Global Sharemarkets

Written By: - Date published: 9:05 am, February 15th, 2018 - 63 comments
Categories: business, capitalism, Economy, economy, Financial markets, International, monetary policy, tech industry - Tags:

U.S. stockmarkets have been highly volatile over the last two weeks. Nothing like a good scare on the global share markets to make people wonder if their money is safe.

The volatility has induced all sorts of unhelpful histrionics about the end of capitalism, and all kinds of media love this fear.

Markets are now happily recovering.

But let’s separate global private debt in mortgages – which is where interest rates are directly important – from the sharemarket.

The most practical way to evaluate financial anxiety is though the interests of ourselves and those who rely on us.

For the sharemarket part of that anxiety, the most useful way to evaluate our interests is through Kiwisaver.

Kiwisaver is a voluntary work-based savings initiative, brought in by the Helen Clark Labour government back in the day. You get to withdraw money out of it after you turn 65, or if you need to as a deposit for your first house.

Kiwisaver is by and large the only way most New Zealanders will have their savings directly exposed to global investment markets.

If you have your Kiwisaver scheme managed by the same institution as your main bank, you should be able to have the balances and the tracking visible as one statement. At least one bank registers your Kiwisaver amount as an offset against your total debt with that same bank, and provides visibility across all accounts including Kiwisaver. Which is pretty cool when that total interest payment goes down and the total principle payment can be adjusted against it.

There are also a range of risk profiles that you can consider, and most of the good schemes enable you to alter those profiles. So you can see things go up and down, faster or slower, depending on what risk-reward profile you choose. Its certainly not a kind of nanny-state anaesthetic in which you just relax and it’s all done for you. Your hand should be on the tiller, and you issue the direction instructions.

That means choosing the degree of global investment volatility you are exposed to. No guarantees with fund managers – and you pay for it. But there’s a lot of stress avoided in having things managed for you.

There’s also legislation coming up in the NZ Parliament (go Fletcher Tabuteau!) for the state (it will probably be NZSuper) to run its own Kiwisaver fund as well (i.e. more directly than Kiwibank’s one).

So how much of our anxiety do we all really want managed? My suggestion is: manage your anxiety through the interests of yourself and the people who rely on you.

To compare our relative levels of safety at this juncture, it is worth tracking assets favoured in times of turmoil.

At about US$1,335 an ounce, gold is actually down from its highs last month of US $1,358. So unless you have a whole bunch of gold sitting somewhere, don’t worry too hard about that.

In currency markets, a Bloomberg index of yen against the US dollar, euro, pound and six other major peers is hovering at around its lowest levels since early 2016.

Measures of stresses in the banking system such as the Libor-OIS spread are little changed over the past month, suggesting no one is worried about banks getting in trouble. If you are keen you can look at the U.S. Federal Reserve stress testing models:

As our Minister of Finance has noted, our economy is trucking along just fine.

Two weeks ago, the IMF raised its forecast of global economic growth this year to 3.9%, up .02% from its projection last October. That’s the fastest rate since 2011.

I recall two years ago there was another bit of global financial heartburn, when concerns about a slowdown in China’s economy and high debt levels there sent the MSCI All-Country World Index down 1.93% in December 2015 and 6.09% in the first quarter of 2016. But then their economy rebounded for two straight quarters in a row, and continues trucking along.

Right now there’s plenty to be anxious in the world. The sharemarket is of any real interest only if you are exposed to it. If you are considering your own financial interests, and want a modicum of exposure to the global financial investment systems, talk to your Kiwisaver team.

Otherwise, inhale.

63 comments on “Global Sharemarkets ”

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  1. Antoine 1
    15 February 2018 at 9:19 am

    Hmm

    I don’t know if there’s so much to be relaxed about,

    A sharemarket crisis can be part of a broader financial crisis. Then businesses can go under, people can lose their jobs, other types of investment (bonds, property) can tank, banks can go under, the tax take can go down leading to less social spending, all kinds of nasty things can happen. Like 2008.

    A.

    • Ad 1.1
      15 February 2018 at 9:32 am

      Was fun writing this before Fletchers really melted.

      Still, since you vigorously defended Kiwisaver re Fletchers yesterday it’s hard to see what you’re complaining about.

