How low can the All Ords go?

[Temjin]

Got a free trial with Huntleys so I looked at back issues out of interest. I wasnt really impressed with some of the calls they made - and from memory underperformed the market last year with their portfolio? Someone correct me if im wrong.

One of their December newsletters was saying the correction was over, and buy back in - and in each article they seemed to forget what the had been talking about the week before.

Glass was always half full, and it clearly wasnt over the time period I was reading.

I also love their buy recommendation on AIO from 9 all the way down to $3.50.

I agree. My Father subscribed to the newsletter and I told him to ignore what the guy say. He doesn't know what he is talking about. Now the latest newsletter saying he "underestimated" the extent of this crisis and had to recalculate some of his "valuations".

Not to mention he is still assuming a gold price of US $650 for his long term valuation in gold miners.

 

[treefrog]

Calls for the all ords to reach 2-3k's seem too extreme a scenario for my money. Look at our biggest financial insto's for example...despite major credit problems they're still expecting huge profits. Then look at mining...commodity prices smashing through record highs as demand continues to grow, unaffected by a global financial crisis.

Hi junior,
have always thought when trying to look at the big picture to include the big factores in the equation. Yes record commodities but what is the consequence??
consumption = global warming and that causes a few problems on a large scale not least the availability of fresh water
high prices = high food prices and spreading food riots
here's a couple of grabs from a quick google of these two issues
The NZ Herald Monday April 14, 2008
"Food riots in developing countries will spread unless world leaders take major steps to reduce prices for the poor, according to the head of the United Nations Food and Agriculture Organisation.
Despite a forecast 2.6 per cent rise in global cereal output this year, record prices are unlikely to fall, forcing poorer countries' food import bills up 56 per cent and hungry people on to the streets, says FAO Director General Jacques Diouf.
The FAO says food riots had broken out in several African countries, Indonesia, the Philippines and Haiti. Thirty-seven countries face food crises, it said in its latest World Food Situation report"

The Earth's Most Precious Resource May Be the 21st Century's Most Lucrative Investment - Green stocks report
"per capita access to clean water is diminishing in all developed and developing countries. Beyond that, 20% of the clean water we do have is lost every year through aging pipes and other faulty infrastructure.
An investment of over $1 trillion will need to be made in the next 20 years to ensure an adequate supply of fresh water for the world's growing population. We'll see this money go to water utility companies and other specialized companies focusing on desalination, purification, pipes, pumps, and anything else that will help increase the amount of readily accessible water.
So it's no surprise that the water companies leading the charge in solving the water supply crisis stand to make legendary profits. A few water companies have already gained over 1000% in the past few months... And to be sure, there will be plenty more to come."

while it is obvious that there are investments possibilities there, I would contend that the current economy is not structured to respond quickly to this change and the question must be how far the drop until it does restructure and deal effectively

 

[professor_frink]

........If you aren't a long term investor then the sharemarket may not be for you.

A chart can tell you where a stock has been but can't tell you where it will go. You only need to read reviews of everybody's individual interpretations on other threads.

Good luck with your investments.

exactly! the sharemarket is for investors only and charts don't serve any useful purpose.

When will people learn



:fish::kebab

 

[Temjin]

exactly! the sharemarket is for investors only and charts don't serve any useful purpose.

When will people learn



:fish::kebab

To think charts don't serve any useful purpose would mean every technical analysis traders in the world were either fraud or just extremely lucky to maintain a consistent profit. Good luck telling them that, plenty of them here. (including myself)

Be open minded to all things.

 

[Julia]

To think charts don't serve any useful purpose would mean every technical analysis traders in the world were either fraud or just extremely lucky to maintain a consistent profit. Good luck telling them that, plenty of them here. (including myself)

Be open minded to all things.

Temjin, I think Professor Frink may have had his tongue just slightly in his cheek with that remark.

 

[professor_frink]

To think charts don't serve any useful purpose would mean every technical analysis traders in the world were either fraud or just extremely lucky to maintain a consistent profit. Good luck telling them that, plenty of them here. (including myself)

Be open minded to all things.

