands. Think about who. Think about where you stand in this process.

...so the majority are running on fear or greed, or are following the trend

Yes. Why else do you think this market has tanked in such quick order?

.

 

[dj_420]

regarding leverage would there not be a great amount of people out there fully leveraged and waiting for the bottom in this??? i know i am, i set up a margin loan specifically for that purpose and have had margin loan at ready for around 3 - 4 weeks. i didnt want to enter into any margin positions until we had a correction.

disc - still holding around 25-30% in shares. only have two positions open now. in hindsight i would have been better off selling those also when i closed out short positions but thems the breaks. still sitting on decent amount of cash and leverage to catch the bottom.

BUT the big question is where is the bottom? and what stocks to buy at the bottom. like others have said in mining it would be proven companies with proven resources, good track records, great mgt, bumper profits etc. even by picking up cheap blue chips at the bottom 30-50% could be made on a rising market after the correction.

i have not really looked at industrials before, only researched everything i could about resources. im now starting to look at other pastures. what industrials have been sold off fairly heavily that have got good profits PE ratio etc?

 

[Pager]

Just my 2 cents worth.

I’m also sitting on the sidelines waiting to add to my long term portfolio.

What I look for is good quality stocks that have not been hit as hard as the general market, what this suggests to me is that people were reluctant to sell these stocks.

As to the bottom, well that’s anyone’s guess IMO, Buy when you feel the stock you want is a good price.

Cheers

Pager

 

[ta2693]

Just my 2 cents worth.

I’m also sitting on the sidelines waiting to add to my long term portfolio.

What I look for is good quality stocks that have not been hit as hard as the general market, what this suggests to me is that people were reluctant to sell these stocks.

As to the bottom, well that’s anyone’s guess IMO, Buy when you feel the stock you want is a good price.

Cheers

Pager

I have two shares in my portfolio holds very well.
one is CSM, the other is NAM.

 

[krisbarry]

Sorry for my slow reply.

My point in this debate is that everything being discussed, and has been over the last year or so, has been priced into the market already. We must undersstand that there are a lot more smarter people out there - and I mean no disrespect to anyone here as it goes for me just as much - but these people think years ahead of the pack.

The reason why so many stocks have had staggering trends is because people have already realised the true potential of China and India. They know what is occuring and have done so for a long time - that's WHY prices are where they are now. If there was more upside scope in China and therefore the knock-on effect into Australia then it would be being priced in accordingly. The market is effeicient enough to do this, although this is a simplified explaination because efficiency runs thorugh a lot of stages and hands.

This does not mean we cannot go up into the future but to do so will mean we need to operate at a different paradigm to what we already do. We need something new to shift to that new level. At this stage ist clear that there is nothing new ou there. If there is nothing new out there, then prices will fall back or re-adjust. A change in economic policy, global policy, whatever, I don't know what the next driver will be. But until there is one, we won't keep travelling this same "china blah blah blah" path. It may well be that the new paradigm is in fact a negative one. A credit crunch, but something unexpected that comes from left field or one that only a small handful really knew about before. I do not subscribe to this US collapse crap. Its been around for 8-years now. You speak to bond traders around the world and they're not concerned. That said, if the current paradigm changes, then it becomes a different story and you'll see the shift. A new paradigm maybe a change in Japanese policy or culture toward US treasuries or a new global currency haven. But its clear than the US$ is still a safe haven as a US bonds.

Not sure I'm making sense. My point is its just not as simple as everyone makes it out to be. If it were people wouldn't be wondering why they bought RIO considerably higher than current levels...

I do not buy into this ... at all. Market sentiment has changed dramatically over the past 4 weeks. From all bulls (well mostly), to all bears (well mostly). Nothing is priced into the market, except future speculation, the market just happens, and local/global events play out and we price this into our markets, seconds, hours, days, weeks after things occur.

I think your theory is back-to-front.

 

[>Apocalypto<]

I do not buy into this ... at all. Market sentiment has changed dramatically over the past 4 weeks. From all bulls (well mostly), to all bears (well mostly). Nothing is priced into the market, except future speculation, the market just happens, and local/global events play out and we price this into our markets, seconds, hours, days, weeks after things occur.

I think your theory is back-to-front.

STC

after your last little call about markets moving in a certain direction I don't think your words are worth anything!

remember your call about being in the market and the prices are going up fancy that! fell over 200 points if I remember correctly.

Like I said in one of my last posts to you. its fella's like yourself that are always on the wrong side, instead of looking for more falls now, you should be looking for points of exhaustion and support!

I would think very cearfully about what you claim especially to members like NIck Rage, I personally think you should read his books before you question his logic!

If you took the time to look at the US Dollar index you would see what he is talking about.


Good trading.

 

[Kauri]

I have no doubt that there is smart money, smarter money, smartest money, insiders, manipulators, whatever.... that move ahead of the crowd, for me it is alright being a part of the crowd so long as you stand to one side of the mob so as you can see clearly what is going on ahead. The leaders leave a trail that can be followed, the current downturn was a distinct possibility for mine, my E/W, and that of people I respect who also post unambiguous E/W charts and opinions, indicated that a top of some sort was imminent, the XAO was showing a rounding top combined with an expanding wedge/triangle, volatility with increased vol was evident without any new highs being made and held, and the XAO reversed its usual lagging position and started leading the XJO. Add to that a new breed of Gurus (in a smaller way resembling the DotComs Blodgett and Grubman?), that had appeared on the forums touting the fundementals of speccie mining companies that had little more than leases, limited cash, and no real prospect of becoming producers, dissapeared en mass!!!
When will this current bearish phase end?? Who in the crowd knows?? Who cares??I believe the signs will be there to be read when it happens, and the final confirmation will be when the Gurus return spreading their hundreds and thousands on the next hot unfundementally sound sector.
In the meantime there is profit to be made trading the market in sync with its current state. One good trade I have found currently is if the market index rises on Friday, short it into the close as not many people are willing to hold over the Northern friday trading and weekend in case their is more bad news and they are locked in until monday.
Smart... no way.. just lucky I guess...
Cheers
..Kauri

 

[Nick Radge]

One of the reasons prices are moving so swiftly is because there are no buyers. They will come, but not so far.

The following chart may offer another example. When you look at the chart ask yourself when you started hearing about the sub-prime/credit crunch. Was it back in February 2006 like this chart? Or was it a few weeks ago when you read about it in the local rag?

So what is this chart? Its a sub-prime banking firm in the US...tell me someone wasn't smart enough to know a long time ago.