The data that I've seen indicates that he under-performed the ASX during the "bull market" during his period at Clime Capital Management. He also has highly publicised blows such as CCP during the GFC and more recently the whole MCE fiasco.
Sharemarket Sale: What stocks to look out for?
- Thread starter Kenster
- Start date
I dunno, sounds like I'm the one being challenged for it...
So what's your verdict? Not that one chart proves anything but do you have any visual confirmation that investors could be buying property when stock markets tank?
lol
Looking at the chart it would seem that Sydney house prices were
after '87 up
after '94 flat to up
after '02 up
after '09 up
Which just goes to show that using 1 chart of 1 recession in 1 country to prove your point that money doesn't go to property when a share market tanks is utter tripe.
Money will not always move from shares to property at these times, but often they will.
The biggest problems that I can see is this:
The formula lags behind increases in EPS.
The formula implies (quite randomly) a growth period for the company.
Forward ROE is assumed.
The higher the current ROE the quicker the future years become insignificant (businesses such as PTM, NVT - and other businesses that do not rely on high working capital are disadvantaged). The growth part of his equation has an implied time-frame. Isn't this the most important assumption in itself, yet it is arbitarily implied?
As you said, companies with cyclical revenues (ie. mining services, resources stocks etc) will not be accurate as the formula gives results that jump all over the place).
It seems to be only useful in very limited circumstances.
I didn't say that 1 chart would prove anything.
As Sunfish said (and I agreed) the US is simply a good example of where that didn't occur.
I don't believe it occurs here either, but feel free to gather and post evidence to the contrary.
Prove it.
The biggest risk is the market is irrational.
So when the market is irrational:
- perhaps generally speaking a 20% ROE might be considered good
- but when the market is irrational, even 40% ROE might fall very quickly to 60%
So when the market is irrational:
- perhaps generally speaking a 20% ROE might be considered good
- but when the market is irrational, even 40% ROE might fall very quickly to 60%
I wonder what that other old fuddy duddy on Fox, Howard Coleman's record is like?
COH is an excellent company, that got completely trashed due to a product recall that they choose to do on their own accord to protect their excellent reputation.
Honestly, the first thought that I had on that day was Howard Coleman and his "wealth winners." Not a good look for his operation. Disclosure, I do not invest in Cochlear shares.
edit: Not sure about his entire record, but that is a recent example that he has got "wrong."
Happy to provide evidence, may not be to your high standards but others may find the following sufficient.
Re '87
In October 1987 the share market fell by over 40 per cent. In the following two years, the investor share of total housing finance rose sharply from 13 per cent to a peak of 34 per cent in January 1989.
Re '02
Looking at the current cycle, between June 2001 and February 2003, the share market lost around 20 per cent in its value, one of the longest bear markets of recent times. Coinciding with the decline in share prices, investor activity as a share of total housing finance has also increased significantly, averaging around 45 per cent of total financing in the past year.
http://www.treasury.gov.au/documents/780/HTML/docshell.asp?URL=03_Housing_Market.asp
Still waiting to see your proof for rubbishing this post,
"What do people do when the stock market tanks? Property."
with this
"What utter tripe. Another entry for the great big book of property myths that have developed over the last 15 year property bubble..."
Re '87
What evidence do you have that shows it was the stock market crash that caused the price/investor finance increases as opposed to the reintroduction of negative gearing (September 1987) after a 2 year absence? Was there a similar uptick in investor share of housing finance in other countries that experienced the same stock market crash?
Re '02
There was a sharp increase in housing commencements following on from the introduction of the FHOG (developers looking to cash in I imagine), so it's not really surprising to hear that investor finance crept up over the 2 years following:
Is that the extent of you evidence?
Nothing so far but coincidental timing as far as I'm concerned.
Re '87
What evidence do you have that shows it was the stock market crash that caused the price/investor finance increases as opposed to the reintroduction of negative gearing (September 1987) after a 2 year absence? Was there a similar uptick in investor share of housing finance in other countries that experienced the same stock market crash?
Re '02
There was a sharp increase in housing commencements following on from the introduction of the FHOG (developers looking to cash in I imagine), so it's not really surprising to hear that investor finance crept up over the 2 years following:
Is that the extent of you evidence?
Nothing so far but coincidental timing as far as I'm concerned.
