Australian (ASX) Stock Market Forum

Boom or Bust?

Realist said:
There's only one certainty in life, and that is you wont be around forever, and forever worrying about what might possibly happen in the future will spoil the good times you have now.

ACctually i think theres 2 certainties in life, "death and taxes" :)

thx

MS
 
michael_selway said:
ACctually i think theres 2 certainties in life, "death and taxes" :)

thx

MS

Those that are unemployed, die as children, or live in the Bahamas or Cayman Islands would disagree of course. ;)



The only certainty in life is death. :(
 
Realist said:
It is like a car driver discounting the possibility of dying in a car accident. It is of course very possible, statistics prove that. But worrying about it is utterly pointless. Even preparing for it by wearing a crash helmet, flame proof suit and driving at 20km/ph in a large bus so you are safer is ridiculous. If it happens to you so be it.

Live for the moment, and enjoy the moment!! There's only one certainty in life, and that is you wont be around forever, and forever worrying about what might possibly happen in the future will spoil the good times you have now.

Realist,

When one uses metaphore, there must be at least a reasonable parallel. At least this time you are closer than you think.

I can think of several gentlemen (and even some ladies I am given to understand) who do at least some of what you suggest. Mind you they don't ride around in buses. They ride around in the fine machines built by Ferrari et al.

Maybe that is the key do our different approaches. You seem to be content with the bus. I like something a bit racier.

Hence, it's crash helmet and flame proof suit for me. It appears it is me who lives for the moment, rather than for some distant retirement, don't you think?

Cheers :D
 
Who's worrying anyway? As much as I wouldn't want to live through a depression, I still see it as great an opportunity as a continuous boom.
 
swingstar said:
Who's worrying anyway? As much as I wouldn't want to live through a depression, I still see it as great an opportunity as a continuous boom.

Exactly Swingstar.
 
Wayne L,

"Many people prosper in recessions. It is those who are prepared, that do so."

As our resident bear I would be interested in your opinion as to how one prepares to "prosper" in a recession/depression?

Thanx
 
clowboy said:
Wayne L,

"Many people prosper in recessions. It is those who are prepared, that do so."

As our resident bear I would be interested in your opinion as to how one prepares to "prosper" in a recession/depression?

Thanx

For a trader, it should be business as usual, with two provisos.

1/ Have the ability to trade long and short

2/ Look outside the share market, to futures. The reason being, volume in a bear market gets very low in shares.

Otherwise, apparently booze sells pretty well in a recession... and there must be other stuff depressed people buy... a matter of research.

I'm happy to stay in derivatives trading... It's an ideal spot to handle a recession from :2twocents

Cheers
 
CanOz said:
So are you shorting stocks, CFDs or trading options?

I'm shorting CFD's on US stocks. There are thousands to choose from.
I'll be delighted if the bear market continues.
I'll be delighted if we go back into a bull market.
I don't care which way it goes, I'll just trade it as it comes.

Bunyip
 
wayneL said:
For a trader, it should be business as usual, with two provisos.

1/ Have the ability to trade long and short

2/ Look outside the share market, to futures. The reason being, volume in a bear market gets very low in shares.

Otherwise, apparently booze sells pretty well in a recession... and there must be other stuff depressed people buy... a matter of research.

I'm happy to stay in derivatives trading... It's an ideal spot to handle a recession from :2twocents

Cheers

My thoughts exactly Wayne. Competent traders will clean up in a bear market or a recession/depression.
It's the longer term hold and hope investors who stand to cop a real mauling, as past recessions/depressions and market slumps have proved.

After the 87 crash it took more than six years for the market to regain its losses.
It took much longer to rebound from the 1929 crash.....decades later, the market was still below its pre-crash levels.
Many of the hold and hope investors who sunk money into the market before the '29 crash would have died of old age without recouping their losses.

It happened so long ago that the investment world has been lulled into complacency and believes it can't happen again. WRONG! It can happen again and it will ! When, I have no idea, but one day the buy and hold brigade could be in for a rude awakening.

Bunyip
 
wayneL said:
It appears it is me who lives for the moment, rather than for some distant retirement, don't you think?

That is a good point Wayne, and it is the one thing that I hate about "investing".

If you put extra money into super BEFORE tax and you invest in boring and solid shares and reinvest dividends and just leave them, and you drive an oldish cheap car and buy a house and pay off the mortgage you are almost guaranteed to retire rich.

The problem is you live poor for 35 years and have no fun. you could carck it the day beofre you turn 65 and have almost ruined your life by being so cheap and boring.

It sucks I agree. :(


But I suppose, once you get your plan started and have some funds in your super and investment accounts, and probably own a house, you can punt and trade away merrily with smaller amounts safe in the knowledge you have a solid nest egg waiting for you in latter life no matter what happens. Graham himself knows the human weaknesses very well, he knows temptation and curiosity kicks in and he recommends the average person does speculate with 10% of their money - not for gain but for sheer fun and to appease the curiosity. He believes they are better off financially longterm not speculating at all though.
 
Forgive me for my lack of knowledge with regards to options etc but,

If the recession was bad enough to take out some banks/finacial institutions and you where shorting stocks with such bank, where would that leave you?

Is it possible to lose money in this way?

