The Bears Den (Bears only!)

[wayneL]

Wayne, I think you have a point.
Did you see this article in today's Age?

Endless spending on foreign luxuries must stop
By Ernest Rodeck
January 19, 2006

PRIME Minister John Howard says Australia can't go broke because our governments owe little money. If persons or businesses owe the money, that is their affair! Is he right?

In theory, yes. In practice, no........

Could this tie in with the article I posted earlier?

One thing is for sure, the Gu'mint treats us like mushrooms.

 

[tech/a]

I cant understand this "Just you wait you'll see" attitude of people who are just willing those who trade in the direction of the market to crash and burn!!.

There are a few here who have----and still do---stick with the fantastic positive action of the market!

Others sit and watch slinging as much Krap as they can muster as soon as the market takes a breather. Willing these opportunists to financial disaster.

Get a grip you people go and make a buck and when the market takes a belting do something about it!!

You're the sort of people who see opportunities pass you by and you get all bitter and twisted because other people are doing what you wished you had the guts to do!

And if you think this is directed at anyone in particular then.
If the cap fits its YOURS.

Wayne the answers simple dont act like a mushroom,find your own paddock and insulate yourself.
Contrary to popular belief people can and some do control their own destiny despite governments.

Michael Of course they have won the war.
There were Bears 20 yrs ago and 10 yrs ago and 5 yrs ago and now.

 

[wayneL]

I was wondering if anybody has looked at buying out of the money index puts to hedge a portfolio against the worst rather than trying to time the market?

MIT

Mit,

Cheap insurance, but won't insulate you much as gamma is very low until you get close to the money. Even then delta only gets to -0.5 when at the money so your put has to go well into the money to be an effective hedge.A better hedge is non-correlated or reverse correlated assets (e.g. gold), or sectors.

Meanwhile time decay happens.

Another alternative is more complicated spread strategies with index options, but you need a view and time frame with options, not just a sitting hedge.

 

[Smurf1976]

This isn't a personal comment directed to anyone here, but the thing I've noticed about bulls is that they're highly selective. In short, a bull market is good provided that they profit from it. So called "bulls" are constantly complaining when even the slightest bullish move occurs in some markets.

For example, interest rates and oil. The mere hint of a bullish move, or in real estate terms "improvement", in interest rates or oil prices and the bulls and the media start screaming. Let's hear some bulls cheering whenever interest rates rise or oil goes up. It's just another market after all and you trade with the market, so no cause for complaint. Just imagine if petrol matched the rampant inflation in house prices. Fantastic news for all sorts of things, but not the bulls who in reality only want a bull market in the assets they happen to own. Somewhat biased IMO.

 

[wayneL]

Wayne the answers simple dont act like a mushroom,find your own paddock and insulate yourself.
Contrary to popular belief people can and some do control their own destiny despite governments.

Well thats the whole point of this thread.

Tech,

You grossly misunderstand Bear logic. We don't necessarily miss opportunities. We are just more concious of true risk...doesn't mean we don't take risk to the upside, we most certainly do. Bears are long oil, gold and suchlike. Bears are actually commodity Bulls, the truth be known.

Bear thought is deeply distrustful of governments and seeks to look behind the spin and propaganda. They may try to treat us like mushrooms, but bears invariably have alternative intellegence sources outside of the mainstream media.

You castigate the bears for taunting bulls...I detect a certain irony in that. The bulls have gatecrashed our party even though there's a sign on the door that says Bears Only, specifically to either taunt or proselytise.

But that's OK it helps to develop the Bear case.

And just to recap some of the risks on the horizon:

Peak oil
Global warming
Global cooling (depends which group of religiosly fanatical zealots you want to believe)
Bird Flu
War (over oil and WATER)
Demographics
and various other scenarios.

Lets not forget, some of the foremost businessmen crashed and burned in the '30's. The bears survived that because they were aware of risk.

 

[michael_selway]

Michael Of course they have won the war.
There were Bears 20 yrs ago and 10 yrs ago and 5 yrs ago and now.

hehe yeah, i mean Bulls have won the war most of the time, but the notable All Ords wars won by Bears were in 1987 & 2002 (sars period). Along the way there a few battles won by Bears (corrections) eg Mar05 and Oct05, Sep11 etc

On the Nasdaq, seems like the bulls havent recovered from the war won by the Bears since 2000!

On the Nikkei, seems like the bulls havent recovered from the war won by the Bears since 1990! Everytime the Bulls come to fight back their right, it seems like they get pushed lower by the Bears....

