Author Topic: Australian Investing Thread  (Read 689818 times)

Ascotillion

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Re: Australian Investing Thread
« Reply #500 on: January 07, 2015, 04:16:49 PM »
Wow, lots of information in here. I'm posting so I can follow along; like a lot of you I'm a beginner who is looking into investing a little bit in the future. Thanks everyone!

terrier56

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Re: Australian Investing Thread
« Reply #501 on: January 07, 2015, 04:22:30 PM »
Europe right now is starring into a deflationary environment.

After seeing the US recovery in recent year I believe this will give them the green light to start QE which should solve both deflation and weak euro economies (chance for Germany to over inflate). For this reason I will be loading up on VEU over the next couple of months.

deborah

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Re: Australian Investing Thread
« Reply #502 on: January 07, 2015, 04:41:12 PM »

Thinking that the USD was going to become stronger against AUD I decided to invest reasonably heavily in GOLD during the slump in October/November. It's paid off reasonably well so far. I intend to keep buying the dips when they occur as part of my strategy to diversify towards somewhat of a 'permanent portfolio'.
I was absolutely sure you were crazy for buying gold, but I was obviously completely WRONG. Sorry for doubting you MsRichLife!

MsRichLife

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Re: Australian Investing Thread
« Reply #503 on: January 07, 2015, 05:07:40 PM »

Thinking that the USD was going to become stronger against AUD I decided to invest reasonably heavily in GOLD during the slump in October/November. It's paid off reasonably well so far. I intend to keep buying the dips when they occur as part of my strategy to diversify towards somewhat of a 'permanent portfolio'.
I was absolutely sure you were crazy for buying gold, but I was obviously completely WRONG. Sorry for doubting you MsRichLife!

It's only been a couple of months, so time will tell. I'm sure it will have it's ups and downs, but I always plan to have GOLD in my portfolio so the dips will be good buying opportunities.

AustralianMustachio

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Re: Australian Investing Thread
« Reply #504 on: January 07, 2015, 05:51:17 PM »
I took profit on gold stocks from a few months ago, but still have some of the GOLD etf myself. At the time I too was considering having it as part of my portfolio (very small amount), but haven't made up my mind. It's been a good investment at times over the last decade, but gold over the long term, I believe pretty much just tracks inflation.

I guess the attraction is that it's supposedly inversely correlated with equities. If things take a downward spiral over the next few months in equity world, owning gold will probably be a good trade short / medium term. Of course this sort of thing makes no difference to long term investors / people who use a dollar cost averaging approach
« Last Edit: January 07, 2015, 05:58:36 PM by AustralianMustachio »

dungoofed

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Re: Australian Investing Thread
« Reply #505 on: January 07, 2015, 08:51:29 PM »
As someone who has seen peers destroyed financially when each of the two bubbles burst over the last 20 years I can say that those who held gold fared the best when they lost their job and needed to liquidate something.

terrier56

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Re: Australian Investing Thread
« Reply #506 on: January 08, 2015, 04:59:04 PM »
Latest vanguard chart for up to the 2013/2014 period

https://static.vgcontent.info/crp/intl/auw/docs/resources/index_chart.pdf?20150102|091500

Jim from QLD

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Re: Australian Investing Thread
« Reply #507 on: January 14, 2015, 06:15:59 AM »
Was wondering whether anyone else found the attached chart interesting. It's 2014 relative performance for gold in USD (decreased 2%), gold in AUD (increased 7%) and VAS (increased 2%).

What's interesting for me is that while if you were US-centric, you'd have been much better off in stocks last year, but that's not the case for Australian investors.

Looking ahead to 2015, when you're hearing things like "markets are overvalued" or "gold is going to continue to slide," remember it probably doesn't apply to Australia.

(TL;DR stick to your strategy)

My takeaway from this is hedge according to where you want to spend your retirement. I know general wisdom is to try and get into
international markets due to the ASX being a small chunk of the investable market and very finance/commodity focused, but I seem to prefer australian companies, the franking is hard to pass up!

It's also my belief that the franking regime encourages aussie equities to act more income-investment like rather than capital growth investment (which is not to say that capital growth doesn't occur, just that tax regimes like the US where dividends are taxed more than capital gains are conducive to low yield high volatility markets). I prefer the income-investment nature as it is steady and predictable.
Check out my attempt to build a personal finance website for aussies.

http://www.personaleconomics.com.au/

AustralianMustachio

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Re: Australian Investing Thread
« Reply #508 on: January 14, 2015, 06:29:53 AM »
It's also my belief that the franking regime encourages aussie equities to act more income-investment like rather than capital growth investment (which is not to say that capital growth doesn't occur, just that tax regimes like the US where dividends are taxed more than capital gains are conducive to low yield high volatility markets). I prefer the income-investment nature as it is steady and predictable.

