Thanks craft for the considered response. All the best with this strategy (and I mean it in a sincere way). In fact this is how my Mum buy/hold shares. I tried many times to tell her that the price she paid is called "sunk cost" and has nothing to do with whether she should hold or sell (she has little income and pays no tax). But I couldn't convince her so I am certainly not going to try that here.
Here's some news on QBE for those interested.
http://www.smh.com.au/business/bond-collapse-sends-qbe-shares-south-20110811-1iow0.html
FWIW it sounds like a whole lot of BS. The bond hasn't collapse. Bond yield has. The bond itself has risen. The total interest QBE will be getting is the same on their existing holding (the US govn't doesn't pay variable rates, right?). Only new purchases are returning less and with the $A falling 10% surely they are ahead if not at least square. Not to mention the fact that, when they need to sell that bond to settle claims they will get a higher price...It's like saying that I am poorer because those CBA shares I hold are now yielding only 4% due to the share price going up 15%...
http://www.smh.com.au/business/bond-collapse-sends-qbe-shares-south-20110811-1iow0.html
FWIW it sounds like a whole lot of BS. The bond hasn't collapse. Bond yield has. The bond itself has risen. The total interest QBE will be getting is the same on their existing holding (the US govn't doesn't pay variable rates, right?). Only new purchases are returning less and with the $A falling 10% surely they are ahead if not at least square. Not to mention the fact that, when they need to sell that bond to settle claims they will get a higher price...It's like saying that I am poorer because those CBA shares I hold are now yielding only 4% due to the share price going up 15%...
And so the panic has ended... let me leave this thread with one final post and a chart.
View attachment 44063
You cannot get a candle that's more similar. Now does that mean we will see the same outcome over the next 12 months? Not necessarily, but what this candle shows us is that market is teetering on something. Personally I don't think the future is written yet - the butterfly effect probably applies here. Time will review the answer, while hindsight will prove how blindingly obvious the current situation is.
Good trading all and may good risk management be with you.
Interesting point SKC but while the weekly bar looks the same the daily bars for those weeks tell totally different stories.
I actually think a closer representative of the bar from last Tue (9/08/11) is actually the bar printed on 21/11/08(green line on the chart) I know the intra day futures trading was pretty much the same. While we saw new lows after that bar, it signaled the end of the real momentum in that downward move, just look at the different flow after that bar.
So while I think we could drift back down to test that 3700-4000 area again (in fact I'd be a little surprised if we didn't test at least 4000 again), unless we see some sort of major event from overseas markets I think we might have seen the lows for this year. How price reacts on the next leg down will be telling, I will definitely be expecting a more orderly retreat - if not it is a worrying sign imo. With the strength we saw in those 2 down days last week I would be very surprised to see our market push below 3700 this year without some sort of major trigger from overseas.
But in this current environment anything is possible.
I don't disagree. But I do feel the current state of affairs are closer to start of 2008 than the end of that year.
Perhaps I've been reading zerohedge too much...
Have a look at the crash of 1929 (and subsequent bear market):Maybe but there are a few things to consider.
- We are not coming off a multi-year bull run
- The excessive leverage we saw at the top of the bullmarket is now drastically reduced
Have a look at the crash of 1929 (and subsequent bear market):
- in the first leg down the market fell 48%
- a recovery happened when the market bounced 48%
- the second drop was 86% and the market was not coming from a multi-year bull run and of course the market had de-leveraged at that point.
This is an extreme example of course but it shows the unpredictability of the market.
This panic has ended but because the major economies of the world are still in deep trouble more drops will come in due course, for the people that missed this drop, more will come... we just don't know when. Remember to be brave when everybody is fearful (to be more precise: be brave then the VIX spikes above 30).
Regards,
I'm not much of an educated investor (quite the opposite really) however I don't believe comparing what happens in current times can be comparable to what happened almost 100 years ago. The share market is vastly different due to many more investors, with quicker access to buy/sell (ie home pc's), the world is vastly different economical situations and rarely can we use the past to predict the future. We can learn from past situations and how to react to certain situations, but certainly it's not a platform from which to predict any future movement. Only time will tell.
Manage your stocks without emotion, have appropriate risk management strategies in place, and most of all...may the force be with you.
Maybe but there are a few things to consider.
- We are not coming off a multi-year bull run
- The excessive leverage we saw at the top of the bullmarket is now drastically reduced
While I think we will see a bear market of some sort and test the lows at 3200-3400 in the next few years, I think we have seen the low for at least the next few months purely judging by the strength seen last week but of course that is no guarantee, especially in the current market. The major risk I see atm is a black swan event which of course renders all analysis pretty much useless.
Disclaimer:I'm purely a chartist and have little understanding or interest in economics, I trade off what the charts tell me.
Talking about how stuffed the world may become, however, is much more engaging.
Both points are true but there are plenty of other factors to counter those. e.g. the lack of bail out ammunition and a much poorer starting point for the economy. As to black swan risk - it's always what you can't see that hits you, isn't it? France wasn't even talked about 2 weeks ago. And so far no one has mentioned UK either...
Fundamental analysis of the current situation is difficult as there are so many variables, and translating those unknowable / undetermined fundamental developments into potential price actions or levels will be nothing more than pure guess work. Trade the chart is definitely the most simple and practical thing to do.
Talking about how stuffed the world may become, however, is much more engaging.
Have a look at the crash of 1929 (and subsequent bear market):
- in the first leg down the market fell 48%
- a recovery happened when the market bounced 48%
- the second drop was 86% and the market was not coming from a multi-year bull run and of course the market had de-leveraged at that point.
This is an extreme example of course but it shows the unpredictability of the market.
This panic has ended but because the major economies of the world are still in deep trouble more drops will come in due course, for the people that missed this drop, more will come... we just don't know when. Remember to be brave when everybody is fearful (to be more precise: be brave then the VIX spikes above 30).
Regards,
Could it be? (doom and gloom scenarios)
1. World War 3 will be played out in the financial markets.
2. This is a form of peasant/worker revolution. Sick of the Government bailing out banks without recourse.
3. The syndicate pools of the financial world losing control.
4. A fundamental shift in the human race. The idea that the capitalisms' infinite growth does not work with a finite closed system(Earth).
5. A simple correction.
All are possible I suppose. HINDSIGHT WELL TELL US EVENTUALLY.
Im getting a sense of 2012 here!
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