Author Topic: Australian Investing Thread  (Read 1883703 times)

mjr

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Re: Australian Investing Thread
« Reply #4800 on: February 29, 2020, 12:29:20 PM »
FX hedges used to hedge currency risk on foreign currency denominated assets are typically rolling three month FX forward contracts, which are realised on a much more frequent basis than the underlying asset. This causes a timing mismatch between the gains/losses resulting from the hedges and the gains/losses from the underlying asset. The effect is that a fund will frequently be forced to distribute gains resulting from FX hedges as those contracts are rolled every three months, even though the respective underlying asset may not have yet been realised

marty998

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Re: Australian Investing Thread
« Reply #4801 on: March 03, 2020, 12:34:29 PM »
Must be seeing things. Swear there was a dead cat bouncing down the road outside yesterday.

bigchrisb

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Re: Australian Investing Thread
« Reply #4802 on: March 05, 2020, 04:01:19 AM »
FX hedges used to hedge currency risk on foreign currency denominated assets are typically rolling three month FX forward contracts, which are realised on a much more frequent basis than the underlying asset. This causes a timing mismatch between the gains/losses resulting from the hedges and the gains/losses from the underlying asset. The effect is that a fund will frequently be forced to distribute gains resulting from FX hedges as those contracts are rolled every three months, even though the respective underlying asset may not have yet been realised

Pretty good summary. What it means for me is that vgad will have more volatility in distributions depending on what the exchange rate does. More turnover means more taxable income to report. Hence better to hold it in a low tax environment.

I also intend to sell and convert to vgs at some point in the future if the aud is stronger.  Personally, I see unhedged as the long term hold, but may pick up a few extra percent until that point.

marty998

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Re: Australian Investing Thread
« Reply #4803 on: March 06, 2020, 12:14:17 AM »
How long until Flight Centre and Webjet look like decent buys? Those two and Qantas still look like they've got a bit further to fall. But they could be great purchases for the medium term.

mjr

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Re: Australian Investing Thread
« Reply #4804 on: March 06, 2020, 01:11:33 AM »
I'll snaffle them up along with everyone else when I buy VAS in about a month !

Eucalyptus

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Re: Australian Investing Thread
« Reply #4805 on: March 06, 2020, 07:07:13 AM »
As perhaps the "povo student" of this forum, I was pretty proud of myself managing to have enough funds to drop $1000 on my super a couple of days ago. As well as buying a bit lower, I'll get the $500 co-contribution from the commonwealth for it. Was planning to do this just before the end of the financial year anyway, assuming I have enough funds (work is pretty random and casual and I go through periods on Nursing placement where i can't work). But I felt comfortable and safe enough to do it with the next two mortgage payments already covered to take advantage of a bit of a market dip. It might crash a heap further but I'm happy with that little potential long term gain :-)

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Re: Australian Investing Thread
« Reply #4806 on: March 06, 2020, 05:37:52 PM »
@Eucalyptus high fives for you!

bigchrisb

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Re: Australian Investing Thread
« Reply #4807 on: March 07, 2020, 11:58:37 AM »
Nice work Eucalyptus!

As for bargains, I see that the travel sector is getting hammered.  Flybe collapsed in the UK.  The one I'm watching at the moment is VAHHA, a listed note/bond from Virgin Australia.  Its been smashed in the last couple of weeks, and is trading at 75c in the dollar. 

It has a fixed face yield of 8% and lasts for 5 years (Nov 2024).  What that means is that you are buying $140 in future cash flows for $75.  A bargain, provided Virgin Australia does not go bust in the next 4 years an 8 months.

Given that they were already in some financial strife prior to the virus problems emerging in China , I don't see it as risk free by any means.  But I am watching it, and am tempted to start to accumulate it over the next while.  I see it as a similar mis-pricing, akin to the SVWPA pricing a few years ago - I did very well out of that (although SVW is much more diversified as a business than Virgin). 

Richmond 2020

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Re: Australian Investing Thread
« Reply #4808 on: March 08, 2020, 11:54:33 PM »
Interesting times. I have a large amount of funds sitting in the offset account. Will need to consider my options.

