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GreenPat said..

japie said..

I don't know how old you are but I recall the declaration on R1:00 notes promising to pay the bearer on demand it's value in gold.

You're talking about 1 Rand notes there, just to be clear?

Yup

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Underoath said..

evlPanda said..
On 01/02/2000 The ASX (AU200) was around $3,000.

22 years later it is at $7,000
It would be reasonable to expect it might be at $6,000 in 2025.
25 years to double.

At what point was the ASX ever a buy???

Its 20 year return is just barely above inflation. The ASX is terrible investment. You could have picked a basket of anything else, and done better. Anything.

You would have made more in cash, by not investing at all.

Sorry got to call this out. Your statements are factuially incorrect.

You are ignoring income derived from investments (Dividends)

The S&P/ASX 200 index has been one of the best ways to invest and grow your wealth in Australia. With long term returns of about 9.5% per year including market growth and dividends.

Nailed it Mr Oath. About half of the return from the ASX200 comes from Divies.

Over 20 years (end Sept 2001 - end Sept 2021), taking dividends into account, the ASX200 has delivered almost a 451% return, The MSCI World in $AUD has delivered 228%, and for further comparison, CPI compounded over that same 20 years was almost 66%.

Breaking that down to a p.a. basis, that is approx 9%pa for the ASX 200 (+ you could add in an extra 0.5% - 1% on average for franking credits), compared to CPI at approx 2.6%pa. I would suggest that the last 20 years have been cracking for the ASX 200 despite the volatility.

Bad finish on Dow today and longer term chart is struggling at higher levels

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Gboots said..
Bad finish on Dow today and longer term chart is struggling at higher levels

Markets are cyclical.

When we hear nearly everyday for months on end that markets are at all time highs, which way is it likely markets will trend?

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AJEaster said..

Underoath said..

evlPanda said..
On 01/02/2000 The ASX (AU200) was around $3,000.

22 years later it is at $7,000
It would be reasonable to expect it might be at $6,000 in 2025.
25 years to double.

At what point was the ASX ever a buy???

Its 20 year return is just barely above inflation. The ASX is terrible investment. You could have picked a basket of anything else, and done better. Anything.

You would have made more in cash, by not investing at all.

Sorry got to call this out. Your statements are factuially incorrect.

You are ignoring income derived from investments (Dividends)

The S&P/ASX 200 index has been one of the best ways to invest and grow your wealth in Australia. With long term returns of about 9.5% per year including market growth and dividends.

Nailed it Mr Oath. About half of the return from the ASX200 comes from Divies.

Over 20 years (end Sept 2001 - end Sept 2021), taking dividends into account, the ASX200 has delivered almost a 451% return, The MSCI World in $AUD has delivered 228%, and for further comparison, CPI compounded over that same 20 years was almost 66%.

Breaking that down to a p.a. basis, that is approx 9%pa for the ASX 200 (+ you could add in an extra 0.5% - 1% on average for franking credits), compared to CPI at approx 2.6%pa. I would suggest that the last 20 years have been cracking for the ASX 200 despite the volatility.

Fair enough! :D

Indeed i did forget the Australian market's penchant for dividends, something entirely lacking in other markets.

Now do housing.

I opted to buy a small house in 2001 rather than invest in the stock market (an actual, real decision). During that time i have also opted to pay down that mortgage(s) instead of diversify. Admittedly risky but you get rich through consolidation and stay rich through diversification, and i wasn't rich!

So what i figured, and again correct me when wrong, was that i was paying down debt in advance, with an interest rate that varied up to 8% at one point, so i was saving 8% which is (for me) earning 15%. Guaranteed, 100%. I liked those numbers.

Also, property allowed me to "leverage to the tits", something i couldn't do as easily nor safely with shares. (Big nope to CFDs and out of the money expiring tomorrow options, thanks).

Twenty years later and i've a nice collection returning enough for one of us to live a simple life from. (of course the other does not want a simple life!)

...you know, i've just (self) realised that i am writing this because i do want to be diversifying into stocks soonish : ). I actually had "a flutter" last year, of all years, and got lucky. Strategy and skill took no (perhaps some) part. +75%. But... when is this bottle of money printing cash-injection going to be taken away from the baby? An entry point is hard to see.