I'll take an Australian Government treasury report over your perceptions every
time
Alternative investments
The poor performance of the stock market in recent years also provided an impetus to invest in housing. Low yields, high volatility, and capital losses in recent years appear to have made the stock market a less attractive option in which to invest for average households. Over 2002-03 the ASX 200 fell significantly (19 per cent between January 2002 and February 2003) (Chart 8). The perceived higher risk of investing in the stock market, be it capital losses or price movements volatility, also means households may have become less willing to borrow to invest in the stock market. Dwelling investment is typically perceived as a safe haven investment (bricks and mortar) and recent strong capital gains have reinforced this perception.
When choosing between alternatives, investors are influenced by comparisons of the overall after-tax rate of return. In this context, taxes from all levels of government, as well as income and asset tests through the social security system, can influence the choice of investments. For instance, Australia has a long tradition of providing concessionary taxation treatment to owner-occupied housing.
Key taxation factors that can influence the choice of investments include the overall personal income tax scales (including tax thresholds and marginal tax rates), the timing of assessing income and deductions, the treatment of inflation, the capital gains tax, the general tax principle that allows losses from one area of income to be offset against other forms of income (including negative gearing on borrowings) and depreciation arrangements. Many of these longstanding taxation treatments apply equally between investment options, such as that between an individual investor in housing or the stock market, and it is therefore difficult to state that they have favoured any particular asset class or that it has contributed to any excessive activity in any particular market.
Chart 8: Share market and house prices
http://www.treasury.gov.au/documents/780/HTML/docshell.asp?URL=03_Housing_Market.asp
These are the opinions of Bond, James Bond
cool. Not necessarily those of the Australian Treasury.I don't see how the opinion of some treasury analyst is evidence of anything.
Been wondering what everyone's been thinking , brave territory right now isn't it eh . Still on the fence myself, even day trades go belly up in this weather don't they hey. Did go in for a looky Thursday, all I could think was holy hell what a mess , not touching this baby. I know one thing , we're consistently breeching lower, I haven't been counting but at a guess it's on it's 5th or 6th this run now , that's big.
For people talking super and the like , I reckon stick with the advice in here and stay the f'k out of there right now , anything could happen from here it's totally unreadable aside from it is still breeching, the US is still in a mess and we might not have even started yet, that's not good. Spose we could still get the old Christmas run if your brave but then you'd likely get caught up in a January dump anyway , not worth it.
Was gonna start a silver thread, what do you guys think of silver , it is one thing I've been thinking about. Got one little company fully paid up, plenty in the bank, licenses for all sorts of things and lots of offers on the table.
Very cheap and some people are saying silver could 10 fold gold from here, dunno. Been thinking about putting my first ever real hold on this mob, seeing where they go. I 'm figuring 24mths .
PS , they're at 1/2 price from a mth ago this week , could be a nice grab.
Cheers
For people talking super and the like , I reckon stick with the advice in here and stay the f'k out of there right now , anything could happen from here it's totally unreadable aside from it is still breeching, the US is still in a mess and we might not have even started yet, that's not good. Spose we could still get the old Christmas run if your brave but then you'd likely get caught up in a January dump anyway , not worth it.
Was gonna start a silver thread, what do you guys think of silver , it is one thing I've been thinking about. Got one little company fully paid up, plenty in the bank, licenses for all sorts of things and lots of offers on the table.
Very cheap and some people are saying silver could 10 fold gold from here, dunno. Been thinking about putting my first ever real hold on this mob, seeing where they go. I 'm figuring 24mths .
PS , they're at 1/2 price from a mth ago this week , could be a nice grab.
Cheers
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Problem with Silver short term is there is both global recessionary pressures pulling it down (with most demand currently industrial related) and it's monetary premium is losing it's sheen.
Here's an excerpt from one of my blog posts 6 weeks ago:
http://www.bullionbaron.com/2011/08/silver-price-tug-o-war.html
I think short term we *could* be heading back to early-QE2 prices (unless Fed cranks up the printing press), perhaps low $20s even.
Medium term however I am extremely bullish on Silver. I think as Gold rises past $2000 and the public become more heavily involved in buying the metals this will put a lot of pressure on the Silver market. The current Gold/Silver ratio (GSR) is around 53. Even at a ratio of 32, when the public holds both a kilo of Silver in one hand and an ounce of Gold in the other, I think the majority will go for the Silver.
