General Markets Talk

[Falchoon]

Tax should of course be a consideration of course but probably have to careful with it overriding your overall decision making or strategy on something speculative too much?

Falchoon a much smarter man (or woman) than me iirc recently held out to get a CGT discount and sold some right at the top of the spike!

I wish, 80% of my profits are in my name (thanks LTR & LPD) and 80% of my investments are in my wife's name. With a 50% CGT discount I'm still paying more tax than her! She even has a $10k capital loss offset sitting there (no thanks KEY).

I think the problem with retail investors as a whole with tax is we only want to account for it when it is realised, a business would provision for it on the journey - but to paraphrase Tom Cruise in The Firm, delaying paying it is the best free loan you can have.

 

[Falchoon]

Honestly guys!

Get your own SMSF about $1,500 pa, ask around in any public bar or street corner heroin dealers for directions to find a good one.

Then and you can trade your butt of and only pay 15% tax.

Handy if you want to access your funds post 60.

FWIW I have a super strategy AND an investment strategy.

 

[Taylor]

What if your assets were owned by a company? You could distribute up to being taxed 30% and then retain the rest in the company for further investment, couldn't you?

 

[DaRick]

And if this was it’s only problem you’d be laughing.

Well, the other problem is that shorting is expensive and likely to be a losing proposition.

 

[ash_1050]

Really???

Have you ever traded this ETF?

I played around with it in March 2020. Here's an article outlining how decay works.

 

[Taylor]

The problem of companies holding assets is toxic wrt capital gains tax.

Simply, all companies except for insurance companies, can not access the 50% discount for GCT assets held for over a year, that applies to individuals holding the same asset.

Can they borrow against the value of the asset to buy new assets and just never sell?

 

[Kram]

Ouch US got smoked..

 

[Falchoon]

What?

Do you have no intention of surviving to 60?

Super is just so tax effective it is ridiculous not to avail oneself of it.

​

I did capitalise the word AND, maybe I could have bolded it.

 

[craigos]

How's my CNB fam doing? Anyone have a realistic estimate as to where this company could end up?

 

[Gigantic]

How's my CNB fam doing? Anyone have a realistic estimate as to where this company could end up?

Even more bullish seeing Oz Minerals join the party.

 

[SizeMatters]

The problem of companies holding assets is toxic wrt capital gains tax.

Simply, all companies except for insurance companies, can not access the 50% discount for GCT assets held for over a year, that applies to individuals holding the same asset.

Some ASX listed companies (such a ASX:SOR) you don't pay CGT on them at all. I sometimes trade SOR for shits and giggles.

 

[HotSausage69]

CNB I love you

 

[The Cryptkeeper]

Well the CNB train rolls on.

Without me on it.

 

[Gigantic]

CNB $2 party

 

[Pappagallo]

Looking up the CNB SP…

 

[Jello_B]

Huge volatility at the moment. Yesterday $42k down, today $45k up

 

[Kram]

Well the CNB train rolls on.

Without me on it.

I had a quick look when it was mentioned on here a few times early on here but thought yeah nah.. only time I was kind of tempted was iirc around $1 after that massive strike that really got my attention.

Anyway good to see see people on the thread have a solid win!

 

[Jello_B]

Really hopeful m3m can have a similar hit, roll the dice jello.

 

[Kram]

Why did the ASX get away pretty much unscathed today after the US got smoked?

With the 2% discount from the weighted average price this week put $10k into the CSL SPP today, surely it's pretty rare that retail kind of get a better deal that the big boys?

edit - ASX ended 0.59% up!

 

[Falchoon]

Why did the ASX get away pretty much unscathed today after the US got smoked?

With the 2% discount from the weighted average price this week put $10k into the CSL SPP today, surely it's pretty rare that retail kind of get a better deal that the big boys?

edit - ASX ended 0.59% up!

I thought we took the hit yesterday, the Facebook news which seemed to be the catalyst for the US decline was released pre our market open Thursday.

 

[DaRick]

Why didn't the ASX get away pretty much unscathed today after the uS got smoked?

With the 2% discount from the weighted average price this week put $10k into the CSL SPP today, surely it's pretty rare that retail kind of get a better deal that the big boys?

The ASX is underpinned by commodities/materials much more than the US is, and demand for iron ore and coal haven't collapsed yet.

Also, commodity firms benefited from the RBA's decision to not lift interest rates for two reasons:
1) Cost of holding inventory is lower with low interest rates, which allows such firms to sustain their revenues
2) Commodity firms tend to be big dividend payers, but high interest rates make big dividend payers somewhat redundant since investors can get a better ROI by investing in financials, or stuffing their money in a bank

Basically, interest rates and commodity firm prices are inversely correlated.

Conversely, the US stock market has a significant tech component, which AUS doesn't have, plus the US keeps raising interest rates to take the sting out of US stagflation. Plus a recession appears likely to occur in the US later this year (money being withdrawn from the economy + inventory pileups point to consumers not having that much money to spend overall), and the US stock market is currently enduring a correction that may devolve into an outright crash.

Tech stocks don't pay many dividends, which makes them even less equipped to handle rising interest rates than big dividend payers, since at least the latter can still provide a more attractive ROI up until interest rates exceed a certain mark, whereas tech stocks don't have that luxury. Plus tech stocks are growth stocks - recessions obviously signify negative growth, so it's no surprise that investors would abandon them during a downturn and switch to more defensive stocks (utilities, consumer staples, telcos, blue-chip healthcare stocks). Moreover, tech stocks are quite volatile, so investors shy away from them even more since they're likely to crash even harder than other stocks.

 

[DaRick]

All that said, the forecasts for Australia's iron ore and coal over H1 2022 aren't encouraging, and I've been saying that for a while.