I agree that Australian investors certainly treat investing in equities as if they're income investments. And that's been the theme for years now. However they're not actually income investments in my opinion, and I'm not so sure they actually will continue to behave like income investments forever.

For one thing equities are far more risky and volatile than traditional income investments such as bonds. For example, take Woodside Petroleum - people are treating this as an income stock. In fact, it is the highest holding in Vanguard's High Yield ETF VHY last time I checked. However with the oil price volatility, it has fallen around 18% over the last few months. Losing 18% of your capital doesn't sound like an income play to me. 

However with rates still very low, the hunt for yield continues unabated. To illustrate this, VHY has massively outperformed VAS over the last few years. I don't believe it will last forever though.

sirdeets

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Re: Australian Investing Thread
« Reply #509 on: January 14, 2015, 06:38:32 PM »
Any Australian focused tips on personal finance for youngish people?

I just read an article focused on US investors regarding contributing to tax effective "super" like accounts, but being able to access them early. 

As I understand it - with our superannuation system - unless you are under severe hardship and can prove it, you can't touch it until you are over 55.  Not very helpful for me and others who want to retire from full time work in my 30s.

Things I have done in the past:

- First Home Savers Account - no longer available but was a good way to get a 20% guaranteed return

- First home buyer concessions (state dependent) - can sometime swing the "rent v buy" equation, depending on the area.  Australia housing I see as overvalued overall but helped in my particular market (Gold Coast, QLD - worst performing real estate over the last 5 years:) )

- Tax returns - deserves a thread of its own but lots of deductions are possible, especially if you are working from home at all, study in an area directly related to your employment (I did this - claimed on TAX even though the money went onto my HELP debt - legal and defers payments while getting tax refunds now)

- Make the most of the credit card balance transfer deals and pay off in full

- Use a no annual fee citi bank signature card for all expenses and pay off in full.. get money in offset for a bit longer and the rewards can be used to buy coles gift cards..

- Online gambling bonus arbitrage

- Take advantage of any employee share plans that offer discounts to market value

- Salary sacrificing FBT exempt items are your workplace

- Something I haven't done - but Tax lost harvesting.  I.e. STW tanks in a year, you sell it, and buy VAS straight away.  You then claim the loss on STW sale to offset any other capital gains in portfolio immediately.  Yes - your cost basis for VAS is now a lot lower - but paying tax in the future is better than now.

- Getting private health insurance to save money (avoid surcharge on tax return)

- Something I haven't done - but in your last year of HECS/HELP - timing the payment so you get a discount

Any other things that young people can do to take advantage of the system?


dungoofed

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Re: Australian Investing Thread
« Reply #510 on: January 14, 2015, 09:18:12 PM »
My takeaway from this is hedge according to where you want to spend your retirement. I know general wisdom is to try and get into international markets due to the ASX being a small chunk of the investable market and very finance/commodity focused, but I seem to prefer australian companies, the franking is hard to pass up!

Hi Jim - A few weeks back Bloomberg writer William Pesek wrote that Australia might also be staring down the barrel of a "lost decade" a la Japan (http://www.smh.com.au/business/the-economy/australia-adrift-lost-decade-beckons-as-good-fortune-wanes-20141209-1239ix.html)

Now, any talk about Pesek involving lost decades are to be taken with a pinch of salt as he's the author of "Japanization: What the World Can Learn from Japan's Lost Decades"(http://www.amazon.com/Japanization-World-Japans-Decades-Bloomberg/dp/1118780698). He obviously has bias as a "lost decade guru," and a correct prediction would galvanise his fate as people line up to ask him "O Pesek! Pray tell which country shall next be affected by a lost decade!"

But it deserves some thought: if we could go back in time 20 years to the start of Japan's lost decade (sic) what would be the best strategy for Japanese investors? It turns out that Japanese investors have even more home bias than Australians, with most of them long JGBs and maybe a few Japanese stocks.

Now, here is where it gets interesting. At first glance you'd think that these Japanese investors should have piled into international stocks (and by extension, Australians in the same position now). But the reality is that when you look at things in terms of standard of living you find out that the Japanese haven't done too badly over the last 20 years, despite what you have been hearing on the news.

