Glass
12th July 2010, 08:17 PM
Here's a guy who can't work out why the market is not doing what the Analysts are saying. He just can't seem to get his head around the con. I find it interesting reading the thoughts of people who nearly get it. You can see the outline of their face through the opaque matrix barrier that is between us and people like this. I can hear them clearly but they can't hear me. Probably all muffled..
Anyway this is a long article. I didn't realise the guy quoted George Soros so much. I cut a fair bit out. The OT is covered in the last paragraph below if you want to shortcut to it.
Seems to me that it is odd a comany can pay dividend without even making a profit. So if there is no pofit, it's easy. Just borrow money to pay the dividends. Anyone see the problem here?
It's a waiting game
Analysts, like the sharemarket last year, may have got ahead of themselves, writes David Potts.
Somebody is reading this market very badly and I hope it's not you - or, worse, me. Then again, maybe the market is misreading us. Plenty of experts are saying the economy is on a roll, in which case share prices are undervalued.
Our most reputable forecasters, the Treasury and the Reserve Bank, are gung-ho about the next 12 months. <--- Who are those guys exaclty? IMF?
If the economy is going to do a lot better, then shouldn't the sharemarket? Well, you'd think so but I'll come back to that.
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................................
Since they're among the most leveraged of all stocks, banks are particularly susceptible to international financial conditions. That would seem to rule out their stocks rallying this side of Christmas. With the banks, representing almost half the value of the entire market, treading water, it's hard to imagine other stocks taking off.
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................................
There's nowhere else speculators can go. The euro is fraying at the edges and billionaire George Soros, who famously took on and beat the Bank of England in 1992 when it was trying to peg the pound against it, says it's doomed.
His hedge fund has also been buying gold and he was reported a few months ago as saying the earliest stages of a bubble are best. He's said before that bubbles always burst but let's not get ahead of ourselves.
Sadly, he's keeping mum about whether he's buying or short selling the US dollar, except that he wrote in his book, The New Paradigm for Financial Markets, that it will fall and he's on YouTube saying the only reason it's getting stronger is because the "system" is sick.
"I know exactly what the dollar is going to do but I'm not at liberty to tell you," he says. I don't like the sound of that.
................................
................................
Odd couple are set for a bust-up
While the sharemarket is in the doldrums, there are two booms going on: one in gold, the other in US bonds.
It's an odd combination, since a boom in one usually precludes a boom in the other. Gold buyers don't normally trust paper securities such as government bonds in uncertain times.
Both are bubbles and so will eventually burst.
Odd couple they may be but one thing they have in common is they're both based on panic. They also show how investors are split down the middle.
Those worried about inflation go for gold. Those worried about deflation  falling prices and shrinking economies  head for bonds.
Still, gold supporters are taking a punt on inflation surging again, when all the signs point to the opposite.
................................
................................
It's a waiting game DAVID POTTS
July 12, 2010 - 2:26PM
Bear or bull? While the sharemarket is in the doldrums, there are two booms going on.
Analysts, like the sharemarket last year, may have got ahead of themselves, writes David Potts.
Somebody is reading this market very badly and I hope it's not you - or, worse, me. Then again, maybe the market is misreading us. Plenty of experts are saying the economy is on a roll, in which case share prices are undervalued.
Our most reputable forecasters, the Treasury and the Reserve Bank, are gung-ho about the next 12 months.
If the economy is going to do a lot better, then shouldn't the sharemarket? Well, you'd think so but I'll come back to that.
................................
................................
There's nowhere else speculators can go. The euro is fraying at the edges and billionaire George Soros, who famously took on and beat the Bank of England in 1992 when it was trying to peg the pound against it, says it's doomed.
His hedge fund has also been buying gold and he was reported a few months ago as saying the earliest stages of a bubble are best. He's said before that bubbles always burst but let's not get ahead of ourselves.