      • Antoine 1.1.1
        15 February 2018 at 9:52 am

        I’m not complaining, I’m just disagreeing with your stance that people who don’t own shares have nothing to fear from a sharemarket crash.

        Also I didn’t defend Fletcher did I?

        A.

        • Ad 1.1.1.1
          15 February 2018 at 10:05 am

          You explained that a company the size of Fletchers at 7% of the NZX failing was nothing to worry about, either for Kiwisaver returns or for employees directly affected.

          Or was that someone else using your name?

          • Antoine 1.1.1.1.1
            15 February 2018 at 10:13 am

            I said that a 7% dip in the Fletchers share price was not a big problem in the context of a well diversified portfolio and that the Fletchers woes were not likely to result in a net loss of jobs. I dont see how that conflicts with what I’ve said here.

            A.

  2. Zorb6 2
    15 February 2018 at 9:43 am

    ‘There’s also legislation coming up in the NZ Parliament (go Fletcher Tabuteau!) for the state (it will probably be NZSuper) to run its own Kiwisaver fund as well (i.e. more directly than Kiwibank’s one).’
    You may be a bit confused here.Kiwibank’s kiwisaver fund is the old Gareth Morgan fund.It operates no different from other kiwisaver funds.
    The ‘Cullen Fund’ is the NZ Super Fund.

    • Ad 2.1
      15 February 2018 at 9:54 am

      Not confused at all.

      Read the bill. As per link provided.

      • Zorb6 2.1.1
        15 February 2018 at 10:17 am

        ‘The primary objective of the working group is—

        (a)
        to examine the accountability requirements of current KiwiSaver providers relating to fees and investment practices:

        (b)
        to advise on establishing a government-owned and operated KiwiSaver provider

        Why would you mention Kiwibank’s fund,it does not operate any different to other kiwisaver funds.

        • Ad 2.1.1.1
          15 February 2018 at 1:38 pm

          I mentioned it as a bracketed item because it is owned by the state and other state funds, so I mentioned them just to refine degrees of separation from state control, perceived or otherwise.

  3. Tony Veitch (not etc) 3
    15 February 2018 at 9:56 am

    Infinite growth in a finite world – sorry, I’ll need to have that explained to me – in simple terms please.

    • Leonhart Hunt 3.1
      15 February 2018 at 10:06 am

      oh that’s easy, Money as a concept has no limit as we currently treat money means it will always increase, buy the amount you need to buy items also increases, so technically you have infinite growth. But your buying power large stays the same (unless production massively increase with little/no cost or infra needed.)

    • bwaghorn 3.2
      15 February 2018 at 11:53 am

      Get on board the Falcon heavy . infinite space plenty of room .
      Its a shame they won’t have room for an ageing roustabout like me

    • Draco T Bastard 3.3
      15 February 2018 at 12:02 pm

      It’s not infinite growth that’s the problem so much. It’s that with capitalism all the wealth ends up in the hands of a few who then starve the rest of the world in their endeavour to have even more.

  4. Stuart Munro 4
    15 February 2018 at 10:01 am

    In the short term this may be true, but my feeling is that markets have not fully recovered from the softness of the GFC even now. Global shipping volumes often give a less volatile picture than markets because they don’t have the same level of nonsense like computer trading. They are still less than robust.

    https://www2.deloitte.com/insights/us/en/economy/global-economic-outlook/2017/shipping-industry-crisis.html

    • Phil 4.1
      15 February 2018 at 12:19 pm

      Your link does not support your comment.

      What it actually shows is a 2.9% per annum growth in the volume of goods transported (2008-2015). This means that the volume of goods being shipped is doubling every 24.25 years. This also means, in the same period, an approximate doubling in the number of cargo ships; the pollution they create; and other environmental impacts such as the number of collisions they have with cetaceans.

      I find this deeply troubling.

  5. Draco T Bastard 5
    15 February 2018 at 12:00 pm

    Capitalism is a failure.

    Continuing to promote capitalism at this point is purely anti-social.

