Big drop today

[RichKid]

Unless they do. Unless they have to. Which they will.

I won't bore you with an extended regurgitation of the facts, but the US is an accident waiting to happen.

ROFLAO!!! That's a classic Wayne! Reminds me of Gary Larson's Far Side jokes. It's a shame that real people get hurt when things go wrong in financial markets.

 

[Kauri]

There has been a lot of talk about the amount of credit that supports the
American populations lifestyle, but I think it is nothing compared to the debt that supports the American administrations lifestyle. I dont know what comes after trillions, but the US Governments credit card debt must be close to it. If the populations spending gets out of hand ,why just raise the interest rates, that will slow them down, if the administrations spending gets out of hand, why just raise the interest rates, that will attract more overseas money.
Will they ever be able to pay it off?
Will the Asian economies that are effectively supplying this credit ever start to turn the tap off?
What will happen to the great American dream if it is?
What happens to Australia if America has to start living within its means?
Why worry, it will never happen, just get another credit card!!!!
Just joking... of course.. :goodnight

 

[Smurf1976]

Why would Americans all of a sudden stop consuming? They wouldn't. artyman:

Imports are made up of various industrial sectors, a slow down in one sector may mean a pick up in another, thus having a neutral effect on overall import/ exports.

A slow down in the US means 3% growth instead of 3.5%, negligible and hardly going to worry Chinese Manufacturers. :samurai:

Recessions are a normal part of the economic environment and happen from time to time. The question is thus when the US will next have a period of negative growth, not if. It is near certain that at some future date the US will be in recession.

This could be a problem for Chinese manufacturers since their economic planning is presumably based on the notion of constant growth (what else would it be based on?).

And I think it must also be considered that (1) China itself is not immune to economic cycles and at some point they will have a bust and (2) Australia is likewise affected by economic cycles.

 

[Yippyio]

Recessions are a normal part of the economic environment and happen from time to time. The question is thus when the US will next have a period of negative growth, not if. It is near certain that at some future date the US will be in recession.

This could be a problem for Chinese manufacturers since their economic planning is presumably based on the notion of constant growth (what else would it be based on?).

And I think it must also be considered that (1) China itself is not immune to economic cycles and at some point they will have a bust and (2) Australia is likewise affected by economic cycles.

Mmmm...........We have alot to worry about don't we, not to mention global warming, El nino, Green House........eeek, I think I will just go and lay down now the stress is getting to me. :22_yikes:

 

[johnno261]

More of this correction to follow. Red Day again tomorrow no doubt!

 

[Yippyio]

More of this correction to follow. Red Day again tomorrow no doubt!

Just watch what the US does, if it comes off slightly double the percentage and that's probably what we are in for.

The fundamentals of Australian companies have little to do with whether the ASX moves up or down at the moment, it's all about about US interest rates, last week it was Hurrican Katrina, the week before it was Hurricane Rita, before that it was oil and is'nt it expensive these days.

What's the next cause for concern ?, another hurricane perhaps or as in the case of last nights movement on the DOW, another US car manufacturer facing a 12 billion dollar bill over the Delphi bankruptcy.....so what !!!

Would someone please explain what all of this really has to do with the us ???
:swear:

It seems our fund managers are very nervous at the moment, virtually looking at any excuse to dump stock. It would be interesting to see how much of their decision was based on the actual Australian fundamentals or simply whether the DOW is going up or down :sheep:

as in "Oh, the DOW is off, we better dump some stock today".

 

[wayneL]

Just watch what the US does, if it comes off slightly double the percentage and that's probably what we are in for.

The fundamentals of Australian companies have little to do with whether the ASX moves up or down at the moment, it's all about about US interest rates, last week it was Hurrican Katrina, the week before it was Hurricane Rita, before that it was oil and is'nt it expensive these days.

What's the next cause for concern ?, another hurricane perhaps or as in the case of last nights movement on the DOW, another US car manufacturer facing a 12 billion dollar bill over the Delphi bankruptcy.....so what !!!

Would someone please explain what all of this really has to do with the us ???
:swear:

It seems our fund managers are very nervous at the moment, virtually looking at any excuse to dump stock. It would be interesting to see how much of their decision was based on the actual Australian fundamentals or simply whether the DOW is going up or down :sheep:

as in "Oh, the DOW is off, we better dump some stock today".

