"Ladies and gents, you are only as "rich" as you feel.
And without a bulletproof foundation of income and high-dividend-paying equities, you will never feel rich."
Man that guy spews marketing material faster than...but he does have some good takeaway sweet and sour nuggets, education for your financial wellbeing.
Sunday, April 17, 2005
Keep This On The Fridge
By Marcus Padley
April 16, 2005
What a life. Pushing electrons around a TV screen. But that's what analysts do. And while we sit in plasterboard boxes in glass towers, outside the world is going on. No amount of electron-shoving would have let you know that in June 2003 "China" was about to happen, that BHP profit forecasts were 100 per cent too low, the price was too low and the return on equity of BHP's Yabulu nickel operation was, in fact, irrelevant. Investing is not about analysing the trees; it's about predicting where the wood is off to, and in Australia, the wood is on the move.
The sharemarket is suddenly falling, not rising. The Reserve Bank has hinted the economy may be slowing, not growing. These are big changes. Falling market. Slowing growth. It means:
· Lock in profits in things that have gone up a lot.
· Sell small trading stocks.
· Sell volatile sectors.
· Sell cyclical sectors.
· Rotate into defensive sectors.
· Rotate into low-risk income stocks.
· Stop giving concept stock the benefit of the doubt.
Sectors to sell include stocks that have risen a lot, are exposed to the economic cycle, have high price-earnings multiples and low yields, priced on hope and glory instead of a boring story:
· Discretionary stocks: Retailers mostly, selling items you don't need.
· Media: Advertising is the first expense to be cut.
· Leisure: People cut back on travel/hotels.
· Builders: House prices drop and builders suffer.
· Transport: At the pointy end of the economic cycle, people ship less goods around.
· Stockmarket-exposed stocks: Obvious - stockmarket falls, stockmarket stocks fall.
· IT: Another expense to be cut in tough times.
· Resources: Exposed to metal prices that are driven by global economic growth.
· Chemicals: Dictated by commodity prices.
· Paper: Paper and pulp prices dictate.
· Biotechs: Priced on irrational exuberance.
On the flip side are defensive stocks, with predictable earnings, steady dividends, monopolies, captive client bases, low P/Es and high yields:
· Food: Everyone's got to eat.
· Booze: Drinking habits are not that cyclical.
· Health care: Everyone still needs it.
· Property trusts: Rents are fixed on long-term contracts, high yields.
· Gambling: Gamblers gamble regardless.
· Utilities: Tend to be priced on valuation and yield. Monopoly customer bases.
· Energy: Like utilities, fairly certain cash flows thanks to monopoly nature of customer bases.
· Banks: Priced on yield, P/E discount to market.
· Telecoms: Theoretically cyclical, though Telstra is pretty defensive at the moment.
· Rural stocks: Priced on drought.
· Oil stocks: Priced on the oil price.
What does this mean to us? Affirms Telstra as a god choice and banks may be worth looking at again.
April 16, 2005
What a life. Pushing electrons around a TV screen. But that's what analysts do. And while we sit in plasterboard boxes in glass towers, outside the world is going on. No amount of electron-shoving would have let you know that in June 2003 "China" was about to happen, that BHP profit forecasts were 100 per cent too low, the price was too low and the return on equity of BHP's Yabulu nickel operation was, in fact, irrelevant. Investing is not about analysing the trees; it's about predicting where the wood is off to, and in Australia, the wood is on the move.
The sharemarket is suddenly falling, not rising. The Reserve Bank has hinted the economy may be slowing, not growing. These are big changes. Falling market. Slowing growth. It means:
· Lock in profits in things that have gone up a lot.
· Sell small trading stocks.
· Sell volatile sectors.
· Sell cyclical sectors.
· Rotate into defensive sectors.
· Rotate into low-risk income stocks.
· Stop giving concept stock the benefit of the doubt.
Sectors to sell include stocks that have risen a lot, are exposed to the economic cycle, have high price-earnings multiples and low yields, priced on hope and glory instead of a boring story:
· Discretionary stocks: Retailers mostly, selling items you don't need.
· Media: Advertising is the first expense to be cut.
· Leisure: People cut back on travel/hotels.
· Builders: House prices drop and builders suffer.
· Transport: At the pointy end of the economic cycle, people ship less goods around.
· Stockmarket-exposed stocks: Obvious - stockmarket falls, stockmarket stocks fall.
· IT: Another expense to be cut in tough times.
· Resources: Exposed to metal prices that are driven by global economic growth.
· Chemicals: Dictated by commodity prices.
· Paper: Paper and pulp prices dictate.
· Biotechs: Priced on irrational exuberance.
On the flip side are defensive stocks, with predictable earnings, steady dividends, monopolies, captive client bases, low P/Es and high yields:
· Food: Everyone's got to eat.
· Booze: Drinking habits are not that cyclical.
· Health care: Everyone still needs it.
· Property trusts: Rents are fixed on long-term contracts, high yields.
· Gambling: Gamblers gamble regardless.
· Utilities: Tend to be priced on valuation and yield. Monopoly customer bases.
· Energy: Like utilities, fairly certain cash flows thanks to monopoly nature of customer bases.
