Downward Spiral to Continue ???

[Aji Widhiwijaya]

 

Some say it's not at the bottom yet, but valuations look appealing across the board..

 

Bank stocks seem to be the hardest hit.

According to Bloomberg data :

ANZ         P/E = 11.54  ($25.9)

CBA        P/E = 15.25  ($52.74)

Westpac  P/E = 13.56  ($25.41)

NAB        P/E = 12.49  ($34.74)

 

Btw, this is just one sector that I've always wanted to own... But other sectors also look attractive..

I definitely see a compelling reason for buying stocks if this trend continues.... no need to hurry though.

 

Adhit, what do you think of these valuations on banks? what's your take?

I remember, your price target on ANZ is around $22 -> PE 10 .. 

[Adhitya G.]

Hi Widh,
 
That is right. The consensus is that sub prime related losses could went up to 200B. Announcement to date is approx 1/4 of it.
I suspect you can be patient with the big banks as they are in a dire shares price plus revenue problem for the long haul (see my comments on banks in the archive). Again the sector look attractive with a big if. Australian economy keeps growing in the face of US induced global slow down. US banks are valued at PE 10 .. so without attractive forward earning outlook, PE 10 should be our target.
 
I like ANZ expansion plan to Asia. If you like, we can discuss ANZ right here ... However, I havent got internet installed at home yet so its a bit difficult to do research at present.

Regards,
Adhitya

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Date: Thu, 17 Jan 2008 10:09:39 +1100
From: aji.wid...@gmail.com
To: austin...@googlegroups.com
Subject: Downward Spiral to Continue ???

[Aji Widhiwijaya]

Thanks for the insights .. yup remember your posting on banking sector.. it does make sense now, reading it thru again.

 

Yup, heard about ANZ expansion into Asia. In fact, one of Fiera's friends' boyfriend (an Oz bloke) works for ANZ emerging market unit and he's been busy travelling to various part of SEAsia, since pretty much in the last couple of years.. So I will definitely have a discussion if we meet him again someday ;)
 

I also like the new CEO, a bit of a cowboy and has a good reputation in Asia, during his tenure with HSBC.

Read about him on paper, he nearly got killed in SthAmerica while working there. The car he was driving being ambushed by a bunch of gangsters.. he managed to escape by running his car into them or something crazy like that ...  pretty gutsy I thought  ;)

[Aji Widhiwijaya]

I guess the above question is finally answered, at least given by what's happened today...

 

Well, I was well aware what the risks when I entered the market..

Again, my move to acquire AFG has been my biggest mistake so far, but again I was well aware what I was going into..

 

I'm holding to my position and not selling anything....

Nonetheless, it's been a rewarding learning experience... ;)

[Adhitya G.]

Benjamin Graham said 'you are neither right or wrong because what others said .. it is rather whether your fact is right or not'...
This is a philosophy of a man which family fortune was wiped out of the market in 1930s depression.
My take is: company which able to overcome US recession will come out on the top. They will be able to take out weakened competition, increase market share and prepare for the next economic cycle. A company with low gearing/debt will not be impacted much by the increase of interest rates... A company with good cash will be able to buy out their competitor a the bottom of the market. Most importantly, a company with excellent people will be able to find their way out.
 
What are these companies? I don't know for sure. What I have is a bunch of list which I have to re-research to reaffirm the 'fact' (which will be impacted by recession)
However,
- It is likely that they wont be the darling of the bull market because their profit growth are likely come from debt/acquisition. They would likely be overweight in the expansion and will take some time to steer their culture to defensive mode.
- I will be patient as these market condition is likely to be here for a while
- This downward spiral was accelerating last night until Fed cut interest rate by .75%. So this will likely take few more time before it settles.
- I readied some of my cash for gradual 'bargain' purchase.
 
If this is depression ala 1930s... It is still good to buy index at the bottom. 27% discount seems like a good deal to me. But I wont be in a rush !

Regards,
Adhitya

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Date: Tue, 22 Jan 2008 17:03:54 +1100
From: aji.wid...@gmail.com
To: austin...@googlegroups.com
Subject: Re: Downward Spiral to Continue ???

[SPAWN]

ehem ehem

 

 

Tengs buat nasihat nya pak....(uhuuuu uhuuuu *sambil nangis* tapi tetep tegar !!!)

Katanya kemaren ASX jongkok tiarap yah...gw jadi males liat portfolio gw..

 

Lo tau dari mana si petuah2 kayak si Benyamin itu perasaan lo sering banget refer ke orang2 seperti itu. Seeet dah !!! Maen Game dikit napa mas....

 

Darwin

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[Adhitya G.]

Folks,
 
You must be wondering what on earth you should hear about these words again.
Share investing...
Its speculative! ... too many sharks! even the professionals didn't know what they were doing!
Oxiana.. down; Zinifex ... down! Allco .. face on the floor! ... ABC.. even the founder is no longer in the share register! ... ANZ... it was $21 last time I check. down 30% from peak! Ok start with MFS and Centro.
Even the 'experts' stop investing (Read Alan Kohler's comment on Eureka report 6 Mar)
 
Within these noises and the sadness of sitting on unrealised loss, one thing that I can bet my bottom dollar on: This will turn around. Even if you bought into market share in the midst of great depression (1930s), You are likely to get some 15% p.a. gain in the following few years.  As the price fall, opportunities abound. That was also true for 1987 crash... true for 1997 Krismon... true for 2001 dot com bubble.  Rio was the cheapest for years about 6 months ago when the market was in panic mode (81 bucks back in July 07)... There are others that will become RIO of today. They may not shot to 60% gain in the space of few months but good business will eventually be reflected in its security price. I am salivating in excitement searchig for these securities ..
 
Very... very.. very important note though: you must buy the right shares. It may be worth checking stock purchase tips from Mr Warren below ( he made approx 10billion last year). More details are in the attached Berkshire newsletter...
............Charlie and I look for companies that have a) a business we understand; b) favorable long-term

economics; c) able and trustworthy management; and d) a sensible price tag. We like to buy the whole

business or, if management is our partner, at least 80%. When control-type purchases of quality aren’t

available, though, we are also happy to simply buy small portions of great businesses by way of stockmarket

purchases. It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone....
 
 

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