By: ang101000
29/10/2009
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Hi Lanlordcity,
It is not my intention to defend Menta but he is correct.
2) Menta is right when pointing the finger at the Australian banks as they are heavily exposed to home loans, hence they are at risk. Furthermore, technical bank insolvency has two forms:
(this is not new ie I'm repeating myself)
1) they don't have access to credit
2) their assets base get devalued.
(Simple way of putting the argument)
1) During 2007, at the beginning of GFC, you will recall that international credit markets have been frozen (banks didn't want to lend to other banks).
Given that Australian banks(big 4) are sourcing their funds for loans from international markets and those markets were frozen, the banks could not rollover their (short term) due debts, so technically they were insolvent. The government stepped in guaranteeing the banks overseas exposure (debt).
2) In USA, the banks had faced the 2nd scenario, their assets have turned out to be devalued (by a huge amount), so technically they were insolvent until the government stepped in and purchased the risky/devalued assets.
see link for USA banks
http://en.wikipedia.org/wiki/Subprime_mortgage_cri sis
For Oz banks see professor Ross Garnout's book 'The Great Crash Of 2008. |
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By: mentawaisurf
29/10/2009
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Mortwell, are you going to answer my question by letting us know your previous aliases on this blog, or do you insist I waste more of my time on you and go back to check before outing you?
While forecasting specific price targets for individual stocks is akin to crystal balling, although many analysts presume to know better, forecasting broader market trends has a higher probability of success due to larger volumes showing a clearer picture of the psychology in the market (as Elliott Wave have shown). So it's not a stretch to project that a break below the key market support of the March low in stock indexes should see many individual stocks also fall below their March lows. As mentioned, we can expect financials to lead the way again along with the higher-beta stocks while the defensive stocks fall to a lesser degree (just as we saw last year). As for any potential bankruptcy of our "to big to fail" big-4, well taxpayers would have to come to their rescue if necessary (just as they did in the US & UK and other nations during the initial wave of the crisis). As for MQG, now our only investment bank, they would be left for the market to dictate their fate. |
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By: almurrie1@y7mail.com
29/10/2009
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Actually, Menta was right. When the USA banks were forced to increase their reserves by the European controlling reserve bank, technically, for a while, they were all bankrupt. They had lent too much and now had to hive off incoming cash into a reserve account. The only way they could do this was by diverting incoming interest payments to this reserve account until this committment was met and in effect completely stop lending. This prevented the "bankrupt" Australian banks from rolling over their loans. Kerashhh!!!. K Rudd Guarantee necessary.
The 1930's crash was engineered at the time because the Reserve Banking System was about to be dismantled. Only in the 1930's, the run on the Banks caused total devestation. I believe this time it was engineered to collapse the West and throw the power to a Central World Government controlled by the bankers. Governments everywhere knew this and stepped in to stop any runs on the Banks and barely averted a worldwide collapse. It is still lurking. While the final stages are now unfolding the other tricks are about to be played, so it would be wise to remain cashed up, and I mean not in a Bank. Watch the banks try to jump loan interest greater than the RBA increases. You can see who is driving the RBA, certainly not the best interests of Australia!!
All I can say is - wait for it, we had it good for a bit.
Al |
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By: landlordcity
29/10/2009
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Hmmm.. Well, I thought sarcasm was more obvious than that. I had to read the post through twice and I suppose I would now call it mockingly ironic. It was a bit too subtle to be called "sarcastic".
Mentawaisurf, why is estimating a future share price target for the top five Australian companies "crystal balling" but estimating that a company is likely to be bankrupt in future not "crystal balling"? I haven't been around long enough to know whether you claim the NAB will go bankrupt or not, but if you have, aren't you "crystal balling" its share price to be zero? If you predict the allords is going to fall below the March low, aren't you "crystal balling"? After all, the March low is a very specific number. |
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By: ecchi.gaijin
29/10/2009
2:34 pm Yahoo! Profile:
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| I believe it was sarcasm landlord, and quite a good example of it too as half way through reading i was also trying to figure out if he was being sarcastic or not. |
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By: mentawaisurf
29/10/2009
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Mortwell, your uniquely sarcastic tone sounds very familiar. Have you appeared on this blog before under another name? You can save me the time of going back to check for such previous sardonic discourse.
