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The top of this cycle for ASX200, cash is king ?


kahuna1

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In reply to: flower on Saturday 11/10/08 03:09pm

So do we take it that the G20 meeting is an admission that the, mainly debtor, G7 nations can't do this without negotiating "re-financing" with the creditor nations?

 

It has occurred to me that what is needed to really end this panic phase is a strong statement of leadership from a major creditor nation, showing a willingness to work in tandem with debtors rather than attempt to fruitlessly hang them out to dry.

 

As Paulson says, "Never have all of us been so dependent on the other and so interdependent. We need to work together."

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QUOTE (Lizard @ Saturday 11/10/08 01:36pm)

Lizard, whats becomming clear that indeed the weekend meeting of the G20, following the useless meeting of the G7, is basically the LAST chance to produce something meaningfull before utter and unstoppable chaos takes over.

 

Mercifully the US Bond market is closed Monday for a holiday.

 

Just as an example of horrific things have become, you need look no further than COMEX and NYMEX, futures markets for Gold and Oil

 

Overnight the London (physical settlement market) fixed spot gold at USD900.50, incredibly spot gold fluctuated USD100 during the day!! What appeared to happen is that COMEX (the gold futures market) simply stopped working as the counterparty risk became to great, similiarly NYMEX (oil futures market) acted the same.

 

So--it now appears that because of the chaos the only way anything can trade is in a PHYSICAL delivery/settlement mode, now you cant find enough 747's to move the daily gold trade, so what chance of ANYTHING trading or settling next week unless G20 DO SOMETHING DRAMATIC

 

Also apparantly the Italian PM not so quietly suggested to G7 that they shut down the whole boiling world's markets and try and resolve matters!!!! Needless to say GWB quickly broadcast his belief that the US would sort it all out!!!!!

 

Apparantly also the magic words BRETTON WOODS was quietly raised again in G7, WHACKO JACKO!!!!!

 

So---Ladies and Gentlemen please take your seats for what should be the weekend performance of a lifetime.

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In reply to: rjd on Friday 10/10/08 09:13pm

rjd there are lots of great posters here on SS and have plenty of knowledge that they like to share with us the uninformed in hoping to make the market a better place for all of us.

Their way of "Paying It Forward"

Really nice to see and alot better than some of the rubbish that goes on at times at other sites.

No better way to learn than from peoples that have been around the traps and have experience..

Soak it up and of course do your own research and benefit then don't forget in the future to also Pay It Forward!!!!

Full marks to all the great posters out there in SS land.

Credit to this site.

V1

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In reply to: rene in geneva on Saturday 11/10/08 05:07pm

Don't lose sight of the fact that behind the economy are real productive assets, real land, real people with real labour. All the legislation, pieces of paper and electronic numbers are a means to an end - and alterable with sufficient will and lateral thinking.

 

Provided we don't abandon the real economy, the pieces of paper will eventually be sorted out - no doubt unfairly to some - but it is not at all a hopeless situation.

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Long time no post on this string. After getting roasted during most of 2007 for calling the string overly pessimistic I quit the market in October/November 2007. Cash went into commercial real estate, yielding a healthy margin above bank rates. A word to the wise you need to pull it out of that market right now as a commercial property correction is coming hot on the heels of this "destruction of wealth".

 

I am just starting to get interested in the ASX200 again with a dabble in ANZ, which is about 5% underwater atm - no big deal in the scheme of things if you have the cashflow (important word right now), a 12 month+ perspective and the stomach for risk. No guts - No glory. It is ABSOLUTELY clear this market is being driven by sellers with NO CASHFLOW and a 5 minute horizon - the staring into the abyss panic is conversely the time to start getting invested.

 

The prices of quality Australian blue chip shares are being excessively hammered primarily because foreign institutional sellers desperately need cash. This is evidenced in the collapse of the A$ - and those words are used advisely - the A$ has plummeted as the funds are ripped from the ASX200 and repatriated.

 

This forex move better be a short term event for the health of the domestic economy. The basic manufacturing base of this country (and Europe, and the USA, etc) has already been exported to China and those imports are all going to cost more in the very near future. Clearly some small Mum and Dad import companies will hit the wall within days/weeks if they don't have a hedged position - and how many would have hedged with all the talk of parity with the US$, which was only 10 WEEKS AGO. Hence the caution on commercial property - there could soon be a lot of vacant possession and anecdotally the pressure on yields and commercial property developers has already started.

 

Primarily I will look for high yielding shares which will definitely be around in 5 or 10 years (LOL - as if I could guarantee that) which will be bought on margin, interest covered by divvies and cashflow and playing for 12 month+ Capital Gain - sounds like a PLAN.

 

WES, QAN, AMP, Banks, all in the starters gate. Better do some homework I think.

 

The BIG BOUNCE will come if Europe and the US sort themselves out QUICKLY - with the A$ and the ASX 200 in the toilet blind freddy can see what will happen if liquidity is restored to capital markets quickly.

 

The time for "hindsight" is right now. These are potentially never to to be repeated fire sale prices for quality Australian companies (they will be repeated sometime - remind yourself - this is the share market dummy).