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Re: Australian Investing Thread
« Reply #4809 on: March 09, 2020, 12:25:23 AM »
I am like a kid in the candy store:)

bigchrisb

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Re: Australian Investing Thread
« Reply #4810 on: March 09, 2020, 12:39:21 AM »
I'm back into accumulation at the moment. Mostly index etfs of one flavour or another. Also continuing to repatriate earnings from euros - exchange rate has shifted 10% in a short time.

stylesjl

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Re: Australian Investing Thread
« Reply #4811 on: March 09, 2020, 01:26:34 AM »
Look at that crash! Just got me some VAS today. 7% fall. Its just too bad now that I don't have anymore money that I'm willing to part with.

I have worked out that the dividend yield is now almost 5%. I mean supposing that yield doesn't decline from a pending recession.

mjr

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Re: Australian Investing Thread
« Reply #4812 on: March 09, 2020, 02:26:22 AM »
I'm of the view it has a way to fall yet.  The upcoming recession hasn't hit yet, nor has the virus properly taken hold and made its effects felt on our health and subsequent behaviours.

The market is back to what it was a year ago.  I didn't throw oodles of cash in then and I'm not doing so now (yet).

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4813 on: March 09, 2020, 02:36:32 AM »
On one hand I'm excited about the bargains to come.

On the other hand I'm a bit concerned about the effect the crappy economy is going to have on the stage 2/3 tax cuts, and I'm downright worried about tax hikes. Not every recession has to be dealt with by stimulus measures. We can just have a long drawn out period of stagnation and economic weakness.

marty998

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Re: Australian Investing Thread
« Reply #4814 on: March 09, 2020, 05:08:26 AM »
I'm back into accumulation at the moment. Mostly index etfs of one flavour or another. Also continuing to repatriate earnings from euros - exchange rate has shifted 10% in a short time.

Indeed it has. I would not have thought the Euro would be as strong as it is, with Italy so affected by the COVID-19 virus.

7.3% market fall today... extraordinary day for oil stocks - Santos down 25%, Oil Search 35%!

marty998

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Re: Australian Investing Thread
« Reply #4815 on: March 09, 2020, 05:10:38 AM »
On one hand I'm excited about the bargains to come.

On the other hand I'm a bit concerned about the effect the crappy economy is going to have on the stage 2/3 tax cuts, and I'm downright worried about tax hikes. Not every recession has to be dealt with by stimulus measures. We can just have a long drawn out period of stagnation and economic weakness.

Maybe one day there will be a special tax hike just for you Bloop :)

Don't know what conspiracy theory Facebook pages you are looking at but no one is talking about tax hikes.

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4816 on: March 09, 2020, 06:29:39 AM »
Marty, the money doesn't come from nowhere.

After the 2009 stimulus there was a tax hike (a deficit levy).

Then before the last election Labor promised to reinstate, and prolong, the deficit levy.

If there's going to be a big cash splash - which I don't even agree with - then the first thing that's going to be done is the institution of a deficit levy or the abolition of some of the high-income tax cuts.

bigchrisb

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Re: Australian Investing Thread
« Reply #4817 on: March 09, 2020, 08:45:06 AM »
I'm of the view it has a way to fall yet.  The upcoming recession hasn't hit yet, nor has the virus properly taken hold and made its effects felt on our health and subsequent behaviours.

The market is back to what it was a year ago.  I didn't throw oodles of cash in then and I'm not doing so now (yet).

I put in about $100k at the end of 2018.  I'm committing about the same at the moment - about $30k in the last couple of days, and moving money around to do some serious buying over the next few too. 

Using VAS as a measure, the market is back to where it was a year ago, but also 5 years ago, in Feb 2015.  I have no ability to pick the bottom, but we are certainly in the territory where I'm putting some dry powder to work.  I intend to keep buying on the way down, with the expectation that the average prices will be OK.

marty998

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Re: Australian Investing Thread
« Reply #4818 on: March 09, 2020, 11:44:49 PM »
Interesting day on the markets today. Open down 4% and then close up 2% thanks to a few incoherent words from DJT about a small stimulus package.

There's no playbook for an economic situation such as this. Stimulating the economy where production/supply has dried up, because the Chinese factories are closed, would ordinarily suggest inflation would break out.

The problem with that line of thinking is that the oil price has collapsed. Which has a deflationary effect, because the cost of transporting everything around has now gone down.

