Meh nothing wrong with locking in some profit, nobody likes paying tax but probably shouldn't overly influence your decision making either.
-
Weekly Prize - Join Any Time - Tip Round 14
The Golden Ticket - MCG and Marvel Medallion Club tickets and Corporate Box tickets at the Gabba, MCG and Marvel.
Round 13 Winner: Boyd oh Boyd
General Markets Talk
- Thread starter Jimmy_the_Gent
- Start date
- Tagged users None
Yeah I actually have no idea how the tax works with this stuff. I have never sold any stock, only bought. I am living overseas so haven't filed a tax return in Australia for the last couple of years. I'm hoping to get back home for a bit soon so will meet with an accountant then and try sort it out. Half expecting to be whisked away at the airport and done for tax evasion or something
Nah, the ATO only really have the resources to go after the big fish. You'd just have to file your remaining returns by 31 October.
But yes, by all means go to an accountant and sort it out.
I would normally recommend a buy-and-hold approach, but:
1) Whether capital gains an issue depends on how much you're earning besides, and whether you've carried forward capital losses from prior years. If you got capital losses from prior years and don't have much taxable income, it's not as big a deal. Also, if he's held the asset for more than 12 months (it sounds like he's close to that mark), he gets a 50% discount on CGT.
2) This market is unusually volatile, and his assets seem extremely volatile (gaining 7K in one day? I've gained $100-$200 in a day due to how spread out my portfolio is, but not thousands!). Under those circumstances, you'd want to lock in a small portion of those gains at least, and sooner rather than later (maybe $500?). Unrealised gains can remain just that if you're not careful.
3) Indonesia blocking iron ore exports will delay or attenuate any decline in commodities (including lithium), but I'm still sceptical about the ASX's fortunes going forward. Firstly, the Chinese economy is in real trouble over the short if not medium-term, with their financial system apparently risking collapse. Since the Australian and Chinese economy are closely intertwined, this would have serious consequences for Australia's economy which would likely spread to the ASX (stock markets invariably crash during recessions).
More specifically, the ASX is built on financials and commodities. China would have to divert its funding away from construction (thus reducing demand for AUS commodities), and towards bailing out at least parts of the financial sector so god knows how many Chinese don't become penniless overnight. Demand for AUS coal would be further reduced by Japan's economy suffering as a result of Chinese decline. Secondly, a lot of big banks, including our Big 4, have ties to China which would be badly affected by such a collapse.
Off topic, I've more or less written off January since investors tend to be more optimistic after the new year, which would push up the ASX beyond where it would normally be. That would explain the unusually outsized performance yesterday. What I've done was buy 1 IAGG bond ETF (oversold), sold $250 worth of IXJ and replaced it with $300 worth of Pfizer (PFE) stocks, because they've plummeted in price and Zacks cites them as a 'Strong Buy'. Long term, Pfizer is a fairly ideal company to own, if Viktor Shvets/Terrence Leung are correct:
- It's a healthcare company, and thus benefits from what he thinks will mostly be a disinflationary environment with low/zero interest rates
- It's a long duration, large-cap stock which is likely in the Top 5% in the healthcare field
- It has significant biotech operations, so will benefit significantly as 3rd gen tech becomes more prominent
- Being a large-cap company, it would devote some resources towards aged care
- It is considered a quality company (QLTY), with a wide moat (big competitive advantage) and is relatively stable (WVOL)
The one downside is that it is quite globalised, but not excessively so. Just over 50% of its revenue comes from the US, and so a less globalised economy and a rising USD won't hurt it too much.
More broadly, I'll change my mind RE my portfolio if it turns out that 2022 won't be as deflationary as I thought it would be. However, I'm not sure yet.
Gigantic
Brownlow Medallist
I know a few people who have been tapped on the shoulder by the ATO after they filed their tax returns.
And not to do with investment returns, but even my mum was audited by ATO for her sole trader small business because she miscalculated a few things.
I tend to buy and hold as well but small highly speculative stuff that has had a huge spike I don't think it's a bad idea to sell a bit to at least cover some of the initial capital outlay as insurance.
