Long term investors (retirees?) -- Stick with banks?

numbercruncher · 16 April 2008

Debt to GDP has never ever been so great, what happens in the great unfolding ? Its all a giant debt ridden pyramid scheme, massive borrowing from the future for an unsustainable present (well the near past was unsustainable, readjustment underway?).

Inflation has got to be the only hope for a way out of this quagmire.

nomore4s · 16 April 2008

davo8 said:
The same goes for traders. I venture to suggest that there is not a single trend-follower making money on financial stocks. All they're doing is feeding money into the market so the big players can sell the peaks.

Um, if you are a trend following trader, I dare say you wouldn't be long financials.

chops_a_must · 16 April 2008

vishalt said:
when you hear people like dave08 mention all the gloom, its time to buy imo, slowly and steadily

Given some of your brilliant calls, I'd be inclined to fade you moreso.

There is simply no rush for financials. Yeah, trade them... but buying for the long term? The information that is coming out would seem to be the sort that precipitates multi year bear markets in sectors.

Having said that, my personal view is that financials will be flat until the market heads back into the 4000s.

Whiskers · 16 April 2008

Julia said:
Whiskers, ...
Couldn't your mother access a greater income by (when stability and growth return to the market) buying good growth companies, and simply selling a few shares when she needs some injection of funds?

Hi Julia.

My mum is a reluctant trader/seller... or at least she was. While her portfolio is still in the black because she has held them for about 5 years, she has recently said I should have sold the banks last year when you (one of my brothers and I) mentioned it. But she had a lot of condidence in her (bank based) financial adviser.

Julia said:
Vishalt, could you explain why Dave08's remarks prompt you to feel it's time to buy?

Do you think we've reached the bottom?

Where has all that debt gone?

I'm also of the view that the correction cycle has about bottomed. (See XAO thread, Immenent & Severe Market Correction and Cycles thread.) For me fundamentals were not that bad, basically because Australian stocks are not near as exposed to the credit defaults as the US financials, but seem to have corrected more. The other issue re the debt levels is that I think it's just the changing dynamic of what a lot of people accept to basically get everything they want and keep up with the Joneses. I've predicted that particular bubble, 'residue' will carry over for another day. Uncle Festivous coined this phrase a 'classic', so I hope it lives up to expectations now.

From a more technical viewpoint the XAO 32.8% fibonacci pretty well agrees with my proportion analysis and the long term median Standard Deviation trend line. Then there are the more obscure various cycle analysis that some of us use that also tends to point to a change in the cycles.

My personal position is that the US markets will stabalise to recover moderately and the USD is soon to regain some strength which will equate to exponential gains for Australian stocks, resources in particular, where the Australian market will outperform the US, as it did before the US credit crunch, on the strength of solid resource sales in a higher AUD to USD conversion.

explod · 16 April 2008

Whiskers said:
Hi Julia.

My mum is a reluctant trader/seller... or at least she was. While her portfolio is still in the black because she has held them for about 5 years, she has recently said I should have sold the banks last year when you (one of my brothers and I) mentioned it. But she had a lot of condidence in her (bank based) financial adviser.

I'm also of the view that the correction cycle has about bottomed. (See XAO thread, Immenent & Severe Market Correction and Cycles thread.) For me fundamentals were not that bad, basically because Australian stocks are not near as exposed to the credit defaults as the US financials, but seem to have corrected more. The other issue re the debt levels is that I think it's just the changing dynamic of what a lot of people accept to basically get everything they want and keep up with the Joneses. I've predicted that particular bubble, 'residue' will carry over for another day. Uncle Festivous coined this phrase a 'classic', so I hope it lives up to expectations now.

From a more technical viewpoint the XAO 32.8% fibonacci pretty well agrees with my proportion analysis and the long term median Standard Deviation trend line. Then there are the more obscure various cycle analysis that some of us use that also tends to point to a change in the cycles.