The takeaway for Australians? I think it's a "soft" recommendation to diversify a part of your portfolio into international stocks if you haven't done so already. But if you don't, and you plan to retire in Australia, then you will still be fine with 100% in Australian stocks/property.

journey2financialfreedom

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Re: Australian Investing Thread
« Reply #511 on: January 15, 2015, 06:30:26 PM »
Anyone else jumping on Woodside (WPL) ?
Just an 18 year old Aussie dude, on the road to Financial Freedom.
http://thejourney2financialfreedom.blogspot.com.au/

JLR

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Re: Australian Investing Thread
« Reply #512 on: January 24, 2015, 03:27:37 AM »
What a great thread. I've learned so much. And have a list of things I now know I need to learn more about....Thank you! :)

Looking at buying some Vanguard ETFs in the near future. Have some money earmarked for it, and have my Etrade account ready to go, but am just waiting to make sure my husband still has a job next month before I pull the trigger and buy.

marty998

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Re: Australian Investing Thread
« Reply #513 on: January 24, 2015, 04:32:02 AM »

Hi Jim - A few weeks back Bloomberg writer William Pesek wrote that Australia might also be staring down the barrel of a "lost decade" a la Japan (http://www.smh.com.au/business/the-economy/australia-adrift-lost-decade-beckons-as-good-fortune-wanes-20141209-1239ix.html)


Been there, done that. Already had the lost decade. The ASX is exactly where it was 10 years ago.

dungoofed

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Re: Australian Investing Thread
« Reply #514 on: January 25, 2015, 06:10:24 AM »
Touche. The difference of course being that if a Japanese investor put 10k per year into the Nikkei each year for ten years from 1992 he'd have 100k in his investment account, while of you had have done the same into VAS since 2005 you would have gained a lot back from the bargains in 2008.

dungoofed

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Re: Australian Investing Thread
« Reply #515 on: January 27, 2015, 07:44:55 AM »
There are plenty of "what's the floor for oil??" threads at the moment, but I was wondering whether anyone in here had their eye out for bargains among Australian miners, whether anyone wanted to have a punt at where or when it all will bottom out?

I'm not particularly keen for extra exposure to Australian miners in excess of VAS holdings but I was looking at the Australian companies in the SPDR S&P Pan Asia Dividend Aristocrats ETF[1] and MND and BHP stand out as massive potential bargains (I'll be looking at SUL and WOW in further detail too).  Also Fortescue.

I know Bigchrisb mentioned he was scooping up some miners but I couldn't remember whether these were large or small ones. The small cap miners have taken bigger hits than the above three (despite very fancy web sites).

Actually that's another thing I have noticed - a lot of Australian blue chips need to get a web designer in to bring their sites into the 21st century.


[1] For your information the Australian holdings according to the prospectus were:

Ansell (ANN)
APA Group (APA)
BHP Bilton (BHP)
Coca Cola Amatil (CCL)
Cochlear (COH)
Monadelphous Group (MND)
Ramsay Health Care (RHC)
Super Retail Group (SUL)
Woolworths (WOW)

bigchrisb

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Re: Australian Investing Thread
« Reply #516 on: January 27, 2015, 04:02:04 PM »
I've been buying bits and pieces in both the oil and iron sectors.  As usual, I didn't manage to pick the absolute bottom, but still feel there is value in the longer term.

Things I've bought in the last 6 months:
- $20k of BHP.
- $10k of Santos.
- $10k of AGL
- $10k of UOS
- $10k of VEU
- $10k EAX
- $5k of CIN
- $45k of VAS when the market was in the 5100-5200 range.  Not trying to pick winners, but happy to index in at lower values.
These are in my "bottom drawer" allocation.  i.e. businesses / ETFs I see as things I can happily hold forever, and are currently at what I think is a good price.

The next are very much specualtive buys, that I'm happy to trade.  Compared to the $ above, its really play money.
$5k ARI
$5k ANG
$5k GRB

I've also got open positions with NWH, DCG and FMG, all of which were speculations that I've lost significant $$ on (20%-70%), gambling too early.  Fortunately, overexposure to REITS over the same period has offset these.  The REITS I mostly picked up while they were smashed up during the GFC, so a "value" attempt several years ago.  I'm hopeful that the energy and materials stocks will seem the same in hindsight, but its painful in the meantime!

« Last Edit: January 27, 2015, 04:44:27 PM by bigchrisb »

misterhorsey

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Re: Australian Investing Thread
« Reply #517 on: January 27, 2015, 09:25:08 PM »
Hi all, great thread! New to the MMM forums and have learnt quite a bit thus far just from reading from the first post!

