Stock Market Crash - End of the Bull!

[Buffettology]

Valuations or prices?

Must mean prices.

IMF has predicted a slowdown in the world economy, not exactly bad, but not exactly blue skies.

The Chinese index is a bubble, and a burst would lead to a severe economic crisis, from the reports I am reading of invested funds into their index.

The US economy, this is a very grey area, I am hearing mixed reports and outlooks on their economy.

The Australian market is overvalued, no doubt, a correction is on its way. I just hope sooner than later, though I have put a bit more of my portfolio back out there, though that may only be short lived.

 

[Buffettology]

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

Note:

An impact lag is: there are several quarters between a cut in interest rates and the response on aggregate demand.


It is estimated output growth falls by 1/3 of a percent in the first and second years, and 1-6 of a percent in the third year, after a 1 percent increase in the short term interest rate (IR).

So the IR rises over the past year+ are still taking effect. Another rise, would be more to combat inflation, than to combat a booming economy. Inflation is cost-push at the moment, so I personally dont see much point in a rise. But no doubt, a rise will help reduce our growth, something that is expected anyways not just at home, but in other world markets.

 

[astroboydivx]

Must mean prices.

Yep, sorry, prices. Doing a few things at once.. Value of course lies in the eye of the beholder...

 

[Buffettology]

Yep, sorry, prices. Doing a few things at once.. Value of course lies in the eye of the beholder...

Or intrinsic value equations........

 

[astroboydivx]

Must mean prices.

IMF has predicted a slowdown in the world economy, not exactly bad, but not exactly blue skies.

The Chinese index is a bubble, and a burst would lead to a severe economic crisis, from the reports I am reading of invested funds into their index.

The US economy, this is a very grey area, I am hearing mixed reports and outlooks on their economy.

The Australian market is overvalued, no doubt, a correction is on its way. I just hope sooner than later, though I have put a bit more of my portfolio back out there, though that may only be short lived.

Yes I hope there is a correction also. I would rather see PE's of 14-15 rather than 17-18. But there is a big difference between a correction and a crash.

 

[Buffettology]

Yes I hope there is a correction also. I would rather see PE's of 14-15 rather than 17-18. But there is a big difference between a correction and a crash.

Yes, sorry, I sort of interchange the two.

By correction/crash, I mean 20%.

I realise a full on crash would mean much more than that and a correction could mean much less, but 20% correction is what I beleive we will see in the last quarter of 07, and with much greater probability into next year.

 

[nizar]

Yes, sorry, I sort of interchange the two.

By correction/crash, I mean 20%+

I realise a full on crash would mean much more than that, but I cant see that happening currently.

What is a full on crash?
1929?

I reckon a prolonged bearmarket/sideways market is much worse than a crash.....

But i guess in any conditions there are always stocks that outperform....

 

[Buffettology]

What is a full on crash?
1929?

I reckon a prolonged bearmarket/sideways market is much worse than a crash.....

But i guess in any conditions there are always stocks that outperform....

Its all down to interpretation. Not sure if there is an exact definition of a crash in the stockmarket at least? Not like there are for recession and depression within an economy (though these definitions dont give an exact representation of the magnitude or quantum).

I think a prologned bearmarket is much worse also. There are always stocks that outperform, but these stocks usually struggle greatly also in an ongoing bearmarket.

A crash is good news for me! Though, not as good at the moment, as I have a couple of large investments into the market I may make in the next few weeks.

 

[wayneL]

Yes I hope there is a correction also. I would rather see PE's of 14-15 rather than 17-18. But there is a big difference between a correction and a crash.

I wanna see 7-9. Thats when I plonk.

 

[Buffettology]

I wanna see 7-9. Thats when I plonk.

CAM, was below 7, prob around 7 ATM. Great, long-term oriented investment.

 

[chops_a_must]

I wanna see 7-9. Thats when I plonk.

I'd say you'd be a plonker if you sat out bull markets too.

But if you want to say you're a plonker in bear markets as well, that's fine by me. :

 

[wayneL]

I'd say you'd be a plonker if you sat out bull markets too.

But if you want to say you're a plonker in bear markets as well, that's fine by me. :

No,

But good purchases at low PEs get stapled to the bottom drawer.

Purchases in bull markets are flogged as per exit rules.

The way of the plonker

 

[chops_a_must]

So I can safely assume you are a holder of ZFX and MRE then?

 

[wayneL]

So I can safely assume you are a holder of ZFX and MRE then?

No, I don't own any Aussie stocks. (apart from BHP at odd times but through NYSE)

 

[ozewolf]

The US market is down (especially property that want recover for some time yet), and looking more grey than ever.
China however has still a lot going for and perhaps good for another 5 years...

Market here will most likely have a bid of a correction by May...

Ozewolf

 

[reece55]

The US market is down .......

Ozewolf, the Dow was up on a record high last night....

Whilst I believe that we are due for a correction/pullback in Australia (minor), Wall Street continues to look bullish.

Bare in mind that the USD has dramatically decreased of late however!

Cheers
Reece

 

[reece55]

So I can safely assume you are a holder of ZFX and MRE then?

Chops
Bare in mind that both these stocks have low P/E's for a reason - cyclical high commodity prices combined with short mine life (not sure about MRE however, but certainly ZFX). They have a huge profit margin risk at the moment and hence the reason for a cautious p/e. This doesn't mean I think they are not good investments (although, this does not constitute investment advice LOL). I remember at $19.00 a share, people were laughing at me when I said ZFX would correct to the $15.00 barrier - hmmmm.........

Maybe I am banging my head here when I tell ppl that valuation by P/E alone is a silly method to evaluate companies. For instance, Google in the US has a forward P/E of about 45. Normally, you would say that is expensive. But when they pull out a 69% increase in QTY profit and you consider their basic monopoly position on the web, the rating is justified.

Valuations should be based on future cash flow adjusted for risk free interest rate and a risk premium. This is obviously pretty tricky to dtermine. If you are going to use a P/E method, evaluate on a sector by sector basis, so you have an apples with apples perspective..........

 

[chops_a_must]

I was just making a point reece...

 

[>Apocalypto<]

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.

Ha Ha,

Before you are so quick to judge that 8000 call, just remember it hit 6000 in under 12 months!

It is a dangerous business to be telling the market where it should go!

 

[>Apocalypto<]

Value of course lies in the eye of the beholder...

Very well said,

As I have posted before, value is only determined by what the market willing pay for it.

Speculation on value is very dangerous.