 

[wayneL]

Found on a UK forum:

A post by a Housing Bear...I thought it pertinent, but also hilarious :

Was in the bank the other day, we just got married and did all the name changing lark.

Anyway the topic of houses turned up, and this financial advisor said " you have to get on the ladder"

now its not like me to be polite but I kicked of at the council last year and the misses got all embarassed about it so I kept my cool this time.

Anyway this trout was going on about buying a house and i just said ( and its what I say to everyone who goes on about it these days)
Can you afford to buy your house today at its present price?

She said no.

So how the f**k do you expect us too then d!ckhead?

Sound financial advise?

Is everyone in this country stupid.

Also found out a mate has dropped his house about 20k (160 to 140) and still no interest will see him tonight Ill add full story tomorow.

 

[TheAnalyst]

Nice post Mich

hehe yeah, i mean Bulls have won the war most of the time, but the notable All Ords wars won by Bears were in 1987 & 2002 (sars period). Along the way there a few battles won by Bears (corrections) eg Mar05 and Oct05, Sep11 etc

On the Nasdaq, seems like the bulls havent recovered from the war won by the Bears since 2000!

On the Nikkei, seems like the bulls havent recovered from the war won by the Bears since 1990! Everytime the Bulls come to fight back their right, it seems like they get pushed lower by the Bears....

 

[tech/a]

My apologies I was under the impression the discussion was pertaining to our market.

That being the case thanks Michael for showing some charts of bear/ish markets.
I'm certain those trading them would be using the appropriate trading stratagies for the market they are in.

When the time arises and the ALL ORDS shows clear bearish characteristics then it should be traded that way.

But to start screaming bear after a singular event????

 

[Smurf1976]

Why is it that long term stock charts always start around 1980? And why not price the market in "real terms" the way that economists compare prices over time?

Why not a proper 40 year real terms chart? Oops! I know, it doesn't help the bull case if we look at both SECULAR BEAR and SECULAR BULL markets. Best to look at the bull portion only since that paints a better picture. It's not just stocks of course, real estate people do exactly the same and also conveniently ignore the effects of inflation and the cost of renovations to the property.

Using the same logic of carefully selected periods for statistics, I conclude that Hobart is in fact warmer than Brisbane. Over the next 3 days the average maximum temperature forecast for Hobart is 30 degrees with the warmest being 36. For Brisbane it's an average of just 27.6 with the highest being only 28. I thus conclude that Hobart is warmer than Brisbane. Absolute nonsense of course since everyone knows that Brisbane is warmer than Hobart, but it shows what you can do with statistics which are themselves accurate if you select a timeframe and situation which supports your case. Hence why the stock bulls love charts starting around 1980, gold bugs love charts featuring the 1970's.

Only a truly long term chart covering multiple major cycles presents an accurate picture which, in the case of anything financial, needs to be adjusted to reflect the declining purchasing power of the currency over that time. Given that a complete valuation cycle lasts somewhere around 35 years (based on US market history, not sure about the ASX) it's misleading to show any chart which covers less than that time. Just like it's misleading to base weather averages on the forecast for the next three days whilst ignoring well over a century of proper records.

 

[wayneL]

Just to clarify, this thread is not about a one day fall on the ASX, it is about the world economy looking forward. Not tommorrow, next week or next month. It's about the next decade.

OK!!!!!

++++++++++++++++++++++++++++++++++++++++++++++

http://www.usatoday.com/money/perfi/housing/2006-01-17-real-estate-usat_x.htm

43% of first-time home buyers put no money down
By Noelle Knox, USA TODAY
WASHINGTON ”” As housing prices soared last year, an eye-popping 43% of first-time home buyers purchased their homes with no-money-down loans, according to a study released Tuesday by the National Association of Realtors.

The trend is potentially ominous. The real estate market is cooling in some areas, and rates on adjustable-rate loans are creeping up. As a result, some no-money-down buyers could owe more than their homes are worth.

The median first-time home buyer scraped together a down payment of only 2% on a $150,000 home in 2005, the NAR found.

Already, home prices in many areas are declining, and the "For Sale" signs are hanging in front yards longer. There's now at least a 50% risk that prices will decline within two years in 11 major metro areas, including San Diego; Boston; Long Island, N.Y.; Los Angeles; and San Francisco, according to PMI Mortgage Insurance's latest U.S. Market Risk Index.

"In a number of areas, particularly on the coasts, they have a high risk of price declines in the next two years," says Mark Milner, chief risk officer of PMI.

 

[Smurf1976]

When the time arises and the ALL ORDS shows clear bearish characteristics then it should be traded that way.

