Black Monday

[SailorRob]

Ok Bull, that is fair enough.

Earlier today you stated;

'the important thing to me is i know and can prove' (that you have beaten the market)

So having made that statement, by definition you must know what your returns have been.

The S&P 500 (what all professionals and serious investors call 'the market' and measure returns against) has the following total returns;

2013 32.29%
2014 13.69%
2015 1.38%
2016 11.96%
2017 21.83%
2018 -4.38%
2019 31.49%
2020 18.40%
2021 28.71%
2022 -18.11%

The CAGR over that time with dividends reinvested was 12.4%

What have your returns been over this period, either a CAGR for the period or preferably year by year. As above, you have this information and can easily provide it.

You must include all cash in your results. I.e. you can't have a year where you're 90% cash while the market rips 30% and you only compare your equity portion that year. It's everything every year.

Super easy to provide. You are anonymous here so nothing to worry about.

If you don't want to provide in public, perhaps a group of us could meet at a bar somewhere and you bring along your returns and when it's proven that you have achieved what you say, I will shout everyone. Would need to go into more detail for 'the bet' but I agree it's not easy.

If you have chosen another market to measure yourself against, that's fine we can use that instead.

Daytr, this all goes for you as well.

For me, I have never said I have or can beat the market. It would be exceptionally difficult over a full cycle.


Where are we at with this?

[bull....]

come on sailor whats taking so long , dont google it you have done all your homework on oxy havnt you ?

i bet you 100k pieces of dirt your got no idea on why you invested in oxy

[bull....]

sailor where are you , you know oxy like the back of your hand or are you out there filling up the trailor already ?

[SailorRob]

sailor where are you , you know oxy like the back of your hand or are you out there filling up the trailor already ?


What's the question you're asking? I'll do my best to answer it.

I originally paid $43 and $47 for my first lot, then it went to $8.

[bull....]

Where are we at with this?

your a bit thick on it sometimes i answered you yesterday , but ill tell you again yes yes and just to make you feel better the time period you mention is characterised by money printing which is not representative of normal investing conditions , thertefore looking forward will i acheive the same returns as the period mentioned going forward. most likely not but it wont stop me trying very hard to do that

[Muse]

This thread has gone bananas

[SailorRob]

come on sailor whats taking so long , dont google it you have done all your homework on oxy havnt you ?

i bet you 100k pieces of dirt your got no idea on why you invested in oxy

So my original investment in OXY was a part of a diversified entry into the oil/gas/coal sector in 2019 as the whole sector was so washed out and sentiment was so bad that it ticked all the boxes of a classic Ben Graham industry situation.

It was absolutely from the pages of The Intelligent Investor and a true contrarian move.

On top of this I hold very strong opinions about the future of the industry and how demand will continue to increase, in fact I believe we are in the infancy of the oil age and this opinion is different to the market.

WTI averaged $71.76 from 2005 to 2010 and $91.80 from 2010 to 2015.

I have also worked in the industry for nearly 20 years but that wasn't really a factor.

So the Anadarko deal originally highlighted it to me and Warren taking the preferred and I continued to study the deal and the Permian and when Covid hit and I was down across the whole energy investment 60% it was primarily OXY XOM and ARLP that I doubled and doubled down again and again.

The situation became incredible complicated with Buffett ditching every share and Icahn stepping in.

If you ask me anything specific about OXY I am sure i can answer as I know it as well as any.

[SailorRob]

your a bit thick on it sometimes i answered you yesterday , but ill tell you again yes yes and just to make you feel better the time period you mention is characterised by money printing which is not representative of normal investing conditions , thertefore looking forward will i acheive the same returns as the period mentioned going forward. most likely not but it wont stop me trying very hard to do that


Ok so we just take your word for it?

[SailorRob]

Here is an example of the level of detail I was going into in November 2020, hopefully it shows I do know why I bought.


Have finally had a decent look into Occidentals Q3 earnings and the earnings call where they present the results and take questions. It wasn't bad at all but there are a few things to keep an eye on.


Worth noting here that they produced 1.2 million barrels of oil per day, which is during normal times 1.2% of total world demand. Their Oil and Gas assets are truly world class particularly in the Permian and they also have a large profile in the Middle East, Latin America and Africa.



They also have a massive chemicals business which is;


Largest Caustic Soda manufacturer in the world
Largest Caustic Potash manufacturer in the world
Largest Calcium Chloride manufacturer in the world
Largest US manufacturer of Sodium Chlorite
The second largest Potassium Hydroxide manufacturer in the world
Second largest Chlorine manufacturer in the world



All this is done at their 22 separate US facilities plus others in Canada and Chile. There is a lot more than above too, that's just the stuff that is the biggest, and all these chemicals are the building blocks for the world we live in. Without them life as we know it is not possible.



The own over 50% of Western Midstream Partners worth over 3 billion (their stake)



They also have;


A 550,000,000 KG/year ethylene cracker
1200 Megawatt power generation from 3 separate plants
25% stake in a massive gas pipeline in the Middle East
Large Gas processing plants





This is a very serious company and this is why billionaires are scrapping over it. All of these assets also tie in with each other and allow them to be operated more efficiently that the competition. It's worth far far more than $11/share but lets take a closer look.



Q3 Earnings



They have reported a free cash flow for the quarter of $1.4 billion but I call bull**** on that for a couple of reasons. We need to think and measure things as business owners and what we care about is how much real cash we are making vs the price of the business while also taking into consideration the leverage.



They have had a cash flow from operations of $1.644 billion for the quarter (real cash coming into the bank) and then they spent $246 million on capital expenses and working capital decreased by $829 million. This $829 million in working capital they are not accounting for, so they are taking the $1.644 billion subtracting the $246 million and calling it $1.4 billion free cash flow.



To understand what the working capital draw means, we need to know what it is. Roughly speaking it means money we owe people but have not paid yet, so we have cash coming in from people who owe us but we have not paid out what we owe yet, this is good but needs to be thought about properly. It could also be that large inventories are getting sold and not replaced which is not necessarily a bad thing. In the questions and answers this exact question was asked and the answer was - 'There are really three big pieces that drove the significant working capital draw in the quarter. Number one is a combination of cash interest payments. Majority of our cash interest payments come due the first and the third quarters. So, that was a big piece of it. Another piece was acquisition-related payments that were processed. And then, finally was just the timing of international crude sales in our marketing business. So, as we move forward, we do expect the marketing to improve as we reduce inventories towards the end of the year, certainly be a lower amount of the cash interest payments associated in the fourth quarter'.



So cash is owed on interest payments and hasn't been paid yet, looking at the income statement they are around $350 million per quarter (not including the 200 million that goes to Berkshire). So the first thing we do is subtract $350 million from the $1.644 billion. Acquisition payments were probably not related to this quarter and are not expensed on the income statements so no adjustment required, the inventory was a build of $183 million so we should add back cash for that but to be conservative we will only add $100 million.



So we now have $1,644 - 350 + 100 = $1,394



From this we need to subtract the capital expenses and they have used $246 million for that figure which is way light as that's nowhere near enough to sustain production (this is really what they spent but it is no reflection of what needs to be spent for our business to survive). They are going to spend $2.5 this year and maximum $2.9 next. So let's take $2.5 and divide by 4 for our quarterly spend. Then subtract that. Now we have $769 million.



So $769 million is what I would call the actual free cash flow, not the 1.4 Billion they reckon. From this we need to take out the Berkshire dividend even though it wasn't paid in cash this quarter, and of course it comes right back into our pockets as Berkshire shareholders, that's another 200 million. Leaving us with a true cash flow of $569 million. I'm calling it $500 to be conservative.



So we have cleared $500 million after all true expenses in 3 Months at an average WTI price of $40.93 for the quarter. This is against a market cap of currently 11 Billion @ $11.80. So if they continue like this for a year at this quarters average WTI then that's $2 Billion in real cash which is really quite incredible. That's a yield of 18% on the investment, or a PE of 5.5, extremely cheap. 2 things to consider, to earn this money they are using lots of debt which can kill them, and WTI of $40 plus is needed. This is the power of leverage, the debt is the best thing in the world at $45 + oil but at less than $35 it's an absolute killer.



In their presentation they say that for every $1 in WTI price there is a $210 million change in cash flow. I have no idea how to adjust this to reflect real cash earnings but it sounds about right to me. So at sustained $45 WTI we could do 3 Billion a year instead of 2. And this goes to show that in a higher price environment this company is a cash printing machine and in lower environment it's a death machine.


As Buffett said when he lent the money, it's a leveraged bet on the future price of oil, and now far far more so.



So any sustained price under $35 and we are starting to see real damage done to the investment, they can survive for a while but at a cost. Late $30's and were ok, the business can fund itself and just wait for recovery. Sustained prices over $45-50 and prepare for lift off.

[SailorRob]

I will admit one thing, it would be much easier if I could just look at chart to make a decision.

Would you consider giving lessons?

[iceman]

This thread has gone bananas

You're not wrong there

[bull....]

I will admit one thing, it would be much easier if I could just look at chart to make a decision.

Would you consider giving lessons?

i dont know why you think i only look at a chart lol
a all rounded investor should know all the skills in my opinion

but anyway from your cut and pasting i assume your following buffet because of his bet on oil
but why is buffet betting on oil

[SailorRob]

i dont know why you think i only look at a chart lol
a all rounded investor should know all the skills in my opinion

but anyway from your cut and pasting i assume your following buffet because of his bet on oil
but why is buffet betting on oil


He hadn't 'bet on oil' back when I started, he had just lent OXY the 10 on the preferred. This was Q3 2019.

It should be obvious why he's got a large energy position. I alluded to the reasons a few minutes ago.

I also bought 5 separate companies last year that Buffett also bought.

But I bought them before anyone knew that he had.

[Bobdn]

Oil is ripping. NZD is dropping. I filled up the car today. A Black Monday.

Imagine if oil investments don't become "stranded assets" in the next 10 years as the EU, UN and Environmental groups have warned. Imagine taking investment advice from politicians and environmental NGOs.

Peak oil demand is expected to come in 2030. By 2050 the demand will still be around 2022 levels or more or less 100m barrels a day.

Vanguard's VDE, it's energy ETF, has a P/E of 8. I have a small amount of money it - around $9000 USD. I do reinvest all dividends. Maybe over 30 years it will turn into a decent amount. I'll use the money for a world cruise.

[bull....]

He hadn't 'bet on oil' back when I started, he had just lent OXY the 10 on the preferred. This was Q3 2019.

It should be obvious why he's got a large energy position. I alluded to the reasons a few minutes ago.

I also bought 5 separate companies last year that Buffett also bought.

But I bought them before anyone knew that he had.

i have to go polish my chart screens shortly cause im off to other things

so briefly
you know buffett started buying oxy a yr ago biggly and increased more of it recently so to me in saying i dont view it as a value play is more my thinking buffet is using oxy as an inflation hedge play which fits into how oxy should be played from an historical perspective

thats why i was ribbing you about you being a trader/investor as i dont see oxy as a value play

anyway gotto go

[SailorRob]

Oil is ripping. NZD is dropping. I filled up the car today. A Black Monday.

Imagine if oil investments don't become "stranded assets" in the next 10 years as the EU, UN and Environmental groups have warned. Imagine taking investment advice from politicians and environmental NGOs.

Peak oil demand is expected to come in 2030. By 2050 the demand will still be around 2022 levels or more or less 100m barrels a day.

Vanguard's VDE, it's energy ETF, has a P/E of 8. I have a small amount of money it - around $9000 USD. I do reinvest all dividends. Maybe over 30 years it will turn into a decent amount. I'll use the money for a world cruise.


They won't, that is guaranteed.

VDE is a great way to play it. Also FENY.

A huge part of the thesis is all the negativity and attacks the industry suffers as well as access to finance.

Production is being made very difficult while demand continues on trend.

Check out per capita oil usage for an Indian vs American.

[SailorRob]

I'm sick of going up against Bull, like a provincial girls 15 against the All Blacks.

[JBmurc]

Astounding statement from White House official talking head Karine Jean-Pierre:

“We are deeply concerned about the transition of Brazil and China to national currencies when conducting mutual settlements. This is a violation of the rights of our citizens who rely on a stable dollar exchange rate on the world market .

America will not allow other countries to dictate their terms to it in mutual trade. We want to warn that the violation of the rights of ordinary Americans will not remain without consequences for these countries.

WTF!

[JBmurc]

Astounding statement from White House official talking head Karine Jean-Pierre:

“We are deeply concerned about the transition of Brazil and China to national currencies when conducting mutual settlements. This is a violation of the rights of our citizens who rely on a stable dollar exchange rate on the world market .

America will not allow other countries to dictate their terms to it in mutual trade. We want to warn that the violation of the rights of ordinary Americans will not remain without consequences for these countries.

WTF!

think this might well be an "april fools joke"... but I think its pretty close to the truth .. just look at History any nation that wants to ditch the USD in OIL trade ...

https://twitter.com/TheThe1776/status/1642762493419470848?s=20

[BlackPeter]

think this might well be an "april fools joke"... but I think its pretty close to the truth .. just look at History any nation that wants to ditch the USD in OIL trade ...

https://twitter.com/TheThe1776/status/1642762493419470848?s=20

Pretty late for fools day ... slow fool?

[JBmurc]

Pretty late for fools day ... slow fool?

And you don't think the US Govt is concerned ... many nations are wanting to move away from using the USD in trade ...

https://twitter.com/The_Real_Fly/status/1642727525800460290?s=20

[SailorRob]

And you don't think the US Govt is concerned ... many nations are wanting to move away from using the USD in trade ...

https://twitter.com/The_Real_Fly/status/1642727525800460290?s=20


Many nations also want to do all kinds of things to the USA, but they can't.

https://twitter.com/JavierBlas/status/1641074551822987266?s=20

If it's purely trade and the other country has exactly what you want and you them, then not too difficult but as soon as you have a mismatch then USD is the only game in town.

The massive % of global trade conducted in $ isn't because they necessarily want to...

[BlackPeter]

And you don't think the US Govt is concerned ... many nations are wanting to move away from using the USD in trade ...

https://twitter.com/The_Real_Fly/status/1642727525800460290?s=20

Sure - any country risking to lose the reserve currency status would be concerned. The Dutch have been in the 17 hundreds when their empire crumbled and the guilder tumbled, the British mid of last century when their empire crumbled and the pound tumbled and I am sure the Americans might be currently concerned.

Lucky for them did the Chinese shoot an amazing own goal with their one child policy. Might be the end for the coming Chinese empire before it starts.

Anyway - anybody believing for just a second that American officials produced the nonsense you copied from (I suppose) your usual brainfood ... needs to ask themselves why they call April 1st "fools day".

Did you really believe it, or do you just live behind your time?

[Bjauck]

Sure - any country risking to lose the reserve currency status would be concerned. The Dutch have been in the 17 hundreds when their empire crumbled and the guilder tumbled, the British mid of last century when their empire crumbled and the pound tumbled and I am sure the Americans might be currently concerned.

Lucky for them did the Chinese shoot an amazing own goal with their one child policy. Might be the end for the coming Chinese empire before it starts.

Anyway - anybody believing for just a second that American officials produced the nonsense you copied from (I suppose) your usual brainfood ... needs to ask themselves why they call April 1st "fools day".

