Australian (ASX) Stock Market Forum

Will be in Cash 100% 12th July 2019

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I know it seems extreme, it's all just about done.

I just have a gut feeling that we have hit the highs for the present and that a major correction looms probably commencing in Europe or the US. And yes, I know the US economy is doing well.

I've been lucky mostly in life and if I'm wrong it won't be the end of the world for me.

gg
 
In no way an argument one way or the other, as seasonality is far from a science, but just for the sake of the discussion. Mind you 68 years of averages in the US SPX (as below) would urge seasonal caution during ensuing months..
Stock Market Seasonality
Bull Markets, by Troy, November 23, 2018: https://bullmarkets.co/stock-market-seasonality/
..To understand seasonality factors such as the Santa Claus Rally, we need a benchmark to compare it against. Here’s the random probability of the stock market (S&P 500) going up on any given month, from 1950 – present..
January: +1.03%
February: +0.04%
March: +1.17%
April: +1.45%
May: +0.26%
June: -0.03%
July: 1.08%
August: -0.05%
September: -0.46%
October: +0.79%
November: +1.52%
December: +1.65%
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Chart from the above article: us-stock-market-monthly-seasonality.png
 
Garpal Gumnut said:
Technical analysis provides some rationality, in relation to market action.

Fundamental analysis is useless.

I cannot see the ASX which is where a significant amount of my funds rested advancing beyond 6400.

Thus by the end of this week I will totally in cash.

I may even buy myself an ice-cream.

gg
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Gold's strength is not send a good signal, among a host of other things. Party is over? Or are we just taking a breather?
 
Mr Z said:
Gold's strength is not send a good signal, among a host of other things. Party is over? Or are we just taking a breather?
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Could pop to new highs beyond pre-GFC high on asx, but good to have a tiny Gold exposure too IMO in case things go south...
 
kid hustlr said:
I'm ok with having views on the mkt but I can't fathom ever being 100% out. If you are bearish be 50/50 or something but in my experience the biggest risk to under performance is being too defensive.

Each to their own and manage your plan I guess
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kid, to clarify for the stocks long-only crowd, as a trader, youre referring to being always in-market in both directions (long n short) ?

important distinction

and if a player is technically bent (versus f/a) it's strange to see someone be so negative without seeing a great opportunity on the sell-side

liquidity is always moving both ways and creates constant mean-reversion gaps , so does that imply the OP is really just displaying a "this can't go any further" bias and using t/a as a mask for that fear?
Has the OP simply just reached the limit of their bias where the itch can't be scratched ?
 
aus_trader said:
Could pop to new highs beyond pre-GFC high on asx, but good to have a tiny Gold exposure too IMO in case things go south...
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More than tiny, sentiment is foul and it is trading strongly. The setup is fantastic, it dosen't get better than this. IMO.
 
I am still net long in the market but I am with GG I "feel" we are near a top or a correction of some type but wont be surprised if we go higher.

I remember Tech in 2007 Aug I think cash it all in then the market bounce all the way to Nov where Nick Radge pretty much called it to the day his EW forecast was spot on.

Tech was still right just early.
 
Smurf1976 said:
If you traded it then gold is income producing (well, capital gains but that’s effectively the same).

If you’re only aiming to earn a few %
“interest” then you wouldn’t need to be a particularly great trader to get that so long as you can produce a some level of profit.

Just a thought.
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Other non income producing categories are non blue chip shares, cash, bonds at very low interest, cash in banks, etc. The advantage of gold and silver is that they have low downside risk and keep pace with inflation. All other assets at in a massive bubble. Give me gold and silver in the hand any day in this market. This rigged market!
 
Joules MM1 said:
kid, to clarify for the stocks long-only crowd, as a trader, youre referring to being always in-market in both directions (long n short) ?

important distinction

and if a player is technically bent (versus f/a) it's strange to see someone be so negative without seeing a great opportunity on the sell-side

liquidity is always moving both ways and creates constant mean-reversion gaps , so does that imply the OP is really just displaying a "this can't go any further" bias and using t/a as a mask for that fear?
Has the OP simply just reached the limit of their bias where the itch can't be scratched ?
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J,

For transparency I run a buy and hold portfolio (66% of total account) and a trading portfolio (33%).

The trading portfolio can be anywhere from 0-100% invested. Over time the portfolio mix may change, largely due to perceived future returns. Long / Short type investing would fall into the trading portoflio mix and again exposure (both in terms of overall mix and % long short) would be decided via perceived future returns.

I personally think being too rigid is a huge downfall in this game but having a clear baseline to which you work around is equally important.
 
Garpal Gumnut said:
I know it seems extreme, it's all just about done.

I just have a gut feeling that we have hit the highs for the present and that a major correction looms probably commencing in Europe or the US. And yes, I know the US economy is doing well.

I've been lucky mostly in life and if I'm wrong it won't be the end of the world for me.

gg
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It wouldnt be the first time you have been right GG
 
Running to bonds is also not the answer.