As you seem determined to discover specific price targets on particular stocks, which is merely crystal balling in my view, my final advice to you is this. Go talk with your financial advisor and obtain his 'professional' opinion. Then come back and let us all know just how well you went investing on his advice. |
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By: landlordcity
29/10/2009
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Huh? I thought your question to Mentawaisurf was:
Since you think the markets and individual companies are overvalued by at least 50%, what do you estimate the individual true share value of Australia's top five companies is?
Where was the answer? What was the answer? I didn't see any answer... |
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By: mortwell4
29/10/2009
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mentawasurf,
Thank you for your most enlightening post. I knew that as you have endlessly forecast the imminent collapse of our economy, you must also have a position on the "true value" of the largest of Australia's companies and also knew that you would be willing to share with us the benefit of your analysis of those companies just as you have shared with us the benefits of your analysis regarding the market as a whole. How, after all, could anyone possibly intelligently take a "short" or "long" position on anything unless an analysis of the relevant sector or company was made and you have proven you have done your homework.
Thank you very much for your prompt and efficient reply, you answered my questions precisely and concisely. Your reply was everything I expected. |
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By: mentawaisurf
29/10/2009
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Mortwell, thank you for your most 'sincere and genuine' request for my view. No one can pretend to know exact price targets for particular stocks (although many analysts proclaim to).
Stock markets are the most sensitive barometer of social mood. That's why they react 'before' the economy does. The economy lags this key social mood indicator, therefore, the economy always shows the best news at market tops and the worst news at market bottoms. So fundamentals will often lead you astray (as we've just seen with both the NAB and ANZ reporting better than expected earnings yet their share prices fell hard). MQG rocketed over 380% since its March low on nothing but hope and optimism about their future prospects based on their leveraged debt model. They've recently invested heavily in the US and Canadian investment banking sectors on their belief that this is the ideal time to expand their market share and brand globally. If they're right they stand to make a fortune (along with their shareholders). If they're wrong it could be their downfall. If we are heading into the major phase of the bear market then they could quickly fall below their March lows, along with all financials. Other stocks would no doubt follow the trend, just as they did last year, but likely to a lesser degree than the financials.
Forecasting market trends is probabilistic. Is it possible this rally could continue to new highs and above moving forward? Certainly. Is it likely? Not from what I've been reading. Basically, it's a worrying time to be holding any stocks. If one's not a trader maintaining their stop losses, on both long and short positions, then it's not the time to be in the market at all. Investors could take some healthy profits, cash up and sit contently and at ease on the sidelines and watch how the next few months unfold. But since I'm not a financial advisor, I can't give any advise. |
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By: mortwell4
29/10/2009
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Mentawasurf,
My apologies for an error in my last post. I'm sure you picked it up but for the benefit of other who mightn't be so well informed as you, BHP reached lows of $19 or so in March and not $15 as I mistakenly stated in my previous post to you. In fact, it was MQG reached that low; BHP did not. My mistake however facilitates my asking you a further question. Do you think MQG will once again fall to the March low of $15 per share? If I remember correctly, I think that was one of the banks you had in your sights to short. In your esteemed view, might the MQG share price go lower even than $15, or go bankrupt, as you think the NAB will?
Thank you once again for your time and patience and for your generosity in sharing your analytical skills. |
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By: ecchi.gaijin
29/10/2009
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" no one wants to hear what they don't want to hear."
Including those who don't want to hear the real question that they were actually asked and yet to answer? ;) |
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By: mortwell4
29/10/2009
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"I'm not a financial advisor but if you want more precise timing and pricing forecasts I can highly recommend subscribing to elliottwave.com -"
Yes, I've had a look at the elliottwave website on your previous recommendation. Thank you very much for sharing that with us. I am not looking for "financial advice" but simply wondered what your enlightened view was of the current individual worth of the top five Australian companies. Unfortunately, the Elliotwave website doesn't deal with such specifics and as you have often discussed shorting the banks, etc, I wondered what your view was currently as to their worth. As you are extremely well versed in this field and have been extraordinarily generous in past sharing your analysis with regard to the collapse of the Australian and world economy and sharing with us your analytical precience that the NAB was in reality bankrupt, I thought you might share your prodigious intellectual analysis of the market system by indicating to us what you believe the true value of the top five listed companies in Australia. Could you please offer something there for us? I mean, since in your expert view the market is going to fall below the March lows, and as BHP shares were selling for 15$ at that time, do you think that 15 dollars per share now is fair value for BHP , as it was in March, or do you think $15 is an inflated value for BHP? Should it be $10 per share perhaps, or lower? Is $11 per share fair value for ANZ as it was in March, or should it in reality be much less than that? Thank you very much in advance for your generosity in sharing your esteemed perspective.