IMHO Silver will be triple digits before the bull market in the metals is over.
P.S. What company random?
Here's an excerpt from one of my blog posts 6 weeks ago:
http://www.bullionbaron.com/2011/08/silver-price-tug-o-war.html
I think short term we *could* be heading back to early-QE2 prices (unless Fed cranks up the printing press), perhaps low $20s even.
Medium term however I am extremely bullish on Silver. I think as Gold rises past $2000 and the public become more heavily involved in buying the metals this will put a lot of pressure on the Silver market. The current Gold/Silver ratio (GSR) is around 53. Even at a ratio of 32, when the public holds both a kilo of Silver in one hand and an ounce of Gold in the other, I think the majority will go for the Silver.
IMHO Silver will be triple digits before the bull market in the metals is over.
P.S. What company random?
No place for the ill-prepared.
After last night's drop I might buy into a gold or silver ETF though. I do believe in their long term future.Thanks for the detail Hobo.
Any thoughts on a time frame for entry , not asking much in the present environment is it ?
Also wondering, what would you be considering at present anyway , a good holding time frame then once in might be and would you go a company or otherwise ?
My fav' right now is AYN which I don't mind mentioning here , don't think I would in a trading club, well not until after I've bought it anyway but yeah take a look and see what you reckon. Actually I think it was Diggers and Drillers that also gave them a pretty good wrap awhile back, mind you I'm not sure what that's worth but anyway.
Cheers
PS , I must admit , their chart is pretty hard to read right now but it looks like 8c could be on it's way min' before anything further.
Any thoughts on a time frame for entry , not asking much in the present environment is it ?
Also wondering, what would you be considering at present anyway , a good holding time frame then once in might be and would you go a company or otherwise ?
My fav' right now is AYN which I don't mind mentioning here , don't think I would in a trading club, well not until after I've bought it anyway but yeah take a look and see what you reckon. Actually I think it was Diggers and Drillers that also gave them a pretty good wrap awhile back, mind you I'm not sure what that's worth but anyway.
Cheers
PS , I must admit , their chart is pretty hard to read right now but it looks like 8c could be on it's way min' before anything further.
Tend to agree with Sunfish regarding gold. Don't think we're out of the woods yet. Though there might be a bit more drop ahead of us, Au should be poised to hit $2000 by year end?
Thanks for that i thought it was munger, but your right it sounds like Graham logic and he was there first
In regards to complications with using a 5 year average, the complication arises in my opinion from extracting the past into the future. I prefer to take the current and anaysts expectations of the future (with due scepticism of their perpetual optimistic nature).
This is just a personal preferance, however i will do a quick glance over the last 10 years of financial history to get a 'feel' for the historical performance of the company in regards to margins, sales growth, share expansion (ie issuance of new shares over time) etc etc. If very recent times show a large positive spike then i generally discount the spike (eg resources). If the spike is negative i then investigate whether its a one off, a new business paradigm, or whether i should look at some form of cyclical mean (eg media)
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You have been doing your homework, well done.
Never blindly listen to anyone that says they have come up with the single magic elixir for investing.
Investing is part analytical, part 'artistic' and lets face it, at the end of the day part luck. Financial forumlae are like a cook book, it provides the 'guide' or 'framework' or how to combine the ingredients, but the end product will always depend on the skill of the chief.
If we are seeing a similar pattern of events to 2008 then we may see the low in Silver (and Gold) later this year... could Greek default be the Lehmans of 2011? Maybe. They say history doesn't repeat, but it rhymes
I'm already fairly loaded up with metals, so if the dip to low $20s doesn't come, that's fine, if it does I will go heavy on Silver again.
My view is that we are likely within 2-2.5 years of the peak of the bull market. In the final 2 years of the last bull market Gold rose by a multiple of 5 and Silver by a multiple of 10. I don't know if we will get a similar rise this time, but I think it's possible.
I remember considering AYN at 2c, too bad I didn't load up. I did ok with the Silver stocks I did buy though. SVL bought 8c and sold 35c. CCU bought 6c (2009) and sold between 70c and 90c.
If Silver gets slammed to low $20s there could be an opportunity to pick Silver stocks up very cheap.
