How far can a spec stock fall?

[wayneL]

Ultimately bears bite the hand that feeds them...

Smart bears grow horns.

 

[BIG BWACULL]

Smart bears grow horns.

and Real Bulls grow balls

 

[nizar]

The last bear market lasted 3 years.

Do you mean 2000-2003?

Well thats not much of a bearmarket is it?
Considering the XAO ended 2000 flat, 2001 flat again, and 2002 with an 11% loss.

Im looking to backtest my system over a bearish period and its hard to find any in the last 20-odd years!

 

[Nicks]

Hate to say it people, but a spec company (or technically any company) can drop to 0.

You see, if noone wants to buy shares and the SP goes down heavily, even much more than it is rationally worth, say even less than its net assets, and the bank dont want to give them money, then they have to offload assets just to stay afloat. If noone wants their assets then they too drop in value (quite plasuible at the moment, having no buyers for a prospective asset like a tenemant or holding, especially when most of the potential buyers are in the same situation), thus starts the fire sale, next thing you know the asset and balance sheet of the company are worth 0 and it has to pay back its creditors such as banks who are saying .... give me my money, and no you cant have any more, and other like companies are saying... no we cant buy your assets, we are buggered too, have no cash to buy and need to sell ours too. Banks are saying .... Shivers we aint giving risky money out now.

So, hence why any specs got offloaded, real bad, and if the recovery dont come soon, there will be many that fall to 0 and you will lose all your money, including any that you just recently bought because you thought it was now a bargain and 'things are just getting silly'.

Only ones that are safe are blue chips with their own cash and dividends, that banks trust. I guess they could profit from any cheap asset fire sales.

Any experienced traders or any one working / trading in the finance industry care to comment or clarify......?

Any one wanna bag what I just said because all of us hate negativity at times like this? espcially speccie day traders?


(ps one blue chip I'd hate to own right now is MBL - Macquaire. They 'revalue' assets to bump up eps, wonder whats happeing to thise revalueations now... CEO was smiling from ear to ear last agm, meanwhile average Jo's were pumping money into MBL @$90+ per share, some even with these new self managed supers would have pumped heaps into the MBL millionaire factory and now have lost 33% of their retirement, I smell Enron in the house of cards)



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do your own research, just my opinions not necessarily fact

 

[nioka]

if we quote everything, whole all ord list will be here

The easiest way to check on the popular speccie stocks is to check the stock pick comp. I've been looking there for bargains.

 

[Nicks]

(ps one blue chip I'd hate to own right now is MBL - Macquaire. They 'revalue' assets to bump up eps, wonder whats happeing to thise revalueations now... CEO was smiling from ear to ear last agm, meanwhile average Jo's were pumping money into MBL @$90+ per share, some even with these new self managed supers would have pumped heaps into the MBL millionaire factory and now have lost 33% of their retirement, I smell Enron in the house of cards)



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do your own research, just my opinions not necessarily fact

FYI Babcock and Brown - BNB, do not follow this strategy. Hence I think they are much safer at the moment and will remain a bargain. Potential strong rebound.

 

[powerkoala]

The easiest way to check on the popular speccie stocks is to check the stock pick comp. I've been looking there for bargains.

some of my speccie are flying high.
maybe you bought it just now, nioka?
quite surprise with the increase though

 

[Bushman]

Do you mean 2000-2003?

Yes

 

[professor_frink]

Do you mean 2000-2003?

Well thats not much of a bearmarket is it?
Considering the XAO ended 2000 flat, 2001 flat again, and 2002 with an 11% loss.

Im looking to backtest my system over a bearish period and its hard to find any in the last 20-odd years!

That was a high to low move of roughly 22%. How much bigger are you after

 

[Bushman]

Hate to say it people, but a spec company (or technically any company) can drop to 0.


Any one wanna bag what I just said because all of us hate negativity at times like this? espcially speccie day traders?

Off course you are spot on Nicks. Any company can go belly up when it cannot pay its debts. At this point the company will have zero value and its assets will be sold off by the administrators. Pasminco, HIH, Ansett, Sons of Gwalia are some of the listed examples I can think of that have gone under in Australia in recent times. Two of those, HIH and Ansett, were iconic Australian companies. Then there were the market darlings in the States - Enron & Worldcom - that went under and left very little to pay back to its creditors and equity holders.

Always remember that when the empire crumbles, equity holders are the last in the queue to get their money back and often will not receive much back in the dollar invested after creditors and debt providers have received their shares.

So keep an eye out on those cashflow statements people.

One thing I will add is that I like solid investors in the top 20 with deep pockets especially cashed up Chinese investors. That is where the funds are given their massive trade surpluses.