Just to remind you, the companies I would like to hear your opinion as to their true value are: NAB, BHP, RIO, CBA, ANZ. Since it is your intention to short the market when the time "is right", you must have formulated what their "true value" is. Should you get a chance, perhaps you might also like to include WOW or maybe even WES! Thank you. |
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By: mentawaisurf
29/10/2009
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Yes Ang, both consumer and bank credit are contracting around the world. This is despite all the co-ordinated efforts by governments and central banks world-wide. Regardless of what we've been told by the pundits about imminent inflation, deflation is winning.
Actually Mortwell, I posted back in March that we could expect a multi-month bear market rally to correct the initial wave of decline, but no one wanted to listen then. I later mentioned that the Dow could rally to 10,000 (ASX200 4750) and we'd still be in a major-degree bear market rally. Markets ran slightly higher but now that we're here, and optimism is extreme again, no one wants to hear what they don't want to hear. I'm not a financial advisor but if you want more precise timing and pricing forecasts I can highly recommend subscribing to elliottwave.com - they have been spot on during the last few years I've been with them. Needless to say, if we're heading into the major bear market to new lows, then all stocks will fall, just some more than others (ie. especially financials which will lead the trend - again). |
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By: mortwell4
29/10/2009
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Mentawasurf, given the hundreds of posts you have made reporting the inevitable collapse/decline of the Australian/world economy and your vast and profound knowledge on the issue of deflation and economic depression, I wonder if you might be a little more specific for us.
We have all read of your obvious disdain for the banks, particularly the macquarie bank and your predicitions of the collapse of the NAB, so I wonder if you would be so kind as enlighten us less generously intellectually endowed individuals with what you percieve as the actual worth per share of Australia's top five companies. I mean, NAB is currently trading at a little under $30 per share as of closing yesterday. Given your belief that the entire market is more than 50% overvalued, what do you think one NAB share should be sell for on the market (if it was only properly assessed according to your economic dictums, and as it will be in due course) or RIO for example.
Here's my list. Please tell us what you think their true share value should be:
NAB,BHP,CBA,RIO,ANZ.
I know my request will probably be child's play for you as I know you would have given this matter a great deal of thought considering that yoiu are currently waiting for the right opportunity to short the market but without wanting to intrude too much on your prodigious skills of economic analysis, if it's not too much for me to ask, and of course, time permitting, I wonder if you might also include Woolworths in that list.
Thank you very much for your kind reflections. |
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By: ang101000
28/10/2009
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full article link;
http://au.news.yahoo.com/a/-/mp/6395685/eurozone-b ank-lending-contracts-for-the-first-time/ |
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By: ang101000
28/10/2009
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Menta,
Whenever I feel optimistic you come along with some 'bear' insight and shutter my illusions about recovery. So here is the latest news that proves you are right again (sorry cut/paste job)
'Eurozone bank lending contracts for the first time'
FRANKFURT (AFP) - Bank lending to the eurozone private sector shrank in September for the first time on record, the European Central Bank said on Tuesday, a stark warning that any recovery is fraught with uncertainty.
Lending contracted by 0.3 percent in September, a bank spokesman said, after growing by just 0.1 percent in August.
It was the first time the figure was negative since the bank's records began in January 1992.
"There are still few signs that the ECB?s unlimited provision of liquidity to banks is prompting any pick up in eurozone broad money and lending," Capital Economics economist Ben May commented.
The central bank is to release its latest quarterly survey of bank lending on Wednesday and "the credit cycle remains the biggest question mark on the timing and the extent of the recovery in the eurozone," UniCredit economists Loredana Federico and Davide Stroppa wrote.