But to start screaming bear after a singular event????

Agreed there. The problem is that many bulls seem to think that bear markets are something unlikely rather than the normal event that they are. It's wise to consider all possibilities and prepare accordingly IMO.

 

[wayneL]

http://www.financialsense.com/fsu/editorials/kirby/2006/0116.html

THE LOOMING FIAT CURRENCY TRAIN WRECK
by Rob Kirby
January 16, 2006


While the bulk of the Western World’s main stream media continues to make pronouncements about the price of both crude oil and gold continuing to rise as a result of Iran’s nuclear aspirations – they have completely and utterly ignored the stark, dark reality of the currency train wreck [that is empirically only beginning to unfold] right in front of our eyes.

Iran’s Potential Influence

So Just How Much Oil Does Iran Produce Per Day Anyway? Well.......

 

[tech/a]

Smurf.

Well 20 yrs is as far back as my charts go.Had I had 100 yr charts the I would have used them.

Wayne.
I bought every property other than my Principal Place of residence NO MONEY DOWN.
Started in 97 and finished buying (For investment) in 2001.
I was geared to the Max.
Today the loans still total $1,147,000 and the property both comercial and domestic have a current value of $2,876,000,I know because I've just had them all valued for another pet project.
They are owned by myself/wife or trusts.
I sold one in April and plan to sell another 2 in the next financial year.
Their sale and their re investment will drop the liability by a further $400K.

There is nothing wrong with the principal infact making money from asset is very lucrative.
Its about timing and those who are doing this in a flat and possibly falling market are asking for trouble.

There is not enough quality education in these methodolgies.As few understand them---if they did they would be exploiting them (The opportunities and methods).
Now is the time for patience,in the 90s it was a time for recognition of opportunity and acting upon that.

 

[wayneL]

Tech,

That article was about FIRST HOME BUYERS, not sophisticated investors such as yourself.

They don't put money down BECAUSE THEY DON'T HAVE ANY! Plus the payments are usually a stretch.

A whole 'nuther bowl of wax to what your talking about.

Cheers

 

[wayneL]

As I trade at night I hang out in a live trading room on MIRC where there are about 130 pro/semi pro Index futures traders.

It was only the middle of last week where the DOW cracked 11,000 points and there was general euphoria all round and Universal bullishness. I was the only bearish voice (of course).

Well here we are only a week later and ~300 points lower....down 160 of those today (as of the moment) Oil is up, Gold is hitting new highs.... and the sentiment in the room is very gloomy indeed. Well not that gloomy because they're all now short But goomy on the economy.

I stress that in the medium term, this may mean nothing, we could be back up to 11,000 or more in a month or 2. But in this environment of acute risk, people should be sensitive to potential turning points in sentiment and be prepared to hedge their exposure.

Also this is good news for certain sectors, such as oil and gold. Take a look at sugar too it's going awesome.

Cheers

<edit> The chart is Dow futures. Don't know why the top is blanked out.

 

[wayneL]

-207 at the close

GOOG down $75 from its high last week

Bears Partying

 

[mit]

I have been in various forums since 2003 and I think that Tech is refering to the people on these forums who have said that the market has gone too far/the economy unsustainable and they are out of the market and are short. These guys would have missed a lot of profit over the last two and a half years.

Can you call yourself a bear if you trade with the trend and are long but think the economy stinks? The market is driven by emotions and government action the economy doesn't seem to have much to do with it unless the market starts worrying about the economy.

I haven't been able to get XAO data prior to 1980. I did manage to get DOW from 1929 though (from Yahoo). Looking at the data actual down trends are relatively short (12-18 months or so). What tends to happen is that the market goes up for a long time, go down for a short time or is flat. Interestingly as pointed above the DOW is still in a Bear period since 2002.

After last nights action, Monday is going to be interesting (NOT) on the ASX

MIT

 

[wayneL]

There has been no short covering between the close of the stock market and the close of futures at 4:15PM EST...Futures closing @ -216

Again, be aware of sentiment changes, protect those profits.

 

[wayneL]

Can you call yourself a bear if you trade with the trend and are long but think the economy stinks?

Very interesting question Mit.

I say yes. Trading with the trend is pragmatism. Preparing for the coming perfect storm is also pragmatism.

Going short against the tide (without very tight stops) is pure faith and one can do it way too soon. This produces Martyrs.

Mercenaries survive longer than Martyrs. To be a surviving bear requires mercenary attitude, and requires running with the bulls when expedient.

Also as pointed out by Smurf. Bears are Bulls, only in different sectors/instruments. eg oil, gold, heritage seeds etc