High Yielding Shares Again

[Intrinsic_Value]

fair. this is the thing, I'm relatively early in my investment life. every thing I've read tells me to not bother trying to time the market, to not worry about the macro-economics, to not bother with short term trading etc etc

how does one know when it is the right time?

do you just wait for GFC like events? they obviously aren't that common.

if you are in it for the long term, does it really matter if stocks are currently 10% too expensive?

what does one do in the meantime? hold cash in high interest accounts?

I don't know how to answer these questions, because it depends on
(a) ones ability to deal with losses
(b) ones time frame.

There are a number of good posts in this thread about long term investing solutions by just buying indexes.

Yet when the market pain is occuring, most people wont have the ability to add to an index when its down. And yet that's the best time to add to an index type fund.

I know this 100% because I was here when the GFC was around. I saw the posts on this form pre-GFC, I saw them during the GFC and I saw post GFC.

During the GFC, IV was one of the most hated guys on this forum. Yet for me, I really made my money during this time.

Yes waiting for a GFC type occurrence is the best time to add.
But again most people wont.

Is anyone adding to Russian stock positions at the moment????
Russian stock market is going through a GFC type occurance right now!!!
Did anyone add recently to the Chinese stock market in the last couple of years (yet Chinese stocks were priced very low a couple of years ago).

Did anyone add to internet stocks a year after the dot.com crisis?

Did anyone add to the Asian stocks after the Asian stock market meltdown in the late 1990's????


Right now is anyone allocating any money to resource contractors??????

 

[johnpendles]

i won't be making financial decisions based on what you write. so dont worry about that.

why were you unpopular during the GFC?

 

[Intrinsic_Value]

What I can tell the people on this forum, is that something doesn't add up!!!!


Either we are going into a serious recession (in which case the market is showing its forward thinking, by discounting the recession susceptible type stocks such as SWM, SGN).

Which if true, will have a big impact on our banks (which are trading above IV, because everyone is desperate for yield).

Which will have a big impact on the index funds (because banks are such a large component of our index).

Or it doesn't.

In which case out of favour non-major ETF contributing stocks, are a good deal.

I don't have the answer.

 

[johnpendles]

Yet when the market pain is occuring, most people wont have the ability to add to an index when its down. And yet that's the best time to add to an index type fund.

No doubt, but what do you do in the meantime? Sit on cash until the pain comes and then go shop for bargains?

Or do you look elsewhere in the world where there is already blood in the streets, i.e. your example of Russia currently?

 

[johnpendles]

What I can tell the people on this forum, is that something doesn't add up!!!!


Either we are going into a serious recession (in which case the market is showing its forward thinking, by discounting the recession susceptible type stocks such as SWM, SGN).

Which if true, will have a big impact on our banks (which are trading above IV, because everyone is desperate for yield).
.

Is there anything wrong with parking your money in a high yielding stock such as Telstra when there are so few options available for capital gain?

 

[Intrinsic_Value]

No doubt, but what do you do in the meantime? Sit on cash until the pain comes and then go shop for bargains?

Or do you look elsewhere in the world where there is already blood in the streets, i.e. your example of Russia currently?

I used Russia only as an example.

Most of Russia is commodity based, it you want this stick with Australia, less risk.

I have a small exposure through Russian TV investments.
Not doing well, and currency movements going against me. I will not add to position.
Not interested in Russian oil, as I believe the secular oil bull market is over.

Sit on cash?
Not a bad idea, given the potential capital losses, if one is wrong.

What else?

Its hard.

One suggestion is not to listen to IV.

This is the first year out of last 5, that I am making losses, against a market that still made gains (including losses)

My first year of serious under performance

 

[redwing]

fair. this is the thing, I'm relatively early in my investment life. every thing I've read tells me to not bother trying to time the market, to not worry about the macro-economics, to not bother with short term trading etc etc

Sounds like a plan

how does one know when it is the right time?

Doesn't gel with the first quote?

do you just wait for GFC like events? they obviously aren't that common.

