WOW - Woolworths Group

[luutzu]

Why would you assume people 'trade in and out of the market on emotional triggers'?
Most traders are not driven by emotions at all.
You do not have to engage in complicated fundamental research to successfully make money which, after all, is presumably the reason you are in the market.

I think that if investors don't look at a company's fundamentals, they're at risk of getting themselves into a ponzi scheme, one that ponzi up and also ponzi down.

 

[Julia]

Not sure how you could come to any other conclusion, if it wasnt emotions that ran the markets then companies would actually be priced at their value and you would never see an event like the GFC or a boom like the tech boom!

There is nothing emotional about simply following price action: staying on a rising trend and exiting when it reverses.

 

[Value Collector]

There is nothing emotional about simply following price action: staying on a rising trend and exiting when it reverses.

it's mathematically impossible for the majority of people to make money this way.

Because, if the majority of people took that strategy, who would be there to buy when the stock when the market is flooded with sell orders because a trend reversal trigger was met, an early group who got their sell orders in quick enough might exit in time, but the rest behind them would just be adding to an avalanche of sell orders and an evaporating list of buy orders and a falling price.

It would just be increasing volatility,

I am not saying it's impossible to make money that way, offcourse it's not. I am just saying it's a game that the majority must lose at to make the profits of the winners, and it becomes more about "Playing the Market" than making sound investments.

It is also the sort of system that feeds the gambling stigma that the share market has, That leads a lot of people to avoid the market all together.

 

[VSntchr]

There is nothing emotional about simply following price action: staying on a rising trend and exiting when it reverses.

The problem is, what is the definition of the trend reversing?
If you have the trigger too tight then you will be stopped out on any slight volatility, too loose and you give back too much of the gains which the momentum provided you with.

Then there is the question of when to get back in if you got stopped out on a slight dip?
Or even after the reversal?


I don't know...it gets quick tricky for me...but I appreciate the fact some employ this strategy successfully. You seemed to have timed it well over the GFC and boggo has a successful weekly chart system which employs this strategy.

 

[Julia]

it's mathematically impossible for the majority of people to make money this way.

Let's not divert the WOW thread into a discussion on trend trading. Wysiwyg has made an appropriate response to you on the trend thread, and I've added a comment there in response to Value Snatcher's post.

My only reason for making any comment was to contradict the baseless assertion by galumay that

few people are really investors and very few have the ability or discipline to research and understand the fundamentals of a company's business so they just trade in and out of the market on emotional triggers

.

 

[galumay]

My only reason for making any comment was to contradict the baseless assertion by galumay
.[/B]

LOL!! "baseless assertion" eh?! Come on, Julia, surely you can do better than throwaway lines like that.

I have yet to see anything since my post that challenges the widely held view that i put forward in what you call my "baseless assertion"!

 

[Julia]

Please yourself. Any suggestion that trend trading is based on emotion is baseless for perfectly obvious reasons. Entries and exits are decided on SP alone, no hoping, no wishing, just using what actually exists on the chart.
Much more emotion involved in hoping that buying a stock in a strong downtrend, eg MND, will turn around.

I earlier suggested not to continue diverting the WOW thread. If you want to make comment about trend following then it would be reasonable to do it on the trend thread.

 

[skc]

Interesting article on WOW and Coles.

http://www.sharecafe.com.au/roger_m.asp?a=AV&ai=32753

Is Aldi A Real Threat To Woolworths & Coles?

It doesn’t take much imagination to see the same market pressures impacting operators here in Australia and this is exactly what Aldi has positioned itself to do.

For a business like Woolworths, currently enjoying the best margins in their history – EBITDA margins of ~7.9 per cent and EBIT margins of ~6.2 per cent on average for the past 4 years -there is potentially pain to come.

If Australia has similar experience to Europe with discount retailers, Woolworth’s margins could eventually HALVE and earnings fall 30-40 per cent in the years ahead assuming our market continues to grow by 3-5 per cent.

 

[luutzu]

....

Much more emotion involved in hoping that buying a stock in a strong downtrend, eg MND, will turn around.

ouch.

We, ok I, don't expect MND to turn around. I expect it to carry on business as usual and the market will turn around and value it properly, or improperly

 

[dlineinvestor]

Certainly not a pretty sight for any holders BUT
Right on the 200 SMA (this "means" short term support for all you fundies out there)
High volume this week could just be that (blow off)

The deal breaker will be if the 200sma is broken ..... it then becomes even more of a sell !

 

[TPI]

In August, Stefan Kopp group managing director of Aldi said this on AFR:

http://m.afr.com/p/business/compani...d_end_coles_woolworths_d33XUgjDY5V0pXmhrWaOtK

“Nine billion is achievable and slightly optimistic. I wouldn’t go beyond that,” he said. “We have 350 stores and we plan to open 25 a year for the next years. Most of those new stores will be fill-in stores and they’ll take some sales away from existing stores.”

Mr Kopp denied customers were less satisfied than four years ago, saying Aldi had just won a Roy Morgan award for highest customer satisfaction.

