Well Done you would be the only person that i know can make that statement,i would be interested to know how you did it..willair..
http://au.youtube.com/watch?v=jHPOzQzk9Qo
Anyone still holding bank shares?
- Thread starter Sunfish
- Start date
http://au.youtube.com/watch?v=jHPOzQzk9Qo
But how is your portfolio diversified if you hold no resources?
Australia in 10 years time?
lets see now...???
There is no way known financial stocks will be 40% of the all ords like a few years ago. That will never ever be seen again.
It's possible we may be the wealthiest nation on the planet. Our coal will be turned into fuel, and fertilizer, solar power and renewable wind helping our electricity grid, but being backed up by gas, and perhaps a few nuclear power plants. Agriculture booming, with food prices even better than now. Australia, a leading member of OFEC, [Organisation of Food Exporting Countries] with the US, Canada, New Zealand, and Brazil.
Lets hope so, as we don't produce anything else now. Our wealth comes from out of the ground. Ever heard of the 'Dutch Disease'.?? Where excess resource wealth makes a nation rely too much on it's lucky fortune, and lets every other industry die because it's not needed anymore.
I don't mind holding so much in resource stocks, because if the boom is over for resources, then so is the party.
See ya's.
Last edited:
Easy-peasy. Take the money out of another account. Methinks he's in the process of making a small fortune.
I took the statement to mean that chilla had $300k and has invested $100k in 2008, hence is "up" to $400k invested... Not that he has made $100k profit in 2008?
Maybe i just read it the wrong way i just thought he started with 100k, "up from $100k odd from the start of 2008",you only have to look at the numbers out there today and even with no-gearing strategies,or gearing on gearing some investors in the last 24 hours would now be in margin call zone,all depends on what happen in the O-S markets tonight..willair..
I dreaded looking at my portfolio tonight, but had a lovely surprise! I am actually UP! I only have 1 Bank share (WBC) which I bought last Monday and is still in the green after today, but had 1 share go up $9000 in value today (38% today for that share), and the rest, which are mainly resources, pretty much held their ground. Sweet!
Love my miners, esp Flinders Mines
Love my miners, esp Flinders MinesYes, sorry if there was confusion with my statement. I had $100K invested in the ASX at the start of 2008, now its $400k. With luck (ie ASX stock take sale lasting for the duration of 2008), i might be able to build this up to $500k.
So far i am probably sitting on on paper losses of around $60k. And the portfolio consists of 29 non-resource stocks and one resource stock (two if you include Wesfarmers exposure to coal)
Financials might not make up 40% of a the ASX in 10yrs time, but i think the banks % of the ASX will be higher in 10yrs.
Lets assume your assumptions regarding resources are correct.
Who is going to organise the financing resource company finance?
How many of the shareholders, who are doing so well, will use margin lending.
How many of the shareholders who are doing so well will need a housing loan.
How many of the employees who are getting paid so well will need a housing loan.
If property prices in 10yrs time are higher, then loans will be higher, hence lending profits will be higher.
I think the VOLUME of resources will definately increase over the next 10yrs, but i cant be sure that PROFIT will definately increase over the next 10yrs.
So i prefer to buy companies that service the reources sector, but is not directly exposed to commodity prices.
For example one company i just recently bought is MSL (The Mac Services Group). The share price has been hammered along with the general market. (Doesnt help that one of its directors has been caught up in the Prime Lending fiasco).
MSL builds, owns, and manages rental accomodation for the mining sector. The share has only been listed since 2007, so i am nervous of taking a big exposure to this company as it does not have a proven track record. But its share price has come from a high of $3.85 to around $2.2. It trades on a 09 PE of around 12. Its got significant developement pipeworks for the next two years. Most importantly, its got very good cash flow that is being used to finance future developement. Current margins of around 43% (how is that for positive cashflow from property investing
)Maybe Sunfish, nobody knows the future. But the game is to try to build passive income streams that one day replace the need to work.
Doing trading strategies, holding gold silver whatever, MIGHT make you profit, but it cant build an income stream. You are effectively still working.
If my goal is just to work, i might as well set up another business.
But investing $500k now and leaving it for 10 years to have a future income stream after year 10 that is $150k p.a and will continue to grow after yr10, makes good financial sense to me.
If there is an alternative way to make future passive income that is higher than this, please let me know.
