ASX Stock Market Just Dropped to 5100, Good Investment Opportunity or Is There Better Choices/Timing?

L[Deactivated] on 24/08/2015 - 07:12

This topic doubles as a reminder to Ozbargainers that with bank interest rates at best 3.6% p/a. The ASX down from 5900 to 5100 appears a good time to buy in.
I will be waiting for perhaps 4700 down spike in the next few weeks and buy initially $40k ASX index cfd, then if another few hundred point down buy another $40k, then convert later to fully owned shares to hold for longterm.

That's my plan, any discussion/advice on my approach, or other investing choices at the moment while prices are relatively low, would be hopefully in right interest for Ozbargainers.

I may not say much as I don't know what's happening in the money world nowadays, but would like to read what others think.

Financial

Comments

  • modsec802 on 24/08/2015 - 07:50
    +3

    Convert later? This will trigger capital gains tax at the time of conversion.

    • [Deactivated] on 24/08/2015 - 11:27

      Good point.

  • shaybisc on 24/08/2015 - 08:04
    +5

    No one in the business of expert opinion on the stockmarket and finance generally has a freakin' clue.

    • KaTst3R on 24/08/2015 - 10:54

      Economists get it wrong the majority of the time. This is nothing new…

    • [Deactivated] on 24/08/2015 - 10:59

      I guess it has a lot to do with sentiment/fear so news probably keeps things unpredictable.

    • DeafMutePretender on 25/08/2015 - 00:03
      +2

      And anyone who does have a clue wouldn't be telling anyone anything. They'd be investing their own money and profiting quietly.

  • mskeggs on 24/08/2015 - 08:28
    +4

    All you can be certain is that now is a better time to buy than when the market was at 5900. Nobody knows where it will go next.

    Certainly, it is preferable to buy when things are low, but relative values are not a perfect guide. For example, if you had bought when the market was down 50% in 1929, you would have gone on to lose 80% of your investment! My own approach is to buy shares in individual companies when they are low, and sell them when they are higher (I always seem to sell too soon). But that requires looking at beaten up stock prices of lots of companies and being able to quickly understand whether the problem is with the business, or just the market.

    Buying an index is a good way to remove the risks of individual errors, but tends to lessen the individual successes. juicedpixel is right that there is little reason to chop and change between an index and direct holdings (more paperwork with direct holdings too).

    If I understand you correctly that you wish to invest a total or $80,000 I would possibly make numerous investments of $10,000 over the next 8 months, called dollar cost averaging, to guard against the risk that markets will fall further.

    • [Deactivated] on 24/08/2015 - 11:24

      Thanks for that. I'm looking at Dividends long term, so getting fair value on the purchase price is what I'm after.
      Like so many others here 3.5% bank interest just isn't as good as we would like to achieve.So the other lazy option (shares) is looking better for now.

      • mooboy on 24/08/2015 - 14:23
        +1

        If you're looking for lazy options with a good dividend yield, I suggest you investigate the high yield index ETFs from Vanguard and State Street. The ASX codes are SYI and VHY. Or, for something more conservative, the Vanguard ASX 300 index fund: VAS.

        As mskeggs mentions, could either spread out your spending over longer term (just standard brokerage costs each investment), or, could go with your original idea to buy 40k now/soon and another 40k in the future.

        The above isn't professional financial advice and is not customised to your situation … ya da ya da

    • Mad Max on 24/08/2015 - 18:30

      Most of the banks look quite attractive at these prices. Do you think the impact of higher capital requirements have been overdone?

      • mskeggs on 24/08/2015 - 19:53

        Since you ask, no.
        I think property will be the banks undoing. Take the Chinese investors out of the market and Sydney and Melbourne have insanely priced real estate with no buyers. You can sustain irrationally priced real estate a long time, and umpteen years with no recession helps, but eventually credit will contract and prices will have to go too.
        And when that happens, banks will be well under capitalised with knock on issues to the share price.

        You can argue that perhaps property won't fall, or just fall a little and stagnate. But that means limited credit growth and consequently limited upside for the banks. And that is the best outcome.

      • cannedhams on 24/08/2015 - 21:47

        have a read of this (I think most of Chris Joyes columns on the big banks are quite good):-

        http://www.afr.com/business/banking-and-finance/the-incredib…

        If you really want to invest in banks, go outside Australia where previous bank failures have meant that risk is adequately priced in.

        Read this as well:- http://www.afr.com/real-estate/goldman-sachs-says-housing-is…

  • Gotchas on 24/08/2015 - 08:35

    The knife is starting to fall

    • mskeggs on 24/08/2015 - 12:39

      Maybe, but I've been of that opinion sine 2008!
      It is a bit like saying it will rain. You will be right eventually.
      It is completely clear that the world economy can't digest the massive debt burden out there, but the central banks have tried mighty hard, kicking off several bubbles. You could miss out on making a lot of money being right in the long term.