    • ropata 5.1
      15 February 2018 at 12:11 pm

      Capitalism is not compatible with democracy or fair trade or a sustainable economy. Its only purpose is exploitation and externalising costs. The endgame is impoverishment and despair. Greece is the model

    • David Mac 5.2
      15 February 2018 at 12:20 pm

      The guy with a chainsaw working 50 hours a week doesn’t want to bankroll $100k p.a. couch surfers. Inside a week, he’d be swapping his saw for a TV remote.

      Driven a Trabant?

      • ropata 5.2.1
        15 February 2018 at 12:27 pm

        Citing crap engineering proves nothing about politics. NASA and CERN are state funded and lead the world.

        • David Mac 5.2.1.1
          15 February 2018 at 3:00 pm

          I disagree Ropata. When NASA are presented with a sub-standard length of neoprene tube it gets sent back to Neoprene Tube Pty Ltd and at NTPL’s expense they have another go or NASA talk to another manufacturer. Competition drives the quality of the tube.

          • ropata 5.2.1.1.1
            15 February 2018 at 3:08 pm

            As Fletchers and Fonterra so aptly demonstrate…

          • Draco T Bastard 5.2.1.1.2
            15 February 2018 at 5:31 pm

            But who developed the neoprene in the first place?

            Apple is a successful company because it had all that US federally funded research to sit on. Research it’s never paid for.
            SpaceX gets to launch a heavy rocket because of all the research that NASA and other space agencies have done. Research it hasn’t paid for.

            The list goes on and on and on.

      • Draco T Bastard 5.2.2
        15 February 2018 at 5:32 pm

        But that’s what he’s doing. Funding bludgers – the shareholders.

  6. Pat 6
    15 February 2018 at 12:11 pm

    lol….and remember the whole ponzi scheme is run on (over) confidence.

    Unfortunately viewing the sharemarket volatility as an isolated event of interest only to those directly invested ignores the the fact it is merely a symptom of underlying problems …..and reviewing your kiwisaver investor profile, while sensible will only have a personal impact at the edges.

    I posted this very good analysis a couple of days ago….it is well worth the read.

    https://www.interest.co.nz/opinion/92062/john-mauldin-ponders-last-weeks-sharemarket-ructions-us-government-debt-and-suggests

    Record debt, artificially low interest rates, rising inflation and crumbling infrastructure do not a good recipe make….especially when one of the cooks is Trump.
    (i deliberately ignored CC and increased natural disaster costs as things are grim enough)

    Would you lend him your life savings? and if you did what sort of return would you want for the risk?

  7. David Mac 7
    15 February 2018 at 12:26 pm

    Growth is as much to do with change as it is with producing more. There used to be 100’s of stables in central London and not a single black cab.

    • Enough is Enough 7.1
      15 February 2018 at 12:43 pm

      Yes I think people forget that.

      The goods and services that are in demand today will not be in demand in 100 years.

      Simple example: Oil is finite. So growth based on our use on oil is limited. Solar energy is unlimited (for the time being). We will over the next 100 years transfer from an oil dependent economy to something quite different. Growth will continue because we will be forced to change the way we live. That change generates the growth.

      • ropata 7.1.1
        15 February 2018 at 1:10 pm

        The century of cheap growth based on oceans of oil is over. There is no comparable energy source that provides similar energy density and ease of transport. The global economy is built on that assumption. All aspects of modern society will be massively restricted without oil.

        War, plague and famine are strong possibilities. “Growth” is over.

        • Enough is Enough 7.1.1.1
          15 February 2018 at 3:13 pm

          Ok

          Lets say the oil runs out tomorrow. Society as we know it changes forever and the world economy retracts by 50% over a 15 year period. Then what. Will it keep retracting? Maybe for another few years. Maybe more.

          At some point though we will hit the bottom and begin growing again.

          Growth is never over.

        • David Mac 7.1.1.2
          15 February 2018 at 3:22 pm

          Like Enough is Enough do you not see room for growth in oil alternatives? In 1900 cities could see no solution for the ever increasing piles of dung. Along came Henry Ford. I like his quote ‘If I gave the people what they wanted I would of given them a faster horse.’

          I don’t think cheap oil is over, at my Caltex petrol is still cheaper than their water. The oil giants are sitting on capped fields. I think it will be phased out, not because there isn’t any but because the escalating price makes exploring alternatives attractive and we want to stop altering the climate.