I had a question regarding Vanguard ETFs, but as it I didn't want to hijack the thread I set up another post.  But I also wanted to acknowledge all the goodness contained in this thread that prompted me to start rethinking my investment strategy.


dungoofed

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Re: Australian Investing Thread
« Reply #518 on: January 27, 2015, 11:49:55 PM »
bigchrisb - thanks for that. Nothing in there that really gives me heartburn in your value picks. And even your speculative trades that are down, they'll have to make some tough decisions but nothing they haven't weathered before. Just make sure when you're down at the pub with your mates you remember the unwritten rule and only tell them about the REITS; losing trades have no place in conversations when beer is involved :P

The other sector-related stock I've been keeping an eye on is Ausdrill.

The thing is I think I'm doing it the wrong way around, in that I should probably choose a few stocks from a shortlist based on research, and then just wait for them to come down in price, instead of starting with a shortlist of potential bargains and then starting to do the research. By the time I've finished reading annual statements and whatnot the window of opportunity may well have passed.

Then again, some like ARI are trading a P/B of 0.08. In a few years people looking back will no doubt point out that it was a no-brainer to buy at the time.


potm

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Re: Australian Investing Thread
« Reply #519 on: January 27, 2015, 11:56:19 PM »
I would calculate that P/B ratio again and be careful about basing an investment decision on such a measure.
Impairments can quickly show you how meaningless it is.

Just because something has fallen a lot, does not make it cheap and good value.

marty998

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Re: Australian Investing Thread
« Reply #520 on: January 28, 2015, 02:47:08 AM »
Didn't ARI used to be BSL? And old BSL shareholders were previously diluted to infinity?

ARI could well be dead in a years time.

marty998

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Re: Australian Investing Thread
« Reply #521 on: January 28, 2015, 02:51:48 AM »
Sorry, mixed up with onesteel right?

Ignore me lol.

Meanwhile at the pointy end of the market, CBA hit another record high today. Not a bad idea to just pour all your money into it. Pretty soon it will be half the market anyway.

AustralianMustachio

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Re: Australian Investing Thread
« Reply #522 on: January 28, 2015, 06:04:25 AM »
Anyone been parking any spare cash in the USD ETF?

I have been a little, and it's paid off pretty well so far. Made 10% in a couple of months.

Some people might say at these levels "oh you've missed the best part of the trade already" and that would be true. However, unless I'm drastically misunderstanding things, a fall from 80 to 70 would be worth more than the fall from parity to 90. And a fall from 70 to 60, even more so.

Of course, you could just buy VTS and be buying US shares at the same time. I know this is "timing the market", but I can't help but feel a correction is coming in US equities in the next few months....

FFA

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Re: Australian Investing Thread
« Reply #523 on: January 28, 2015, 09:10:11 AM »
It's also my belief that the franking regime encourages aussie equities to act more income-investment like rather than capital growth investment (which is not to say that capital growth doesn't occur, just that tax regimes like the US where dividends are taxed more than capital gains are conducive to low yield high volatility markets). I prefer the income-investment nature as it is steady and predictable.

I agree that Australian investors certainly treat investing in equities as if they're income investments. And that's been the theme for years now. However they're not actually income investments in my opinion, and I'm not so sure they actually will continue to behave like income investments forever.

For one thing equities are far more risky and volatile than traditional income investments such as bonds. For example, take Woodside Petroleum - people are treating this as an income stock. In fact, it is the highest holding in Vanguard's High Yield ETF VHY last time I checked. However with the oil price volatility, it has fallen around 18% over the last few months. Losing 18% of your capital doesn't sound like an income play to me. 

However with rates still very low, the hunt for yield continues unabated. To illustrate this, VHY has massively outperformed VAS over the last few years. I don't believe it will last forever though.
Indeed, I was studying these same ETFs 6 months ago and keen for yield. Was close to investing in VHY until I noticed WPL as the top holding which made me lose confidence in the methodology completely so I just stuck with the basic VAS.

FFA

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Re: Australian Investing Thread
« Reply #524 on: January 28, 2015, 09:19:45 AM »
Of course, you could just buy VTS and be buying US shares at the same time. I know this is "timing the market", but I can't help but feel a correction is coming in US equities in the next few months....
Yeah i have the same feeling, maybe not a bad time to rebalance VTS. I expect more volatility in coming months as expectations for US interest rate rises approach.

