As for China, my hope is that as the Chinese economy slows (as it will) things will pick up in the U.S and Europe, thus the ying/yang of the global economy will be balanced.

I am not sure I agree with Marc Faber that China will have a “bad year”, I just guess it won’t be a great one like they have been having for the past decade. All economic booms come to an end, if you believe otherwise then you are setting yourself up for a nasty fall.

I guess my point is simply that Oz is seeing investment right now. Is it possible projects will be cancelled? Yes, but is it likely if China wants to diversify out of US Treasuries and does “want to secure a supply of resources at the best price for them”? Probably not I suspect.

As to whether the Chinese are smarter than us with a long term plan that we seem to lack, then Yep, I reckon we can pretty much take that as a given!

It seems to me that the RBA are not ahead of the curve and not even on it, but way behind. Yes there is a lot of mining investment going on, but there was also a lot of building investment going on in Dubai as well

I seem to recall BHP shutting down a mine major operation over in WA in 2008/2009 and as far as I am aware it has not re-opened. I also saw a warning the other day that there might be a LNG supply glut.

Personally I think as a nation we are falling for the old supply/demand trap. We are ramping up supply egged on by nations like China & Japan because this will ultimately drive down prices and play right into their hands. Remember a lot of these new mining projects are foreign owned or are backed by foreign interests..why? Because they want to secure a supply of resources at the best price for them…not us!

Maybe it is just me, but I reckon the RBA has a very messed up view of how the real world operates.

Effects of same on resource stocks, metal prices etc … Not something I’d pretend to be able to call.

Australia has no plan B. This is why I’m extremely bearish the AUD. Unfortunately there are one gazillion carry trades providing fuel to the fire !

Remember above not advice, just commentary — seek financial advice/decisions/info from a financial adviser

By the way, Anon, if there are more than 2 links the moderation system kicks in and it holds the comment for approval..sorry about that.

This is what worries me about that statement Ned:

http://www.kitconet.com/charts/metals/base/lme-warehouse-zinc-5y-Large.gif

http://www.kitconet.com/charts/metals/base/lme-warehouse-lead-5y-Large.gif

http://www.kitconet.com/charts/metals/base/lme-warehouse-copper-5y-Large.gif

Traditionally metals prices have a negative correlation to warehouse levels. China has also been accumulating more than they require from excessive credit and government stimulus.

Remember above not advice, just commentary — seek financial advice/decisions/info from a financial adviser.

The RBA seems to have a different game in mind for Oz though? And as definitely taken to chatting about mining booms and upside risks and inflation. I found the following quote interesting:

“There’s only so much activity that can take place and if we want to have all this mining investment and mining output, which is happening, then basically the other part of the economy, for the moment will have to be restrained somehow,” Mr Battellino said.

Asked how the restraint would be carried out Mr Battellino said “through interest rate policy”.

http://www.wabusinessnews.com.au/en-story/1/78742/Mining-to-double-boom-beyond-15yrs-RBA

*Correction
Should be:

100% M.O.S. ~3,500
50% M.O.S. ~4100.

Remember above not advice, just commentary — seek financial advice/decisions/info from a financial adviser.

Which high flyers are no good? I might put them on the ban list lol.

Some good ones are: Seth Klarman, David Einhorn, Stuart Walton, Paul Tudor, Buffet of course .

Soros is very difficult to track. He is very erratic and says one thing and does another.

Also you need to be careful Einhorn some of his picks are real dogs. I prefer his macro and industry bets rather than individual stock picks. Infact he likes to buy alot of dogs that woof

Remember above not advice, just commentary — seek financial advice/decisions/info from a financial adviser.

It sure looks that way right now.
The rogue element here is low interest rates in multiple countries fueling carry trades. The international monies will likely end up in Australia and you’d expect some to end up in equity markets ?
Its also important to note just because the margin of safety is negative doesn’t mean it cant get worse! Remember the dot com boom

I make a rule if I enter the ASX meaningfully I need at least 100% M.O.S. in bull markets and 200% M.O.S. in bear markets. This takes alot of the downside out of the equation.

So to give me 100% M.O.S. (assuming earnings stability) the market will need to drop to ~2,365.
50% M.O.S. would be ~3,547.
If Term deposits fall to 4% (from 6%) and earnings stay constant:
100% M.O.S. market would be 3027
50% M.O.S. 3878.
So lots of variables here…and these will keep changing no doubt.

Of course these rules do get broken, but I need to very certain that i’m correct. Atm i’m not confident in the ability of the market to outpace bank returns from these levels. Normally I would use government bonds as the benchmark but given bank deposits are guaranteed this is abit pointless !

Remember above not advice, just commentary — seek financial advice/decisions/info from a financial adviser.

When I look at the chart of the ASX All Ords above I just wonder how long it will take to get back up to around 6500. It isn’t going to happen this year, if it does I will gladly be buying the drinks!

How about 2011? That also looks a bit of a stretch which means your P/E analysis above is very relevant. Maybe it is best to sit in cash for some years?

I try and go in with the mindset everyone has something to offer. I used to extrapolate bad calls and then say everything doesn’t work related to that person or method in the past. I think alot of people do this and its very limiting. I’m trying to be more open to ideas but selective and cautious at the sametime. Somethings work sometimes, other times they are useless.

Remember above not advice, just discussion — seek financial advice/decisions/info from a financial adviser.

Remember above not advice, just discussion — seek financial advice/decisions/info from a financial adviser.

So returns are barely above a 6mth term deposit. Theres a negative margin of safety for current asx returns and a 5 year term deposit (~8%).
Thats a shokka

Remember above not advice, just discussion — seek financial advice/decisions/info from a financial adviser.

Remember, above just discussion — seek financial advice from a qualified financial adviser.

I guess over the next 6 months we will find out if the bulls or bears are in control!