I'll try. But I can't guarantee anything

 

[Bill M]

exactly! the sharemarket is for investors only and charts don't serve any useful purpose.

When will people learn



:fish::kebab

I should have clarified that, my apologies. The guy was reading Huntley's and I was presuming he was thinking about entering the market. He was asking for opinions so I assumed he was not a trader.

As for traders I salute you guys (and girls), I haven't the knowledge, nerves, nous and time to do it or understand it. The "XAO Analysis" thread is very interesting reading, keep up the good work, cheers for now.

 

[Junior]

Hi junior,
have always thought when trying to look at the big picture to include the big factores in the equation. Yes record commodities but what is the consequence??
consumption = global warming and that causes a few problems on a large scale not least the availability of fresh water
high prices = high food prices and spreading food riots
here's a couple of grabs from a quick google of these two issues
The NZ Herald Monday April 14, 2008
"Food riots in developing countries will spread unless world leaders take major steps to reduce prices for the poor, according to the head of the United Nations Food and Agriculture Organisation.
Despite a forecast 2.6 per cent rise in global cereal output this year, record prices are unlikely to fall, forcing poorer countries' food import bills up 56 per cent and hungry people on to the streets, says FAO Director General Jacques Diouf.
The FAO says food riots had broken out in several African countries, Indonesia, the Philippines and Haiti. Thirty-seven countries face food crises, it said in its latest World Food Situation report"

The Earth's Most Precious Resource May Be the 21st Century's Most Lucrative Investment - Green stocks report
"per capita access to clean water is diminishing in all developed and developing countries. Beyond that, 20% of the clean water we do have is lost every year through aging pipes and other faulty infrastructure.
An investment of over $1 trillion will need to be made in the next 20 years to ensure an adequate supply of fresh water for the world's growing population. We'll see this money go to water utility companies and other specialized companies focusing on desalination, purification, pipes, pumps, and anything else that will help increase the amount of readily accessible water.
So it's no surprise that the water companies leading the charge in solving the water supply crisis stand to make legendary profits. A few water companies have already gained over 1000% in the past few months... And to be sure, there will be plenty more to come."

while it is obvious that there are investments possibilities there, I would contend that the current economy is not structured to respond quickly to this change and the question must be how far the drop until it does restructure and deal effectively

All very valid points, my posts have been in response to the impact on the All ords of the credit bubble....I haven't considered environmental impacts.

 

[rederob]

Calls for the all ords to reach 2-3k's seem too extreme a scenario for my money. Look at our biggest financial insto's for example...despite major credit problems they're still expecting huge profits. Then look at mining...commodity prices smashing through record highs as demand continues to grow, unaffected by a global financial crisis.

It's been a while since this thread was opened.
Low 4ks are a shoe-in.
High 3ks are coming more and more into play.
Oddly enough the US has not yet sunk into a technical recession, let alone depression.
So technical recession will lock in a 3k scenario.
And depression thereafter looks like a good bet, with the allords possibly dipping into 2k range.

 

[r34ztune]

It's been a while since this thread was opened.
Low 4ks are a shoe-in.
High 3ks are coming more and more into play.
Oddly enough the US has not yet sunk into a technical recession, let alone depression.
So technical recession will lock in a 3k scenario.
And depression thereafter looks like a good bet, with the allords possibly dipping into 2k range.

what evidence/facts can you base your claims that the s/market will dip to 2k? Even Warren Buffet admitted he can't tell what the market will do the next day let alone next year.

 

[chrissyoscar]

It's been a while since this thread was opened.
Low 4ks are a shoe-in.
High 3ks are coming more and more into play.
Oddly enough the US has not yet sunk into a technical recession, let alone depression.
So technical recession will lock in a 3k scenario.
And depression thereafter looks like a good bet, with the allords possibly dipping into 2k range.

Ok so the share market goes as low as 2500-2900, what would that mean.
Telstra at $2.20, NAB at $13, QBE $11, Tol around $3, BHP being resource should only drop to $30 lol, and so on.
Come on does that really sound like a scenario that could happen.
It will never get that low as most think the market is already cheap.
But hey If it does I'll be the first to say good call, just before I jump of the cliff.
I'll probably have to wait my tern as no doubt there's be a line of jumpers at the bridge.
The market will settle but I do agree it could go to low 4000,s out of fear and nothing else.