I'm just annoyed I filled up a full tank of petrol on Saturday :D

Reversifi

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Re: Australian Investing Thread
« Reply #4819 on: March 10, 2020, 08:03:14 PM »
Itís been an interesting couple of weeks. I just couldnít comprehend mid Jan why the markets werenít freaking out about the virus. Markets were at peak and while Iím normally buy and hold I dumped $320k of VAS ETFs when they started to move. As Iíd only moved into VAS last year in a big way my average VAS buy price was ~$85. Sold for $86 and with divvies Iím about $10k up (and I had some CGT losses I can offset).

But my, doesnít it make you a bloody pariah in the FIRE community if you dare to react to the market! Iíve been told Iím a fool. Buy and Hold, Buy and Hold! Itís like a Liberal party election slogan.  OK Iím a fool, a fool that could buy back all my holdings for $32k less than two weeks ago (or add another 426 VAS ETFs) and still hit the divvie date at the end of the month.

But this trick is a two-parter. I must get back into the market at some point. Bought a small portion of VAS at $75 got some orders in at low $70s and high $60s. Iím of the opinion that there is going to be more pain for VAS and the wider Australian economy over the next 6 months.

So am I a fool?
(I'm maxing out super contributions each month so I'm DCA if it makes anyone feel better).

mjr

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Re: Australian Investing Thread
« Reply #4820 on: March 10, 2020, 08:10:21 PM »
So you got lucky and bailed out, once ? 

What if you had 10x the amount in the market and had to give up 25% of your gains in CGT ?  Would you do the same thing then ?

One data point is meaningless.  If you can reliably do it over many cycles, then you'll have something to crow about.  Until then, not.

Reversifi

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Re: Australian Investing Thread
« Reply #4821 on: March 10, 2020, 08:26:07 PM »
Yeah I probably would. I went through the GFC in stocks I saw how low they can go. I also saw companies go broke and their stocks become worthless. I think a lot of Aussie investors are a little naÔve having missed the worst of the GFC and can't remember what a recession feels like (because the last one was 1991). I'm still DCA and holding my super but taking profits off the table to reinvest where I see value. 

Edit: I also don't see what I did was luck in anyway. There were very clear market signals. It took a lot of inertia to get me to sell.
« Last Edit: March 10, 2020, 08:28:11 PM by Reversifi »

deborah

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Re: Australian Investing Thread
« Reply #4822 on: March 10, 2020, 08:50:10 PM »
Itís been an interesting couple of weeks. I just couldnít comprehend mid Jan why the markets werenít freaking out about the virus. Markets were at peak and while Iím normally buy and hold I dumped $320k of VAS ETFs when they started to move. As Iíd only moved into VAS last year in a big way my average VAS buy price was ~$85. Sold for $86 and with divvies Iím about $10k up (and I had some CGT losses I can offset).

But my, doesnít it make you a bloody pariah in the FIRE community if you dare to react to the market! Iíve been told Iím a fool. Buy and Hold, Buy and Hold! Itís like a Liberal party election slogan.  OK Iím a fool, a fool that could buy back all my holdings for $32k less than two weeks ago (or add another 426 VAS ETFs) and still hit the divvie date at the end of the month.

But this trick is a two-parter. I must get back into the market at some point. Bought a small portion of VAS at $75 got some orders in at low $70s and high $60s. Iím of the opinion that there is going to be more pain for VAS and the wider Australian economy over the next 6 months.

So am I a fool?
(I'm maxing out super contributions each month so I'm DCA if it makes anyone feel better).

If youíre buying the same thing as youíve recently sold, you will probably be considered a trader by the ATO, and your income adjusted accordingly, so you will probably be paying more than CGT for that exercise. They crack down on those exercises no matter how small the package of the financial security concerned, especially if, as you say, youíve sold and bought exactly the same thing within a dividend period. There was a time when that was ok for an investor to do, but that was a few years ago now. See https://www.morningstar.com.au/stocks/article/avoid-this-expensive-tax-time-mistake/168452 for example.

Reversifi

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Re: Australian Investing Thread
« Reply #4823 on: March 10, 2020, 08:56:25 PM »
It's a great point Deborah. My capital losses are from 5 plus years ago and were totally different shares. Because I didn't sell VAS at a loss I should be OK (although I'm taking my average price). But I'll make a point to double check. Maybe I should jump across to A200 to really be on the safe side.