My personal position is that the US markets will stabalise to recover moderately and the USD is soon to regain some strength which will equate to exponential gains for Australian stocks, resources in particular, where the Australian market will outperform the US, as it did before the US credit crunch, on the strength of solid resource sales in a higher AUD to USD conversion.

On what basis of fact have you formed the view that the Banks have just about bottomed?

Why do you believe the US dollar will soon gain some strength?

Did you happen to look at the new thread posted by Metric this morning. "The Black Death of Financial Collapse" The looming problems of the world financial markets as enumerated are well reasoned, can you back your own claims above with similar substantive reasoning.

This thread would be very much followed by older newcomers to the Forums who would be vulnerable to suggestion. Your assertions border on financial advice and unless you are so qualified I feel compelled to suggest that it be toned down. I am surprised that moderators have seen fit to sit by on this.

dalek · 16 April 2008

explod said:
This thread would be very much followed by older newcomers to the Forums who would be vulnerable to suggestion.

Maybe mods don't share your views that this thread would be an attractor to older, and therefore naive, stupid people fresh out of a CAE course on "how to turn on a computer"

cuttlefish · 16 April 2008

explod said:
On what basis of fact have you formed the view that the Banks have just about bottomed?

Why do you believe the US dollar will soon gain some strength?

I'm also of the view that there's plenty more pain to be felt yet by the Australian banks over the coming year (I'm short again but perhaps a little prematurely). But I thought Whiskers comments were well enough reasoned - basically arguing that the Aus banks are reasonably insulated from the US sub prime, and that resources will continue to show strength.

I'm less optimistic - I think the banks will need at the very least need to show some profit declines in response to the US and general credit/liquidity situation but also hold out that its likely there will also be some nasty surprises/skeletons (like the recent example of ANZ's unexpected exposure to stock lending etc.) to come as well over the coming year.

We also have the situation where cash yields are improving and so the relative attractiveness of bank yields, given the increased level of risk in banking at the moment, also loses its appeal.

professor_frink · 16 April 2008

explod said:
This thread would be very much followed by older newcomers to the Forums who would be vulnerable to suggestion. Your assertions border on financial advice and unless you are so qualified I feel compelled to suggest that it be toned down. I am surprised that moderators have seen fit to sit by on this.

ummmm, no. The post can stay.

Muschu · 16 April 2008

explod said:
This thread would be very much followed by older newcomers to the Forums who would be vulnerable to suggestion.

That sounds very patronising quite frankly. Perhaps some of us older newcomers can bring a tad of extra maturity to the topic. It is also quite an assumption that being new to the forums means being new to investment.
Regards
Rick

explod · 16 April 2008

Muschu said:
That sounds very patronising quite frankly. Perhaps some of us older newcomers can bring a tad of extra maturity to the topic. It is also quite an assumption that being new to the forums means being new to investment.
Regards
Rick

My apologies. There was a time when I was wet behind the ears and got burnt badly be professional fiancial advisers. As a result 5 years ago I became my own adviser and have not looked back. In the begginning though I made a lot of mistakes, some of them from newsletters such at Rivkins, Fat Profits et. al. I was vulnerable to suggestions and learnt the hard way. Just trying to be honestly helpful.

A lot of posters on the forum seem to take some of the spin, for example Bloomberg on Wall Street as concrete fact almost. I am not intending to put down but when I notice support for such garbage I become upset and have to jump in. I will try to be more restrained and proper in future.

ps. Having said that sometimes the stuff from Bloomberg is ok

Muschu · 16 April 2008

explod said:
My apologies. There was a time when I was wet behind the ears and got burnt badly be professional fiancial advisers. As a result 5 years ago I became my own adviser and have not looked back. In the begginning though I made a lot of mistakes, some of them from newsletters such at Rivkins, Fat Profits et. al. I was vulnerable to suggestions and learnt the hard way. Just trying to be honestly helpful.