At the end of the day bonds will only rise in value if interest rates continue to drop, and if interest rates continue to drop, you would do better in shares.

But if interest rates rise significantly, ofcourse that will be bad for shares, but it will be a lot worse for those holding bonds at today’s prices.

Either way, I think holding a mixed bag of good companies with high returns on equity is the way to go throughout the cycle.

Sure, timing your entry and exits well can result in profits (and fees and cap gains tax), but that’s a risk also that you will mistime it, and end up locked out, with less money to invest after tax and fees.
 
When the first negative GDP quarter hits -

1: The ASX takes a massive swing up?
2: The ASX muddles along sideways.
3: The ASX falls 50 to 100 points that day and down maybe 150 for the week.

Im going 3

The market simply cannot rally into falling GDP and a shrinking domestic economy, and then there's the housing bust.
 
So_Cynical said:
When the first negative GDP quarter hits -

1: The ASX takes a massive swing up?
2: The ASX muddles along sideways.
3: The ASX falls 50 to 100 points that day and down maybe 150 for the week.

Im going 3

The market simply cannot rally into falling GDP and a shrinking domestic economy, and then there's the housing bust.
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The housing bust is 75% through IMO.
The World economy is 5 years ahead of ours.IMO
Dont worry, be happy, IMO
 
F9C09C93-BE82-47D3-8A39-CB0B1662868E.png

If you check out this chart, you can that except for the boom and bust of the early 2000’s, the growth of the market has been pretty steady, it doesn’t look like a bubble to me.

Yes, we have reached the same level as we were at roughly before the last collapse when there was a genuine bubble.

But the fundamentals have moved on since then, we have had years of decent gdp growth, population growth, profits have grown, there has been 10 years of inflation, dividends are higher etc.

You can see things got to hot to fast leading up to he big crash, but that hasn’t happened leading up to now.

If we were in a similar bubble the asx would be over 10,000, but it’s not.
 
I think like Gold, Bonds can also be a small part of a portfolio that can withstand the good and bad times of the economy. They provide steady income without the big swings in price.

The US bonds could be the exception IMHO so I won't touch them. Things may look OK now in these, but one day when the ballooning US multi-trillion dollar US Govt debt hits a critical mass, could they turn to 'junk bond' status ?
 
aus_trader said:
I think like Gold, Bonds can also be a small part of a portfolio that can withstand the good and bad times of the economy. They provide steady income without the big swings in price.

The US bonds could be the exception IMHO so I won't touch them. Things may look OK now in these, but one day when the ballooning US multi-trillion dollar US Govt debt hits a critical mass, could they turn to 'junk bond' status ?
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I don’t think the USA will ever default on their bonds, there is no need, they can just print more money, the bonds are payable in US dollars, and they control the printing press.

So that makes the risk of government bonds not a default risk, but an inflation risk.
 
I catch up occasionally with a guy who works as a private banker for high net worth clients. He says they are telling their people 2020 is the year. Reckons a few construction companies have gone under (small to medium) and engineers/architects have very little work on.
 
Value Collector said:
I don’t think the USA will ever default on their bonds, there is no need, they can just print more money, the bonds are payable in US dollars, and they control the printing press.

So that makes the risk of government bonds not a default risk, but an inflation risk.
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I knew you'd say that VC, but the current situation is they keep kicking the can down the road. In other words they only pay their re-payment of debt obligation while the principal keeps growing due to spending. Because they have the printing press they print whatever the number they need to meet the trillions required for the payment and they can keep doing it especially while the interest rate is kept low. The debt keeps growing though, you probably know that the congress argue back and forth and then give in to any drastic fiscal measures and just lift the debt ceiling each time.

Is that the sort of place you'd want to park any of your money in? You've partially answered this question too in saying:

Value Collector said:
but an inflation risk
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At some point if inflation get's out of control they have a lever called interest rates to reign it in with. What happens to their debt re-payments under a high interest rate environment?
 
aus_trader said:
I knew you'd say that VC, but the current situation is they keep kicking the can down the road. In other words they only pay their re-payment of debt obligation while the principal keeps growing due to spending. Because they have the printing press they print whatever the number they need to meet the trillions required for the payment and they can keep doing it especially while the interest rate is kept low. The debt keeps growing though, you probably know that the congress argue back and forth and then give in to any drastic fiscal measures and just lift the debt ceiling each time.

Is that the sort of place you'd want to park any of your money in? You've partially answered this question too in saying:



At some point if inflation get's out of control they have a lever called interest rates to reign it in with. What happens to their debt re-payments under a high interest rate environment?
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No, I don’t want to own any low interest government bonds.

——-

If interest rates rose, it would not have a massive effect on the USA’s ability to pay, because loans stretch out over 30 years of fixed interest.

It may actually give them a chance to by back the bonds issued in the last 10 years at well below face value also.
 
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