Black Monday

[SailorRob]

traders speak , i dont expect you to understand anyway guess your be pleased to know your travel time on the road's is taking longer and your doctors visits but hey bet your house will start to go up soon

New record: Annual net migration tops 110,000 for the first time in history


https://www.nzherald.co.nz/business/new-record-annual-net-migration-tops-100000-for-the-first-time-in-history/X3FQ4AUWHNBVPPJYRLKLFAFSZM/


I am familiar with the term 'overbought' which refers to the act of buying - to obtain in exchange for payment, and means that short term something has been pushed in price over it's actual value and a correction is implied.

What I am not familiar with and would like your guidance on is what 'over brought' means, brought meaning to take or go with something to somewhere.

So my question was what was over brought? Where was it brought from and what was it and how does this pertain to trading?

[SailorRob]

I think it's very segmented in regards who is sitting pretty & who isn't.
Some came out of Covid flush others were flushed.
Mortgage holders are struggling, those without debt it doesn't matter.
Rural economy is mixed with farmers I hear generally tightening their belts.
Construction mixed, Government projects have certainly kept the trades busy in lieu of private construction which has waned.
Strong Immigration has also certainly helped considerably.
Interesting times.


Those without debt aren't struggling, but I think what we're missing is those who OWN debt.

Every debt is someones asset and all that debt is owned by someone. That someone has had 10 years of nothing but now is getting nominally paid for the first time in a long time and by the looks of things they are out spending. What they don't realise is that they are actually spending their capital not income but that illusion is the name of the game.

[SailorRob]

Go NZ https://croakingcassandra.com/2023/10/11/a-few-snippets-from-the-imf-weo/

Hey everyone, take the entirety of your life savings and invest all or almost all of it in this one country - preferably put 90% plus of it in one asset class that doesn't earn anything!

Worked so far eh! What could go wrong.

[moka]

The recession is getting postponed thanks to strong job market,but cycle will repeat.
We are in a rolling recession which is unusual, and some analysts expect it to continue next year and maybe longer. Charts in the article show the ups and downs in various sectors from 2019 to 2023.

A rolling recession describes an economic downturn that only affects some sectors at a time. With a hard recession, most sectors are hit at the same time with layoffs and financial struggles. During a rolling recession, various sectors take financial downturns at different times. After those sectors recover, the slowdown "rolls" to other areas.
The overall economy never takes a large dip. Typically, the job market stays relatively strong in a rolling recession. A rolling recession is in constant motion, so it prevents a large-scale market crash.

https://www.weforum.org/agenda/2023/03/what-is-a-rolling-recession-economy-news/
Whereas a standard recession hits all sectors at approximately the same time, a rolling recession means some industries are contracting as others expand.

https://www.capitalgroup.com/advisor/insights/articles/us-economy-rolling-recession.html
What happened to the widely predicted recession that was supposed to wreak havoc on the U.S. economy this year? It happened. Just not all at once.
Different sectors of the economy have experienced downturns at different times. Thanks to this rare case of a “rolling” recession, the U.S. may not experience a traditional recession at all this year, or next, even with the dual pressures of elevated inflation and high interest rates.
“I am increasingly seeing signs that we may not get a broad-based recession,” says Capital Group economist Jared Franz. “Instead, what we are getting are mini-recessions in various industries at various times without much synchronization.”

Different sectors have experienced downturns at different times – travel, manufacturing, oil, chemicals, housing, semiconductors.

[SailorRob]

We are in a rolling recession which is unusual, and some analysts expect it to continue next year and maybe longer. Charts in the article show the ups and downs in various sectors from 2019 to 2023.

A rolling recession describes an economic downturn that only affects some sectors at a time. With a hard recession, most sectors are hit at the same time with layoffs and financial struggles. During a rolling recession, various sectors take financial downturns at different times. After those sectors recover, the slowdown "rolls" to other areas.
The overall economy never takes a large dip. Typically, the job market stays relatively strong in a rolling recession. A rolling recession is in constant motion, so it prevents a large-scale market crash.

https://www.weforum.org/agenda/2023/03/what-is-a-rolling-recession-economy-news/
Whereas a standard recession hits all sectors at approximately the same time, a rolling recession means some industries are contracting as others expand.

https://www.capitalgroup.com/advisor/insights/articles/us-economy-rolling-recession.html
What happened to the widely predicted recession that was supposed to wreak havoc on the U.S. economy this year? It happened. Just not all at once.
Different sectors of the economy have experienced downturns at different times. Thanks to this rare case of a “rolling” recession, the U.S. may not experience a traditional recession at all this year, or next, even with the dual pressures of elevated inflation and high interest rates.
“I am increasingly seeing signs that we may not get a broad-based recession,” says Capital Group economist Jared Franz. “Instead, what we are getting are mini-recessions in various industries at various times without much synchronization.”

Different sectors have experienced downturns at different times – travel, manufacturing, oil, chemicals, housing, semiconductors.


Well I wish it would roll around into some of the sectors I am trying to participate in.

[Daytr]

Those without debt aren't struggling, but I think what we're missing is those who OWN debt.

Every debt is someones asset and all that debt is owned by someone. That someone has had 10 years of nothing but now is getting nominally paid for the first time in a long time and by the looks of things they are out spending. What they don't realise is that they are actually spending their capital not income but that illusion is the name of the game.

I did say, those without debt it doesn't matter. I.e they are sitting pretty.

If it's all zero sum, so good is bad & visa versa let's see interest rates go to 20% and see how that works out.

Higher interest rates suck money out of the economy as mortgage holders tighten their belts. The knock on effect or multiplier effect is quite considerable.

The actual owners of that debt, the lenders don't increase their margin or free cash by the amount interest rates go up.
I.e interest rates move from 2.5% to 7% the banks aren't making an additional 4.5%, they are making pretty much the same margin give or take.

Yet that 4.5% on $400K or whatever the mortgage is being sucked out of the mortgage holders pocket and won't be spent in the local restaurant etc

There is still something like 40% of mortgage holders to roll onto the new rates.

[SailorRob]

I did say, those without debt it doesn't matter. I.e they are sitting pretty.

If it's all zero sum, so good is bad & visa versa let's see interest rates go to 20% and see how that works out.

Higher interest rates suck money out of the economy as mortgage holders tighten their belts. The knock on effect or multiplier effect is quite considerable.

The actual owners of that debt, the lenders don't increase their margin or free cash by the amount interest rates go up.
I.e interest rates move from 2.5% to 7% the banks aren't making an additional 4.5%, they are making pretty much the same margin give or take.

Yet that 4.5% on $400K or whatever the mortgage is being sucked out of the mortgage holders pocket and won't be spent in the local restaurant etc

There is still something like 40% of mortgage holders to roll onto the new rates.


Thanks for the lessons bro. Nobody said zero sum.

The lenders are also the borrowers.

Maybe the 4.5% on 400k term deposit is getting spent in the restaurant.

[kiora]

I did say, those without debt it doesn't matter. I.e they are sitting pretty.

If it's all zero sum, so good is bad & visa versa let's see interest rates go to 20% and see how that works out.

Higher interest rates suck money out of the economy as mortgage holders tighten their belts. The knock on effect or multiplier effect is quite considerable.

The actual owners of that debt, the lenders don't increase their margin or free cash by the amount interest rates go up.
I.e interest rates move from 2.5% to 7% the banks aren't making an additional 4.5%, they are making pretty much the same margin give or take.

Yet that 4.5% on $400K or whatever the mortgage is being sucked out of the mortgage holders pocket and won't be spent in the local restaurant etc

There is still something like 40% of mortgage holders to roll onto the new rates.

False

"Collectively, the banks have managed to expand their interest margin from 2.04% to 2.38%, which has equated to a roughly 17% lift in their overall profit margin on their lending.6/09/2023"
https://www.google.com/search?q=bank+margins+nz&rlz=1C1CHZN_enNZ1004NZ1005&oq=bank+margins+nz&gs_lcrp=EgZjaHJvbWUyBggAEEUYOTIKCAEQABgPGBYYHjIKCA IQABiGAxiKBTIKCAMQABiGAxiKBTIKCAQQABiGAxiKBTIKCAUQ ABiGAxiKBTIKCAYQABiGAxiKBdIBCDg3NTlqMGo3qAIAsAIA&sourceid=chrome&ie=UTF-8

[Daytr]

Thanks for the lessons bro. Nobody said zero sum.

The lenders are also the borrowers.

Maybe the 4.5% on 400k term deposit is getting spent in the restaurant.

And that interest is taxed.
Where as mortgage repayments aren't deductible.

Let alone much of the increased income from higher TDs will be beig spent on higher rates, higher fuel & food costs.
Those cost increases apply to mortgage holders as well of course they just have significantly less disposable income.

[Daytr]

False

"Collectively, the banks have managed to expand their interest margin from 2.04% to 2.38%, which has equated to a roughly 17% lift in their overall profit margin on their lending.6/09/2023"
https://www.google.com/search?q=bank+margins+nz&rlz=1C1CHZN_enNZ1004NZ1005&oq=bank+margins+nz&gs_lcrp=EgZjaHJvbWUyBggAEEUYOTIKCAEQABgPGBYYHjIKCA IQABiGAxiKBTIKCAMQABiGAxiKBTIKCAQQABiGAxiKBTIKCAUQ ABiGAxiKBTIKCAYQABiGAxiKBdIBCDg3NTlqMGo3qAIAsAIA&sourceid=chrome&ie=UTF-8

34bps of 450 is hardly the major component of the point I was making, but yes it all adds up.

[Bjauck]

And that interest is taxed.
Where as mortgage repayments aren't deductible. The tax received by the government, does not evaporate. The government uses it to pay police, benefits, reduce borrowing etc. So ends up back in the economy.

Of course every last drop of the return on a term deposit is taxed, whereas a small proportion of the return is taxed in NZ from the assets bought with a mortgage. So a significant part of that return just ends up inflating the cost of land. That is sucking money from house buyers and the economy.

The high immigration rate has kept the economy alive, despite the high emigration rate too. I wonder when overseas born residents will outnumber the NZ born.

[Valuegrowth]

False

"Collectively, the banks have managed to expand their interest margin from 2.04% to 2.38%, which has equated to a roughly 17% lift in their overall profit margin on their lending.6/09/2023"
https://www.google.com/search?q=bank+margins+nz&rlz=1C1CHZN_enNZ1004NZ1005&oq=bank+margins+nz&gs_lcrp=EgZjaHJvbWUyBggAEEUYOTIKCAEQABgPGBYYHjIKCA IQABiGAxiKBTIKCAMQABiGAxiKBTIKCAQQABiGAxiKBTIKCAUQ ABiGAxiKBTIKCAYQABiGAxiKBdIBCDg3NTlqMGo3qAIAsAIA&sourceid=chrome&ie=UTF-8


I am familiar with the term 'overbought' which refers to the act of buying - to obtain in exchange for payment, and means that short term something has been pushed in price over it's actual value and a correction is implied.

What I am not familiar with and would like your guidance on is what 'over brought' means, brought meaning to take or go with something to somewhere.

So my question was what was over brought? Where was it brought from and what was it and how does this pertain to trading? Overbought means overvalued due to excessive buying at unjustifiably high prices. If we follow volume, prices for a considerable period we can find out. Some of the current popular stocks are in overbought territory.

[SailorRob]

Overbought means overvalued due to excessive buying at unjustifiably high prices. If we follow volume, prices for a considerable period we can find out. Some of the current popular stocks are in overbought territory.

Indeed

What I want to know is what over brought means, what Bull was talking about.

[thebusinessman]

Indeed

What I want to know is what over brought means, what Bull was talking about.

Mr Rob,

Please, study this comment, it is the perfect example of a net negative contribution to the forum.

I'm here for NZ Sharemarket thoughts. I don't mind looking over a misspelling or two. I can even deal with a little snark in someone's reply if everything's on track. I object to posts with zero sharemarket merit that I end up wading through trying to follow a conversation.

Those that get your little joke probably don't think much of you for it. And when you find yourself needing to bring others down to feel good there's a bit of soul searching that's overdue.

[moka]

The tax received by the government, does not evaporate. The government uses it to pay police, benefits, reduce borrowing etc. So ends up back in the economy.

Of course every last drop of the return on a term deposit is taxed, whereas a small proportion of the return is taxed in NZ from the assets bought with a mortgage. So a significant part of that return just ends up inflating the cost of land. That is sucking money from house buyers and the economy.

The high immigration rate has kept the economy alive, despite the high emigration rate too. I wonder when overseas born residents will outnumber the NZ born.I see that according to the 2018 census, 72.6% of New Zealand residents were born in New Zealand.

[SailorRob]

Mr Rob,

Please, study this comment, it is the perfect example of a net negative contribution to the forum.

I'm here for NZ Sharemarket thoughts. I don't mind looking over a misspelling or two. I can even deal with a little snark in someone's reply if everything's on track. I object to posts with zero sharemarket merit that I end up wading through trying to follow a conversation.

Those that get your little joke probably don't think much of you for it. And when you find yourself needing to bring others down to feel good there's a bit of soul searching that's overdue.

There is no way I would try to bring a man down who can make money off any chart anywhere anytime. A 12 screen trading genius who has beaten the market over 20 years is not to be trifled with.

A misspelling is an incorrect spelling of a word. Clip will be able to tell you this, however the lack of understanding of what a word means is something different again.

But what would I know, a trading term that I would not understand.

Now back to reading annual reports.

[bull....]

There is no way I would try to bring a man down who can make money off any chart anywhere anytime. A 12 screen trading genius who has beaten the market over 20 years is not to be trifled with.

A misspelling is an incorrect spelling of a word. Clip will be able to tell you this, however the lack of understanding of what a word means is something different again.

But what would I know, a trading term that I would not understand.

Now back to reading annual reports.


is not reading an annual report just the same as reading a chart ?

[SailorRob]

is not reading an annual report just the same as reading a chart ?

Yes it is. They are identical activities.

And I've just realised reading a chart is much faster too. Damn. All these wasted years.

Once again Bull. I thank you.

Anyone thinking I was trying to bring you down is utterly clueless.

[bull....]

Yes it is. They are identical activities.

And I've just realised reading a chart is much faster too. Damn. All these wasted years.

Once again Bull. I thank you.

Anyone thinking I was trying to bring you down is utterly clueless.

if you had 12 screens you could read and compare 12 annual reports at once .... now wouldnt that be productive. time to upgrade from your 1 screen crt monitor

[Rawz]

If National win and the ABs win the World Cup it could be a big mood change for the country and we may get a very merry Christmas rally

[Valuegrowth]

Yes it is. They are identical activities.

And I've just realised reading a chart is much faster too. Damn. All these wasted years.