The US economy does lead the world economy whether we like it or not, and the health of the US influences all of us, either directly or indirectly. If.......no, when the US economy tanks, so will we,China or no China, end of story.

Aussie valuations aren't cheap enough to ignore this. I don't get where people think the ASX is cheap. P/E < 10 is a "getting cheap". 15 is top dollar unless there is some extraordinary growth story.

7 is cheap, though we haven't seen this for a while....maybe thats the problem. There is a whole generation of investors who have scarcely ever seen P/E's < 12.

 

[Smurf1976]

The US economy does lead the world economy whether we like it or not, and the health of the US influences all of us, either directly or indirectly. If.......no, when the US economy tanks, so will we,China or no China, end of story.

Aussie valuations aren't cheap enough to ignore this. I don't get where people think the ASX is cheap. P/E < 10 is a "getting cheap". 15 is top dollar unless there is some extraordinary growth story.

7 is cheap, though we haven't seen this for a while....maybe thats the problem. There is a whole generation of investors who have scarcely ever seen P/E's < 12.

You've hit the nail on the head there wayneL.

There are lots of people around at the moment who think P/E's of 25 in stocks and property rental yields of 3% are normal. They are NOT normal by any historical measure.

All I can say is that markets revert to the mean and the only question is how they get there. Either dividends / rent go up or capital values come down.

Now, if only my crystal ball told me which one and when.

 

[clowboy]

NICE comic

Very nice, says alot

 

[Yippyio]

The US economy does lead the world economy whether we like it or not, and the health of the US influences all of us, either directly or indirectly. If.......no, when the US economy tanks, so will we,China or no China, end of story.

Aussie valuations aren't cheap enough to ignore this. I don't get where people think the ASX is cheap. P/E < 10 is a "getting cheap". 15 is top dollar unless there is some extraordinary growth story.

7 is cheap, though we haven't seen this for a while....maybe thats the problem. There is a whole generation of investors who have scarcely ever seen P/E's < 12.

Agreed on the US economy leading the world, just frustrating.

Part of the frustration is the media today, which I believe are partly responsible for inflated P/E ratio's, stocks get hyped through media and the media is vulnerable to manipulation partly because it's always about the next big story, this is the 21st century and the media's part in hyping a good story or a bad story is only going to grow.

The US has been having hurricanes forever, 30 years ago we would have never have even known that a hurricane was terrorising the gulf of Mexico, it would not have been reported, here in OZ and would not have been a blip on the ASX radar.

These days it's front page news all over the world, with regular updates on the hour.

I guess the media play their part in producing a far more volitile market, unfortunatley the problem is if you say something enough times it is sure to become a self fulfilling prophecy.

 

[Smurf1976]

I guess the media play their part in producing a far more volitile market, unfortunatley the problem is if you say something enough times it is sure to become a self fulfilling prophecy.

We live in an age where even primary school children have watched numerous hours of what amounts to:

"The stock market is risky so you must always have your finger on the sell button and you have to watch the market all day",

"Currency markets are unpredictable so nobody makes money trading forex because it just isn't possible. Even the banks and the government don't have a clue how the market works. Nobody really understands forex. The National Australia Bank had a go at it and, just to prove our point, lost a fortune",

"But you can't go wrong with property and that's why you should leverage it to the limit even if that means a bit of creative accounting with the figures you give to the bank and then you just borrow more (equity withdrawal) when the guaranteed price increase happens. And we're in a new paradigm where interest rates will never go up more than 0.25% from what they were when you took the loan out"

investment advice courtesy of commercial television. So don't expect too much sense in the market.

 

[It's Snake Pliskin]

We live in an age where even primary school children have watched numerous hours of what amounts to:

"The stock market is risky so you must always have your finger on the sell button and you have to watch the market all day",

"Currency markets are unpredictable so nobody makes money trading forex because it just isn't possible. Even the banks and the government don't have a clue how the market works. Nobody really understands forex. The National Australia Bank had a go at it and, just to prove our point, lost a fortune",

"But you can't go wrong with property and that's why you should leverage it to the limit even if that means a bit of creative accounting with the figures you give to the bank and then you just borrow more (equity withdrawal) when the guaranteed price increase happens. And we're in a new paradigm where interest rates will never go up more than 0.25% from what they were when you took the loan out"

investment advice courtesy of commercial television. So don't expect too much sense in the market.

