Have you felt the "GFC"??
- Thread starter moyjos
- Start date
in our business the GP is now less than 40 % of what it was Pre GFC
No OS hols this year etc..............But hey, still very very grateful
I have clients whose goal is to get back to broke !
Then I look at the rest of the undeveloped world and once again I am so grateful for my big reducion in GP
Odd I know, but everything is relative,
ta
rolf
No OS hols this year etc..............But hey, still very very grateful
I have clients whose goal is to get back to broke !
Then I look at the rest of the undeveloped world and once again I am so grateful for my big reducion in GP
Odd I know, but everything is relative,
ta
rolf
We took a big hit with the loss amounting to over $3mil this was all share related. As far as property we have seen the rents go up dramatically which is great for the cash flow.
The super also took a big hit but has recovered somewhat since.
We don't actually wind up the fall out until August 2010 at which time we will pay out the last fixed loan which we rolled into a term deposit to save the break costs. Managed to deposit at the same rate as we were paying but still lost on the changeover. The government banking guarantee saved us in this case as I was able to deposit the money (be it using 3 entities) in a second (or third) tier bank who I wouldn't have touched without the security of the government guarantee.
Mentally it really gave me a big hit and certainly effected my confidence.
Cheers
The super also took a big hit but has recovered somewhat since.
We don't actually wind up the fall out until August 2010 at which time we will pay out the last fixed loan which we rolled into a term deposit to save the break costs. Managed to deposit at the same rate as we were paying but still lost on the changeover. The government banking guarantee saved us in this case as I was able to deposit the money (be it using 3 entities) in a second (or third) tier bank who I wouldn't have touched without the security of the government guarantee.
Mentally it really gave me a big hit and certainly effected my confidence.
Cheers
Has the GFC affected me ? yes and no.
Super lost about $20,000 but im 25 years off getting near that.
My wage is still tracking cpi as usual.
We were told to use up our leave reserves so that little safety blanket has halved its size.
We have begun to hire again.
So i believe we have seen the low point although the aviation industry will be a slow recovery.
Super lost about $20,000 but im 25 years off getting near that.
My wage is still tracking cpi as usual.
We were told to use up our leave reserves so that little safety blanket has halved its size.
We have begun to hire again.
So i believe we have seen the low point although the aviation industry will be a slow recovery.
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Shoot, that's brutal, HA. Here's hoping 2010 is a better year for all of us. I'm hoping the smell I'm detecting is opportunity
, but am bearing in mind that it may be Armageddon. 
The reason people margin loan is to increase their return. It goes without saying that this increases risk.
To a point where its unnecessary. If you're happy with less return, don't margin loan.
Then again, most people don't have a lot of cash to put in the stockmarket for a decent return so that's why they borrow.
I was at a christmas party last Saturday night, talking to a guy who asked is $20k capital enough to live on in the stockmarket. Like, do it full time. OMG!!
I have no less than $500k in the market at any one time, usually quite a bit more, so i'm happy with the returns without borrowing. I understand not many can do that.
Another famous Buffett saying is: "You can tell who's wearing no swimmers only when the tide goes out" or something like that.
So true but its as always horses for courses. Just be prepared to cop the risk.
As for super. I'm sure i lost money there but i never look at my super. Why bother when its a long way away?
To a point where its unnecessary. If you're happy with less return, don't margin loan.
Then again, most people don't have a lot of cash to put in the stockmarket for a decent return so that's why they borrow.
I was at a christmas party last Saturday night, talking to a guy who asked is $20k capital enough to live on in the stockmarket. Like, do it full time. OMG!!
I have no less than $500k in the market at any one time, usually quite a bit more, so i'm happy with the returns without borrowing. I understand not many can do that.
Another famous Buffett saying is: "You can tell who's wearing no swimmers only when the tide goes out" or something like that.
So true but its as always horses for courses. Just be prepared to cop the risk.
As for super. I'm sure i lost money there but i never look at my super. Why bother when its a long way away?