Did you really believe it, or do you just live behind your time? We are increasingly floundering April fish every day in a “post truth” era. The once pragmatic Conservatives now lie that the horrendous Easter holiday queues at European borders are not due to the extra Brexit checks. And the, in times past, “my country ‘tis of thee” American Republicans ignore their man’s illegality and undermining of their country’s due process.

[Bobdn]

deleting my post...trying to keep it "Black Monday".

Threads gone a bit haywire lately

[SailorRob]

https://www.bloomberg.com/news/articles/2023-04-03/missed-mortgage-payments-swell-in-housing-bellwether-new-zealand?fbclid=IwAR0aBToF3v06FofLG80weOoBfSLea_R6R D4WO6eQA6BuCXTPqA84bios9iM&leadSource=uverify%20wall

[Nor]

https://leadstories.com/hoax-alert/2023/04/fact-check-white-house-press-secretary-karine-jean-pierre-did-not-say-us-deeply-concerned-about-brazil-and-china-switching-to-national-currencies-when-conducting-mutual-settlements.html

[SailorRob]

VERY important to understand.

https://www.investorschronicle.co.uk/education/2021/02/25/finding-hidden-value/ (https://www.investorschronicle.co.uk/education/2021/02/25/finding-hidden-value/)

[JBmurc]

Sure - any country risking to lose the reserve currency status would be concerned. The Dutch have been in the 17 hundreds when their empire crumbled and the guilder tumbled, the British mid of last century when their empire crumbled and the pound tumbled and I am sure the Americans might be currently concerned.

Lucky for them did the Chinese shoot an amazing own goal with their one child policy. Might be the end for the coming Chinese empire before it starts.

Anyway - anybody believing for just a second that American officials produced the nonsense you copied from (I suppose) your usual brainfood ... needs to ask themselves why they call April 1st "fools day".

Did you really believe it, or do you just live behind your time?

Yes History is filled with failed Empires along with their loss of reserve currency status...USD only matter of time till its surpassed ... not really the thread to debate the endless WARS the US likes to start or be involved in ...

[Baa_Baa]

Yes History is filled with failed Empires along with their loss of reserve currency status...USD only matter of time till its surpassed ... not really the thread to debate the endless WARS the US likes to start or be involved in ...

Hey JB, we don't talk often but I'd just like to say that your Twitter sources of information is also your undoing here. No one here really seems to have much regard for Twitter or the Tweeters, so it doesn't matter how many of them you quote, none of them are taken seriously, which undermines your credibility in posting them.

Even although you may be right from time to time, like who knows really? Your association with obscure Twitter posters and citing them isn't really helping to get your message across. It works against you, can you see that?

[JBmurc]

Many nations also want to do all kinds of things to the USA, but they can't.

https://twitter.com/JavierBlas/status/1641074551822987266?s=20

If it's purely trade and the other country has exactly what you want and you them, then not too difficult but as soon as you have a mismatch then USD is the only game in town.

The massive % of global trade conducted in $ isn't because they necessarily want to...

Yes all a matter of trust with Fiat currencies ...Massive shift in Trade last 20yrs .. surely driving force behind shifts away from using USD for trade between many nations

https://twitter.com/AndreasSteno/status/1592036401453109248?s=20

[JBmurc]

Hey JB, we don't talk often but I'd just like to say that your Twitter sources of information is also your undoing here. No one here really seems to have much regard for Twitter or the Tweeters, so it doesn't matter how many of them you quote, none of them are taken seriously, which undermines your credibility in posting them.

Even although you may be right from time to time, like who knows really? Your association with obscure Twitter posters and citing them isn't really helping to get your message across. It works against you, can you see that?

I'm not stressed I'm not selling everyone must make up their own minds I grew up in a house where the newspaper and TV news was the truth dust to dawn .. read read read ...watch listen ..trusted everyone like a good boy ..listened to my broker and he just made me broker ... listen to my Doc and he made me sicker ..listen to my boss and keeped working pay check to pay check told only way to keep food on the table ....I left school young straight to work at sea 3500days+ ... no Uni qualifications .....

But then I started to read and watch and study and follow others not always mainstream narrative .. and now in mid 40's I'm my own boss ...we own our own home no banks on title etc...

IMHO Twitter has been a great addition for my informational gathering you just don't get via MSM ... along with Youtube ...yes you get many opinions .. yes sometimes they are wrong ..and sometimes MSM is ...

[alokdhir]

I'm not stressed I'm not selling everyone must make up their own minds I grew up in a house where the newspaper and TV news was the truth dust to dawn .. read read read ...watch listen ..trusted everyone like a good boy ..listened to my broker and he just made me broker ... listen to my Doc and he made me sicker ..listen to my boss and keeped working pay check to pay check told only way to keep food on the table ....I left school young straight to work at sea 3500days+ ... no Uni qualifications .....

But then I started to read and watch and study and follow others not always mainstream narrative .. and now in mid 40's I'm my own boss ...we own our own home no banks on title etc...

IMHO Twitter has been a great addition for my informational gathering you just don't get via MSM ... along with Youtube ...yes you get many opinions .. yes sometimes they are wrong ..and sometimes MSM is ...

:t_up::t_up::t_up:

[bull....]

I'm not stressed I'm not selling everyone must make up their own minds I grew up in a house where the newspaper and TV news was the truth dust to dawn .. read read read ...watch listen ..trusted everyone like a good boy ..listened to my broker and he just made me broker ... listen to my Doc and he made me sicker ..listen to my boss and keeped working pay check to pay check told only way to keep food on the table ....I left school young straight to work at sea 3500days+ ... no Uni qualifications .....

But then I started to read and watch and study and follow others not always mainstream narrative .. and now in mid 40's I'm my own boss ...we own our own home no banks on title etc...

IMHO Twitter has been a great addition for my informational gathering you just don't get via MSM ... along with Youtube ...yes you get many opinions .. yes sometimes they are wrong ..and sometimes MSM is ...

:t_up::t_up:

[bull....]

RBNZ OCR announcement today
25 hike most assume the outlook statement be most interest

adding to the tougher outlook for nz economy from falling housing market and consumer spending downturn the other headwind starting to accelerate is the falling milk price and lower payout flowing to farmers going forward.

[Balance]

RBNZ OCR announcement today
25 hike most assume the outlook statement be most interest

adding to the tougher outlook for nz economy from falling housing market and consumer spending downturn the other headwind starting to accelerate is the falling milk price and lower payout flowing to farmers going forward.

RBNZ has no choice but to raise rates with this spendthrift Labour government pouring petrol on the inflation fire.

Buckle your seat belt.

[bull....]

RBNZ has no choice but to raise rates with this spendthrift Labour government pouring petrol on the inflation fire.

Buckle your seat belt.

evident going around the shop's etc there has been some slowdown , seem to get a park much easier now

[causecelebre]

https://www.rnz.co.nz/news/business/487315/government-deficit-higher-than-forecast

Pity finance minister doesn't talk about the farce in 20-21 when Treasury made a massive bond issuance (one issue > $50b) that attracted little investor interest, thus, Treasury buying the majority - there's a money print if we ever saw one. The debt was issued at 1% and the govt (or rather us the tax payer) is paying the cost of selling those bonds now. The issue is the govt is selling those bonds at a yield > 4%. You can see where this is going: the selling price is discounted by the difference in rates multiplied by the number of years until maturity. If treasury bought, say, $30b of 10yr 1% bonds its sales loss is 3%, multiplied by say 8 years, thats almost a $3b loss. The finance minister has contractually agreed to put the cost of this loss on to the tax payer! The loss is real and our children will pay for it. Had the govt run a book build and discovered the price then it may have increased the offering and investment from the market may have occurred. We have a finance minister with no real financial market private experience and we are being robbed due to their incompetence

How about treasury mark to market with no shenanigans about not declaring real unrealised losses

[SailorRob]

https://www.rnz.co.nz/news/business/487315/government-deficit-higher-than-forecast

Pity finance minister doesn't talk about the farce in 20-21 when Treasury made a massive bond issuance (one issue > $50b) that attracted little investor interest, thus, Treasury buying the majority - there's a money print if we ever saw one. The debt was issued at 1% and the govt (or rather us the tax payer) is paying the cost of selling those bonds now. The issue is the govt is selling those bonds at a yield > 4%. You can see where this is going: the selling price is discounted by the difference in rates multiplied by the number of years until maturity. If treasury bought, say, $30b of 10yr 1% bonds its sales loss is 3%, multiplied by say 8 years, thats almost a $3b loss. The finance minister has contractually agreed to put the cost of this loss on to the tax payer! The loss is real and our children will pay for it. Had the govt run a book build and discovered the price then it may have increased the offering and investment from the market may have occurred. We have a finance minister with no real financial market private experience and we are being robbed due to their incompetence

How about treasury mark to market with no shenanigans about not declaring real unrealised losses

But he ran the finances of the Student Union! Learned a few tricks from his old man as well I'd imagine.

[bull....]

massive hawkish rbnz move 50 pt up

orr wants to crush housing :scared:

[Fortunecookie]

massive hawkish rbnz move 50 pt up

Fast and furious starring Adrian Orr haha

[Toddy]

Takes the hop out of Easter Bunny.

[bull....]

he likes catching the market wrong footed , even the banks lol

[Fortunecookie]

Reminds me of the time just before the GFC. Fixed for 12 months at 9% or 8% for longer term rates. Fortunately I went for 12 months because the rates dropped suddenly afterwards. I am not saying it will happen this time round. Things are too difficult to foresee and general randomness.

[Fortunecookie]

he likes catching the market wrong footed , even the banks lol

Yep took everyone by surprise. I think with the Ozzies holding the rates. It gave a false sense that the rise would be minimal or none at all.

[Bjauck]

massive hawkish rbnz move 50 pt up

orr wants to crush housing :scared: Inflation is still way above the target of 1 - 3%.

Why not the converse - RBNZ previously set such low interest rates that massively inflated the price of housing.in fact the inflation range target results in interest rates that over-inflate house prices, given long-standing NZ tax policies.

[Daytr]

Reminds me of the time just before the GFC. Fixed for 12 months at 9% or 8% for longer term rates. Fortunately I went for 12 months because the rates dropped suddenly afterwards. I am not saying it will happen this time round. Things are too difficult to foresee and general randomness.
Yep & I just read, highest rates since 2008. Ominous.
Australia leave rates in check at 3.5%, we keep leading the world... down the wrong path.
Inflation has been driven by supply issues not over heated demand. Orr is misreading the situation completely & rate hikes aren't going to stop OPEC from cutting oil production or speed up supply of goods.
Higher interest rates isn't going to stop health workers fleeing for Australia, in fact probably drive more to leave tightening the labour market further.
He slashed rates to zero to avoid a pandemic induced recession, then creates his own recession, just as business is trying to recover.

[alokdhir]

I agree ...I think Mr Orr is trying to do which even FED is scared to do .... He is hell bent on causing massive pain and even then inflation will not die easily ...as almost 50% part is beyond rates control ...

Maybe big boost to benefits / super rates made him add extra 25bips ....it maybe rebalancing of wealth in his mind ....make middle class suffer and let poorer class have something more to spend to counter inflation ...seems logical if looked at it philosophically !!

[winner69]

Alokdhir, how I see things re OCR

1- I think it’s a case of what Orr should do versus what it looks like he will do
2- Recall Orr was late to start hiking rates. He’s been behind the curve from the beginning and backward looking in decision making.
3- the outlook for the economy (esp residential building) is bad enough Orr should now stop hiking rates.
4- but with a vision fixed on the rear vision mirror Orr will deliver a few more sizeable hikes. Orr will do overdo the hikes. Hence my suggestion that 6% is possible.
5- These decisions will make a recession inevitable (could be avoided as in 3 above)
6- even then it’s going to take 2-3 years to fix the underlying inflation ‘problem’ - esp if Orr gets fixated on his 1%-3% range
7- the market will lead the fall in interest rates, maybe that’s even started which is interesting.

things could change if Govt intervenes ….they’ve got him by shorts and curlies by keeping him on for another term.

Playing out as I thought it would

Shock and Orr seems a popular phrase today

[bull....]

banks and market starting to raise there terminal rate higher now 6% soon ?

recently centrix was saying 19k behind on mtge's. guess when the banks start jacking the mtge's up soon that be 19k mortgagee sales coming soon anyway guess orr is willing to sacrifice a few for the many in the long run

[clearasmud]

banks and market starting to raise there terminal rate higher now 6% soon ?

Assuming no more supply shocks an OCR of 5.5% could be the top. But it it will stay there for the rest of the year.

[JBmurc]

RBNZ leading the highest OCR since 2008, having increased 500 basis points in eleven hikes since August 2021; the fastest and largest monetary policy tightening on record.....

I'm Gutted if only this latest rate rise was a week away ... have to convert a good chunk of AUD to NZD pay Mr IRD !!! ... just on todays spike in NZD will cost me $800 !!!

[winner69]

Still a way to go to get OCR to 8% …not that many years ago

[JBmurc]

Still a way to go to get OCR to 8% …not that many years ago

yeah back when we purchased a house its now more that tripled in value...and even more in rebuild cost to replace .... now match that up to incomes .... I can't see how NZ consumers could continue to keep above water with such high household debt levels at say 8%

[BlackPeter]

massive hawkish rbnz move 50 pt up

orr wants to crush housing :scared:

I guess he just wants to crush the wage - price spiral. Difficult if you work against a government which uses private company resources as ammunition to increase inflation by pushing the minimum wage up and up and up.

They say never fight the FED, but maybe this is a case of never fight a government hell-bound to increase inflation?

[alokdhir]

yeah back when we purchased a house its now more that tripled in value...and even more in rebuild cost to replace .... now match that up to incomes .... I can't see how NZ consumers could continue to keep above water with such high household debt levels at say 8%

Thats why exactly previous 8% levels will feel like 15% now ...so not possible ....but more Mr Orr plays to the galleries and make fun of Govt ...more soon the rates will " NEED " to come down ....

Todays move is actually not bad for stocks ...as it brings the interest rate pivot led recovery much sooner ...

From NZX perspective ...let Mr Orr deliver another 50 bips next meeting and then by last qtr our market will be rejoicing in full bloom

[Balance]

RBNZ has no choice but to raise rates with this spendthrift Labour government pouring petrol on the inflation fire.

Buckle your seat belt.

Entirely predictable - this spendthrift government giveth and the RBNZ taketh.

Mortgage holders get squashed and the worse is yet to come for them.

[alokdhir]

https://www.marketwatch.com/investing/bond/tmbmknz-10y?countrycode=bx

Big thumbs down from Bond markets ...OCR up, 10 year bond yield down ....it seems market does not care ...actual rates will not rise ...thats why RBNZ delivered 50 bips as otherwise actual rates wud have started declining ...which is too early as inflation still pretty high .

[nztx]

https://www.nzherald.co.nz/business/ocr-reserve-bank-to-decide-on-rate-hike/7AGFV6GWZVE5NEE2WZJ3RTCACI/

Reserve Bank hikes Official Cash Rate to 5.25 per cent


That wasn't very ORR-SOME - Adrian ;)

Fancy being known as the pr*ck who pushed Aotearoa into RECESSION
and untold financial suffering by many out there.. ?