          Horses are now for hobbies and sport. I think oil derivative powered vehicles will go the same route.

          • ropata 7.1.1.2.1
            15 February 2018 at 6:52 pm

            Meanwhile the USA is strategically planting military bases in all the oil rich countries. They can cut the global oil supply lines at will and take it all for themselves. The first priority will be their war machine. If there’s any dregs after that it will go to industry and the elites able to pay top dollar. Public transport might be somewhere down the bottom of the priority list.

            The private car will be seen as historical evidence of this generation’s moral depravity and destruction of the future.

            • Exkiwiforces 7.1.1.2.1.1
              15 February 2018 at 6:58 pm

              You could say the same for China as well as some of their PLA Bases are start to appear strategic places.

            • David Mac 7.1.1.2.1.2
              15 February 2018 at 7:13 pm

              Cripes, yes that’s one view. I’m pleased it’s not mine. I’d struggle to maintain a happy demeanor and justify getting out of bed. I’d be in a state of constant depression.

              Do you really think motor cars represent our generation’s moral depravity and destruction of the future? I wonder if early civilisations saw fire in a similar light.

              I’m happy to continue using a car to visit my Mum and whip down to the shop for milk, blissful in my ignorance….I do love machines.

    • Draco T Bastard 7.2
      15 February 2018 at 5:41 pm

      Growth is as much to do with change as it is with producing more.

      The problem comes down to growth (get bigger) and GDP (gets bigger). So, yes, economists go on about growth also containing development but it’s not made clear because they’re choosing the wrong word and the wrong measurement.

      Much better to split the two. Have development and growth so that people know the difference.

      Of course, once they do that then it becomes obvious that we don’t need growth any more. Just development.

      Still, the big problem is capitalism and how it concentrates wealth into the hands of the few and thus drives up poverty.

      • Ed 7.2.1
        15 February 2018 at 5:42 pm

        And capitalism is failing.

      • David Mac 7.2.2
        15 February 2018 at 7:23 pm

        Hands of a few? Anyone holidaying in Doubtless Bay or enjoying a nice red are capitalism players Draco.

        If there aren’t 500 wagons loaded with milk powder heading to ports each day, kiss government paid benefits goodbye.

        • One Anonymous Bloke 7.2.2.1
          15 February 2018 at 7:30 pm

          Get off your knees. If there weren’t government support for business in the form of regulatory oversight and roads, there’d be no economy to speak of at all.

          • David Mac 7.2.2.1.1
            15 February 2018 at 7:53 pm

            Yes we need a government to mark out the pitch, blow the whistle and take care of those that can’t play. Capitalism needs taxation to survive, sure.

            But if the stream of logs, tourists and milk powder stops, government provision and enterprise alike, we’re all eating fern roots.

        • greywarshark 7.2.2.2
          15 February 2018 at 7:33 pm

          but i thought that dairy only brings in 6 per cent of our national earnings – though is a lot by physical volume.

        • Draco T Bastard 7.2.2.3
          16 February 2018 at 2:29 am

          Hands of a few?

          Yes. What is it now, eight people own as much as half the worlds population. That’s the sort of aggregation of wealth that causes poverty.

          Anyone holidaying in Doubtless Bay or enjoying a nice red are capitalism players Draco.

          Are they? Or is it that they have no option?

          See, I’m pretty sure it’s the latter. Enjoy a nice red? Either make it yourself, of which very few people have the time because capitalism has taken it from them, or buy it from a bunch of capitalists that have screwed down the workers to make themselves rich.

          If there aren’t 500 wagons loaded with milk powder heading to ports each day, kiss government paid benefits goodbye.

          That’s a lie.

          Government creates money, spends into the economy via infrastructure spending and UBI. That money will then be spent consuming NZ’s own resources of which we have quite a few.

          We don’t need international trade or money to utilise our own resources for what we need and want. That’s just another lie from capitalists.

          Actually, from what I can make out, capitalism is based entirely upon lies.