00Stinger
100 - 7
Yeah I get your first points, I'm actual CPA qualified and a Financial controller so I've got a pretty good grasp of capitals gains, volatility of the market ext. I'm pretty lucky that two of the young accountants at work have just been reading up on companies, their balance sheets and reading forums on them. Lucky they have been bored being stuck at home with their parents during covid. This is how we jumped on AVZ and IHL.
On my portfolio I'm up around 200% on the same time last year (excluding a quick pump and dump on RNU around June last year). Literally doubled my money in 2 weeks, which I know goes against my theory
AVZ & IHL have had most of my investment and have gone crazy. Also holding a lot of Webjet shares, still confident long term they get back to around $10.
Sent from my SM-G981B using Tapatalk
To get to $10 again WEB's market cap will have to roughly double what it was from just before the crash?
I've always liked the company but that will take some patience.
I've always liked the company but that will take some patience.
00Stinger
100 - 7
just under $10
Dropped as low as about $3 during the start of covid I think
One thing Webjet has is a good cash reserve to see it through these covid times. Coupled with the fact that most travel agents have gone under during covid and the fact that they can run on skeleton staff during this time feels me with confidence. Once travel starts back up they are going to have almost an early monopoly on the market so they should get back to $10ish imo
But I bought these about twelve months ago at about $4.75 with the thought of holding them for a while to get back to that $10 mark
Maybe I should have said "it's not very likely".
Statistically it isn't, because going after individuals or small businesses, unless they're very high earners, there exist massive discrepancies between yearly tax returns or someone dobbed them in, would usually be a waste of limited resources considering what they'd get back - even more so after Abbott gutted the ATO years ago.
I read in A Generation of Sociopaths that the IRS devote the vast amount of their resources (around 98%) to keeping an eye on the bigger fish, and while the ATO is arguably even stricter, I don't see why they wouldn't be similar.
Falchoon
Brownlow Medallist
- Feb 15, 2002
- 29,588
- 10,777
- AFL Club
- St Kilda
- Other Teams
- Bluestar Airlines, Anacott Steel
My bad; I had no idea. I'll defer to your expertise in that regard.
I'm much more conservative WRT investing in stocks than you are, have specific rules for doing so, and I'm very reluctant to do so in a volatile market. That's both a good and bad thing - it's a good thing because it reduces my concentration risk, and the stocks I invest in will likely have a good (but not perfect) risk-return ratio. The bad thing is that I've pretty much sacrificed outsized returns like you've had, but the vast majority of investors wouldn't have the know-how to do what you did, and I'm no exception.
In the medium-to-long term, I think that investing in lithium companies is a good idea, but I'm leery over the near term because I'm worried about the commodities outlook. But different strokes for different folks. Cannabinoid pharmaceuticals is a nascent industry and so is too volatile for my liking right now, plus varying legality between nations still limits their potential.
That said, different strokes for different folks, and I'm honestly happy for your success.
00Stinger
100 - 7
ATO will target an industry every year and anyone whose claims are way above the average deductions for their salary is I'm the firing line
Small businesses and sole traders as well as businesses that don't do an external audit also get heavily scrutinising
Sent from my SM-G981B using Tapatalk
00Stinger
100 - 7
Nah all good mate, I've got a good knowledge on capital gains/loses and what not but I'm not a tax expert by any means. Sounds like you have a good grasp on things though.My bad; I had no idea. I'll defer to your expertise in that regard.
I'm much more conservative WRT investing in stocks than you are, have specific rules for doing so, and I'm very reluctant to do so in a volatile market. That's both a good and bad thing - it's a good thing because it reduces my concentration risk, and the stocks I invest in will likely have a good (but not perfect) risk-return ratio. The bad thing is that I've pretty much sacrificed outsized returns like you've had, but the vast majority of investors wouldn't have the know-how to do what you did, and I'm no exception.
In the medium-to-long term, I think that investing in lithium companies is a good idea, but I'm leery over the near term because I'm worried about the commodities outlook. But different strokes for different folks. Cannabinoid pharmaceuticals is a nascent industry and so is too volatile for my liking right now, plus varying legality between nations still limits their potential.