How will the Iron ore price fall effect the Pilbara/Perth will house prices crash again...? some marginal mines are closing now .

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bazz61 said..
How will the Iron ore price fall effect the Pilbara/Perth will house prices crash again...? some marginal mines are closing now .

Perth prices haven't done what the east coast has done.

Last boom we had iron ore and oil/gas running at the same time. The oil/gas thing is down and iron ore hasn't pulled workers from everywhere this time. This sort of suggests the massive demand of last boom hasn't fuelled this cycle, but probably a period of depressed prices, Covid and now rising salaries.

This resources boom is running - iron ore has obviously tanked, but other metals are still hot, particularly energy metals. There's appetite to throw money at things, but my sources are telling that capital is getting tighter.

So, my guess, iron ore hasn't been the driver of the rise and probably won't do that much this time for a fall.

Outlook for gold and gold stocks is bullish.

I hear "royalty companies" have a good return.

My silver has doubled in a year.

Have also done very well with an unlisted property trust. Neither income nor capital guarenteed but the management company has an excellent track record.

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evlPanda said..
Now do housing.

Rentals for working people is one of the surest and safest investments. See what Kiyosaki says is the best real estate to buy and what he puts his cash into.

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cisco said..
See what Kiyosaki says is the best real estate to buy and what he puts his cash into.

He puts his cash into Bitcoin

www.cryptoglobe.com/latest/2021/09/rich-dad-author-robert-kiyosaki-predicts-giant-stock-market-crash-keeps-hodling-bitcoin/

Axie Infinity up another 30% today. Up 1,500% in the three months.



cryptobriefing.com/axie-infinity-revenue-jumped-another-85-august/

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myscreenname said..

He puts his cash into Bitcoin

Gold, silver and bitcoin.

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eppo said..
Another thread off the rails lol ..

Ha ha ha ha ha ha LMFAO. I bugger off for six months because.. this place is ridiculous. I just happen to be passing by and I thought, why not, I'll just call in. What do I find? It's WORSE! I think I'll just switch off again. Life is sweeter on the other side. ;) Bye!

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evlPanda said.. Indeed i did forget the Australian market's penchant for dividends, something entirely lacking in other markets.

Whilst the bigger companies on the ASX have higher than average dividends compared to other global sharemarket index averages, dividends are also valued in many other western and emerging markets as a form of return as you will see by the payout yields below.

Wish I'd hopped on the share market wagon in May 2020, rather than 20 years ago. The returns have been better than earning wages for the last 17 months. I know it won't last but it has been bloody good

^^ Yeah, but going back to early 2020, who honestly expected that?

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bazz61 said..
How will the Iron ore price fall effect the Pilbara/Perth will house prices crash again...? some marginal mines are closing now .

Will we see WA seceding again?

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AJEaster said..
Breaking that down to a p.a. basis, that is approx 9%pa for the ASX 200 (+ you could add in an extra 0.5% - 1% on average for franking credits), compared to CPI at approx 2.6%pa.

Yeah.

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I would suggest that the last 20 years have been cracking for the ASX 200 despite the volatility.

Nah.

An i obviously thought about this a bit. And again correct me where you see different. It's interesting.

So the 2.6% CPI is what irks me. Because as you pointed out that comes to 1.67, or 67% inflation, eating (well) into any profits.

You take that 451% that the ASX appreciated over the past 20 years, and if you'd invested $100 you'd of course have $451, which after adjusting for inflation is $270. (450 / 1.67)

$100 to $270, after 20 years. 270.06%, to be exact.

wow : |

Now, i do genuinely disagree with myscreenusername's example of the clearly speculative and hype driven return on a game that sucks balls (c'mon myscreenusername; nobody actually plays it). but, you could have cleaned up 20 years of returns on the ASX in days.

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Get to the point

In our current, er very interesting, economic climate a 50-100% return is kinda normal. I mean the feds and even the .au reserve bank have created so much "money" by updating a row or so in a database (fact) that if you're not making 20%+ you're not making anything at all. You have to make 20%+ to tread water!

Times have changed, is what i'm getting at. The point. Tech is and will and perhaps always has outperformed everything. And i get it and fully understand and even mentioned above that "you get rich (and poor (careful mysecreenusername)) by consolidating and rich by diversifying", but at some point you have to face the new reality (it's a constant, change is).