· Banks: Priced on yield, P/E discount to market.
· Telecoms: Theoretically cyclical, though Telstra is pretty defensive at the moment.
· Rural stocks: Priced on drought.
· Oil stocks: Priced on the oil price.
What does this mean to us? Affirms Telstra as a god choice and banks may be worth looking at again.
Friday, April 15, 2005
Is there fear out there
The fear is rising in the US. Here with the ASX200 at
down from 4266.9 or 6.3% drop
15 days below the 50 day MA
this could be good for a drop down to the 200 day MA which is still rising. Is destiny 3875?
At this point only those who have entered market in last four months are under water.
Westfield 15.99
Telstra 5.04
| 4:07pm | 4,014.300 | -68.000 | -1.67% |
15 days below the 50 day MA
this could be good for a drop down to the 200 day MA which is still rising. Is destiny 3875?
At this point only those who have entered market in last four months are under water.
Westfield 15.99
Telstra 5.04
Thursday, April 14, 2005
Candlesticks rule and Telstra
ASX200
Back down near the intra day low from a couple weeks back and the lowest closing in almost three months. Intra day is why you must use candlesticks instead of simple line graphs. Line only conveys one piece of information while candlesticks convey four; low high open close.
Hopefully this will bring some fear in to the Aus market, as we are looking to buy.
Telstra firms as the worst comments I have found aren't too bad, Income Investors view is real income has only marginally increased over the last five years. That is true, but it is at least stable has a good dividend and in unlikely to be as effected in a big down turn, compared to banks and shopping centre owners.
| 4,082.300 | -52.700 | -1.27% |
Hopefully this will bring some fear in to the Aus market, as we are looking to buy.
Telstra firms as the worst comments I have found aren't too bad, Income Investors view is real income has only marginally increased over the last five years. That is true, but it is at least stable has a good dividend and in unlikely to be as effected in a big down turn, compared to banks and shopping centre owners.
Monday, April 11, 2005
ASX Outlook from Dale Gillham 11 Apr 05
When the market confirms the low, you will find many stocks present buy signals, so right now I suggest you use the next few weeks to study the market to find which will be the best to buy. That said, given that the next rise is highly unlikely to go beyond 14 months, I recommend you be more conservative if you leverage your investments. It is generally during the last stages of a bull market when many people get caught out and end up losing money.
http://www.wealthwithin.com.au/pages/default.cfm?page_id=17472
The trustees agree with this outlook and will look to position themselves for gains over the coming months. Concentrated on shares with the greates potential and least risk. Current thoughts have not changed, Opis Fund, Telstra, ANZ, WDC and NAB are on our watchlist. Telstra May 4.94 Puts are looking very attractive, as the trustees would be happy purchasing shares under 5.00.
http://www.wealthwithin.com.au/pages/default.cfm?page_id=17472
The trustees agree with this outlook and will look to position themselves for gains over the coming months. Concentrated on shares with the greates potential and least risk. Current thoughts have not changed, Opis Fund, Telstra, ANZ, WDC and NAB are on our watchlist. Telstra May 4.94 Puts are looking very attractive, as the trustees would be happy purchasing shares under 5.00.
Why do things go wrong when you tell?
The very first book I read on options was the ten biggest mistakes an options trader could make. I forgot which number it was but telling anyone about an active trade was a big called mistake. Here, once again is an example. I have had lots of profitable trades in the last month, but the one I wrote about has turned in to a loser. BWNG covered call. Still at least it is only a small loser and if I take the risk of not covering my call when I sell the BWNG shares tonight then at I will come out even. Though that would leave me naked short on BWNG for four months. Umm might be worth the risk, but if a buyout came the price would shoot up and I could lose even more than the $340 that I should close out for tonight.
The upside takeaway from this is if I had gone long the shares at the original $5.15 I would be down $1270. SO once again the options strategy comes out ahead.
Also, by using turtle approach of cash management and only taking a part stake to begin with I limited the loss the on this position.
The upside takeaway from this is if I had gone long the shares at the original $5.15 I would be down $1270. SO once again the options strategy comes out ahead.
Also, by using turtle approach of cash management and only taking a part stake to begin with I limited the loss the on this position.
Wednesday, April 06, 2005
Investment Clock
The Investment Clock is a great long term investment guideline. Where are we on the investment clock today? Interest rates rising,, share markets peaked, housing peaked, commodity prices peaking. Looks like it is getting close to 2 o'clock.
What to expect.
Rising rates, falling shares, falling commodity prices. Get ready for a downturn in the world economy and cashed up to profit during the next upturn.
Dog Bowl Super Fund is steering clear of economically sensitive stocks like the banks and Westfield, though may look to pick up some utility style stock like Telstra. The Fund will remain heavily in cash waiting for better long term buying opportunities ahead.
What to expect.
Rising rates, falling shares, falling commodity prices. Get ready for a downturn in the world economy and cashed up to profit during the next upturn.
Dog Bowl Super Fund is steering clear of economically sensitive stocks like the banks and Westfield, though may look to pick up some utility style stock like Telstra. The Fund will remain heavily in cash waiting for better long term buying opportunities ahead.
Subscribe to:
Posts (Atom)