You bought it on yourself .. Stupid stupid befuddled grandiose money shuffling twit
many might be left thinking ;)


More of Gobbo Robbo's "Help Ease the pain" hand outs must be due out next week
after this ? ;)

[SailorRob]

yeah back when we purchased a house its now more that tripled in value...and even more in rebuild cost to replace .... now match that up to incomes .... I can't see how NZ consumers could continue to keep above water with such high household debt levels at say 8%

More than trippled in 'price'

[SailorRob]

https://www.nzherald.co.nz/business/ocr-reserve-bank-to-decide-on-rate-hike/7AGFV6GWZVE5NEE2WZJ3RTCACI/

Reserve Bank hikes Official Cash Rate to 5.25 per cent


That wasn't very ORR-SOME - Adrian ;)

Fancy being known as the pr*ck who pushed Aotearoa into RECESSION
and untold financial suffering by many out there.. ?

You bought it on yourself .. Stupid stupid befuddled grandiose money shuffling twit
many might be left thinking ;)

Indeed. Remember in 2019 he was ordering banks to prepare for negative.

[Valuegrowth]

Low, high and zero interests rates are a time bomb. This time is no different. What happened in the past will happen in a different manner. Hope,there won’t be depression or great depression.

[nztx]

Indeed. Remember in 2019 he was ordering banks to prepare for negative.


That's dead right .. He was too :)

[Habits]

More than trippled in 'price'

He would probably be referring to market value which would be correct. Price is the replacement value, and given building costs, I would expect that would be more

[SailorRob]

He would probably be referring to market value which would be correct. Price is the replacement value, and given building costs, I would expect that would be more

I thought value was all the NET cash that an asset produces over it's lifetime, discounted to today.

I would call it market price and value something different.

Remember in aggregate all people can ever earn from any asset is the sum of its net cash flows. Individuals can earn more or less but aggregated it's not possible.

[Rawz]

The NZ economy is too resilient!. Who would have thought the economy would have been able to take on such a swift increase in the cost of funds in such a short period of time.

The not so old way of thinking was that business and home balance sheets were carrying too much debt that interest rates would never be able to increase for fear it would wipe the entire system out.

Orr is onto it and knows 50bp increases the only way and maybe not even enough to kill the economy…

[SailorRob]

The NZ economy is too resilient!. Who would have thought the economy would have been able to take on such a swift increase in the cost of funds in such a short period of time.

The not so old way of thinking was that business and home balance sheets were carrying too much debt that interest rates would never be able to increase for fear it would wipe the entire system out.

Orr is onto it and knows 50bp increases the only way and maybe not even enough to kill the economy…

Yep, every dollar of debt is someone's asset and a lot of people who were earning nothing on a million bucks are now out spending their new income. Which isn't real of course. But higher rates can be stimulating as well...

[Grumble]

For most people on wages/salaries they will be permanently disadvantaged from 15% cumulative inflation since covid began (or whatever the number ends up being) because they’ll never get that through pay rises.

Mortgage holders will suffer some pain in the interim, but eventually those rates will go down. And there is some level of responsibility on taking up a 2.5% mortgage and thinking it would stay there forever.

Inflation needs to be cut as soon as possible and this is the right move.

Btw had Orr taken a more cautious approach before slashing OCR right after the first lockdown and keeping it down despite a booming late 2020/ all of 2021, maybe house prices wouldn’t have surged as much as they did, maybe the mortgage rates wouldn’t have cut as low as they did, and then maybe people wouldn’t be in such a difficult position today. But I guess if my aunt had b*llocks…

[SailorRob]

For most people on wages/salaries they will be permanently disadvantaged from 15% cumulative inflation since covid began (or whatever the number ends up being) because they’ll never get that through pay rises.

Mortgage holders will suffer some pain in the interim, but eventually those rates will go down. And there is some level of responsibility on taking up a 2.5% mortgage and thinking it would stay there forever.

Inflation needs to be cut as soon as possible and this is the right move.

Btw had Orr taken a more cautious approach before slashing OCR right after the first lockdown and keeping it down despite a booming late 2020/ all of 2021, maybe house prices wouldn’t have surged as much as they did, maybe the mortgage rates wouldn’t have cut as low as they did, and then maybe people wouldn’t be in such a difficult position today. But I guess if my aunt had b*llocks…

He was slashing in 2019 and ordering banks to prepare for negative the absolute pillock.

[Baa_Baa]

Yep, every dollar of debt is someone's asset and a lot of people who were earning nothing on a million bucks are now out spending their new income. Which isn't real of course. But higher rates can be stimulating as well...

Interesting, yes a return to interest on savings and higher dividends, but perhaps not all of those beleaguered savers and investors are spending their recently resumed 'income' from savings and investments. They have a lot of catch-up to do first, having taken conservative positions and been hammered for it for a long time and are in net effect still losing against inflation, though not losing quite as much as recent past times.

Best not to generalise imo, a large percentage of the population will not be feeling any serious threats from the rising CPI or rising mortgage rates, and remember that a huge proportion of NZ'ers wealth is in property, and a large percentage of that is debt free. If they have no debt and are not selling, and they have some savings or investments that are paying out increasing returns, then realistically it's only consumable inflation that affects them and that's a rounding error on their cashflows and has no material effect on their balance sheets.

They might not be 'rich' by your standards, but very few are I suspect. Let alone as savvy about money, investing and wealth creation as you purport to be. And that said, I suspect a lot don't really care too much about it either, in favour of a good life without concern for whether they can afford a latte or a holiday, or to renovate heir home. Most people I suspect lead a lot more simple lives, saving what they can, getting out of debt, building a legacy they can live on and pass on to their offspring.

Few I suspect really give a second thought about being rich and making all the right decisions every time at exactly the right time, whatever they are.

[Paint it Black]

Yep & I just read, highest rates since 2008. Ominous.
Australia leave rates in check at 3.5%, we keep leading the world... down the wrong path.
Inflation has been driven by supply issues not over heated demand. Orr is misreading the situation completely & rate hikes aren't going to stop OPEC from cutting oil production or speed up supply of goods.
Higher interest rates isn't going to stop health workers fleeing for Australia, in fact probably drive more to leave tightening the labour market further.
He slashed rates to zero to avoid a pandemic induced recession, then creates his own recession, just as business is trying to recover.
Agree with you that currently it is a supply driven inflation issue ie too much money chasing too few goods ie worker supply. Very soon the money supply will also disappear from the private sector and we will be in an even deeper recession in a couple of months with the country going backwards for a year or more. Why couldn't Orr pause, let the lag of the existing measures take effect, and review the impact then take the next step as Australia has done or at the most apply another 25 pts as most pundits expected. I really wonder if Orr is on a bit of an ego trip trying to be the great inflation crusher at the expense of many stms companies now going to the wall. He quickly needs to publically front up with some searching questions and be informed his job is also on the line.

[Habits]

I thought value was all the NET cash that an asset produces over it's lifetime, discounted to today.

I would call it market price and value something different.

Remember in aggregate all people can ever earn from any asset is the sum of its net cash flows. Individuals can earn more or less but aggregated it's not possible.

Paying the present value of future cash flows leaves no upside and a very boring investment.

[SailorRob]

Paying the present value of future cash flows leaves no upside and a very boring investment.

My friend, you're forgetting the most important thing.

The discount rate.

You get to choose it.

Almost everyone pays more than present value thus even less upside and far from boringly, potentially losing a lot of money.

[t.rexjr]

New dwelling building consents info from February 2023

Actual. 2,972
Adjusted 3,206
Trend 3,407

New dwelling building consenting looks like it peaked in March 2022

Actual. 5,303
Adjusted 4,565
Trend 4,326

Already down ±25% from the peak. I wouldn't be surprised to see these numbers topple further in the next few months. Lots of thumb twiddling on its way...

Building industry poised to fall off a cliff.

https://www.stats.govt.nz/information-releases/building-consents-issued-february-2023/

[SailorRob]

Paying the present value of future cash flows leaves no upside and a very boring investment.

I don't disagree with what you are implying though.

[nztx]

https://www.oneroof.co.nz/news/43360

‘Can I really afford it?’: Fears for mortgage holders as cash rate jumps to 5.25%



Data released this week by NZ credit agency Centrix showed a spike in the number homeowners falling behind in their mortgage payments.

There were 18,900 mortgages that were in arrears in February, up from 18,400 in January and up 23% year-on-year.

Centrix managing director Keith McLaughlin expects more households to come under pressure, with around 50% of existing home loans, by value, set to roll onto higher interest rates within the next 12 months.

“Our latest data shows mortgage arrears climbing for the seventh consecutive month, which could point to many being unable to service these higher mortgage rates – a difficult situation for anyone to be in,” McLaughlin said.


Looks like a Mortgage bloodbath on it's way within the next 12 months - folks

And you wondered why the NZX nosedived today heading out to close

With growing numbers of businesses falling over - could there be any clearer signal of what is coming ? ;)

[JBmurc]

He was slashing in 2019 and ordering banks to prepare for negative the absolute pillock.


Yes along with the promotion that rates would stay low for longer with no material rises till 2024 to help NZ businesses from COVID issues ..next 20 or so months Orr goes nuts pushing rates 500bpts higher ..

.. pretty much you can't trust anything Orr says ... I wouldn't be surprised to see another 25bpts next meeting and talk of more if needed ....while working kiwis will continue to leave in droves living wage increases not enough to keep up with every increasing costs to live ... of course the retired rich are getting some great low risk returns in the bank and will continue to wonder what all the fuss is about .. just import the workers ?? oh they don't want to come ........

[Grumble]

He was slashing in 2019 and ordering banks to prepare for negative the absolute pillock.

Yes you are absolutely right.

[SailorRob]

Yes along with the promotion that rates would stay low for longer with no material rises till 2024 to help NZ businesses from COVID issues ..next 20 or so months Orr goes nuts pushing rates 500bpts higher ..

.. pretty much you can't trust anything Orr says ... I wouldn't be surprised to see another 25bpts next meeting and talk of more if needed ....while working kiwis will continue to leave in droves living wage increases not enough to keep up with every increasing costs to live ... of course the retired rich are getting some great low risk returns in the bank and will continue to wonder what all the fuss is about .. just import the workers ?? oh they don't want to come ........

They think they're getting great returns but in reality they're losing purchasing power faster than they were when rates were much lower.

[SailorRob]

Interesting, yes a return to interest on savings and higher dividends, but perhaps not all of those beleaguered savers and investors are spending their recently resumed 'income' from savings and investments. They have a lot of catch-up to do first, having taken conservative positions and been hammered for it for a long time and are in net effect still losing against inflation, though not losing quite as much as recent past times.

Best not to generalise imo, a large percentage of the population will not be feeling any serious threats from the rising CPI or rising mortgage rates, and remember that a huge proportion of NZ'ers wealth is in property, and a large percentage of that is debt free. If they have no debt and are not selling, and they have some savings or investments that are paying out increasing returns, then realistically it's only consumable inflation that affects them and that's a rounding error on their cashflows and has no material effect on their balance sheets.

They might not be 'rich' by your standards, but very few are I suspect. Let alone as savvy about money, investing and wealth creation as you purport to be. And that said, I suspect a lot don't really care too much about it either, in favour of a good life without concern for whether they can afford a latte or a holiday, or to renovate heir home. Most people I suspect lead a lot more simple lives, saving what they can, getting out of debt, building a legacy they can live on and pass on to their offspring.

Few I suspect really give a second thought about being rich and making all the right decisions every time at exactly the right time, whatever they are.


Great Post, yes a lot of very good points there.

Another large percentage however will be! There do seem to be a hell of a lot of folk with new swimming pools, Ford rangers plus new car for the girl and god only knows what else.

But the large percentage you speak of exist as well that is for sure.

Hopefully this doesn't turn into a political contest between the two.

[Fortunecookie]

https://www.oneroof.co.nz/news/43360

‘Can I really afford it?’: Fears for mortgage holders as cash rate jumps to 5.25%





Looks like a Mortgage bloodbath on it's way within the next 12 months - folks

And you wondered why the NZX nosedived today heading out to close

With growing numbers of businesses falling over - could there be any clearer signal of what is coming ? ;)


"Mortgages in arrears rose 23% in February from a year earlier to 18,900, according to data released Tuesday by Auckland-based credit bureau Centrix. That equates to 1.29% of overall mortgages, the highest since March 2020."

https://www.bloomberg.com/news/articles/2023-04-03/missed-mortgage-payments-swell-in-housing-bellwether-new-zealand#:~:text=Mortgages%20in%20arrears%20rose%20 23,the%20highest%20since%20March%202020.

A rise of 23% sounds substantial, but 18,900 mortgages only equate to 1.29% of overall mortgages. Is it really a bloodbath.

For context the years after the GFC, the highest annual foreclosure rate was 2.63% I believe was in 2010. A close proxy to mortgagee sales as it is a different in funding structure and legal processes. The above percentage 1.29% relates to mortgage arrears which is quite different to rates on foreclosure/mortgagee sales. We are certainly no way near GFC territory. I know you haven't referred to GFC, this is to give context.

Even with a .50% rise today. I think the general consensus is we are near peak rate.

[Fortunecookie]

Great Post, yes a lot of very good points there.

Another large percentage however will be! There do seem to be a hell of a lot of folk with new swimming pools, Ford rangers plus new car for the girl and god only knows what else.

But the large percentage you speak of exist as well that is for sure.

Hopefully this doesn't turn into a political contest between the two.

As much as I hate CCCFA because it's flawed in approach. It actually reduced the demand on lending on top of higher rates and removal LVR restrictions - post Dec 21.

The 2 year rate Dec 2019 was around 3.5% and the same time the floating rate was 5.25%. Each bank will have different ways of stress testing borrowers. But on average they will use a tested rate of 2% above the floating rate. So for a borrower to approved during Dec 2019, they would be stress tested for a rate of 7.25%. The reason I have included the fixed rate is because the majority of borrowers go on a fixed rate as opposed to floating. In terms of current fixed rates we are close to 7.25%. Banks stress test other ways as well and I think the general consensus is still we are close to peak rates.

I don't doubt there are some people at risk -particularly people who borrowed/purchased mid 2020 to late 2021. There are some doubts people can afford mortgage repayments post mid 2020. But banks can manage that i.e interest only repayments/cashflow. The driver of mortgagee sales will be a dramatic loss of jobs. But apparently Adrian Orr doesn't forsee that.

[JBmurc]

They think they're getting great returns but in reality they're losing purchasing power faster than they were when rates were much lower.

correct .. and lending at this rates is actually pretty good if your putting the funds to good use .. as inflation in share prices like say Gold Producers have been very good 50%+ up in many last few months ... like ASX gold plays RED , RMS , RSG etc ... 7-8% pa loan just a tax write off for many of us...

[nztx]

"Mortgages in arrears rose 23% in February from a year earlier to 18,900, according to data released Tuesday by Auckland-based credit bureau Centrix. That equates to 1.29% of overall mortgages, the highest since March 2020."

https://www.bloomberg.com/news/articles/2023-04-03/missed-mortgage-payments-swell-in-housing-bellwether-new-zealand#:~:text=Mortgages%20in%20arrears%20rose%20 23,the%20highest%20since%20March%202020.

A rise of 23% sounds substantial, but 18,900 mortgages only equate to 1.29% of overall mortgages. Is it really a bloodbath.

For context the years after the GFC, the highest annual foreclosure rate was 2.63% I believe was in 2010. A close proxy to mortgagee sales as it is a different in funding structure and legal processes. The above percentage 1.29% relates to mortgage arrears which is quite different to rates on foreclosure/mortgagee sales. We are certainly no way near GFC territory. I know you haven't referred to GFC, this is to give context.