 

If you have guaranteed cashflow, take a 12 month+ perspective, borrow the money if you can - margin lenders are still lending and rates will drop, don't panic if you miss the bottom, do your homework, don't rush in in one fell swoop but feed it in slowly - in the longer term IMHO this is the start of a once in a quarter (century that is), maybe even lifetime opportunity and there's no need to be too hasty with your hard earned.

 

Remember, Fortune favours the brave - Buy when there's blood in the streets.

 

 

Happy Hunting!

 

 

 

 

 

 

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QUOTE (bloodclot @ Saturday 11/10/08 04:26pm)

B: Leaning into a howling gale never won you any friends, I started bellyaching about the consequences of Sir Spendsalot's effective ZERO interest rates and specifically how the resultant borrowing binge had to came back and bite everybody on their collective backsides three years ago--however we are still here by following our own advice, many arent.

 

Having just come back from 5 weeks in Europe, specifically in England in some well to do southern towns about 10/15% of the shops are freshly empty, and I know for a fact that commercial property developers are running for the hills and simply not proceeding with purchase agreements if they can wriggle out of contracts that arent fully completed.

 

Methinks we are way to sanguine about all forms of property in Oz, in Perth the real estate spruikers claimed months ago the hefty end of town couldn't drop in price, WRONG WRONG.

 

Not too sure about taking on any debt whatsoever any more, a personal choice I guess, but yes, opportunities will abound, BUT for heavens sake be very careful, many smaller companies just simply arent going to make it.

 

Personally think its one of the most exciting times in the market ever, nothing like a hefty dose of REALISM !!!

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Hi there,

 

Jim Rogers interview - certainly tells it how it is:

 

http://www.bloomberg.com/avp/avp.htm?clipS...12UMJ.V0PuY.asf

 

Interesting right at the end - they are talking about currencies and as per usual Jim's not impressed by the USD. He's basically putting the strength of the USD down to a gigantic short covering rally?

 

By the way, don't write the G20 off so soon! Wayne Swan has come up with a solution! Word on the street is that it has something to do with shopper dockets.

 

http://www.sharescene.com/html/emoticons/lmaosmiley.gif

 

Regards,

Ice

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DJIA - A 700 point plunge followed by an 800 point rise and finishing down 128 points after a subsequent 230 point dive. Talk about getting choke slammed. It's an exodus of redemption for cash - nobody is comfortable about the security over lending and borrowers are equally wary of the risk of being hollowed out by the next loan they undertake. Auction clearance rates for real estate sits at an ugly 65% and only on the back of foreign investors acting to snap up domestic property. Households fret on several fronts - outstanding credit due on retail transactions, stalling wages and precarious unemployment. Our hope and sole avenue of rejuvenation lies on China's ability to assume the roles of both producer and consumer. It's a one man (or woman - for the feminists) party, not by choice, but because there's only room for one player in this dilapidated hellhole.

 

The "moneyness" of equity is gone. Forget future economic prospects; just make sure you've enough to meet existing debt obligations. You know credibility is off the menu when even the most secure of institutions, or so we were led to believe, stop lending to each other out of fear and uncertainty over repayment of their principal. As of consequence, the mechanism of financial intermediation collapses, businesses find it hard pressed to secure adequate working capital, lending terms have made way for up-front cash and what had been a robust economy only days ago is now teetering on the brink of collapse as it resorts to lending from the Russian Federation. These days, one would have to be pretty desperate to be asking, of all people, the Russians for a loan!

 

Forex markets represent the pinnacle of insanity. The longs - USD and JPY. The shorts - Everything else. Commodity indexed currencies including the SAR, AUD, CAD and BZR are hammered senseless by capital flight stemming from a severe case of risk aversion. The Korean Won has seen better days but not so since its attempted bid to secure Lehman. The Americans weren't gonna allow that just as the Japanese were conveniently obstructed from acquiring US heavy industry assets in the nineties - death by excessive dilution. Gold is down against major currencies despite the lacklustre of fiat money but is still +14% YTD. The metal is NOT underpriced anyhow and any further gains are only on the basis of its ability to capitalize from the fear in equity markets. The strength in JPY and USD is understandable from risk preception angles and, as crazy as it may sound, apparently the greenback's comeback is due to the fact that people still believe in the US being able to recover from the fire they started before the other suckers caught up in her shinanigans. Remember that the flight is from equity, not currencies, although fiat money itself is equally unreliable due to the dubious track record of their issuers.

 

China is playing the "good for business" hand and demonstrated clear intention to sustain structural integrity in global financial markets. This been evident in her decision to drop 27 bps off the official lending rate, providing assurances of extending the term of credit lines made to American institutions (such as in the form of treasury notes and trade deficits) and even going as far as to offer new investment capital to fund the acquisition of domestic assets in the US. The Chinese have an ultra long-term focus of allowing the US to topple and demise in its own way - the slow and steady way. China is of the opinion that a robust foreign policy and good foreign relations is precursory to the development of a strong and formidable nation with exercisable sway and clout over global phenomena. As long as she keeps herself steady, the organic law and order of convergence and divergence will ensure that her adversaries will wax and wane along that long-term downtrend regression into irrelevancy. Keeping the Americans on drip feed whilst the rest of the world loathes at the US over its century of foreign policy failure is one fine and auspicious investment IMO.

 

Sunday is going to be 28 degrees of pure Melbourian sunshine. I'm good for a barbie http://www.sharescene.com/html/emoticons/biggrin.gif .

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