A lot of posters on the forum seem to take some of the spin, for example Bloomberg on Wall Street as concrete fact almost. I am not intending to put down but when I notice support for such garbage I become upset and have to jump in. I will try to be more restrained and proper in future.

ps. Having said that sometimes the stuff from Bloomberg is ok

The honesty and sentiments are greatly appreciated Explod. Thanks. By no means do I know it all and hence the question. Retirees may be in a different position to younger people when it comes to investment choices or strategies, but even within the retiree "category" I am sure there are many "sub-types". And I understand what you are saying about advisors and newsletters. Finding quality advice can be quite a grind.
All the best
Rick

Julia · 16 April 2008

explod said:
On what basis of fact have you formed the view that the Banks have just about bottomed?

Why do you believe the US dollar will soon gain some strength?

Did you happen to look at the new thread posted by Metric this morning. "The Black Death of Financial Collapse" The looming problems of the world financial markets as enumerated are well reasoned, can you back your own claims above with similar substantive reasoning.

This thread would be very much followed by older newcomers to the Forums who would be vulnerable to suggestion. Your assertions border on financial advice and unless you are so qualified I feel compelled to suggest that it be toned down. I am surprised that moderators have seen fit to sit by on this.

Explod, I share your view about the bad news not all being out yet.
Also respect Whiskers' view.
We will all look at the same set of facts from our own, and different, points of view. The bottom line is that none of us know.

Also, I'd just like to say that I doubt Whiskers meant to be offering advice.
I read his post as being an expression of his own opinion and nothing more.

And, as noted by Rick, I don't think you need to be concerned about older investors who may happen to be new to this forum being vulnerable to suggestion. Most of them seem to me to be pretty smart. Just that they are honest enough to ask questions.

vishalt · 16 April 2008

chops_a_must said:
Given some of your brilliant calls, I'd be inclined to fade you moreso.

You're right, my calls are brilliant. I had Rio Tinto $90, and I bought long-term non-margin BHP @ $33 while everyone was thinking it was the end of the world and it would head back to $23, I laughed. Your fear, my pleasure.

Short-term rally for the banks comign right up, mainstream media is now switching on to "Fed restoring global confidence" headlines. And why wouldn't you buy them for the long-term? That is the most paranoia filled statement I have ever heard, you make it sound like we are using a primitive financial system from 200 BC.

If you want to buy CBA when it breaks $50 or $60 or NAB as it heads up to $40 be my guest, I'm not saying dump all your cash into the one stock right now, but do it partially because it *MAY* fall a bit lower but there has been a bit of support lately which indicates a good point to buy.

All you have to remember is that Americans are greedy wankers who are happy to commit corporate fraud for more money, our banks, and most Euro ARE cleaner and we have reported no net losses.

The old "buy in gloom, sell in boom" kicks in here, this is exactly why Buffet is rich, simple methodology and its kicking day trading ass at the moment.

Anyway, some of you really make it sound like all seven of our banks are going to be packed up and bailed out by the RBA and run by the government or something, please have some quiet time lol.

cuttlefish · 16 April 2008

And the DOW opens with a nice jump upwards tonight on the following great news:

JP Morgan earnings down by 50% vs last year
Housing starts at 17 year low
Oil prices at record highs
Inflation up

woohoo! </sarcasm>

ah well, looks like my bank shorts are toast but at least golds started the night looking good.

chops_a_must · 17 April 2008

vishalt said:
Firstly I don't listen to "experts", I listen to amateurs (mainly elderly columnists) who have been investing like me but for a long time and ol - have they had better recommendation than analysts ever have.

I like Westpac because the bank is a very liquid major, I'm happy with their business units. Also with Gail Kelly onboard the bank is bound to get good publicity! Also because my dad has Commonwealth Bank and we don't like NAB or ANZ.

13/3/08

vishalt said:
Lol same, ANZ really is looking like the cheapest.