I am not particularly keen to share how much i've "made" or "beaten" or "won" or whatever (oh wow, i am drunk (tequila)) ...in general how much of a difference there is between myself and the/a common investor ("winner", ...somehow : ( ), but it's just that 270% over 20 ****ing years, which is longer than many people i know even lived for, is, well, kinda sad.

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...C R A C K I N G ! ! !!

Yeah. Nah.

Nah.

270% over 20 years is terrible. Just terrible.

It's the 20 years (!), and the compound inflation, that is killing that investment.

At 20:1 (historically standard) you'd have made that this year in property (safe as).

Sorry evl, Axie Infinity was up over 120% this week, not the 30% I reported earlier. It's market cap makes it the 5th largest gaming company behind EA games.

But yeah, you are the gaming expert! No one actually is playing it and I've just been making this all up. Lols

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evlPanda said..

Yeah. Nah.

Nah.

270% over 20 years is terrible. Just terrible.

It's the 20 years (!), and the compound inflation, that is killing that investment.

At 20:1 (historically standard) you'd have made that this year in property (safe as).

Inflation is the enemy of ALL investments. You simply must beat it to be a successful investor.

The ASX200 has beaten inflation by around 6% over 20 years (or a little bit more with franking credits included). Similar outcomes have been achieved with the average of Sydney property. Check this graphic out, with the average price of property across the greater Sydney area to be, say, $300k in 2001. In order for it to have got the same return as the ASX200, the "Sydney average" would have needed to have risen to $1.35mill ($300k x 4.5 as per my previous graph on the ASX200), but you can clearly see that it has fallen short of that number, coming in at about $1mill. Let's add in a small amount for net rental, assuming it is an investment property and is positively geared (yeah right, most likely not, given Aussies love negative gearing!)...so let's call it pretty close between the ASX200 and Sydney Property.

It is a given that we are looking at averages here, and no doubt there are properties that have outperformed the above property average, and some that have underperformed the average, just like many shares on the ASX200 as individuals have outperformed the ASX200 (eg: CSL, CBA) and some have been pigs (eg: Myer/Babcock ect).

Another thing to point out in the graph is the long stretches of time between growth spurts in property, and the huge spurt over the last 10-11y with interest rates falling so dramatically. House prices can only grow faster than wage inflation when interest rates are falling, it won't be so sweet when interest rates turn. Tapering most likely will start in the US as soon as Nov, already agreed to start here in Aust, and the bond market is pricing US rate rises as soon as mid/late 2022. So whether the RBA move rates up or not between now and 2024 is irrelevant, the cost of money will be going up in 2022/2023 due to how banks fund their book. I wouldn't be betting that property will have as smooth a run as it has.

Anyway, the ASX200 has simply been the best performing long term listed asset class (covering bonds, infrastructure, listed property, diversified global bourses) available to Aussie investors over that 20y period. This can't be disputed, whether you like the impact of inflation or not, facts are facts. Sure there are plenty of interesting investments that have made good short-medium term gains in the last few years, but history shows that every bit of over-exuberance will eventually revert to the mean.

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AJEaster said..
Anyway, the ASX200 has simply been the best performing long term listed asset class (covering bonds, infrastructure, listed property, diversified global bourses) available to Aussie investors over that 20y period. This can't be disputed, whether you like the impact of inflation or not, facts are facts. Sure there are plenty of interesting investments that have made good short-medium term gains in the last few years, but history shows that every bit of over-exuberance will eventually revert to the mean.

Past performance is no indicator of future performance.

If you toss a coin 20 times and it comes up heads 20 times, your next throw has a 50% chance of coming up heads.

Bitcoin looks like it's about to break all time high again shortly.

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myscreenname said..

AJEaster said..
Anyway, the ASX200 has simply been the best performing long term listed asset class (covering bonds, infrastructure, listed property, diversified global bourses) available to Aussie investors over that 20y period. This can't be disputed, whether you like the impact of inflation or not, facts are facts. Sure there are plenty of interesting investments that have made good short-medium term gains in the last few years, but history shows that every bit of over-exuberance will eventually revert to the mean.

