Opportunity is knocking!

If vas dropped to $40 a share could you imagine what the bulk of the fund holdings like banks would drop to, probably half what they are now. Crazy low from highs

 

You dont try to pick the bottom. And you train yourself to accept losses. For shares you average in.

the best time to buy is when the market looks bad. So you buy assuming there will be short term losses but long term gains.

Worked for property during the gfc.

 

For me, I have no desire to pick the bottom. I just want to know I'm not buying at the top...AND the craziness is finished. So I'm looking for big falls, and then either a period of time where it flattens out, or at a minimum the volatility is back to normal and things look like they're not so desperate.

I have a few metrics I use to determine this - macro indicators and then specific things I want to see in the share chart as well.

 

You bought 140K worth of asset with 140K though. I bought 660K worth of asset with 140K. The only way you can purchase 660K worth of assets using 140K of cash is with a margin loan ( I doubt you'd get a facility that large with just 20% down, but let's just say you could) or using resi property equity, so you'd have to repay that as well..... so again I ask, how does it compare...after accounting for an apples v apples comparison? What you are arguing is the same as me suggesting the dual occ only cost 140K

 

US has cut rates to ZERO and is reintroducing QE..... hold on for the ride folks.
Bank of Canada cut 50bpts at emergency meeting over the weekend
Reserve Bank NZ cut 75bpts over the weekend
Yields on some Govt bonds are crazy low... no wonder fixed rates are getting so cheap last week and this week.

• 2-year yield: US 0.49% Australia 0.54%
• 5-year yield: US 0.72% Australia 0.57%
• 10-year yield: US 0.96% Australia 0.95% Germany -0.55%

 

I wonder whether this may help, feds reduce ir to 0-25%.... omg near 0
Stabilise US stock market ? How will this impact on our market.

Redirect Notice

 

I think futures briefly jumped up, but then broke heavily down and from what I can currently see all market futures are down 4.5% or more. ASX 200 already down 3.4% 3 minutes after open. Seems like everybody in the market agrees with the central banks - this is bad!

From what I have read, volatility is a big part of a bear market, and this one certainly has delivered thus far.

 

RBA now expected to cut a further 25bps in the very near future apparently. I think a number of other central banks have cut too.

 

I think the spread between RMBS securities that banks fund of and the longer yield curve has risen dramatically in recent days though. Usually there's a small risk premia between them and when gov't bond rates lower, so do RMBS rates.

I.e the market is pricing in a rising risk of mortgage defaults now.

The funding costs bank borrow at will be this rate, not the gov't bond rate.

I.e. fixed rates MAY move in the opposite direction soon.

Theoretically this makes sense. If I'm buying securitised packaged up mortgages and providing liquidity & funding to originators/banks/etc, I want to be paid far greater than 1 week ago to reflect the rising risk of default and fear mindset taking hold of markets.

Central banks will do all they can to fight this. The Fed's direction of latest QE to RMBS buying program probably reflects the above too.

Should also mean flow through of any further rate cuts has more limited pass through (without QE with it), as banks grapple with higher funding costs associated with dried up funding liquidity.

This market has moved rapidly (like most) in recent days/weeks too.

 

Down 7% now

After not watching the market for a long time, I can't stop watching now.. the volatility is out of control..

 

Haha yeah, I have never really been interested in finance prior to the past few months after seeing a financial adviser for the first time, but it's a fascinating time to get interested. Perhaps a bad time, things will be boring once everything stabilises!

Also, futures actually limited down for the S&P500 and Dow I believe, not quite there for the NASDAQ. Goldman Sachs predicting -5% Q2 GDP growth for the US.

 

Evil business idea:

1. Wait until Covid19 really hits.
2. Advertise something that old people buy at an unbelievably low price.
3. Wait for the orders to come in.
4. Then send out an email apologising that it was a pricing error and ask whether they would like their money refunded or counted as store credit.
5. The ones that died obviously won't reply, leaving you with a nice amount of money for not actually doing anything.

 

It's looking very similar to 2008 right now. Only without the exponential increase just prior.


The US market is different - they're still above the major trendline, but if that breaches it's going to get super messy. Probably will breach that tonight given the news over the weekend.



I'm not big into indicators but the price action tells the story Fun times!

 

US futures down again - think that's why

 

If I can fix all my investment loans for between mid 2s and 3s, I think I'll hit the go button.

 

AMP 3 year fixed. Investor P&I 2.85% Investor IO 2.99%

 

I just fixed investment loan with ING at 2.75% PI. I was on variable rate of 3.36% after latest cut. So overall even if there is one more cut and assuming it’s passed in full I would still be better off with fixed rate.


Cheers
Oracle

 

And..... dow futures down by the 5% limit.

there are no fundamentals in this sort of market. Only psychology.

 

Same as the supermarket right now, really.

 

Completely understandable Terry. I understand feeling bummed if you bought something then prices dropped further, even if it doesn't actually hurt you financially.

No one can predict the future, even though some on here are pretending that they can. It's all guess work. All you can do is estimate the probabilities that a certain outcome will occur.

For example, the 52 week high for VAS is around $90. It was trading at $62 on Friday, and could go lower.

Of these outcomes, which is more probable, in your guesstimation?

$60 - 33% drop from high.
$50 - 44% drop from high.
$40 - 56% drop from high.

Past performance is no indication of future performance, but to put these drops into perspective:

Black Thursday, 1929 - down by: 83.4%
Black Monday, 1987 - down by: 29.6%
The Dot Com Bubble, 2000 - down by: 44.7%
The GFC, 2008 - down by: 50.9%

4 Stock Market Crashes And What Caused Them | Canstar

So, if VAS dropped to $40, this would represent the second biggest crash in Australian stock-market history. No one can rule that out, just guess if it is a probable outcome.

I do think it is a time to watch and wait, but it would be a shame to wait for VAS to hit $40 and miss it at $55 (for example, assuming it gets that low).

There is the regret of paying too much and the regret of missing a good price because you were waiting for a better price. Tricky times.