Experienced traders and investors know the markets and a lot have already fled and cashed up.
You can bet they are ready to jump back when they think the time is right.
When the mums and dads are fleeing the experts are buying.

 

[M34N]

It's been a while since this thread was opened.
Low 4ks are a shoe-in.
High 3ks are coming more and more into play.
Oddly enough the US has not yet sunk into a technical recession, let alone depression.
So technical recession will lock in a 3k scenario.
And depression thereafter looks like a good bet, with the allords possibly dipping into 2k range.

2000's? That's a serious depression, what sort of time frame would you be talking about here to reach that event, 5+ years? Impossible to predict that time frame, no way could you put a figure on it.

For all we know the US economy may rebound by the end of this year even, who knows, we could be back in record territory by then!

 

[rederob]

what evidence/facts can you base your claims that the s/market will dip to 2k? Even Warren Buffet admitted he can't tell what the market will do the next day let alone next year.

Let's see:
You bought a house and had mortgage.
The value of the house fell substantially below the mortgage so you sell the house at a loss and still owe the bank the balance on the mortgage.
While paying off the mortgage and rent your fuel bill doubles and the cost of everything you consume rises substantially due not only to pre-existing inflationary pressures, but also to passed-on costs principally energy/transport related.
You lose your job because GM shuts down yet another production facility and your employer loses his major supply contract.
You go to your bank for a loan to tide you over the tough times only to find that you have no collateral, and are now deemed a credit risk. Moreover, you learn you couldn't have afforded the repayments anyway as interest rates are now through the roof.
You go home, turn on the news are greeted with the Fed stating that the US is not in recession, and the next rate movement could be "up".
Multiply this story several million-fold and you are scraping the surface of what is happening to real people in the world's largest economy.
At a corporate level the burden of debt is still gathering momentum.
The US is going down the gurgler and its stock market will follow.
Our stock market will follow it - perhaps not as steeply in the longer run.

In the world of probabilities, a US recession in the near to medium term is a certainty.
I'm not so sure about a "depression": Haven't been around long enough to experience one.
I'm clearly not Warren Buffett, although like him I have no idea where the market will end up tomorrow, or next year. I am very confident, however, that the market has a long way to fall from here. It might take up to a year to bottom, or perhaps longer. I believe the allords will plumb the 3k range at some point, but at this stage would not bet on a 2k outcome.

 

[dhukka]

Oddly enough the US has not yet sunk into a technical recession, let alone depression.

On the contrary I think the US economy probably tipped into recession back at the beginning of this year. It may have poked it's head out again with the help of rebate checks but that won't last long. 6 Consecutive months of job losses without a recession would be first and there is little doubt that the job losses reported so far have been understated. John Maudlin talked about it in his newsletter today.

Martin Feldstein, the head of the NBER said that the US economy was probably sliding into a recession in December or January. It is often stated and falsely reported by media hacks that a recession is 2 consecutive quarters of negative GDP. That is not the case, if it were, there was no US recession in 2001.

 

[Muschu]

...I'm clearly not Warren Buffett, although like him I have no idea where the market will end up tomorrow, or next year. I am very confident, however, that the market has a long way to fall from here. It might take up to a year to bottom, or perhaps longer. I believe the allords will plumb the 3k range at some point, but at this stage would not bet on a 2k outcome.

Tried to ignore this but gave in..... because it is self-contradictory. "I have no idea"; but "I am very confident"; and then throw in the "I believe".

Yes, these are challenging times and they're not being aided, in my view, by global statements and self-fulfilling prophecies. Fear is ruling. It has almost become a competition in its own right.

I'm quite OK with saying I don't know where the market is going and that most informed opinion suggests further losses.

Beyond that point very strong evidence is needed in my opinion. I don't know that such tangible, relevant evidence is currently available. Maybe it is or maybe there's a place for acknowledging uncertainty and waiting.

