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Hi Dr Doom

yes interesting to watch atm - and I generally agree with you. :)

I see the US bumped rates up another 25 bps o/night with the 'forward language' as they put it :) suggesting 1 or 2 more rises before adopting a wait and see mode.

I think US rates would have to either go up significantly more and/or oil would have to go $75-80+ before a big enough dent was made in US consumer confidence (the main driver of the US economy) to initaite a recession.

but who knows....something out of left field could spring up at any time....nothing would surprise me nowadays. :rolleyes:

so I'm starting to dig out and dust off my umbrella and drize-a-bone in case the cow manure eventually hits that proverbial fan :D

cheers

bullmarket :)
 
Back on to the local scene, I am getting very nervous about the XJO ASX200. Looks like getting to the irrational stage setting itself up for a correction. Lookiong at the charts, the ratio of bull runs to retracements is getting smaller ie shorter sharper advances followed by short sharp retracements.
Going by this very rough guide, a market correction is due withhin a week, give or take a couple of days.
Also, in real terms the US Dow Jones would have to be around the 14000 level to be anywhere near new bull market highs. In real terms it hasn't even kept up with inflation. If it couldn't break out of the trading band when interest rates were practically zero, what chance of the Dow making any meaningfull gains with interst rates on the rise (to support the dollar)?.
 
Given what's at stake, I think the US interest rates will be raised to whatever level is required to maintain reserve currency status. If that sinks the economy then so be it.

My reasoning is simply that the US stands to lose far more from a Dollar collapse than it does from simply having a recession / depression. Losing the next election versus losing the US dominance of the world.

As for stocks, the US market reached what by any definition was a top in 2000 and has not yet reached the valuation levels normally associated with bottoms. Also Australian real estate underwent a rather visible blow off in 2003 and valuations are still nowhere near those seen at market bottoms. Meanwhile the world trend in interest rates is up, the gold price is rising and growth seems to be slowing a little. Think about that...
 
Thank you ;)
Couldn't resist taking out some short CFD's today, with the frenzy in full swing eg Rinker which by the way has a lot to loose in a US housing shake-out, downturn, CRASH.
 
I suspect you are right about Rinker.

I am bearish long term but think this boom will go a while longer yet.
These things always seem to go longer than expected. Prices aren't silly yet.
The world is more resiliant than ever. It is the US that worries me a little but while China and India boom they will hold out.

My other point is that if the US domestic economy crashes a bit, it will really only hurt the poor and part of the middle class. The US is not run for them anyway.
 
Knobby22 said:
I suspect you are right about Rinker.

I am bearish long term but think this boom will go a while longer yet.
These things always seem to go longer than expected. Prices aren't silly yet.
The world is more resiliant than ever. It is the US that worries me a little but while China and India boom they will hold out.

My other point is that if the US domestic economy crashes a bit, it will really only hurt the poor and part of the middle class. The US is not run for them anyway.
Click to expand...

They updated forecasts a bit only

Hm current P/E is 20 now!

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 62.8 100.3 126.4 140.4
DPS 21.0 35.0 40.2 44.6

Thx

MS
 
Hi Dr Doom

Dr Doom said:
Back on to the local scene, I am getting very nervous about the XJO ASX200. Looks like getting to the irrational stage setting itself up for a correction. Lookiong at the charts, the ratio of bull runs to retracements is getting smaller ie shorter sharper advances followed by short sharp retracements.
Going by this very rough guide, a market correction is due withhin a week, give or take a couple of days.
Also, in real terms the US Dow Jones would have to be around the 14000 level to be anywhere near new bull market highs. In real terms it hasn't even kept up with inflation. If it couldn't break out of the trading band when interest rates were practically zero, what chance of the Dow making any meaningfull gains with interst rates on the rise (to support the dollar)?.
Click to expand...

I'm also watching XJO and I agree the weekly chart at least shows there could be some profit taking soon but I wouldn't say I am nervous about it.

Below is my updated average market PER's spreadsheet which shows the weighted (by market cap) and unweighted average PER for the ASX indices down to ASX300. The weighted average PER for XJO is 17.1 atm and the unweighted is 19.8 using forcast 2006 EPS numbers

Personally I tend to put more emphasis on the weighted average so based solely on PER's I see our market atm as fair value at best with a bias to looking a little expensive overall. I am not expecting a 1987 style crash at all but a drift back to the ~4800 support level from earlier this year is definitely on the cards imo if things go pear shaped in the US and/or here.

Personally, our market has had a sensational run since March 2003 so I am happy to just let things slide atm but an eventual retrace to below 4800 would be a very bearish medium to long term signal for me.

cheers

bullmarket :)
 

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http://www.smh.com.au/news/business/buffett-takes-19b-bet-on-shares/2006/04/03/1143916464286.html

INVESTMENT guru Warren Buffett, struggling to find acquisitions big enough to boost Berkshire Hathaway's returns, is making a $US14 billion ($19.6 billion) bet global stockmarkets won't go into free fall.