Even with a .50% rise today. I think the general consensus is we are near peak rate.


Annualise the increase rate, then start considering that 50% of all mortgages will have review dates
in the next 12 months, with higher interest rates - many will be double of better -- to then get
a feeling for what lies ahead. Another 6-12 months of inflationary effects biting away at those
borrowers coming up to new rate reviews and what is the likely outcome on these ?

Ahead lay increasing headwinds for businesses, possibility of further falling over, jobs lost
at time of inflation hitting all - All up, not a pretty scenario .. hope I'm wrong.

Let's not forget cyclone effects and damage coming into the overall economic picture as well

[bull....]

Annualise the increase rate, then start considering that 50% of all mortgages will have review dates
in the next 12 months, with higher interest rates - many will be double of better -- to then get
a feeling for what lies ahead. Another 6-12 months of inflationary effects biting away at those
borrowers coming up to new rate reviews and what is the likely outcome on these ?

Ahead lay increasing headwinds for businesses, possibility of further falling over, jobs lost
at time of inflation hitting all - All up, not a pretty scenario .. hope I'm wrong.

Let's not forget cyclone effects and damage coming into the overall economic picture as well

your not wrong
nz is in stagflation environment orr has no choice but to crush the economy
stagflation will make everyone very poor even those rich baby boomers
bond / forex action last night after the ocr increase reinforces the big recession narrative coming
geo-politic's will keep inflation from returning to 2-3% unless the economy goes into very deep recession
hope im wrong too

[alokdhir]

your not wrong
nz is in stagflation environment orr has no choice but to crush the economy
stagflation will make everyone very poor even those rich baby boomers
bond / forex action last night after the ocr increase reinforces the big recession narrative coming
geo-politic's will keep inflation from returning to 2-3% unless the economy goes into very deep recession
hope im wrong too

U r not wrong in assuming big recession coming ...but if u think that environment all stocks will crash on NZX ...that is not right ...as many good companies like FPH / IFT / MFT have more business outside NZ then here plus they are cash positive companies with either no debt or very nominal / controlled debt ...these will do well still and market will selectively love them over local economy related stocks

But all know what comes after big recessions ...lower rates ...then also these companies do better then local smaller stocks due to valuation expansion

Thus it will be stock selective market ahead ...with emphasis on large caps with non local economy dependent business ...also being cash flow positive and low debt

Earnings recession will come for local / smaller stocks like WHS / TRA / HLG / etc ....not for FPH / IFT / MFT etc ....though market sentiment will cause some pain there too ....

[bull....]

U r not wrong in assuming big recession coming ...but if u think that environment all stocks will crash on NZX ...that is not right ...as many good companies like FPH / IFT / MFT have more business outside NZ then here plus they are cash positive companies with either no debt or very nominal / controlled debt ...these will do well still and market will selectively love them over local economy related stocks

But all know what comes after big recessions ...lower rates ...then also these companies do better then local smaller stocks due to valuation expansion

Thus it will be stock selective market ahead ...with emphasis on large caps with non local economy dependent business ...also being cash flow positive and low debt

Earnings recession will come for local / smaller stocks like WHS / TRA / HLG / etc ....not for FPH / IFT / MFT etc ....though market sentiment will cause some pain there too ....

we are not the only country with potential to go into recession ... might end up being a global recession.
you are right stock selection will be very important as it is now

[Fortunecookie]

Annualise the increase rate, then start considering that 50% of all mortgages will have review dates
in the next 12 months, with higher interest rates - many will be double of better -- to then get
a feeling for what lies ahead. Another 6-12 months of inflationary effects biting away at those
borrowers coming up to new rate reviews and what is the likely outcome on these ?

Ahead lay increasing headwinds for businesses, possibility of further falling over, jobs lost
at time of inflation hitting all - All up, not a pretty scenario .. hope I'm wrong.

Let's not forget cyclone effects and damage coming into the overall economic picture as well

The increase rate is on a annual basis. I am not sure what you mean.

I agree it is a fact a large majority will be refixing at a higher rate than currently. Something I mentioned in a response to SR. As an example borrowers have been stressed tested at 7.25% if they took out borrowings Dec 2019 just before covid and before ridiculously low rates were offered. So my point is yes borrowers will need to make an adjustment when refixing in the next 9 months. But people who borrowed before covid should be able to manage. It isnt an exact science, banks will have different ways to stress test. Some applications were approved at the margin while some approved with plenty of servicing buffer. The quirk with mortgages is that the longer you have it , the less risk it becomes because people get payrises over time and adjust their consumption behaviour accordingly. Obviously it doesn't really apply for the last couple of years due to high inflation. That's why I made the point that there is concentrated risk from mid 2020 to late 2021. But banks do have ways to manage clients that are struggling. They will offer interest only in the view that things will improve over time. Historically NZ banks have had very low arrears rate. But of course this only works if people have jobs. From what I can gather, we are still ok on the employment front.

Sure the weather events/cyclone will have an impact in terms of inflationary and economic survival. That's where insurance comes into play. I think a few billion has or will be payed out. Whether a community decides to rebuild or relocate. That's a different matter and something the govt, insurers, banks are still discussing. It's hard to know. From what I seen with the Christchurch rebuild, insurance money created economic growth and attracted plenty workers to the area and put alot of pressure on rental cost/supply. This time around it will depend regarding potential managed retreat or rebuild.

I am not denying there isn't going to be a recession or potential stagflation down the line. IMO companies exposed to discretionary spending will fare less better. But I'm no macro or micro expert. I'm learning as I go. I just think that provided there is no higher surge in job losses, on the whole most borrowers will be ok.

[causecelebre]

Another issue that i'd like to see the stats on is the number of Interest Only mortgages that are coming off the 5 year term and as they roll over the banks forcing the mortgager to go P and I. This is seriously going to affect cashflow. There is a change a good number of these will have to find ways to increase the cash flow of these properties, e.g. increase the loan term, or end up selling

[Paint it Black]

Orr says employment is beyond its sustainable level. Perhaps he should visit a hospital or retirement village to see the employment shortages there.

[causecelebre]

Orr says employment is beyond its sustainable level. Perhaps he should visit a hospital or retirement village to see the employment shortages there.

....hospitality, public transport, construction industry, fruit pickers. The list goes on. Clearly the only ones unemployed aren't populating the employment survey

[Paint it Black]

Yep Orr and his esteemed Committee are in Cuckoo Land. Chippie in some way needs to step in now. Nicola Willis will definitely do this when the Nats sweep in during the recession

[BlackPeter]

Orr says employment is beyond its sustainable level. Perhaps he should visit a hospital or retirement village to see the employment shortages there.

This is exactly what he said.

Not enough available and willing workers to fill vacancies. Rising the interest rates will do two things: 1) Reduce consumption (and with that demand for services) and 2) Increase the willingness of potential workers to look for a job.

All good. I guess you can't really blame Orr for the brain dead policies of the government which stopped immigration for dumb populist reasons. While they now start peddling to turn the tap on again is just a case of too little too late.

[Paint it Black]

1) But how do you reduce consumption of essential services in hospitals etc? 2) Orr also says the current levels of unemployment is unsustainable. Apparently he doesnt want to raise the willingness of people to work as this creates more employment! Middle NZ is now being crushed between the snail speed non immigration ideologies of Labour and Orr's determination to have a recession by wacking the very people who can prevent it.

[bull....]

This is exactly what he said.

Not enough available and willing workers to fill vacancies. Rising the interest rates will do two things: 1) Reduce consumption (and with that demand for services) and 2) Increase the willingness of potential workers to look for a job.

All good. I guess you can't really blame Orr for the brain dead policies of the government which stopped immigration for dumb populist reasons. While they now start peddling to turn the tap on again is just a case of too little too late.

in aussie they opened the immigration floodgates to solve worker shortages and now they have a rental shortage with rents going thru the roof at a time builders are collapsing left right and centre

[Paint it Black]

Yep their rental shortage is big with the influx of temporary visa workers and lack of social housing. But at least there they are doing their best to help green shoot developments with lower interest rates and not Shock and Orr their way into a recession.

[SailorRob]

The increase rate is on a annual basis. I am not sure what you mean.

I agree it is a fact a large majority will be refixing at a higher rate than currently. Something I mentioned in a response to SR. As an example borrowers have been stressed tested at 7.25% if they took out borrowings Dec 2019 just before covid and before ridiculously low rates were offered. So my point is yes borrowers will need to make an adjustment when refixing in the next 9 months. But people who borrowed before covid should be able to manage. It isnt an exact science, banks will have different ways to stress test. Some applications were approved at the margin while some approved with plenty of servicing buffer. The quirk with mortgages is that the longer you have it , the less risk it becomes because people get payrises over time and adjust their consumption behaviour accordingly. Obviously it doesn't really apply for the last couple of years due to high inflation. That's why I made the point that there is concentrated risk from mid 2020 to late 2021. But banks do have ways to manage clients that are struggling. They will offer interest only in the view that things will improve over time. Historically NZ banks have had very low arrears rate. But of course this only works if people have jobs. From what I can gather, we are still ok on the employment front.

Sure the weather events/cyclone will have an impact in terms of inflationary and economic survival. That's where insurance comes into play. I think a few billion has or will be payed out. Whether a community decides to rebuild or relocate. That's a different matter and something the govt, insurers, banks are still discussing. It's hard to know. From what I seen with the Christchurch rebuild, insurance money created economic growth and attracted plenty workers to the area and put alot of pressure on rental cost/supply. This time around it will depend regarding potential managed retreat or rebuild.

I am not denying there isn't going to be a recession or potential stagflation down the line. IMO companies exposed to discretionary spending will fare less better. But I'm no macro or micro expert. I'm learning as I go. I just think that provided there is no higher surge in job losses, on the whole most borrowers will be ok.


Sound reasoning. I would add there is no such thing as a Macro expert, with my definition being someone who has a consistent track record of being able to foresee what is coming even in general terms.

Look at the RBNZ with all their staff and budget, could not forecast their way out of a paper bag - Fed even worse even with 1000 Phd's

So don't sell yourself short, your logic is sound.

[bull....]

chicken prices going up wont help inflation too ... might be some big price hikes soon see inghams getting slaughtered today in aus on a news report saying 1000's of there chicken dying from an infection

[Panda-NZ-]

Look at the RBNZ with all their staff and budget, could not forecast their way out of a paper bag - Fed even worse even with 1000 Phd's.

We could do with a chatGPT for economics .

[BlackPeter]

1) But how do you reduce consumption of essential services in hospitals etc?

Easy - same as in any other industry, and not different than our (or any other) government is doing it currently. Somebody has to pay for it and this somebody has a budget. If the prices go up faster than the budget, then services will be reduced. Easy. Not different from deciding not to fund a particular medication people need or from stopping essential surgeries because there are no doctors / nurses or medical technicians around we are happy to pay.

I know - it is cruel, but people always die because of limited medical funding. There is no unlimited medical funding, and Orr just reduced a bit the amount of money around. Obviously - we all could as well decide to pay higher taxes and use in future a smaller car, cut down on the champagne and on the boat trips, then we would not need to cut down on medical services.


2) Orr also says the current levels of unemployment is unsustainable. Apparently he doesnt want to raise the willingness of people to work as this creates more employment! Middle NZ is now being crushed between the snail speed non immigration ideologies of Labour and Orr's determination to have a recession by wacking the very people who can prevent it.

Actually - I heard him saying that the current level of employment is unsustainable. Opposite thing. You need to listen before you accuse him of saying what you wanted to hear instead of what he said;

[BlackPeter]

in aussie they opened the immigration floodgates to solve worker shortages and now they have a rental shortage with rents going thru the roof at a time builders are collapsing left right and centre

Oh dear - I guess everyone has to die one death. Obviously - we can just keep the workers out and let our companies crumble due to labour shortages and our old people die without support from carers. I hope you are volunteering, are you?

[Panda-NZ-]

Actually - I heard him saying that the current level of employment is unsustainable. Opposite thing. You need to listen before you accuse him of saying what you wanted to hear instead of what he said;

It's Adrian Orr, not the oracle. It's one man's opinion at the end of the day.

[Paint it Black]

Just hope BP you aren't the one wanting a stent in a hurry.
Yes I meant 'employment' pretty obvious if you kept reading.

[Tomtom]

Demographically we, like other OECD countries, have fewer workers and an increasing number or consumers proportionally. It's far from apparent to me that unemployment rates will increase substantially.

[Paint it Black]

Demographically we, like other OECD countries, have fewer workers and an increasing number or consumers proportionally. It's far from apparent to me that unemployment rates will increase substantially.
Exactly - Orr is banging his head against a brick wall trying to reduce the employment rate so as to reduce demand to reduce inflation. He should be trying to increase supply by making the country more productive. More supply equals more competition equals lower inflation. Instead he wants a recession.

[Tomtom]

I don't think RBNZ can increase productivity.

Judging by the years of productivity comission that have been dutifully ignored by successive governments, they have no interest in improving productivity either.

[SailorRob]

I don't think RBNZ can increase productivity.

Judging by the years of productivity comission that have been dutifully ignored by successive governments, they have no interest in improving productivity either.


Doesn't help that the commission is chaired by a devout communist who's primary goal is moving the means of production to the state.

[SailorRob]

They might not be 'rich' by your standards, but very few are I suspect. Let alone as savvy about money, investing and wealth creation as you purport to be. And that said, I suspect a lot don't really care too much about it either, in favour of a good life without concern for whether they can afford a latte or a holiday, or to renovate heir home. Most people I suspect lead a lot more simple lives, saving what they can, getting out of debt, building a legacy they can live on and pass on to their offspring.

Few I suspect really give a second thought about being rich and making all the right decisions every time at exactly the right time, whatever they are.


Couple of thoughts about this, also I don't think I have ever purported to be savvy about money, investing and wealth creation! Just hope to share any knowledge I have managed to accumulate and call out crap.

But what I was thinking is that if this is true about few giving a second thought about being rich, why then do we have a national obsession with LOTO and other forms of gambling and why when any credit is extended to most people do they grab it with both hands and immediately use it to command material resources.

I think that rather than few really giving a second thought to being rich, almost everyone gives a lot of thought to it, they just don't think the right way. And they don't want to be rich, to be rich, they want to be rich to spend money.

As they say - everyone wants to be a millionaire so they can spend a million dollars, which is the very opposite.

We live in a material world and virtually everyone would love to have a flash house, 2 flash cars, luxurious overseas holidays and the social status of wealth, so rather than few, I counter almost all.

[Paint it Black]

I don't think RBNZ can increase productivity.

Judging by the years of productivity comission that have been dutifully ignored by successive governments, they have no interest in improving productivity either.
You are right not directly but the care the RBNZ manages the OCR settings, while allowing for the lag and not springing big surprises, affects the confidence levels of private sector decision makers.
The government and RBNZ's main priority should be to provide no surprises stability and to provide a good investment environment to enable productivity to flourish. Instead there are too many surprises which smacks of Orr always wanting to impose himself over Robertson not necessarily for the countries good.

[SailorRob]

https://www.newstalkzb.co.nz/on-air/heather-du-plessis-allan-drive/audio/katlyn-parker-milford-asset-management-portfolio-manager-on-the-market-reactions-to-the-latest-ocr-increase/


Is this the same 'Milford Asset Management Expert' who had a large position in AT1s because the "yields were great" and it's a "disgrace" they were wiped out before the equity...

