For those of you who didi not understand the concept of a bear trap

[john_1]

This is it baby old papa bear got you big time!!!

[Pam_1]

Today is spoiling what could have been the first green week in months. Last Fri the ALSH closed on 26992, looks like this is 11th red week in a row, will close around 26700. It is uncommon for any measurement to follow same trend 11 (days, weeks, months) measuring points in a row without a small reversal somewhere inbetween. (I think Simon mentioned 9 green days in a row some years ago in his warrants course). Painfully interesting times. Have a good week end.

[Surf_Rat]

Hey some of us had a great day in the ocean hussling Grommets and riding some big swells out there on the JSE each day has its angles did you guys see Joffie on the banks on summit what did he actually say ( short term ) Louisg not long term thats a no Brainer at the moment but If we have to wait for sets in the oceans I would give up surfing cheers

[louisg]

Agreed SurfRat, buying the banks long term is a no brainer. Yet there are those that diagree. I guess common sense is not that common. Although we all strive to have fun in what we do, shouln't investing prioritize a positve real return over having fun?

[john_1]

LG prehaps you can help me.. what is fair value for FSR, and ASA and how you get to that number. That way I will be able to see when it is under valued.

[BRE]

That's easy John, when inflation starts slowing down and the economy starts picking up.

[john_1]

quantify that in a share price.

[BRE]

Ah, a worthy challenge ... let me take out my fragile crystal balls and have a peek . I can't see it ... I guess my balls are too small :(

[john_1]

See my friend LG believes he has bought below fair value.. I would like to believe that but don't know how to work that out. Thats why I ask. They recon that there is 600 billion worth of sub prime still to be written off. that means we have only seen 40% so far.

[BRE]

The thing is no one can quantify the bottom in a share price. Investing would be easy if you could. I believe the prices will go much lower because the market reflects the economy ... inflation up, interest rates up, stocks down as businesses find it harder to make decent profits. But LG has a point; prices for most top40 companies will come back up again so long term investors will see their money again. The question is when. In my opinion, there will be opportunities to invest at lower prices, and that will be when the economy has improved enough for Tito to drop the interest rates. But that's just my opinion.

[louisg]

John, do you agree that 12-18 months that there is a very good chance that inflation will have decreased substantially from these levels? Secondly, do you agree that in such an environment that interest rates would decrease to lower levels? Thirdly, IF this scenario plays out do you believe that this environment would be condusive to a favourable environment for the banks and retailers? I am of the opinion that this scenario may well happen and IF it does, then I believe that the present prices of the banks, retailers and certain industrials are very good value. For a long term investor its a no brainer.OMO. My money is where my mouth is. Financials and industrials for now.

[john_1]

All I know is tha economist get it wrong over and over again, in fact predicting is the one area that the private sector is likly to underperform the public sector. To give you and example the smartest minds in the US employed to predict the oil price in 20 years from now thought $70 would do it... So quite clearly we have a situation that is outside of most peoples model of normal... if oil was at $30 I would agree with you.

[topgun]

Eskom as a parastatal being a case in point?

[BRE]

LouisG, what will cause inflation to decrease substantially in 12-18 months? I've heard lots of experts talk about when inflation will peak but no one can shed some light on why it will peak. Personally, I can't see inflation just turning around, something has to change fundamentally for it to be more that an IF. I'm quite happy to wait until inflation peaks before jumping in because this could turn around in 12-18 months or it could go on for quite some time. OMHO

[#15]

Yes and America will start to tap its secret new oil fields close to area 53, causing the oil price to drop and inflation world-wide to come down. China & India is going to go back to riding bicicles. Inflation will drop to below 10% in SA and FSR, SBSA and ABSA will be be able to make money off a new bond-lending spree feeding into a new property bubble. Where's my valium?

[#16]

The bear trap has been set by Xtrata ..

[louisg]

All the price increases we have had in the last twelve months MUST repeat themselves in order for inflation to REMAIN at its present level of 11.6% year on year. Do you really believe that oil, food etc. will repeat the substantial increases they have had in the past year? I do not, in fact I think they will DECREASE. We must also consider that there is already about 2.2% in the bag because of the new basket weightings. Inflation SHOULD peak in the next 2-3 months in my opinion. Less inflation = less interest rates = more money to spend = more PROFITS/DIVIDENDS = higher share prices. OMHO

[#18]

Inflation SHOULD peak in the next 2-3 months in my opinion. If I had a nickel for every time I heard that in the last year or 2.

[louisg]

Vitorc what is your outlook may I ask? That is if you have one.

[#20]

Ouch - a bit of a barb in that question, hey Louigi? My outlook is simple: Oil will never be in ample supply in the world again, and we're entering a global super cycle of high inflation as an effect of western economic policy started in the 60s/70s. All my investment decisions have been built around this, for example buying inner city accomodation due to high travelling costs.