What are we buying on Monday?

[sptrawler]

Money is cheap and getting cheaper, stimulus on the way, the market is the only place offering decent yields other than risky (ratesetter type) credit, growth is still the only game in town, at some point the pile in begins in spite of COVID19, infection rates in China have well and truly flattened, all the virus growth now is ex China.

Add to that Australia hasnt had a massive run since the GFC, now we have a major retraction, I cant see a better game in town, as you say.

 

[InsvestoBoy]

Money is cheap and getting cheaper, stimulus on the way, the market is the only place offering decent yields other than risky (ratesetter type) credit, growth is still the only game in town

I always find it funny when people say this kind of thing.

In Japan money was "cheap and getting cheaper" in the 90s, stimulus of every type attempted, with equities being the only place offering "decent yields", none of that saved the equity market there.

If money is so cheap and plentiful, why are CBs all over the world forever trying to gush even more? If the RBA setting rates at 1.5% for 5 years was cheap money while the Fed/ECB/PBoC have been doing all their stimulus, why are our GDP and inflation numbers keep getting worse?

It's almost as if none of that actually matters for future equity returns.

Add to that Australia hasnt had a massive run since the GFC, now we have a major retraction, I cant see a better game in town, as you say.

We did have a pretty massive run in total return terms, it just doesn't show up in the free charting tools because it got paid out as dividends rather than buybacks like in the US.

Is there really a perception that this drop is a "major retraction"? This is nothing, not even in comparison to other post GFC blips. We dropped more than this in 2018 and that was just a market tantrum!

 

[kid hustlr]

To be fair Japan is a pretty unique case (didn't it run like 8 fold in a 10 year period prior to the crash?).

This could definitely be the start of a huge crash. Very possible. It's also possible markets move past this in 3 months time.

Trade & Invest to your plan

 

[qldfrog]

Buy oil and copper producers?

Oil yes copper not yet

 

[InsvestoBoy]

To be fair Japan is a pretty unique case (didn't it run like 8 fold in a 10 year period prior to the crash?).

Hmmm yeah, pretty unique...



Was Japan unique, or just first? ZIRP, QE, POMO, these are all terms Japan was using in the 90s.

 

[qldfrog]

Oil yes copper not yet

And not tomorrow at open let it time to go lower this week

 

[kid hustlr]

Hmmm yeah, pretty unique...

View attachment 101114

Was Japan unique, or just first? ZIRP, QE, POMO, these are all terms Japan was using in the 90s.

Lol point taken. Does QQQ include dividends or something, just eyeballing the Nasdaq index it only looks 7 fold in the chart. S&P is a better benchmark imo

 

[sptrawler]

I always find it funny when people say this kind of thing.

In Japan money was "cheap and getting cheaper" in the 90s, stimulus of every type attempted, with equities being the only place offering "decent yields", none of that saved the equity market there.

If money is so cheap and plentiful, why are CBs all over the world forever trying to gush even more? If the RBA setting rates at 1.5% for 5 years was cheap money while the Fed/ECB/PBoC have been doing all their stimulus, why are our GDP and inflation numbers keep getting worse?

It's almost as if none of that actually matters for future equity returns.



We did have a pretty massive run in total return terms, it just doesn't show up in the free charting tools because it got paid out as dividends rather than buybacks like in the US.

Is there really a perception that this drop is a "major retraction"? This is nothing, not even in comparison to other post GFC blips. We dropped more than this in 2018 and that was just a market tantrum!

That is all true, but regarding Japan, they import everything from energy to raw materials, had a massive run up post 1960 with making a quality product at a reasonable price, this was then reflected in their living standard and then along came China and SE Asia then they faced the same problem as the U.S.
We on the other hand have copious amounts of energy, raw materials and a small population.
Also a massive overseas interest in living here, so there is plenty of money, yet to come into circulation. So IMO we are still in a growing phase as far as economic growth goes, for how long ?
But I personally think there is still plenty of steam left, time will tell, but I dont think this is going to be a GFC style fall.
Just my guess.

 

[Smurf1976]

This is nothing, not even in comparison to other post GFC blips. We dropped more than this in 2018 and that was just a market tantrum!

