Australian Investing Thread

[Bloop Bloop]

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]

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]

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]

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]

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]

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]

It’s been an interesting couple of weeks. I just couldn’t comprehend mid Jan why the markets weren’t freaking out about the virus. Markets were at peak and while I’m normally buy and hold I dumped $320k of VAS ETFs when they started to move. As I’d only moved into VAS last year in a big way my average VAS buy price was ~$85. Sold for $86 and with divvies I’m about $10k up (and I had some CGT losses I can offset).

But my, doesn’t it make you a bloody pariah in the FIRE community if you dare to react to the market! I’ve been told I’m a fool. Buy and Hold, Buy and Hold! It’s like a Liberal party election slogan.  OK I’m 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. I’m 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]

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]

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 naïve 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.

[deborah]

It’s been an interesting couple of weeks. I just couldn’t comprehend mid Jan why the markets weren’t freaking out about the virus. Markets were at peak and while I’m normally buy and hold I dumped $320k of VAS ETFs when they started to move. As I’d only moved into VAS last year in a big way my average VAS buy price was ~$85. Sold for $86 and with divvies I’m about $10k up (and I had some CGT losses I can offset).

But my, doesn’t it make you a bloody pariah in the FIRE community if you dare to react to the market! I’ve been told I’m a fool. Buy and Hold, Buy and Hold! It’s like a Liberal party election slogan.  OK I’m 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. I’m 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 you’re buying the same thing as you’ve 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, you’ve 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]

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.

[deborah]

I don’t 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]

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]

I hardly think that one successful data point makes you a successful market timer, was my point.

[Richmond 2020]

Aussie market down almost 6% today. The fear is real.

[Richmond 2020]

Make that down 7%.

[Bloop Bloop]

Just bounced up. I suspect we might have hit bottom today.

[Reversifi]

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]

US futures are down 3%.  We have more to fall yet.

[stylesjl]

Looks like the dividend yield is now 5%. Lowest level now since the lowest point in 2016.

[middo]

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.

[Little Aussie Battler]

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]

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]

Good work.

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

[itchyfeet]

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, I’ll 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 I’ll 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 I’ll be sitting back with my fingers crossed 🤞

[marty998]

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]

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.

[Bloop Bloop]

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.

[Fresh Bread]

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).

[happy]

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]

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]

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.

[mjr]

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".

[Bloop Bloop]

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]

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]

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]

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.

[marty998]

Market down 10% today, with a chunk of that in the after market auction at 4:10pm, so there's a disconnect between the VAS ETF price movement for the day and the market of about 2.5%. Wonder how they will true that up.... guess we'll find out tomorrow.

Rather sobering fact talked about on ABC’s 7:30 tonight in that there are only 2000 ICU beds in all of Australia.  As a healthcare worker I can only hope more extreme and stringent social distancing/containment issues are mandated and implemented by government sooner rather than later. 

They're already rationing ICU beds in Italy - people over 60 are being turned away.

You can expect the same thing to happen here, there's a rush on ordering of ventilators but even still, there won't be enough if there is a spike in infections.

[marty998]

I totally hear you Marty as just out of personal interest I’ve been following this pretty close for weeks now and reading different studies (yes I’ve got rather weird interests....lol) on all different aspects of this pandemic.  It’s heartbreaking what’s happening in different countries as they attempt to deal with this.  I think though to have it very publicly on record the actual number of icu beds in Australia should be a pretty sobering stat for all Australians and the government how terribly serious this is and it really is at crisis point (especially with flu season about to hit). 

Economically it’ll be pretty interesting to see how this all shakes out and where things do end up bottoming out on the Australian and international markets.  Glad we are one of the very fortunate ones who are able to slowly drip feed in as the markets tank and eventually recover :-) Sadly for a lot in the community, economically this is going to be a disaster and I do feel for them :-(

Yep - I hate seeing people cheer at a market drop. The wholesale destruction of wealth and hard earned savings of millions of hard working people is nothing to cheer about.

All things considered, more of the $17 billion stimulus should have been spent on the Health System. Wanna stimulate the economy? Hire more doctors and nurses and invest in hospital equipment.

This is a health crises first and an economic one second. They're trying to fix the latter (effect) before treating the former (cause).

[chevy1956]

This is a health crises first and an economic one second. They're trying to fix the latter (effect) before treating the former (cause).

I care about the economic impact but to me it's way overdone. We should be able to accept lower growth for 6 months to a year. It shouldn't be catastrophic. The health crisis though is really important. Let's work through that and the economy will come back.

[Dropbear]

UBS Australian ETFs to be Terminated

https://www.ubs.com/au/en/asset-management/funds-and-prices/exchange-traded-funds.html

UBS announced on Friday 13 March that MONY, DIV, ETF, UBE, UBJ, and UBU index funds will be terminated from the ASX on Monday 11 May.

