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Market is crap

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stockwhizben

stockwhizben

Joined
7 November 2007
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Market is crap. I had 600k in with a 450k margin loan. Now ive only got 98k equity. Im finding it goes down then up but not as up as it was and so the highs arent the same highs as previous and slowly the cash gets chipped away.
This was meant to be my house deposit. I only hope houses in melb stop going up and go down a bit as well.
 
While i feel for people in your situation, you must realise that sometimes the market is like this.

Never play with cash you cant afford, unless you are a seasoned professional. Perhaps you should consider getting out now...
 
Is this guy for real or what? LOL

Hey, Tattslotto is crap because I didn't win last week, or the week before, or last month, or last year... but you don't see me investing ALL money, let alone money that's not even mine, into that risky venture.

Oh, the market is a risk? Geez, and I thought it only went up? LOL :D

Absolute gold.
 
Is this a wind-up?

Who would have thought a 75% leveraged exposure to the equity market could be risky?

Ben, you may wish to revisit your strategy.
 
M34N said:
Is this guy for real or what? LOL

Hey, Tattslotto is crap because I didn't win last week, or the week before, or last month, or last year... but you don't see me investing ALL money, let alone money that's not even mine, into that risky venture.

Oh, the market is a risk? Geez, and I thought it only went up? LOL :D

Absolute gold.
Click to expand...

Comparing the market to tattslotto is a little out there buddy :p:

I can understand where he's coming from - conservative stock investment is almost always part of a portfolio, but lately even conservative stocks are falling hard.


Being so heavily on margin in this market is of course unwise; especially if you don't really have money to burn.


When a lot of people hear the term diversified portfolio, they believe that refers to a diverse range of stocks. Which is utterly wrong. You should be diverse in your investments; a mixture of cash, stocks, property (if affordable), & possibly even gold!

Unfortunately; people have become accustomed to stocks doing nothing but rise, & a lot quite aren't used to seeing these irrational declines. Which is why I refuse to be on any sort of margin loan at the moment, & as a result all my stocks are bought with money I can lose.
 
I am just wondering.....when did the general investment community start taking out margin loans? How many years ago? Was it prior to the last recession or since? Could it be that a lot of new investors have got so confident with this bull market and are too highly leveraged? Could this leverage in itself lead to a big correction in the future?
 
nah i wont be getting out until i get my $200k profit, i want to be there for the next rally too - who knows when thats happening, market going sideways and down'ish. i have had to sell a bit as was in margin call position - spoke to NAB and they said loads of people are getting hit so made me feel better. yeah nyden i like your point and at 25 yo i think i need to take some risks to get a leg-up, its better than buying a flash car and drinking it up i reckon tho. i get the points about pretty highly geared but if i was to buy a house somewhere i would be geared much higher and i dont want that. (I reckon must have a missus nowadays to afford a first home and repay it comfortably). no its not a wind up either. yeah i thought about getting a bit of gold and rang the perth mint a couple of months back. didnt know whether to store it there or under my pillow.sounded good but never got around to it.
yea i still think i know a bit about markets - was there in tech wreck, stayed up to watch them ring the bell and open the USA up after 9-11 so i do have a keen interest in it - was just venting my annoyance at the recent volatility i guess.
and thats my story so far
 
M34N said:
Is this guy for real or what? LOL

Hey, Tattslotto is crap because I didn't win last week, or the week before, or last month, or last year... but you don't see me investing ALL money, let alone money that's not even mine, into that risky venture.

Oh, the market is a risk? Geez, and I thought it only went up? LOL :D

Absolute gold.
Click to expand...


HAR HAR HAR Falling off my chair laughing:( Can't believe someone could put 600k into the market without nderstanding or expecting the downside.
CATAPILLAR
 
You really worry me...do you know what a liquidity crunch does to all asset markets particularly the stockmarket in times when inflation is also a problem? Go back and look at economic history and consider that the savings and loans between 89-94 was but a mere baby to the subprime. If you want to hold be prepared to hold for a couple of years - up to 4 years before getting your capital back and that things are going to get a whole lot worse and you will get more margin calls. We are not going to see 6800 for a long long time. There will be a bounce but it will be small as people will just sell into it and short the market...this is not a correction. Liquidity gives birth to market booms and liquidity crunches kill them..or at the very least also start reading about how to short at least you might preserve the capital you have left.
 
dombat said:
You really worry me...do you know what a liquidity crunch does to all asset markets particularly the stockmarket in times when inflation is also a problem? Go back and look at economic history and consider that the savings and loans between 89-94 was but a mere baby to the subprime. If you want to hold be prepared to hold for a couple of years - up to 4 years before getting your capital back and that things are going to get a whole lot worse and you will get more margin calls. We are not going to see 6800 for a long long time. There will be a bounce but it will be small as people will just sell into it and short the market...this is not a correction. Liquidity gives birth to market booms and liquidity crunches kill them..or at the very least also start reading about how to short at least you might preserve the capital you have left.
Click to expand...
But Australia is immune from recession... strong economy, China, blah blah.;)
 
Nyden said:
Comparing the market to tattslotto is a little out there buddy :p:

...