Once again Bull. I thank you.

Anyone thinking I was trying to bring you down is utterly clueless. Which one is more important? A Srong balance sheet or a strong chart?

[Joshuatree]

If National win and the ABs win the World Cup it could be a big mood change for the country and we may get a very merry Christmas rally

IF! Maybe a sugar rush before reality hits .The destruction a Nat/NZfirst/Act could bring, just the opposite,I'm very concerned.It would be a great leap backwards imo.

[JBmurc]

IF! Maybe a sugar rush before reality hits .The destruction a Nat/NZfirst/Act could bring, just the opposite,I'm very concerned.It would be a great leap backwards imo.

Really how much worse can it be after this present mob has run NZ into the ground ..

[Rawz]

IF! Maybe a sugar rush before reality hits .The destruction a Nat/NZfirst/Act could bring, just the opposite,I'm very concerned.It would be a great leap backwards imo.

I talk to a lot of mum and dad business owners through my line of work and all are very hopeful of a change in thinking. Lots of capex is being put on hold right now and if its another 3 years of terror from Labour/greens/maori party they wont do anything. Just feedback from the front line. Small business is crucial to the nz economy

[mike2020]

It cant get any worse. What astounds me is 3x2% of our population would choose 1 of 3 green mps as pm. That's todays society.

[Bjauck]

I see that according to the 2018 census, 72.6% of New Zealand residents were born in New Zealand.

19.4% born overseas in 2001
22.9% in 2006
25.2% in 2013
27.4% in 2018
There may be pause in 2023 owing to Covid. It is definitely time to have policies that encourage labour productivity growth rather than relying on immigration to support the economy.

[Fortunecookie]

I talk to a lot of mum and dad business owners through my line of work and all are very hopeful of a change in thinking. Lots of capex is being put on hold right now and if its another 3 years of terror from Labour/greens/maori party they wont do anything. Just feedback from the front line. Small business is crucial to the nz economy

George Gregan: 3 more years

Can't deal with that thought lol

[alokdhir]

As per ASB research ...NZ First participation in the Govt can be positive for markets !!!!

Dont know how it will play out but it seems they expect Winston to reign in tax cuts and Govt spending etc thus better fiscal management and so on ...

Monday our market will react to election results ....clear mandate for change and chance of better Govt expenditure management shud please markets and vice versa

[Joshuatree]

I talk to a lot of mum and dad business owners through my line of work and all are very hopeful of a change in thinking. Lots of capex is being put on hold right now and if its another 3 years of terror from Labour/greens/maori party they wont do anything. Just feedback from the front line. Small business is crucial to the nz economy

I have the opposite view.Luxon has minimal experience but his lust for power at anyexpense is so transparent.,Hipkins huge successful experience.Tax cuts the worst thing atpit and they don't stack up .Yes the rich will get richer,no one else,yes a great leap back to racism,yes our carbon footprint will be worse, people in poverty will increase,rents will keep rising
To think of all those businesses who took the handout during COVID ,now some of thembiting the hand that fed them,saved them .

[Rawz]

I have the opposite view.Luxon has minimal experience but his lust for power at anyexpense is so transparent.,Hipkins huge successful experience.Tax cuts the worst thing atpit and they don't stack up .Yes the rich will get richer,no one else,yes a great leap back to racism,yes our carbon footprint will be worse, people in poverty will increase,rents will keep rising
To think of all those businesses who took the handout during COVID ,now some of thembiting the hand that fed them,saved them .

it doesnt really matter Labour or National both basically the same. 20% of the country decide who runs the country next. i.e. the swing voters. i was having this conversation with my father in law last week who is labour and will never change. he talks just like you thinks labour helps the poor and national help the rich lol. the reality is basically they are the same.

as i was saying above the most important thing is the appearance of change is what the country needs. thats why National needs to win. then in 9 years time the swing voters can put labour back in

[bull....]

australia voice referendum tomorrow

[777]

it doesnt really matter Labour or National both basically the same. 20% of the country decide who runs the country next. i.e. the swing voters. i was having this conversation with my father in law last week who is labour and will never change. he talks just like you thinks labour helps the poor and national help the rich lol. the reality is basically they are the same.

as i was saying above the most important thing is the appearance of change is what the country needs. thats why National needs to win. then in 9 years time the swing voters can put labour back in

And by 9 years time all the current Labour MP's will be otherwise occupied. Good riddance.

[Ricky-bobby]

I have the opposite view.Luxon has minimal experience but his lust for power at anyexpense is so transparent.,Hipkins huge successful experience.Tax cuts the worst thing atpit and they don't stack up .Yes the rich will get richer,no one else,yes a great leap back to racism,yes our carbon footprint will be worse, people in poverty will increase,rents will keep rising
To think of all those businesses who took the handout during COVID ,now some of thembiting the hand that fed them,saved them .

I’m with RAWZ, it’s bloody hard for small businesses at the moment. Nothing has got better over the last 9 years. Hospitals = shambles, roads = shambles, education = shambles (esp here in Marlborough…), I don’t think the good working class folk have been well looked after either. What’s been our return on investment over the last few years?.. it’s gone backwards.

[causecelebre]

...Hipkins huge successful experience....

Really?

As Minister of Health: Closure of the charter schools to place the Teachers Union. When he took over as minister 5.8% of kids where only turning up 70% of the time. By the time he was finished as minister that was 12.4%. Maori even worse 10% to 20%. Literacy of a third 15 year olds struggle to read and write. He centralised 16 polytechs and saw a 10% decline in students and asked for a $330m bailout earlier this year

Covid: Hipkins maintained we would be at the front of the queue yet buggered up the ordering process. Failed to introduce rapid saliver tests insisting on expensive PCR's a year later. He still hasn't apologised for wrongly accusing two women of breaking lockdown - even though it was his own team that messed that up. Remember the pregnant journalist in Afganistan? He released inaccurate and personal information after she criticised managed isolation

Economy: Well a $7.6b deficit about says it all

Perhaps Hipkins biggest success is getting the poor to have shorter showers. We will never know

[Joshuatree]

it doesnt really matter Labour or National both basically the same. 20% of the country decide who runs the country next. i.e. the swing voters. i was having this conversation with my father in law last week who is labour and will never change. he talks just like you thinks labour helps the poor and national help the rich lol. the reality is basically they are the same.

as i was saying above the most important thing is the appearance of change is what the country needs. thats why National needs to win. then in 9 years time the swing voters can put labour back in
The horror,the horror at that thought.Your father has wisdom hard-earned.
Looking at it from an investor point of view
The marriage of Nat/Act/NZ first would be a super hi risk speculative investment with no upside.Simple really.

[mike2020]

Whos simple? Or was that really simple? Really?

[winner69]

Anniversary of Black Monday next week. Here’s a piece by Warren from Hobson Wealth -


There’s a historic moment in time coming up next week – the anniversary of Black Monday, the global stock market crash of October 1987.

Stock markets around the world were giddy in the years headed into late 1987, fuelled by speculation and huge fear of missing out.

Barbecue conversations were all about the next “next big thing”, shares and stocks, tips, "my broker says", and so on.

Think of the epic movie Wall Street and Gordon Gecko’s famous line, “Greed is good”. I think it sums up the mood and the attitude of the times.

NZSE40

But on Monday, Oct 19, 1987, things came crashing down both here in New Zealand and around the world as the international markets started trading in their time zones a bit later than ours.

The NZ share market index at the time, the Barclays Index, which then became the better-known NZSE40, fell 15% in one trading session.

Mayhem ensued in the aftermath as share prices collapsed, companies went broke, and people rightfully worried about their livelihoods and futures.

The fallout in NZ from the crash was long-lived, and its after-effects still hung over financial markets in the early 1990s.

NZ went into a recession in the early 1990s as gross domestic product (GDP) growth went negative for a time, unemployment leapt, and interest rates soared.

The then-National government walked into parliament in 1990 to be confronted with a terrible set of government accounts leading to and necessitating the now-famous Mother of All Budgets in May 1990.

Much of this was due to the parlous state of financial markets in the wake of the sharemarket crash.

Winston Churchill once said: “Those that fail to learn from history are doomed to repeat it.”

Well, what have we learned from the late 1980s and early 1990s, and how have things changed, at least in financial markets?

That period was all about Chase Corporation, Equiticorp, Omnicorp, Brierley Investments and Fletcher Challenge, who were our leading listed companies.

In the late 1980s, international investment banks and share brokers had a significant presence in NZ (I'll explain why in a second). Those with boots on the ground here included Merrill Lynch, Barclays/BZW, ABN Amro, Salomon Brothers/Citigroup, Goldman Sachs, Credit Suisse and some of the Japanese banks, including Nomura and Daiwa.

We had local players, too, including some at least part-owned by Aussie parents, Fay Richwhite, Buttle Wilson, Hendry Hay McIntosh and so on.

Disappearing companies

Just before the October 1987 crash, the level of the NZSE40 Index was 3,798, and by November, the index had fallen 43% to 2,168.

Hundreds of listed companies effectively disappeared ...

The global companies were here for only one reason: privatisation, following what became known as Rogernomics and then Ruthenomics and the resulting bonanza in investment banking fees.

Remember the initial public offerings (IPOs) of Telecom, NZ Rail and more.

NZ did a slightly better job than Mikhail Gorbachev did in the former Soviet Union, but only just!

We sold assets that our parents had paid for through their taxes, and we arguably sold them too cheap. Telecom’s issue price was $2.50, which went up to $10 within a decade, for example. We could say the same for gentailers and airports.

Back to learning from history, as Churchill said.

If we fast-forward to today, there are just two international bankers or brokers here: Australia’s enormously successful Macquarie Group and the Swiss behemoth UBS.

Goldman Sachs and Citigroup are scaled down to mainly small banking offices, with their focus appearing to be big-ticket government-related banking work, if they can get it, like the Air NZ capital raise and the Kiwi Wealth sale in 2022, for example.

Corporate NZ in poor health

This decline in international participation is really because of the poor overall health of corporate NZ and particularly the listed space. We’ve really muddled along to today with some overall comparatively pedestrian businesses that haven't energised or fired up – whatever you want to call it – the stock markets.

Of course, we have had some absolute crackers in the likes of Fisher & Paykel Healthcare, Xero, Infratil, EBOS, Mainfreight and a few others. They're essentially the Berkshire Hathaways, Apples and Microsofts of the NZ corporate sector.

We need more, though, many more, as NZ financial and investment markets now face something of a conundrum.

NZ has $100 billion invested in the many KiwiSaver schemes and around $175b in other private superannuation savings.

This includes the eminently successful NZ Superannuation Scheme (NZSS), thanks to Sir Michael Cullen, which is growing at around $5b each year.

The NZ share market has a market capitalisation of about $160bn. Compare that to the market cap of Apple – $4,670b.

In short, we now have a very successful KiwiSaver arrangement with capital coming into a very small market with persistently very little new issuance (new capital requirements).

Shutters and struggles

So, where is all that money going to go?

Not NZ, unfortunately, as indicated by the NZSS, which has for some time had most of its investments outside of NZ.

Without new listings, the NZ capital markets are going to struggle.

NZ-dedicated funds will have to shutter because they'll be unable to place or invest their inflows.

Capital will inevitably continue flowing offshore.

The Aussies will keep stealing our companies by attracting their primary listings or with takeovers. But that’s capitalism – embrace it or die.

We can and do build some great businesses here in NZ, including the likes of Rocket Lab, Zuru, All Birds, Xero, Anaplan and many more.

We need the capital to go to them, as it does in offshore markets.

The hype and speculation of the 1980s led to Black Monday and the sharemarket crash of October 1987. The shallow corporates at the time here in NZ were wiped out, while the ensuing years saw a slew of (arguably cheap) privatisations come to the market but also led to overseas direct investors.

Have we learned from history?

[Bjauck]

NZ sharemarket was the Wild West with cowboys in the 1980s. It substantially put off many potential investors for a generation…

For a start, We now need a much more decent tax-free savings scheme to encourage households away from tax-free capital gains from leveraged residential property. KiwiSaver doesn’t cut the mustard.

[Panda-NZ-]

Is investing overseas better for NZ? Probably.

Why invest in fletchers when you can get microsoft, then bring those new capital gains into NZ.

[kiora]

Is investing overseas better for NZ? Probably.

Why invest in fletchers when you can get microsoft, then bring those new capital gains into NZ.

Simplistic idea?

"Microsoft in $29bn back taxes dispute in US"
https://www.bbc.com/news/business-67085704

"FIF tax rules for individuals and trusts: $50,000 NZD or more invested overseas"
https://www.hatchinvest.nz/articles/tax-50000-fif#:~:text=The%20FIF%20rules%20apply%20for,didn't %20sell%20anything).

[alokdhir]

Fingers crossed or I should depend on the collective WISDOM of NZers to do the right thing ....I have faith in our electorate !!!!

[winner69]

Fingers crossed or I should depend on the collective WISDOM of NZers to do the right thing ....I have faith in our electorate !!!!

Don’t think it really matters (re stock market) what the outcome

[alokdhir]

Maybe it won't matter in the real terms but it will surely help in changing sentiment and hope for the future ....:t_up:

[strikereureka]

Possibility of FIF tax limits going up under NACT?

[beacon]

"FIF tax rules for individuals and trusts: $50,000 NZD or more invested overseas"
https://www.hatchinvest.nz/articles/tax-50000-fif#:~:text=The%20FIF%20rules%20apply%20for,didn't %20sell%20anything).

Some got paid heaps to do a massive disservice to NZ, and NZ based investors investing meaningful funds overseas. FIF is the unfairest, stupidest capital gains taxation scheme in the world for investors.

Taxes (already tax-paid) capital - based on its market value annually, regardless of any capital gain or income - promoting short termism in capital allocation. Why didn't Labour introduce FIF type capital Gains Tax regime on property investment?

Each overseas investment is treated as an individual FIF - and losses are ring fenced and can't be carried forward, or even adjusted against profits from another FIF within the same year.

All Actual Foreign Tax credits are forfeit when you make a loss, and part of them are forfeit even when you make a PROFIT, despite DTAA benefits, if any.

Buy FIFs in a company structure, and you can't use CV method - this is the most draconian and unfair clause. :t_down:

No squeak out of the local Investment Institutions - as they can earn ridiculous fees by fabricating PIE structures - which still can't get around FIF rules. What a shambles?