Berkshire has sold a form of insurance to buyers wanting protection from a drop in "four major equity indices" over the next 15 to 20 years, according to a US Securities and Exchange Commission filing.

Instead of buying the individual shares, Mr Buffett is wagering that the indices - three of which are outside the US - won't tumble and force Berkshire to pay a claim.

The "long-duration equity index put contracts" are among the largest transactions Berkshire has disclosed and represent the kind of risk that Mr Buffett, the company's chief executive officer, is turning to as undervalued companies get harder to find.

Mr Buffett calls such investments, including stakes in oil derivatives, silver and zero-coupon bonds, "unconventional".

"They figured out a very interesting strategy that basically nobody else can do because of their size and long-duration capital," said David Winters of Wintergreen Advisers in Mountain Lakes, New Jersey. "Buffett and [sidekick Charlie] Munger have made the ultimate contrarian play here. They take a premium in today and they're willing to buy securities if markets really plunge," he said.

Mr Buffett, 75, has become the world's second-richest person largely by buying stocks he considered undervalued, such as Coca-Cola Co, Gillette, Wells Fargo and American Express, and holding them for years.

The stock-index contracts, derivatives that function like put options, increase Berkshire's risks from market losses. A 30 per cent decline in each of the indices last year would have led to a $US900 million pretax loss for the company, according to the March 7 SEC filing. Berkshire's "maximum exposure" was about $US14 billion at the end of last year, the filing said.

Berkshire didn't disclose which stock indices are covered under the contracts, how they're structured, who bought them or how much Berkshire was paid.

For Berkshire to lose the $US14 billion that the company says is at risk, all four indices covered by the puts would have to fall to zero, according to Gary Gastineau, managing director of ETF Consultants, a research firm in Summit, New Jersey. That's unlikely, given historical trends.

The S&P 500, the benchmark index for US stocks, has generated a positive return over any 25-year period since 1925, assuming dividends were included, according to a 2002 study by Ned Davis Research in Venice, Florida.

Bloomberg

Hm hes a Bull?

thx

MS
 
from my quick read of that is it implying that if stock markets crash he has purchased the right to buy certain stocks from people????

It may seem like madness but how many people have I heard say , if only the market would crash, I'd mortage the house.
 
I think I've found the world's biggest bear! he's calling for an imminent global crisis and depression :(

http://www.financialsense.com/fsu/editorials/laird/2006/0516.html


The world is about to change radically... in every way, and you and your life are going to be directly affected, and soon too.
Click to expand...

The very recent price swings of gold are being driven by fear of a US dollar collapse that will kill the USD SYSTEM. This, coming at the same time that there is a world energy war brewing in the Middle East.
Click to expand...

we are looking at a world war coming and also a great depression due to the collapse of the USD system. Your life is about to change radically.
Click to expand...
 
Yea, there are always uberbears and fearful shareholders willing to buy their books. They mainly talk rubbish however.

I am getting bearish but not for those silly reasons.
 
Well that wasn't hard to pick was it?.... the correction I mean.
Still on track with the master plan - short non-gold stocks in market strength, bail out at the bottom, then go long GOLD for the ride home. A trade on the side, short $US against Swiss Franc.
Talking about market strength, I've noticed that all the 'up' day's in the XJO etc have been very half-hearted, very indecisive.
Lots of money to be made though, lots of volatility for CFD trades....
 
This is for you Wayne, you are such a notorios bear that the first thing I thought of when I saw the cover was you- mainly due to all those funny cartoons and quips you make, patience my friend, your market will come (unless it has found us already)...
http://www.economist.com/opinion/displaystory.cfm?story_id=6975848

That bear does look soft and cuddly though, I feel like petting it but that might have my head taken off with one paw sweep, beware the bear!
 

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OOOhhhh! I like it!

Straight into "my pictures" with that one. :D
 
Another of my more recent aquisitions :D
 

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Imo, US$ was & is already in trouble more than we thought.

Russia is planning for Roubel based bourse to trade its metals & oil. Iran is planning to have multi-currency SE to trade its oil, China & its Yuan & Middleeast markets are falling like crazy!! who's backing up the US$ again?? who said gold was bearish?? what else again is out there?? How long will it be before the Euro takes over the US$ role?

I think the DOW had/has many more issues to solve other than inflation rates. America stopped being the centre of the universe when they put their interest rates to nothing! They created a monster that is eating itself now as there's nothing esle to eat!

what will all these Yens that are all over the world & put in every single country's SE be doing back in Japan?!!!

very interesting!

cheers,
 

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