That's the primary reason I don't think we've seen the bottom yet.

The market hasn't even entered a bear market whilst the impacts on the real economy are real and rapidly mounting.

That said, I'm thinking the market drops 25% from its peak not 75% in terms of order of magnitude.

 

[peter2]

I'm not willing to buy just yet (other than a few gold stocks). The ASX was sold off heavily Friday evening. We're going to open very low and may rally a little during the day.

My next high probability trade is to short the VIX, both here and in the US. I will start small though. I'm not anticipating a V reversal but a U one.

The first qtr results will be very interesting and we may see further dips then with the drop in earnings.

 

[InsvestoBoy]

That is all true, but regarding Japan, they import everything from energy to raw materials, had a massive run up post 1960 with making a quality product at a reasonable price, this was then reflected in their living standard and then along came China and SE Asia then they faced the same problem as the U.S.
We on the other hand have copious amounts of energy, raw materials and a small population.

They import energy/raw materials and export a lot, they run a balance of trade surplus every year for a long time.

We have copious energy, raw materials and import everything, even our oil. Consistent deficit balance of trade.

I'm not sure what the point is, are you saying Japans economy suffered all this time because they consistently produce some of the worlds most valuable stuff?

Also a massive overseas interest in living here, so there is plenty of money, yet to come into circulation. So IMO we are still in a growing phase as far as economic growth goes, for how long ?

Two points,

1. We are importing growth as you say, which keeps the raw GDP growing, but GDP per capita not so much, so we grow but nobody feels any benefit of it. As I heard a smart guy say about this, "well done Australia, too bad Australians."...

2. In terms of investment performance in assets like stocks, long duration, gold, that GDP is still growing matters much less than the rate of change of GDP growth (and inflation) has been slowing YoY and looks to continue to.

But I personally think there is still plenty of steam left, time will tell, but I dont think this is going to be a GFC style fall.
Just my guess.

Who knows, this is what is so funny about having these conversations, you can't debunk economic tourist talking points like "cheap money, stimulus, blah" without people inferring you're saying the GFC 2 is on its way. That being said, it really just is the stock market which isn't acting GFC-ey, bonds, commodities, AUD, all are back there.

 

[sptrawler]

They import energy/raw materials and export a lot, they run a balance of trade surplus every year for a long time.

We have copious energy, raw materials and import everything, even our oil. Consistent deficit balance of trade.

I'm not sure what the point is, are you saying Japans economy suffered all this time because they consistently produce some of the worlds most valuable stuff?



Two points,

1. We are importing growth as you say, which keeps the raw GDP growing, but GDP per capita not so much, so we grow but nobody feels any benefit of it. As I heard a smart guy say about this, "well done Australia, too bad Australians."...

2. In terms of investment performance in assets like stocks, long duration, gold, that GDP is still growing matters much less than the rate of change of GDP growth (and inflation) has been slowing YoY and looks to continue to.



Who knows, this is what is so funny about having these conversations, you can't debunk economic tourist talking points like "cheap money, stimulus, blah" without people inferring you're saying the GFC 2 is on its way. That being said, it really just is the stock market which isn't acting GFC-ey, bonds, commodities, AUD, all are back there.

I agree with your points, but the market is emotionally driven, not driven by common sense.
We on here for a long time, have been saying Australia is in for a drop in living standards, however the question is will the corona virus be the catalyst that causes a mass fall in our market.
I don't think so, our small and relatively young population and easily accessible raw materials is a very big buffer, which wont last forever but I feel it isn't at the tipping point yet.
Stimulus IMO is nothing but a band aid placebo, to give the masses a sense of security and restore some confidence. Realistically can the Government spend enough to turn around an economy? IMO No, that requires structural change and an increase in productivity.
At the end of the day, people working and spending is what makes the World go around, not Governments throwing morsels around.

Japan has had a problem with deflation for years, as a result of its own success and rapid growth, their wages, affluence and cost soared to stupid levels. Then when tightening happened the bubble burst and has been deflating for years.
https://www.thebalance.com/japan-s-lost-decade-brief-history-and-lessons-1979056

 

[peter2]

I'm tempted to buy some of the big discounts in the market atm but have to remind myself that this is not my trading style. I've no track record of doing this. The few times I've tried doing something like this with GEAR didn't turn out very well because I chickened out adding to the position as it started to go up.