[SailorRob]

Some got paid heaps to do a massive disservice to NZ, and NZ based investors investing meaningful funds overseas. FIF is the unfairest, stupidest capital gains taxation scheme in the world for investors.
Annually taxes accrued income, that could vanish next month - promoting short termism in capital allocation. Why didn't Labour introduce FIF type capital Gains Tax regime on property investment?
Each overseas investment is treated as an individual FIF - and losses are ring fenced and can't be carried forward, or even adjusted against profits from another FIF within the same year.
Actual Foreign Tax credits are forfeit when you make a loss, despite DTAA benefits, if any.
Buy FIFs in a company structure, and you can't use CV method - this is the most draconian and unfair clause. :t_down:
No squeak out of the local Investment Institutions - as they can earn ridiculous fees by fabricating PIE structures. What a shambles?


Exceptional post and points, thanks. Hard not to be cynical about this system.

With a even slightly volatile portfolio you can be taxed multiple times without making any overall gains for years and years.

[SailorRob]

Investors should pray for stocks to go down not up.

When stocks get cheaper how can this not be good news?

Only one in a thousand get this - massive edge you can have over the numerically illiterate.

999/1000 would understand that a 6% term deposit is better than a 2% one, but cant relate that to equity market.


https://x.com/F_Compounders/status/1713257590891614493?s=20

[workingdad]

I have the opposite view.Luxon has minimal experience but his lust for power at anyexpense is so transparent.,Hipkins huge successful experience.Tax cuts the worst thing atpit and they don't stack up .Yes the rich will get richer,no one else,yes a great leap back to racism,yes our carbon footprint will be worse, people in poverty will increase,rents will keep rising
To think of all those businesses who took the handout during COVID ,now some of thembiting the hand that fed them,saved them .

In all honesty I don’t understand why they are referred to as tax cuts. It’s merely correcting a failure to move tax brackets in line with inflation for far too many years. This adjustment is long overdue as low income earners fall into higher tax brackets than they should be. Govt spending that has achieved sweet all other than pad the pockets of bureaucracy is a major issue.

Rents have gone up more in the last few years than I can recall. Who would have thought increasing landlords costs would be passed on to tenants let alone discourage buying properties for rentals.

I’m not saying either party is perfect but I’m happy to see less of a politician in luxon using his business acumen to get things on track fiscally and try something different. He’s whipped national into shape in opposition so I look forward to seeing what he does as PM.

[SailorRob]

In all honesty I don’t understand why they are referred to as tax cuts. It’s merely correcting a failure to move tax brackets in line with inflation for far too many years. This adjustment is long overdue as low income earners fall into higher tax brackets than they should be. Govt spending that has achieved sweet all other than pad the pockets of bureaucracy is a major issue.


So true. And obvious...

[thebusinessman]

Investors should pray for stocks to go down not up.

When stocks get cheaper how can this not be good news?

Only one in a thousand get this - massive edge you can have over the numerically illiterate.

999/1000 would understand that a 6% term deposit is better than a 2% one, but cant relate that to equity market.


https://x.com/F_Compounders/status/1713257590891614493?s=20

I guess the people who don't get this are a mixture of the fully invested and those who refuse to buy something that's more expensive than they've seen it before...

[Valuegrowth]

https://www.stuff.co.nz/business/property/133104557/rental-prices-jump-72-to-secondhighest-rate-on-record

Rental prices jump 7.2% to second-highest rate on record.

https://www.mpamag.com/nz/news/general/rental-prices-hit-second-highest-rate-on-record/462915

Rental prices hit second-highest rate on record

Not only housing but also all types of expenses such as rents, rates, transportation, and insurance are increasingly unaffordable for people. People like us at least will invest in the stock market and face inflation and coming recession.

[Valuegrowth]

https://www.youtube.com/watch?v=FmEr158xMMc

[ValueNZ]

Investors should pray for stocks to go down not up.

When stocks get cheaper how can this not be good news?

Only one in a thousand get this - massive edge you can have over the numerically illiterate.

999/1000 would understand that a 6% term deposit is better than a 2% one, but cant relate that to equity market.


https://x.com/F_Compounders/status/1713257590891614493?s=20
And 999/1000 would prefer a 6% term deposit with 6% inflation vs a 2% term deposit with no inflation. It's a funny thing, money illusion.

[beacon]

14789

Hopefully, Luxon with his business experience and acumen can do better for NZ and Kiwis (long suffering from cartels in many sectors) - in attracting foreign capital to invest in NZ.
If you take out Chinese Investment (most of it done with not just economic motives) in NZ, I suspect we've had capital drain (International Foreign Direct Investment FDI) in the last decade.
:t_down:

[Valuegrowth]

Hope we are not going to see another Black Monday. As I said before strong job market worldwide should prevent any calamity in markets in the short run. However,If asset prices continue to go up, next crisis could be hyperinflation.


Anniversary of Black Monday next week. Here’s a piece by Warren from Hobson Wealth -


There’s a historic moment in time coming up next week – the anniversary of Black Monday, the global stock market crash of October 1987.

Stock markets around the world were giddy in the years headed into late 1987, fuelled by speculation and huge fear of missing out.

Barbecue conversations were all about the next “next big thing”, shares and stocks, tips, "my broker says", and so on.

Think of the epic movie Wall Street and Gordon Gecko’s famous line, “Greed is good”. I think it sums up the mood and the attitude of the times.

NZSE40

But on Monday, Oct 19, 1987, things came crashing down both here in New Zealand and around the world as the international markets started trading in their time zones a bit later than ours.

The NZ share market index at the time, the Barclays Index, which then became the better-known NZSE40, fell 15% in one trading session.

Mayhem ensued in the aftermath as share prices collapsed, companies went broke, and people rightfully worried about their livelihoods and futures.

The fallout in NZ from the crash was long-lived, and its after-effects still hung over financial markets in the early 1990s.

NZ went into a recession in the early 1990s as gross domestic product (GDP) growth went negative for a time, unemployment leapt, and interest rates soared.

The then-National government walked into parliament in 1990 to be confronted with a terrible set of government accounts leading to and necessitating the now-famous Mother of All Budgets in May 1990.

Much of this was due to the parlous state of financial markets in the wake of the sharemarket crash.

Winston Churchill once said: “Those that fail to learn from history are doomed to repeat it.”

Well, what have we learned from the late 1980s and early 1990s, and how have things changed, at least in financial markets?

That period was all about Chase Corporation, Equiticorp, Omnicorp, Brierley Investments and Fletcher Challenge, who were our leading listed companies.

In the late 1980s, international investment banks and share brokers had a significant presence in NZ (I'll explain why in a second). Those with boots on the ground here included Merrill Lynch, Barclays/BZW, ABN Amro, Salomon Brothers/Citigroup, Goldman Sachs, Credit Suisse and some of the Japanese banks, including Nomura and Daiwa.

We had local players, too, including some at least part-owned by Aussie parents, Fay Richwhite, Buttle Wilson, Hendry Hay McIntosh and so on.

Disappearing companies

Just before the October 1987 crash, the level of the NZSE40 Index was 3,798, and by November, the index had fallen 43% to 2,168.

Hundreds of listed companies effectively disappeared ...

The global companies were here for only one reason: privatisation, following what became known as Rogernomics and then Ruthenomics and the resulting bonanza in investment banking fees.

Remember the initial public offerings (IPOs) of Telecom, NZ Rail and more.

NZ did a slightly better job than Mikhail Gorbachev did in the former Soviet Union, but only just!

We sold assets that our parents had paid for through their taxes, and we arguably sold them too cheap. Telecom’s issue price was $2.50, which went up to $10 within a decade, for example. We could say the same for gentailers and airports.

Back to learning from history, as Churchill said.

If we fast-forward to today, there are just two international bankers or brokers here: Australia’s enormously successful Macquarie Group and the Swiss behemoth UBS.

Goldman Sachs and Citigroup are scaled down to mainly small banking offices, with their focus appearing to be big-ticket government-related banking work, if they can get it, like the Air NZ capital raise and the Kiwi Wealth sale in 2022, for example.

Corporate NZ in poor health

This decline in international participation is really because of the poor overall health of corporate NZ and particularly the listed space. We’ve really muddled along to today with some overall comparatively pedestrian businesses that haven't energised or fired up – whatever you want to call it – the stock markets.

Of course, we have had some absolute crackers in the likes of Fisher & Paykel Healthcare, Xero, Infratil, EBOS, Mainfreight and a few others. They're essentially the Berkshire Hathaways, Apples and Microsofts of the NZ corporate sector.

We need more, though, many more, as NZ financial and investment markets now face something of a conundrum.

NZ has $100 billion invested in the many KiwiSaver schemes and around $175b in other private superannuation savings.

This includes the eminently successful NZ Superannuation Scheme (NZSS), thanks to Sir Michael Cullen, which is growing at around $5b each year.

The NZ share market has a market capitalisation of about $160bn. Compare that to the market cap of Apple – $4,670b.

In short, we now have a very successful KiwiSaver arrangement with capital coming into a very small market with persistently very little new issuance (new capital requirements).

Shutters and struggles

So, where is all that money going to go?

Not NZ, unfortunately, as indicated by the NZSS, which has for some time had most of its investments outside of NZ.

Without new listings, the NZ capital markets are going to struggle.

NZ-dedicated funds will have to shutter because they'll be unable to place or invest their inflows.

Capital will inevitably continue flowing offshore.

The Aussies will keep stealing our companies by attracting their primary listings or with takeovers. But that’s capitalism – embrace it or die.

We can and do build some great businesses here in NZ, including the likes of Rocket Lab, Zuru, All Birds, Xero, Anaplan and many more.

We need the capital to go to them, as it does in offshore markets.

The hype and speculation of the 1980s led to Black Monday and the sharemarket crash of October 1987. The shallow corporates at the time here in NZ were wiped out, while the ensuing years saw a slew of (arguably cheap) privatisations come to the market but also led to overseas direct investors.

Have we learned from history?

[SailorRob]

I guess the people who don't get this are a mixture of the fully invested and those who refuse to buy something that's more expensive than they've seen it before...


The fully invested should do as it will be just as important to them, see my posts on OCA about how much better off you'll be if the share price stays down for many years.

Reinvested dividends and retained earnings being used for buybacks will have a dramatic effect over time.

[SailorRob]

And 999/1000 would prefer a 6% term deposit with 6% inflation vs a 2% term deposit with no inflation. It's a funny thing, money illusion.


Funny you say that, perhaps more like 9999/10,000.

The number of highly regarded pros I have heard lately harping on about how great higher nominal returns are without regarding real returns is mind boggling.

[SailorRob]

Hope we are not going to see another Black Monday. As I said before strong job market worldwide should prevent any calamity in markets in the short run. However,If asset prices continue to go up, next crisis could be hyperinflation.


Why do you hope that we are not going to see another great opportunity to buy great businesses at far lower prices exactly? Lets see if your programming can answer that.

[Valuegrowth]

I am waiting patiently to buy strong balance sheet companies at beautiful prices. Buying a wonderful company at a beautiful price is a way to go. Simply, my approach to the market is not to pay high prices for overvalued assets. I also sell stocks of companies which cannot increase shareholder value, maintain sustainability, and generate enough cash and cannot produce strong balance sheets in the medium to long term.


Why do you hope that we are not going to see another great opportunity to buy great businesses at far lower prices exactly? Lets see if your programming can answer that.

[SailorRob]

I am waiting patiently to buy strong balance sheet companies at beautiful prices. Buying a wonderful company at a beautiful price is a way to go. Simply, my approach to the market is not to pay high prices for overvalued assets. I also sell stocks of companies which cannot increase shareholder value, maintain sustainability, and generate enough cash and cannot produce strong balance sheets in the medium to long term.





My god your programmer is a moron.

You literately just said you hope we don't see the opportunity to buy good companies at lower prices (I hope we don't have a black Monday), then when I question you, you reply that your strategy is to patiently wait for a.... Black Monday.

Get yourself upgraded programming.

[Valuegrowth]

I am not waiting for a black Monday to buy stocks. Market sell-off and pullbacks are common in markets. Black Monday can come at any time when we are least expected. Equity Markets don’t like uncertainties.

Current risks: credit risk, interest rates risk, liquidity, and recent developments (geopolitical risk)

I don’t buy high leverage companies as well. Defensive stocks such as consumer staples and health care are good bets but many stocks in the sector are overvalued. Investors are flocking to defensive stocks these days.

As I said I am ready to pay beautiful or fair price for a wonderful company.

https://www.investopedia.com/terms/d/defensivestock.asp#:~:text=Key%20Takeaways-,A%20defensive%20stock%20is%20a%20stock%20that%20p rovides%20consistent%20dividends,Cola%2C%20are%20c onsidered%20defensive%20stocks.

“A defensive stock is a stock that provides consistent dividends and stable earnings regardless of the state of the overall stock market.”

[SailorRob]

I am not waiting for a black Monday to buy stocks. Market sell-off and pullbacks are common in markets. Black Monday can come at any time when we are least expected. Market don’t like uncertainties.

Current risks: credit risk, interest rates risk, liquidity, and recent developments (geopolitical risk)

I don’t buy high leverage companies as well. Defensive stocks such as consumer staples and health care are good bets but many stocks in the sector are overvalued. Investors are flocking to defensive stocks these days.

As I said I am ready to pay beautiful or fair price for a wonderful company.

https://www.investopedia.com/terms/d/defensivestock.asp#:~:text=Key%20Takeaways-,A%20defensive%20stock%20is%20a%20stock%20that%20p rovides%20consistent%20dividends,Cola%2C%20are%20c onsidered%20defensive%20stocks.

“A defensive stock is a stock that provides consistent dividends and stable earnings regardless of the state of the overall stock market.”

Would a black Monday not help you with your goal?

[SailorRob]

“Keep your eye on one thing and one thing only, how much government is spending. Because that’s the true tax. Every budget is balanced. There is no such thing as an unbalanced federal budget. You’re paying for it. If you’re not paying for it in the form of explicit taxes, you’re paying for it indirectly in the form of inflation or in the form of borrowing. The thing you should keep your eye on is what government spends. And the real problem is to hold down government spending as a fraction of our income. And if you do that, you can stop worrying about the debt.”


Milton Friedman

[beacon]

For a start, We now need a much more decent tax-free savings scheme to encourage households away from tax-free capital gains from leveraged residential property. KiwiSaver doesn’t cut the mustard.

I'll second that

[beacon]

Here’s a piece by Warren from Hobson Wealth -

... So, where is all that money going to go?

Not NZ, unfortunately, as indicated by the NZSS, which has for some time had most of its investments outside of NZ.

Without new listings, the NZ capital markets are going to struggle.

NZ-dedicated funds will have to shutter because they'll be unable to place or invest their inflows.

Capital will inevitably continue flowing offshore.

The Aussies will keep stealing our companies by attracting their primary listings or with takeovers. But that’s capitalism – embrace it or die.