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Re: Australian Investing Thread
« Reply #4824 on: March 10, 2020, 09:57:45 PM »
I donít think you need to be making a loss for that to kick in. There was an interesting practice a few years ago, where some self funded retirees were advised to sell stocks during the dividend period ex dividend and buy them again pre dividend - thus getting two dividends without paying any tax (because they were inside a pension paying super fund). The ATO cracked down hard on the practice, and there were certainly no capital losses being made.

marty998

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Re: Australian Investing Thread
« Reply #4825 on: March 11, 2020, 12:15:07 AM »
So you got lucky and bailed out, once ? 

What if you had 10x the amount in the market and had to give up 25% of your gains in CGT ?  Would you do the same thing then ?

One data point is meaningless.  If you can reliably do it over many cycles, then you'll have something to crow about.  Until then, not.

One data point is ALL you need.

The sum total of every participant in the market doesn't matter in the slightest when you're only considering your own situation.

mjr

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Re: Australian Investing Thread
« Reply #4826 on: March 11, 2020, 04:09:04 AM »
I hardly think that one successful data point makes you a successful market timer, was my point.

Richmond 2020

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Re: Australian Investing Thread
« Reply #4827 on: March 11, 2020, 08:01:35 PM »
Aussie market down almost 6% today. The fear is real.

Richmond 2020

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Re: Australian Investing Thread
« Reply #4828 on: March 11, 2020, 08:06:20 PM »
Make that down 7%.

Bloop Bloop

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Re: Australian Investing Thread
« Reply #4829 on: March 11, 2020, 08:17:27 PM »
Just bounced up. I suspect we might have hit bottom today.

Reversifi

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Re: Australian Investing Thread
« Reply #4830 on: March 11, 2020, 08:19:50 PM »
Big call. I put in a lowball offer on VAS of $68 yesterday and put it month expiry on the buy order. I was surprised it got filled today!

mjr

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Re: Australian Investing Thread
« Reply #4831 on: March 11, 2020, 10:26:51 PM »
US futures are down 3%.  We have more to fall yet.

stylesjl

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Re: Australian Investing Thread
« Reply #4832 on: March 12, 2020, 01:10:23 AM »
Looks like the dividend yield is now 5%. Lowest level now since the lowest point in 2016.

middo

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Re: Australian Investing Thread
« Reply #4833 on: March 12, 2020, 05:27:40 PM »
The All Ords are now down 30% from 20th Feb to this morning.  More than just a bear market now.  I would not like to guess when it is going to bottom.



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Re: Australian Investing Thread
« Reply #4834 on: March 12, 2020, 07:25:24 PM »
I'm sitting on a relatively large pile of cash that I was going to use for a house renovation.

I am getting very tempted to just dump it all into the market and borrow to fund the renovation.  With interest rates below 3% (and probably not going up any time soon) it's still a relatively cheap funding option.

I'll probably end up doing nothing, but 12 months from now I will either feel like a fool or a genius.

itchyfeet

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Re: Australian Investing Thread
« Reply #4835 on: March 12, 2020, 10:14:44 PM »
Well I decided to pull the trigger before market closing.

Just bought $50k of VAS,

It was my first trade since 6 Jan.

Last trade was made at $85. This one at $66. Quite the difference!

mjr

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Re: Australian Investing Thread
« Reply #4836 on: March 12, 2020, 11:53:45 PM »
Good work.

I'm still planning on holding off for a month or so.  But if I miss the bottom, big whoop !

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Re: Australian Investing Thread
« Reply #4837 on: March 13, 2020, 01:12:26 AM »
I said I would start buying if we hit -30% so am committing to that.

Fully committed now 🐖

Once I get my 2019 bonus and March salary next week, Iíll bundle it with the rest of the remaining cash I have to put another $50K into the market.

After that, if I want to put more in Iíll need to access my redraw, but I prefer to keep the 2 years of spending I have there in case of some emergency.... so I have just one more trade to make this month and then Iíll be sitting back with my fingers crossed 🤞

marty998

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Re: Australian Investing Thread
« Reply #4838 on: March 13, 2020, 02:53:40 AM »
What an unbelievable day. Down 8% then finishing up 4%.

Trigger was the RBA injecting $9 billion of liquidity into the financial system, and then in the last 15 minutes of trade a whole lot of short covering.

