Australian (ASX) Stock Market Forum

The official "ASX is tanking!" panic thread

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InsvestoBoy said:
There is an equal weight ETF on the ASX called MVW.
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So in a 'balanced' system where everything should kinda sorta balance out, what cause the falls seen recently in MVW?

Is this strategy placing a 'bet' on historical correlations continuing? These correlations have lasted a lot longer than the recent bull run but still, they are just historical correlations
 
fiftyeight said:
So in a 'balanced' system where everything should kinda sorta balance out, what cause the falls seen recently in MVW?

Is this strategy placing a 'bet' on historical correlations continuing? These correlations have lasted a lot longer than the recent bull run but still, they are just historical correlations
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Not sure what you are asking exactly.

The ETF in question holds approximately the same stocks as MSCI Australia Index but it equal weights them rather than market capitalisation weights them.

What historical correlations are you referring to?
 
fiftyeight said:
Yeah that would not amke any sense, I thought you were saying MVW run an equal weight strategy similar to yours
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They kind of do! It's just equal weight stocks instead of asset classes.

The mathematical rationale is the same, I'm just less exposed to equity market risk than they are.
 
Hmmmmm, if it is purely a vol harvest using some mathematical model, why bother diversify, just go to the asset classes with the most vol?

The correlations I was asking about are the historical correlations of cash/bonds/equities/gold.
 
fiftyeight said:
Hmmmmm, if it is purely a vol harvest using some mathematical model, why bother diversify, just go to the asset classes with the most vol?
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To be fair to the original Permanent Portfolio, you'll note the recommendations are: the longest duration gov bonds you can find (most volatile), growth stocks (most volatile) and gold (which if you count as a commodity is the least volatile, but if you count as a currency, one of the more volatile compared with G10 pairs ;) ).

The correlations I was asking about are the historical correlations of cash/bonds/equities/gold.
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Correlations roll over time, and some pairs of asset classes in the 4 might become correlated for a while, but there are underlying macroeconomic reasons why the correlations on those 4 will never all be simultaneously high.
 
Summary of today.
Market sells off dramatically on China currency manipulation.
Market reverses panic and traders dive back in as China sets rate above 7 again.
People realise that the Yuan is set against a basket of currencies most of which the US is very much stronger against.
Meaning the Yuan has actually been gaining against most currencies.
There was not need to panic or believe Trumps ill timed labeling.
The US is not the only currency in the world nor is it China's largest trading partner, well, at least whilst Britain remains in the Euro anyway.
 
Donald sends a thousand tweets Xi wispers to his central bank - world markets react strongly. Always be wary of the quiet opponent in a fight.
 
Not only did China blatantly not stop Fentanyl exports to kill Americans and fail to even start investing in rural equipment which were the two things Trump mentioned as reasons for implementing the last tranche of his initial tariff threat, but they now have pulled out of purchasing from US farmers altogether!
China's international exports over all have actually INCREASED, since the US tariffs which is making a mockery of Trumps tariffs.
It's a massive slap in the face and reeks of that quiet confidence which is somewhat terrifying! Maybe they already are in control of the world!

Labeling China a currency manipulator is inaccurate with respect to it's behavior over the last few years with currency, but it does allow for the Commerce Department previously proposed threats about undervalued currencies to be an illegal trade subsidy. This US Treasury's designation as such opens the floodgates to countervailing duties on Chinese goods.
 
notting said:
Not only did China blatantly not stop Fentanyl exports to kill Americans and fail to even start investing in rural equipment which were the two things Trump mentioned as reasons for implementing the last tranche of his initial tariff threat, but they now have pulled out of purchasing from US farmers altogether!
China's international exports over all have actually INCREASED, since the US tariffs which is making a mockery of Trumps tariffs.
It's a massive slap in the face and reeks of that quiet confidence which is somewhat terrifying! Maybe they already are in control of the world!