Growth of the ECB's wider M3 money supply indicator, which measures cash, deposits and various other financial items, fell to 1.8 percent in September from a revised 2.6 percent in August, the ECB spokesman said, also a record low.
Lending and money supply data reflect consumer demand and overall activity in an economy.
A falling figure points to lower demand, which normally means inflation will ease and allow the ECB to cut interest rates. However, ECB rates are already at a record low of 1.00 percent and are not expected to be cut further.
ECB president Jean-Claude Trichet has warned meanwhile that "uncertainty remains high" regarding a recovery from the eurozone's first recession and analysts say credit could get tighter as demand from business rises. |
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By: lasty49
28/10/2009
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Jades,
There is no right way or wrong way to base your decisions.
Yours maybe oil driven,Menta's maybe some rabbit counting soothsayer and mine maybe the dartboard.
As long as it works for you that's all that matters.
Nice call and good hunting . |
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By: jadeshangrila
28/10/2009
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| Lasty, I have foretold punters several days ago that the market is facing the similar problem as in 2007 and sold off my stock before others notice. This wasn't a pot luck guess this was one calculated based on previous crash. If the analysis was based on debt inflation it wouldn't have been so accurate. My forecast was based on the the fact that oil has started to take off just as the economy starts to grow. The consumption of oil in China has increased 16% in 2009 compared to 2008, what about India. Oil is a limited resource unlike debt and printed money anyone or government can print as much as they like. This GFC is different from 1930s in the it is not the result of debt but of selective inflation of crude oil a key commodity which governments cannot control. It is the side effect of global economic growth and everyone wanting to live a good life and a car to drive. You can't grow a modern economy without enough oil. If someone found a cheap alternative to oil the Dow will take off like a rocket. |
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By: mentawaisurf
28/10/2009
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| Australia's share market has actually surged over 50% from the March lows (a near perfect key fibonacci retracement). And it's no coincidence that we followed the Dow almost to the percentile. We can expect no different as US stocks (initially financials) again lead us into the underlying bear market trend - this time to new lows. |
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By: ecchi.gaijin
28/10/2009
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| The international loans have been reined in somewhat though, look at what happened to Rams etc. I am guessing that some of our banks were/are asked to get their ratios in better order. |
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By: almurrie1@y7mail.com
28/10/2009
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Davo
Repay? They will have lent the extra already, free money making more money. Exactly what banks are ALL about.
Al |
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By: landlordcity
28/10/2009
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It may be claimed we are the "fastest" growing economy in the G20 but as far as the stock market is concerned, we have a bit of catching up to do. Still, many of you expect our exchange to suffer major falls still. Here's the scorecard showing the year to date comparison against a few other economies. We don't win too many gold medals in this race.
Argentina MERVAL +168.56%
Peru LGI +148.50%
Brazil Bovespa +114.58%
Hang Seng Hong Kong +97.91%
India NSE50 +90.46%
Korea KOSPI +74.29%
Mexico Bolsa +73.77%
Shanghai Composite China +72.94%
Colombia IGBC +67.29%
Malaysia KLSE +45.69%
Spain IBEX +45.25%
Nikkei +40.63%
Britain FTSE100 +35.0%
Netherlands AEX +31.22%
Germany DAX +30%
Canada TSX +29.47%
USA DOW +25.27%
Australia All Ords +24.39% |
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By: ecchi.gaijin
28/10/2009
4:40 pm Yahoo! Profile:
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| Anyone remember who was predicting AUD to reach 40s? lol |
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By: lasty49
28/10/2009
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"It now seems likely that the USD has put in a major long-term bottom."
Didnt I say a few days ago that as soon as we see some weakness the bears will be in euphoria !
Dont jump to conclusions yet Menta, this market was due for a correction, the magnitude unclear.
The long term uptrend is still intact and until such time that its broken the overall risk is the upside.
Dont go licking that honey just yet my bearish friend. |
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By: davidjtroy
28/10/2009
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"It now seems likely that the USD has put in a major long-term bottom "
Wouldn't this be somewhat of a saviour for our banks? I mean they got themselves in trouble while the AUD was buying USD.75 (average) so as we get closer to parity they can repay some of these monies (back to more comfortable leverage levels) and get more bang for their buck? |
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