Oh dear the Henry tax has just killed my mining portfolio

[kwallace]

Why do I feel better knowing that I'm not the only one to get hammered... I remember long ago (2 weeks) with me thinking about selling to make a few little bucks but saying to myself nah this is going to go on and on and on

I agree about it being tough to get through though, there does seem to be alot of panic. The only up side is that shares will be dirt cheap again and if you have cash or bailed out early it will be a good buy again.

But then you don't want to catch a falling sword....

 

[tech/a]

Why do I feel better knowing that I'm not the only one to get hammered... I remember long ago (2 weeks) with me thinking about selling to make a few little bucks but saying to myself nah this is going to go on and on and on

I agree about it being tough to get through though, there does seem to be alot of panic. The only up side is that shares will be dirt cheap again and if you have cash or bailed out early it will be a good buy again.

But then you don't want to catch a falling sword....

Dont!!

Initially like all "shocks" there will be over reaction.
Reality will eventually set in as the realisation strikes that production wont cease and demand will drive supply.
Id be more concerned with a fall in demand.
Youll see where it pulls up--it will be pretty clear.

 

[pixel]

Even if the super tax passed the senate, i thought it was due to start in 2012? Why would shareholders be selling off now?

Markets hate uncertainty, that's why.
It only takes a little stimulus to create a stampede. While ludicrous ambit claims may work for unions when a new round of negotiations begins, the ALP has yet to figure out that this isn't about coal miners union vs bosses behind closed doors, but the National Economy being discussed in public.

 

[moXJO]

Unfortunate market timing for Rudd, concerning his mining tax announcement.

 

[Julia]

Julia,



Why on Earth do you hold them?? There has been an accelerating decline happening for some time, as Nun said since well before the Henry report. China is tightening up credit, their market is falling, this is the big picture.

I have had some miners on my radar as possible buys but they keep breaking support, and look nothing like a buy in their present state. If they don't look like a buy, then why hold??

brty

Because it's just BHP and CEY and these together constitute a very small proportion of my asset base, CEY actually went up yesterday and I'm still about two thirds in cash. And because as I said yesterday I think this is an over-reaction and BHP at least is a long term hold.

Further, it's not just the Rudd tax that's affecting the market - it's the fear about Greece et al, and possibly even the foiled terrorist attack in New York.
Fear is contagious and quickly gets disproportionate.

However, I do agree with you that the miners, with a few exceptions, have not been a buy in recent times.

 

[The Trooper]

Time to keep an eye out for stocks to buy. There seems to be mass panic at the moment and this is affecting international as well as domestic mining stocks. The Henry report seems quite clear that the tax is on Australia's non-renewable resources. This combined with the two year waiting period (in which a federal election will occur) and there is likely to be significant opposition means it looks like the chicken littles are running and the market will be ripe with opportunity.

charteredaccountants.com.au/henryreview (not sure if this pasted link will work but it has a good summary of the Henry review)

 

[Calliope]

Further, it's not just the Rudd tax that's affecting the market - it's the fear about Greece et al, and possibly even the foiled terrorist attack in New York.
Fear is contagious and quickly gets disproportionate.

And the oil slick in the Mexican Gulf is not helping the oil companies.

 

[brty]

Julia,

Further, it's not just the Rudd tax that's affecting the market - it's the fear about Greece et al, and possibly even the foiled terrorist attack in New York.
Fear is contagious and quickly gets disproportionate.

Personally I think it is China, the rest is mostly smokescreen and noise.

I am not a long term holder of any stock, just look for opportunities as they present themselves. I have been watching BHP recently with an intention to buy, but this accelerating move to the downside is an ominous sign for possibly quite a few months. There will obviously be a relief rally sometime soon and holding over 90% cash myself, I am hoping to catch part of that move.
The only stock I currently hold is well outside the mining sector, being PRY, which unfortunately for me did not catch today's contagion, because I wanted to buy more.

brty

 

[sammy84]

Dont!!

Initially like all "shocks" there will be over reaction.
Reality will eventually set in as the realisation strikes that production wont cease and demand will drive supply.
Id be more concerned with a fall in demand.
Youll see where it pulls up--it will be pretty clear.

A lot of damage can be done waiting for reality to set in can't in Tech? I don't necessarily not agree with your statement (I am hoping you're correct), just find such a fundamental view on price movement very unlike you...

 

[nunthewiser]

LOL . Go some mid cap mining stocks i say

Different strokes for different folks but gotta love a sell down and mass hysteria......

" Oh dear the Henry tax has just put steak on my table for dinner"

 

[nunthewiser]

Using a break of todays lows as stopout points is classed as catching falling knives? and frowned upon by the more "experienced" traders that use hindsight to plot a position they shhould of taken ?

not meaning to sound sarcastic just intrested to see at what point "experienced " traders would enter a position .... take MGX and PLA for example .

 

[nunthewiser]

And how about OZL? ........... as " experienced " traders would you take a position at 105/106 with a stop a touch below todays low ?

No signs staring at you ?

or is this classed as catching knives? instead of a technical entry with low risk/reward criteria,s.

silly me i must be the only silly bugga here

I spose i have to wait until tommorow till i get an answer tho?

 

[tech/a]

And how about OZL? ........... as " experienced " traders would you take a position at 105/106 with a stop a touch below todays low ?

No signs staring at you ?

or is this classed as catching knives? instead of a technical entry with low risk/reward criteria,s.

silly me i must be the only silly bugga here

I spose i have to wait until tommorow till i get an answer tho?