The actual full name of those bonds was something like "7% CET1 write down" implying they were gone as soon as CET1 went below 7%. In the name ffs.

[JBmurc]

Couple of thoughts about this, also I don't think I have ever purported to be savvy about money, investing and wealth creation! Just hope to share any knowledge I have managed to accumulate and call out crap.

But what I was thinking is that if this is true about few giving a second thought about being rich, why then do we have a national obsession with LOTO and other forms of gambling and why when any credit is extended to most people do they grab it with both hands and immediately use it to command material resources.

I think that rather than few really giving a second thought to being rich, almost everyone gives a lot of thought to it, they just don't think the right way. And they don't want to be rich, to be rich, they want to be rich to spend money.

As they say - everyone wants to be a millionaire so they can spend a million dollars, which is the very opposite.

We live in a material world and virtually everyone would love to have a flash house, 2 flash cars, luxurious overseas holidays and the social status of wealth, so rather than few, I counter almost all.

Yes.. worked with many guys that thought Lotto would be their path to riches .. every week the same numbers $20+ pw .... waste huge $$$ on going out food partying up holidays cars ... they always though wanted to invest in the sharemarket (as I would let them in on some of my trades ...) but they always had a major FEAR they would lose all their funds ??? funny as that was exactly what they were doing gambling

[Entrep]

We live in a material world and virtually everyone would love to have a flash house, 2 flash cars, luxurious overseas holidays and the social status of wealth, so rather than few, I counter almost all.

Social media, something I wish never existed, is the cause of a lot of this.

[Nor]

https://www.newstalkzb.co.nz/on-air/heather-du-plessis-allan-drive/audio/katlyn-parker-milford-asset-management-portfolio-manager-on-the-market-reactions-to-the-latest-ocr-increase/


Is this the same 'Milford Asset Management Expert' who had a large position in AT1s because the "yields were great" and it's a "disgrace" they were wiped out before the equity...

The actual full name of those bonds was something like "7% CET1 write down" implying they were gone as soon as CET1 went below 7%. In the name ffs.


"The actual full name of those bonds was something like "7% CET1 write down" implying they were gone as soon as CET1 went below 7%. In the name ffs."

At last! Some useful information from SailorRob.

[SailorRob]

"The actual full name of those bonds was something like "7% CET1 write down" implying they were gone as soon as CET1 went below 7%. In the name ffs."

At last! Some useful information from SailorRob.

Unlikley but perhaps one day we could say the same about you.

How about you repost what you consider your best contribution ever on Share trader?

Thanks in advance.

[Nor]

Unlikley but perhaps one day we could say the same about you.

How about you repost what you consider your best contribution ever on Share trader?

Thanks in advance.

Actually I think starting a thread about haircuts in nzdx, which, though rather bungling, was rather prescient in view of what happened with Credit Suisse collapse and wipeout of bonds before shares.
Which is why I find your post so useful, because it shows that the fear about all AT1 bonds is unjustified, because these Credit Suisse ones were specifically intended to wipeout in the circumstances. Doesn't necessarily apply to all.

Do you have internet out on the water?

[SailorRob]

Actually I think starting a thread about haircuts in nzdx, which, though rather bungling, was rather prescient in view of what happened with Credit Suisse collapse and wipeout of bonds before shares.
Which is why I find your post so useful, because it shows that the fear about all AT1 bonds is unjustified, because these Credit Suisse ones were specifically intended to wipeout in the circumstances. Doesn't necessarily apply to all.

Do you have internet out on the water?


For the last decade have just hotspotted from cellphone, raising phone to top of mast in a bag when necessary.

Now have 2 degrees wireless broadband which runs of 12 volts, is incredibly cheap and far better reception than a phone.

When circumnavigating NZ later this year I was going to get iridium and was looking forward to being offline for 3 Months with only TXT message capability and occasional weather data, but looks like starlink will provide a much better and cheaper option.

[Fortunecookie]

Social media, something I wish never existed, is the cause of a lot of this.

Envy is an unfortunate human trait.
Social media probably amplifies the keeping up with the Jones mentality.

I had a epiphany last month. I was standing on the lift in a shopping mall, observing people and it just hit me. Fashion is capitalism. Things are perceived as getting "old" so we are encouraged to replaced them. It's what keeps the wheel turning to feed demand. It was so obvious how come I only officially recognised then

I'm curious Is sharetrader defined as social media?.

[kiora]

For the last decade have just hotspotted from cellphone, raising phone to top of mast in a bag when necessary.

Now have 2 degrees wireless broadband which runs of 12 volts, is incredibly cheap and far better reception than a phone.

When circumnavigating NZ later this year I was going to get iridium and was looking forward to being offline for 3 Months with only TXT message capability and occasional weather data, but looks like starlink will provide a much better and cheaper option.

How does the 2 deg broadband modem ? or is it the phone you mean? to run on 12 volts ?
https://www.2degrees.nz/help/broadband-help/troubleshooting/wireless-broadband

[mike2020]

Envy is an unfortunate human trait.
Social media probably amplifies the keeping up with the Jones mentality.

I had a epiphany last month. I was standing on the lift in a shopping mall, observing people and it just hit me. Fashion is capitalism. Things are perceived as getting "old" so we are encouraged to replaced them. It's what keeps the wheel turning to feed demand. It was so obvious how come I only officially recognised then

I'm curious Is sharetrader defined as social media?.

If you go to wikipedia for the definition absolutely it is. If you go to your local facebook page and read some of the comments turning into a ****e show it will cement the idea for you. Search dog off lead to get you started.

[Daytr]

You are right not directly but the care the RBNZ manages the OCR settings, while allowing for the lag and not springing big surprises, affects the confidence levels of private sector decision makers.
The government and RBNZ's main priority should be to provide no surprises stability and to provide a good investment environment to enable productivity to flourish. Instead there are too many surprises which smacks of Orr always wanting to impose himself over Robertson not necessarily for the countries good.


1) But how do you reduce consumption of essential services in hospitals etc? 2) Orr also says the current levels of unemployment is unsustainable. Apparently he doesnt want to raise the willingness of people to work as this creates more employment! Middle NZ is now being crushed between the snail speed non immigration ideologies of Labour and Orr's determination to have a recession by wacking the very people who can prevent it.


Agree with you that currently it is a supply driven inflation issue ie too much money chasing too few goods ie worker supply. Very soon the money supply will also disappear from the private sector and we will be in an even deeper recession in a couple of months with the country going backwards for a year or more. Why couldn't Orr pause, let the lag of the existing measures take effect, and review the impact then take the next step as Australia has done or at the most apply another 25 pts as most pundits expected. I really wonder if Orr is on a bit of an ego trip trying to be the great inflation crusher at the expense of many stms companies now going to the wall. He quickly needs to publically front up with some searching questions and be informed his job is also on the line.

Yep, I think you are right, ego is playing a part in it. How on earth Orr thinks NZ can solve global inflation on its own is ridiculous. Even home grown inflation on things like food is again supply driven due to weather events. Does he think higher interest rates is going to improve the weather as well?
I typically agree with RBNZ independence but someone needs to call him out.
I see one or two of the bank economists are starting to.

[Fortunecookie]

If you go to wikipedia for the definition absolutely it is. If you go to your local facebook page and read some of the comments turning into a ****e show it will cement the idea for you. Search dog off lead to get you started.

Admittedly this forum is more tame compared to other sites which is good. I deleted FB a long time ago. Sure it has it's uses by letting people stay connected, but it's nice to break free from it. Coincidentally it was about the same time my mum sent me a friend request. The thought of her trying to send a private message, but really it ends up on everyones feed.

I was on different threads on Reddit. More of a US bias naturally. I think I did pick up some useful information. I remember in a car thread, one poster worked as a new car salesman. Basically letting everyone know how things were changing in terms like getting rid of sales incentives, how much buyers were borrowing (the US loves to borrow). Too me that's stuff is quite interesting. Because it's quite hard to get investment ideas when the economies are gloomy.

[SailorRob]

How does the 2 deg broadband modem ? or is it the phone you mean? to run on 12 volts ?
https://www.2degrees.nz/help/broadband-help/troubleshooting/wireless-broadband


No I mean the modem.

So most consumer electronics from laptops to phones to basically everything actually run on low voltage DC. The 240 AC is inverted to DC within the box that the plug is in or a intermediate box like on a laptop cable.

Most laptops run on 17 to 19 v DC for example, cellphones on 5v DC.

You can tell what the voltage is by looking at the 'box' it will say the input and output volatge.

The 2 Degrees modem, just so happens to be 12v DC so you just get another plug to suit the back of the modem from Jaycar for $2 and wire directly into the battery.

If however it was 20v DC or 5v DC, no problem you can easily step it up or down, in this case no need.

So you can take the Modem in your car just plug into Ciggy socket.

[SailorRob]

Yep, I think you are right, ego is playing a part in it. How on earth Orr thinks NZ can solve global inflation on its own is ridiculous. Even home grown inflation on things like food is again supply driven due to weather events. Does he think higher interest rates is going to improve the weather as well?
I typically agree with RBNZ independence but someone needs to call him out.
I see one or two of the bank economists are starting to.


Non tradeable inflation has been elevated for over a decade.

[Balance]

Yep, I think you are right, ego is playing a part in it. How on earth Orr thinks NZ can solve global inflation on its own is ridiculous. Even home grown inflation on things like food is again supply driven due to weather events. Does he think higher interest rates is going to improve the weather as well?
I typically agree with RBNZ independence but someone needs to call him out.
I see one or two of the bank economists are starting to.

https://www.rbnz.govt.nz/about-us/how-we-work/te-ao-maori---an-evolving-and-responsible-strategy

The beginning and the end of RBNZ under Adrian ‘woke’ Orr.

[see weed]

https://www.rbnz.govt.nz/about-us/how-we-work/te-ao-maori---an-evolving-and-responsible-strategy

The beginning and the end of RBNZ under Adrian ‘woke’ Orr.
This will put the cat among the pigeons, but I am only the messenger. From a person in a bar... Too much about the maori this and maori that, and not enough about the good for all NZers, and not enough about the indigenous people living here before maori arrived in this country. We are all immigrants to this country with equal rights. And this person told me to google 'Skeletons In The Cupboard'. Happy Easter everyone.

[Valuegrowth]

https://www.youtube.com/watch?v=sYnZJWdHRdY

[Curly]

This will put the cat among the pigeons, but I am only the messenger. From a person in a bar... Too much about the maori this and maori that, and not enough about the good for all NZers, and not enough about the indigenous people living here before maori arrived in this country. We are all immigrants to this country with equal rights. And this person told me to google 'Skeletons In The Cupboard'. Happy Easter everyone.

Could not agree more. Time to shout it out hard and strong.

[Aaron]

https://www.rbnz.govt.nz/about-us/how-we-work/te-ao-maori---an-evolving-and-responsible-strategy

The beginning and the end of RBNZ under Adrian ‘woke’ Orr.

The irony of it all was when he said Maori are disadvantaged as they do not have access to capital (much like all poor people) while he was boosting house prices to the moon with ridiculously loose policy guaranteeing Maori and other poor people would be worse off during his time as governor. "White man speaks with forked tongue" springs to mind. In Adrian's case it is probably more a lack of awareness than actual deceit.

In reality Adrian has probably done more to set Maori back than anyone else in recent history.

[SailorRob]

The irony of it all was when he said Maori are disadvantaged as they do not have access to capital (much like all poor people) while he was boosting house prices to the moon with ridiculously loose policy guaranteeing Maori and other poor people would be worse off during his time as governor. "White man speaks with forked tongue" springs to mind. In Adrian's case it is probably more a lack of awareness than actual deceit.

In reality Adrian has probably done more to set Maori back than anyone else in recent history.


Absolutely right 100%.

Always the unintended consequences, without fail.

[Recaster]

The irony of it all was when he said Maori are disadvantaged as they do not have access to capital (much like all poor people) while he was boosting house prices to the moon with ridiculously loose policy guaranteeing Maori and other poor people would be worse off during his time as governor. "White man speaks with forked tongue" springs to mind. In Adrian's case it is probably more a lack of awareness than actual deceit.

In reality Adrian has probably done more to set Maori back than anyone else in recent history.

Actually, he received the Polynesian Business Person of the Year award in 2001:

https://www.beehive.govt.nz/release/pacific-business-awards-inspiring-0

[Balance]

Actually, he received the Polynesian Business Person of the Year award in 2001:

https://www.beehive.govt.nz/release/pacific-business-awards-inspiring-0

So first he drove rates down to stop a recession and created inflation.

Now he is driving rates up to create a recession to get inflation under control.

Wonder how the Maoris feel about Woke Orr adopting their Maori ways to screw up the economy and the most vulnerable segments of the workforce and population.

https://www.stuff.co.nz/business/money/300849075/ocr-hike-do-74000-people-really-have-to-lose-their-jobs-to-save-economy

“If the Reserve Bank’s best solution to high inflation is to push 74,000 people into unemployment, it may be time for a new solution, one economist says.

“…. the most vulnerable parts of the community including low-income workers with weak employment security, and heavily indebted households, would bear the brunt of high interest rates while those who were better off benefitted from an increased return on their savings.”

[Paint it Black]

I hope he is planning a visit to the local food bank in a month's time to thank everyone for helping to reduce the employment rate to a sustainable level.

[Nor]

Seems to me that if you're giving away food free the demand is always going to be astronomical.

[Panda-NZ-]

I think the right to repair and even upgrade should be enforced by legislation if needed. It's better for the consumer and the environment (though not the companies of course).

If jobs aren't on the line because cars, phones, tractors etc are made by robots and AI then maybe people will consider it more.

[Fortunecookie]

In terms of employment most economies will be subject to the threat of reduced employment participation due to changing demographics. Which is a inflationary driver.

I do have a unpopular view point. Past and current immigration policies have been based on getting the skilled and educated into the country. However do we face a situation that most middle age to older workers occupy non physical/labour type work. Perhaps for reasons of being upskilled or physically not being able to.

So on a relative basis do we end up in a situation where it's actually manual/ physical workers that we need more than skilled workers as we have done in the past.

Of course this places pressure on housing, services, infrastructure etc. What is the lessor of the two evils so to speak. Less workers in certain industries that increases wage inflation or put price pressure on the housing etc. The argument has always been that and perhaps economic theory point to business investing in capital to improving productivity. I do wonder as a smaller national that we struggle with this argument.

The OCR is a blunt tool to address the inflation on the demand side. A few people have commented that supply side inflation needs to be addressed i.e labour, input cost, supply disruption, weather disruption (probably unavoidable).

Just a thought. Perhaps we will experience this more so in the future.

[t.rexjr]

and not enough about the indigenous people living here before maori arrived in this country.

Who are these pre maori indigenous people you speak of?

[mike2020]

Who are these pre maori indigenous people you speak of?

Daring to engage, you must be ready for work tomorrow.

Seems to be a common theme I'm hearing that the storm has passed and growth is on the horizon and we should all be prepared for it.

