Stock Market Crash - End of the Bull!

[hangseng]

I agree, the only trouble is, currently I cannot find an undervalued company (with sound fundamentals). At least, not in the areas I am looking (Coal was stated earlier, but thats not an area I have an overly large knowledge of).

Have a very close analysis of Anglo Australian Resources (AAR). Not a Uranium stock and probably why it has gone under the sights of most.

At a market capitalisation of $27m, no debt, large cash and gold reserves, unsold gold from the last pour, funding a PFS for an excellent Zinc deposit at Koongie Park and self funded. No capital raisings just gold production and with gold and Zinc prices rising.

You want sound fundamentals and undervalued, then this is it without question in my view.

 

[>Apocalypto<]

Firstly, as the name says, I am a firm believer in Buffetts investment methadology. For this, I currently need to see the end of this bull.

Companies are currently overvalued, and the market has been a bull market for the past few years. Very similar to the 87 crash situation, the market was a bull market from 82-87 from the top of my head, a very similar length of time to the current climate. However, baby boomers pouring invesment dollars into the market, trying to gain as large returns as they can before their retirements, is definately a factor of which will maintain a sturdy bull market for the near future.

I have currently pulled all my funds out of the stock market, waiting for this bull to end, though I think we might see more of a flattening out of the market over the next year or two, as opposed to a drastic crash. I would LOVE to see a crash, as these current bond returns I am receiving are pathetic when looking at the compounding rate of return over the next couple of years.

What are your opinions on the current overheated market, and when do you think this could end? Do you see a crash, or a flattening out?

One point to think about Buffettology.

This time in 2005 where people thinking that companies were over valued? so what makes them overvalued now? In 1 year from now you could be saying jeez i wish i bought in 07 they were much less value then. A share is only worth what a market is prepared to pay for it, regardless of what individuals think of its value.

Why would any one want a market destroying crash?

If that occurred the market could go sideways for years with investor confidence shot! and if it is not making a wide range then it is also no good for traders.

From what i see on the monthly XAO there is a posiblity that we could lose up to 50% and still have a healthy trend. That retracment could also pan out over a year or more and does not mean a 90 degree drop it may slowly drop down for that time span or more who knows (now I am just speculating blind).

So I for one hope that is the case and this bull market does not end anytime soon.

I would find it sad to see a mass panic and it ending in some kind of huge crash.

I guess a lot of it comes down to weather the US hits a recession and how bad the negative influence is and lasts.

 

[Buffettology]

Have a very close analysis of Anglo Australian Resources (AAR). Not a Uranium stock and probably why it has gone under the sights of most.

At a market capitalisation of $27m, no debt, large cash and gold reserves, unsold gold from the last pour, funding a PFS for an excellent Zinc deposit at Koongie Park and self funded. No capital raisings just gold production and with gold and Zinc prices rising.

You want sound fundamentals and undervalued, then this is it without question in my view.

Thanks, I will take a look at it when I get some time. I am a bit cautious of resources however, as I am not overly knowledgable in the area, and they are manipulated a bit much by prices of the resources, which can change a lot easier than that of general products. Will take a look though, its definately an area I have been thinking about lately, due to my inability to find any other undervalued stock out there. One I dont mind ATM though, is CAM.

P.S One of ROE (I think it was) tips rose over 5% today. Not bad at all. Maybe those pies are hitting taking off in the US

 

[Buffettology]

One point to think about Buffettology.

This time in 2005 where people thinking that companies were over valued? so what makes them overvalued now? In 1 year from now you could be saying jeez i wish i bought in 07 they were much less value then. A share is only worth what a market is prepared to pay for it, regardless of what individuals think of its value.

Why would any one want a market destroying crash?

If that occurred the market could go sideways for years with investor confidence shot! and if it is not making a wide range then it is also no good for traders.

From what i see on the monthly XAO there is a posiblity that we could lose up to 50% and still have a healthy trend. That retracment could also pan out over a year or more and does not mean a 90 degree drop it may slowly drop down for that time span or more who knows (now I am just speculating blind).

So I for one hope that is the case and this bull market does not end anytime soon.

I would find it sad to see a mass panic and it ending in some kind of huge crash.

I guess a lot of it comes down to weather the US hits a recession and how bad the negative influence is and lasts.

I can see your point, and I agree, it may not be a quick crash and then an instant bounce back, we may see a crash that takes a year or more before it starts moving back upwards. The thing is, for my kind of investing (value investing), this is still much better than a continuation of this bull market. I just need to get a solid company, at a good price, and then hold it. I have done a lot more analysis on this since this post, and I estimate it will be in the last quarter of this year.

Reasons, inflation figures are announced April 24 I beleive, a relatively high rate will probably mean an IR rise in May. This will push up the dollar, make our exports more expensive, and incrementally slow the commodity boom.

Further, this IR rise, will not be seen in the indicators until later in the year. By this time, (from what I have read), it is expected the US will announced poor economic figures.