We can and do build some great businesses here in NZ, including the likes of Rocket Lab, Zuru, All Birds, Xero, Anaplan and many more. We need the capital to go to them, as it does in offshore markets.

... Have we learned from history?

No, we haven't. We keep investing in Australia without a reciprocal policy from them allowing us to use their franking credits. Aussie investing in NZ can use our Imputation credits, Kiwi investing in Oz can't use franking credits. Meaning, we are double taxed. Yet we persist in investing in Australia - wholesale... STOP investing in Australia, and they'll become more reciprocative promptly.

Over the last 10 years, we've continued to bleed International capital from NZ (see table I posted earlier). We've continued to bleed International capital especially from NZ equity - losing more than a quarter of it just in the last 5 years (see table below). Without some of the captive Kiwisaver money buttressing NZX50, our national RoCE chart would have looked sickly.

14791

[Snoopy]

No, we haven't. We keep investing in Australia without a reciprocal policy from them allowing us to use their franking credits. Aussie investing in NZ can use our Imputation credits, Kiwi investing in Oz can't use franking credits. Meaning, we are double taxed. Yet we persist in investing in Australia - wholesale... STOP investing in Australia, and they'll become more reciprocative promptly.


No, that is not true (the bit I have highlighted in bold). Aussie's investing in NZ do not get any benefit from NZ imputation credits.
https://www.ato.gov.au/business/imputation/in-detail/trans-tasman-imputation-special-rules/

SNOOPY

[beacon]

No, that is not true (the bit I have highlighted in bold). Aussie's investing in NZ do not get any benefit from NZ imputation credits.
https://www.ato.gov.au/business/imputation/in-detail/trans-tasman-imputation-special-rules/

SNOOPY

Thank you Snoopy. I stand corrected.

[bull....]

Maybe it won't matter in the real terms but it will surely help in changing sentiment and hope for the future ....:t_up:

NZD up reasonable amount this morning on election outcome and all blacks win.

[bull....]

how about that sth africa/ france game :t_up: great games of rugby this weekend.

lucky i have multiple screens to be able to work and watch rugby at the same time lol

[JBmurc]

No, we haven't. We keep investing in Australia without a reciprocal policy from them allowing us to use their franking credits. Aussie investing in NZ can use our Imputation credits, Kiwi investing in Oz can't use franking credits. Meaning, we are double taxed. Yet we persist in investing in Australia - wholesale... STOP investing in Australia, and they'll become more reciprocative promptly.

Over the last 10 years, we've continued to bleed International capital from NZ (see table I posted earlier). We've continued to bleed International capital especially from NZ equity - losing more than a quarter of it just in the last 5 years (see table below). Without some of the captive Kiwisaver money buttressing NZX50, our national RoCE chart would have looked sickly.

14791

Why my dividend-paying ASX held are non franking...

yes NZ capital will continue to invest overseas esp when the last 6yrs had the socialists in control .... piss all attraction in the NZX if your focus/interest is resources ..

NAT/ACT need to turn up for primary industry and make us an attractive country to invest in again and not just property/tourism focus

[strikereureka]

Why my dividend-paying ASX held are non franking...

yes NZ capital will continue to invest overseas esp when the last 6yrs had the socialists in control .... piss all attraction in the NZX if your focus/interest is resources ..

NAT/ACT need to turn up for primary industry and make us an attractive country to invest in again and not just property/tourism focus

FBU dragging the NZX down today it seems.

Incoming government should see energy infra, property and banking stocks all take off as they will undo all the indifference/greenwashing of the past 6 years.

[Valuegrowth]

I'll second thatI couldn't agree more.

[SailorRob]

NZD up reasonable amount this morning on election outcome and all blacks win.

It's moved less than 20% of average daily volatility. Less movement than any normal day.

[bull....]

It's moved less than 20% of average daily volatility. Less movement than any normal day.

better to check volatility after the US sessopn anyway looks like a normal days volatility. the point i was making is it was up which means traders viewed the incoming govt as positive at this point in time.

[SailorRob]

better to check volatility after the US sessopn anyway looks like a normal days volatility. the point i was making is it was up which means traders viewed the incoming govt as positive at this point in time.


Point I'm making is it's just like any other day and thus we cannot draw any conclusions aside from traders are not euphoric nor are they in shock.

[bull....]

Point I'm making is it's just like any other day and thus we cannot draw any conclusions aside from traders are not euphoric nor are they in shock.

one conclusion you can make is that the party that was more interested in clamping down on free speech , promoting rascism etc etc is finally gone. as musk said thankgoodness

[Ggcc]

one conclusion you can make is that the party that was more interested in clamping down on free speech , promoting rascism etc etc is finally gone. as musk said thankgoodness
We are in a limbo land until things are finalised. I don't believe a National government is secure yet and we may see a second election coming if Winston or Luxon puts his foot down.

[777]

We are in a limbo land until things are finalised. I don't believe a National government is secure yet and we may see a second election coming if Winston or Luxon puts his foot down.

Neither of them would risk a second election in case the dumped lot got back in.

[winner69]

Talking of volatility there’s an old saying

“SailorRob did not become skilled by always sailing on a calm sea."

[Ggcc]

Neither of them would risk a second election in case the dumped lot got back in.
I hope so. I feel behind closed doors they can work together, as they have common goals. In the media their alter egos come to light.

Once all deals are ticked off and they have formed a government we will see the sharemarket take off again. That is my belief.

[bull....]

I hope so. I feel behind closed doors they can work together, as they have common goals. In the media their alter egos come to light.

Once all deals are ticked off and they have formed a government we will see the sharemarket take off again. That is my belief.

they all work out a deal as adults. anyway according to this articele peoperty will do really well next period based on data

People always say the election impacts the property market.
But is it actually true?
I dug into property market data from the past nine elections and here’s what I found.

https://www.oneroof.co.nz/news/do-kiwis-buy-more-homes-when-national-wins-at-the-polls-44448

[winner69]

CPI print 5.6%

That’s down heaps

New Govt, inflation falling …..Santa rally on markets …anything else

[Ggcc]

CPI print 5.6%

That’s down heaps

New Govt, inflation falling …..Santa rally on markets …anything else
Well NZX turnover is very low after these figures. Only just under 20 Million so far

[SailorRob]

CPI print 5.6%

That’s down heaps

New Govt, inflation falling …..Santa rally on markets …anything else

When the rate of increase in prices of goods and services drop it's good, but when the price of stocks fall it's bad?

[Rawz]

When the rate of increase in prices of goods and services drop it's good, but when the price of stocks fall it's bad?

Yes.. i want the price of my steak to be very low and the value of my portfolio to be very high.

[Bjauck]

No, that is not true (the bit I have highlighted in bold). Aussie's investing in NZ do not get any benefit from NZ imputation credits.
https://www.ato.gov.au/business/imputation/in-detail/trans-tasman-imputation-special-rules/

SNOOPY
While not benefiting from the imputation credit per se, What about the supplementary dividend (and FITC) paid to non-resident shareholders by a NZ company, that pays a dividend with imputation credit attached. I don’t really understand the process or effect, but doesn’t that reduce the double taxation burden for a non-resident shareholder? I am pretty sure Australia does not have a similar scheme for the non-resident shareholders in their companies that attach franking credits.

[Snoopy]

While not benefiting from the imputation credit per se, What about the supplementary dividend (and FITC) paid to non-resident shareholders by a NZ company, that pays a dividend with imputation credit attached. I don’t really understand the process or effect, but doesn’t that reduce the double taxation burden for a non-resident shareholder? I am pretty sure Australia does not have a similar scheme for the non-resident shareholders in their companies that attach franking credits.

Bjauck, this matter is addressed in the link I posted before
https://www.ato.gov.au/business/imputation/in-detail/trans-tasman-imputation-special-rules/

"Note: The NZ income tax rules do not provide for exemption from NZ withholding tax in respect of a dividend paid by a NZ company to a foreign resident from taxed corporate profits. Instead, NZ withholding tax imposed on the dividend is effectively refunded to the foreign resident in the form of a supplementary dividend. The supplementary dividend is also subject to NZ withholding tax."

So foreign shareholders in NZ companies get their dividends taxed before they are sent out of NZ. However they also get a supplementary dividend payment that matches the tax taken off. That means the 'net effect' for Australian shareholders of NZ companies is the same as for an NZ shareholder in the cash payment received. However, unlike the NZ shareholder. the foreign shareholder cannot claim the NZ imputation credits attached to such a dividend.

Going the other way, the mechanism is a little different. An NZ shareholder in an ASX listed tax paying company can receive the same cash payment as an Australian shareholder in that same company. Unlike in New Zealand, the Australian tax authorities do not take any withholding tax off such a dividend paid to foreigners. You would be correct in observing there is no supplementary dividend payment made to NZ shareholders. But there is no need for such a payment because unlike NZ, no withholding tax is deducted in Australia. And of course NZ investors cannot claim those Australian franking credits

What we have here are two different mechanisms to achieve the same thing for 'foreign' investors. Both NZ investors receiving dividends from Australia and Australian investors receiving dividends from New Zealand receive a cash amount net, equal to a dividend without withholding tax being taken off. But the tax laws on each side of the Tasman are different to achieve the same thing. That means the system is equally fair from the perspective of NZ and Australian investors not suffering the penalty of withholding tax, and equally unfair in that Australians do not get the benefit of 'NZ imputation credits' and we do not get the benefit of 'Australian franking credits'.

SNOOPY

[Valuegrowth]

https://www.theguardian.com/world/2023/jul/08/new-zealand-housing-crisis-couch-surfing#:~:text=New%20Zealand%20housing%20stock%20 is,NZ%24600%2C000%20in%20the%20UK.

"New Zealand housing stock is extremely expensive, says Grimes, pointing to the 50% increase (https://www.stuff.co.nz/life-style/homed/real-estate/127295443/house-prices-up-50-per-cent-over-the-last-five-years--trade-me) in house prices between 2016 and 2021. The average cost of a home in New Zealand is about NZ$900,000 (https://www.theguardian.com/world/2023/may/10/new-zealand-house-prices-drop-again-but-still-out-of-reach-for-first-time-buyers) ($555,000/£435,000), compared to a little under NZ$600,000 in the UK (https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/march2023#:~:text=Average%20house%20prices%20incre ased%20over,in%20Northern%20Ireland%20(5.0%25).)."

[Valuegrowth]

https://www.visualcapitalist.com/mapping-housing-market-affordability/
MARKETS (https://www.visualcapitalist.com/category/markets/)
Ranked: 15 of the World’s Least Affordable Housing Markets



Australia
Canada
China (Hong Kong)
Ireland
New Zealand
Singapore
United Kingdom
United States

[SailorRob]

Yes.. i want the price of my steak to be very low and the value of my portfolio to be very high.

And how do you deal with the exceptionally low forward returns and inability to reinvest?

[Bjauck]

Thanks Snoopy for the explanation of the differences between Australia and NZ.

[Rawz]

And how do you deal with the exceptionally low forward returns and inability to reinvest?


Say OCA went to $2 over the next 6 months.. that would be the best thing ever. I could sell and move the funds to one of the many 1000’s of other companies out there in the world. I would then hope the price of that stock doubles/triples etc

Why would anyone want their investment to fall in value, that makes no sense

[SailorRob]

Say OCA went to $2 over the next 6 months.. that would be the best thing ever. I could sell and move the funds to one of the many 1000’s of other companies out there in the world. I would then hope the price of that stock doubles/triples etc

Why would anyone want their investment to fall in value, that makes no sense

It makes all the sense in the world as I've mathematically highlighted many times.

I have also highlighted that hope isn't a valid strategy and I don't recommend it, wishing I also have up at around the age of 7.

If you have the ability to move funds between higher and lower valuations consistently that's another thing.

That you are using hope however suggests that you do not.

If OCA goes to $2 in 6 months, do you have the skill to sell and reinvest into something that will outperform OCA forward?

[Rawz]

It makes all the sense in the world as I've mathematically highlighted many times.

I have also highlighted that hope isn't a valid strategy and I don't recommend it, wishing I also have up at around the age of 7.

If you have the ability to move funds between higher and lower valuations consistently that's another thing.

That you are using hope however suggests that you do not.

If OCA goes to $2 in 6 months, do you have the skill to sell and reinvest into something that will outperform OCA forward?

Yes you have posted many times that you wish for all our investments to go down in value its the most bizarre investment strategy ive ever seen. You are getting your wish with OCA right now. The SP is down about 50% from its high. Where is the buyback? DPS are decreasing. How is this wonderful investment strategy of yours benefiting you?

Talk about hope. You are basically hoping a good performing stock goes down in value. When in reality it never will. The SP will always follow performance.

Yes ill take my chances of selling OCA at $2 and investing it elsewhere.

[Snow Leopard]

...

So foreign shareholders in NZ companies get their dividends taxed before they are sent out of NZ. -- This is TRUE.

However they also get a supplementary dividend payment that matches the tax taken off. -- This is only true if the dividend is FULLY imputed, otherwise the NRWT is greater than the Supplementary.

That means the 'net effect' for Australian shareholders of NZ companies is the same as for an NZ shareholder in the cash payment received. -- This is FALSE. Australian shareholders get more cash, and the less it is imputed the morer they get. I will do examples if there is demand.

However, unlike the NZ shareholder. the foreign shareholder cannot claim the NZ imputation credits attached to such a dividend. -- This is TRUE. But Australians may be able to offset the NZ NRWT against their AU tax liabilities.

...

NZ tax for AU dividends is also complicated by whether the AU dividend is fully franked I believe.

[SailorRob]

Yes you have posted many times that you wish for all our investments to go down in value its the most bizarre investment strategy ive ever seen. You are getting your wish with OCA right now. The SP is down about 50% from its high. Where is the buyback? DPS are decreasing. How is this wonderful investment strategy of yours benefiting you?

Talk about hope. You are basically hoping a good performing stock goes down in value. When in reality it never will. The SP will always follow performance.

Yes ill take my chances of selling OCA at $2 and investing it elsewhere.

Most bizzare, no wonder buffett also desires it.

I've posted the math with OCA between now and 2040, the difference in return with lower vs higher prices, feel free to pick apart the math.

Oh so Davita 20% one day drop, I was dreaming about that was I?

Putting massive portions of my net worth into Berkshire when it DROPPED to 175, but you say it can't drop?

Everything I've bought has been good performing businesses when they have DROPPED in price, even when I already own in bulk.

Lower prices better than high. You cannot understand simple maths.

Love having people like you vs me in transactions, makes it much easier.

With OCA do your own buyback bro.

[SailorRob]

Yes you have posted many times that you wish for all our investments to go down in value its the most bizarre investment strategy ive ever seen. You are getting your wish with OCA right now. The SP is down about 50% from its high. Where is the buyback? DPS are decreasing. How is this wonderful investment strategy of yours benefiting you?