Nope, but they will come along when you least expect (or want) them

if you are in it for the long term, does it really matter if stocks are currently 10% too expensive?

Probably not, but there's always somewhere to invest your hard earned. Who knows whether stocks may be more expensive in one month or six months from now, or less expensive

what does one do in the meantime? hold cash in high interest accounts?

Depends on your strategy

I don't know how to answer these questions, because it depends on
(a) ones ability to deal with losses
(b) ones time frame.

There are a number of good posts in this thread about long term investing solutions by just buying indexes.

Yet when the market pain is occuring, most people wont have the ability to add to an index when its down. And yet that's the best time to add to an index type fund. I'll be ready like Craig Thompson with a credit card and no consequences IV, in fact I'm banking on some really bad days in the years to come

I know this 100% because I was here when the GFC was around. I saw the posts on this form pre-GFC, I saw them during the GFC and I saw post GFC.

During the GFC, IV was one of the most hated guys on this forum. Yet for me, I really made my money during this time. No Hate IV, we loved you. I lost money during the GFC though, with a fund that should have flourished through that period to now.

Yes waiting for a GFC type occurrence is the best time to add.
But again most people wont.

Is anyone adding to Russian stock positions at the moment????
Russian stock market is going through a GFC type occurance right now!!!
Did anyone add recently to the Chinese stock market in the last couple of years (yet Chinese stocks were priced very low a couple of years ago).

Did anyone add to internet stocks a year after the dot.com crisis?

Did anyone add to the Asian stocks after the Asian stock market meltdown in the late 1990's????

Right now is anyone allocating any money to resource contractors??????

 

[Gendry]

Is anyone adding to Russian stock positions at the moment????
Russian stock market is going through a GFC type occurance right now!!!
Did anyone add recently to the Chinese stock market in the last couple of years (yet Chinese stocks were priced very low a couple of years ago).

Did anyone add to internet stocks a year after the dot.com crisis?

Did anyone add to the Asian stocks after the Asian stock market meltdown in the late 1990's????


Right now is anyone allocating any money to resource contractors??????

Plenty of people have indeed been trying to pick the bottom with mining service companies, oil companies, BHP and RIO.

Most of the time it's silly though. People think "oil has gone down 50% it'll have to go up 50% soon" but they forget that the lower levels were abnormally high. Its actually closer to it's long term average now.

If commodity cycles tend to overshoot on the upside as well as the downside, then the last boom period was an overshoot on the upside. To get to the overshoot on the downside the price will fall much longer than people think (as has been witnessed).

Then only once there's evidence the market has turned, do we attempt to jump in and ride it up again (if you go in for that sort of thing).

 

[Intrinsic_Value]

Is there anything wrong with parking your money in a high yielding stock such as Telstra when there are so few options available for capital gain?

no there is not.
But would you park all your capital in this stock.

There were a number of years when Telstra stock declined. The dividend wouldn't have protected against capital losses.

As part of a diversified investment stream I wouldn't have any problem with holding Telstra in that holding.

But I emphasise diversified, including holding that most lowest of current income generating asset, cash.

 

[The Falcon]

John, as a suggestion you would DCA into index funds but keep powder dry in the form of a line of credit for GFC type events. You would also pick individual stocks that you have conviction on, be it based on thematics, growth, value etc. You may or may not be waiting for another GFC event for a very long time. Then the ultimate question is, when there is blood in the streets and the media is saying that the financial system has collapsed, and the world as we know it has finished, will you actually buy? Most won't, even though on sunny days they beleive they will.

 

[The Falcon]

But at least if you go down, so does the captain of your ship (in this case Mr Kerry Stokes).

Its not always possible, but I generally like it when there is a big insider, owning lots of shares.

If I loose, so does he.

Nothing like having a significant proportion of ones money invested (for a big fish), for that big fish to keep his eye on the LONG TERM, game.

I don't hold SVW, but I do hold (and recently topped up) on SWM.

Yep, this is it. 68% held by Australian Capital Equity. This is the Stokes family vehicle, Mining services, construction, media, listed equities ($1b portfolio) and soon to be LNG. SVW is almost like a family office. This is a "co-invest" situation and you need to have long horizons.