That said, different strokes for different folks, and I'm honestly happy for your success.
I've tried to diversify mine into mining, health, crypto & renewable energy.
Look with my profit in the last 12 months I have honestly got very ****ing lucky (the young accountants have made it for me really with their study). AVZ I almost cashed out for a loss just before June 30 when they were about 13 cents. Today they finished at 91.5 cents, glad I held my nerve is an understatement.
I'm happy to run at somewhere in the 7-10% growth p.a as it is more than investing that money into my mortgage after CGT.
I took a loss on CRO on the accountants studies at work too so it's not all unmissable, but I'll let it slide after his big hits with AVZ & IHL though.
VR1, EX1, CGF & IXF are others we are looking at. Got an older family member who was a former business journalist who is big on graphite, says you need it for lithium batteries but it's more scarce than lithium. Also something connected to the metaverse seems the next big $$$ maker imo
Sent from my SM-G981B using Tapatalk
Thanks for the input.
Put it that way, it sounds like random breath testing, with some demographics (like teenage hoons) more likely to get caught than others.
Mate, you flatter me.
I could write reams RE my experiences with investing. My initial strategy was to copy the late David Swensen's Unconventional Success and implement a buy-and-hold strategy using index funds, but I quickly realised there were several problems:
1) The market is unusually volatile, and index funds aren't liquid enough to transfer money in and out quickly enough should there be a slump
2) The portfolio itself does best when you have rising inflation and yields due to the high allocation to REIT's (20%), so it does quite poorly when yields are low and the environment is disinflationary (hence why the S&P 500 has caught up and overtaken it in recent times) - so it basically does best when value/cyclical stocks are ascendant
3) An allocation of 20% to REIT is too high given its volatility, especially in this environment (should apparently be a maximum of 10%)
4) It neglects infrastructure, despite its superior Sharpe Ratio to equities and REIT's historically
5) It's not varied enough in its approach to bonds (in environments with rising inflation/yields, fewer short-term bonds are better, but in the opposite environment, you'd prefer more and longer-term bonds)
Suffice to say, after a lot of reading, and $1200 worth of capital losses later, I've finally come up with what I think is a more workable strategy for the current environment, which I've expounded upon in prior posts.
I do plan to invest in semiconductor, copper, lithium, rare earth and graphite companies (thanks for the tip
) in the medium-to-long term, including through the ASX. However, I'm waiting for the dust to settle RE commodities though, so that may not be for another 6-12 months.Thanks for the advice regarding the metaverse - not surprisingly, FB and MSFT, owing to their founders being imperialists, are getting in on the act. Other third-gen tech I plan to invest in includes renewables, blockchain technology, space travel, cybersecurity, cloud computing, fintech (with caution), robotics and non-fossil fuel vehicles. I've already tentatively invested in biotech through VRTX/HZNP/PFE - all relatively stable companies with competitive advantages and some quality.
However, IMO these industries will be unstable at first because so many players will want a piece of the action, so you'll see volatile industries with many low-quality growth companies that will ultimately fail. I learnt this the hard way through CLNE (a renewables ETF), and now tentatively invest in renewables through a long-standing utility (NEE). I think that reducing but not eliminating investment in GAMMA in favour of third-gen tech companies over a long period of time (8-15 years) is the right way to approach this problem, because volatility will be lower since the dust will have settled and it will be increasingly easy to discern high quality third-gen tech companies.
Much of my knowledge has been post hoc (i.e. after screwing up) because I'm actually a noob investor (only started in mid-February last year or thereabouts), and so I was actually blindsided by this start to the New Year.
What has interested me is that consumer staples have pretty much held their ground since the New Year, while healthcare stocks have cratered. That's partially due to dividend payouts, but they usually rise and fall together because they're both defensives. It suggests that maybe US investors in particular are hedging their bets a little, because they're unsure whether there'll be rising inflation/growth or stagflation. For mine, I'm not sure there'll be any inflation in the US beyond the short-term; inflation occurs when too much money chases too few goods. In the US, stimulus is being withdrawn prematurely IMO, interest rates are going to rise, and inventory is piling up. That means that it's more likely that too little money chases too many goods (so disinflation/deflation). Also, I bought some more USD since higher interest rates signify lower inflation, thus raising the value of each dollar since there's less money available to spend on goods.