Never have I ever seen the index rise 12% in the space of 4 hours.

bigchrisb

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Re: Australian Investing Thread
« Reply #4839 on: March 13, 2020, 03:59:00 AM »
Me either.  I'm usually an efficient market hypothesis kind of guy, but right now we seem to be well and truly in a herd mentality.  If people sniff momentum either way they pile in.

For me, its a great opportunity - at the start of March I had about $500k available in cash and offset/redraw accounts.  I've been buying heavily the last while - including $20k of VGAD last night and $50k of VAS. I still have about $300k left available, and it may well get put to work over the coming weeks and months if things keep deteriorating. 

I see a massive short term disruption for sure, but the majority of people recover from it.  I do wonder what kind of structural changes we are likely to see from it though.  The ones on my mind are:
- Reviewing how we run global supply chains. I suspect we may see increased intervention in maintaining domestic supply chains.  I'm not sure how to invest that theme though!
- The great work from home trial.  Remote working has historically been technically feasible, but socially resisted.  A lot is currently being forced - I do debate about what this means for future work patterns if it becomes accepted and we have a lasting step-change.  That would have major structural impacts - office property would tank, location to CBD would become less relevant for residential property, and all things commuting (car industry, oil, toll roads) would take a hit.  Winners would be nice places to live with good data services, web/cloud/communication providers.  Taking it to extremes and geo-arbitrage becomes a bigger deal.

Interesting food for thought.  In the meantime, I'm continuing to back up the truck for more index investments.

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Re: Australian Investing Thread
« Reply #4840 on: March 13, 2020, 07:29:21 AM »
I think I might have correctly called the bottom yesterday. The swift and stringent response by our authorities will ensure short-term pain but medium-term gain and I can see this mild flu  thing petering out in the next 4-6 weeks, as it did in China.

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Re: Australian Investing Thread
« Reply #4841 on: March 13, 2020, 04:45:41 PM »
Bloop Bloop that's a troll comment. One of the forum rules is don't be a dick.

It's not a mild virus for everyone, people have died in the thousands, there are older people on here reading your comment.

China has successfully dealt with it by using some fairly extreme curfew measures. There is a distressing video out of Iran on Twitter that shows what happens without adequate decision making and facilities to deal with the sick. In Italy doctors have had to choose who to ventilate and therefore save because they were too late with the lockdown.

I'm optimistic that we will flatten the curve in Australia so as to reduce loss of life and I'm happy with the stimulus package (Morrison looked like he'd swallowed a wasp when he announced it).

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Re: Australian Investing Thread
« Reply #4842 on: March 14, 2020, 04:02:50 AM »
Bloop Bloop that's a troll comment. One of the forum rules is don't be a dick.

It's not a mild virus for everyone, people have died in the thousands, there are older people on here reading your comment.

I'll bite.
Indeed, firstly, how a society treats its vulnerable is a measure of that society. Secondly there are now plenty of *young* immunocompromised folk (transplant recipients, leukaemia/cancer survivors, folk on corticosteroids for asthma and a variety of other common maladies) who are now objecting to the current tone of "don't worry only the sick and the old will die" message that is being promulgated.

Back to thread business. Even this conservative investor has converted some ( circa 15%) of her cash in super to a more aggressive allocation. Holding back because I think we've got further to go. How do I judge this? Well currently I'm using the toilet paper index. When toilet paper returns to the shelves I reckon we've hit the bottom ;)

marty998

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Re: Australian Investing Thread
« Reply #4843 on: March 14, 2020, 06:37:51 AM »
this mild flu thing

I have seen far too many of these kind of posts on Facebook and things said in person to me lately. Without exception, it is a comment made by healthy adults who feel they are strong enough to get over it.

This is an infectious disease that kills people. Knowingly carrying COVID-19, breaking quarantine and subsequently infecting someone is the same as knowingly carrying AIDS and infecting someone. One person upset that the Canberra marathon* had been postponed wrote on Facebook the same words you did - that he's healthy and most marathon runners are, so there should be no need to ban these events. It's incredibly selfish and short sighted not to understand you can be an asymptomatic carrier who goes onto infect others.

There is no stringent response from "the authorities". The PM wanted to go to the footy today, all whilst potentially being a carrier due to Peter Dutton testing positive. How many people would Scotty from Marketing have infected while there?