Well it did go up, and then down again
. It's back at my buying price now. Hopefully $1bn in provisions is enough? Seriously, I think the "four pillars" policy on the banks in Australia makes them a semi-monopoly, which means good growth to be had in the long term.Well said Chilliaa, I agree 100%. The more doom and gloom the better so I can continue to buy future income streams at bargain prices.
Cheers - Gordon
Dave99,
Just one small suggestion, i think you should structure share purchases with a 5yr minimum view point, not one year.
If you limit yourself to one year, your psychological process may be hampered and you are more likely to take a speculative viewpoint than an investment viewpoint.
Share prices over time gravitate around the true intrinsic value of a company, but over shorter durations market sentiment plays has a greater effect than fundamentals on share prices.
Just one small suggestion, i think you should structure share purchases with a 5yr minimum view point, not one year.
If you limit yourself to one year, your psychological process may be hampered and you are more likely to take a speculative viewpoint than an investment viewpoint.
Share prices over time gravitate around the true intrinsic value of a company, but over shorter durations market sentiment plays has a greater effect than fundamentals on share prices.
I agree. Most of my investments are in "set and forget" type index funds and super. This is just some speculative money because I think the banks are very low. A bit of fun rather than retirement money
Thats a good attitude to have.
Well it did go up, and then down again
Did you hear the conference call, when an analyst was asking John Stewart (NAB' CEO), pretty aggressively mind you, how can we believe that $1bn is the end of the provisioning, since one year ago they were at 0, then $181m, now a $1b
Entertaining stuff....Did you hear the conference call, when an analyst was asking John Stewart (NAB' CEO), pretty aggressively mind you, how can we believe that $1bn is the end of the provisioning, since one year ago they were at 0, then $181m, now a $1b
Yes NAB is the main bank that i am a bit weary of, not just because of the credit crisis, but because
1) they had similar problems in i think it was 2001 and 2004.
2) they paid 18 times earnings for a US regional bank (Great Western) just last yr. This is double the average price, even back then, for a regional bank. There are few competitive barriers to entry to justify such a price.
To me this suggests that NAB has some structural flaws in its senior operating and buy out procedures (a bit like IAG). These sought of issues are partly cultural and thus very hard to change.
I would still be happy to buy the shares, but i would want a much greater discount on purchase price to compensate me for these additional risks.
Kudos to you chilliaa! I have a feeling that in the near future you will look back at 2008 and be very happy you ventured against popular sentiment at the time and built your portfolio. I think you will get the income stream you desire with a nice bonus of capital growth as well! Now if only I had 500k to be invested as well
Happy Investing!
e
They sure look cheap now, but the lower price comes with a drop in earnings/yield expectations. I still believe there will be bigger discounts, we are in a downtrend that hasn't bottomed yet. And boy, am I glad I didn't buy any australand shares - I was very close to do so last week. Still I own no shares, am still thinking of buying Quantas or Woolworths, but my feeling is there's no need to hurry.
That may be the best way to go with a downturn like this and over the next few days with all the clustering of value there will be some cheap extremes to take advantage of ,i don't care how low the Banks go it's not important what today's price is or the div's they will still pay in a few months,what is important is what the price will be in one year -5 years-10 years,just another bump in the road..willair..
I for one definately dont think that everything is going to be hunky dory by 2009. The important issue to to look through the cycle and make sure you are buying companies that can weather the downturn.
The hardest thing is trying to buy at the low point.
Even if profits continue to deteriorate there will be a point at which people buy based on expectations of a turnaround in PROFIT (not this is diferent from buying based on expectations of a turnaround in share price)
Let me use harvey norman as an example. Its 10yr annual average PE ratio (excluding 2008) ranges from 38 in 2001 to 15 in 2006.
The current expected PE on 2008 earnings is 10.5
Now lets assume that profits deteriorate 20% by the end of 2009, this would push the PE up to around 13 times earnings. However at the end of 2009, people might start sensing a recovery, ABS figures showing a upswing in earnings etc. Thus they start bidding the stock up, which can increase the PE even though historical underlying profits are decreasing (this is exactly what happened in 2001).
Now this becomes purespeculation, but i am just trying to show an example:
So if based on recovery expectations the PE gets bid up to say 20 times (the mid point of the 10yr PE range) we get a hypothetical share price of $5.07
Significantly higher than the current share price
Now there are many assumptions here, as well as fundamental changes in valuation due to potentially higher interest rates (effecting the discount factor).
But it explains the logic of historical research that share prices generally recover BEFORE a turnaround in profit. And proves that its very hard to pick the bottom of share prices.