[nztx]

https://www.nzherald.co.nz/business/paul-glass-the-real-size-of-govt-debt-in-nz-stripped-of-accounting-tricks/T3YYKGRWQBANFO334PGJWJ4MRY/

Paul Glass: The real size of Govt debt in NZ, stripped of accounting tricks


Larger shovel needed - Grant ? ;)

to replace the previous one which was too small or worn out in just two terms ? ;)

Perhaps hitting solid bedrock is just a job too hard .. :)

[Balance]

https://www.nzherald.co.nz/business/paul-glass-the-real-size-of-govt-debt-in-nz-stripped-of-accounting-tricks/T3YYKGRWQBANFO334PGJWJ4MRY/

Paul Glass: The real size of Govt debt in NZ, stripped of accounting tricks


Larger shovel needed - Grant ? ;)

to replace the previous one which was too small or worn out in just two terms ? ;)

Perhaps hitting solid bedrock is just a job too hard .. :)

“Successive governments had driven NZ government debt down to less than 20 per cent of GDP. That prudent approach to debt all changed with the current government which, through its two terms, has spent taxpayer money at a rate unmatched in NZ’s history.

And unfortunately, looking at economic and social outcomes, so much of that expenditure, which has fuelled our rise in debt, appears to have been wasted.”

And there are those who want this addicted to wasteful spending government to have another term to then completely destroy NZ.

[Panda-NZ-]

Sir john raised it from 20% to 40%.

Plus the "alternative" has not invested enough in NZ super fund or kiwisaver.

[Balance]

Sir john raised it from 20% to 40%.

Plus the "alternative" has not invested enough in NZ super fund or kiwisaver.

Usual garbage from panda-nz, ignoramus Labour Party peasant, who wanted Ryman to load up with even more debt to do a share buyback.

[Ferg]

Who are these pre maori indigenous people you speak of?

There is plenty of archeological evidence for people living in NZ prior to the great Maori migration and lots of different angles on this. For example, around Poukawa amateur archaeologist Russell Price found evidence of human occupation that dates as far back as 2000 BC determined using volcanic ash layers and radio carbon dating. There are also Welsh stories of people banished to the other end of the earth for multiple generations who were dropped off in Westland and Hokianga. The Waitaha peoples came here from Easter Island before the Maori migration. Large skulls have been found that belonged to people who were around 7 foot tall. A large Celtic wishing stone was found in Bombay. Maori folklore talks of the ghostly people that were already here. There are genetic throwbacks with fair skinned Maori who have green eyes and red hair who have a slightly different genealogical lineage. There are multiple angles on this and possibly multiple different peoples that were here before the Maori migration and I suspect I have missed many of the other angles. Google is your friend - I recommend start with the Poukawa dig. I found it fascinating.

https://www.celticnz.co.nz/PoukawaRevisited/PoukawaPart1.html be sure to click 'continue' at the bottom of the first page and so on. I spoke with one of the people on the excavation team and he believes the write-up as presented was a fair representation of what happened.

[SailorRob]

There is plenty of archeological evidence for people living in NZ prior to the great Maori migration and lots of different angles on this. For example, around Poukawa amateur archaeologist Russell Price found evidence of human occupation that dates as far back as 2000 BC determined using volcanic ash layers and radio carbon dating. There are also Welsh stories of people banished to the other end of the earth for multiple generations who were dropped off in Westland and Hokianga. The Waitaha peoples came here from Easter Island before the Maori migration. Large skulls have been found that belonged to people who were around 7 foot tall. A large Celtic wishing stone was found in Bombay. Maori folklore talks of the ghostly people that were already here. There are genetic throwbacks with fair skinned Maori who have green eyes and red hair who have a slightly different genealogical lineage. There are multiple angles on this and possibly multiple different peoples that were here before the Maori migration and I suspect I have missed many of the other angles. Google is your friend - I recommend start with the Poukawa dig. I found it fascinating.

https://www.celticnz.co.nz/PoukawaRevisited/PoukawaPart1.html be sure to click 'continue' at the bottom of the first page and so on. I spoke with one of the people on the excavation team and he believes the write-up as presented was a fair representation of what happened.


The Tamil Bell. Article does not tell us that it was found by local Maori in the roots or base of a giant tree that was blown over.

https://en.wikipedia.org/wiki/Tamil_bell

[Aaron]

There is plenty of archeological evidence for people living in NZ prior to the great Maori migration and lots of different angles on this. For example, around Poukawa amateur archaeologist Russell Price found evidence of human occupation that dates as far back as 2000 BC determined using volcanic ash layers and radio carbon dating. There are also Welsh stories of people banished to the other end of the earth for multiple generations who were dropped off in Westland and Hokianga. The Waitaha peoples came here from Easter Island before the Maori migration. Large skulls have been found that belonged to people who were around 7 foot tall. A large Celtic wishing stone was found in Bombay. Maori folklore talks of the ghostly people that were already here. There are genetic throwbacks with fair skinned Maori who have green eyes and red hair who have a slightly different genealogical lineage. There are multiple angles on this and possibly multiple different peoples that were here before the Maori migration and I suspect I have missed many of the other angles. Google is your friend - I recommend start with the Poukawa dig. I found it fascinating.

https://www.celticnz.co.nz/PoukawaRevisited/PoukawaPart1.html be sure to click 'continue' at the bottom of the first page and so on. I spoke with one of the people on the excavation team and he believes the write-up as presented was a fair representation of what happened.

Sounds like bull*hit to me. But like any good conspiracy theory you would have to wade through too much s*it to get to the bottom of it all.

Abel Tasman and Captain Cook will be rolling in their graves.

[Ferg]

Sounds like bull*hit to me. But like any good conspiracy theory you would have to wade through too much s*it to get to the bottom of it all.

Abel Tasman and Captain Cook will be rolling in their graves.

That's your retort to someone who did 25 years of archeological digging in Poukawa? Educate yourself Aaron. Or remain blissfully ignorant. The choice is yours.

[Aaron]

That's your retort to someone who did 25 years of archeological digging in Poukawa? Educate yourself Aaron. Or remain blissfully ignorant. The choice is yours.

I had a skim read, interesting that it was not backed by professional archeologists. A part timer finding some Moa bones and making wild speculations does not a realistic theory make.

Don't worry I am not going to do concurrent 4 year degrees in archeology, anthropology and geology to debate you on this one.

Interesting that people going down these rabbit holes always seem to do a lot of reading, I suspect usually influenced by confirmation bias. Other than this one dig why have we not heard more about this "theory" before. And before you say it is suppressed by Maori remember this all came out when Maori still had little say in academia or the govt.

Not sure "Black Monday" is the appropriate thread. We should really head back to the other threads so share traders can go about their business while we solve the countries problems.

[SailorRob]

That's your retort to someone who did 25 years of archeological digging in Poukawa? Educate yourself Aaron. Or remain blissfully ignorant. The choice is yours.


Also odd there was 137 years between Tasman and Cook, but the Frogs were here in '69 as well and passed Cook off North Cape.

So no ship for 137 years and then 2 in 1769.

[Ferg]

Aaron - like McFadgen you skimmed it, clearly do not understand it, and you denigrate people who cannot defend themselves. Shameful. It was backed by the professionals of the day so your conclusions are incorrect and are misinformation.

[Aaron]

Aaron - like McFadgen you skimmed it, clearly do not understand it, and you denigrate people who cannot defend themselves. Shameful. It was backed by the professionals of the day so your conclusions are incorrect and are misinformation. Ignorance must be bliss - especially where you would rather toss around labels in a futile attempt to extinguish conversation and discovery of information....your reply is risible.

I don't know much about archeology but surprised I have not heard about something that sounds pretty significant and ground breaking before today.

Apologies for suggesting you are a conspiracy theorist, I will keep my eyes open for further confirmation of this theory.

[Ferg]

It was ground breaking at the time....in more ways than one. If you do more than skim reading then you would understand what happened next. Why is another story.

[Nor]

Used to read this sort of stuff in Truth. That's about the level of it. Welshmen dropping people off in Westland a thousand years ago. Rubbish.

[Ferg]

Educate yourself Nor. The information is waiting there for you on Poukawa Man per my link. The Welsh angle was merely one of many.

Aaron - also it's not a 'theory'. The facts are Russell Price found evidence of human occupation in the Poukawa area that dates back to the BC era.

[Habits]

Nz aborigines

[BlackPeter]

Educate yourself Nor. The information is waiting there for you on Poukawa Man per my link. The Welsh angle was merely one of many.

Aaron - also it's not a 'theory'. The facts are Russell Price found evidence of human occupation in the Poukawa area that dates back to the BC era.

Interesting ... I learned something today (so, it must be a "Golden Monday" :) );

And you are right - The people living here before are even captured in Maori legends and documented on a government website ... meaning - it must be true! We probably would violate the treaty if we question it.

https://teara.govt.nz/en/patupaiarehe/page-1

Just wondering whether the Maori had as well a treaty with the patupaiarehe before they made them extinct?

[Baa_Baa]

There is plenty of archeological evidence for people living in NZ prior to the great Maori migration and lots of different angles on this.

https://www.youtube.com/watch?v=qLRrUNuLC4Y
https://www.youtube.com/watch?v=iddMQlgFBzQ
https://www.youtube.com/watch?v=rf_inGOubEg
https://www.youtube.com/watch?v=BXmEPYdT9ek
https://www.youtube.com/watch?v=FKd6ru71ktY

[Getty]

Seems to me that if you're giving away food free the demand is always going to be astronomical.

Exactly, and it's creating a dynamo 'economy', which is feeding off non users.

[SailorRob]

https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/market-insights/guide-to-the-markets/mi-guide-to-the-markets-us.pdf

[Daytr]

Wow this Thread is way off topic! Not great.

[SailorRob]

Wow this Thread is way off topic! Not great.


Sport, the topic of this thread is/was that Monday the 24th August 2015 was going to be a down market day.

She's been off topic for a little while now.

Keep with the program.

[Nor]

Exactly, and it's creating a dynamo 'economy', which is feeding off non users.

A 50 gram pouch of rolling tobacco is $125. And every former smoker will know that tobacco is the priority.

[see weed]

Who are these pre maori indigenous people you speak of?
I only found out a couple of years ago. If you google 'Skeletons in the Cupboard' a good doco about and the premaori. They also found bones over 1000 years old up north. Another thing I heard that all the books in the library about premaori history were removed from the library in the 1960s. Another interesting topic you can google before they shut it down is 'The Kaimanawa Wall' Is it an ancient pyramid. Don't worry about Black Monday, we can get back to that tomorrow.

[Daytr]

I only found out a couple of years ago. If you google 'Skeletons in the Cupboard' a good doco about and the premaori. They also found bones over 1000 years old up north. Another thing I heard that all the books in the library about premaori history were removed from the library in the 1960s. Another interesting topic you can google before they shut it down is 'The Kaimanawa Wall' Is it an ancient pyramid. Don't worry about Black Monday, we can get back to that tomorrow.

Is this the doco you refer?
That skull looks so real! I'm a believer. 🙄

https://www.rnz.co.nz/national/programmes/mediawatch/audio/2018658273/seven-foot-tall-pre-maori-disappear-from-tvnz

[RTM]

Is this the doco you refer?
That skull looks so real! I'm a believer. 🙄

https://www.rnz.co.nz/national/programmes/mediawatch/audio/2018658273/seven-foot-tall-pre-maori-disappear-from-tvnz

https://www.tandfonline.com/doi/abs/10.1080/03036758.1979.10419412

This is worth reading as well.

[whatsup]

I only found out a couple of years ago. If you google 'Skeletons in the Cupboard' a good doco about and the premaori. They also found bones over 1000 years old up north. Another thing I heard that all the books in the library about premaori history were removed from the library in the 1960s. Another interesting topic you can google before they shut it down is 'The Kaimanawa Wall' Is it an ancient pyramid. Don't worry about Black Monday, we can get back to that tomorrow.

See weed, you should as should all N Zers read , The Musket Wars " really enlighting give a good history of Maori towards each other, should be compulsary reading in all N Z schools.

[Nor]

Don't suppose any of the Polynesian canoes who turned up on these shores, (and contributed to the indigenous makeup), turned around and went elsewhere because the land already had people.
Different standards apply to Europeans?

[causecelebre]

I remember when this was announced. NZ was the laughing stock of the financial world. Should cover the inflation cost of cigarettes .....

https://www.stuff.co.nz/business/131736319/thousands-more-receive-cost-of-living-payment-as-tax-returns-processed

[Ferg]

https://www.tandfonline.com/doi/abs/10.1080/03036758.1979.10419412

This is worth reading as well.
Unfortunately RTM the author of that book is/was the primary antagonist towards Russell Price. McFadgen thought he could further his own career and position by discrediting 25 years of work by Russell Price. At the time McFadgen was not an archeologist and the link I provided shows McFadgen did an unauthorised dig on private property over a weekend in a different location with some drinking buddies, and somehow this 'disproves' Russell Price's work complete with carbon dating with the DSIR...! Of course if you dig in a different location you will get a different result. McFadgen fails to grasp that absence of evidence is not evidence of absence. He is a disgrace to the scientific community.

Edit: if your moniker is your initials, then no offence intended if your surname is McFadgen!

[bull....]

International Monetary Fund presents gloomy outlook for New Zealand, global economy

https://www.newshub.co.nz/home/politics/2023/04/international-monetary-fund-presents-gloomy-outlook-for-new-zealand-global-economy.html

The International Monetary Fund's latest projections for New Zealand's economy make for grim reading, with Aotearoa expected to have weak growth, high inflation and rising unemployment over the coming two years.

:scared: timber .... where are the canoe's

[Balance]

International Monetary Fund presents gloomy outlook for New Zealand, global economy

https://www.newshub.co.nz/home/politics/2023/04/international-monetary-fund-presents-gloomy-outlook-for-new-zealand-global-economy.html

The International Monetary Fund's latest projections for New Zealand's economy make for grim reading, with Aotearoa expected to have weak growth, high inflation and rising unemployment over the coming two years.

:scared: timber .... where are the canoe's

Chill.

Exactly what Adrian Orr wants & what the RBNZ IS ENGINEERING with its rate hikes - it is happening and NZ will be all good in 2024.

[Bobdn]

NZD has taken a massive dump. Not sure they want that with oil above $80USD.

It's almost as though...the world doesnt want our goods and services and punters don't want to leave their money here.

[JBmurc]

NZD has taken a massive dump. Not sure they want that with oil above $80USD.

It's almost as though...the world doesnt want our goods and services and punters don't want to leave their money here.

Just imagine if we didn't have higher rates ... we would be in the 50's USD/NZD ... why would one want to invest in NZ with our present tight labour market woes , high costs bottom of the world away from the major importers of products we can farm .. guess this is why we continue to see our trade deficit widen

New Zealand has a net liability position as we have more liabilities with the rest of the world than we do assets...

NZ rockstar economy no more ..

which when you look at are young nation rich with high rainfall , minerals, renewable energy ,large economic zone ... it takes some really bonehead Govt's back to back to put our nation in its present situation ..

[BlackPeter]

NZD has taken a massive dump. Not sure they want that with oil above $80USD.

It's almost as though...the world doesnt want our goods and services and punters don't want to leave their money here.

No worries - we don't want foreign money! Been a couple of weeks ago listening to an "expert panel" discussion at Lincoln University (chaired by Kim Hills) - and the outcome was pretty much that the experts prefer to have less tourism in NZ. They said that we are just sick and tired to pick up after them and provide toilets and infrastructure - and flying to NZ is anyway not environmentally friendly. Better tell the tourists to stay away and spend their money somewhere else.

