reality check take 2

[adaran01]

From: Adam Randall


42 posts must be a record, and who said you catch more flies with honey.
anyway my question is what is the average ROI on shares as apposed to property.
That is if you paid $1 for a single share in an average Australian company how many years would it take for the income of that share to equal the value of that share. the answer is about 50 although it is not uncommon to have ROI's in the share market as high as 100. That means it would take between 50 to 100 years to make your money back from that 1 share.
In property the ROI is around 10-15. For example Take a 100,000 dollar house in Adelaide renting at $165 per week. How many years does it take for the income of that house to equal the value of the house.
165*52=$8580
100,000/$8580 = 11.65
So it will take 11.65 years to have your return on investment.
This takes out all the other crap like leverage, taxation, negative gearing, trading, and the 3 billion other variables from both forms of investing, which will determine wether you are a good investor or poor investor.
As much as Rembran11 has stimulated conversation I find it insulting and very narrow minded the way you try and shoot everyone down, and dismiss their success stories as rubbish, or highly exaggerated.
Basically if you are not interested in property P**s of somewhere else, Im sure there are plenty of day trading forums out there.

 

[WebBoard]

Reply: 1
From: Robert Longmore


If you take out All the other crap as mentioned, then the share value wouldn't change at all. or at least only increase at the rate of inflation.

 

[adaran01]

Reply: 1.1
From: Adam Randall


hello
neither would the house, that is my point. I think its called the P/E price to earnings ratio. I am not talking about the value of the share increasing I am talking about its basic ability to create an income. The example shows that the average share cannot compete with property when it comes to income production.

 

[WebBoard]

Reply: 1.1.1
From: Gary Smith


>> The example shows that the average share cannot compete with property
when it comes to income production. <<

Let me enlighten you to the use of shares to generate income. Where to
start.... Well I will restrict myself to shares I have owned.

Lets begin with an average Aussie share - the Commonwealth bank. It floated
in 91 - maybe you heard of it, it was in all the papers. So, floated in 91
for about $5.60, payable in instalments as I remember. Since then it has
paid out $7.29 in dividends. You actually got your money back in about 9
years - a tad less than the 50 to 100 you seem to think is average. Oh, and
of course you also got over 500% capital growth as well. What was the
housing capital growth in Adelaide in the last decade? And it's not even as
if CBA is an especially well run bank. National Bank in 91 was trading at
$5.00. Since then has paid out $8.15 in dividends and managed a 600% gain as
well. So lets a bit of a comparison here. You have a choice of your Adelaide
house for $100,000 in 91, renting $165 a week. Or $100,000 of NAB shares.
That year you would have received $8500 in rent. Or a dividend cheque of
$9000. (the dividend in 91 was .45c and you have bought 20,000 shares at
$5.00) So even then, you are starting from behind. And you haven't paid for all the rates, incurance, maintainence yet.
Leap forward 10 years and what have you got. I'm allowing that the value of
the house has doubled and the rent has also doubled in that time - make you
own assumptions. So you could receive $17000 in rent, or $24600 in dividend.
I know which one I would go for, especially seeing the dividend has already
had tax at the company rate paid. Not to mention the shares would now be
worth $640,000 as opposed to $200,000 for the house. Higher income and much
higher capital growth - what more do you want??

But banks aren't really considered high yield shares anyway. Lets try one
that is. One of my favourites is AGL. For those who don't know it, it sells
gas. Boring as hell, but it makes a consistently good profit doing it. In
91, it was selling for $2.00. Since then, it has paid $3.04 in dividends.
Want to work out the ROI on that one Adam? If you had bought $100,000 in AGL
shares in 91 then you would this year have received a dividend cheque of
$37,000. Invest through a company and it would be tax free. And as a bonus,
a capital growth of 500% for the decade as well. Getting the message yet
Adam?

I could go on with others, but you can do your own research if you want to.
Check out the returns of the big aussie icons - Fosters, Woollies, BHP,
Coles, Qantas, etc.

Maybe being a property forum, I should look at some property stocks. You've
heard of listed property trusts? How about Westfield. Trading for about
$1.80 in 91, and paid $1.79 in dividends. Capital growth of about 80% for
the decade. Not stunning, certainly less than a decent residential house
investment. Well, what about a developer like Leighton. Trading for about
1.00 in 91, paid $1.73 in dividends and now trading around $7.00.