My shopping list:
CCP: ASF'ers remain keen on this company. Same with CSL, RMD, COH.
TNE: I've already bought some but was too early.
CAJ, CMM: Look OK
IVC: If the price goes lower.
ALX and TCL: Toll collectors and they keep collecting while raising the tolls.
TLG and ADN: A couple of spec's that have not been sold off during this fall.
MYX and SRG are a couple that I'll never buy despite how low they may go.

I've got a list of strong stocks but I'll need to wait for reversal setups before buying any in this list.

 

[moXJO]

China may be the key reason we boom or bust.
I'm not sure of the lag time on imports/exports.

We are pretty much their supermarket.
Australia supplies 61 per cent of China's iron ore, 53 per cent of its coal and 23 per cent of its thermal coal.
Food, education, tourism, etc.

Everyone is bearish and with good reason(I am too). But should we be looking for the bull from left field?

 

[frugal.rock]

Not sure about Monday morning yet...but,
Have been working with NZC, SWF, EHH, these 3 have lifted my pfolio/cash by 10%... profit realised in the last 2 weeks.
Not feeling the burn... moved earlier in the piece.
Keeping tabs on BRN, BUD, EN1, TYR, Z1P, TTT, GOR, FAU, AUZ. Those last 3 being gold related. Stocks in bold are held.
SWF in trading halt.

F.Rock

 

[sptrawler]

They import energy/raw materials and export a lot, they run a balance of trade surplus every year for a long time.

We have copious energy, raw materials and import everything, even our oil. Consistent deficit balance of trade.

I'm not sure what the point is, are you saying Japans economy suffered all this time because they consistently produce some of the worlds most valuable stuff?



Two points,

1. We are importing growth as you say, which keeps the raw GDP growing, but GDP per capita not so much, so we grow but nobody feels any benefit of it. As I heard a smart guy say about this, "well done Australia, too bad Australians."...

2. In terms of investment performance in assets like stocks, long duration, gold, that GDP is still growing matters much less than the rate of change of GDP growth (and inflation) has been slowing YoY and looks to continue to..

Further to my last post when comparing GDP per capita between Japan and Australia, we are quite a way ahead, in 2017 our GDP per capita was $49,000 whereas Japans was $42,000.
Also as we both said ours is a growing younger population, mainly due to importing people and money, as opposed to Japans aging population.
https://www.worldometers.info/gdp/gdp-per-capita/
Don't get me wrong, I'm not a bull about this, but I hopefully don't miss an opportunity because I'm overly nervous.

 

[joeno]

Oil is heading to $30... Putin threatened Saudis and US Shale with increased production. Price war. I'd short the Aussie oilers unless somebody has a better strategy

 

[qldfrog]

Australia supplies 61 per cent of China's iron ore, 53 per cent of its coal and 23 per cent of its thermal coal.

I am pretty sure that what you mean is Australia supplies .xxx..of China imports....
A very big difference for coal especially where by far most of China's coal is domestic.
should their economy slow down, imports will not slow down, they will disappear completely, unsure about iron situation but coal on its own can collapse our economy
It is a very important point that every one conveniently forgets..

 

[Smurf1976]

Everyone is bearish and with good reason(I am too). But should we be looking for the bull from left field?

I think a distinction needs to be made here between the "end of the world" sort of view versus that which fits into the "bottom is coming but we haven't seen it yet" sort of view.

Both could be considered bearish short term but one is long term bullish.

 

[Sharkman]

That's the primary reason I don't think we've seen the bottom yet.

The market hasn't even entered a bear market whilst the impacts on the real economy are real and rapidly mounting.

i agree, but i don't know for sure where the bottom will be, and neither does anybody else.

i do know however that if i don't dollar cost average in on a semi-regular basis, something like this will happen: not quite at the bottom yet... just a little bit further down then i'll buy... this is just a dead cat bounce, should wait for another fall... this rally seems to have run out of legs, don't want to get head faked, just hold off a little bit more... oh wow it's right back up to where it was before, and i'm holding all this cash, how did that happen?