Combined, and the fact that the market will probably rise until the end of the year also, I can see this triggering a panic in the market, and beginning a crash. This is just speculation, but if these things pan out, I would not be surprised to see this scenario pan out.

Thanks.

P.S Of course, the Chinese indicators will also play a factor, but these are a bit unpredictable still.

 

[>Apocalypto<]

I can see your point, and I agree, it may not be a quick crash and then an instant bounce back, we may see a crash that takes a year or more before it starts moving back upwards. The thing is, for my kind of investing (value investing), this is still much better than a continuation of this bull market. I just need to get a solid company, at a good price, and then hold it. I have done a lot more analysis on this since this post, and I estimate it will be in the last quarter of this year.

Reasons, inflation figures are announced April 24 I beleive, a relatively high rate will probably mean an IR rise in May. This will push up the dollar, make our exports more expensive, and incrementally slow the commodity boom.

Further, this IR rise, will not be seen in the indicators until later in the year. By this time, (from what I have read), it is expected the US will announced poor economic figures.

Combined, and the fact that the market will probably rise until the end of the year also, I can see this triggering a panic in the market, and beginning a crash. This is just speculation, but if these things pan out, I would not be surprised to see this scenario pan out.

Thanks.

P.S Of course, the Chinese indicators will also play a factor, but these are a bit unpredictable still.

some very interesting food for thought there, greatly enjoyed that thanks. Great to see your putting dates in.

I am also on your side of some sought of drop coming sooner then later but i am unable to determine when from my analysis, but i will be able to see it when it comes.

Hope your right on the Aussie dollar cuz i am long on it and hungry to add more as long as it says so.

one point, does warrant a possible crash is us aussies at the moment are so enthusiastic as investors and we are in a buying frenzy, I see we are at times ignoring wall streets lead and still it driving up! (not 100% sure if that is good or bad)

when the turn dose come and people realize it is bigger then may 06 and April 05 it could start a middle trend position holders getting jumpy and bailing out.

but again that is my speculation.

China will feel the pinch a little if there is a global slow down, but with china you have to remember they have a local market of 1.3 billion so they will be able to soak up a lot of it.

interesting times.

I take it as it comes, great if it does keep up at this pace till next year.

 

[CanOz]

I can see your point, and I agree, it may not be a quick crash and then an instant bounce back, we may see a crash that takes a year or more before it starts moving back upwards. The thing is, for my kind of investing (value investing), this is still much better than a continuation of this bull market. I just need to get a solid company, at a good price, and then hold it. I have done a lot more analysis on this since this post, and I estimate it will be in the last quarter of this year.

Reasons, inflation figures are announced April 24 I beleive, a relatively high rate will probably mean an IR rise in May. This will push up the dollar, make our exports more expensive, and incrementally slow the commodity boom.

Further, this IR rise, will not be seen in the indicators until later in the year. By this time, (from what I have read), it is expected the US will announced poor economic figures.

Combined, and the fact that the market will probably rise until the end of the year also, I can see this triggering a panic in the market, and beginning a crash. This is just speculation, but if these things pan out, I would not be surprised to see this scenario pan out.

Thanks.

P.S Of course, the Chinese indicators will also play a factor, but these are a bit unpredictable still.

Don't forget about that slippery issue of oil and related energy prices...and grains, they all add up for inflation. Might get a good energy boom for a short period though, until that effects demand.

Cheers,

 

[Wysiwyg]

After doing my pleasurable browse through the various forums I notice a lot of `excited` posts coming in.Mostly newer posters expressing their excitement at the present increases.
What does mean to you in regards to red days?

 

[x2rider]

Hi folks

I think you can usually find that when the average joe blow in the street is starting to talk about the stock market and " I'm putting all I can at the moment into it " , Is the forerunner to a correction of reasonable proportions .
They all get stung really hard and walk around for the next few years telling everyone what a fool they are for "gambling " in the market.

I have been scaling back my trading and am only trading the indexs at the moment . There is enough money to be made in this and a lot easier to get out when you have to .

Cheers martin

 

[Buffettology]

Don't forget about that slippery issue of oil and related energy prices...and grains, they all add up for inflation. Might get a good energy boom for a short period though, until that effects demand.

Cheers,

Definately havent forgot about those. Oil prices though appear stable in the short-term. Though, I dont like the fact that Demand has nearly caught Supply, and this will only get worse with high growth rates in both China and India.

I personally, think its labour market inflation thats the immediate problem (I know at least where I work, salaries are rising to attract and retain skilled labour). Banana prices have fallen, and imported inflation should fall with our rising dollar. So I would not be overly surprised to see the RBA hit its target rate and leave IR unchanged in May. Though, I personally hope the opposite.

I will have to have a chat with our macroeconomic indicator specialist tomorrow and see his opinion. All he deals with all day long are macro indicators, so he should have some deep knowledge.