With regards to property investing there is a propensity for negative gearing in this country. Foolish!

 

[wayneL]

You've hit the nail on the head there wayneL.

There are lots of people around at the moment who think P/E's of 25 in stocks and property rental yields of 3% are normal. They are NOT normal by any historical measure.

All I can say is that markets revert to the mean and the only question is how they get there. Either dividends / rent go up or capital values come down.

Now, if only my crystal ball told me which one and when.

I've just been forwarded an email from a US tip sheet, where a PE of 13 was considered "INSANE" and one should back up the truck and load up. The stock had recently halved in value.

Well, NO THANKYOU Mr. Wall St Tipster! Let it halve again and I might be interested...maybe.

OK, this doesn't preclude me from trading the crap out this dog, but my bottom drawer has been collecting cobwebs for one helluva long time now.


CHeers

 

[Yippyio]

I've just been forwarded an email from a US tip sheet, where a PE of 13 was considered "INSANE" and one should back up the truck and load up. The stock had recently halved in value.

Well, NO THANKYOU Mr. Wall St Tipster! Let it halve again and I might be interested...maybe.

OK, this doesn't preclude me from trading the crap out this dog, but my bottom drawer has been collecting cobwebs for one helluva long time now.


CHeers

Anything with a PE of less then 13 means that either the company has a hopeless PR strategy or there is not alot of blue sky or that they are in a declining market. I would prefer to place my money in something which is in a little more favour like a PE of between 15 & 20

 

[Milk Man]

Re: the media.
Spot on smurf! If these reporters are so good at handling money, where's their lear-jet and 50m boat?

 

[wayneL]

Anything with a PE of less then 13 means that either the company has a hopeless PR strategy or there is not alot of blue sky or that they are in a declining market. I would prefer to place my money in something which is in a little more favour like a PE of between 15 & 20

I think it means the share market is chronically overvalued.

To put into perspective:

If I was looking at buying a pty ltd that was earning $50,000 nett profit under management, I would be looking to pay $750,000 at pe 15 or $1,000,000 at pe 20.

Not this little black duck!

{this has nothing to do with trading. I'm talking about bottom drawer investments here}

 

[Yippyio]

PE ratio's do seem to have crept up and 15 - 20 is fairly normal and accepted these days.

I think media have played a role in this, ramping stocks (I blame just about everything on the media) but also dividend strategies have become more sosphisticated making certain companies more attractive to prospective income investors. The more of these people you have jumping on board the higher the PE ratio. If you announce an 80% dividend payout ratio watch your SP jump.

 

[RichKid]

If I was looking at buying a pty ltd that was earning $50,000 nett profit under management, I would be looking to pay $750,000 at pe 15 or $1,000,000 at pe 20.

Not this little black duck!

{this has nothing to do with trading. I'm talking about bottom drawer investments here}

Sounds logical to me, if you're going to pay a premium there must be a very good reason for it, especially if you're a Warren Buffet follower. The issue is that it's all relative, is 15 low? or is it high? why??

The missing ingredient I suppose is doing due diligence to make sure the business is on its way up rather than down, a pe alone wont show that. Too much work for me to examine fundamentals only, hence trading for me.

 

[tech/a]

Sounds logical to me, if you're going to pay a premium there must be a very good reason for it, especially if you're a Warren Buffet follower. The issue is that it's all relative, is 15 low? or is it high? why??

The missing ingredient I suppose is doing due diligence to make sure the business is on its way up rather than down, a pe alone wont show that. Too much work for me to examine fundamentals only, hence trading for me.

HMMMM Wayne I have a Company you maybe interested in.

OH where did you find that picture of me?

 

[It's Snake Pliskin]

I think it means the share market is chronically overvalued.

To put into perspective:

If I was looking at buying a pty ltd that was earning $50,000 nett profit under management, I would be looking to pay $750,000 at pe 15 or $1,000,000 at pe 20.

Not this little black duck!

{this has nothing to do with trading. I'm talking about bottom drawer investments here}

BXP has a low P/E ratio. I hold and see this as a stock of the future. It's currently 27 -28cents and will only get better.

Check this one out and "make your research" , as chicken used to say.

I'm not ramping just proving there is value to be found.