Talk about hope. You are basically hoping a good performing stock goes down in value. When in reality it never will. The SP will always follow performance.

Yes ill take my chances of selling OCA at $2 and investing it elsewhere.

Also, seeing as I'm a bit slow, can you explain to me if your strategy is so obvious and mine so bizarre, what have your returns been over the last 5 years and why are they so much worse than the Sailors?

Why are you doing so awful?

[Rawz]

Also, seeing as I'm a bit slow, can you explain to me if your strategy is so obvious and mine so bizarre, what have your returns been over the last 5 years and why are they so much worse than the Sailors?

Why are you doing so awful?

I'm making all the investing mistakes possible now while im young and my portfolio is small :eek2:

Ive got this white board in my home office and every lesson is up on it...

One day i hope to be a billionaire like you. Obviously you have compounded for a long time and have incredible wealth beyond imagine of most

[Rawz]

Most bizzare, no wonder buffett also desires it.

I've posted the math with OCA between now and 2040, the difference in return with lower vs higher prices, feel free to pick apart the math.

Oh so Davita 20% one day drop, I was dreaming about that was I?

Putting massive portions of my net worth into Berkshire when it DROPPED to 175, but you say it can't drop?

Everything I've bought has been good performing businesses when they have DROPPED in price, even when I already own in bulk.

Lower prices better than high. You cannot understand simple maths.

Love having people like you vs me in transactions, makes it much easier.

With OCA do your own buyback bro.

No one here argues about buying in when something is cheap.

what you keep posting over and over is you hope something drops in value once someone has made their investment. this makes no sense.

glad you can time the market you must be a billionaire

[SailorRob]

I'm making all the investing mistakes possible now while im young and my portfolio is small :eek2:

Ive got this white board in my home office and every lesson is up on it...

One day i hope to be a billionaire like you. Obviously you have compounded for a long time and have incredible wealth beyond imagine of most

Cheers, I'm doing OK yep.

The only reason I've done well is from stocks dropping a lot AFTER I have purchased.

You can do your own research on Buffett wanting his stock portfolio to fall not rise.

I've posted the math behind wanting OCA to stay low for many years even though I have a full position, it's irrefutable. I can walk you through it if you struggle.

If you know OCA will be $2 by 2030, that's a 16% CAGR. You want that ability to invest at 16% to remain as long as possible while you reinvest dividends and income. If it shoots up now you lose the ability to invest at 16%.

So easy...

Please reply to my OCA post showing the math regarding the performance to 2040. Show me where I'm wrong.

And show me where buffett says he wants companies he's already bought to go up not down in value.

[SailorRob]

By 2025 your return will be 23% CAGR

By 2027 it will be 40%

By 2029 it will be 178%

Who doesn't want these returns, you can invest unlimited amounts of fresh money at these massive returns...

[Rawz]

Your whole theory relies on a stock performing well and remaining low. This just wont happen in the long run, the SP will follow earnings/cash flows.

When a stock crashes and is undervalued yes obviously everyone loves that opportunity. But your CAGRs above will never happen

[SailorRob]

Your whole theory relies on a stock performing well and remaining low. This just wont happen in the long run, the SP will follow earnings/cash flows.

When a stock crashes and is undervalued yes obviously everyone loves that opportunity. But your CAGRs above will never happen

Correct this is an extreme example, but any less extreme also works. You agree with what I am highlighting finally.

What you perhaps miss is that with OCA this extreme example is already happening. And has done for 7 or 8 years already. Will it continue till 2030 maybe not.

[SailorRob]

Your whole theory relies on a stock performing well and remaining low. This just wont happen in the long run, the SP will follow earnings/cash flows.

When a stock crashes and is undervalued yes obviously everyone loves that opportunity. But your CAGRs above will never happen

Simple maths isn't really a theory...

[SailorRob]

Your whole theory relies on a stock performing well and remaining low. This just wont happen in the long run, the SP will follow earnings/cash flows.

When a stock crashes and is undervalued yes obviously everyone loves that opportunity. But your CAGRs above will never happen

I have WAY more OCA now because of low prices for years than I would do if it had run. Surely you understand? So in the end I will make WAY more.

Unless I've messed up my analysis. Which is why everyone wants stocks to go up NOW. Because they don't trust their analysis. They need the market to tell them they are right.

[Rawz]

Simple maths isn't really a theory...

the maths works but the theory of a stock staying low while performing and assuming dividends per share are maintained by the company is dream world stuff. Example OCA

[Valuegrowth]

Cheers, I'm doing OK yep.

The only reason I've done well is from stocks dropping a lot AFTER I have purchased.

You can do your own research on Buffett wanting his stock portfolio to fall not rise.

I've posted the math behind wanting OCA to stay low for many years even though I have a full position, it's irrefutable. I can walk you through it if you struggle.

If you know OCA will be $2 by 2030, that's a 16% CAGR. You want that ability to invest at 16% to remain as long as possible while you reinvest dividends and income. If it shoots up now you lose the ability to invest at 16%.

So easy...

Please reply to my OCA post showing the math regarding the performance to 2040. Show me where I'm wrong.

And show me where buffett says he wants companies he's already bought to go up not down in value.


Your whole theory relies on a stock performing well and remaining low. This just wont happen in the long run, the SP will follow earnings/cash flows.

When a stock crashes and is undervalued yes obviously everyone loves that opportunity. But your CAGRs above will never happen I agree dropping share prices of quality companies create great opportunities for intelligent stock pickers. Current overvalued stocks should come down sooner than later. My preferred stock category is strong balance sheet.

[SailorRob]

the maths works but the theory of a stock staying low while performing and assuming dividends per share are maintained by the company is dream world stuff. Example OCA

Well I would counter that this dream you speak of has been Berkshire Hathaway for 60 years. Markel for 40... Hundreds of others... Microsoft... Apple... Davita...

[Rawz]

Well I would counter that this dream you speak of has been Berkshire Hathaway for 60 years. Markel for 40... Hundreds of others... Microsoft... Apple... Davita...

I hope OCA is the next Apple or Microsoft.

Best wishes

[SailorRob]

I hope OCA is the next Apple or Microsoft.

Best wishes

Wishes, attaining the age of 7... Stop...

Stop your hoping and wishing, you're not a child. Study, do the work, read annual reports, do a math course. Anything but hope and wish.

[Daytr]

Wow I didn't realise the Sage of Omaha had turned economic theory upside down.
Honestly some of the garbage I have read on here lately such as higher interest rates are a good thing.
Apparently lowering taxes on another thread won't lower Government income.
The economy apparently is also boiling!

If you buy a stock and the price drops it is not a good thing for your long term returns, as you have outlaid more capital than you could of.

If the stock appreciates strongly based on future earnings and its PE goes through the roof, the future earnings have been brought forward, so why wait?
Why wouldn't you capitilise there and then.

Hey, but this is just basic stuff, so it's bizarre that it's even a question.

[Rawz]

Wishes, attaining the age of 7... Stop...

Stop your hoping and wishing, you're not a child. Study, do the work, read annual reports, do a math course. Anything but hope and wish.

Well that went over your head

all the best

[SailorRob]

Wow I didn't realise the Sage of Omaha had turned economic theory upside down.
Honestly some of the garbage I have read on here lately such as higher interest rates are a good thing.
Apparently lowering taxes on another thread won't lower Government income.
The economy apparently is also boiling!

If you buy a stock and the price drops it is not a good thing for your long term returns, as you have outlaid more capital than you could of.

If the stock appreciates strongly based on future earnings and its PE goes through the roof, the future earnings have been brought forward, so why wait?
Why wouldn't you capitilise there and then.

Hey, but this is just basic stuff, so it's bizarre that it's even a question.

Day Trader is correct.

Buffett is wrong again.

See for yourselves...

https://youtu.be/UNeFtyoZoSI?si=-7zfK9oe2DyPBfti

Day Trader, the guru.

[SailorRob]

Well that went over your head

all the best

Just all the best, no wishing and hope?

[SailorRob]

Wow I didn't realise the Sage of Omaha had turned economic theory upside down.
Honestly some of the garbage I have read on here lately such as higher interest rates are a good thing.
Apparently lowering taxes on another thread won't lower Government income.
The economy apparently is also boiling!

If you buy a stock and the price drops it is not a good thing for your long term returns, as you have outlaid more capital than you could of.

If the stock appreciates strongly based on future earnings and its PE goes through the roof, the future earnings have been brought forward, so why wait?
Why wouldn't you capitilise there and then.

Hey, but this is just basic stuff, so it's bizarre that it's even a question.

Seriously people if you are the one in a thousand that can understand Buffett and instantly see how wrong Day Trader is, you have a massive edge.

[Rawz]

imagine taking a full position on a stock and it doubles from there but then some sailor tells you actually its better if your position had halved.. :confused:

[SailorRob]

imagine taking a full position on a stock and it doubles from there but then some sailor tells you actually its better if your position had halved.. :confused:

Taken a while but you're getting there. I have a full position in Berkshire, if it goes down 50% the I will make far more money over time than if it doubles.

If like you, you buy something overvalued and it gets destroyed then sorry pal but you're out.

[Rawz]

Taken a while but you're getting there. I have a full position in Berkshire, if it goes down 50% the I will make far more money over time than if it doubles.

If like you, you buy something overvalued and it gets destroyed then sorry pal but you're out.

LOL no. If berkshire went down 50% and then you took a full position you would make far more money. and this is the crux of the conversation. You insist taking a 50% drawdown on a full position (your words) is good for you. Im the opposite. Would rather take the capital gain and move onto the next stock that has a drawdown.

anyways this is on repeat so bye bye sailor

[SailorRob]

imagine taking a full position on a stock and it doubles from there but then some sailor tells you actually its better if your position had halved.. :confused:

I didn't know Warren sailed to be totally honest.

[Snoopy]

Snoopy wrote
"So foreign shareholders in NZ companies get their dividends taxed before they are sent out of NZ."
-- This is TRUE.


Off to a good start. We agree!



Snoopy wrote
"However they also get a supplementary dividend payment that matches the tax taken off.
-- This is only true if the dividend is FULLY imputed, otherwise the NRWT is greater than the Supplementary."

Snoopy wrote:
"That means the 'net effect' for Australian shareholders of NZ companies is the same as for an NZ shareholder in the cash payment received. "
-- This is FALSE. Australian shareholders get more cash, and the less it is imputed the more they get. I will do examples if there is demand.


I didn't want to get into the case of what happens if the dividend is not fully imputed, or if an Australian dividend is not fully franked. 'Frankly' (sic) that is clouding the more prescient issue of what happens when a dividend is fully franked, (or fully imputed in the New Zealand case.)

POINT OF DISCLOSURE: I live in New Zealand and so can take advantage of NZ imputation credits. I do not have any personal experience of what the withholding tax situation is for a non-NZ resident (which I understand SL is) holding NZ shares. So I must bow to the Snow Leopard's personal experience on this (i.e. I will be very happy for SL to correct me if I am wrong).

However, my evidence on what happens with supplementary tax payments comes from p29 in the IR274 booklet (dated July 2022), as put out by the NZ IRD. There is a referred to table, which shows how 'Foreign Investor Tax Credits' ('FITC') get woven into declared income by a New Zealand company. The table reads as below.



New Zealand company's profit before tax$100.00


Less income tax at company tax rate (28%)$28.00


Equals Company's after tax profit$72.00


Add back FITC claimed by company$12.17


Amount available for non-residents dividend$72.00


Share of profits paid to non-resident shareholder$84.71


less Non resident withholding tax deducted at 15%$12.17


equals Net dividend paid to non-resident shareholder$72.00



This table aligns with what I previously said about the supplementary tax credit payment to foreign shareholders of NZX tax paying listed companies being exactly wiped out by an equivalent withholding tax deducted. Thus the cash deposited in the shareholder bank account is the same amount of money, whether you be a New Zealand resident or a foreign shareholder. As I said before, I am happy to be proved wrong if a foreign person in this situation is treated differently. But I can only go on what the IRD is telling me.



Snoopy wrote
"However, unlike the NZ shareholder. the foreign shareholder cannot claim the NZ imputation credits attached to such a dividend."
-- This is TRUE. But Australians may be able to offset the NZ NRWT against their AU tax liabilities.


NZ Taxpayers certainly get a credit for Australian withholding tax paid in Australia (note I said 'withholding tax' which is not the same thing as 'franking credits'. If an Australian firm has no franking credits to distribute, then they will instead take withholding tax off any dividend distributed,) So it would not surprise me if it went the other way too, with Aussie NZX shareholding taxpayers getting a tax credit for any NZ company withholding tax paid in NZ.



NZ tax for AU dividends is also complicated by whether the AU dividend is fully franked I believe.


Yes it is, but can we leave that complication aside for now?

SNOOPY

[Daytr]

Day Trader is correct.

Buffett is wrong again.

See for yourselves...

https://youtu.be/UNeFtyoZoSI?si=-7zfK9oe2DyPBfti

Day Trader, the guru.


Taken a while but you're getting there. I have a full position in Berkshire, if it goes down 50% the I will make far more money over time than if it doubles.

If like you, you buy something overvalued and it gets destroyed then sorry pal but you're out.

I'm not saying Buffet is wrong at all, I am saying your interpretation is wrong.

Imagine if you bought Apple 20 years ago & it halved in value and you reinvested the dividends etc as you say and the SP stayed at that halved value. Yes you would recoup your loss & some, no problem there.

However you would be much, much better off by the stock multiplying in value and still receiving the dividends & reinvesting them.

You are talking cross purposes where you build a portfolio that you continually reinvest in. That only works if the stock still has the same outlook as when you first purchased. Otherwise you either over paid by double or something has changed in the company.

Whereas many people will look for large capital gains which is valuing the future profits in advance and take profit & move on.

Both strategies have merit and it depends on how good you are at picking stocks.

Your strategy is also has a double down effect which again only works if you have picked the right stock and that something hasn't fundamentally changed.

[SailorRob]

I'm not saying Buffet is wrong at all, I am saying your interpretation is wrong.

Imagine if you bought Apple 20 years ago & it halved in value and you reinvested the dividends etc as you say and the SP stayed at that halved value. Yes you would recoup your loss & some, no problem there.

However you would be much, much better off by the stock multiplying in value and still receiving the dividends & reinvesting them.

You are talking cross purposes where you build a portfolio that you continually reinvest in. That only works if the stock still has the same outlook as when you first purchased. Otherwise you either over paid by double or something has changed in the company.

Whereas many people will look for large capital gains which is valuing the future profits in advance and take profit & move on.

Both strategies have merit and it depends on how good you are at picking stocks.

