Australian (ASX) Stock Market Forum

The official "ASX is tanking!" panic thread

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Value Collector said:
The perma-Bulls have been right for 120 years, I don't really see that changing, they will buy the dips and keep moving forward.
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Depends how long they are willing to wait......

I don't see this market back at 7500 so early more like testing 6450, but in the end we need to trade the market in front of us whatever it may do not what we expect or hope for.
 
Telamelo said:
Worth keeping an eye on pre-market US future's currently down -331 points (as to continuation of selling momentum from last Friday night?)
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Friday’s sell-off put the S&P500 back near 4000, so it’ll be interesting to see if the broader-market index finds support at this major psychological level, or breaks lower.

All trading carries risk, but with US yields opening significantly higher today, continued repricing for another 75bps hike from the Fed next month could increase the selling pressure on equities.
 
What level would one sell an October put credit spread on ASX200 ?

Is 5900/5800 ‘safe’, or could one come up to 6,200/6,000 ?

Gunnerguy
 
waterbottle said:
I looked at some historical data over the weekend. ASX tends to be less volatile than the NASDAQ, and it doesn't replicate the same large movements that US markets experience. Having said that, big moves exist, they're uncommon, and aren't always the beginning of a new trend....
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  • It's a different index composition (megacap growth vs largecap value)
  • It's a different currency
  • It's a different set of market participants trading the volume at different times of the 24 hour futures trading cycle.
  • Yes, SPI is less volatile, but the RV delta is not as much as your data implies due to the above.
 
Value Collector said:
You can trade the market if you want, but you don’t need to, you can just buy and hold it, and collect the dividends.
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We each have different invetment objectives. Yeah, you can buy and collect the divvy but what if you catch a falling knife that takes 25 years to recover? For me the pattern of trend in this market is clear, we are headed lower and much lower over the long term. I agree with Wayne, be prepared to ultimately test the COVID crash low possibly even lower in the longer term. Just my opinion as ridiculous as it may sound...
My thoughts are those coming up to retirement need to take action now. Holders of real estate investment who bought for capital gain in the last 10 years will be in pain also....

As for inflation getting back under control, don't bet on it. Interest Rates which usually trend the same way are in a new bull that will last a very long time.
 
gartley said:
We each have different invetment objectives. Yeah, you can buy and collect the divvy but what if you catch a falling knife that takes 25 years to recover? For me the pattern of trend in this market is clear, we are headed lower and much lower over the long term. I agree with Wayne, be prepared to ultimately test the COVID crash low possibly even lower in the longer term. Just my opinion as ridiculous as it may sound...
My thoughts are those coming up to retirement need to take action now. Holders of real estate investment who bought for capital gain in the last 10 years will be in pain also....

As for inflation getting back under control, don't bet on it. Interest Rates which usually trend the same way are in a new bull that will last a very long time.
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My strategy is simply to buy quality and hold through the market cycles, if the market drops I buy more, if the market rises, I buy more.

On average both traders and buy and holders get the same return, but traders share a larger portion of that return with their brokers.

Yes some traders (just like some investors) will do better than average, but only because so other trader did worse than average.

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We could see a big drop like the covid drop, but I believe it will snap back just as fast, and it might also not eventuate at all.

Basically the 100’s of companies listed on stock exchanges will earn what ever profit they earn, have growth of whatever growth they have, and pay what ever dividends they pay and buy and hold types will collect all that benefit.

Traders on average will collect the exact same growth and dividends as the long term investors on average, but will have to pay more fees and taxes along the way, meaning on average their return is lower.
 
Value Collector said:
Traders on average will collect the exact same growth and dividends as the long term investors on average, but will have to pay more fees and taxes along the way, meaning on average their return is lower.
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If you are not a trader how would you know? Every trader is different, I would say most traders are net losers. Other traders however are making on average 5% a month consistently and earning a living from the markets whilst most investors buying a holding as a super fund will average 8% over a 20 year period.
Whatever the case, most market participants I would say are net losers and it can't be any other way.
 
gartley said:
If you are not a trader how would you know? Every trader is different, I would say most traders are net losers. Other traders however are making on average 5% a month consistently and earning a living from the markets whilst most investors buying a holding as a super fund will average 8% over a 20 year period.
Whatever the case, most market participants I would say are net losers and it can't be any other way.
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If you re-read my original posts they actually answer your question.

The market generates a positive return over time, through dividends and growth.

Let’s call this return the “market average return”, buy and hold people are guaranteed to get the “market average return” over time, minus the minor fees they pay on entry and exit.

