Why aren't we trading in the US?

[doctorj]

Good question - can't say I have the foggiest, but I'm in inclined to think it's a little of both

 

[BREND]

I can't say I know much about the companies that own these rigs but it seem the rig market isn't as tight as it was, say 6-12 months ago and I've noticed rates coming off the boil too.

If you look into the order book of RIG and GSF, their order book lines up to 2009. Assuming that their order books are filled eventually, their PEs are too cheap now.

 

[wayneL]

If you look into the order book of RIG and GSF, their order book lines up to 2009. Assuming that their order books are filled eventually, their PEs are too cheap now.

I think folks have forgotten what cheap PEs are.... or never experienced them yet because they are too young. Come back and tell me they're cheap when they're <10.

 

[It's Snake Pliskin]

I think folks have forgotten what cheap PEs are.... or never experienced them yet because they are too young. Come back and tell me they're cheap when they're <10.

Low PEs

 

[BREND]

I think folks have forgotten what cheap PEs are.... or never experienced them yet because they are too young. Come back and tell me they're cheap when they're <10.

Ok, I should say PE is cheap relative to their growth rate.

 

[wayneL]

Ok, I should say PE is cheap relative to their growth rate.

PE Growth (PEG) Factor
The PEG Factor, is the price-earnings (PE) ratio divided by the earnings per share (EPS) growth rate. The PEG factor measures the relative cost of earnings growth at the previous day's closing share price. The formula is the following:

= PE ratio / EPS Growth Rate


The PEG ratio is a tool that can help investors find undervalued stocks. When used in conjuction with other ratios, and the sector, it provides investors a perspective of how the market views a firm's growth potential in relation to EPS growth.

Note:

- A PEG factor equal to one, means that the market is pricing the stock to fully reflect its EPS growth potential.

- A PEG factor greater than one, indicates that either the stock is overvalued, or that the market expects its future EPS growth to be greater than the current consensus.

- A PEG factor less than one, indicates that either the stock is undervalued, or that the market does not expect the company to achieve its forcasted EPS growth.

RIG is ~0.4. It is a well known, highly analyzed and much traded stock. Does this tell us anything with regards to the statement in bold? I don't know, just putting the question out there.

Lots of momo in the price action... but so has everything.

 

[BREND]

RIG is ~0.4. It is a well known, highly analyzed and much traded stock. Does this tell us anything with regards to the statement in bold? I don't know, just putting the question out there.

Lots of momo in the price action... but so has everything.

In my view, market didn't expect much from this stock. This is a wrong perception, check out the order book, all the way till 2009. Just in the case of resources sector, many mining stocks are still trading at low P/Es compared to their growth rate, to me market is wrong again.

My investment style is to tap on market mistake, and ride on profit. Rather than to buy into high PE stocks and expect the expensive stocks going to become more expensive. This method has provided me with 28% year-to-date return from US market.

 

[yonnie]

decided to stay in Oz for the moment while the going is good and bugger off to the US when it stops.
Not going to wait 2 years here for the market to go back up again

 

[theasxgorilla]

Alright, at the moment the Ozzie share market is going very well, but what do you trade when there`s not much going left???????? Just waiting a few years weathering the storm?

Wouldn`t we better off to consider opening an US broking account and the world will be your oyster?

How do you deal with the currency exposure?

If I was a European and I took my Euro-denominated capital and put it into the S&P500, 3 years later (today), when I liquidated and bought new Euros I'd have made a whopping 5.5% p.a. Hmmm...

 

[reece55]

How do you deal with the currency exposure?

If I was a European and I took my Euro-denominated capital and put it into the S&P500, 3 years later (today), when I liquidated and bought new Euros I'd have made a whopping 5.5% p.a. Hmmm...

ASXG
One way you could hedge the currency risk out would be to buy the AUD/USD pair - the IG mini has a 2 pip spread with 10,000 USD per parcel (and you can buy a decimal portion, as long as it's above 1 contract). So, not only here would you hedge out your risk, you would be getting paid interest on the amount.

Cheers

 

[wayneL]

How do you deal with the currency exposure?

If I was a European and I took my Euro-denominated capital and put it into the S&P500, 3 years later (today), when I liquidated and bought new Euros I'd have made a whopping 5.5% p.a. Hmmm...

Let's say buy AUD$100k's worth of US stock. Simply purhase back your AUDs via forex or futures. Same applies for any other currency.

This will effectively keep the US holding AUD denominated.

Alternatively, if you buy the SP via futures, only your margin is ever exposed to currency fluctuations.

<edit> Reece, I was still typing mine while you posted yours.

 

[yonnie]

With a broker like IB you can have your deposits in different currencies: AUD, Euro, USD, GBP and probably a couple of others so that might help.

Also I wouldnt put that money there for a short period like 3 years.

Ok the USD is going down, but we will see what the AUD/USD cross rate is in a couple of years time when the commodities run out of steam

 

[theasxgorilla]

Let's say buy AUD$100k's worth of US stock. Simply purhase back your AUDs via forex or futures. Same applies for any other currency.

This will effectively keep the US holding AUD denominated.

Alternatively, if you buy the SP via futures, only your margin is ever exposed to currency fluctuations.

<edit> Reece, I was still typing mine while you posted yours.

Reece/Wayne...

Okay, so if I wanted to typically hold a position for 12 months in another currency...what is the best way to hedge? Best being defined as transaction cost and time flexible ie. can I pay one low price to hedge and remain covered for the duration of the trade and as long as it takes me to repatriate my funds...even if that happens to be an unknowable length of time.

 

[wayneL]

Reece/Wayne...

Okay, so if I wanted to typically hold a position for 12 months in another currency...what is the best way to hedge? Best being defined as transaction cost and time flexible ie. can I pay one low price to hedge and remain covered for the duration of the trade and as long as it takes me to repatriate my funds...even if that happens to be an unknowable length of time.

For margin reasons, it's best to have the hedging instrument and the assets in the one account. IB is ideal for this as you can trade the stocks, forex, currency futures and futures options from one single account. For set and forget, forex is probably best as there is no contract expiries to worry about, however you will presumably incur interest charges (I don't know because I don't trade the forex)

I prefer currency futures and options, but I am more active in my hedging strategy.

FWIW

 

[theasxgorilla]

IB is ideal for this as you can trade the stocks, forex, currency futures and futures options from one single account.

I feel suitably ignorant...reading www.interactivebrokers.com as I type this...is that the IB being referred to here?

 

[lesm]

I feel suitably ignorant...reading www.interactivebrokers.com as I type this...is that the IB being referred to here?

Yes

 

[niknah]

I've been wanting to transfer moneys across to the US ever since the AUD hit >80c

With IB you've got to trade a certain minimum every month or they charge you fees, not good if you buy and hold.
Recently I opened up an account with www.zecco.com(free trades), the setup was confusing but after I got online everything's been ok.