driver
- 02 Mar 2006 15:23
cynic
- 12 Jun 2006 19:55
- 218 of 934
I also think HYC is a good company with a good future. Trouble is, market is so unsettled and likely to remain so for at least a further few weeks, that it takes a brave man to dive in
explosive
- 13 Jun 2006 17:21
- 219 of 934
What do you make of CHNS then Cynic?
cynic
- 13 Jun 2006 17:27
- 220 of 934
No idea m8 ..... All I now know is that CHNS stands for China Soto who seemingly make batteries or somesuch.
As for trading in general, I haven't a clue what to do..... Does one take cash out and hope to buy cheaper on the morrow or stay put and watch it all crumble further? ..... or do you really think there will be at least a significant DCB tomorrow?
driver
- 13 Jun 2006 17:40
- 221 of 934
Have we just witnessed the start of a crash or a healthy correction? As the worlds stock markets, commodity prices and property continued to climb higher last month, Warren Buffett, the legendary US investor, said at Berkshire Hathaways annual meeting that "like most trends, at the beginning its driven by fundamentals [but] at some point speculation takes over."
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A prime example of speculators getting onto the bandwagon was the rally in the gold price from $600/oz to over $700/oz in just over three weeks. The background fundamentals became more supportive over the period: US foreign policy was unravelling, the spectre of inflation was raising its ugly head, oil prices were firm and the dollar was falling. But the speed and scale of bullions rise suggests a prominent helping hand from speculators.
The problem about speculative excess is that you do not have a clue when precisely the music will stop. The important matter for investors, looking for longer-term rewards with more certainty, is where do we go from here?
In the last few weeks we have seen a shake-out in financial assets generally. Commodities, where recent speculative excess has been greatest, have been hit hardest. This has a knock-on effect on mining and energy stocks, which in turn have driven stock indices down.
But there is something bigger going on.
When market participants see other investors liquidating their positions, they panic, do the same and ask questions later. This is why markets tend to fall faster than they rise. Theres no such thing as an upward crash. The best explanation for the recent market upheavals is that investors have, en masse, switched to becoming more risk averse.
Is this change in mood justified? The proximate catalyst for the slump in share prices starting Wednesday last week was the disappointing US inflation numbers. Investors have been on a knife-edge in recent weeks, worrying that the Fed may overreact to economic data. Mr Bernanke makes less opaque utterances than his predecessor, and that transparency hasnt helped. So worse-than-expected inflation numbers provoked a sell- off in growth assets like commodities and equities, based on the view that the Fed will tighten US rates too much in the face of these figures.
But Mr Market has in effect overreacted on behalf of the Fed, and done Bernankes work for him. Lower stock prices and lower commodity prices give the Fed less reason to tighten! Meanwhile, it follows that any benign economic data could spark a relief rally. In other words equity and commodity markets have just endured a healthy correction.
Indeed, there is little proof that the recent rally in commodity prices is finished. The current commodity bull run dates back to late 1999 when gold and oil bounced off their 25-year lows. Its origins lie in a slow and inadequate supply response to a surge in Asian demand. In recent months the commodity markets have overreacted to this powerful idea, and the ensuing falls have acted as a reality check for commodity investors.
Markets do not go up in a straight line, however persuasive the fundamentals. But as long as demand continues to outstrip supply, the recent falls in commodity prices do not signal the end of the bull run.
Commodity cycles are inherently much longer than most participants imagine. It takes seven to 10 years to bring on a new oilfield, and five to seven years to get a copper mine up and running. Higher commodity prices now are the price we must pay for not investing in production infrastructure 20 years ago.
The supply response is also hampered by declining oil reserves in the North Sea and Gulf of Mexico, plus the current rage for nationalising energy resources amongst Latin American politicians. Moreover, tighter environmental regulations and tougher obligations on mining companies to provide social programmes for the local populations have added to the planning time for new resource projects.
There are also shortages of equipment in the mining sector. Chip Goodyear, Chief Executive of BHP Billiton, told analysts earlier this year that miners had to wait up to 18 months for the giant tyres used on earth moving equipment. Skilled manpower is also in short supply. Workers are mindful of their improved bargaining power and there has been an increase in strikes among mine workers.