In the same vein, if CWN gets much cheaper might be of interest

 

[johnpendles]

John, as a suggestion you would DCA into index funds but keep powder dry in the form of a line of credit for GFC type events. You would also pick individual stocks that you have conviction on, be it based on thematics, growth, value etc. You may or may not be waiting for another GFC event for a very long time. Then the ultimate question is, when there is blood in the streets and the media is saying that the financial system has collapsed, and the world as we know it has finished, will you actually buy? Most won't, even though on sunny days they beleive they will.

i'd like to think i would, but who knows. i haven't been in a situation where i've lost 40-50% of my capital in a stock market blood bath, so it's hard for me to sit here and confidently say that in such a scenario i'd be happy/willing to keep pumping money into the market.

i hope i'd have the stones to do it, since that's when huge huge gains can be made, but i guess i'll only know when I'm in that situation.

 

[china]

i'd like to think i would, but who knows. i haven't been in a situation where i've lost 40-50% of my capital in a stock market blood bath, so it's hard for me to sit here and confidently say that in such a scenario i'd be happy/willing to keep pumping money into the market.

.

We may be there soon. My portfolio of three blue chips are down 20%

 

[johnpendles]

We may be there soon. My portfolio of three blue chips are down 20%

GFC events are not common though?

Sure we could see a 10% pull back, but is that really worth stocking up cash for? Particularly when we know it's so hard to predict these things.

 

[pinkboy]

We may be there soon. My portfolio of three blue chips are down 20%

China, it is well known you purchased ANZ, BHP and WOW. What would it look like if you had purchased say CBA, RIO and WES for example instead on the same dates? Goes to show you just dont know what the market will do, even to Blue Chips.

I dont feel you should cut and run. Take the next couple sets of dividends to ease the pain and when an opportunity does come for you to take back your capital, take it, and put it somewhere where you will feel less taken by the market.


pinkboy

 

[china]

I dont feel you should cut and run. Take the next couple sets of dividends to ease the pain and when an opportunity does come for you to take back your capital, take it, and put it somewhere where you will feel less taken by the market.


pinkboy

Thats my plan. I just feel lucky that I am not about to retire or that I need the cash right now. The money had previously been sitting in a term deposit. I am also amazed that the entire trifecta is down.

 

[The Falcon]

Even if you were to retire soon China, you'd have a suitable cash buffer and top that up with the dividends no? We aren't taking about a permanent loss of capital.

I'm with Pinkboy, when they recover to purchase price, sell them and buy Vanguards unlisted balanced index fund and sleep well. Your horizons are too short for stock investment.

 

[redwing]

Just having a quick look and without dividends

Over the last 12 months ANZ is up about 5%, WOW down around 10% and BHP down around 22%

VAS is pretty much where it was 12 months ago

 

[Intrinsic_Value]

Exited 70% of my chinese stock market positions.

Its been my saving graise one the main reason why my underperformance this year was as small as it was.

 

[Intrinsic_Value]

Just having a quick look and without dividends

Over the last 12 months ANZ is up about 5%, WOW down around 10% and BHP down around 22%

VAS is pretty much where it was 12 months ago

You cant look at it like this.

Prior performance is not an indication of future performance.

And for the banks the number one secret I can tell this forum is to look at long term returns on Book Value, and then compare current market share price values to book values.

Again not rocket science.

I am out of all Australian banking stocks.

I have some risky positions in media/advertising companies that are not doing well from a share price point of view.

Yet it gives me a certain degree of confidence.

Either the market is correctly forecasting difficult times ahead, and discounting those industries susceptiable to downturns, or the shares are good value.

But if difficult times do come, then the Australian banks will suffer, because they are trading at the top of their range in regards to Price to Book Value.

And when times get difficult, provisions go up, bad debts go up. Market reacts and price to book value declines.

This is how I obtained most of my China positions.
The banks were trading at less than book value.

In the US this is how I made my money from US banks, except not only were they trading less than book value, they were trading at less than NTA.