Unfortunately; people have become accustomed to stocks doing nothing but rise, & a lot quite aren't used to seeing these irrational declines. Which is why I refuse to be on any sort of margin loan at the moment, & as a result all my stocks are bought with money I can lose.
Click to expand...
But that was my point exactly, buying Tattslotto is a risk, just like shares trading. Since 2003, the market has gone from under 3,000 points to over 6,100 now. That's crap now is it? Sounds like people want to have their cake, and eat it too.

Markets are irrational, they always have been and its been happening since before all of us were born, and will keep happening. But to put money you don't own and to literally put your house on the line on the stock market, you may as well be at the roulette table picking red or black!

This is exactly why I dumped my last accountant / 'financial adviser', they were suggesting to me to be "fully leveraged" and to "buy in every dip". Apparently they bought during the August crisis and were laughing in October at the new all-time highs the market hit. I had better sense than to go all into the market with other people's money that I would eventually have to repay. Now stockwhizben is a prime example of exactly what happens when you follow that risk.

Lesson learned, hopefully.
 
Nyden said:
I can understand where he's coming from - conservative stock investment is almost always part of a portfolio, but lately even conservative stocks are falling hard.
Click to expand...

But do you expect conservative stocks to continue to go up or stay in a sideways pattern while the rest of the market gets smashed?

It doesn't work like that.
I was criticised by a few when in December i sold every stock i had in profit, apart from Gold stocks and cashed in a geared managed fund as i was "panic selling".

I also recall all the bulls ranting about "buying opportunities" "Decoupling" etc etc.
We live and die by our own decisions, right or wrong, and many of the Bulls have been ignoring the warning signals that have been there for a very long time.

That is their right but they also have to be prepared to suffer the consequences of their actions when wrong.
 
Mate, I'm having real trouble believing this situation.......just for one thing, to start off with LVR 75%, I really fear for the stocks you have to own........all large caps, so called 'blue chips'...all pretty popular and well valued..and how pleased is the bank now that you have 98k when you started off so close to lvr limit for even the 'safest stocks', even after you sold some.....

I probably love margin more than anyone on this site but the whole point of margin is outperformance........if you are fair dinkum, all I can say is too dump stock and get out of the situation cause you have probably done well to still have 98k.....margin is about outperformance.......how can you outperform if you buy all the stocks with 75% lvr.....a good result for you would be to beat your interest rate..

I'm in my 20's and love risk and margin more than most, but you got to take risks based on your skill and your value add.....not just buy from the set menu.....anyway that's my rant and I admire your goals...just remember your goal of a house or $200 000 profit has nothing to do with your investment strategy........if you looked hard enough you could probably find a stock which will turn $20k into $200k in five years.......that's what investment and risk is about, not taking out a 450k loan and buying off the set menu:2twocents
 
rainmaker i started with $zip. Got a couple of thousand worth of telstra shares from my folks for my 18th or 21st birthday i think then i got a couple of more thousand of australian foundation invest coy around that time as well. Began to gear up off this and put some of pay chq into my loan every now and then regular savings i'd say about 3 years or something ago. so nope i didnt start with $150k, that was just the highest i had a couple of mths back. when i look back - havnt really analysed how i got to get 150k (or now 98k), i should look at the stocks which made it happen. i bought and sold leighton and mac bank a fair bit i know that much.
so of course im not that happy, my savings using this strategy have gone up by way more than i could ever have hope to save and i am on no means a big salary. quite small actually.
probably what i need to do now is to protect what left i have of this 98k, keep my powder dry. have looked at options but found to be expensive. and not too optimistic about reporting season and prob more loan write downs to come.
and i feel for the retirees and their super funds dropping too.
and everything i read in the paper from the economists reckon the market will be pretty solid but more likely in the second half of this year. (and now some smart as* will come back saying dont believe the paper - but whats the answer then ...dont read anything or do your own research. but that is doing your own research!)
and to catapillar hope you bumped your head falling off the chair. your time will come mr smarty pants
 

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