Not enough bragging........come on and share your success stories

[ren-A]

Cashflow game = mindset change

G'day all,

Biggest win for my family recently was buying and playing Kiyosaki's Cashflow 101 game. At schoool we learn maths, history, english, science, etc but until this game, nothing taught us about how to set goals, do basic personal wealth accounting, then learn in a no-risk environment. It got me off my butt to turn $100k home equity earning me 0% passive income into a positively geared 6% share investment. Future cap gains will be a nice kicker and we're already up $3500 since July 04.

fyi, here's my favourite Cashflow strategy: when you get a stock at $1 or $5, go and borrow $100k from the bank. Invest 75% of it in shares and hold onto the $25k - this funds the repayments. In time, the stock price will rise and anything in the $20+ range gives you at least a $225k profit. Repay the loan and you have your Big Deal nest egg. Whilst the $1 to $20 is not realistic in the real world, the concepts of good debt, share appreciation, passive income, balance sheet management from this game are not only educational wins for me, but even more importantly, for my teenage children.

fyi, latest real-world success. Was researching Warren Buffett and looking for an Australian approach and discovered http://www.conscious-investor.com/
Used the tool to assess the market and came across Cochlear, just after a profit warning (August 04). Fundamentals still sound so bought 1000 shares at $18.84. Steady appreciation until last week, when a key US competitor had a product recall. Cochlear gained 1.5% on the day, and is currently over $24 for a $5k cap gain. Cost of software ~= $A1000. Bargain.

Doens't happen often but oh boy, it's sweet when it does.

Since I bought Cashflow and got off my butt, I've reduced my time-to-retirement from >11 years to <5. Now that's worth it!

 

[The Y-man]

A bit more detail

Well looks like you guys all bought before the boom. Pity us younger kids didn't know about the Jan somers books because we were too young, still in high school etc. Now I got to wait 7-8 years to buy in the next property boom. Sure I can buy it now then hold it for 7 years but I think it would be smarter buying just before the next boom takes off. damnnn

Hi np2003,

You can also use the "intervening years" to learn (and take advantage of) other asset classes.

I'll give you a bit more detail about those years between 1997 and 2000 I talked about in my earlier post. I initially left it out, because I thought it might get a bit boring, but I think it might help you get some ideas.

Despite working all those hours, my wife and I knew that just saving the money up in a bank account wasn't going to cut it. So we thought about putting the money into the share market (we had also heard rumours of people making money in shares! ). As I had no idea which shares to buy or whatever, I decided to put my faith in managed funds.

Being a bit cautious, I decided to invest the money with several different fund managers (some big, some small, but all with 4 start Assirt Ratings). Every month I would look at the fund that had performed the WORST (i.e. the price had got up least, or had gone down most...) and added more funds into it to "balance it out" (dollar cost averaging).

As a result of this, we ended up getting about 15%-20% pa performance instead of the 6%pa a term deposit would have given us. (hmmm....maybe this is another brag..... )

Those (and the following) years also taught us a lot about how the share market behaves, and it is interesting to see that almost all of our investment activities at the moment are in fact directed back in the share market arena.

Cheers,

The Y-man

 

[Tandella]

fyi, here's my favourite Cashflow strategy: when you get a stock at $1 or $5, go and borrow $100k from the bank. Invest 75% of it in shares and hold onto the $25k - this funds the repayments. In time, the stock price will rise and anything in the $20+ range gives you at least a $225k profit. Repay the loan and you have your Big Deal nest egg. Whilst the $1 to $20 is not realistic in the real world, the concepts of good debt, share appreciation, passive income, balance sheet management from this game are not only educational wins for me, but even more importantly, for my teenage children.

In reality, would the bank really lend you 100K unsecured to invest in spec shares for a $1 each ?
(Acey's signature about theory and practice crossed my mind while reading your reply )

On the topic of Cashflow, is there an upcoming session in Syd ? Would love to play it with new people to pick up new strategies

 

[Bill.L]

Hi all,

qaz(at least your nic is easy to type), in answer to your first question

"Not enough bragging........come on and share your success stories"

Wallabies... and I mean the jumping type(looks like a small kangaroo for the OS forumites), our success and lives are due to them.

I suppose I better explain....

On the road home from the nearest town, there is a place about 3km from our house where swamp wallabies are often eating the grass close to the edge of the road. These wallabies are much smarter than average kangaroos, and have learn't over the years to NOT go on the road just at the sound of a car or truck. Infact they just happily sit there and watch you go by, then resume eating.
The road though winding a bit, is easily travelled at 100 kph(or more), which most of the locals do, even with the wallabies on the side of the road, day or night.