 

[nizar]

I can see your point, and I agree, it may not be a quick crash and then an instant bounce back, we may see a crash that takes a year or more before it starts moving back upwards. The thing is, for my kind of investing (value investing), this is still much better than a continuation of this bull market. I just need to get a solid company, at a good price, and then hold it. I have done a lot more analysis on this since this post, and I estimate it will be in the last quarter of this year.

Reasons, inflation figures are announced April 24 I beleive, a relatively high rate will probably mean an IR rise in May. This will push up the dollar, make our exports more expensive, and incrementally slow the commodity boom.

Further, this IR rise, will not be seen in the indicators until later in the year. By this time, (from what I have read), it is expected the US will announced poor economic figures.

Combined, and the fact that the market will probably rise until the end of the year also, I can see this triggering a panic in the market, and beginning a crash. This is just speculation, but if these things pan out, I would not be surprised to see this scenario pan out.

Thanks.

P.S Of course, the Chinese indicators will also play a factor, but these are a bit unpredictable still.

Buffet.
Note the RBA raised rates 3 times last year. Didnt seem to effect the market that much.

 

[Buffettology]

Buffet.
Note the RBA raised rates 3 times last year. Didnt seem to effect the market that much.

But a slowdown in the US was not expected the same time this effect of an increased IR would be seen at home.

Not to mention, the market seems very strange at the moment and at least to me, seems far more unstable than it did last year.

I dont think an IR rise will see an immediate impact (a small fall in the index of course), but I see it bouncing back relatively quickly.

 

[astroboydivx]

In mid 2005 my wife and I sold our PPOR, and went hardcore into shares via a margin loan.

We took our $300k and borrowed $300k in a margin loan and away we went.

By this stage, the sharemarket was hovering I think around 4000 points, and there were concerns that it was reaching it's peak from the March 2003 Iraq War trough. From memory it went as low as 2800 around this time. People were wondering how far the bull had to go.

But we invested nonetheless and I don't need to remind you guys that we've now hit 6200.

The $300 000 is worth $550 000, and whilst there are some froth and bubbles out there, I think the trend will continue to 8000 before the bear comes to town. Probably 18 months away.

 

[Kimosabi]

In mid 2005 my wife and I sold our PPOR, and went hardcore into shares via a margin loan.

We took our $300k and borrowed $300k in a margin loan and away we went.

By this stage, the sharemarket was hovering I think around 4000 points, and there were concerns that it was reaching it's peak from the March 2003 Iraq War trough. From memory it went as low as 2800 around this time. People were wondering how far the bull had to go.

But we invested nonetheless and I don't need to remind you guys that we've now hit 6200.

The $300 000 is worth $550 000, and whilst there are some froth and bubbles out there, I think the trend will continue to 8000 before the bear comes to town. Probably 18 months away.

I hope you have a good exit strategy planned and are prepared to pull the trigger when you have to.

 

[Buffettology]

I hope you have a good exit strategy planned and are prepared to pull the trigger when you have to.

I hope so too, where is your logic that the bull will not end? Are you just a massive risk taker, or do you have some kind of knowledge to beleive it will hit 8000? I hate to say it, but I honestly beleive you are kidding yourself! If it hits 8000 all the best for you, but I cannot see it happening within 18 months. Who knows, I may be wrong.

 

[Kimosabi]

Well, at least they didn't put their money in Westpoint or Fincorp.

 

[astroboydivx]

Well, at least they didn't put their money in Westpoint or Fincorp.

Eh, thanks.
Yes Kimosabi I'm just an uneducated fool...

 

[astroboydivx]

I hope so too, where is your logic that the bull will not end? Are you just a massive risk taker, or do you have some kind of knowledge to beleive it will hit 8000? I hate to say it, but I honestly beleive you are kidding yourself! If it hits 8000 all the best for you, but I cannot see it happening within 18 months. Who knows, I may be wrong.

And I could be wrong too. Who really knows. In fact in saying 8000 I was being a little devilish to stir some bears but I think 7000+ is a reasonable expectation. That's 10% p.a over the next 18 months.

Valuations are 17 times next years earnings, the IMF is reporting growth in the world economy of 4.9% p.a over the next 2 years. There's still blue sky on the horizon.

Yes we need to watch the USA to see if they'll hit a recession, and yes we need to keep an eye on valuations, but whilst things have been strong we are not in a bubble. Yet.

I don't plan to exit the market (ever), because I plan on holding these stocks through my trust for the next 100 years and will therefore be relying on their dividends and growth for my retirement.

However I have various investments inc residential real estate, listed property trusts and international managed funds to spread risk around.

 

[YOUNG_TRADER]

I don't plan to exit the market (ever), because I plan on holding these stocks through my trust for the next 100 years and will therefore be relying on their dividends and growth for my retirement.

You have any investment in a fountain of youth? How long do you plan on living for 130yrs 150yrs? :

 

[astroboydivx]

Correction: my trust will hold them for the next 100 years. Or 75 years. Whatever the maximum age of a trust is

 

[dhukka]

Valuations are 17 times next years earnings,

Valuations or prices?