wayneL said: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.
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.Yippyio said: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:
Smurf1976 said: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.
johnno261 said:More of this correction to follow. Red Day again tomorrow no doubt!
Yippyio said: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".
You've hit the nail on the head there wayneL.wayneL said: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.
wayneL said: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.
We live in an age where even primary school children have watched numerous hours of what amounts to:Yippyio said: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 said: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.
Smurf1976 said: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.
wayneL said: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 said: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
wayneL said: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}
RichKid said: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.
wayneL said: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}
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?