A few years ago, when we were returning home from a trip to Melbourne, during a stormy evening, I thought of the Wallabies and how they may be spooked by the thunder and lightening(I even told my wife who was wondering why I was slowing), so I slowed down to about 70kph, something I had not done at that location in over 15 years of driving down this road.
As we were going around one of the curves, I noticed a car coming in the opposite direction with their lights on high beam, it makes it very hard to see, so I continue to the left of the approaching car to suddenly realise that the road embankment is on my immediate left. They were on my side of the road dead ahead and I could only realise it about 20 to 30 metres from impact. I locked the brakes and as we aquaplaned across the road my only words were "Oh ****".

In total the 5 people in our car and the 3 in theirs were taken to hospital for a variety of injuries, from broken bones to cuts and seatbelt burns, in other words minor injuries. Both cars were total writeoffs. We actually hit them absolute front and centre.

Most people who have head-on accidents on country roads only ever have one, and if there had not been wallabies I would have been travelling much faster, probably over 100kph, and been just another road statistic(as with several others from my family and the other car).

So to me my story starts with wallabies.

bye

 

[ren-A]

In reality, would the bank really lend you 100K unsecured to invest in spec shares for a $1 each ?

On the topic of Cashflow, is there an upcoming session in Syd ? Would love to play it with new people to pick up new strategies

G'day Tandella,

You're right, the bank wouldn't lend, but it's the starting concept that's important.

And yes, some of us are getting together in a few weeks to brush up on our Cashflow skills. The details of the game are below for those who have yet to come along and enjoy one of the finest Cashflow venues on
offer in the great city of Sydney.

Venue: Lounge Area, Street Level, Centre of Hotel Lobby
Westin Hotel
GPO No1 Martin Place
Sydney

Timing: Fourth Saturday every month (ie 23/10)
10am - 12.30

(Bring own board if poss). Ill post details on the Metting Point of this forum a bit closer to the date.

Or if you wanted to play every Monday night, here's a regular group:
http://www.sydneycashflowplayers.com/

Cheers

 

[Bill.L]

Hi all,

Ren-A, just a point on your cochlear investment, and you are not the first to mention it. That being it is along the lines of a Buffett style of investment. I have to disagree with this strongly.

Buffett follows the teachings of Graham and Dodd who were value investors. They always looked for a margin of safety.
Cochlear with a PE of 35, a price to book of over 8, and a price to sales of 4.5, would not be any where near their interpretation of "value". It would need to be in the $6-8 range to be considered "value" not $24 or the recent lows of $18+. Not to mention a deteriorating balance sheet backed up by the equity raising of $27m, effectively diluting the holdings of current shareholders.

Sorry just had to get that off my chest. I'm glad you made money in it.

bye

 

[Sunfish]

I sold my Gympie Gold shares just before they had the fire in their coal mine. Lost a bit, but not the lot!

T

 

[ren-A]

Different values = different assumptions

Hi all,

Ren-A, just a point on your cochlear investment...Cochlear with a PE of 35, a price to book of over 8, and a price to sales of 4.5, would not be any where near their interpretation of "value". It would need to be in the $6-8 range to be considered "value"

Sorry just had to get that off my chest. I'm glad you made money in it.

bye

Hi Bill and thanks for the reply. "Value" is a slippery term. My forward projections of Cochlear, based on Buffett filters including the stability of past ROE, EPS, etc, indicate a higher future value. I use a 10-15% margin of safety, and even then my entry point was okay. It's good to have a challenging viewpoint from an obviously experienced analyst such as yourself - thanks for the input.

Have a great day

 

[thefirstbruce]

My greatest success for the last 12 months was buying resource stocks back before May. After reading a zillion tech analysis books, and ending up ga ga, I just fell back onto simpler strategies...in this case, is demand for Aussie coal and fuel going up, and are there limitations on an equitable increase in supply? Answer... yes, esp in China.....

Further, with coal stocks, a lot of sale contracts were coming up for renewal, at a higher cost of course....

therefore I bought FLX, MCC, SRL, WPL, and HDR. Have now started to trade these on resistance and support levels. Currently ahead 180% pre tax.

 

[alwayscurious]

Thus far.

Got married early with NOTHING. Borrowed furniture, car loan on a 18 y/o car, and renting.

Studied hard, got a job. No idea about money, but knew how to give.
Read Kiyosaki's "Rich dad Poor Dad"

About 2 years into the job - started saving money.

Blew some on a holiday (nice! )
Put 5K into managed fund with monthly installments
Saved 30K towards first house
Bought at Nov 2001 for 150K (northside Brisbane)

Continued reading - got hold of Jan Somers Book in late 2002
Took 6 months to read books, talk to people and get my head around the concepts - then bought first IP in June 2003 for 157K (southside Brisbane)
Bought second IP in Oct 2003 for 63K

So far the values are at:
PPOR 279K
IP 1 250K
IP 2 80K
Managed Fund 21K after sold down and used in the purchase new PPOR
for 298K

So we've made a bit of capital gain, but the cashflow has been an issue. Still - eyes are opened now so here we come.

And we still can and are giving.