Your strategy is also has a double down effect which again only works if you have picked the right stock and that something hasn't fundamentally changed.

No.

You're better off reinvesting all the dividends at low prices and then having the share price multiplying in value.

But agree with the rest. I'm not misinterpreting anything, my thoughts and strategy is identical to Buffett as I learned it from him.

[Daytr]

No.

You're better off reinvesting all the dividends at low prices and then having the share price multiplying in value.

But agree with the rest. I'm not misinterpreting anything, my thoughts and strategy is identical to Buffett as I learned it from him.

Well that only works if you just didn't buy a lemon and that's the why it halved in value and maybe it halves again and you keep reinvesting until you have wiped out a considerable amount of capital.

Doubling down is rarely a good strategy, but it depends on the situation on that rare occasion. I.e the whole market might be down like during the pandemic. But then again if you weren't fully invested you can take opportunity on those sorts of occasions.

There are plenty of stocks that were considered blue chip that have never bounced back. Kodak & Nokia come to mind but there are plenty of others.

[SailorRob]

Well that only works if you just didn't buy a lemon and that's the why it halved in value and maybe it halves again and you keep reinvesting until you have wiped out a considerable amount of capital.

Doubling down is rarely a good strategy, but it depends on the situation on that rare occasion. I.e the whole market might be down like during the pandemic. But then again if you weren't fully invested you can take opportunity on those sorts of occasions.

There are plenty of stocks that were considered blue chip that have never bounced back. Kodak & Nokia come to mind but there are plenty of others.

Agreed yep.

The original point was more around a OCA situation where over 7 or 8 years you can reinvest dividends at wiped out prices.

If you get a long period of depressed prices like the 70's you can reinvest dividends for a decade or more at sub 10 PE's and get very rich.

[Snow Leopard]

...
However, my evidence on what happens with supplementary tax payments comes from p29 in the IR274 booklet (dated July 2022), as put out by the NZ IRD. There is a referred to table, which shows how 'Foreign Investor Tax Credits' ('FITC') get woven into declared income by a New Zealand company. The table reads as below.



New Zealand company's profit before tax
$100.00


Less income tax at company tax rate (28%)
$28.00


Equals Company's after tax profit
$72.00


Add back FITC claimed by company
$12.17


Amount available for non-residents dividend
$72.00


Share of profits paid to non-resident shareholder
$84.71


less Non resident withholding tax deducted at 15%
$12.17


equals Net dividend paid to non-resident shareholder
$72.00



This table aligns with what I previously said about the supplementary tax credit payment to foreign shareholders of NZX tax paying listed companies being exactly wiped out by an equivalent withholding tax deducted. Thus the cash deposited in the shareholder bank account is the same amount of money, whether you be a New Zealand resident or a foreign shareholder. As I said before, I am happy to be proved wrong if a foreign person in this situation is treated differently. But I can only go on what the IRD is telling me
....

Yes, non-residents, such as myself, will get $72 in their account...

But, residents, such as yourself, only get $67 in your account: because the RWT is 33% on dividends.

After that, we may, or may not, have a further amount to pay, reclaim or offset given our respective tax situations.
But that is complicating things.

Disc: Current in the Isle of Man, listening to Storm Babet blow by.

[Baa_Baa]

Agreed yep.

The original point was more around a OCA situation where over 7 or 8 years you can reinvest dividends at wiped out prices.

If you get a long period of depressed prices like the 70's you can reinvest dividends for a decade or more at sub 10 PE's and get very rich.

I have many thousands of new OCA shares from the DRP's over the years since I took up a position, accumulated slowly on SP weakness over about 3-4 years, which now every 6 months brings in more shares through DRP, so the lower the SP that I get these new shares the better, also including the discount of the DRP to market price, at the time. I haven't put a cent into OCA for I think at least a year, maybe two, I don't need to, but my holding has increased as a # and % of portfolio quite significantly, just in that relatively short time.

The longer the SP stays low, the better it is for me, and even lower would be better(!) as I enjoy an increasing portfolio through more DRP dividends/shares. This is because my intent is never to sell, it is on the contrary to grow my investment in OCA over many years and enjoy the returns. My stake in the company keeps increasing and now my direct capital cost of accumulation is zero. A share buyback would just be icing on the cake, but I can't see it currently with the current bank debt or development aspirations.

One day if the SP goes ballistic and gets well ahead of the PE, then my investment thesis is challenged as I'm in a probably in a better position than had I not done this, to sell some and maybe even recoup some or all of my initial capital investments, leaving me with a capital free holding that will continue to grow from DRP's ad infinitum. One day I'll cancel the DRP and take the dividends in cash, and if I don't think the cash % is enough, I'll move the free holding to another company that does. If they stopped the dividend/DRP for a year or so, for whatever reason, I'd ride it out and make my mind up until when I found something I liked better.

I think people struggle with this because they don't get 'long term investing' or how to do it. I think most people in the market, or maybe just most around here who bother to post their thoughts, seem to be focused purely on capital gains, getting them as quickly as possible, and getting out, to lock in gains and avoid capital losses. Nothing wrong with that except they possibly don't take into account that that approach is not an equity investment growth strategy and is essential a trader strategy and subject to trading fees and capital gains taxes, it is not a long term investment strategy.

It's entirely ok, imo to have different strategies for different investments. Not everything fits nicely with long term, or momentum, or short term, or whatever. Just try to choose deliberately and wisely whatever works best for your own circumstances.

[Snoopy]

Yes, non-residents, such as myself, will get $72 in their account...

But, residents, such as yourself, only get $67 in your account: because the RWT is 33% on dividends.


Ah, OK I take your point. But that Overall withholding tax rate of 33% is because there is a difference between NZ company tax rate of 28% and what was the top personal tax rate in New Zealand of 33%.

In Australia the company tax rate is higher at 30%. I see the Australian personal tax bracket rate of 32.5% applies to incomes of up to $120k per year. So a smaller difference for most people. Maybe that is why I can't see a mention of a withholding tax, over and above the franking credits for Aussies holding shares in their own country?

So you are right. There is a difference between the dividend money put into your bank account between NZ and Australian investors in NZX companies. But the way I look at it, that difference is more to do with the difference between individual and company tax rates in the respective countries. It is not a fundamental conceptually different taxation principle at work here. Indeed if the the NZ shares were held by another NZ company, like your own private investment vehicle, then the payment into each account would be the same, no matter what side of the Tasman you were domiciled on.



After that, we may, or may not, have a further amount to pay, reclaim or offset given our respective tax situations.
But that is complicating things.


Indeed!



Disc: Current in the Isle of Man, listening to Storm Babet blow by.


Oh wow. I have always wanted to go there. I had the idea of hiring a bike and doing a lap of the TT circuit too. Although I was envisioning something 'pedal powered', rather than something with a motor! My other thought about going there was that if I went to the UK again I would probably catch Covid-19 on the way over, so I might need a semi-isolated place to hunker down for a week. Would the IOM fit that bill?

SNOOPY

[Valuegrowth]

https://www.youtube.com/watch?v=P6xj152z9nQ

[Snow Leopard]

...
Oh wow. I have always wanted to go there. I had the idea of hiring a bike and doing a lap of the TT circuit too. Although I was envisioning something 'pedal powered', rather than something with a motor! My other thought about going there was that if I went to the UK again I would probably catch Covid-19 on the way over, so I might need a semi-isolated place to hunker down for a week. Would the IOM fit that bill?

SNOOPY

I assume you realise that the TT course is nearly 61km long and the climb out of Ramsey is brutal.
Best do it on a weekend morning and when you get to the Bungalow you MUST divert to the Victory Cafe for a meal.

There is plenty of other cycling and walking routes to enjoy.

You will also be required to ride the assorted steam trains and electric trams, visit the worlds largest water-wheel at Laxey and have pulled pork baps on the sea-front.
It is compulsory to eat kipper baps, queenies and Davidson's Ice Cream on Peel promenade/break water.

Neither the UK or the IOM require Covid isolation these days.

[bull....]

Well that only works if you just didn't buy a lemon and that's the why it halved in value and maybe it halves again and you keep reinvesting until you have wiped out a considerable amount of capital.

Doubling down is rarely a good strategy, but it depends on the situation on that rare occasion. I.e the whole market might be down like during the pandemic. But then again if you weren't fully invested you can take opportunity on those sorts of occasions.

There are plenty of stocks that were considered blue chip that have never bounced back. Kodak & Nokia come to mind but there are plenty of others.

yep your right
there is a reason it works for buffett , he is a great stock picker. most people are not

[bull....]

Agreed yep.

The original point was more around a OCA situation where over 7 or 8 years you can reinvest dividends at wiped out prices.

If you get a long period of depressed prices like the 70's you can reinvest dividends for a decade or more at sub 10 PE's and get very rich.

you must be very good being able to see the future in 7 -10yrs and know that it will all work out , with skills like this you must be on the NZ rich list ?

[SailorRob]

I have many thousands of new OCA shares from the DRP's over the years since I took up a position, accumulated slowly on SP weakness over about 3-4 years, which now every 6 months brings in more shares through DRP, so the lower the SP that I get these new shares the better, also including the discount of the DRP to market price, at the time. I haven't put a cent into OCA for I think at least a year, maybe two, I don't need to, but my holding has increased as a # and % of portfolio quite significantly, just in that relatively short time.

The longer the SP stays low, the better it is for me, and even lower would be better(!) as I enjoy an increasing portfolio through more DRP dividends/shares. This is because my intent is never to sell, it is on the contrary to grow my investment in OCA over many years and enjoy the returns. My stake in the company keeps increasing and now my direct capital cost of accumulation is zero. A share buyback would just be icing on the cake, but I can't see it currently with the current bank debt or development aspirations.

One day if the SP goes ballistic and gets well ahead of the PE, then my investment thesis is challenged as I'm in a probably in a better position than had I not done this, to sell some and maybe even recoup some or all of my initial capital investments, leaving me with a capital free holding that will continue to grow from DRP's ad infinitum. One day I'll cancel the DRP and take the dividends in cash, and if I don't think the cash % is enough, I'll move the free holding to another company that does. If they stopped the dividend/DRP for a year or so, for whatever reason, I'd ride it out and make my mind up until when I found something I liked better.

I think people struggle with this because they don't get 'long term investing' or how to do it. I think most people in the market, or maybe just most around here who bother to post their thoughts, seem to be focused purely on capital gains, getting them as quickly as possible, and getting out, to lock in gains and avoid capital losses. Nothing wrong with that except they possibly don't take into account that that approach is not an equity investment growth strategy and is essential a trader strategy and subject to trading fees and capital gains taxes, it is not a long term investment strategy.

It's entirely ok, imo to have different strategies for different investments. Not everything fits nicely with long term, or momentum, or short term, or whatever. Just try to choose deliberately and wisely whatever works best for your own circumstances.

Yes, and perhaps an even bigger reason very few can see it how we do is that they are not comfortable with their own analysis, so a stock price below their purchase price means that they think they're wrong (most likely they are). They need market pricing to tell them the value of the business.

For us, if $100 notes keep getting offered to us for lower and lower prices we are among the very few that think this is a good thing.

[Daytr]

I have many thousands of new OCA shares from the DRP's over the years since I took up a position, accumulated slowly on SP weakness over about 3-4 years, which now every 6 months brings in more shares through DRP, so the lower the SP that I get these new shares the better, also including the discount of the DRP to market price, at the time. I haven't put a cent into OCA for I think at least a year, maybe two, I don't need to, but my holding has increased as a # and % of portfolio quite significantly, just in that relatively short time.

The longer the SP stays low, the better it is for me, and even lower would be better(!) as I enjoy an increasing portfolio through more DRP dividends/shares. This is because my intent is never to sell, it is on the contrary to grow my investment in OCA over many years and enjoy the returns. My stake in the company keeps increasing and now my direct capital cost of accumulation is zero. A share buyback would just be icing on the cake, but I can't see it currently with the current bank debt or development aspirations.

One day if the SP goes ballistic and gets well ahead of the PE, then my investment thesis is challenged as I'm in a probably in a better position than had I not done this, to sell some and maybe even recoup some or all of my initial capital investments, leaving me with a capital free holding that will continue to grow from DRP's ad infinitum. One day I'll cancel the DRP and take the dividends in cash, and if I don't think the cash % is enough, I'll move the free holding to another company that does. If they stopped the dividend/DRP for a year or so, for whatever reason, I'd ride it out and make my mind up until when I found something I liked better.

I think people struggle with this because they don't get 'long term investing' or how to do it. I think most people in the market, or maybe just most around here who bother to post their thoughts, seem to be focused purely on capital gains, getting them as quickly as possible, and getting out, to lock in gains and avoid capital losses. Nothing wrong with that except they possibly don't take into account that that approach is not an equity investment growth strategy and is essential a trader strategy and subject to trading fees and capital gains taxes, it is not a long term investment strategy.

It's entirely ok, imo to have different strategies for different investments. Not everything fits nicely with long term, or momentum, or short term, or whatever. Just try to choose deliberately and wisely whatever works best for your own circumstances.


Yes, and perhaps an even bigger reason very few can see it how we do is that they are not comfortable with their own analysis, so a stock price below their purchase price means that they think they're wrong (most likely they are). They need market pricing to tell them the value of the business.

For us, if $100 notes keep getting offered to us for lower and lower prices we are among the very few that think this is a good thing.

Yep we get it you are buying lower in the hope of selling higher. Be it dividends reinvested or you just buy more shares.

It's basic compounding and averaging down. Which may or may not work out over time.

Sorry to sound like a smart arse, but its hardly rocket science.

[SailorRob]

Yep we get it you are buying lower in the hope of selling higher. Be it dividends reinvested or you just buy more shares.

It's basic compounding and averaging down. Which may or may not work out over time.

Sorry to sound like a smart arse, but its hardly rocket science.

In the hope of holding forever sport. And letting company buybacks work like Berkshire.

Your earnings will exceed your cost basis. I have a company where my annual dividend is more than my cost price.

[Aaron]

Another down day in the US, at what point do higher interest rates and fixed interest securities look better than a diversified equity index fund dropping in value.

When will people nearing retirement and financial advisors start weighting portfolios more heavily in fixed interest as all standard financial advice advises.

Will this switch tank the stock markets?

[SailorRob]

Yep we get it you are buying lower in the hope of selling higher. Be it dividends reinvested or you just buy more shares.

It's basic compounding and averaging down. Which may or may not work out over time.

Sorry to sound like a smart arse, but its hardly rocket science.

Bought Davita on the drop, decent position, highlighted the opportunity here. Now it has raced up and given me nearly 12 months return in a few days.

I am absolutely gutted.