Now I know what you are saying - I've just picked the best ones. Well you
are right, I'm trying to make a point. Add in the others that don't do so
well and the total return goes down. This is where you need to be ruthless.
If a company goes bad, sell the sucker. This is the opposite of what people
are led to believe is the way to make money. They are told and believe that
you need to sell your shares to make money. So they see their CBA shares
double in price and they sell out, then buy something else looking for
another quick gain. Eventually they end up in something like Pacific Dunlop
and sit idly by as hopeless directors throw away their money. And then
whinge about how bad the stock market is. You need to sell the dogs and keep
the good ones. And if a good one starts going bad, exercise your control and
sell.it. Immediately. Even the best investors will get it wrong sometimes -
the difference between then and other people is in their reaction to it.
Exactly the same as in property. If you managed to get tenants who don't pay
the rent and start trashing your place - you wouldn't just ignore it would
you? You'd get them out of there ASAP. It wouldn't make sell all your
properties and get a job. It's a fact of investing life that things will
occasionally go wrong.

It was really pathetic to so many people (rightly) slam Eric for being close
minded and ignorant, then in the next sentence do exactly the same thing
themselves. They are savvy property investors, who study the market, look
for bargains, creatively use the system to their advantage. look outside the
norm; yet when the look at shares they revert back to being first-base
investors, screaming 'It can't be done!', looking for as many reasons not to
invest as possible, assuming that the worse will always happen, and worst of
all, getting their information from people with little experience with what
they are talking about, and then believing them without doing their own
research. Look beyond the populist opinion, unless of course you believe
that the only way to make money in real estate is by negative gearing.

Open your eyes and look around - you might just see something you like. And
if you don't, at least you will be better informed. There sure are shares
that will take 100 years to pay you back, if ever (One.Tel anyone) - but
there is no law that says you have to buy them.

Gary

 

[WebBoard]

Reply: 1.1.1.1
From: Gary Smith


I just made an edit to my post. I miscalculated the yield on the house in my first post - I said it was 5% when it was really 8.5%; just deleted my references to it.

Gary

 

[IanF]

Reply: 1.1.1.2
From: Ian Findlay


I'm sure I wont be the only one to point out that it costs a lot less to own
$100k of property (say $25k - $20 for deposit and 5k costs) than $100k of
shares ($100K). To use $100k of real money (or better still existing
equity), you could have $500k of property under control. If using exisiting
equity you can borrow the entire $105k and it only costs $7.5k (or about
$3.8k as interest is deductible, about $73 week). The $150 rent per week
gives about $75 net cash flow. Yes I know its much more complicated that
this with neg gearing, deductions, tax, etc but in essence the property
gives nice cash flow, costs almost nothing to maintain and has relativly
stable capital growth

In general propertry also tends to give lower but more stable growth than
shares which are more volatile.

The last decade has also been a period of unprecedented stock market growth
although this has significantly slowed in the last year or so, for example
most indices (Oz. US and UK) are at the same levels or less than a year ago.
Coupled with the opeing up of alternate markets for super moneys
(traditionally spent only on stocks) and a low inflation, low interest rate
economy (as per Greenspand reductions in US rates) this will likely continue
for the medium term I'd guess.

Both property and shares have advatages and disadvantages - you pays your
money, you take your choice. I've seen both property and shares plummet. I
used to own UK Railtrack shares which are now worth only a fraction of their
height (luckily I got out near the top) as well as London property which was
worth only about 40% of its value precrash. Its taken the property the last
5-6 years to recover to previous levels (AVERAGE house price in London is
about $550k, not this is average).

This all being said I would not wish to use either as a sole investment
strategy. It makes sense to diversify and this is exactly what I've done.
Hold both property and shares and you should be alright.

Ian

----- Original Message -----
From: "propertyforum Listmanager" <listmanager@bne003w.webcentral.com.au>
To: <Recipients of 'propertyforum' suppressed>
Sent: Sunday, June 03, 2001 10:08 AM
Subject: Re: reality check take 2