Obviously - planes still would need to fly, given that all the panel experts loved to travel ... but this is a different subject. Ah yes, and they didn't worry either who is paying for their (two academical staff, the CEO of Christchurch airport and the iwi rep - paid by Selwyn District council) salaries if NZ runs out of money thanks to their consensus.

[Bobdn]

Yes, indeed. Tourism, said successive governments, was always NZ's second biggest foreign exchange earner. Hugely important apparently and then all of a sudden...it didn't matter. No wonder our economic outlook is bleak.

[bull....]

Fed expects banking crisis to cause a recession this year, minutes show
https://www.cnbc.com/2023/04/12/fed-expects-banking-crisis-to-cause-a-recession-this-year-minutes-show.html

[bull....]

more chiefs lol ....

Three Waters reforms reworked into 10 regionally-led entities in shake-up
https://www.newshub.co.nz/home/politics/2023/04/three-waters-reforms-reworked-into-10-regionally-led-entities-in-shake-up.html

[causecelebre]

more chiefs lol ....

Three Waters reforms reworked into 10 regionally-led entities in shake-up


https://www.newshub.co.nz/home/politics/2023/04/three-waters-reforms-reworked-into-10-regionally-led-entities-in-shake-up.html

Different lipstick, same pig

[Nor]

I think that anyone who worries about the details of where their water comes from, or goes to, must have some sort of vested interest in the matter. A job, patronage, contracts etc.
But I don't think it should be a stalking horse for maori this, that and etc. There is far far too much of that as it is.

[peat]

I think that anyone who worries about the details of where their water comes from, or goes to, must have some sort of vested interest in the matter. A job, patronage, contracts etc.
But I don't think it should be a stalking horse for maori this, that and etc. There is far far too much of that as it is.

I just like to turn on the tap and have drinkable water
and flush my No 2's far far away and hope they are dealt with humanely.

Is that a vested interest?

[SailorRob]

https://www.downtoearth.kiwi/post/the-imf-says-nz-has-the-worst-current-account-deficit-out-of-all-40-advanced-nations-in-the-world

[Nor]

I just like to turn on the tap and have drinkable water
and flush my No 2's far far away and hope they are dealt with humanely.

Is that a vested interest?

No, so why are you up in arms about it?

[SailorRob]

Our old friend Hussman reminded us last night that - Valuations are the main driver of long-term returns, but the main driver of market returns over shorter horizons is the attitude of investors toward risk],

And many are now a lot more risk adverse and won't be buying if down days are here for a while. Need keen buyers to start a turn around if we are indeed in a big correction.

Ties in with what Mr P said in those posts KW linked to.


What is Hussmans fund return over the last TWENTY years?

[SailorRob]

NZD has taken a massive dump. Not sure they want that with oil above $80USD.

It's almost as though...the world doesnt want our goods and services and punters don't want to leave their money here.

Care to comment on the massive gain NZD posted overnight?

[Bobdn]

"The dollar fell and the euro hit a one-year high against the U.S. currency on Thursday after producer prices fell last month". CNBC

[bull....]

yep all us dollar related

anyway i see fisher funds dropping all performance fee's on there funds

Fisher Funds to jettison feeshttps://www.goodreturns.co.nz/article/976521586/fisher-funds-to-jettison-fees.html

guess they figure they wont be able to beat there benchmark going forward ?

[SailorRob]

yep all us dollar related

anyway i see fisher funds dropping all performance fee's on there funds

Fisher Funds to jettison feeshttps://www.goodreturns.co.nz/article/976521586/fisher-funds-to-jettison-fees.html

guess they figure they wont be able to beat there benchmark going forward ?

They never have. I analysed their 7 main funds over 10 years, so 70 years combined and they outperformed only 6 years. Every fund had underperformed the market over a decade.

Funny thing is that from here it should be much easier to outperform over the next cycle.

[bull....]

They never have. I analysed their 7 main funds over 10 years, so 70 years combined and they outperformed only 6 years. Every fund had underperformed the market over a decade.

Funny thing is that from here it should be much easier to outperform over the next cycle.

wonderful fee generators there funds were

[SailorRob]

Strongly recommend watching Buffetts recent CNBC interview.

Virtually nobody will outperform Berkshire over the next decade. Not meaning no other companies, I mean investors.

Bought (what some refer to as brought) the Japanese companies at a 14% yield and borrowed at 0.5 to do it.

[whatsup]

wonderful fee generators there funds were

Why should they be paid twice for doing their job !!

[Fortunecookie]

Strongly recommend watching Buffetts recent CNBC interview.

Virtually nobody will outperform Berkshire over the next decade. Not meaning no other companies, I mean investors.

Bought (what some refer to as brought) the Japanese companies at a 14% yield and borrowed at 0.5 to do it.

I agree Berkshire or Buffett will be hard to beat. We try to imitate him(likely in vain) by trying to find undervalued companies and attempt to replicate his temperament. But I think there is one area very few can imitate.

It's when he buys into a company and its get him on a seat at the board. It has been mentioned many times that he doesn't want to control the CEOs actions or day to day operations of the company. But I guess think about the dynamics. You have Buffett on the board that is considered by many people as the greatest capital allocator. He stands right beside the CEO ready and waiting. So you can only imagine the discussions between him and the CEOs. He wont be forcefully, he will simply nudge him/her in the right direction. We can try to be every else that Buffett is great at, but this aspect is difficult to replicate. Undervalued is in the current/past context and we do our best to think it will move towards intrinsic. In alot of cases he has a tangible influence on the companys future. Perhaps that is why is called the oracle (he makes his own miracles) I think he has denied in the past this aspect. But I think it's all part of his humility.

Capital allocation is the downfall of many CEOs, companies and ultimately shareholders. To have Buffett on the board. That can never be underestimated.

Obviously you can tell I'm a Buffett fan.

[percy]

Another;The Secret Broker;
\https://stockhead.cmail20.com/t/d-l-zkhkkhd-yupddjlly-u/

[Recaster]

Another;The Secret Broker;
\https://stockhead.cmail20.com/t/d-l-zkhkkhd-yupddjlly-u/

Excellent article. Thanks Percy.

[Onemootpoint]

I agree Berkshire or Buffett will be hard to beat. We try to imitate him(likely in vain) by trying to find undervalued companies and attempt to replicate his temperament. But I think there is one area very few can imitate.

It's when he buys into a company and its get him on a seat at the board. It has been mentioned many times that he doesn't want to control the CEOs actions or day to day operations of the company. But I guess think about the dynamics. You have Buffett on the board that is considered by many people as the greatest capital allocator. He stands right beside the CEO ready and waiting. So you can only imagine the discussions between him and the CEOs. He wont be forcefully, he will simply nudge him/her in the right direction. We can try to be every else that Buffett is great at, but this aspect is difficult to replicate. Undervalued is in the current/past context and we do our best to think it will move towards intrinsic. In alot of cases he has a tangible influence on the companys future. Perhaps that is why is called the oracle (he makes his own miracles) I think he has denied in the past this aspect. But I think it's all part of his humility.

Capital allocation is the downfall of many CEOs, companies and ultimately shareholders. To have Buffett on the board. That can never be underestimated.

Obviously you can tell I'm a Buffett fan.

He definitely has pulling power, and a lot of influence.

His post Japan trip interview on CNBC was interesting.

[SailorRob]

I agree Berkshire or Buffett will be hard to beat. We try to imitate him(likely in vain) by trying to find undervalued companies and attempt to replicate his temperament. But I think there is one area very few can imitate.

It's when he buys into a company and its get him on a seat at the board. It has been mentioned many times that he doesn't want to control the CEOs actions or day to day operations of the company. But I guess think about the dynamics. You have Buffett on the board that is considered by many people as the greatest capital allocator. He stands right beside the CEO ready and waiting. So you can only imagine the discussions between him and the CEOs. He wont be forcefully, he will simply nudge him/her in the right direction. We can try to be every else that Buffett is great at, but this aspect is difficult to replicate. Undervalued is in the current/past context and we do our best to think it will move towards intrinsic. In alot of cases he has a tangible influence on the companys future. Perhaps that is why is called the oracle (he makes his own miracles) I think he has denied in the past this aspect. But I think it's all part of his humility.

Capital allocation is the downfall of many CEOs, companies and ultimately shareholders. To have Buffett on the board. That can never be underestimated.

Obviously you can tell I'm a Buffett fan.


Good post and very interesting you say this now as the CNBC interview alludes to what you have highlighted but in the context of the fully owned companies. Buffett and Greg Able both said that Greg is much more forceful than Warren and will tolerate less deviation from perfection.

What you have highlighted is true in the public equities and more so in the private.

My comment regarding difficult to beat is in part due to the fact that Berkshire has grown EPS at a far higher rate than the market over the last 10 years and is valued much lower currently. 2 very powerful forces. They have a virtually unlimited runway to reinvest all earnings at 10% + and augment that with free float as well as incredibly low rate debt such as the Japan issues.

[SailorRob]

Another;The Secret Broker;
\https://stockhead.cmail20.com/t/d-l-zkhkkhd-yupddjlly-u/

Great article percy,

I'll add to it with this;

https://open.substack.com/pub/aucklandpropertyrealitycheck/p/renting-vs-buying-property-in-new?r=b4gmj&utm_campaign=post&utm_medium=email

His numbers are off, maintenance WAY higher and S&P500 returns 10% not 8% so his argument is dramatically understated.

Everyone thinks property makes them rich but the truth is the very opposite.

It's what will stop them from ever being rich.

[Bobdn]

S&P real rate of return is 6.7 per cent. From J Siegel, Stocks for the Long Run, the most recent edition. So that's 6.7 per cent after inflation. Add inflation and one gets the 10 per cent or close enough.

[SailorRob]

S&P real rate of return is 6.7 per cent. From J Siegel, Stocks for the Long Run, the most recent edition. So that's 6.7 per cent after inflation. Add inflation and one gets the 10 per cent or close enough.


Yep that's right.

Compounding at at 6.7% real over your lifetime will produce astonishing results.

[Fortunecookie]

Good post and very interesting you say this now as the CNBC interview alludes to what you have highlighted but in the context of the fully owned companies. Buffett and Greg Able both said that Greg is much more forceful than Warren and will tolerate less deviation from perfection.

What you have highlighted is true in the public equities and more so in the private.

My comment regarding difficult to beat is in part due to the fact that Berkshire has grown EPS at a far higher rate than the market over the last 10 years and is valued much lower currently. 2 very powerful forces. They have a virtually unlimited runway to reinvest all earnings at 10% + and augment that with free float as well as incredibly low rate debt such as the Japan issues.

I see what you mean. Berkshire is well positioned. They seem to have plenty of cash to invest at any time, purely because it just generates cash. I am not familiar with Abel I have to admit. He seems very successful in his own right and he has been part of the Berkshire ecosystem. I do get the feeling Buffett has always been stern in decision making, but never liked confrontation. So this direct approach from Abel is an interesting contrast. Knowing Buffett he would have done a thorough job sussing him out for the role.

Its interesting they are buying into Japan banks. It reminds me of the the Chandlers brothers from Hamilton. At one time they bought into a Japan Bank. They ran a very concentrated portfolio and achieved a excellent investment record. I don't think too many people in this country know about them. But they are right up with the great investors. I think 30% plus p.a over 20 years.

[bull....]

6.7% over the long run of US markets might be right but for most people that is not the case. most people investing horizon is a limited amount of time therefore returns depend on when you start and when you end and how index's perform within that time period
as the article i posted on this thread mths ago proved for most people 6.7% is not reality

[SailorRob]

6.7% over the long run of US markets might be right but for most people that is not the case. most people investing horizon is a limited amount of time therefore returns depend on when you start and when you end and how index's perform within that time period
as the article i posted on this thread mths ago proved for most people 6.7% is not reality

Not even close no. I think nominal around 2% on average according to JP Morgan, so in real terms most lose money over time.

[Entrep]

Interesting articles and discussion.

So, sell all rental properties and buy BRK-B?

Also, those examples account for the inherit leverage in property correct? It seemed like they did from the wording.

[SailorRob]

Interesting articles and discussion.

So, sell all rental properties and buy BRK-B?

Also, those examples account for the inherit leverage in property correct? It seemed like they did from the wording.


Not really, even if you didn't use any leverage at all you'd still get awful results. Leverage will help only if the rate you're borrowing at is lower than the rate of inflation over a long period of time. *edit, or of course if you time it right buy 2016 sell 2021 etc...

If you own rental property then have a look at your price to revenue and ask what margins you are going to achieve and compare to say Google or Apple.

If as per his example you have a million dollar property returning GROSS 800/w that's a Price to Sales of 24 times.

More expensive than just about any business in the world. Now even if your margins are higher than Apple and Google you're going to have a pretty awful result.

Berkshire Price to sales is less than 3 times.

A property returning 800/w with a 50% Net margin (impossibly high) is worth $260,000 if you want a 8% return. It's that simple.

In aggregate investors cannot earn more than the 800/w less all expenses as that is all the cash generated.

[SailorRob]

I see what you mean. Berkshire is well positioned. They seem to have plenty of cash to invest at any time, purely because it just generates cash. I am not familiar with Abel I have to admit. He seems very successful in his own right and he has been part of the Berkshire ecosystem. I do get the feeling Buffett has always been stern in decision making, but never liked confrontation. So this direct approach from Abel is an interesting contrast. Knowing Buffett he would have done a thorough job sussing him out for the role.

Its interesting they are buying into Japan banks. It reminds me of the the Chandlers brothers from Hamilton. At one time they bought into a Japan Bank. They ran a very concentrated portfolio and achieved a excellent investment record. I don't think too many people in this country know about them. But they are right up with the great investors. I think 30% plus p.a over 20 years.


Berkshire is not buying into any Japanese banks.

Chandler Brothers is one of the greatest investing stories of all time, completely unknown.

Phenomenal article - https://www.institutionalinvestor.com/article/b150nr9k08bfxb/secrets-of-sovereign

The only investor I have ever heard of that is better than the Chandlers is Bull.

[winner69]

Care to comment on the massive gain NZD posted overnight?

Care to comment on the “massive” fall NZD posted overnight, against Most major currencies as well

[SailorRob]

Care to comment on the “massive” fall NZD posted overnight, against Most major currencies as well


No comment as I have no idea.

My original care to comment question was in response to someone who posted about a 'massive' move down in the NZD, which I could hardly even see, and a day or two later there was a massive gain that went without commentary.

My point being that day to day movements in the NZD USD cross are pointless pontificating about.

I have no idea how the Kiwi is above .55 US but there you go. I don't hold very much of it at all.

[Fortunecookie]

Berkshire is not buying into any Japanese banks.

Chandler Brothers is one of the greatest investing stories of all time, completely unknown.

Phenomenal article - https://www.institutionalinvestor.com/article/b150nr9k08bfxb/secrets-of-sovereign

The only investor I have ever heard of that is better than the Chandlers is Bull.

Apologies SR, thanks for the correction. Trading houses not banks. I wonder if they are the same as keiretsu.

I read the article a while back. It is a very good read from what I remember. The only other write up I could find was through twitter, but I forgot who posted it. It's hard to find information on these brothers which is unfortunate.

I am starting to hear more about Bull's awesome track record. Doesn't it make him a goat.

[bull....]

Berkshire is not buying into any Japanese banks.

Chandler Brothers is one of the greatest investing stories of all time, completely unknown.