      • cannedhams on 24/08/2015 - 17:50

        Yep, if you pray for rain, it eventually does fall.

        People think that Peter Schiff, etc etc are geniuses for picking the 2008 share market collapse even though Schiff had been calling it since 2001.

        Or as Keynes said, in the long run the earth will fall into the sun and we are all dead. Sure the merry go round will stop, the trick is knowing when.

      • Mad Max on 24/08/2015 - 21:14
        +2

        I agree with you that Melbourne and Sydney real estate looks overpriced, but the recent Chinese currency devaluation may actually make the rich Chinese more eager to get their money out. And Australia's real estate has been a favourite.
        I think that ANZ looks very attractive at $26.91.
        And if tomorrow it gets closer to $25 I think it will be a screaming buy.

        • cannedhams on 24/08/2015 - 22:18
          +2

          We've been here before. People said that it wouldnt matter if Japan hit the wall, because even if it did then Australian assets would only become more attractive to Japanese investors.

          Japan did hit the wall, and they promptly held a firesale on all their Australian assets to try and raise some desperately needed cash to stem the bleeding back home.

          The Chinese appetite for Australian real estate has been vastly overstated. There are plenty of other places that Chinese can invest in, and it is still the case that Chinese people that have invested in Chinese real estate over the last fifteen or so years have done vastly better than those who might have invested in Australia over the same time period.

  • kev98 on 24/08/2015 - 14:36

    I regret buying WOW @ $34 now

    Might buy some more NAB soon though if it drops to $28

    • cannedhams on 24/08/2015 - 17:48
      +1

      I said I'd buy WOW at $25.00, and its just about there, but now I'm getting cold feet. I think it will head south a bit more. If it gets down to 22 I think it is an absolute screaming buy but it is not there yet.

      I read about 20 different opinions on WOW about a year ago, nineteen said hold or buy and the twentieth said sell. The twentieth one was the most persuasive. It made the simple argument that WOW was still priced for growth as long as it was above $25.00, and the chances of it growing much more than it currently is is debatable.

      I am a price conscious consumer but still find myself shopping at Coles or Woolies over Aldi. Convenience means something, and if you buy home brand the price difference is marginal.

  • idjces on 24/08/2015 - 19:12
    +1

    I have a habit of jumping in too early on the falling knife :(. It's a quick fast drop down, but it always take's it's time on the way back up. You might miss out on 3% gains on the way back up, but that's better than the 10%+ drop you could have avoided by not jumping in too early on the way down.

    Wait for the dust to settle

    • cannedhams on 24/08/2015 - 21:12

      Good advice. The other good piece of advice is "if you fluke it, bank it". Geez I wish I had cashed in on a few good returns in 2008.

  • cannedhams on 24/08/2015 - 21:39

    Also, afaik, there are no asx listed cfds anymore. Good riddance, there are a couple of posts on here from people who lost their shirt on them. Whats wrong with taking a punt on vanilla securities?

  • chumlee on 24/08/2015 - 21:40

    Good read here. I find Marcus Padley more reputable than most brokers.

    http://marcustoday.com.au/webpages/1332_free-articles.php?ar…

    • mskeggs on 25/08/2015 - 07:24

      That is like saying he is the most compassionate shark in the feeding frenzy. Entertaining writer, though.

  • lost69 on 25/08/2015 - 10:48
    +1

    Shemitah 2015 is coming, its the end. Its all falling apart:

    http://www.zerohedge.com/news/2015-08-24/black-monday-brings…

    http://www.zerohedge.com/news/2015-08-22/seven-year-glitch-h…

    Invest in MREs and 7.62s instead.

  • eckorock on 25/08/2015 - 12:20

    re your tactics "buy ASX Index CFD… then convert later to fully owned shares to hold for longterm."

    That's not how CFD works, I think you might be confusing buying Options with CFDs. CFD is a buy/sell like a stock, if you started by buying it then to complete the trade you would have to sell it. Likewise if you started by selling it then to complete the trade you would have to buy it back at some stage.

    Options on the other hand you can "exercise" and convert from an option into shares. But they are time sensitive and lose significant value as they get closer to expiry date.

    Even if the Index CFD is technically a "Future", e.g. "ASX200 December 2015", you still won't be able to exercise it , it will just "roll over" to the next-month future and keep rolling over indefinitely.

    Just to re-iterate, CFD does not "convert" into fully owned shares, the only way you could realize that tactic would be 2 completely different phases.
    1. Buy CFD, Sell CFD (via CFD dealer like IG)
    2. Use assumed profits to Buy fully owned stocks (ASX50 blue chip?) (via Broker like Comsec) and hold for long term

  • [Deactivated] on 31/08/2015 - 02:44

    Years ago I borrowed a book on the stock market. My eyes glazed over and I returned it. I'm thinking of trying again. But before I invest all that time, can you folks already doint it answer a question:

    Is the stock market, in the end, just a game of chance - essentially - gambling?