> From: "gary" <pointless@optusnet.com.au>
>
> >> The example shows that the average share cannot compete with property
> when it comes to income production. <<
>
> Let me enlighten you to the use of shares to generate income. Where to
> start.... Well I will restrict myself to shares I have owned.
>
> Lets begin with an average Aussie share - the Commonwealth bank. It
floated
> in 91 - maybe you heard of it, it was in all the papers. So, floated in 91
> for about $5.60, payable in instalments as I remember. Since then it has
> paid out $7.29 in dividends. You actually got your money back in about 9
> years - a tad less than the 50 to 100 you seem to think is average. Oh,
and
> of course you also got over 500% capital growth as well. What was the
> housing capital growth in Adelaide in the last decade? And it's not even
as
> if CBA is an especially well run bank. National Bank in 91 was trading at
> $5.00. Since then has paid out $8.15 in dividends and managed a 600% gain
as
> well. So lets a bit of a comparison here. You have a choice of your
Adelaide
> house for $100,000 in 91, renting $165 a week. Or $100,000 of NAB shares.
> That year you would have received $8500 in rent. Or a dividend cheque of
> $9000. (the dividend in 91 was .45c and you have bought 20,000 shares at
> $5.00) The house yield you give is pretty low (5.15%)- I guess you are
> talking about after expenses income. So even then, you are starting
behind.
> Leap forward 10 years and what have you got. I'm allowing that the value
of
> the house has doubled and the rent has also doubled in that time - make
you
> own assumptions. So you could receive $17000 in rent, or $24600 in
dividend.
> I know which one I would go for, especially seeing the dividend has
already
> had tax at the company rate paid. Not to mention the shares would now be
> worth $640,000 as opposed to $200,000 for the house. Higher income and
much
> higher capital growth - what more do you want??
>
> But banks aren't really considered high yield shares anyway. Lets try one
> that is. One of my favourites is AGL. For those who don't know it, it
sells
> gas. Boring as hell, but it makes a consistently good profit doing it. In
> 91, it was selling for $2.00. Since then, it has paid $3.04 in dividends.
> Want to work out the ROI on that one Adam? If you had bought $100,000 in
AGL
> shares in 91 then you would this year have received a dividend cheque of
> $37,000. Invest through a company and it would be tax free. And as a
bonus,
> a capital growth of 500% for the decade as well. Getting the message yet
> Adam?
>
> I could go on with others, but you can do your own research if you want
to.
> Check out the returns of the big aussie icons - Fosters, Woollies, BHP,
> Coles, Qantas, etc.
>
> Maybe being a property forum, I should look at some property stocks.
You've
> heard of listed property trusts? How about Westfield. Trading for about
> $1.80 in 91, and paid $1.79 in dividends. Capital growth of about 80% for
> the decade. Not stunning, certainly less than a decent residential house
> investment. Well, what about a developer like Leighton. Trading for about
> 1.00 in 91, paid $1.73 in dividends and now trading around $7.00.
>
> Now I know what you are saying - I've just picked the best ones. Well you
> are right, I'm trying to make a point. Add in the others that don't do so
> well and the total return goes down. This is where you need to be
ruthless.
> If a company goes bad, sell the sucker. This is the opposite of what
people
> are led to believe is the way to make money. They are told and believe
that
> you need to sell your shares to make money. So they see their CBA shares
> double in price and they sell out, then buy something else looking for
> another quick gain. Eventually they end up in something like Pacific
Dunlop
> and sit idly by as hopeless directors throw away their money. And then
> whinge about how bad the stock market is. You need to sell the dogs and
keep
> the good ones. And if a good one starts going bad, exercise your control
and
> sell.it. Immediately. Even the best investors will get it wrong
ometimes -
> the difference between then and other people is in their reaction to it.
> Exactly the same as in property. If you managed to get tenants who don't
pay
> the rent and start trashing your place - you wouldn't just ignore it would
> you? You'd get them out of there ASAP. It wouldn't make sell all your
> properties and get a job. It's a fact of investing life that things will
> occasionally go wrong.
>
> It was really pathetic to so many people (rightly) slam Eric for being
close
> minded and ignorant, then in the next sentence do exactly the same thing
> themselves. They are savvy property investors, who study the market, look
> for bargains, creatively use the system to their advantage. look outside
the
> norm; yet when the look at shares they revert back to being first-base
> investors, screaming 'It can't be done!', looking for as many reasons not
to
> invest as possible, assuming that the worse will always happen, and worst
of
> all, getting their information from people with little experience with
what
> they are talking about, and then believing them without doing their own
> research. Look beyond the populist opinion, unless of course you believe
> that the only way to make money in real estate is by negative gearing.
>
> Open your eyes and look around - you might just see something you like.
And
> if you don't, at least you will be better informed. There sure are shares
> that will take 100 years to pay you back, if ever (One.Tel anyone) - but
> there is no law that says you have to buy them.
>
> Gary
>
>
>
>
> To reply: mailtoropertyforum.4693@bne003w.webcentral.com.au
> To start a new topic: mailtoropertyforum@bne003w.webcentral.com.au
> To login: http://bne003w.webcentral.com.au:80/~wb013
>