  8. AB 8
    15 February 2018 at 1:55 pm

    Prosperous insiders don’t recognise the extent of personal/psychological alienation that now exists out in punterland.
    Lots of people want a another financial crash, a Trump presidency, in fact anything cataclysmic enough to clean out the Augean stables of late-stage capitalism. They will seize on any sign of another GFC with glee. It’s remotely possible they’re right – nobody really knows.
    But it’s a dangerous thing to wish for. It took two world wars (50 million dead) and a great depression to give us the 35 year interregnum (1945-1980) known as the golden age of social democracy – before normal transmission was resumed.

  9. greywarshark 9
    15 February 2018 at 2:01 pm

    When anyone writes how rotten things are going to be and that we are doomed, I decree that they put in some useful and realistic thing that people can do to counteract things in their daily personal lives or in some group thing in their area.

    My latest thought is not new, but just the vision of it. I am thinking of the Russian nesting dolls that fit together, matryoshka. Neighbourhoods can find a way to be like that, closer, then the whole suburb and then town would have these mutually supportive groups that would mean that we were more than individualistic.

    We have neighbourhood support which is quiet at the moment but instead of just thinking about protecting against crime, getting to know a little about each other to say hello once a week, share leftover garden vegs etc. would be a greater reason for it.

  10. Exkiwiforces 10
    15 February 2018 at 3:46 pm

    I’m not really surprise that this correction has happen on the equity markets as this had to happen sooner or later as the threat of rising interest rates looms as interest rates worldwide are at historic lows and in some case at negative percentage rates in other worlds banks are charging you to keep money in the bank not the other way round.

    With record low interest rates around the world its been hard for those that use savings to live off aka retirees, semi retires or those you are about to retire from the workforce as the banks are seen a low risk option when compared to the equity markets. But with these low interest rates the only way these people could a return from their investment’s to live was to put it in shares as the return from dividends and share price increases offer a far better than in the bank, this comes with a far great risk than the Bank. As is the case with the mother-in-law she had to put the her retirement fund into the equity market because of the low interest rate, but the flip to this is she has really good accountant and he see the correction coming and pull her funds out late years.

    For me atm I can ride this storm out ever through I’m about to be pension off due work related injures i’m still getting a income at reduce level, but my partner and I have taken advantage of the low interest rates and reduce our debt to zero. Unlike a good percentage of my cohort who are spending up like a drunken sailor on a run ashore or cash up service person who has return from 6mths active service (I brought a house, kitted out the house white house, reno’s, pay down debt etc).

    But there is going to be a sting in the tail with my cohorts and those people that have use the low interest rates to maintain their lifestyle by putting everything on the card etc. or those that have kept on expanding their business while they haven’t put any savings or pay down debt for a rainy day. As these people will get caught when the rates will start going up. There was a graph in the Australian Newspaper or was it the ABC Finance Report in the new a couple of days ago. Showing household debt to income and paying debt off ratio. If interest rates rise to 3.5% by the end of this year as everyone is predicting this adds up to about 13% of total income.

    Now if households have to use 13% of there total income to pay off debt the effect on the overall Australia economy could be huge and only knows what affect if something similar a occurs in NZ. Most of the older generation and some of us Gen X’s know that interest rate have to some eye watering levels before aka double digits and the effect that has.

    We also need to remember the workers ongoing retirement saving funds have been heavily invested into the equity markets due the low interest rates which is ok if you are starting out or a quarter to half way of your working life you will be fine as the long term tend overall for equity markets is always going up. But if are you 3/4 quarters through working life or not far off from retiring, you may to want seeking some financial advice as I think the next 12 to 18 mths might be a little rocky as interest rates start going up as mob mentality sets in as everyone panics for the door. As those you are panicking on a the equity markets are those trying to make a quick buck, those you are high leveraged on the market, Option and futures traders trying to cover their ass as the market tanks which feeds on the Mum and Dad investors who have taken a punt of the market instead of having a family date out at the Trots where the odds are sometimes better.

    Keep claim and Keep carrying on.

  11. AsleepWhileWalking 11
    15 February 2018 at 5:03 pm

    “Measures of stresses in the banking system such as the Libor-OIS spread are little changed over the past month, suggesting no one is worried about banks getting in trouble”

    It might suggest nobody is worried, but what you didn’t say is that about a month before the latest craaash LIBOR fell below what is was in 1973. (In other words banks don’t trust other banks to pay back money borrowed – somebody’s very very worried).