The global economy still seems out of sorts to me with govt bond yields for 5+ yrs for Germany, Switzerland, Japan etc below 0.5% or even negative in some cases!

deborah

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Re: Australian Investing Thread
« Reply #525 on: January 28, 2015, 09:58:57 PM »
George Cochrane is at it again about retiring early - it's his whole column this week!

http://www.canberratimes.com.au/money/super-and-funds/early-retirement-looks-attractive-but-is-it-a-goer-20150129-1310nj.html

FFA

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Re: Australian Investing Thread
« Reply #526 on: January 29, 2015, 09:04:24 AM »
George Cochrane is at it again about retiring early - it's his whole column this week!

http://www.canberratimes.com.au/money/super-and-funds/early-retirement-looks-attractive-but-is-it-a-goer-20150129-1310nj.html
He seems to make the traditional assumption about needing a percentage of preretirement income. It is not necessarily the case maybe they are living on $34k or less now. Perhaps he should read this MMM blog!

" to stretch $1 million over that time period, you could only spend around $34,000 a year.... I suspect this will require a significant drop in living standards given your current combined incomes of $180,000 a year before tax."

happy

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Re: Australian Investing Thread
« Reply #527 on: January 29, 2015, 03:40:24 PM »
Yes their current and future living expenses are not mentioned, so how he comes to such a firm judgement is a bit sloppy.
What struck me is that with a mustachian way of life, both those cases are quite possible.
Journalling at Happy Aussie Downshifter

happy

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Re: Australian Investing Thread
« Reply #528 on: January 29, 2015, 03:44:54 PM »
Basic questions here:

1. What do people use to track the market?  Do you look at "market watch" on asx.com.au? Or something else? Do you look at asx200 or all ords or something else?
2. What is the simplest way to do this in your opinion?
Journalling at Happy Aussie Downshifter

potm

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Re: Australian Investing Thread
« Reply #529 on: January 29, 2015, 04:24:14 PM »
What are you looking to track and for what reason?
If you want to keep track of the index then just follow XJO for the ASX 200.
I have watchlists set up for companies I want to keep track of that I may be interested in buying if the opportunities present themselves.

If you are asking about the actual sites or apps to use then I use Commsec. I have an account with them, no longer have any holdings with them. They have high fees but their website and app are very good.

AustralianMustachio

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Re: Australian Investing Thread
« Reply #530 on: January 29, 2015, 04:26:16 PM »
www.google.com/finance

It's free and has lots of useful stuff on there, can compare companies with charts, indexes, etc. The data is real time for the US market, but 20mins delayed for the ASX I think.

dungoofed

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Re: Australian Investing Thread
« Reply #531 on: January 29, 2015, 09:25:09 PM »
I've been thinking about portfolio tracking a bit lately too. Currently putting together a tool that tells me just a few basic things:

1) Dividends vs expenditure (aka FIRE-ometer)
2) "You have $5000 sitting idle in your bank account. Invest it."
3) "Investing some money? You're underweight in xxxxxx."
4) "Need some cash? The best investment to sell would be yyyy."
5) "The market is crashing"
6) "Consider selling AAA to buy some more BBB" - ie you are so far from your target allocation that you might benefit from inflicting some capital gains tax and selling an overperformer.
7) "You need to sell these bonds, and buy these ones"
8) "zzzz on your watchlist is cheap right now" (HT: potm)

I currently implement 7 by putting a reminder in Google Calendar for, say, 15 years later, each time I buy a bond that needs to be long term.


happy

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Re: Australian Investing Thread
« Reply #532 on: January 29, 2015, 10:07:54 PM »
What are you looking to track and for what reason?

 At some point in the future I will have  a lump sum to invest and I'm trying to prepare myself now or I may move to self funded super. I started watching my super balance daily to try to get an idea of how it fluctuated, and to gauge my emotional responses when it went up or down. Just familiarising myself basically. I soon realised however that since it is in a big fund, its widely diversified and doesn't really reflect movements in say the ASX200. So I set out to find out how to monitor "the market", and went to the ASX page but got a bit overwhelmed by the detail. I realise after reading the responses that even saying "the market" is too loose - i.e. which part of the market etc.  So I guess I'm asking if there's a summarised format somewhere that I can check daily and say "ah the market is up" FWIW.

As I type this I wonder, well what is it worth? What is the point of doing that?  I wonder if its time for me to get some skin in the game in a small way. At my age I don't need too much outside super, and don't want to earn more income that will be highly taxed, but maybe I should take some small positions in some index funds just so I can see how it all works. 
Journalling at Happy Aussie Downshifter

potm

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Re: Australian Investing Thread
« Reply #533 on: January 29, 2015, 10:49:30 PM »
I've been thinking about portfolio tracking a bit lately too. Currently putting together a tool that tells me just a few basic things:

8) "zzzz on your watchlist is cheap right now" (HT: potm)


Commsec has an alerts feature in the app that can give you a push notification when a share reaches a certain price.