Nun.
You could place a trade as you suggested.
My view is its too early to call and while we see many
charts with tails like these it isnt supported in the majority of cases with a
very high volume bar closing HIGHER than yesterdays close OR a low volume continuation above todays High.

Heres a bit of chart explaination.

 

[eddyeagle]

For those in cash, there are stocks that are starting to look good value again I reckon. Could be some good buying opportunities soon.



From The Age:

KFC: Playing chicken on the mining boom
BARRY FITZGERALD
May 5, 2010 - 9:36AM
It's been a case of small and warm beers for Kevin Rudd in his meetings with mining executives in Perth after kicking them in the guts with the tax grab known as the resource super tax profits (RSTP).
In Perth mining circles, the RSTP is being called the GFC Mark II, or Garimpeiro's personal favourite, the KFC – the Kevin Rudd financial crisis.
The industry is making it loud and clear that there is nothing super about the tax grab, pointing to the share price damage caused since the proposal was unveiled on Sunday. The share price retreat has hit the superannuation accounts of every work'n Australian.
The mining executives are also threatening all sorts of doom around future investment plans, job losses and a mass exodus to warmer investment climes. No wonder, given the KFC will make Australia's mining industry the highest taxed in the world (55 per cent of earnings).
Add the gloom in the mining sector caused by the KFC to the broad retreat in commodity prices caused by China's efforts to slow overheating sectors of its economy and fears that there will be repeats of the Greek debt woes elsewhere in Europe, and you can see why there has been a mighty sell-off in the past couple of days.
Today will be another shocker. Copper has fallen to a seven-week low, oil slumped $US3 a barrel and aluminium has given up any hope of holding above $US1 a pound in overnight markets. Even gold let the side down, with June Comex gold off some $US14 an ounce.
Local miners are just going to have to wear the commodity-price falls. But there is good reason to believe that the sell-off in shares triggered by the KFC is overdone. Why is that so? Because the KFC is not going to proceed as currently planned.
It is a theme picked up by ANZ's head of commodity research Mark Pervan.
Pervan said there was no surprise that the mining industry's response to the proposed tax has been very negative, flagging concerns such as reduced domestic project opportunities, a move offshore, lower foreign investment in the sector and reduced merger and acquisition activity.
But he reckons that after the three-week consultation period between industry and Treasury boffins on the proposed tax, the existing tax proposal "will be watered down and concessions made to appease some of these concerns".
Garimpeiro reckons there is no doubt about that. Apart from anything less, legislation for the KFC is not anticipated before 2012, making the whole thing subject to Labor getting back in to power. Polls earlier this week showed there was no guarantee of that happening.
It is against that background that some brave types out there are using the cover of the KFC dark cloud over the mining sector to snap up miners and explorers at what they reckon could prove to be bargain prices.
They will be encouraged on that score by Pervan's comment on the big picture outlook : "This is not the end game. Australia will remain a primary beneficiary of a China-led commodity boom over the coming decade. And other governments, such as India and China, are reviewing their own resource tax structures, suggesting the comparative change may end up being less than initially thought."

 

[Julia]

From the above quote:

But he reckons that after the three-week consultation period between industry and Treasury boffins on the proposed tax, the existing tax proposal "will be watered down and concessions made to appease some of these concerns".
Garimpeiro reckons there is no doubt about that. Apart from anything less, legislation for the KFC is not anticipated before 2012, making the whole thing subject to Labor getting back in to power. Polls earlier this week showed there was no guarantee of that happening.

Tony Abbott has now said categorically that there is no way the Libs can support this tax.

The Greens will vote for it in the Senate, so whether or not the legislation passes will come down to the decisions of Fielding, Xenophon, and Scullion.

Rudd will be ardently trying to stick with his 40% in order not to exacerbate his flourishing reputation for being the backflip king.

 

[nunthewiser]

Nun.
You could place a trade as you suggested.
My view is its too early to call and while we see many
charts with tails like these it isnt supported in the majority of cases with a
very high volume bar closing HIGHER than yesterdays close OR a low volume continuation above todays High.

Heres a bit of chart explaination.

Thanks for the reply .

We obviously trade different time frames and entry criterias.

Each to there own.........

 

[tech/a]

Thanks for the reply .

We obviously trade different time frames and entry criterias.

Each to there own.........

Which timeframe are you talking of?

 

[nulla nulla]

A lot of mining shares rebounded off the interday lows yesterday to close green. People holding the shares may have felt squeezed by those selling it down.
The sudden drop obviously made a lot of these shares attractive for some. MGX at $1.40 was a standout for the quick, having dropped a higher percentage in the previous two days than the rest of the miners. FMG & OZL look good at these entry levels as well.
Some may want to bag the Henry Tax revue but the panic reactions of some have created opportunities for others. Go stocks.

 

[Calliope]

Rudd will be ardently trying to stick with his 40% in order not to exacerbate his flourishing reputation for being the backflip king.

"As you knowwww" Bernie Fraser who is totally unbiased says "I think it is long overdue to be honest" so it must be okaaay.

 

[Calliope]

I hate to think how our superannuation funds are performing after our market has dropped 7.5% in the last 9 days. They have huge investments in the banks and the big resources.

It is ironic that one of the reasons Rudd is giving for whacking the big miners is to divert more money to super fund managers for them to mismanage.