I wanted to buy BoQ too buy it surged too much today and it hasn't suffered as much as the other banks or Bendigo.

vishalt said:
ANZ has almost surged 20% in the last 4 sessions, I'll keep my cool, if there's one lesson I've learnt is keep your cool!

Hopefully ANZ retests that level or near abouts.

25/4/08

So what happened between you buying that top in ANZ, and pouring scorn on it the other day?

So much for long term buying hey?

vishalt said:
You're right, my calls are brilliant. I had Rio Tinto $90, and I bought long-term non-margin BHP @ $33 while everyone was thinking it was the end of the world and it would head back to $23, I laughed. Your fear, my pleasure.

Whoopdee doo!

2 out of about 20 it looks like.

The point I was making is that you can't insult another person's calls, if you aren't prepared to stick to your own yourself. Especially if they aren't any better than the average joe's.

So what's with the switch from ANZ to BOQ? FWIW, it's probably the Home deal that gave them the pop in deposits.

vishalt said:
The old "buy in gloom, sell in boom" kicks in here, this is exactly why Buffet is rich, simple methodology and its kicking day trading ass at the moment.

Buffett is a master, and he value things a little differently than saying companies are "very liquid". Water is very liquid, should I invest in it? The most overused term in finance right now.

And I'm guessing you mean your short term trading is not going well? For mine, there has been very little in the way of longer term trades happening, it's been rather boring. All the money has been made in short term and swing trading of late.

vishalt said:
Anyway, some of you really make it sound like all seven of our banks are going to be packed up and bailed out by the RBA and run by the government or something, please have some quiet time lol.

Nah I wont, but perhaps you can. At least some consistency if you are going to attack people, would be good.

Thanks.

P.S. - financials well under performing yet again.

explod · 17 April 2008

Julia said:
Explod, I share your view about the bad news not all being out yet.
Also respect Whiskers' view.
We will all look at the same set of facts from our own, and different, points of view. The bottom line is that none of us know.

Also, I'd just like to say that I doubt Whiskers meant to be offering advice.
I read his post as being an expression of his own opinion and nothing more.

And, as noted by Rick, I don't think you need to be concerned about older investors who may happen to be new to this forum being vulnerable to suggestion. Most of them seem to me to be pretty smart. Just that they are honest enough to ask questions.

Thanks Julia and points taken. At times it is an emotional and streesful business. It was in fact a my super fund that I put in the hands of advisers. Have gradually rescued myself but perhaps get things a bit out of proportion sometimes as a result.

If we can survive perhaps a bad experience is a good one

cheers explod

davo8 · 17 April 2008

cuttlefish said:
I'm also of the view that there's plenty more pain to be felt yet by the Australian banks over the coming year (I'm short again but perhaps a little prematurely). But I thought Whiskers comments were well enough reasoned - basically arguing that the Aus banks are reasonably insulated from the US sub prime...

Agreed (both). Banks are probably insulated and strong BUT: (a) there are liars loans out there, just not so many (b) a dip in the housing market and a few foreclosures would hurt (c) banks are exposed to business risk and to off-balance sheet stuff like derivatives (d) banks have to borrow so are vulnerable to credit conditions (e) there are "unknown unknowns" like ANZ. All banks are highly leveraged and these things hurt their business model.

By any conventional theory this is not a correction but a bear market in most sectors and especially financials. August was a correction but Jan and Mar were lower lows. The trend is down. A simple indicator like EMA x-over said SELL in Jan and it says "DON'T BUY" now. Bear markets are not over in 4 months.

My conclusion on banks is: not yet a while. My facts are as above. If you disagree, I'd like to know what facts you base a different opinion on.

vishalt · 17 April 2008

chops_a_must said:
13/3/08
So what happened between you buying that top in ANZ, and pouring scorn on it the other day?

So much for long term buying hey?

