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Author: jeffrubinstein Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 6186  
Subject: Re: Buying ANZ Date: 7/17/2008 4:48 AM
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Hello again, Folks,

Are you concerned about CBA's exposure as the largest mortgage lender in Australia. The potential non-performing mortgage assets they hold is orders of magnitude larger than (it too lazy to look it up, but know it is big) than ANZ total exposure to Opes Prime of $650M.

I'm not really concerned about CBA, because they are unlikely to have made 100% loans and most of their outstanding mortgages will be for less than 75% of (today's) valuation. OTOH, ANZ are not only likely to lose a substantial sum of real money, they will have badly damaged their relationship with their main customer base - small businesses. Those sort of account holders simply cannot afford to bank with someone with even a hint of shady behaviour. I can see them moving over to Westpac/NAB or one of the smaller banks in droves if any more bad news emerges. JMO, of course and I wish you luck with your investment. It may be that ANZ will quickly recover from the setback as they are the most go-ahead of the four big banks in Australia.

Will that 10-15% move up be from the bottom or just a head fake? It's so hard to tell real time.

There's the rub. But I am intending to wait for two major events to play out before I will commit money to things. One is the US Presidentials as this will heavily influence the investment climate for some time. The other would be an expected crisis in China. I believe the Shanghai bourse has fallen by over 50% from its highs last year. In addition, I noticed that 75% of polled fund managers are now underweight in Indian stocks as they are expecting major inflation problems in the emerging markets sector. I would wait for this one to have played out a bit more. Again, JMO.

With the high AUD against USD I would not encourage US investors to be buying Australian companies, unless they think it is different this time and the USD is cactus.

My bad! I should have said that I wrote from comfy, suburban Melbourne (and NOT the Florida one either) so my picture of currency risk is a bit different.

As it happens, I will almost certainly be putting some money into a foreign currency bank account and using it to by short term bank paper of at least six months duration. I need to look at interest rates to decide on a home for this, but I think parity for the A$ against the US$ will not hold for very long. Australia has the best terms of trade they have ever had. IMO, they can only get worse from here...

Regards

Jeff
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