 

[adaran01]

Reply: 1.1.1.3
From: Adam Randall


<One of my favourites is AGL. For those who don't know it, it sells
gas. Boring as hell, but it makes a consistently good profit doing it. In
91, it was selling for $2.00. Since then, it has paid $3.04 in dividends.
Want to work out the ROI on that one Adam? If you had bought $100,000 in AGL
shares in 91 then you would this year have received a dividend cheque of
$37,000.>
Did the people who invested in AGL back in 1991 know anything about the major sell off of Australian electrical assets,(this has a direct bearing on the current share price) that only started occurring on a large scale since 1998,if they are astute investors as you claim then they must have known this was going to happen in 1991, or are they just glorified lottery winners.
If your using good examples of shares, then there are equally good examples of property. This is a bit of a silly argument considering I don't think one form of investing is any better than another, so I agree with most of the points you make. I actually have 30000 KAZ shares myself and I have done very well out of them, however the price to earnings ratio is about 87 on them, and this does make me nervous, as I think this will be unsustainable. I am not by any means a sophisticated investor, but I do try to make myself informed. I have bias towards property because I have 3 houses, the other reason is most people I know own shares of some sort, and continually tell me its the best way to go. When I ask them why they bought a particular share, not a single one of them has any more insight into the shares they have bought than I do. The most common reply is "they are blue chip stocks" and thats it.
I bought my last house because mains water looks like it may be connected in the near future by the council, the quarry that causes all the heavy traffic to pass the house is not far off depleted, along with several other reasons, these things will definitely increase the value of the house, the difference between my friends and I, is I have real research that non-one else bothers to look at, they have to wait for some columnist to write their research.
Also my opinion is that to be successful at share market investing, it requires much more knowledge, alot more research, and to be ahead of the pack alot more sophistication than in residential property investment.
Finally I treat most people with a great deal of respect, when I see someone else being arrogant or disrespectful to others it annoys me. If someone had talked to me the way Eric talked to others I would not have been at all happy. I have found in the past people like that seem to have an attitude adjustment when you meet them face to face, a bit like an arrogant 16 year old P plater, they will tail gate, not signal, cut in, and generally be arrogant, until you follow them home and confront them, then they magically turn into meek cowards who "honestly did not see you" as they follow 5cm from your backside.
Regards Adam

 

[lawsjs]

Reply: 1.1.1.3.1
From: Jeremy Laws


People people people,
I rarely read _any_ posts, but this one for some reason caught my eye. You are arguing about things that are very silly, at best. Almost 8 years ago when I bought my first property I had been having exactly the same argument with a friend of mine. My points then were
1) - You CANT get the leverage on shares you can on property. Recently you can get close, but 5% deposit on shares (forget FHOG) is just impossible.
2) - Whilst shares _may_ grow better than property there _is_ an inherent risk.
3) - It is way easier to 'play' with shares than buy and hold.
4) - Dividends are at best quarterly, so to rely on the income to support debt is trickier.
5) - You have no control over the asset.

In the time that my friend and I have been investing his portfolio of blue chip and spec stocks has reached a significant $+/-60,000 - enough for him to be able to buy a house he needs to live in. My own share portfolio which I have only just started to play with again (I played in school previously) is around $50k, totally funded from property increases. Play money, in relation to the property I have. My focus on property, for me has been phenomenly successful.

My father retired in 1994. His super was invested 50% shares/50% property. My mother asked me the other day which I thought would be worth more. They live entirely from rental income and always reinvest their dividend payments. I replied their share portfolio would have to be worth more than their property. Especially since there is no way you would describe most of the areas they invested in as boom suburbs. The real answer however was that the values were within about $50,000 of each other. In other words they were worth exactly the same, after a period of seven years!

This is very long winded, and I do apologise, but much as I argued tooth and nail 8 years ago the same points, without my friends opinions being out there I would have no where near the asset base I have now. In short I _love_ it when people say how poorly property performs - Even very experienced share traders can one day grow up to make very fine tenants! To make money in anything you need a contrarian view. Frankly I think Shares probably are better to invest in, and that is from someone with a huge property bias. However I would _never_ recommend anyone start their investment career in shares. It is too easy to play (buy/sell) with and get wiped out. But who the hell cares! Its such a personal thing. I hope you both have extremely succesful trading in whatever vehicle you choose.