As I type this I wonder, well what is it worth? What is the point of doing that?   

I think that is the question you have to answer, what are you aiming to achieve. What will your strategy be to invest the lump sum. I think reading some investment books would be of more benefit than to watch the market each day.

FFA

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Re: Australian Investing Thread
« Reply #534 on: January 29, 2015, 11:38:45 PM »
I've been thinking about portfolio tracking a bit lately too. Currently putting together a tool that tells me just a few basic things:

1) Dividends vs expenditure (aka FIRE-ometer)
2) "You have $5000 sitting idle in your bank account. Invest it."
3) "Investing some money? You're underweight in xxxxxx."
4) "Need some cash? The best investment to sell would be yyyy."
5) "The market is crashing"
6) "Consider selling AAA to buy some more BBB" - ie you are so far from your target allocation that you might benefit from inflicting some capital gains tax and selling an overperformer.
7) "You need to sell these bonds, and buy these ones"
8) "zzzz on your watchlist is cheap right now" (HT: potm)

I currently implement 7 by putting a reminder in Google Calendar for, say, 15 years later, each time I buy a bond that needs to be long term.
I just use an excel spreadsheet.

Inputs: balances from online trade account / superannuation / bank balances
Outputs: net worth, income yield, asset allocation actual vs target and delta to rebalance.

In separate tabs in the same s/sheet I keep a record of all share trades, super contributions, dividends, etc

Agree with potm  "what are you aiming to achieve. What will your strategy be to invest the lump sum. I think reading some investment books would be of more benefit than to watch the market each day."

I'm a recent convert to the boglehead / passive approach.... If you give up on market timing and stock picking, then portfolio tracking becomes much more simplified towards measuring what you have versus the plan, and there's not so much need for alerts/watchlists/ratios/charts etc

happy

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Re: Australian Investing Thread
« Reply #535 on: January 30, 2015, 04:08:20 PM »
Quote
I think that is the question you have to answer, what are you aiming to achieve. What will your strategy be to invest the lump sum. I think reading some investment books would be of more benefit than to watch the market each day.

Yes I agree I definitely have more  theory to learn. My problem is that I'm good at reading and theorising and planning, but not very good at implementation. I stand and watch for a long time before I do anything ( hence I'm "watching the market").  My head is swimming with theory about bogleheads, canadian couch potato, permanent portfolios, dividend investing etc etc. If I'm not careful I'll read forever and never do anything.  So as well as the theory I'm trying to learn what to actually do, since this will be a point of weakness for me.  Lack of familiarity with the practical process is likely to paralyse me, so as I say I'm trying diminish this possibility. Some things you just have to do to learn about ( e.g. you can read about a new piece of software, but you actually have to use it to develop skill).
Journalling at Happy Aussie Downshifter

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Re: Australian Investing Thread
« Reply #536 on: January 30, 2015, 04:57:17 PM »
Seems like you're following the theory of passive investing, which would advocate not watching the market. There really is no skill involved in it. Just get off your ass and create a brokerage account. In fact you don't need to even get off your ass. CMC is good for low cost brokerage if you don't already have an account.

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Re: Australian Investing Thread
« Reply #537 on: January 30, 2015, 05:58:55 PM »
Seems like you're following the theory of passive investing, which would advocate not watching the market. There really is no skill involved in it. Just get off your ass and create a brokerage account. In fact you don't need to even get off your ass. CMC is good for low cost brokerage if you don't already have an account.

Yes agreed. Not intending to pick individual stocks or trade.

Thanks  to those who offered  practical tips/sites etc
Journalling at Happy Aussie Downshifter

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Re: Australian Investing Thread
« Reply #538 on: January 30, 2015, 09:03:44 PM »
Seems like you're following the theory of passive investing, which would advocate not watching the market. There really is no skill involved in it. Just get off your ass and create a brokerage account. In fact you don't need to even get off your ass. CMC is good for low cost brokerage if you don't already have an account.

Yes agreed. Not intending to pick individual stocks or trade.

Thanks  to those who offered  practical tips/sites etc
Yup just do it like Nike.

A few further thoughts. 1. I'd say limited skill rather than no skill. An example is averaging a lump sum over perhaps 3-6 months to your target AA. Depending how big your portfolio is, but it's a much more gentle entry and avoids losing confidence / giving up in case entry timing unlucky. 2. Try hard to focus on process not outcomes. Be happy if you follow your plan even if portfolio down. Be annoyed with yourself when you break rules, eg decide to skip a scheduled rebalance, even if it resulted in a profit. Easier said than done, but this general mindset is very important I believe.