Phenomenal article - https://www.institutionalinvestor.com/article/b150nr9k08bfxb/secrets-of-sovereign

The only investor I have ever heard of that is better than the Chandlers is Bull.

they have done very well , i couldnt see any per yr gains analysis or more in depth analysis on how they did it but my rough guess was if you started with 10m to get 5 billion you would need at least 35% - 36% per annum compounded over 20 yrs
less return needed per annum if they contributed to there fund along the way with div re-investment etc etc .
so on face value they are a way better investor than me , + i started with quite a few zero's less

[winner69]

Guy on tv says s&p500 heading to 4800

[bull....]

adding to the story about property investment being crap esp old homes

Landlord interest payments jump up by thousands due to new tax rules

https://www.stuff.co.nz/business/property/131738452/landlord-interest-payments-jump-up-by-thousands-due-to-new-tax-rules

[SailorRob]

they have done very well , i couldnt see any per yr gains analysis or more in depth analysis on how they did it but my rough guess was if you started with 10m to get 5 billion you would need at least 35% - 36% per annum compounded over 20 yrs
less return needed per annum if they contributed to there fund along the way with div re-investment etc etc .
so on face value they are a way better investor than me , + i started with quite a few zero's less


Someone who compounded at 36.44% for 20 years is 'on face value' a way better investor than bull.

Thanks for clearing that up mate, we were wondering if they were on face value any better than you.

[SailorRob]

I am starting to hear more about Bull's awesome track record. Doesn't it make him a goat.

Indeed.

He can make money off any chart, anywhere any time.

As he runs 12 Screens and has 4 charts per screen, and with some markets being open 24/7 these days...

His actual performance is only limited by one single thing.

The 60 hours a week he spends busting his gut in his ordinary job.

But even while working 60 hours a week he has still destroyed the market over the last 10 years, he's still getting his figures together but will soon let us know what they were.

[SailorRob]

Interesting articles and discussion.

So, sell all rental properties and buy BRK-B?

Also, those examples account for the inherit leverage in property correct? It seemed like they did from the wording.


So if you sold a rental and got 800k NZD you could buy a share of BRK.A.

That share would give you (roughly) $260 dollars a day in REAL income after all expenses. Or nearly 100k/pa.

in 10 years time, that same share will likely be giving you $700 a day or 250k per year.

I doubt that an average house will fetch $9600 in rent a week in 10 years time.


If a loaf of bread inflates at the same rate as historically, this could buy you 46,296 loaves of bread a year while keeping capital intact.

[Bobdn]

Impossible to know how a single share will do in 10 years time.

Trying to work out the value of a company and future returns is near impossible (no, it is impossible). Graham favoured indexing by the end of his life, by the way.

Anyway, sorry for interrupting, I'll hand the thread back to you.

[SailorRob]

Impossible to know how a single share will do in 10 years time.

Trying to work out the value of a company and returns is near impossible. Graham favoured indexing by the end of his life, by the way.

Anyway, sorry for interrupting, I'll hand the thread back to you.

For you this is 100% correct.

Give me a quick rundown on what Berkshire owns, just the first 300 or so companies and what avenues that they have to reinvest capital at a 10% ROE and how certain this is, particularly for the larger ones.

Then give me a rough indication of the ROE of the S&P 500 over the last 100 years or so.

And give us more detail on Graham towards the end of his life, what did he do with his capital exactly and how do you know?

And then finally give me a few paragraphs on the difference between indexing or owning many hundreds of different companies vis a conglomerate structure.


Thanks Bob

[SailorRob]

Impossible to know how a single share will do in 10 years time.

Trying to work out the value of a company and future returns is near impossible (no, it is impossible). Graham favoured indexing by the end of his life, by the way.

Anyway, sorry for interrupting, I'll hand the thread back to you.


Every company you own is a single company.

So if it's impossible to know how any one of them will do...

Then by definition it's impossible to know how they ALL will do.

[Bobdn]

Sounds like an interesting Sunday morning assignment or I could just make another cup of instant coffee and look out to sea. I'm putting the kettle on...

[SailorRob]

Trying to work out the value of a company and future returns is near impossible (no, it is impossible).

And this folks is how we can make money in the equity market.

Because other investors exist like this.

You are competing with people who think valuation is impossible.

And I am glad for it.

[SailorRob]

Sounds like an interesting Sunday morning assignment or I could just make another cup of instant coffee and look out to sea. I'm putting the kettle on...

It would change your life more dramatically than any other single decision you've ever or will ever make.

But you will just do nothing as you say.

I'd suggest a few thousand hours though, not just a morning.

[BlackPeter]

Every company you own is a single company.

So if it's impossible to know how any one of them will do...

Then by definition it's impossible to know how they ALL will do.

Your conclusion might be correct, the evidence you are providing however is not. Have a look into physics.

Newton demonstrated that it is quite possible to predict the behaviour of a large number of atoms (e.g. in his famous apple falling from a tree).

Heisenberg however demonstrated that it is impossible to predict the behaviour (or even the location) of any one single atom (Heisenberg's famous fuzziness theorie).

Sometimes it is quite possible to predict the behaviour of a large number of elements, while it might not be possible to predict the behaviour of any individual element. Statistical predictions do use this feature.

[SailorRob]

Your conclusion might be correct, the evidence you are providing however is not. Have a look into physics.

Newton demonstrated that it is quite possible to predict the behaviour of a large number of atoms (e.g. in his famous apple falling from a tree).

Heisenberg however demonstrated that it is impossible to predict the behaviour (or even the location) of any one single atom (Heisenberg's famous fuzziness theorie).

Sometimes it is quite possible to predict the behaviour of a large number of elements, while it might not be possible to predict the behaviour of any individual element. Statistical predictions do use this feature.


Technically correct but not that relevant.

I bet a lot of people did not expect the behaviour that the Japanese or British or NZ stockmarkets as a whole provided over the last 30 years!

But yes, Berkshire is exactly that, a large number of elements that can be reasonably well predicted.

[bull....]

Food prices were up 12.1% in the year to March 2023 - which is the highest annual rate of increase seen since 1989; Kiwis 'crushed at the checkout', National's Willis says

https://www.interest.co.nz/personal-finance/120758/food-prices-were-121-year-march-2023-which-highest-annual-rate-increase

inflation figure's released this week too

[Valuegrowth]

https://www.theguardian.com/commentisfree/2023/mar/12/the-guardian-view-on-corporate-greed-its-causing-inflation

[ValueNZ]

https://www.theguardian.com/commentisfree/2023/mar/12/the-guardian-view-on-corporate-greed-its-causing-inflation
That begs the question, when have firms ever not been greedy? Is the article suggesting that somehow firms were less profit motivated than previously? How is collusion across all sectors possible, after all it would only take one company to undercut prices in their given sector to bring the price back down in their given market?

Perhaps there is a more logical answer to inflation, like an expansion of the money supply?

[Valuegrowth]

https://www.marketwatch.com/story/the-fed-has-it-wrong-corporate-greed-is-to-blame-for-inflation-not-rising-wages-socgen-analyst-says-e1236056

[Valuegrowth]

https://www.marketwatch.com/story/the-fed-has-it-wrong-corporate-greed-is-to-blame-for-inflation-not-rising-wages-socgen-analyst-says-e1236056
That begs the question, when have firms ever not been greedy? Is the article suggesting that somehow firms were less profit motivated than previously? How is collusion across all sectors possible, after all it would only take one company to undercut prices in their given sector to bring the price back down in their given market?

Perhaps there is a more logical answer to inflation, like an expansion of the money supply?

[ValueNZ]

https://www.marketwatch.com/story/the-fed-has-it-wrong-corporate-greed-is-to-blame-for-inflation-not-rising-wages-socgen-analyst-says-e1236056
"Corporate greed" has always existed. I ask you if times of inflation are a result of corporations becoming more greedy, then are times of deflation a result of corporations becoming less greedy? It is a simple fact that firms in a majority of cases operate in competitive markets, where they must price their goods/services competitively with each other. I find the idea of firms colluding at such enormous scales absurd, but even if some firms were able to collude to change the market price it would just result in more firms entering the market and therefore the price falling back to its natural equilibrium.

[Valuegrowth]

That begs the question, when have firms ever not been greedy? Is the article suggesting that somehow firms were less profit motivated than previously? How is collusion across all sectors possible, after all it would only take one company to undercut prices in their given sector to bring the price back down in their given market?

Perhaps there is a more logical answer to inflation, like an expansion of the money supply? I found very interesting article.https://www.rba.gov.au/education/resources/explainers/causes-of-inflation.html

[ValueNZ]

I found very interesting article.https://www.rba.gov.au/education/resources/explainers/causes-of-inflation.html
That's weird theres no section about corporations becoming more greedy on that article. Nor is there a section about collusion by all firms

[bull....]

NZ economy: Recession tipped to be twice as deep as earlier forecasts - ASB


https://www.nzherald.co.nz/nz/nz-economy-recession-tipped-to-be-twice-as-deep-as-earlier-forecasts-asb/NXNT25D7LZB7NMQRQM7V247EQA/




Mortgage demand drops as property market slumps further


https://www.nzherald.co.nz/business/mortgage-demand-drops-as-property-market-slumps-further/CE3ZWQR2XJHH5NBDN4ALMWOICQ/

the above obviously has implications for certain sectors and stocks in time


anyway i see US markets still range trading .... last mth. volitility prop pick up on the break

[Daytr]

Interesting with all this talk of recession that the NZX50 is up around 11% ytd. I had my Kiwi Saver in an aggressive fund after last year's sell off which has done pretty well. I have just switched it to cash.

[BlackPeter]

Interesting with all this talk of recession that the NZX50 is up around 11% ytd. I had my Kiwi Saver in an aggressive fund after last year's sell off which has done pretty well. I have just switched it to cash.

Trying to beat the "Sell it in May"- rush ;) ?

[Poet]

Interesting with all this talk of recession that the NZX50 is up around 11% ytd. I had my Kiwi Saver in an aggressive fund after last year's sell off which has done pretty well. I have just switched it to cash.

Hmmm, I see NZX50 is up 3.1% year to date not 11%
And the NZX50C which doesnt compound dividends is up under 2% YTD
Or am I misunderstanding the numbers?

[SailorRob]

Hmmm, I see NZX50 is up 3.1% year to date not 11%
And the NZX50C which doesnt compound dividends is up under 2% YTD
Or am I misunderstanding the numbers?


No you're not.

You are correct. Daytr is a really interesting character, trading off his phone he may need a bigger screen as his figures are way off.

He has provided a lot of misinformation and told us that he's a former pro with 20 years experience.

[SailorRob]

Interesting with all this talk of recession that the NZX50 is up around 11% ytd. I had my Kiwi Saver in an aggressive fund after last year's sell off which has done pretty well. I have just switched it to cash.


Dude get your figures right, or even within ballpark.

[Daytr]

Hmmm, I see NZX50 is up 3.1% year to date not 11%
And the NZX50C which doesnt compound dividends is up under 2% YTD
Or am I misunderstanding the numbers?
Sorry quite correct. My figure was for the last six months not year to date.

[bull....]

Sorry quite correct. My figure was for the last six months not year to date.

yep if you timed it right you have done well with your 11% ... could almost forget the rest of the yr and go on holiday with that return

[SailorRob]

yep if you timed it right you have done well with your 11% ... could almost forget the rest of the yr and go on holiday with that return


So if I was sitting on 14.5% YTD, should I go to cash and forget the rest of the year?

[BlackPeter]

So if I was sitting on 14.5% YTD, should I go to cash and forget the rest of the year?

The answer to this question clearly is dependant on whether SP's will go up or down ... and nobody can tell you that in advance.

[bull....]

So if I was sitting on 14.5% YTD, should I go to cash and forget the rest of the year?

possibily depends on the market conditions and how good you think you are to replicate it again next yr ( which i know you think timing is rubbish ) but did you know this tactic is employed by traders in institutions sometimes to lock in there bonus lol

[SailorRob]

The answer to this question clearly is dependant on whether SP's will go up or down ... and nobody can tell you that in advance.


Exactly. But what we can say is that over the next 10 years they should rise with earnings and distribute some as cash or buybacks.

Where cash will always be negative real rate.

[SailorRob]

possibily depends on the market conditions and how good you think you are to replicate it again next yr ( which i know you think timing is rubbish ) but did you know this tactic is employed by traders in institutions sometimes to lock in there bonus lol


I know this tactic is used but I also know that nobody, or VERY few have been successful at employing it to beat the market over long periods.

[SailorRob]

Even Daytr 6 Month figures are well off the mark...

9.5%...

Not 11%.

And that's the GROSS index.

[Daytr]

yep if you timed it right you have done well with your 11% ... could almost forget the rest of the yr and go on holiday with that return
My point is the NZX 50 has risen significantly in the last six months against the economic rhetoric and is now banging up against previous levels that it fell from, so I have moved to cash, as I don't see too much more upside & would rather bank my gains.

[SailorRob]

My point is the NZX 50 has risen significantly in the last six months against the economic rhetoric and is now banging up against previous levels that it fell from, so I have moved to cash, as I don't see too much more upside & would rather bank my gains.


NZ market is exactly where it was 4 years ago...

[777]

NZ market is exactly where it was 4 years ago...

Really.

https://finance.yahoo.com/quote/%5ENZ50?p=%5ENZ50

[SailorRob]

Really.

https://finance.yahoo.com/quote/%5ENZ50?p=%5ENZ50


Yes really mate.

I'm not talking about some ridiculous fake Gross index.

I'm talking about the NZX 50 market... the same way every other market is measured...

Education is key, no excuse to be ignorant these days.

Impossible for the index you think is the index to ever really go down for long...

https://milfordasset.com/insights/gross-index-will-beat-capital-one

[Bobdn]

Interesting article. I had no idea about the index's history.

[Baa_Baa]

NZ market is exactly where it was 4 years ago...

The NZ50 Capital market is not 'exactly' where it was in April 2019, in fact it's up 9.78%. But I think we get your point, four years index capital gains of about 10% isn't much, it's only up 10% from the recent lows, but at least there is an upwards trend since June last year. It's been very volatile in those four years, just like most international capital markets.

[SailorRob]

The NZ50 Capital market is not 'exactly' where it was in April 2019, in fact it's up 9.78%. But I think we get your point, four years index capital gains of about 10% isn't much, it's only up 10% from the recent lows, but at least there is an upwards trend since June last year. It's been very volatile in those four years, just like most international capital markets.


Correct, I was referring to the 11th of July 2019. As you point out that's not 4 years ago, my exactly where it is now meant exactly where it is now but my 4 years was not meant as exact.

So we can say 4 years of capital gains of 10%.

Or we can say 1378 days or 3.8 years of 0% gain.

I should have said the NZ market is exactly where it was nearly 4 years ago!

[SailorRob]

Interesting article. I had no idea about the index's history.


Yeah it's a total con job as a lot of things in finance are.

If comparing to overseas indexes like the S&P500 you need to use the NZ capital index.

The one that recovered from 1987 in 2018...

[Bjauck]

The NZ50 Capital market is not 'exactly' where it was in April 2019, in fact it's up 9.78%. But I think we get your point, four years index capital gains of about 10% isn't much, it's only up 10% from the recent lows, but at least there is an upwards trend since June last year. It's been very volatile in those four years, just like most international capital markets.

Since April 2019, the median house price is up about 35%. Labour has been good for landlords and homeowners. Although the kiwi love affair with residential land means that asset class, rather than listed shares is now on the edge of the cliff?