I think you lost me already, I might have liked ANZ at one point but I do not have the money to invest in banks yet (I am trying to save up to a certain limit first) as I think ANZ is trying to be a wannabe HSBC and its bad debt provisions are probably the worst. Good time to buy when you want to be a flogged/dead horse though, but like I said my preference is with BoQ/WBC.

chops_a_must said:
Whoopdee doo!

2 out of about 20 it looks like.

or 2/2? I only traded BHP and Rio medium term last year, and I killed most of my day-trades in them? I had some fantastic calls for Orica also. My only bad call was Virgin Blue Airlines but that hit my trailing stop and bailed out with a profit. I also made a bad call on Caltex but got bailed out thanks to a stop as well.

The only thing I regret was not being patient enough with BHP, that is one winner of a company/stock.

chops_a_must said:
The point I was making is that you can't insult another person's calls, if you aren't prepared to stick to your own yourself. Especially if they aren't any better than the average joe's.

What insult? I was just saying when you hear the people around you frustrated in gloom and doom about to think the world is going to end - that IS a good buying point.

Maybe you distinguished incorrectly?

chops_a_must said:
So what's with the switch from ANZ to BOQ? FWIW, it's probably the Home deal that gave them the pop in deposits.

BoQ's a regional, Queensland is a strong growth area where even US superstars buy homes at because its so tropical, so its a "duh" investment imo.

chops_a_must said:
Buffett is a master, and he value things a little differently than saying companies are "very liquid". Water is very liquid, should I invest in it? The most overused term in finance right now.

His style of trading is simple but more than meets the eye though.

chops_a_must said:
And I'm guessing you mean your short term trading is not going well? For mine, there has been very little in the way of longer term trades happening, it's been rather boring. All the money has been made in short term and swing trading of late.

I don't do short term trading anymore, an 8-6 job kind of stops you from that and hence I took a hit in January, but hey, thanks to short term trading I have been able to spend like an American woman going shopping with a credit card (cept I had all cash) and my savings filled up more than I imagined.

Now using a no-debt approach I'm extremely comfortable that even if my investment collapses I won't owe the bank anything (except for broking fees).

chops_a_must said:
Nah I wont, but perhaps you can. At least some consistency if you are going to attack people, would be good.

What attack lol

chops_a_must said:
P.S. - financials well under performing yet again.

That's a shame, we do tend to suck US d*ck and JPMorgan/Citi rallied hard last night, I'm extremely impressed we showed an awkward form of reslience.

Oh well I hope they go down even more for my long-term buying sake but I think in the short-term we will have some upside pressure till the media says "world confidence falters again"

vishalt · 17 April 2008

Julia said:
Vishalt, could you explain why Dave08's remarks prompt you to feel it's time to buy?

Do you think we've reached the bottom?

Where has all that debt gone?

I don't know if we've reached the bottom, what is the bottom? I'm not Nostradamaus, all I'm saying is when everyone around you is losing the plot and preaching gloom and doom, for a cashed up person its a good time to buy.

Worked for me for: Beach Petroleum, SP Ausnet, BHP ($33, score!), but I'm down on Neptune lol.

I don't know where the debt has gone but I believe that its only US banks that are dirty whereas Aussie banks and most Euro/Canadian banks aren't.

About the debt: I could be wrong but I reckon the hedgies have priced that in a fair bit and are probably moving onto pricing in the "worst is over and the banks are going to recover" bit.

Muschu · 17 April 2008

I'm not sure if this is an appropriate comment but:
If this thread has gone off the original question as posed [ie: long term, possibly retirees, sticking with the banks or not] then is it perhaps time for this thread to go and for someone to start a new discussion under a different title?

Long term investors (retirees?) -- Stick with banks?

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Whiskers

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explod

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dalek

cuttlefish

professor_frink

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Muschu

explod

explod

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Julia

In Memoriam

vishalt

cuttlefish

chops_a_must

Printing My Own Money

explod

explod

davo8

The Random Walker

vishalt

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Muschu

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