    If JP Morgan and Deutsche have the value of their assets drop more than 3.8 and 3.9% they are screwed (Doucha Bank being rumoured to be technically insolvent and subject to a stealth bail out last year).

    Its good to see people on TS talking about the financial system. Maybe we won’t be sheep to the slaughter after all. Fingers crossed…

  12. cleangreen 12
    15 February 2018 at 5:31 pm

    The belief system in capitalism is now on the wane so it will implode as capitalism is just a mirage proffered by business interests so we are in a vacuum at present about to be consumed by another Global crash, and the right wing can say what they like but cant convince the majority who now don’t believe in the economic miracle any more that capitalism promised with there “trickle down” futures.

    • Ed 12.1
      15 February 2018 at 5:37 pm

      Yes clean green a crash is coming as sure as night follows day.
      The crises of capitalism are coming to a head.
      Sadly, I fear it has come too late for our species and other complex life forms on the Earth.
      The biggest beneficiaries of industrial capitalism will be bacteria.

      • ropata 12.1.1
        15 February 2018 at 6:43 pm

        Cockroaches will survive as well. It seems quite likely that the US government is under the control of a cabal of crustaceans conspiring to kill all other life forms on Earth :tinfoilhat:

      • David Mac 12.1.2
        15 February 2018 at 7:37 pm

        …and when all the dust settles what will happen? You’ll be swapping some of your nectarines for a few of my chickens….sorry Ed, remiss of me, my grapefruits. You’ll get fed up with grapefruit and start thinking how nice a pane of glass would be but the guy making it hates nectarines….Maybe if we could have some token that represents value…..oh dear, fledgling capitalism.

        Capitalism is not the culprit, we’re doing it wrong.

        • One Anonymous Bloke 12.1.2.1
          15 February 2018 at 7:48 pm

          Capitalism (like Communism) doesn’t exist outside of books about economic theory.

          ‘Social democracy, we’re doing it wrong’. FIFY.

          • David Mac 12.1.2.1.1
            15 February 2018 at 8:03 pm

            By what means did I came about my clothes? I didn’t read about them or make them myself.

            Yep, I’d go along with that too, we are doing social democracy wrong.

            • One Anonymous Bloke 12.1.2.1.1.1
              15 February 2018 at 8:34 pm

              The ability to spend money on goods is not confined to social democracies. cf: the USSR, Cuba, etc.

        • Draco T Bastard 12.1.2.2
          16 February 2018 at 2:34 am

          Ah, the usual idiotic mistake of confusing trade for capitalism.

          Capitalism is ownership.

          Capitalism is the culprit and we’re definitely doing it right – that’s why it’s failing. Capitalism will always fail because it results in the few owning everything and everyone else starving.

  13. Lara 13
    16 February 2018 at 1:01 pm

    Okay, thought about it for a few days, and have to weigh in with my 2 cents worth here because the OP covered two markets of which I am intimately familiar; US indices and the Gold cash market.

    I’ve been analysing these markets daily for 10 years now. I’m a Chartered Market Technician.

    I see a common assumption in the OP that gold is a favoured market in times of turmoil. But the price evidence does not support this oft repeated claim.

    The stock market crash that preceded the Great Depression ran from 1929 to 1933. But Gold had already peaked in 1923 and fell from $21.73 in 1923 to $17.06 in 1931.

    The two sets of data are not inversely correlated. Look at the correlation coefficient between price of the S&P500 and Gold, you will find it has absolutely zero reliable correlation, swinging from a positive right through to a negative correlation.

    Regarding the fall in price over the last couple of weeks in the US indices:

    This is totally normal and to be expected volatility. After some months of steadily rising price this is a normal pullback.

    If Kiwis want to read news and ill informed market commentary and think they need to have a more active role in managing their Kiwisaver funds, they would most likely interfere too much and likely lose from it. Buy and hold in a bull market is the most profitable approach, and adding to a portfolio when markets pullback is part of a normal strategy.