Sadly, he's keeping mum about whether he's buying or short selling the US dollar, except that he wrote in his book, The New Paradigm for Financial Markets, that it will fall and he's on YouTube saying the only reason it's getting stronger is because the "system" is sick.
"I know exactly what the dollar is going to do but I'm not at liberty to tell you," he says. I don't like the sound of that.
................................
................................
Odd couple are set for a bust-up
While the sharemarket is in the doldrums, there are two booms going on: one in gold, the other in US bonds.
It's an odd combination, since a boom in one usually precludes a boom in the other. Gold buyers don't normally trust paper securities such as government bonds in uncertain times.
Both are bubbles and so will eventually burst.
Odd couple they may be but one thing they have in common is they're both based on panic. They also show how investors are split down the middle.
Those worried about inflation go for gold. Those worried about deflation  falling prices and shrinking economies  head for bonds.
The world's most successful hedge fund speculator, George Soros, appears to be in the inflation camp. He says gold is in the early stages of a bubble, though that was a few months ago, so for all we know he might be out by now.
More recently, he's been predicting a double-dip recession in the US and Europe, which, by keeping interest rates low, would be good for gold.
................................
................................
Relaxed dividend rule 'a positive'
A little-noticed government reform has made it easier for dividends to be paid.
Previously, a company had to report a profit, or at least have some retained earnings, before it could declare a dividend.
But the rules have been relaxed. The new test is that a company has to be solvent. <-- have to be able to meet the debt repayment only
This will especially help listed investment companies. In 2008, Wilson Asset Management had to suspend its dividend because it wasn't making a profit under the international accounting rules adopted by Australia. Assets have to be marked to market, so if the sharemarket plunges so does its reported profits.
"It is one of the most positive steps for the stockmarket and capital markets I have seen in over 30 years," says Geoff Wilson of Wilson Asset Management.
"Essentially we will always be in a position to pay a dividend irrespective of current-year or retained earnings."
Dividends account for more than half the sharemarket's returns over time.
With the market so volatile they're a godsend and put a floor under the stock price
Full article....... (http://www.theage.com.au/money/investing/its-a-waiting-game-20100712-107b4.html)
Anyway this is a long article. I didn't realise the guy quoted George Soros so much. I cut a fair bit out. The OT is covered in the last paragraph below if you want to shortcut to it.
Seems to me that it is odd a comany can pay dividend without even making a profit. So if there is no pofit, it's easy. Just borrow money to pay the dividends. Anyone see the problem here?
It's a waiting game
Analysts, like the sharemarket last year, may have got ahead of themselves, writes David Potts.
Somebody is reading this market very badly and I hope it's not you - or, worse, me. Then again, maybe the market is misreading us. Plenty of experts are saying the economy is on a roll, in which case share prices are undervalued.
Our most reputable forecasters, the Treasury and the Reserve Bank, are gung-ho about the next 12 months. <--- Who are those guys exaclty? IMF?
If the economy is going to do a lot better, then shouldn't the sharemarket? Well, you'd think so but I'll come back to that.
................................
................................
Since they're among the most leveraged of all stocks, banks are particularly susceptible to international financial conditions. That would seem to rule out their stocks rallying this side of Christmas. With the banks, representing almost half the value of the entire market, treading water, it's hard to imagine other stocks taking off.
................................
................................
There's nowhere else speculators can go. The euro is fraying at the edges and billionaire George Soros, who famously took on and beat the Bank of England in 1992 when it was trying to peg the pound against it, says it's doomed.
His hedge fund has also been buying gold and he was reported a few months ago as saying the earliest stages of a bubble are best. He's said before that bubbles always burst but let's not get ahead of ourselves.
Sadly, he's keeping mum about whether he's buying or short selling the US dollar, except that he wrote in his book, The New Paradigm for Financial Markets, that it will fall and he's on YouTube saying the only reason it's getting stronger is because the "system" is sick.