Remain confident that there will always be someone out there who knows beyond a shadow of a doubt that what you are doing is completely and totally insane.

 

[WebBoard]

Reply: 1.1.1.3.1.1
From: Robert Longmore


I have made a fair amount of cash on shares, well over 1 mill, but only by studying and sticking to my rules, i only invest in companys with Proven directors and managers, and as a shareholder you have unlimited acess to company documents. How many people who invest in shares ask for company profit and loss reports and predictions and other documents on a monthly basis? not many, but i do! and if i see a crash coming, i will sell, if all is running well and falling into my rules, then i will keep. The same info can be gained from companies you Don't hold shares in either, Just ring the directors and ask for them, and tell them you are a fund manger for a private Managed fund. they will be all to happy to spill the beans and send you all the info you could want.

Of course i have studied companies every day for 2 yrs and back tested my rules before making my first purchase, i also use the same rules for IPO's as well, and no I dont hold or ever held tech companies except TLS.

But with Property, i know nothing! thats why i am here, i am studying like hell to learn the game before i throw any cash at it, once i feel i confident and have set guidlines i will then start to backtest my guidlines and if all works well, then i will see the bank. (no i will not sell any shares to put into Property, unless they fail the monthly test, then they will be sold and re-invested in another)

Im sure all the people who have made a lot of money in Property have spent a lot of time and effort researching the topic before blindly jumping in. or have a deep passion for property, personally i LOVE investing in shares, and i also like property, although no where as much as company ownership, and because i love shares, i enjoy researching the topic and situations.

i guess the level of wealth people achieve in whatever investment vehicles they choose, is totally reliant on their passions, drive and persistence and willingness to succeed. so therefor both Property and shares are just as good as each other, its up to the individual.

 

[aam]

Reply: 1.1.1.3.1.1.1
From: Apprentice Millionaire


>i guess the level of wealth people achieve in whatever investment vehicles they
>choose, is totally reliant on their passions, drive and persistence and willingness to
>succeed. so therefor both Property and shares are just as good as each other, its up
>to the individual.

I agree with Robert: it is horses for courses. I started my journey to wealth with shares, to fund my children's education. Now I still have shares, and I am branching into property. I will at some stage consider options and derivatives of shares. I am also part of a property syndicate. Down the track, I expect also to consider buying a business(working on it, not in it). So I do not really care about this property versus shares debate: it is the aim which is important in my view. Becoming wealthy.

Cheers
Apprentice Millionaire
(aka Jacques)

 

[WebBoard]

Reply: 1.1.1.3.1.1.1.1
From: Samantha Lind


Hi all,
Not picking on or criticising anyone's choice of investment but -
Did anyone's property drop from 200k to ZERO in a day?,a week? a month?
NO!! Need we say more!
Sam

 

[WebBoard]

Reply: 1.1.1.3.1.1.1.2
From: Eric Snow


Gary,

Good to see a like-minded individual on the forum. It's typical of people to fear what they don't understand. Personally, I enjoy watching the average person "invest" in property. More loans written means more profit for the banks, of which I am a part-owner.

So let's go everyone! Gear 'til it hurts!

I get a particularly perverse pleasure every time I open up the Sunday paper and read the latest "property booms again!" (Note exclamation point) every week without fail. (I am sure it has NOTHING to do with the fact that real estate ads are a large part of their revenue.)

Eric

 

[WebBoard]

Reply: 2
From: Eric Snow


Adam,

If you are so worried about a particular share going down the tubes then why not buy into a share fund? Much lower risk. And yes, I would give you the same advice face to face.

Friend, I think you need to calm down. Go re-read Rich Dad, Poor Dad. I hear there are some great ideas in there. *LOL!*

Excuse me now, I have to get back to my day-trading forum...

Eric

 

[WebBoard]

Reply: 1.1.1.3.1.1.1.2.1
From: The Wife


Eric,

Are you here to 'save us' or to 'mock us'

I really cant see why you are here, if you dont like property?

Do you just check in on property forums everynow and then to see if anything has changed for you?

Do you have a life mission to cut down any tall poppys that might pop up?

Perhaps you didnt know this was actually a property forum?

Do you like to spend time with likeminded people? if so, your in the wrong place.