---

Can I please ask you all for your review of how this affects me?

When I first started ETF investing a couple of years ago, I bought some UBU along with several other ETFs as part of my broad initial strategy.  Since then, my strategy has been simplified to focus more on VAS and VGS (which were also there from the beginning), but to date I still hold UBU.

Currently I'm coasting in a semi-FIRE state, about 60% to being FIRE - I've been pursing a research project and have a reduced income to report this financial year.  I have an emergency fund for 2+ years of living.  However, the project is now on hold due to the virus disruptions, so it might be good if I can return to work.

When the markets started dropping due to Covid-19, I thought I would hold all my ETFs as I planned.

However, it appears that I am now being forced out of UBU.  The timing is terrible - currently showing the lowest price it has been in quite some time.  However, as of now, I'm still 25% up over the 4 or so years that I've been holding it.

Can I please ask:

1 - What are my options?  Am I correct in thinking that I will have to leave UBU (whether I sell out at some point or wait for termination in May) and realise whatever profit or loss has accrued at that point?  Are there no other options for remaining invested in the US market and continuing to ride out the storm?

2 - What are your bets for timing - selling now verses selling later or terminating?  (Sorry, we're not usually the types to be discussing market timing like this!)  Or does timing matter at all, because if I sell UBU and buy an equivalent holding at current prices, have I effectively remained invested through the crash, so as to sufficiently benefit from any future recovery?

3 - Is this issue just one of the risks associated with investing, or are there any other lessons for me or others to be learnt here please?

Thanks!

[mjr]

1 - Yep, you have to bail.  You get to choose when you liquidate, from now until May.

2 - I think it's still going to fall, but that's clearly market timing so what the hell do I know ?  Given that you don't have a choice, best bet is to reinvest as quickly as possible - hopefully not going to make a lot of difference whether you liquidate now or in 2 months.

3 - It's a risk investing with managed funds/etfs for sure.  Only way to minimise the risk is go wth the big funds with the big players

[marty998]

If you don't bail, you will receive your proceeds from UBS a little later than 14 May.

However, UBS has to liquidate the entire fund. It may not be possible for them to do this if some stocks (especially those at the very bottom of the index) are illiquid, or they judge it to not be in the best interests of unit holders to sell immediately and crash the share price of those stocks at the bottom.

Waiting till the very end also means you will pick up a share of the final tax components of the fund upon liquidation, including capital gains and (most likely) losses. You might choose to crystallise your losses now (and use them in this tax year) by selling out on market, rather than wait till the wind up of the fund which could spill over into 2021 tax year.

I'd get out now, reinvest whatever proceeds you have in your other assets in your allocation (VAS and VGS)

[Abundant life]

Is anyone else having trouble logging into their share trading account?

I've been with St George's direct shares for a few years now and hold a modest portfolio of an LIC and TLS. I login regularly to check on them (so I haven't forgotten my password!)

I'd like to at least see how they are going and invest in ETF's while the market is down. However last week when I couldn't log in I was able to phone them and they explained they were having 'technical problems'.

Since then I still can't log in and now the website says they're experiencing high call volumes. I tried to call at various times of the day, the last time waiting on the line for over 15 minutes, then gave up. I sent them an email but have heard nothing back. Am I the only one this is happening to?

[deborah]

I would expect this to be happening. Everyone is panicking. They’re probably all selling. You’ll have to be prepared to stay on the phone for an hour if you want to get through, and choose your time well.

[Juan Ponce de León]

Commsec has been fairly good and the few times the website wasn't working I could login via the phone app.

[Dropbear]

1 - Yep, you have to bail.

Thanks mjr

[chevy1956]

CommSec is working for me. I just bought a bunch of VAS. I intend to buy a couple more times over the next 6 or so months.

[bigchrisb]

Nabtrade has been patchy on the high volume days.  I've been able do most of what I wanted eventually.  I'm accumulating, about 250k committed thus far and have about the same available. Wife and I also keeping 2 years expenses in cash accounts in case offsets freeze up.

[marty998]

And the level of fucked just went up a notch today. ZIRP just hit Australian shores and the QE taps have been turned on.

The RBA basically just printed $90 billion to hand to the banks and say "here, throw it at the economy". Anecdotally I am already hearing of job losses and wage cuts. Interest rates at zero aren't going to help if you have no income :(

The cap raisings have started. Webjet in a trading halt (definitely a raising), and Flight Centre also in a TH (no details as yet).

I didn't think it would be so soon but here we are.

One saving grace is that the environment is loving it. Clear blue skies and clean air to breathe :)