RE AUS, the RBA haven't formally lifted interest rates (weakening the AUD/USD while encouraging inflation, ceteris paribus), but they lost control over the yield curve in late October, so I bought some AUS bonds (they now make up 10% of my portfolio). The yield curve has been rising, but I don't think that begets any real inflation for a while. Contrary to what various
I agree with you RE health. Renewables and mining IMO need to be approached gradually and selectively - there will be periodic attempts to revive fossil fuels due to lobbying, but political pressure will ultimately ensure renewables win out - but I respectfully disagree RE crypto, and especially Bitcoin. IMO they're far too volatile, and there's no powerful government or hard resource backing them (i.e. gold). Crypto is already in the process of being banned and I'm not surprised, because people are already getting scammed en masse, which is unacceptable for moral, ethical, economic and political reasons.
Thanks for reading another of my ramblings, and cheers for your tips.
EDIT: I know you say that you got lucky, but sometimes you make your own luck, and you did that by picking the right people, trusting their judgment and having the courage of your convictions. I'm sometimes too reactive or irresolute for my own good, unfortunately.
Last edited:
Jello_B
Norm Smith Medallist
- Mar 2, 2014
- 5,614
- 4,654
- AFL Club
- Port Adelaide
Nice one. I’m holding CDT until it gets to at least 10c.
For those on graphite... besides RNU another is EGR.
I have a very very speculative microcap that has some serious promise. GED.
I have a very very speculative microcap that has some serious promise. GED.
00Stinger
100 - 7
Looks like it would have been good to get in about 12 months ago
Sent from my SM-G981B using Tapatalk
00Stinger
100 - 7
The issue with a lot of crypto investors is they are trying to get rich quick and buying scam coins or ponzie scheme coinsThanks for the input.
Put it that way, it sounds like random breath testing, with some demographics (like teenage hoons) more likely to get caught than others.
Mate, you flatter me.
I could write reams RE my experiences with investing. My initial strategy was to copy the late David Swensen's Unconventional Success and implement a buy-and-hold strategy using index funds, but I quickly realised there were several problems:
1) The market is unusually volatile, and index funds aren't liquid enough to transfer money in and out quickly enough should there be a slump
2) The portfolio itself does best when you have rising inflation and yields due to the high allocation to REIT's (20%), so it does quite poorly when yields are low and the environment is disinflationary (hence why the S&P 500 has caught up and overtaken it in recent times) - so it basically does best when value/cyclical stocks are ascendant
3) An allocation of 20% to REIT is too high given its volatility, especially in this environment (should apparently be a maximum of 10%)
4) It neglects infrastructure, despite its superior Sharpe Ratio to equities and REIT's historically
5) It's not varied enough in its approach to bonds (in environments with rising inflation/yields, fewer short-term bonds are better, but in the opposite environment, you'd prefer more and longer-term bonds)
Suffice to say, after a lot of reading, and $1200 worth of capital losses later, I've finally come up with what I think is a more workable strategy for the current environment, which I've expounded upon in prior posts.
I do plan to invest in semiconductor, copper, lithium, rare earth and graphite companies (thanks for the tip
Thanks for the advice regarding the metaverse - not surprisingly, FB and MSFT, owing to their founders being imperialists, are getting in on the act. Other third-gen tech I plan to invest in includes renewables, blockchain technology, space travel, cybersecurity, cloud computing, fintech (with caution), robotics and non-fossil fuel vehicles. I've already tentatively invested in biotech through VRTX/HZNP/PFE - all relatively stable companies with competitive advantages and some quality.