The actual response is coming from the bottom up, from sporting organisations and from businesses. The government doesn't really have a clue here. And the less said about China the better. Infections are going down because they are simply not reporting them. As is the case in Iran and Indonesia.

The Government may well have banned gatherings of 500 people. But each day I come into contact with 2000 on public transport, 3000 people in my building at work, a few hundred out in the shops and many more in other daily activities. Multiply it out across all of Sydney and you can see the problem.

*Fortunately I can sleep in a little bit and not go out for my 30km training run tomorrow. Unfortunately I'm now looking at a blank running calendar for the next few months. What's a boy to do with all his hard efforts and training now?

bigchrisb

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Re: Australian Investing Thread
« Reply #4844 on: March 14, 2020, 10:01:53 AM »
It's rife in Europe. My kid got sent home from childcare with vomiting and fever, and we have been advised that there is a positive test from the childcare centre. We are now bunkered down and waiting to see what happens.  The Netherlands is no longer testing unless you end up on a respirator.

It's a nasty disease. We have our fingers crossed that we are young and healthy enough for it to be a minor inconvenience. But many will die.

While I see a huge opportunity for investment because of panic, don't lose compassion for those less fortunate than you.
« Last Edit: March 14, 2020, 03:14:59 PM by bigchrisb »

mjr

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Re: Australian Investing Thread
« Reply #4845 on: March 14, 2020, 03:04:22 PM »
Hey Bloop,

while I don't think we've hit bottom yet, just wanted to let you know that I'm NOT getting upset/riled/offended by what was clearly a throwaway comment from you regarding "mild flu".

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Re: Australian Investing Thread
« Reply #4846 on: March 14, 2020, 06:21:41 PM »
I can see why people would be offended by my comment. Although I think they should be careful what they impute to me. I never said I wasn't going to follow recommendations re social distancing or that I don't believe that stringent measures are called for (in fact, I noted the stringent measures in my earlier post). The fact that almost all sporting and social events, and now increasing numbers of schools, have been called off attests to the stringency of the government response. You can politicise it and say it wasn't Canberra but rather the health advisors - in any case, the response is there, and it's been stringent.

I also didn't say that I am callous to the vulnerable. A mild flu will hit the vulnerable hard, too - elderly people die from commonplace viruses. For the majority of the population, it is a mild flu. I am confident the eventual death toll will be less than that of a typical flu season and therefore I am confident that the economic impact will be short-term and limited.

mrmoonymartian

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Re: Australian Investing Thread
« Reply #4847 on: March 14, 2020, 06:40:12 PM »
Mild throwaway comments are likely to peter out within 4-6 posts anyway.

Is a HELOC the best way to lever up in Aus? I don't know if we are at bottom yet, but I'm starting to feel greedier than usual.

BattlaP

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Re: Australian Investing Thread
« Reply #4848 on: March 14, 2020, 08:26:34 PM »
I also didn't say that I am callous to the vulnerable. A mild flu will hit the vulnerable hard, too - elderly people die from commonplace viruses. For the majority of the population, it is a mild flu. I am confident the eventual death toll will be less than that of a typical flu season and therefore I am confident that the economic impact will be short-term and limited.

You are spreading misinformation, stating in confidence things which even medical experts are not calling facts. In may in fact be that there are two separate strains - one mild, one more serious - and that we may see a second wave of more serious infections. It may be that greater exposure can lead to more serious cases and it is in fact the case that some otherwise healthy people have fallen seriously ill and even died.

I'm glad you're feeling confident, but it is a confidence borne, of necessity, out of ignorance - because these things just haven't happened yet and not even people that have trained their entire careers to deal with pandemics of this nature are making claims anywhere near as bold as yours.

deborah

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Re: Australian Investing Thread
« Reply #4849 on: March 16, 2020, 02:07:13 AM »
There is an interesting set of simulations in the Washington Post

https://www.washingtonpost.com/graphics/2020/world/corona-simulator/

of a virus, under several different simulations. They are interesting from an investment perspective, because they indicate that the more effective our social distancing rules are, the fewer people will initially get it, and possibly, the longer the actual problem period will last.  Each scenario would have different financial effects if it's as many of the population (and as effective) as the graphic indicates.