Good luck

potm

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Re: Australian Investing Thread
« Reply #539 on: January 30, 2015, 09:59:32 PM »
In terms of the practical aspects of buying ETFs, avoid buying in the first half hour or so of market opening. Let them settle down and the market makers to put the orders in. If doing a market order, check the spread to make sure you aren't paying too much.

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Re: Australian Investing Thread
« Reply #540 on: January 31, 2015, 07:12:02 PM »
I've been thinking about portfolio tracking a bit lately too. Currently putting together a tool that tells me just a few basic things:

8) "zzzz on your watchlist is cheap right now" (HT: potm)


Commsec has an alerts feature in the app that can give you a push notification when a share reaches a certain price.



Just wondering whether you or anyone else had considered selling puts to accumulate a position in a stock.

potm

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Re: Australian Investing Thread
« Reply #541 on: January 31, 2015, 07:27:57 PM »
Just wondering whether you or anyone else had considered selling puts to accumulate a position in a stock.

The intention of writing puts would be to earn some extra income and under a bad scenario you end up accumulating a position in a stock.
The option market in Australia is a lot less liquid so I have not looked into it. I doubt I would be tempted even if it was liquid anyhow. I buy good businesses when they are selling at an attractive price. The basic overall strategy is pretty simple.

I don't mean any offense but I'd like to point you to one of your posts which makes a very good point:
Coming off the back of devastating losses like I had there is massive temptation to do anything you can that will give you an edge. Needless to say this can be a very dangerous way of thinking if it results in you taking on greater risk, and in the worst case it can be a gateway to a slippery slope of riskier and riskier investments, similar to how a gambler steps up their bets on a losing streak.

I can't help but think your judgement is being skewed by your desire to make back your losses, just a reminder to keep a clear head.

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Re: Australian Investing Thread
« Reply #542 on: January 31, 2015, 10:54:27 PM »
: ) yes none taken - you are correct and thanks for the reminder (and the reminder that I need to update my journal!)

The risk is that the price drops well through the price of the put you sell, and you have to pay more for the stock than it is currently trading at. But if I had decided that say BHP is worth $30, and I'd be overjoyed to buy it at $25, then selling a put at that price (or at that price plus the premium, because the premium is effectively a discount on the price you pay) strikes me as no worse off than putting a limit order at the same price. In both cases you're going to be left paying for and holding a stock that is now worth a lot less. This shouldn't matter under normal circumstances, but it's the black swan event of the company folding or being bought out at a lower stock price, locking in the loss, that would make it painful.

I can however see the advantage of having BHP on a watch list at $25 as opposed to having a limit order or selling a put at $25. You can take the time to see whether whatever is pushing the price down is worth considering or whether your initial analysis still holds true. On the other hand, if the price just touched $25 before going back up then you may have missed an opportunity. 


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Re: Australian Investing Thread
« Reply #543 on: January 31, 2015, 11:15:30 PM »
If you're interested in buying BHP at $30 dollars, then you should just buy it.
If you write the put, if the price goes up then you miss out on buying BHP for a little option income. If it goes down then you buy BHP for a lot higher than you could have. Neither are ideal outcomes.

The point of writing options is always in the hope that the contract expires out of the money and you get yourself a little income. The strategy you are suggesting hedges the exposure by your willingness to buy the share if the price does drop. Still, the aim of the strategy is for that not to happen though.
Another way to do it is to write calls for shares you already own.

It's more popular in the US as the option market is a lot more liquid and its a way to earn some extra income with the low yields on the companies there.
There is no free lunch though.

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Re: Australian Investing Thread
« Reply #544 on: February 01, 2015, 12:37:06 AM »
Hello!

I've been following this thread with interest and now have an Australian orientated question about a EFT for gold.

The motivation is for diversification and I'm trying to figure out the best way for exposure to to gold, with relative ease of liquidation (for portfolio rebalancing) ...also personally I have zero interest in physically holding it!
The solution that jumps out at me is ASX traded EFT, however if there's a more effective solution someone can suggest I'm all ears :)

Anyway, the question I have is PMGOLD a sound option?
(Brief comparison with a popular gold EFT is GOLD)

GOLD MER is 40 basis points whilst PMGOLD is only 15 basis points.

PMGOLD is 1/100th troy ounce of the shiny stuff, whilst GOLD seems just under that.

PMG is issued by Gold Corporation (trading as The Perth Mint), a statutory authority of the Government of Western Australia.
GOLD is backed by physical allocated gold held by HSBC Bank USA (the custodian).