Labeling China a currency manipulator is inaccurate with respect to it's behavior over the last few years with currency, but it does allow for the Commerce Department previously proposed threats about undervalued currencies to be an illegal trade subsidy. This US Treasury's designation as such opens the floodgates to countervailing duties on Chinese goods.
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I'm not going to stick up for China, but when I came across a clueless fool like a Trump as an opposing prop forward when I played rugby as a kid I would revel in the opportunity, not with the objective of breaking that opponent immediately, but slowly throughout the entire game. It kept it entertaining. It's why I always asked my captain to take the scrum.
 
I respect Trump for being the only free world leader to call out China and stand up to them.
This is the defining issue of our times. Every thing else pales into insignificance.
The Europeans are utter gutless hypocrites for selling out human rights for trade.
China's has long history of compromising trading partners and destroying them in exactly this way.
If the world does not stand up to China now and just keeps letting them bribe us all into compromises we will all be living in a horror beyond our wildest fears.
We should be prepared to take on a deep depression to defeat this unprecedented evil.

PEOPLE NEED TO WAKE UP AND SCREAM IT FROM THEIR ROOFTOPS

 
notting said:
I respect Trump for being the only free world leader to call out China and stand up to them.
This is the defining issue of our times. Every thing else pales into insignificance.
The Europeans are utter gutless hypocrites for selling out human rights for trade.
China's has long history of compromising trading partners and destroying them in exactly this way.
If the world does not stand up to China now and just keeps letting them bribe us all into compromises we will all be living in a horror beyond our wildest fears.
We should be prepared to take on a deep depression to defeat this unprecedented evil.

PEOPLE NEED TO WAKE UP AND SCREAM IT FROM THEIR ROOFTOPS
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Probably a bit stronger wording than I would use, but I agree with the general thrust of your sentiment.
But is China to blame, or are we to blame, for always chasing the cheapest labour cost?
We send all our manufacturing there, give them our intellectual knowledge to build things for us, then complain when they start copying.
The only problem is, they no longer need us, but we want them to give us a fair go.
Why should they? How can we make them?
Other than what Trump is doing, yet he is being shouted down by big business and the press. So the continual slide will resume, when Trump goes.
 
There is no escaping the fact that as of right now, until such time as it is broken, what we have is a double top in the XJO and a rather massive one at that with the peaks almost 12 years apart and a low in between that's 55% down from the peak.

Whether or not that turns out to have any significance is harder to guess. Eg someone could have said the same thing comparing 1994 with 1987 but the market then went up more than 200%, not including dividends, over the next 13 years.:2twocents
 
The Dictatorships Bank of China inc has set the daily reference rate for the USD to Chinese Yuan (CNY) at 6.9996
This is called getting the market used to the 6 handle without trying to look like a currency manipulator. How could anything be more manipulative?
Technical however the label currency manipulators meaning in the rules of the financial world is a little different to what it really is.
 
notting said:
The Dictatorships Bank of China inc has set the daily reference rate for the USD to Chinese Yuan (CNY) at 6.9996
This is called getting the market used to the 6 handle without trying to look like a currency manipulator. How could anything be more manipulative?
Technical however the label currency manipulators meaning in the rules of the financial world is a little different to what it really is.
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The U.S have been trying to get China to float its currency for years, Trump is the only one of the presidents who has actually done something, whether it causes a disaster remains to be seen.
But a disaster at this stage is much better IMO, than a slow death by a thousand cuts, which was going to happen the way China was growing.
They have had free reign, to grow their economy and manufacturing base over the past couple of decades, but to let them just keep going, untill everyone else becomes a third world country isn't a good plan.
Just my opinion.
 
sptrawler said:
The U.S have been trying to get China to float its currency for years, Trump is the only one of the presidents who has actually done something, whether it causes a disaster remains to be seen.
But a disaster at this stage is much better IMO, than a slow death by a thousand cuts, which was going to happen the way China was growing.
They have had free reign, to grow their economy and manufacturing base over the past couple of decades, but to let them just keep going, until everyone else becomes a third world country isn't a good plan.
Just my opinion.
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A very sound opinion at that.
What is even more frightening is that China was not signitary to any arms race agreements either.
They have built up massive amounts of medium range missiles, Submarines even coast guard boats which are actually war ships.
It is huge!
China is fully at war with the free world on all fronts, shots have not been fired but it is not out of the question.
 
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