Forum Archive Index - April 2000

["hugh webber" <hugh.webber@clear.net.nz>]

sorry I haven't read all the debate on this but its too interesting a topic
to miss.
Whether a crash will come or just a winnowing out of overhyped stocks that
don't
come up with the earnings once they've had their initial development
honeymoon
is the question.
NZ is in completely a different situation now from 1987, which really was
overblown and
leveraged to hell, apart from some techs so I don't think we'll get a
general crash here.
In the US the comments have been that investors are now 
more selective on techs and are investing in the ones expected to come up
with decent
earnings rather than blue sky and its getting harder and harder to get
IPO's with those
x baggers.
I don't think the Central Banks would let a crash go very far without
stepping in.
Personally I do a relatively small ratio of borrowing to get a magic round
number of shares
and pay it off before having a go at the next target. Cash? what's that? 
I recall Bob Jones anecdote of how he complained to Ron Brierley that the
richer he
got the more he struggled for cash. Ron told him the secret was to put
aside an investment block
with returns earmarked just for pocket money but I guess you need to be
rich enough to do that.
Diversification? what's that except a means of ensuring a low weighted
average return.
Buffet is not into diversification, he says its a means of hiding failure
when you should be
targetting success.
Some interesting posts on Buffet I'd like to come back on.
I'm interested in Buffetology as a technique, not in following Buffet's
moves which would be
after the horse had bolted anyway. I suspect he has gotten old and departed
from his own
analysis; when a share matures he should be getting out of it into a better
Buffett type share
but I think he has become a prisoner of his own size; he can't dispose of
his holdings without
crashing the market - who would want to buy a share Buffett wants to sell
except at a very very
low price? maybe he should be taking the companies private in that
situation, breaking them up
and selling to institutions.

cheers,
hugh
----------
> From: jbartley <jbartley@ihug.co.nz>
> To: sharechat@sharechat.co.nz
> Subject: Re: [sharechat] The way things will go down
> Date: Sunday, 9 April 2000 22:16
> 
> There is little doubt in my mind that a crash will come.  The difficulty
I
> have is that I have been reading predictions for such a crash since 1991.
> Prechter from Elliot Wave Theorist was predicting one back then.  The
crash
> was predicted for last year in Xmas 1998 by  a well known commentator.  A
> crash was predicted for 2000 when the bug hit; I am still waiting
> 
> I think the only answer is to diversify, do not use any form of leverage
and
> have a reasonable amount in cash.  I would be interested in the comments
of
> others
> 
> Jim Bartley
> 
> 
> 
> 
> At 20:09 04/09/2000 +1200, you wrote:
> >When the crash comes there are a few things that you should have already
> >done:
> >
> >1.   Paid off all consumer and credit card debt.
> >2.   Sold your house if it has a mortgage and perhaps even if it     doesn't.
> >3.   Reduced your personal spending levels.
> >4.   Be right out of the market.
> >
> >People assume that because the underlying economies are strong that this
> >will support the stockmarket. That proposition is patently and
> >historically false. When the vast amounts of wealth that have
> >accumulated on paper are wiped out overnight consumer spending stops in
> >its tracks. Recession comes fast and hard and leverage accelerates the
> >process.
> >
> >The market prices are unprecedented in history and it is clear the
> >so-called new economy companies will never match the expectations no
> >matter how well they perform in terms of profit.
> >
> >There are also indications that the internet will also be nothing like
> >the hopes for it have been. In fact it is trending towards being merely
> >a global billing, mail and pornography medium that is making very little
> >money (profit) for the participants.
> >
> >The so-called old economy stocks are also way overpriced. Remember, if
> >consumer spending slows right down then old-economy P/E ratios are
> >suddenly pushed right up.
> >
> >Unfortunately, the mania has reached such a fever pitch that the outcome
> >will be so bad that it will be the most significant economic event of
> >the last 300 years.
> >
> >The detrious will be catastophic. NZ will be hit with regard to the
> >stockmarket less badly that most because the NZ market is all but dead.
> >However, there will be a large negative effect. The real economy will be
> >badly affected. 
> >
> >It will be a fascinating study as all panics are.
> >
> >So, if you are not a professional and you are still in the market then
> >you are a fool!
> >
> >Most of the comments on this tightly regulated stock chat site are  from
> >cherries who weren't active in the last crash and have little
> >comprehension of what one is like.
> >
> >No doubt I'll cop some flak from these people for my comments but it is
> >to the more intelligent people I am speaking.
> >
> >So the choice is yours. Either batten down the hatches, day trade
> >holding no positions overnight or you will pay the price.
> >
> >Best of luck.
> >
> >PS. Have purposely included no humour in this email because I know it is
> >objectionable to the site owner and most of the readers.
> >
> >PPS The last people you should rely on for a view on what is going to
> >happen are brokers, analysts and the media who all have their own
> >dictated agendas.
> >
>
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> >
> 
> 
>
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