    What I mean is, I've always gotten the impression that while insider trading is illegal, the millionaires are the ones that really make the money - because they get tips from their rich mates - and they all make certain they don't get 'caught'. And everyone else is really stumbling around in the dark.

    Oh - and I was reading the asx site… They say to get a broker, put your order in with them, etc. In this day and age surely there's a way to do instantaneous buy/sell?

    If not, who's the cheapest?

    Thanks for reading.

    • Mr BoMBAStiG on 31/08/2015 - 09:32

      Watch the movies Wolf of Wall Street, Wall Street and Wall Street: Money Never Sleeps to answer your first question.

      There are plenty of free online tutorials on the ASX site and Commsec (cheapest btw) to answer your second one.

      • [Deactivated] on 31/08/2015 - 23:38

        I just looked at Commsec. Their info is the perfect example why people must give up.

        The fees from their page here:
        https://www.commsec.com.au/support/rates-and-fees.html

        … are:

        Share Trades Internet Preferred
        $19.95 (Up to $10,000)
        $29.95 (Between $10,000 and $25,000)
        0.12% (Over $25,000)

        Share Trades over the Internet
        $29.95 (Up to $10,000)
        0.31% (Over $10,000)

        So you look up what "internet preferred" means (because it's cheaper). You find you have to be a "CHESS Participant Sponsored with CommSec and settle your trades either through a Commonwealth Direct". Um… Ok - you wonder what that means. So you type "CommSec CHESS Participant" into a search engine, find another page that takes you to this form:

        https://www3.commsec.com.au/media/57736/issuersponsored.pdf

        … Nowhere do they tell you who can do this. The word "sponsored" certainly seems to indicates not everyone can.

        Also, further down that first page:

        CommSec Share Packs over the Internet
        $66 per pack (One share pack of 6 shares - $11 per share)

        Cheaper again, but another info-chase begins to discover what's required.

        It takes days just to work out how to open… what do you call it… a trading account!? People must give up and go to a 'professional' - who I know from past reading, make the safest trades (earning you less) and take fees (which reduces profit).

        Then you have to do the same with every other portal to the stock market. I should be ready to buy/sell in a few months, lol.

        My hat is off to people that find a way through this maze.

    • eckorock on 31/08/2015 - 12:31
      +1

      No, you have a fundamental misunderstanding of what it is about.
      When you buy stock you are literally buying a share of the ownership of that company. Which entitles you to do things like vote on issues, share in the annual profit, etc.

      • [Deactivated] on 31/08/2015 - 23:12

        Thanks… Yeah, I get the the long term part. I mean the basic view people have, that know even less than I do. i.e. Buy low, it goes up, sell - look for the next.

        I just want what everyone does I guess. Fast, easy way to make money, LOL.

        I'm going through the asx site now, and udemy courses I've never opened. ;-)

        Actually I posted in another thread, but all beginners there I think, so no-one answered… Has anyone tried these pay-newsletters that tell you what/when to buy/sell? And are any of them much good?

  • [Deactivated] on 31/08/2015 - 23:45

    Sorry for venting my frustration above.

    Noticed lots of other Commsec fees. $14.95 for a stop loss, in addition to the sell fee.

    Isn't "CMC Markets" cheaper?

    • 1-10 trades: $11 or 0.10%, whichever is greater
    • 11-30 trades: $9.90 or 0.08%, whichever is greater
    • > 30 trades: $9.90 or 0.075%, whichever is greater
  • eckorock on 01/09/2015 - 13:27

    best advice I can give you is that if you want to invest money in stocks, invest into a managed fund or ETF. Put your money in and make regular contributions and then just leave it on auto-pilot. Don't worry about individual stock picking.

    • [Deactivated] on 02/09/2015 - 03:21

      Thanks for the contructive info. I am considering it. Too early to tell yet though, whether I can get a handle on it myself. I have $300k (cash) to invest, and that's a lot to trust a stranger with.

      (Amazing what you can turn $70k into, when all you do is browse gifs and funny videos. What's reddit anyway!?)

  • strikerzebra on 04/09/2015 - 14:16

    It's pretty much impossible to predict where the market will go, the safe bet is buying now as it's definitely a better time to buy than when the market was 5900 and hold longterm as the markets so up long term, after every crash they do rebound eventually, sometimes after a year, sometimes a few years but the market always goes up long term.

  • C Lee on 10/05/2020 - 21:29

    Can anyone recommend me books for introduction of stock market please?
    I have been always interested in shares but I want to study properly this time

    • cloudy on 10/05/2020 - 22:09

      securities analysis. ben graham. my pc doesn't have caps :(

Login or Join to leave a comment
Login Join