Past performance is no indicator of future performance.

If you toss a coin 20 times and it comes up heads 20 times, your next throw has a 50% chance of coming up heads.

Bitcoin looks like it's about to break all time high again shortly.

Absolutely agree on that, I was only addressing the factual info from the past 20y which is what Panda has been discussing. The next 20 years expected returns from standard asset classes are expected to be much lower due to current valuations and expected interest rate rises. The graphic from BCA below paints that picture. Forecasts from many others share the same narrative, albeit with slightly different return forecasts.

My personal portfolio contains long/short share strategies, hedgefunds, unlisted private equity, unlisted private debt, unlisted infrastructure and a smattering of Crypto through a 3rd party manager. Investing in the broad index of traditional assets (including residential property) is not my favoured strategy moving fwd.

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AJEaster said..
Absolutely agree on that, I was only addressing the factual info from the past 20y which is what Panda has been discussing. The next 20 years expected returns from standard asset classes are expected to be much lower due to current valuations and expected interest rate rises. The graphic from BCA below paints that picture. Forecasts from many others share the same narrative, albeit with slightly different return forecasts.

My personal portfolio contains long/short share strategies, hedgefunds, unlisted private equity, unlisted private debt, unlisted infrastructure and a smattering of Crypto through a 3rd party manager. Investing in the broad index of traditional assets (including residential property) is not my favoured strategy moving fwd.

Many are predicting a major crash, I'm sure it's coming too. I've been locking in crypto profits that I've held since 2016 in stages this year which I am using to pay off remaining debt and to fund a sabbatical. The majority of my holdings are all residential regional property, which I hope to hold on to, they are making decent returns, but am looking at rearranging the deck chairs next year. Possibly buy some good quality property in inner Melbourne when property prices there crash.

I wish I had a crystal ball.

Price movement is the best indicator . Supply and demand . Minimise risk by reducing allocation per assets within a class . Look at what happened to BHP. Shares having an interesting battle between bulls and bears .
US ten year treasury note chart shows interest rates could be going up

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Gboots said..
Price movement is the best indicator . Supply and demand . Minimise risk by reducing allocation per assets within a class . Look at what happened to BHP. Shares having an interesting battle between bulls and bears .
US ten year treasury note chart shows interest rates could be going up

Price mofement iss ze best indicator . Supply undt dement . Minimise r-r-risk by r-r-reducingkt allocation per assets vizzin a klass . Look at vhat happened to BHP. Schares hafingkt an interestingkt battle between bulls undt bears . US ten year treasury nichte khart schows interest r-r-rates kould be goingkt up

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AJEaster said..
Anyway, the ASX200 has simply been the best performing long term listed asset class (covering bonds, infrastructure, listed property, diversified global bourses) available to Aussie investors over that 20y period. This can't be disputed, whether you like the impact of inflation or not, facts are facts. Sure there are plenty of interesting investments that have made good short-medium term gains in the last few years, but history shows that every bit of over-exuberance will eventually revert to the mean.

Except, well, you know. That 2017 thread about it started when it was around $2k. You can't ignore this.

Everything has crashed, and continues to crash, in btc. There are some wild upswings every few years, but these inevitably crash to new lows.

Why is this happening? Easy money is weak money.

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evlPanda said..
Except, well, you know. That 2017 thread about it started when it was around $2k. You can't ignore this.

Everything has crashed, and continues to crash, in btc. There are some wild upswings every few years, but these inevitably crash to new lows.

Why is this happening? Easy money is weak money.

I look at investments like catching waves. First you need to find a good bank, without too many sups in the line up. You pick your waves carefully, you hang on, enjoy the ride, for as long as possible, but always keep your eye on the shore and make sure you get off before you get dumped in the shore break.

I've been liquidating my BTC holdings this year in stages, sold a big chunk today. I think the wave looks like it's about to close out. There will be broken boards.

Easy money, hard money, is all money.

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evlPanda said..
Except, well, you know. That 2017 thread about it started when it was around $2k. You can't ignore this.

Everything has crashed, and continues to crash, in btc. There are some wild upswings every few years, but these inevitably crash to new lows.

Why is this happening? Easy money is weak money.