What I wanted was for it to drop another 50% or even 80% AFTER I had bought it.

Yes even better if before I bought it but once I've bought it, then I use Raws strategy of wishing and hoping for it to go wayyyyy down.

[SailorRob]

Another down day in the US, at what point do higher interest rates and fixed interest securities look better than a diversified equity index fund dropping in value.

When will people nearing retirement and financial advisors start weighting portfolios more heavily in fixed interest as all standard financial advice advises.

Will this switch tank the stock markets?

Absolutely has to have a huge effect at some point. Particularly with inflation rate declining in the US.

[winner69]

Hey SailorRob …is Blackbeard one of your relatives

[SailorRob]

Hekia SailorRob …is Blackbeard one of your relatives

Of course.

Another reason to be extremely upset that I've made so much money so quickly is that davitas capital allocation is devoted to buybacks. They have halved their share count over the last few years.

So the lower the price drops after my purchase and the longer it stays down, the more I make.

Provided I'm right about the business long term. Welshers 200 million USD stake...

[Daytr]

In the hope of holding forever sport. And letting company buybacks work like Berkshire.

Your earnings will exceed your cost basis. I have a company where my annual dividend is more than my cost price.

Which stock is that out of interest?

[SailorRob]

Which stock is that out of interest?

Alliance Resource Partners. ARLP.

Dividend higher than stock price after less than 3 years.

My average cost is slightly above the current dividend but I bought the bulk below.

[winner69]

Alliance Resource Partners. ARLP.

Dividend higher than stock price after less than 3 years.

My average cost is slightly above the current dividend but I bought the bulk below.

Nvidia future returns getting better by the day

[bull....]

nz 10 yr just made a new high this cycle :scared:

[Joshuatree]

Cheers, I'm doing OK yep.

The only reason I've done well is from stocks dropping a lot AFTER I have purchased.

You can do your own research on Buffett wanting his stock portfolio to fall not rise.

I've posted the math behind wanting OCA to stay low for many years even though I have a full position, it's irrefutable. I can walk you through it if you struggle.

If you know OCA will be $2 by 2030, that's a 16% CAGR. You want that ability to invest at 16% to remain as long as possible while you reinvest dividends and income. If it shoots up now you lose the ability to invest at 16%.

So easy...

Please reply to my OCA post showing the math regarding the performance to 2040. Show me where I'm wrong.

And show me where buffett says he wants companies he's already bought to go up not down in value.

Dropping alot after you've purchased
So you can top-up ,add more?

[winner69]

nz 10 yr just made a new high this cycle :scared:

Still a way to go I reckon ……..as normal service resumes

[Daytr]

Alliance Resource Partners. ARLP.

Dividend higher than stock price after less than 3 years.

My average cost is slightly above the current dividend but I bought the bulk below.

Nicely done

[moka]

https://www.theguardian.com/world/2023/jul/08/new-zealand-housing-crisis-couch-surfing#:~:text=New%20Zealand%20housing%20stock%20 is,NZ%24600%2C000%20in%20the%20UK.

"New Zealand housing stock is extremely expensive, says Grimes, pointing to the 50% increase (https://www.stuff.co.nz/life-style/homed/real-estate/127295443/house-prices-up-50-per-cent-over-the-last-five-years--trade-me) in house prices between 2016 and 2021. The average cost of a home in New Zealand is about NZ$900,000 (https://www.theguardian.com/world/2023/may/10/new-zealand-house-prices-drop-again-but-still-out-of-reach-for-first-time-buyers) ($555,000/£435,000), compared to a little under NZ$600,000 in the UK (https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/march2023#:~:text=Average%20house%20prices%20incre ased%20over,in%20Northern%20Ireland%20(5.0%25).)."Recently I went to an auction with a friend who was downsizing and looking for a low maintenance home. This particular house had sold for $525K in 2015. My friend thought top price could be about $1.02m. It went for $1.06m, so up just over 100% in 8 years.

[ronaldson]

Market down another 0.9% so far today, being the fourth trading day post-election, and continuing a downtrend since that event.

It seems that a bounce (if any) once the final result is declared early next month will be muted at best. Brighter prospects for dairy following the latest product auctions hasn't reversed or even stalled the trend.

KFL NAV per share, another barometer, continues to fall. And what may lie hidden "in the books" is not yet known by the incoming Government, however that is. So sentiment is not on side just now despite the All Blacks being still in the game. We need a good rally both on and off the field!

[Jaa]

Still a way to go I reckon ……..as normal service resumes

US 10Y at a 16.5 year high. Be big news when it breaks 5%.

[Relaxed]

Recently I went to an auction with a friend who was downsizing and looking for a low maintenance home. This particular house had sold for $525K in 2015. My friend thought top price could be about $1.02m. It went for $1.06m, so up just over 100% in 8 years.

So, that is a lot of extra dollars, but in percentage terms a compounding rate of about 9%. Higher than average, but not extreme.
Part of the issue with the way these things are reported is that as time keeps compounding prices, the absolute dollar growth will look more and more.

eventually we will have a headline that says "average house price is now $5 million". But more information would be required before we could judge whether this was better or worse than the current prices (especially average wage and interest rates).

[ValueNZ]

So, that is a lot of extra dollars, but in percentage terms a compounding rate of about 9%. Higher than average, but not extreme.
Part of the issue with the way these things are reported is that as time keeps compounding prices, the absolute dollar growth will look more and more.

eventually we will have a headline that says "average house price is now $5 million". But more information would be required before we could judge whether this was better or worse than the current prices (especially average wage and interest rates).
I'd call it a extreme CAGR considering housing is a unproductive asset. Essentially all that has happened to get to these house prices is multiple expansion, which is obviously unsustainable.

[mike2020]

I dropped out of the share market entirely in 2008. Needed everything to debt service. Probably sold at a good time as I recall. Same change of government scenario to a certain extent. Wasn't even watching what happened the next two years just dog paddling down river.
What caught me out then was the rapid change in interest rates. Fixed high long term. I have no idea what happens from here this time.
It does seem when sentiment is at its most negative that is the actual bottom.

[FTG]

US 10Y at a 16.5 year high. Be big news when it breaks 5%.

Lest not forget...Credit market "issues" often progress into creating Black Monday type events with equity markets.

The Bond market moves over the last 12-24 months are a BIG canary in the mine...?

[Baa_Baa]

Lest not forget...Credit market "issues" often progress into creating Black Monday type events with equity markets.

The Bond market moves over the last 12-24 months are a BIG canary in the mine...?

IF it happens, which it may or may not, who really knows, these once in a decade things might be once in a couple or three decades, then the folks who've been building and protecting their buying power off-market for the past few years will be very well positioned to scoop up low priced equities and there's no real rush to do it. Crashes are usually surprisingly slow moving. Just deciding what to pounce on, and when, if it happens, is the current priority.

[SailorRob]

IF it happens, which it may or may not, who really knows, these once in a decade things might be once in a couple or three decades, then the folks who've been building and protecting their buying power off-market for the past few years will be very well positioned to scoop up low priced equities and there's no real rush to do it. Crashes are usually surprisingly slow moving. Just deciding what to pounce on, and when, if it happens, is the current priority.

They won't though. They will crap themselves and wait till fresh all time highs before entering.

[ValueNZ]

IF it happens, which it may or may not, who really knows, these once in a decade things might be once in a couple or three decades, then the folks who've been building and protecting their buying power off-market for the past few years will be very well positioned to scoop up low priced equities and there's no real rush to do it. Crashes are usually surprisingly slow moving. Just deciding what to pounce on, and when, if it happens, is the current priority.
Those folks will probably on average do worse than if they had just been fully invested at all times.

[Daytr]

I dropped out of the share market entirely in 2008. Needed everything to debt service. Probably sold at a good time as I recall. Same change of government scenario to a certain extent. Wasn't even watching what happened the next two years just dog paddling down river.
What caught me out then was the rapid change in interest rates. Fixed high long term. I have no idea what happens from here this time.
It does seem when sentiment is at its most negative that is the actual bottom.

Don't forget we had a mini credit crunch in the last year with 2nd teir banks in the US being taken over. Not saying there might not be more to come but that was probably the shock that sharply higher rates caused and it was patched over by the FED.

US borrowers in the homeloan market aren't as impacted by changing interest rates as they have a 30 year mortgage market.

China imo is the biggest concern with large structural issues in the world's 2nd largest economy. But unless there is civil unrest that is likely to be a slow decline or perhaps recovery if they can address the issues over time.

Left field events can't be ruled out of course like what has happened in the Mid East in the last few weeks.

I'm still picking that there is another move down in markets in the short term, unless the FED surprises and advocates for cutting interest rates earlier than expected.

As I have indicated previously, I think it's a good time to have some dry powder on standby.

[Daytr]

In case you missed it.

https://www.theguardian.com/business/2023/oct/18/china-economy-grows-retail-sales-rise-property

https://www.aljazeera.com/news/2023/10/18/chinas-xi-urges-west-against-decoupling-at-belt-and-road-forum

[bull....]

US 10Y at a 16.5 year high. Be big news when it breaks 5%.

powells comments 15mins ago have sent 10 yr yield's to just under 5% and stocks tanking sp 500 dropped 50 handles on what he said.

of course he is finally admitting geo-politics is going to keep inflation higher

[SailorRob]

powells comments 15mins ago have sent 10 yr yield's to just under 5% and stocks tanking sp 500 dropped 50 handles on what he said.

of course he is finally admitting geo-politics is going to keep inflation higher

Which of the 12 screens did you see that on, check the plug ain't loose.

[bull....]

Which of the 12 screens did you see that on, check the plug ain't loose.

i only have 6 screens. 2 for tv and 4 for trading. i moved to a new house and found 12 screens blocked the water view from my window. anyway powells comments means your nissan cube going to cost more to fill up

[SailorRob]

i only have 6 screens. 2 for tv and 4 for trading. i moved to a new house and found 12 screens blocked the water view from my window. anyway powells comments means your nissan cube going to cost more to fill up


Some cheap properties next to the sewerage treatment plant but things can't be that bad?

[Leemsip]

Good call on the DVA Sailor Rob.
Got a small parcel a couple of days ago.

[Relaxed]

I'd call it a extreme CAGR considering housing is a unproductive asset. Essentially all that has happened to get to these house prices is multiple expansion, which is obviously unsustainable.

True, but houses have been going up by a little over 6% on average for decades
"YoY growth data is updated quarterly, available from Dec 1990 to Mar 2023, with an average growth rate of 6.1%." (https://www.ceicdata.com/en/indicator/new-zealand/house-prices-growth)

This doubles the average price every 12ish years anyway.

the trick, in my opinion, is to figure out how to keep up.
so far, pay rises and investing in the share market have together kept me in the mix.

for the kids, I have started them on investing since they were 10. they will be well positioned to buy a house (or go on a holiday and not buy a house) by the time they are 30. but only if they continue the investing plan once they get their first jobs.

[SailorRob]

Good call on the DVA Sailor Rob.
Got a small parcel a couple of days ago.


Appreciate the feedback. It's an extremely high quality company but the higher the prices goes the weaker the effect of their main use of capital which is to buyback shares.

[SailorRob]

True, but houses have been going up by a little over 6% on average for decades
"YoY growth data is updated quarterly, available from Dec 1990 to Mar 2023, with an average growth rate of 6.1%." (https://www.ceicdata.com/en/indicator/new-zealand/house-prices-growth)

This doubles the average price every 12ish years anyway.

the trick, in my opinion, is to figure out how to keep up.
so far, pay rises and investing in the share market have together kept me in the mix.

for the kids, I have started them on investing since they were 10. they will be well positioned to buy a house (or go on a holiday and not buy a house) by the time they are 30. but only if they continue the investing plan once they get their first jobs.


Don't matter a damn what they have or have not been doing for decades, it's what they will do that matters. Massive multiple expansion which cannot be repeated and rates that have fallen for 40 years, and incorrect measurement of returns (no costs taken out) and sill only a paltry 6%, so imagine if multiples contract and rates go up and you factor in costs....

[winner69]

NZ 10:year rising ……I reckon going higher still …….before trading in 4%/7% range for a protracted time

[Daytr]

Don't matter a damn what they have or have not been doing for decades, it's what they will do that matters. Massive multiple expansion which cannot be repeated and rates that have fallen for 40 years, and incorrect measurement of returns (no costs taken out) and sill only a paltry 6%, so imagine if multiples contract and rates go up and you factor in costs....

Yes but you can't live in your share portfolio.

[SailorRob]

Yes but you can't live in your share portfolio.


Many options exist that don't involve paying 50 to 60 times earnings and borrowing to do it as well.

[SailorRob]

NZ 10:year rising ……I reckon going higher still …….before trading in 4%/7% range for a protracted time


What is your track record of what you reckon will happen to the bond market in future periods and what have you spent all the money you've made on trading it?

[Relaxed]

Don't matter a damn what they have or have not been doing for decades, it's what they will do that matters. Massive multiple expansion which cannot be repeated and rates that have fallen for 40 years, and incorrect measurement of returns (no costs taken out) and sill only a paltry 6%, so imagine if multiples contract and rates go up and you factor in costs....

I can imagine a lot of things. multiples contracting is just one of them.
I'm not sure what point you are trying to make though. if it is that things can go down, then I agree. if it is that they will go down then I also agree. it's just when and for how long that we can't really know.
but history says that over a long enough time frame (I use 10 years) things have gone up.

So I plan accordingly.

Investing to keep up.
Having fun along the way

[SailorRob]

I can imagine a lot of things. multiples contracting is just one of them.
I'm not sure what point you are trying to make though. if it is that things can go down, then I agree. if it is that they will go down then I also agree. it's just when and for how long that we can't really know.
but history says that over a long enough time frame (I use 10 years) things have gone up.

So I plan accordingly.

Investing to keep up.
Having fun along the way



My point is that you don't judge the future by what has happened in the past when it has happened through 40 years of declining rates and multiple expansion.

I'm not saying anything will go down, just saying that the prices on non productive assets cannot compound at a greater rate than the economy for long periods of time.

Yes nobody can know the when or the how long but we can say that taking an average over the last 40 to 50 years and assuming this will be roughly correct going forward will be wrong.

Unless people can constantly borrow more and more against their incomes forever then then at some point we will be constrained by income growth, which is economic growth, which in NZ per capita is ZERO.

If we're lucky we'll do 1.5%.

History says the exact opposite, it says that over time its a Goose egg (see Shillers irrational exuberance for the data or look at European prices over 4 to 500 years).

When you say history, what you mean is NZ and 40 years, that is not history!

It has to be a Goose egg for obvious reasons.

[Relaxed]

My point is that you don't judge the future by what has happened in the past when it has happened through 40 years of declining rates and multiple expansion.