The Traders as a group also receive this exact same “Market average return”, except they redistribute it to each other via trading, so some end up with more, while others end up with less, but the overall return of the group of trader is the same as the buy and holders minus their trading fees.

Of course traders pay a lot for in trading costs, so their returns will be less over all as a group than the investor group.
 
greggles said:
Going to be an ugly close in a few minutes.
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Well, we were down compared to fridays close, but we have only dropped back to what we were last Wednesday. Sharemarkets fluctuate I wouldn’t worry about it to much.

We will be lower than todays level in the future, and we will be higher than todays level in the future.
 
Value Collector said:
The market generates a positive return over time, through dividends and growth.
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Through dividends yes, but this is dynamic and based on business conditions of that company as such not always guaranteed or if so sometimes at a reduced level.
Growth depends on timing and when you bought. You could buy a company and you go into drawdown for years maybe a huge drawdown like 50% or more of your initial investment. If you are happy to ride this out then fine. I don't like it, as it ties up my capital and god knows how long you have to wait to recoup it, let alone a company going belly up. For me it's too much risk, but that's me. Drawdown s.cks...

Account preservation and survival is paramount (don't want to risk any more than 1% of my account on any trade), as long it's intact I will live to trade another day as the markets never stop and opportunities are plentiful on a weekly basis.
For me develop a system that has proven to be robust over a range of market conditions, make sure that system gives good clean signals to ensure your best execution and make sure those systems are based on volatility and momentum conditions. Nothing worse than getting in and trade does nothing for a long time.
In so far as commisions eating into you, that depends on the tax implications of how you set your trading business up.
 
gartley said:
Through dividends yes, but this is dynamic and based on business conditions of that company as such not always guaranteed or if so sometimes at a reduced level.
Growth depends on timing and when you bought. You could buy a company and you go into drawdown for years maybe a huge drawdown like 50% or more of your initial investment. If you are happy to ride this out then fine. I don't like it, as it ties up my capital and god knows how long you have to wait to recoup it, let alone a company going belly up. For me it's too much risk, but that's me. Drawdown s.cks...

Account preservation and survival is paramount (don't want to risk any more than 1% of my account on any trade), as long it's intact I will live to trade another day as the markets never stop and opportunities are plentiful on a weekly basis.
For me develop a system that has proven to be robust over a range of market conditions, make sure that system gives good clean signals to ensure your best execution and make sure those systems are based on volatility and momentum conditions. Nothing worse than getting in and trade does nothing for a long time.
In so far as commisions eating into you, that depends on the tax implications of how you set your trading business up.
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You are not really understanding what I am saying.

Let me try one more time with the example used by Warren Buffett to explain it, and you will either get it or you won’t, (Buffett actually won a $1 Million bet based on this theory that a market index would beat the average return of 200 hedge funds over a 10 year period.)

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Here is the example Buffet used to explain the theory.

Imagine we split the entire stock market in half, we give 50% to a group of long term holders that just hold their half and collect dividends and take what ever capital gain or loss happens for the next 10 years.

The second half of the stock market is given to a group of Traders, who rather than holding their 50% share of the market immediately begin trading it amongst them selves over the next 10 years.

After that 10 year period both halves of the stock market would have produced the same gross return and both the holding group and the trading group would have been exposed to the same amount of value creation (or destruction).

The holding group would have all received their market average return, but the trading groups total average over all return would be less due to trading costs they incurred that diverted cashflow to their external helpers/brokers.

Now as you pointed out some of the members of the trading group will out perform the holders because they were able to take a larger portion of the return from their 50% of the stock market, but this extra return one trader gets is the at the expense of another trader in his group, so the group as a whole has less than the holding group even though some Individual traders beat the market.

That’s the simple point I am making, you can definitely trade and attempt to beat the market average return, but the odds are against you, and you may end up doing worse than the guys that simply bought and held and played golf for 10 years.
 
john5 said:
to live off dividends alone you need megacapital, dividends can also be cut or stopped at board whim
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The vast majority of "traders" are not making consistent through the cycle returns that would mean they can live off a small amount of trading capital either.

Trading returns are not consistent and one would be a fool to believe they couldn't be stopped by the market at a whim.

Should be obvious to anyone with access to spreadsheet software and mathematics education at the year 10 level.
 
Even starting with a $200k trading account and assuming gun trader returns 30% per annum returns every year with no disruption, drawdown, volatility, etc ....you are talking $60k a year, pre-tax...might as well get a job at Woolworths, you will be doing a lot less work to get the same money.
 
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