Certainly not ignoring BTC, just not choosing to proactively speculate on it directly. There is a massive difference between INVESTING and SPECULATING. When I invest my hard earned after tax money, I place the funds into an asset on the basis of fundamental research showing the asset is undervalued and I can make money through dividends (in the case of shares), growing profits and therefore growing share prices. Speculation on the other hand happens when you are unable to value an asset and hope it will go up because someone may (or may not) simply pay more for it than you. BTC can't be valued, so it rises and falls on speculation only.

Over the last 10 years BTC has crashed by more than 50% from it's peak no fewer than 7 times, with 3 of those falls being over 80%. BTC is by far the most volatile tradable vehicle accessible to the general public. Why is it happening? PURE SPECULATION / VOLUME ON FOMO / DUTCH TULIPS.

finance.yahoo.com/news/7-biggest-bitcoin-crashes-history-180038282.html

Interestingly the market cap of BTC at today's new highest price is US$1,242Bill. BTC by far is the biggest crypto by market cap, with the next being Etherium at US$486Bill. To put the BTC market cap into perspective, FaceBook is the 5th largest company by market cap in the USA at US$960Bill, and the next biggest company is Amazon at US$1.73Trill. Somebody, please tell me how the speculation on BTC and price of BTC makes any sense.

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AJEaster said..
Somebody, please tell me how the speculation on BTC and price of BTC makes any sense.

For someone who studies the market fundamentals, it surprises me that you are asking this question.

How does the 20% increase in property prices over the past year make any sense? Speculating in the price of risky assets isn't supposed to make fundamental sense as it's all based on perception.

Bitcoin and Crypto will devour gold and other assets. It is the currency of the younger digital generation. It's a fact that Bitcoin is basically becoming like a giant Pac-Man. It's sucking assets from all asset classes. It's trickling into bonds now. but the key area it started with is gold, and it will accelerate.

The most widely traded crypto is Tether's [USDT] and then there's a dozen Tether wanna-be's. USDT can be traded 24-7, settle instantly, and they actually earn interest well above your paper dollars.

bitcompare.net/coins/tether/savings-interest-rates

Crypto is here to stay, this is just the beginning - get used to it.

There is no "massive" difference between investing, speculating and gambling. The primary difference is the amount of risk undertaken.

When you choose to invest in a company based on researching its value, there is no certainty that the price will rise. So to some extent you are also speculating, gambling.

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myscreenname said..

AJEaster said..
Somebody, please tell me how the speculation on BTC and price of BTC makes any sense.

"For someone who studies the market fundamentals, it surprises me that you are asking this question.

How does the 20% increase in property prices over the past year make any sense? Speculating in the price of risky assets isn't supposed to make fundamental sense as it's all based on perception."

..................................................................................

"There is no "massive" difference between investing, speculating and gambling. The primary difference is the amount of risk undertaken....."

It was rhetorical.

I beg to differ on your last 2 points. Risk is a HUGE difference. With speculation/gambling the odds are not in your favor, hence the potentially larger payouts and higher loss rates..........where as with fundamental investing long term, for example in broadly diversified equity portfolio, it is.....albeit far from guaranteed as a positive outcome. Or at least that is the way I view it.

Ok, so if I was to buy a residential property to lease out am I:

a. Investor
b. Speculator
c. Gambler

Fact is, I could be all three.

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myscreenname said..
Ok, so if I was to buy a residential property to lease out am I:

a. Investor
b. Speculator
c. Gambler

Fact is, I could be all three.

If you are doing it because you have evaluated the options, chosen a location and property with a reliable rental demand history (such as military or close to a University etc.) and are investing an amount of capital that you can afford should rental demand drop or mortgage rates increase, and your predicted returns (you have assessed yourself) are based on long term historical data and provide a long term investment at reliable risk level then ... you are an investor

If you are doing it because you believe the property bubble hype about some location that has no history or fundamental rental base driver but you read about it on facebook this morning...... you are a speculator

If you have no appreciation of historical property values or interest rates, you are so na?ve you don't even know you are na?ve and you have borrowed way more than you can reasonable repay should you only get 364 rental return days a year or the mortgage interest rate increases by 0.1%, you don't even understand you have a 5 year interest only loan but this morning you posted on social media about how well you are doing in the property market....then you are a gambler