For one thing, the Fed's drive to crush US stagflation by raising interest rates makes investment in commodity firms in general less attractive overall for reasons outlined above. This would include AUS commodity firms, albeit to a lesser degree due to RBA caution.

Second, Chinese construction is declining, negatively affecting demand for AUS iron ore, and to a lesser degree AUS coal since fewer buildings will need power. China limiting AUS coal imports as much as possible, combined with both them and Japan emerging out of their winter, will further affect demand since less electricity, and thus coal, will be required for heating.

Third, AUS forward earnings have been rocky for a while - this has partially been due to AUS financials suffering from rolling economic slumps due to Delta/OMICRON, but it also points to demand for AUS commodities becoming rocky. It's also for this reason that I've been pushing YMAX (a covered call ETF) so hard, because it does pretty well in these sorts of situations.



Fourth, although the sectors underpinning them differ, the US and AUS stock markets are still tightly correlated, especially during crashes and corrections. This is because the US and AUS are close trade partners, and a US recession would disrupt such trade. Moreover, the US is a superpower and so has a large effect on the global economy, so if it gets a recession it reverberates worldwide. Plus recessions invariably precipitate stock market slumps because investors inevitably withdraw from the stock market and keep money in cash for a rainy day.

To illustrate, check out the below:



First, the S&P 500 since March 2020:



Then the S&P ASX 200:


The two are at frighteningly similar stages of the decline process (experiencing a bull trap). The US stock market IMO has already just entered into the 'fear'/'capitulation' stage given how one of its premier stocks (FB) was absolutely smoked. I don't see why the ASX won't eventually follow by the end of H1 2022, especially since Fed interest rates + its safe-haven status strengthen the USD, and the USD is inversely correlated with commodities and emerging markets like China. This is partially because demand for commodities decreases during downturns, but also because emerging markets are valued for their potential growth, not for their stability. EM countries also typically raise their interest rates in order to preserve their currencies relatrive to the USD, which exacerbates the decline of their equities.

That said, I expect our bull trap to be more drawn out due to the RBA's reluctance to increase interest rates + the Fed not yet managing to reduce commodity demand. The Russo-Ukraine conflict flaring up (iron ore) + serious Chinese stimulus would further draw out said bull trap and attenuate - though not prevent - the ASX's decline if the timing was opportune.

 

[DaRick]

And yet at the same time they are getting whacked by very high and rising petroleum costs which make up a significant portion of their operating expenses.

No doubt; that's probably part of the reason why commodity firms (that aren't oil/energy companies) as a whole perform poorly during stagflationary periods, come to think of it.

 

[Kram]

Long shot but those anyone have shares in Senex.

Someone suggested I could look at selling before they get taken over.

Guess I should do some reading..

 

[DaRick]

What I've been doing over the past week and a half:
- I pumped and dumped XOM after the share price went absolutely bananas - it always feels good to pump and dump an evil company

- I recalculated how I measured volatility for each stock/ETF because I realised that they current broad based approach - ideally keep investments within a range of 10% either way - wasn't taking into account how bond/currency ETFs were much less volatile than stock ETFs, so I was losing out on opportunities to sell and buy

- To this end, what I did was take an ETF that was close to the mean in terms of portfolio volatility (10%), divided the percentage of my portfolio that said ETF comprised by a figure which approximated 1 standard deviation both ways (15), and then divided the 3-year standard deviation of the ETF by the mean standard deviation of my entire portfolio.

I found said SD by using morningstar.com and clicking on risk (NOT morningstar.com.au), and if that figure wasn't available I either used the index/category SD (depending on how appropriate for the ETF it was) or cross-checked with the 1-year (?) SD available on the www2.asx.com.au website for each ETF. If the 1-year SD was unusually high, as it was for HLTH, I assumed that the 3-year SD was up to 1.5 times higher (more like 1.25 for bond ETFs), which is reasonably consistent with what I've found when examining differences between 1-year and 3-year SD on sites like Fidelity.

I used a 3-year SD because a 1-year SD might be misleading if the market was behaving unusually for some reason, whereas a 5-year SD would exclude many newer ETFs and maybe not fully consider recent fluctuations.

After doing that, I realised that GGOV, AGVT and HLTH were too volatile for my liking (HLTH in particular was dangerously volatile, nearing a 3-year SD of 20%), and so I cut my losses in all three.

With stocks, what I did was use Refinitiv (available via SelfWealth Premium) to figure out the 5-year SD, divide that by the 5-year SD for VOO (S&P 500) or STW (S&P ASX 200) and then multiplied that by the 3-year equivalents for both.

- I then split my sector analysis into three categories: the ones I expected to do consistently well going forward in 2022 (blue), the ones I expected to do well at various periods in 2022 (green), and the ones I expected to plummet (red). I split some sectors - healthcare/communication staples into two because growth-oriented and blue-chip healthcare are quite different animals. The former would do reasonably well during disinflationary downturns, but not so much during stagflation, whereas the latter would hold its own in both scenarios.

- I replaced the Trend Trigger Factor with the True Strength Index - the latter is not as volatile and hence more indicative of how bullish/bearish a stock/ETF really is. I also got rid of the Linear Regression Std Dev and Donchian Price Channels because they needlessly overcomplicated my analysis, and I reinterpreted the Linear Regression 100% figure and the DMI while modifying my use of the Std Dev measurement to make sure it would be at the midway point between the Linear Regression 50% and 100% figures.

I reckon that the Trend Trigger Factor would be more suitable in less volatile markets, but I think that using both that and the TSI at once would just complicate things too much, and I have a bad habit of doing that. So I'll just switch back to the TTF when the market is less volatile. Kanga Commando The Cryptkeeper jd2010 might be interested in re-reading that old post of mine, because I made my edits there.