Perfect example of the lack of financial literacy out there. And as much as I hate to admit it, I was once one of those who thought I could "live off the stockmarket", even though I was inexperienced and underfunded. (Real life taught me it's a bit harder than it might look!)
Unfortunately, parents with bad money habits pass those onto their children. I've heard people suggest teaching financial literacy in schools, but if financially intelligent people are thin on the ground, then who draws up the syllabus?
That was exactly my point - I suspect we are in violent agreement.
Investing in shares with borrowed money increases risk, but provided that risk is managed appropriately, I don't have an issue with it. I'm not quite sure what your second paragraph means, though. How much risk to take is clearly a decision for the individual to make.
And like yourself, I have 6 figures of sharemarket exposure.
What i meant is that if you have $100k in the market and receiving for eg 30% return. Then be happy with $30k pa.
But if you want more and take a margin loan to give you $200k in the market and $60k pa be prepared for the inevitable risk and eventual margin calls.
The more money you have in the market, the less risk you need to take. And the more money you have in there the less need you have for margin loans.
Unless you (not meaning you specifically ) are greedy. In that case will eventually be burnt.
But if you want more and take a margin loan to give you $200k in the market and $60k pa be prepared for the inevitable risk and eventual margin calls.
The more money you have in the market, the less risk you need to take. And the more money you have in there the less need you have for margin loans.
Unless you (not meaning you specifically ) are greedy. In that case will eventually be burnt.
I was shocked last week to find out that a school mate of mine who, with his wife, had run a busy small business for decades was also a Storm victim. He didn't lose everything and could sell his business to his son. Who knows, he may have intended to sell it to him for $1 so even the son lost out.
I think there is a perception that a margin call is, in itself, a negative event. It's not. Being forced to sell shares at a loss is a negative event. To my mind, as long as I can prevent the forced sale of shares, I figure the risk is appropriately managed.
Ultimately, I'm not so worried about having to shift 20 grand from an offset account to reduce the LVR of an investment loan at short notice. Incidentally, my bank doesn't actually use the cash to pay down the loan, it just lodges it as extra security, so when the problem passes I can get the cash back, and without any tax consequences.
I think it's important to really understand what the risks are, because otherwise you can't manage them properly. Which is why margin calls don't worry me.
Evand - I think I understand your view now, but clearly we differ in what constitutes 'acceptable risk'.
everyone holds different views. i view all shares as too risky. overpaid fatcats running companies that i have a miniscule interest in and cant create value from... no thanks
Hey GR
I stop eating when I worry. In the case of the GFC that is good as it saves me money.
has the GFC affected me ? its been a bit of a blessing in didguise, i had our ppor on the market but the fear mongering from the media stoped people buying mil $$ properties , we would have been happy with 1.3 ish but no takers , our mortgage payments were like 9k month, then the rates went down and down and down , the home is finnished and the pool is almost complete, the mort is now 5k ish and the buisiness has now three full timers, many other properties have now been sold at well over a million $$ so it should bring this one to about 1.6 ish, but i wont be selling just yet as i have workrd out a way to add the massive storage areas to my business expenses, approx 30% so when the FHB are done i will be there , OH! my super has droped to 6k but i only had 7k to start with lol
Fair enough, but by staying in I've ridden the correction back up again, and to a point where I'm ahead of when I bought in 18 months ago. Servicing a margin call allows me that flexibility. I also get to have my $20k BACK when the market corrects back up.
Sure, I'm paying some interest for the money that isn't in the offset account for a few months, but that difference is tax deductible against my (fairly high) income, and allows me to hold on to the larger dividends I wouldn't have gotten if I sold down (plus the franking credits).
I agree that it's riskier than having shares directly, but I still believe that with proper risk management, it's a great way to generate wealth.
One of the positives of a margin loan that isnt discussed is the heightened awareness because of that margin loan.
More focus is given to stock selection and investors are less likely to hold lazy portfolio's.
This can increase stock selection efficiency.
Due to having such a wonderfull cropping season in 2007, possibly once in a lifetime, we found ourselves debt free when the crap hit in 08.