All these factors continue to hamper the supply response in commodity markets. They will help underpin firmer prices in the long-term. Nor are we on the threshold of a severe shake-out, as was experienced in 1987. Some pundits cite eerie similarities between now and then.
The run-up to "Black Monday" was characterised by concerns about the widening US trade deficit, a falling dollar, fears of rising inflation and uncertainties surrounding the new Fed Chairman, Alan Greenspan. But as Mark Twain put it "History does not repeat itself, it rhymes."
The capitalist world now is very different from that in 1987. There has been a 25% jump in the global labour force since 1990, as ex-communist states have become part of the market economy. It follows that the balance of power is shifting decisively in favour of the corporate sector and away from labour. Meanwhile, the emergence of low cost centres has slashed the prices of manufactured goods, while the spread of technology has enabled companies to run their enterprises more effectively.
Accordingly profits as a proportion of GDP are historically high. But there is no reason why it shouldnt be higher. Our world of brisk growth, lower manufacturing costs and low real rates is a more benign environment for equities than in 1987.
The FTSE 100 index and the FT-All Share are now more or less back where they started the year. Yet the P/E ratio of the blue chip index has fallen from 14 to 12 since then. This undemanding rating, together with low borrowing costs and the return of fear amongst investors, presents a buying opportunity for the shrewd rather than foolhardy investor.
Realistic
- 14 Jun 2006 17:03
- 222 of 934
driver: hoping for an opinion from you re ALY. Have you heard that there might be a deal at RGT or is this just company hype to keep the company afloat and the directors in a job? What chance of a deal at HML soon? VOG has recently taken a battering so could be a buying opportunity but PET has hardly moved so everybody must think that there is a deal there soon.
kimoldfield
- 14 Jun 2006 21:53
- 224 of 934
Realistic, ReGen are a company worth researching, they have some very good stuff in their pipeline and I am confident that eventually they will become a heavyweight, that is assuming they are not taken over, though that might not be a bad thing: they are close to a deal of some sort, how much value it will have I do not know. I would advise you to check them out on their website - http://www.regentherapeutics.com/regen/. Profitability may be close......or not! I am holding the shares long term, have done for some time and am not fazed by the price fluctuations.
HML should have news regarding their potential licensing deal with an "un-named dermatological pharmaceutical company based in the USA" by 16th or 19th of June; mI hope it is good news!
kim
Realistic
- 15 Jun 2006 14:06
- 225 of 934
driver and kim. Thanks for the replies. It is always difficult to find out what is really going on. It seems that there are umpteen million RGT shares looking for a home with few buyers. HML must be a buy if they really are that close to a deal.
moneyplus
- 21 Jun 2006 16:23
- 226 of 934
I have heard whispers that erx is very close to news and next week for hml. hope this is all good as I'm hanging on to mine. latest find for you to check out is IOV again awaiting news for that one but I bought in because the company looks a potential bagger last interims were v. good. what do you think driver??
explosive
- 21 Jun 2006 19:59
- 227 of 934
Any views on The Carphone Wharehouse? I know they aquired Telequip which in turn has aquired Norcom....... Seams this company has a few sidelines and maybe a play at the bigger companies is coming...
cynic
- 21 Jun 2006 23:18
- 228 of 934
Realistic ... I concur HML looks a pretty good bet at the current price though apparently they have had a couple of other deals collapse at the last hurdle. I suspect that is why the price is not already higher.
moneyplus
- 06 Jul 2006 18:49
- 231 of 934
EPY is going up again after a pull back-half year results due end of September. It's hard to buy many online-I'm expecting good rewards from this one!!
silvermede
- 25 Jul 2006 09:37
- 233 of 934
See RIFT news today and also COH trading Update
hewittalan6
- 25 Jul 2006 09:41
- 234 of 934
Watch BRY (contracts flowing, no debt) and HYC (just keeps going up).
Alan
silvermede
- 25 Jul 2006 09:48
- 235 of 934
Alan - Noted & thanks
moneyplus
- 25 Jul 2006 13:36
- 237 of 934
EPY-half year results out on the 28th interest is definitely rising!!