“That’s in line with our internal data and research which is telling us we are providing better stores to customers now than four years ago. We are getting better but the other supermarkets are getting better as well,” he said.

Out-of-stock items were falling, checkout service was improving and Aldi was extending its produce range, adding meat items, a more sophisticated bread offer and extending and sprucing up older stores. "We will grow to a certain size and we might become No. 3, but we’ll never be a big player, or even close to, the size of Coles and Woolworths," Mr Kopp said.

“We have areas where we can improve and do better – that’s what we should be focusing on.”

 

[galumay]

I earlier suggested not to continue diverting the WOW thread. If you want to make comment about trend following then it would be reasonable to do it on the trend thread.

Julia, I have seen you do this same thing in the past. You have failed to actually read and comprehend what I wrote, then you have made assumptions based on your misunderstanding and used a school-marmish tone in your communication of that misunderstanding.

 

[Julia]

galumay, since you refuse to move your commentary to the trend following thread, let's just summarise the exchange.

I agree with your comments there, its pretty much the case with shares in general, so few people are really investors and very few have the ability or discipline to research and understand the fundamentals of a company's business so they just trade in and out of the market on emotional triggers.

I questioned why you would assume anyone trading in and out of the market did so motivated by emotion, which brought the following:

Not sure how you could come to any other conclusion, if it wasnt emotions that ran the markets then companies would actually be priced at their value and you would never see an event like the GFC or a boom like the tech boom!

There is nothing emotional about simply following price action: staying on a rising trend and exiting when it reverses.

Then I suggested we should not divert the WOW thread into a discussion on trend trading and referred to wysiwyg's response which he'd sensibly put on the trend following thread, adding that I've also made a comment there in response to Value Snatcher's post.

Then:

LOL!! "baseless assertion" eh?! Come on, Julia, surely you can do better than throwaway lines like that.

I have yet to see anything since my post that challenges the widely held view that i put forward in what you call my "baseless assertion"!

It was not a throwaway line at all. You offered no basis for suggesting people who trade on price action are motivated by emotion. I attempted to explain that trading on price is trading on just that. No emotion.

Finally you have decided on a personal criticism re schoolmarm comment. I have just politely suggested, more than once, that discussion on trend following go to that thread, so that people who just want to read about WOW are not irritated by some extraneous discussion.

I'll try asking once again, for the same reason.

 

[Ves]

His post has nothing to do with trend trading!!! Did I miss him mentioning this???

You're interpreting his use as the word "trade" as technical trading / trend following, when he just means trade as in buy / sell.

Geez, disagreements out of thin air!!!

 

[Julia]

His post has nothing to do with trend trading!!! Did I miss him mentioning this???

You seem to have missed wysiwyg's moving (via VC's post) the non-WOW related discussion to the Trend thread.
That is where trend following came up.

You're interpreting his use as the word "trade" as technical trading / trend following, when he just means trade as in buy / sell.

OK. Why then would necessarily any trade be based on emotion rather than eg simply what the price is?
How about putting the idea that all buys/sells that are not based on 'value investing' are emotionally based to people like Tech/A, Trembling Hand et al?
galumay some while ago in a discussion about charting said that no matter how much he squinted, it was still voodoo to him.

That's fine, but it seems unreasonable not to accept that others find charts a useful and a non-emotional guide to profitability.

 

[Joe Blow]

This thread appears to be drifting off topic. Please keep your posts focused on WOW and feel free to start a new thread if there is another topic you wish to discuss.

 

[McLovin]

There's a whole branch of finance (behavioural finance) that deals with people's emotions and cognitive biases and how it distorts asset prices. I would have thought the basis of trend following is rooted in hitching your wagon to those biases.

 

[Ves]

OK. Why then would necessarily any trade be based on emotion rather than eg simply what the price is?
How about putting the idea that all buys/sells that are not based on 'value investing' are emotionally based to people like Tech/A, Trembling Hand et al?

No one ever said they were. You're just arguing for the sake of it now. I'm out.

 

[So_Cynical]

Interesting article on WOW and Coles.

http://www.sharecafe.com.au/roger_m.asp?a=AV&ai=32753

I saw Roger Montgomery on "The Business" talking about this, reading the detail in the article its easy to see how Aldi could cut Wollies profit margin in half as has been the case in all territory's where Aldi operates.

Wondering what a 50% reduction in profit translates to in Share price terms? back to under 20 bucks?

 

[McLovin]

I saw Roger Montgomery on "The Business" talking about this, reading the detail in the article its easy to see how Aldi could cut Wollies profit margin in half as has been the case in all territory's where Aldi operates.

Wondering what a 50% reduction in profit translates to in Share price terms? back to under 20 bucks?

Ummm....is it just a coincidence that right at the time margins started falling Europe fell in the toilet?



There might be a segment of the market that wants no choice when shopping but they would be the minority. Waitrose has also grown it's market share, and they most definitely are not at the budget end.