Eric, your point/purpose here, just doesnt make any sense, and I really dont think your average adult person would waste time like that, in a place were there are hardly any likeminded people, and you greatly dislike the very point and topic of the forum....???

Are you here to sell something? shares products perhaps?

Yourself? are you going to run anti property seminars?

What are you doing here?

I just dont get it, after this post I wont be bothered to read any posts authored by you, as you havent shown you are here for any purpose other than to be a bit of a git.

I feel its just the rantings of an unbalanced person.


TW
~Life is a daring adventure, or nothing at all~

 

[aam]

Reply: 1.1.1.3.1.1.1.2.1.1
From: Apprentice Millionaire


>Eric, your point/purpose here, just doesnt make any sense, and I really dont think your
>average adult person would waste time like that, in a place were there are hardly
>any likeminded people, and you greatly dislike the very point and topic of the forum....???

Eric might be an adult (?), but he certainly shows immaturity.

Cheers
Apprentice Millionaire
(aka Jacques)

 

[WebBoard]

Reply: 1.1.1.3.1.1.1.2.1.1.1
From: Eric Snow


Michael,

At least you have a sense of humour. The others around here are like humourless drones.

Eric

 

[WebBoard]

Reply: 1.1.1.3.1.1.1.2.1.1.2
From: Eric Snow


Michael,

Risk equals return. Write it on your bathroom mirror so it's the first thing you see every morning.

No, I have never tried to borrow money to buy shares. Why bother? Why get into debt? I will be wealthy enough soon enough without borrowing.

Shares are actually a lot less volatile than you think.

Eric

 

[paulzag]

Just who is Eric Snow? OFF TOPIC

Reply: 1.1.1.3.1.1.1.2.1.2
From: Paul Zagoridis


On 6/5/01 2:54:00 PM, The Wife wrote:
>I feel its just the rantings
>of an unbalanced person.

Found this on "Eric Snow"

CNN - Man charged with killing two deputies, denied bond - Feb. 24, 1997
Man charged with killing two deputies, denied bond February 24, 1997 Web posted at: 10:50 p.m. EST MENDENHALL, Mississippi (CNN) -- Convicted killer Eric Snow now faces new capital murder charges that he shot two deputies in cold blood as they...
2/25/1997

http://cgi.cnn.com/US/9702/24/briefs.pm/deputies.killed

Dreamspinner ;-)

 

[WebBoard]

Risk and return

Reply: 1.1.1.3.1.1.1.2.1.1.2.1
From: Andrew Scott


Eric,

If you stop to think about it, Risk doesn't always equal Return.

How are you measuring risk? How are you measuring return? How can they possibly be the same?

The standard sharemarket definition of risk is short term volatility, ie. variance from the long term, observed/expected results. I assume that you will adopt this definition.

(This definition is problematic, as short term, long term, and volatility remind undefined, but we'll ignore that for the moment)

If you have a friend who you know is reliable, and always ALWAYS pays back debts but doesn't believe in credit cards, this friend asks to borrow $100 because they need to buy a couch that's on sale this week, and want to get the discount. They offer to pay you $150 the week after, when they get paid. You lend them $100, and a week later get $150. This is a return of 50% (higher, if you project it out annually , with no risk. How can this be?

A problem gambler goes to the casino with $100, and starts playing roulette. The odds on roulette are well known, and the house isn't fixing the game. The gambler wins some and loses some, but keeps playing all night. Eventually the gambler has played all their money - they have lost 100%, but the risk wasn't that extreme. How can this be?

A less simple example.. you have a portfolio of 100 different shares, in different markets, each of which has a long term growth of 30% annually, but are a bit volatile. However, because you have them in a portfolio the volatility is diminished - when one is down another is up. Simple statistics. But the whole portfolio must have a long term growth of 30% annually too, since it is the average of the shares in it. However, it is less risky than any of the stocks individually - you have reduced risk without reducing return. How can this be?

Risk and return are different beasts. We're not talking random events here, this is a reality where people make deals with other people. Only in some economic or probability theories are risk and return strongly correlated.

Andrew Scott

 

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Reply: 2.1
From: Firefrog .


If we disagree with something let's do so but then leave it alone, I for one am sick of reading Eric's dribble. All who reply to him perpetuate his cause (now I doing it as well) We should remember the reason we are all here, to discuss and share information on Investment Property not discuss the validity of someone who professes to hate IP's.


+++ Climbing down from my Soap Box++++

The Frog

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You can achieve far more than you allow yourself to believe. - David Pollitt