    After some time of increasing volatility there will be an end to this bull market, as there always is. But not yet. Currently this market is strong and healthy, despite high and persistent levels of debt. That debt means the resulting crash will be horrible, but it is hopeless as a timing tool for identifying when the crash is upon us.

    There are plenty of tools useful for that. A good technical analyst should be able to identify the difference between volatility to ignore, and the early stages of a potential market crash.

    Unfortunately in bull markets technical analysis tends to become less popular, and is often maligned towards their ends. I can’t remember which firm it was, but I have heard that one large Wall St firm fired all their technical analysts in 1999. I bet they regretted that decision after the Dotcom crash began in 2000.

    “The sharemarket is of any real interest only if you are exposed to it.”

    At this time that’s most Kiwis. We’re mostly all in. Both in property, and in our sharemarket via Kiwisaver.

    Otherwise I agree very much with the final sentence.

    I just have issues with some assumptions within the OP.

    • Exkiwiforces 13.1
      17 February 2018 at 12:13 am

      I agree with your assumptions Lara, but as interest rates start to climb in the US and worldwide I see that a few more pangs will happen as the more conservative investor moves his or her money to the bank instead to Lessing their risk to the equity market. The flip side to this if the Hedge funds, the short sellers and futures market etc. get it wrong then we are more likely to see a crash as every man and his dog, the kitchen sink head for the same door as everyone else, then it would be like the Grand National Race at Aintree where its anyone guess on who wins.

      We need to mindful on how interest rates rise as this will lead to inflation, wage increases etc, if its to fast then we are likely to see some problems i.e inflation getting of control, uncontrollable wage increases, debt repayment issues as everyone carried on a drunken sailor on shore leave while the interest rates were low (note todays gen/ the me me set have never seen double digit interest rates in their lifetime) and the economy tanks.

      I think old Winnie mention this just before he enter coalition talks or at the end, as he believe the economy could head when at the current data that was available and past historic tends.

    • Pat 13.2
      17 February 2018 at 6:12 am

      “There are plenty of tools useful for that. A good technical analyst should be able to identify the difference between volatility to ignore, and the early stages of a potential market crash.”

      And yet they never finger them until after the event.

      As you yourself state…
      “After some time of increasing volatility there will be an end to this bull market, as there always is.”

      There are many aspects of sharemarket activity that are hotly debated but the fact that picking the timing of a crash is impossible is not one of them. Markets, even those widely influenced by algorithms, are not rational.

      As noted above, sharemarket volatility is merely a symptom of wider problems.

      • Lara 13.2.1
        23 February 2018 at 8:33 am

        Again, you have misinterpreted my words. I choose my words very carefully.

        Picking when a market MAY crash is something that technical analysis can do. But it cannot do that before it begins, only after it has begun. After the high, after some downwards movement from price, there are several tools which can indicate the difference between another correction or pullback, and the potential early stages of a full bore bear market.

        But it’s an exercise in probability, not certainty.

    • Ad 13.3
      17 February 2018 at 7:55 am

      Lara, great to hear from an expert in the field.
      I clearly do not have your level of expertise.

      My view on taking a greater interest in Kiwisaver risk still holds.
      I think too many just sign up and forget it.
      Where you generally can, take a hold of your life.

      I am surprised that you say you can predict a crash.
      Not too many predicted the last one. It seems that New Zealand has had one about once a decade since I can remember – and that does not mean we are “due” one.

      I only partly agree that we are all and equally exposed to the share market.
      Some are, more than others. It takes something like the 1987 crash for me to remember whole development companies falling, together with brokerage firm and second tier finance companies. Sure the link is definitely there, but at the moment it’s the share market that is volatile, not the property market.

      Thanks for commenting as an expert practitioner.

      • Lara 13.3.1
        23 February 2018 at 8:29 am

        To be clear, I did not say I can predict a crash.

        I said that I can identify a potential crash after the markets have turned.

        Once price begins to come down there are many indicators which can point to the probability of a full bore bear market continuing to pull price lower.

        I think most people would see a crash prediction as predicting a crash at or just before the high, not after. That’s not how technical analysis works.

        Although to be fair, prior to the high I can and will be advising my membership the the risk of a crash increases.

        It’s an exercise in probability, not certainty.