 

[wayneL]

Ok so the share market goes as low as 2500-2900, what would that mean.
Telstra at $2.20, NAB at $13, QBE $11, Tol around $3, BHP being resource should only drop to $30 lol, and so on.

You're right it doesn't seem low enough.

< 2000 it is then.

 

[noirua]

:aus:I wonder, does the index mean more than the shares that are representative within it?
Do we look at the index without being able to name all that many shares within it or their track record or indeed, the price record?
Good grief! The index has gone down 3 - 4%, probably what will happen in less than five hours time. Don't concern yourself about, only do so, if you think your stocks can't weather the storm or you think Australia is about to collapse.
An article recently spoke of Australia's two level economy, where many businesses will do better than in the last 100 years and few will do worse than anytime in the last 100 years. Overall the economy will survive better than Europe and the States. Maybe, yes, the financial storms and even hurricanes are all around us, but, but, but, there is fair weather in the GREAT country of AUSTRALIA, keep calm, relax, take a lofty point of view, the other side of the tunnel is great for this magnificant continent.:aus:

 

[enigmatic]

I have been hovering over the ASX and have notice an increasing amount of companies having a equal or lower Mkt cap to there actual Cash. In the resource sector.
And an increasing number of Companies with a low PE. I'm relatively new however i have been reading that an average PE is 13 normally. with some companies like BHP expecting to reach 9 by 2010 at much older prices i think $48 for it to drop to $30 and level at that would indicate a PE of 5.6 I seriously doubt BHP would get to that level or even a PE of 9.

The demand is strong in the rest of the world other then the US and even there it is still strong, Fear is the only thing that is driving the market down, A group of New investors riding the high gains bailing out when they start lossing money.
Just my thoughts.

 

[rederob]

Tried to ignore this but gave in..... because it is self-contradictory. "I have no idea"; but "I am very confident"; and then throw in the "I believe".

Yes, these are challenging times and they're not being aided, in my view, by global statements and self-fulfilling prophecies. Fear is ruling. It has almost become a competition in its own right.

I'm quite OK with saying I don't know where the market is going and that most informed opinion suggests further losses.

Beyond that point very strong evidence is needed in my opinion. I don't know that such tangible, relevant evidence is currently available. Maybe it is or maybe there's a place for acknowledging uncertainty and waiting.

Nothing contradictory in what I wrote: I have no idea if the allords will be higher tomorrow than today, or higher next year than today.
I am confident that significant falls are ahead of us as the global malaise we are experiencing has not resolved itself. Resolution could be less than a year, could be more?
I believe, from my research - and I spend typically around 20 hours a week reading on market related matters - that the allords is destined for a number in the 3000 range before global markets rally and we can again invest with some confidence.

People have good reason to be fearful of market direction: There is nothing on the horizon that suggests we a close to improvement. In fact the signposts clearly point to massive financial debt burdens in the US rolling across the world and dragging us further down. The 5 trillion debt carried by Fannie Mae and Freddie Mac alone suggest something more dire than than Northern Rock Building Society bailout is about to happen.

Unlike you, I'm not OK saying I don't know where the market is going. I have a very high degree of confidence that significant falls are ahead. By the same token, there will be some intermittent rallies as well, and I will sell several of my long term holdings into these, and retain only a few energy and metals (mostly gold/copper) plays.

 

[Julia]

T

Beyond that point very strong evidence is needed in my opinion. I don't know that such tangible, relevant evidence is currently available. Maybe it is or maybe there's a place for acknowledging uncertainty and waiting.

Rick, I guess most of us would agree that fear is dominant at present.
But there's sufficient reason for this fear. It's not irrational. And, of course, it's feeding on itself.

My concern for those who are "acknowledging uncertainty and waiting" is that they are risking capital in the process. I just can't see that it makes sense to have funds in e.g. falling bank stocks, right now, when you could be utilising a sector, e.g. coal, which is doing better. Or, failing that, just staying in cash until confidence returns. Or using options.

I'll be surprised if we don't see further profit downgrades come reporting season, with the resultant further falls in SP.