However, IMO these industries will be unstable at first because so many players will want a piece of the action, so you'll see volatile industries with many low-quality growth companies that will ultimately fail. I learnt this the hard way through CLNE (a renewables ETF), and now tentatively invest in renewables through a long-standing utility (NEE). I think that reducing but not eliminating investment in GAMMA in favour of third-gen tech companies over a long period of time (8-15 years) is the right way to approach this problem, because volatility will be lower since the dust will have settled and it will be increasingly easy to discern high quality third-gen tech companies.
Much of my knowledge has been post hoc (i.e. after screwing up) because I'm actually a noob investor (only started in mid-February last year or thereabouts), and so I was actually blindsided by this start to the New Year.
What has interested me is that consumer staples have pretty much held their ground since the New Year, while healthcare stocks have cratered. That's partially due to dividend payouts, but they usually rise and fall together because they're both defensives. It suggests that maybe US investors in particular are hedging their bets a little, because they're unsure whether there'll be rising inflation/growth or stagflation. For mine, I'm not sure there'll be any inflation in the US beyond the short-term; inflation occurs when too much money chases too few goods. In the US, stimulus is being withdrawn prematurely IMO, interest rates are going to rise, and inventory is piling up. That means that it's more likely that too little money chases too many goods (so disinflation/deflation). Also, I bought some more USD since higher interest rates signify lower inflation, thus raising the value of each dollar since there's less money available to spend on goods.
RE AUS, the RBA haven't formally lifted interest rates (weakening the AUD/USD while encouraging inflation, ceteris paribus), but they lost control over the yield curve in late October, so I bought some AUS bonds (they now make up 10% of my portfolio). The yield curve has been rising, but I don't think that begets any real inflation for a while. Contrary to what variousfortune tellerseconomists have been saying, this is because I don't think a pandemic running riot across the nation will boost the economy or encourage consumers to go out and spend money on goods, not least because they 1) fear getting infected or 2) think they might need it as a nest egg in case the economy deteriorates further. So while consumers have money, goods would be accumulating because said money is not chasing said goods. Hence, I've been topping up my AUS bond holdings a little. I'm not sure when I'll start selling them - as soon as I see signs of a consumption-led boom (increasing chances of inflation), I think.
I agree with you RE health. Renewables and mining IMO need to be approached gradually and selectively - there will be periodic attempts to revive fossil fuels due to lobbying, but political pressure will ultimately ensure renewables win out - but I respectfully disagree RE crypto, and especially Bitcoin. IMO they're far too volatile, and there's no powerful government or hard resource backing them (i.e. gold). Crypto is already in the process of being banned and I'm not surprised, because people are already getting scammed en masse, which is unacceptable for moral, ethical, economic and political reasons.
Thanks for reading another of my ramblings, and cheers for your tips.
EDIT: I know you say that you got lucky, but sometimes you make your own luck, and you did that by picking the right people, trusting their judgment and having the courage of your convictions. I'm sometimes too reactive or irresolute for my own good, unfortunately.
The bigger more stable based coins that are backed by bitcoins block chain in a similar manner to gold in industrial applications are the way to go. Bitcoin is like gold as it is limited in supply and quantity with limited uses.
I was pretty against crypto as I couldn't get my head around it from a financial sense as in where is the commodity? How is it backed? Ext. But I watched a fair few podcasts with some highly intellectual people and that convinced me to get in.
But I literally bought a few of the bigger coins or more stable ones ETH, BNB & CRO. Combined they are up about 75% since I bought them in about March last year so I did muss the goldrush. I'm just going to sit them there for 5-10 years and see how they play out
Sent from my SM-G981B using Tapatalk
Mofra
Moderator
- Dec 6, 2005
- 67,514
- 199,419
- AFL Club
- Western Bulldogs
- Other Teams
- Footscray, Coney Island Warriors
- Moderator
- #2,570
Zero-dollar averaging. I have a dozen stocks or so in my portfolio I'm holding that way (albeit a lot of them DRP shares where I sold down and recouped my initial investment).
I've got like 2 things out of 27 not down today.
RE crypto, yes I agree that a lot of people are trying to get rich quick, which almost never works. Part of the issue though, is that your average investor is IMO not sophisticated enough to tell the difference between 'legitimate' crypto and crypto which is being used to facilitate scams. I actually don't think Bitcoin is a Ponzi scheme per se, but it is being used to perpetrate an alarming number of them.