Grain prices crashed in October/November 2008, just as we were getting ready to harvest the winter crop. Would have made a loss had we sold at harvest. Plus, input prices for fert and roundup were still at record highs at the time. Cost me a fortune to plant the summer crop in Nov 08, and on paper it was hard to see how I could make a profit. Was a scary time for me. Held onto the wheat after harvest, and from the $150/t it rose to $190/t, and we managed to sell for a slight profit. Sorghum prices also recovered from the crash levels, and made a heap from it thanks to a wet summer last.
Bought a new header that gets delivered soon thanks to our nutcase governments 50% investment allowance. Deere and company USA is very thankfull. Plus a heap of other stuff and saved an enormous amount of tax.
Our share portfolio was debt free in 08. Just rode it from top to bottom, then half way back up again. Also added stuff on the way down, and on the way up again. Put in a heap at 4000 on the way up. Also participated in all the capital raisings, even right at the bottom, as otherwise dilution hits you. Wasn't real keen at the time but it looks fantastic now. Great learning experience and possibly almost square again after all the additions.
I really don't know of anyone much effected out here. Unemployment never increased in this part of Australia and workers are still short. I don't know of a single person who lost a job. Mining never really slowed at all. The 72 carriage coal trains with 80 tonnes a car still rumble through to Newcastle now as they did then.
See ya's.
ps..Forgot this one.
Bought a unit in Mortdale Sydney in Nov 08 as part of farm succession plan with brother. Not sure if it was a good buy or not. Don't care either, as it's his.
Grain prices crashed in October/November 2008, just as we were getting ready to harvest the winter crop. Would have made a loss had we sold at harvest. Plus, input prices for fert and roundup were still at record highs at the time. Cost me a fortune to plant the summer crop in Nov 08, and on paper it was hard to see how I could make a profit. Was a scary time for me. Held onto the wheat after harvest, and from the $150/t it rose to $190/t, and we managed to sell for a slight profit. Sorghum prices also recovered from the crash levels, and made a heap from it thanks to a wet summer last.
Bought a new header that gets delivered soon thanks to our nutcase governments 50% investment allowance. Deere and company USA is very thankfull. Plus a heap of other stuff and saved an enormous amount of tax.
Our share portfolio was debt free in 08. Just rode it from top to bottom, then half way back up again. Also added stuff on the way down, and on the way up again. Put in a heap at 4000 on the way up. Also participated in all the capital raisings, even right at the bottom, as otherwise dilution hits you. Wasn't real keen at the time but it looks fantastic now. Great learning experience and possibly almost square again after all the additions.
I really don't know of anyone much effected out here. Unemployment never increased in this part of Australia and workers are still short. I don't know of a single person who lost a job. Mining never really slowed at all. The 72 carriage coal trains with 80 tonnes a car still rumble through to Newcastle now as they did then.
See ya's.
ps..Forgot this one.
Bought a unit in Mortdale Sydney in Nov 08 as part of farm succession plan with brother. Not sure if it was a good buy or not. Don't care either, as it's his.
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Took a bit of a hit in super, not going down in value but not going up either despite increased contributions (ie. sal sac). Took a small hit to shares, but was mostly out of the market for the majority of the period, except for a little tinkering. Recovered some of that over the last few months. Otherwise have mainly been in cash. Not the greatest return, but better than losses.
Best result of the GFC was Pennies From Kevin at the Sydney Theatre Company last weekend, their annual review. Really funny, with some great singing, piano playing, and impersonations of political figures. Acts such as the woman impersonating Michelle Obama singing Leader Of The Pack (Leader Named Barack) and My Guy, and the guy impersonating Peter Garrett playing guitar to Blue Sky Mining, where "who's gonna save me" was referring to his political career.
GP
Best result of the GFC was Pennies From Kevin at the Sydney Theatre Company last weekend, their annual review. Really funny, with some great singing, piano playing, and impersonations of political figures. Acts such as the woman impersonating Michelle Obama singing Leader Of The Pack (Leader Named Barack) and My Guy, and the guy impersonating Peter Garrett playing guitar to Blue Sky Mining, where "who's gonna save me" was referring to his political career.
GP
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