As for beer, hmm should I start a wheat crop or start hoarding beer itself?
 
clowboy said:
As for beer, hmm should I start a wheat crop or start hoarding beer itself?

Well I own FGL.

Should I start looking at buying into debt collecting agencies, repossesion companies, privatised jails, or investing in homeless shelters?

:D
 
clowboy said:
Forgive me for my lack of knowledge with regards to options etc but,

If the recession was bad enough to take out some banks/finacial institutions and you where shorting stocks with such bank, where would that leave you?

Is it possible to lose money in this way?


Correct me if I'm wrong, but if that happened you would get to keep 100% of the value of the shares.
 
clowboy said:
Forgive me for my lack of knowledge with regards to options etc but,

If the recession was bad enough to take out some banks/finacial institutions and you where shorting stocks with such bank, where would that leave you?

Is it possible to lose money in this way?

As for beer, hmm should I start a wheat crop or start hoarding beer itself?


With CFD's on stocks, if you're holding a short position in a company that goes broke, it's the best possible situation you can be in, according to two CFD brokers I spoke to.
Say you went short with CFD's on a stock at $10, and you're still holding your short position when the company goes broke. Your trade is closed at a price of zero. Effectively you've paid zero for your position, and sold it at $10. Your profit is 100% of the price at which you went short.

However, you can't realise your profit until the liquidation process has been completed. This could happen quite quickly, or it could take quite a while. HWE was wound up in a few months after it went broke, meaning that short CFD holders got their hands on their profit fairly quickly.
The liquidation process in SGW is still going on, meaning that holders of SGW CFD short positions have been kept waiting for a considerable time for their profits.

Bunyip
 
The interesting thing about shorting is that the most you can ever make in any transaction is about 48% (after tax and fees)

That is if the company you buy goes under you get 100%minus fees of say 4% divided by 2 cause of tax = 48%.

Of course going long you always have that chance of a 10 bagger..

Go Loooooooooooooong I say.* :D

(*In no way do I know anything about going short - never done it, probably never will :eek: )
 
bunyip said:
With CFD's on stocks, if you're holding a short position in a company that goes broke, it's the best possible situation you can be in, according to two CFD brokers I spoke to.
Say you went short with CFD's on a stock at $10, and you're still holding your short position when the company goes broke. Your trade is closed at a price of zero. Effectively you've paid zero for your position, and sold it at $10. Your profit is 100% of the price at which you went short.

However, you can't realise your profit until the liquidation process has been completed. This could happen quite quickly, or it could take quite a while. HWE was wound up in a few months after it went broke, meaning that short CFD holders got their hands on their profit fairly quickly.
The liquidation process in SGW is still going on, meaning that holders of SGW CFD short positions have been kept waiting for a considerable time for their profits.

Bunyip

Indeed, but if you held a put, you could exercise it and settle at T+1!


Magdoran
 
The issue of shorting needs to be cleared up:

If you sold BHP short today (and could hold above the 3 day ASX limit), at $27.23, and BHP went to $0.10, you could buy back to close with a gross return of $27.13 per share, less brokerage.

The tax on this will vary depending on the way a person's finance is structured. Traders for instance may be structured to count this as income, and not be subject to CGT.

Now if for example an August $25 put was purchased today at close at $0.48 ($480 per contract), and BHP fell to 0.10 tomorrow, depending on volatility the put may be worth around $24,420, a return of 5,087.50%.

Now I’m not suggesting this is likely, it isn’t. But it illustrates the mechanics of some of the bearish strategies open to play the short side of the market.
 
Realist said:
The interesting thing about shorting is that the most you can ever make in any transaction is about 48% (after tax and fees)

That is if the company you buy goes under you get 100%minus fees of say 4% divided by 2 cause of tax = 48%.

Of course going long you always have that chance of a 10 bagger..

Go Loooooooooooooong I say.* :D

(*In no way do I know anything about going short - never done it, probably never will :eek: )

There is no question about those mathematics. I've brought this up many times before.

Longterm trend followers won't find a lot of advantage with shorting.

Swing trading is a whole 'nuther story however. I have consistently made most of my money from shorting the market. Yes have had a few multibaggers from longs (unleveraged) but bottom line, shorts win... for me anyway.

Add in leverage (as Mag points out) and going short and long makes a lot of sense for a full time trader... in fact, it is essential if you make your income from trading.

Cheers
 
Smurf1976 said:
A phsical shortage of oil would virtually guarantee a worldwide economic bust. It is not simply a case of having to pay higher prices, in the event of serious shortage it is a case of having to use less, possibly quite a lot less if events in the Middle East turn nasty. Since practically all economic activity consumes energy and virtually all transport relies on oil, that means lower production of goods and services - the very definition of a recession (or depression if it's serious).

What are the chances of this? Next few years it's anyone's guess. Look ahead 10 or 20 years and it's highly unlikely that China can grow its oil consumption without a corresponding fall elsewhere (most notably in the USA). The supply simply isn't there to back up rising demand and, so far at least, is not being built on anywhere near a sufficient scale.

A risk that is difficult to quantify but a real one nonetheless. Never before has the world faced a serious, prolonged energy constraint - with the combined effects of 43 years of declining oil discoveries (trend terms) and climate change, we seem likely to be in truly uncharted waters in the years ahead. :2twocents

Well said Smurf1976, fully agree with you...
 
Top