PMGOLD is listed on the ASX site structured product, whilst GOLD is a share (unsure what the difference is there)

The viewpoint I've arrived at is that there's not a great difference in the implementation, only the MER am I missing something here, why does anyone use the other ETF that are all at least quarter of a percent MER higher?


http://www.perthmint.com.au/investment_gold_asx.aspx
http://www.etfsecurities.com/institutional/au/en-gb/products/product/etfs-physical-gold-gold-asx

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Re: Australian Investing Thread
« Reply #545 on: February 01, 2015, 09:16:42 AM »
The point of writing options is always in the hope that the contract expires out of the money and you get yourself a little income. The strategy you are suggesting hedges the exposure by your willingness to buy the share if the price does drop. Still, the aim of the strategy is for that not to happen though.

Keep in mind I am specifically referring to the case where you believe a stock is valued at $30, but would like to buy at $25. I'm not interested in making a small stream of income selling naked puts - I actually plan to buy the stock if it comes down. Selling a put would mean you could own the stock when it came down in price and the premium you collect is just the icing.

However as you mentioned the market isn't particularly liquid. I might try it for one trade to see how it works in practice, but not rushing to get started with options just yet.

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Re: Australian Investing Thread
« Reply #546 on: February 01, 2015, 09:30:20 AM »
Hi Meat -

If you've already read the PMGOLD prospectus I suggest your next stop is here: http://goldchat.blogspot.jp/

The main difference, and the reason PMGOLD is so much cheaper, is because it is a call on unallocated gold. Let me break this down into its two components for you.

1) it's a call on physical gold, which means that at any time you can contact Gold Corporation and request the physical gold to which you have claim be sent to you. There will be a charge for this but from what I have seen it is not unreasonable.

2) they don't actually have gold set aside for people making the claims above. While this may sound bad, especially compared to GOLD which is supposedly an allocated ETF, it is the reason they can keep their MER low. In the case of the ETF there are multiple transactions as they have to request the custodian to purchase/sell gold to cover their risk as the price of gold changes. In the worst case scenario for PMGOLD, you would have to wait a little if everyone suddenly decided to do a run on gold and claim their calls at once. The reason is because there is a constant flow of gold into the Perth Mint from mining companies. So even if they don't have your gold today, under most situations they should be receiving a new shipment shortly anyway, and you'll receive your physical out of that.

Regarding which one you choose to purchase, it will come down to the reasons you are looking to get PMs exposure. The other options are unallocated ETFs that just track the price but have no actual gold, onshore physical and offshore physical.

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Re: Australian Investing Thread
« Reply #547 on: February 01, 2015, 07:27:00 PM »
: ) yes none taken - you are correct and thanks for the reminder (and the reminder that I need to update my journal!)

The risk is that the price drops well through the price of the put you sell, and you have to pay more for the stock than it is currently trading at. But if I had decided that say BHP is worth $30, and I'd be overjoyed to buy it at $25, then selling a put at that price (or at that price plus the premium, because the premium is effectively a discount on the price you pay) strikes me as no worse off than putting a limit order at the same price. In both cases you're going to be left paying for and holding a stock that is now worth a lot less. This shouldn't matter under normal circumstances, but it's the black swan event of the company folding or being bought out at a lower stock price, locking in the loss, that would make it painful.

I can however see the advantage of having BHP on a watch list at $25 as opposed to having a limit order or selling a put at $25. You can take the time to see whether whatever is pushing the price down is worth considering or whether your initial analysis still holds true. On the other hand, if the price just touched $25 before going back up then you may have missed an opportunity.
i think your logic makes sense, if you are going to place a "set in stone" limit order, then why not enter the trade via a put option and capture an extra discount. However most limit orders are not set in stone, and a bit like your watchlist approach, still have the flexibility to cancel the order if there is major market upheaval or a company specific event that changes your desire to invest, provided of course you cancel before the order gets hit.

The motley fool guy has been writing about this strategy in recent months and giving the specific example of how he acquired BHP around $27 or thereabouts.

But for sure, it's a complex strategy and you really need to know what you're doing in detail, and understand all the risks. Not something i would personally be doing at this point but can see it might be of interest to explore for others. A small trial trade might be a good approach to test it out for real and appreciate all the practical issues like liquidity, hidden transaction costs, etc...

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Re: Australian Investing Thread
« Reply #548 on: February 01, 2015, 09:41:29 PM »
Motley Fool you say? Thanks will check it out.

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Re: Australian Investing Thread
« Reply #549 on: February 02, 2015, 01:02:11 AM »
@dungoofed thanks for the breakdown and the link looks like a good site and quite a fair amount of useful insight there for me to chew through :)