Governments also have trouble telling between the two, which makes it more likely that they'll enact a sweeping ban on Bitcoin, if not crypto altogether, should the issue become endemic.
I approve of blockchain technology, but more because of its versatility. You probably know this already, but blockchain tech is designed to make databases unhackable, thus protecting client/patient privacy. I can see it being used in many fields, particularly healthcare.
Ethereum is more stable than Bitcoin yes, but it is still very volatile (like other forms of crypto), so I wouldn't be investing in it right now at any rate.
I know this is a bit beside the point, but comparing Bitcoin/crypto to gold would make me more dubious about it as an investment, not less. Gold is overrated as an inflation-hedge and commodities in general have a terrible risk-return ratio, IMO partially because they don't pay dividends or interest. Currency isn't that much better, which is why I only advocate investing up to 10% of your portfolio in currency as a hedge (currently I have 7.75% in USD).
I also respect intelligent investors in general, but like the rest of us they're only human, and they can get things wrong (e.g. Jeremy Grantham and Lyn Alden, who write a lot of good stuff, were both wrong about emerging markets over 2021 - I recognised this in around mid-year and now have only 2.5% of my portfolio in them). My approach, while admittedly not efficient and involving a fair bit of trial-and-error, was to take what I thought was the best advice from various investment gurus and firms, before synthesising said advice to create both my portfolio and a workable strategy towards investment generally.
The investment gurus whose advice I used to formulate my portfolio are:
- David Swensen (helped create my initial strategy, diversification, came up with min 5% - max 30% allocation to each investment class, which I modified slightly to incorporate more assets, pointed out that most people who invest in shares underperform the market)
- Optimized Portfolio (highlighted poor risk-return ratio of commodities, prioritising government>corporate bonds due to risk)
- The Evidence Based Investor ('Asset Allocation' category and having a 'Size' factor, and accounting for high-yield bonds in a very limited manner)
- Jeremy Grantham (including quality/value/ESG factors in one's portfolio)
- Lyn Alden (investing in companies with a sustainable competitive advantage ('moat'), not shorting, and not using leverage to invest, included a 'Moat' factor, including short-term bonds, investing in individual countries when appropriate)
- SeekingAlpha (including a 'Dividend' factor)
- BetaShares (including a 'Covered Call' factor, especially for unstable or declining markets)
- VanEck (including infrastructure as a category, including infrastructure REIT's to differentiate from regular REIT's)
- Gretchen Tai (pointed out that you should ideally pay less than a 0.5% fee for an ETF, and definitely NOT above 1%)
- MacroBusiness (helped focus my portfolio towards 'min vol' factor/defensive sectors, pointed out importance of hedging to the right currency, using longer bonds and investing in bonds from specific countries, anti-crypto, helped form my market timing strategy)
- Paul Merriman (including intermediate government bonds)
- Investopedia (including ESG bonds)
- Zacks (good at picking out individual US and sometimes AUS stocks to invest in, given that they meet my investment rules)
- Viktor Shvets (helped focus my portfolio towards 'min vol' factor, setting out my long-term investment strategy)
- Steven van Metre (provides a contrarian perspective which can help me 'see through' phenomena, provided that I understand the underlying theory)
- Stockspot (for picking out best-performing ASX ETF's)
- MSCI (including a 'multi-factor' fund to accommodate 'momentum' factor)
I've compensated for the risk of underperformance in stock picking by 1) not including many as part of my portfolio (under 5% ATM) and 2) only buying shares sparingly ($250-$500 per company).
That said, to each his own, and I hope that you can maintain your gains WRT crypto.
I think everyone's taken a bath, man.
When Wall Street falls, the ASX almost always follows.
The best I can say for myself is that I've taken less of a bath than most in both markets.
idc, actually want to go down to start buying again.
- Oct 9, 2006
- 22,755
- 29,509
- AFL Club
- Hawthorn
- Other Teams
- Super Tottenham....from the Lane.