"I know exactly what the dollar is going to do but I'm not at liberty to tell you," he says. I don't like the sound of that.
................................
................................
Odd couple are set for a bust-up
While the sharemarket is in the doldrums, there are two booms going on: one in gold, the other in US bonds.
It's an odd combination, since a boom in one usually precludes a boom in the other. Gold buyers don't normally trust paper securities such as government bonds in uncertain times.
Both are bubbles and so will eventually burst.
Odd couple they may be but one thing they have in common is they're both based on panic. They also show how investors are split down the middle.
Those worried about inflation go for gold. Those worried about deflation  falling prices and shrinking economies  head for bonds.
Still, gold supporters are taking a punt on inflation surging again, when all the signs point to the opposite.
................................
................................
It's a waiting game DAVID POTTS
July 12, 2010 - 2:26PM
Bear or bull? While the sharemarket is in the doldrums, there are two booms going on.
Analysts, like the sharemarket last year, may have got ahead of themselves, writes David Potts.
Somebody is reading this market very badly and I hope it's not you - or, worse, me. Then again, maybe the market is misreading us. Plenty of experts are saying the economy is on a roll, in which case share prices are undervalued.
Our most reputable forecasters, the Treasury and the Reserve Bank, are gung-ho about the next 12 months.
If the economy is going to do a lot better, then shouldn't the sharemarket? Well, you'd think so but I'll come back to that.
................................
................................
There's nowhere else speculators can go. The euro is fraying at the edges and billionaire George Soros, who famously took on and beat the Bank of England in 1992 when it was trying to peg the pound against it, says it's doomed.
His hedge fund has also been buying gold and he was reported a few months ago as saying the earliest stages of a bubble are best. He's said before that bubbles always burst but let's not get ahead of ourselves.
Sadly, he's keeping mum about whether he's buying or short selling the US dollar, except that he wrote in his book, The New Paradigm for Financial Markets, that it will fall and he's on YouTube saying the only reason it's getting stronger is because the "system" is sick.
"I know exactly what the dollar is going to do but I'm not at liberty to tell you," he says. I don't like the sound of that.
................................
................................
Odd couple are set for a bust-up
While the sharemarket is in the doldrums, there are two booms going on: one in gold, the other in US bonds.
It's an odd combination, since a boom in one usually precludes a boom in the other. Gold buyers don't normally trust paper securities such as government bonds in uncertain times.
Both are bubbles and so will eventually burst.
Odd couple they may be but one thing they have in common is they're both based on panic. They also show how investors are split down the middle.
Those worried about inflation go for gold. Those worried about deflation  falling prices and shrinking economies  head for bonds.
The world's most successful hedge fund speculator, George Soros, appears to be in the inflation camp. He says gold is in the early stages of a bubble, though that was a few months ago, so for all we know he might be out by now.
More recently, he's been predicting a double-dip recession in the US and Europe, which, by keeping interest rates low, would be good for gold.
................................
................................
Relaxed dividend rule 'a positive'
A little-noticed government reform has made it easier for dividends to be paid.
Previously, a company had to report a profit, or at least have some retained earnings, before it could declare a dividend.
But the rules have been relaxed. The new test is that a company has to be solvent. <-- have to be able to meet the debt repayment only
This will especially help listed investment companies. In 2008, Wilson Asset Management had to suspend its dividend because it wasn't making a profit under the international accounting rules adopted by Australia. Assets have to be marked to market, so if the sharemarket plunges so does its reported profits.
"It is one of the most positive steps for the stockmarket and capital markets I have seen in over 30 years," says Geoff Wilson of Wilson Asset Management.
"Essentially we will always be in a position to pay a dividend irrespective of current-year or retained earnings."
Dividends account for more than half the sharemarket's returns over time.
With the market so volatile they're a godsend and put a floor under the stock price
Full article....... (http://www.theage.com.au/money/investing/its-a-waiting-game-20100712-107b4.html)