I'm not saying anything will go down, just saying that the prices on non productive assets cannot compound at a greater rate than the economy for long periods of time.

Yes nobody can know the when or the how long but we can say that taking an average over the last 40 to 50 years and assuming this will be roughly correct going forward will be wrong.

Unless people can constantly borrow more and more against their incomes forever then then at some point we will be constrained by income growth, which is economic growth, which in NZ per capita is ZERO.

If we're lucky we'll do 1.5%.

History says the exact opposite, it says that over time its a Goose egg (see Shillers irrational exuberance for the data or look at European prices over 4 to 500 years).

When you say history, what you mean is NZ and 40 years, that is not history!

It has to be a Goose egg for obvious reasons.

Fair enough. but I would suggest that there are a lot of people that are currently able to save a deposit and service the mortgage.
this suggests that it is possible with current wage rates. (just not for everyone, which has always been true.)

I'll know more when the kids start trying to buy their first home, but that's not yet. what I do know is they will be earning amounts that I could never have earned, largely though the growth in the average wage (at an absolute $$ level and ignoring purchasing power).

So even with the risks you note, I'll still be investing and keeping an eye on things to make sure it goes up over time, and not down

[Daytr]

Many options exist that don't involve paying 50 to 60 times earnings and borrowing to do it as well.

Yes you can rent and for average punter pay 50% of their income away.

Property is one of the few investments you can get that sort of leverage at the lowest borrowing rates available and with relative security.

I'm not advocating for property over equities, both have their merits. For most people it's easier to pick a winner in property than it is in the stock market. I.e it's rare you have winners & losers in individual houses over time, they generally all go up over time. So for the risk / return property has been and will continue to be a very good investment.

Diversification between two good asset types is a good thing.

[mike2020]

In the last 5 years our kids have bought first and already second homes plus one has an investment property, both have kids, and enjoy a lifestyle we didn't have at their age. I think that says a lot. A lot of debt yes but the income to cover it. I see all their friends in very similar situations and they have decent homes. They definitely have no memories of interest rates in the 20s

[SailorRob]

Yes you can rent and for average punter pay 50% of their income away.

Property is one of the few investments you can get that sort of leverage at the lowest borrowing rates available and with relative security.

I'm not advocating for property over equities, both have their merits. For most people it's easier to puck a winner in property than it is in the stock market. I.e it's rare you have winners & losers in individual houses over time, they generally all go up over time. So for the risk / return property has been and will continue to be a very good investment.

Diversification between two good asset types is a good thing.

Over time?? Over what time and where?? Nominally?? Or real??

You don't borrow to buy assets that don't go up faster than what you're paying for the debt.

Obviously it cannot go up faster than the debt costs for ever being non productive.

Just a forced savings scheme for the masses.

[SailorRob]

In the last 5 years our kids have bought first and already second homes plus one has an investment property, both have kids, and enjoy a lifestyle we didn't have at their age. I think that says a lot. A lot of debt yes but the income to cover it. I see all their friends in very similar situations and they have decent homes. They definitely have no memories of interest rates in the 20s

Yes all seems a little bit odd does it not. Let's see what the future brings, will they all be rich enjoying incredible lifestyles in an environment that cannot produce real growth per capita. Or will the debt costs be a wash.

[mike2020]

No idea of the future but recent experience in the market seeing a few investment properties selling up to 2.5 times purchase price at 10 years or less makes me think it can't be a huge risk. Was talking to a fairly recent immigrant yesterday. Both qualified nurses and can afford a mortgage. Plenty more where they came from.

[Relaxed]

In the last 5 years our kids have bought first and already second homes plus one has an investment property, both have kids, and enjoy a lifestyle we didn't have at their age. I think that says a lot. A lot of debt yes but the income to cover it. I see all their friends in very similar situations and they have decent homes. They definitely have no memories of interest rates in the 20s

I like these stories. well done to your kids.
The other thought is that the house you live in, and the mortgage you are paying, is largely substituting equity for rent.

When I was first paying my mortgage I didn't track the interest paid, I tracked the extra equity I now had in my house.
I could cover the mortgage payments, because I didn't ever over extend myself, and we lived just fine. nothing fancy but definitely better off than my parents and grandparents.

I expect the kids will be the same

[SailorRob]

No idea of the future but recent experience in the market seeing a few investment properties selling up to 2.5 times purchase price at 10 years or less makes me think it can't be a huge risk. Was talking to a fairly recent immigrant yesterday. Both qualified nurses and can afford a mortgage. Plenty more where they came from.

So due to what's happened in NZ over the last 10 years, which is a historical anomaly never seen before in history basically anywhere and has lead to one of the most expensive property markets in recorded history, based on this analysis, a nurse should borrow massive multiples of their annual salary to participate in this market as your analysis shows it can't be a huge risk.

Just because they can afford to borrow doesn't mean it's a good idea.

So all I need to do is find things that have gone up 2.5 times over the last 10 years and borrow to buy.

The fact they have gone up 2.5 times in 10 years means they carry LESS risk than if they hadn't gone up at all???

Mind boggling logic.

I should find something that's gone up 100 x in 10 years and it will be totally risk free.

Property that has gone down over the last 10 years carries the most risk??

I have a lot to learn.

[Daytr]

Over time?? Over what time and where?? Nominally?? Or real??

You don't borrow to buy assets that don't go up faster than what you're paying for the debt.

Obviously it cannot go up faster than the debt costs for ever being non productive.

Just a forced savings scheme for the masses.

If I had $1M to invest 10 years ago and I bought 5 properties at $1M with 20% deposit.
Property doubles, after costs & rental income & taxes my $1M is now worth circa $4M.
A hellova lot better than what I would earn in the bank in that time.

Will it repeat itself over the next 10 years? Who knows.

[Ggcc]

If I had $1M to invest 10 years ago and I bought 5 properties at $1M with 20% deposit.
Property doubles, after costs & rental income & taxes my $1M is now worth circa $4M.
A hellova lot better than what I would earn in the bank in that time.

Will it repeat itself over the next 10 years? Who knows.
I have noticed is there is always demand for good properties. Those will go up faster than the not so good properties and it also depends on where they are. If I could talk to younger me, I was have bought up a few properties when I was earning the good money, instead of trying to be freehold. In Napier, there are sections 2000 square metres in size coming up and they will be selling for what I have heard... $1.2 million just for the land at the Mission Hills, then you need to build for approximately the same amount. $4000-$5000 per square metre.

[Relaxed]

If I had $1M to invest 10 years ago and I bought 5 properties at $1M with 20% deposit.
Property doubles, after costs & rental income & taxes my $1M is now worth circa $4M.
A hellova lot better than what I would earn in the bank in that time.

Will it repeat itself over the next 10 years? Who knows.

This is definitely the safest way to leverage. I'd never leverage like that on my shares.
personally I don't like being a landlord so it's not for me. plus the fact that I might be a bit short of the funds you mention :)

[mike2020]

I have noticed is there is always demand for good properties. Those will go up faster than the not so good properties and it also depends on where they are. If I could talk to younger me, I was have bought up a few properties when I was earning the good money, instead of trying to be freehold. In Napier, there are sections 2000 square metres in size coming up and they will be selling for what I have heard... $1.2 million just for the land at the Mission Hills, then you need to build for approximately the same amount. $4000-$5000 per square metre.

That is exactly what I saw, better homes in better areas rather than the crap box cash flow type that used to be an investors target.

[mike2020]

So due to what's happened in NZ over the last 10 years, which is a historical anomaly never seen before in history basically anywhere and has lead to one of the most expensive property markets in recorded history, based on this analysis, a nurse should borrow massive multiples of their annual salary to participate in this market as your analysis shows it can't be a huge risk.

Just because they can afford to borrow doesn't mean it's a good idea.

So all I need to do is find things that have gone up 2.5 times over the last 10 years and borrow to buy.

The fact they have gone up 2.5 times in 10 years means they carry LESS risk than if they hadn't gone up at all???

Mind boggling logic.

I should find something that's gone up 100 x in 10 years and it will be totally risk free.

Property that has gone down over the last 10 years carries the most risk??

I have a lot to learn.

Youd make a great teacher. 👍

Unfortunately its not just the ten year self forfilling price rule your arguing against is it. Look at the last 40 years. Sure we might get a decent plague or a massive infertility problem....

[bull....]

Live: US 'will not let terrorists like Hamas, tyrants like Putin win' - Joe Biden

https://www.stuff.co.nz/world/300992901/live-us-will-not-let-terrorists-like-hamas-tyrants-like-putin-win--joe-biden

[SailorRob]

Youd make a great teacher. 👍

Unfortunately its not just the ten year self forfilling price rule your arguing against is it. Look at the last 40 years. Sure we might get a decent plague or a massive infertility problem....

This is what I'm saying. The last 40 years have been a dream run of never to be repeated rates consistently decreasing with ever expanding multiples and you still have only got a 3% real return over the 40 years.

Think about it.

Unless you're telling me nurses can borrow more and more multiples of their income over time then any price rises will be matching income rises. Will a nurses income compound at 6% for a decade against an economy doing a goose egg in real per capita terms?

Maybe.

But sure, get your kids to lever themselves up to the hilt to buy nz property, as it has worked in the past it will continue.

[SailorRob]

If I had $1M to invest 10 years ago and I bought 5 properties at $1M with 20% deposit.
Property doubles, after costs & rental income & taxes my $1M is now worth circa $4M.
A hellova lot better than what I would earn in the bank in that time.

Will it repeat itself over the next 10 years? Who knows.

You wouldn't have just bought bitcoin and tesla??

Interesting. You must hate money!

[Daytr]

You wouldn't have just bought bitcoin and tesla??

Interesting. You must hate money!

Slightly different risk profile would be an understatement.

[mike2020]

This is what I'm saying. The last 40 years have been a dream run of never to be repeated rates consistently decreasing with ever expanding multiples and you still have only got a 3% real return over the 40 years.

Think about it.

Unless you're telling me nurses can borrow more and more multiples of their income over time then any price rises will be matching income rises. Will a nurses income compound at 6% for a decade against an economy doing a goose egg in real per capita terms?

Maybe.

But sure, get your kids to lever themselves up to the hilt to buy nz property, as it has worked in the past it will continue.

For the record I was against the rental purchase. I figured it was unnecessary pressure at their age. But we cant all live om a boat.

[mike2020]

This is what I'm saying. The last 40 years have been a dream run of never to be repeated rates consistently decreasing with ever expanding multiples and you still have only got a 3% real return over the 40 years.

Think about it.

Unless you're telling me nurses can borrow more and more multiples of their income over time then any price rises will be matching income rises. Will a nurses income compound at 6% for a decade against an economy doing a goose egg in real per capita terms?

Maybe.

But sure, get your kids to lever themselves up to the hilt to buy nz property, as it has worked in the past it will continue.

Anyway. Now I have you out to 40 years lets look at what grandma and gramps paid for the new villa in Khandalla back in '43. Probably hasn't changed much...

[SailorRob]

For the record I was against the rental purchase. I figured it was unnecessary pressure at their age. But we cant all live om a boat.

So if they didn't buy the rental it wouldn't exist? They can't live in their own house? I don't get the 2 houses can't all live 9n a boat. Can't they just have the one?

[SailorRob]

Anyway. Now I have you out to 40 years lets look at what grandma and gramps paid for the new villa in Khandalla back in '43. Probably hasn't changed much...

Exactly. 3% real over last 40 and probably slightly negative real over the next.

Land is 10 to 20k per hectare... And that's the good land. So under 1000 per section, some $400 per section.

[mike2020]

So if they didn't buy the rental it wouldn't exist? They can't live in their own house? I don't get the 2 houses can't all live 9n a boat. Can't they just have the one?
That is what I would have hoped for. One bigger home. But they have their own plan and it will end up with them owning a lifestyle block hopefully before the kids start school.
I know your way smarter than me but I see plenty of people way less clever than myself making buckets off houses simply because they believe the story.

[X-men]

Prefer property anytime....only if U have a strong stomach to handle the sheet casino market...so volatile

[bull....]

i think this site is nearly dead ... admin dude is using a add-on to show fake numbers viewing.

[Jaa]

powells comments 15mins ago have sent 10 yr yield's to just under 5% and stocks tanking sp 500 dropped 50 handles on what he said.

of course he is finally admitting geo-politics is going to keep inflation higher

Yup, too much tension, disruption and excesses in the world for inflation to come down. Thus higher interest rates for longer.

Bad news for the NZX that is full of interest rate sensitive energy, telco & property companies.

Lead story on Market Watch: Why stock-market investors are fixated on 5% as 10-year Treasury yield nears key threshold (https://www.marketwatch.com/story/stocks-face-growing-headwinds-as-10-year-treasury-yield-sits-on-edge-of-5-6b8ef5d4)

"The ride to 5% is occurring during what BofA calls the worst bond bear market in almost 250 years of U.S. history"

That kind of a rise has to blow something up.

[Ggcc]

Exactly. 3% real over last 40 and probably slightly negative real over the next.

Land is 10 to 20k per hectare... And that's the good land. So under 1000 per section, some $400 per section.
Have you looked around Napier? Ask about Mission Hills. People are paying roughly more than $400,000 for a 350 square metre section

[SailorRob]

That is what I would have hoped for. One bigger home. But they have their own plan and it will end up with them owning a lifestyle block hopefully before the kids start school.
I know your way smarter than me but I see plenty of people way less clever than myself making buckets off houses simply because they believe the story.


Incredible that you have posted this comment as you have paraphrased one of my favorite Buffett quotes, I'm not sure if you have done so deliberately but I suspect not.

"People start being interested in something because it's going up, not because they understand it or anything else. But the guy next door, who they know is dumber than they are, is getting rich and they aren't," he said. "And their spouse is saying can't you figure it out too? It is so contagious. So that's a permanent part of the system."

And another version he uses;

“You can’t stand to see your neighbor getting rich. You know you’re smarter than he is and he’s doing these things and he’s getting rich.”


I'm certainly no smarter than you are I've just though things through more thoroughly and done 20 x more work.

I have considered the implications where tradesmen and nurses are all driving around in new Rangers and putting new bathrooms and kitchens in there second homes and appearing extremely affluent over the last 10 years when they live in a 2 crop agrarian state that is going backwards.

I then study the situation very carefully and follow the money and understand where it came from and how and what is required for it to continue, look at history and other countries etc...

But you hit the nail on the head with your post, sometimes the dumber you are the more money you make, this has happened time and time again through history and Buffetts quote first appeared in the late 50's

End result always the same.

[SailorRob]

Have you looked around Napier? Ask about Mission Hills. People are paying roughly more than $400,000 for a 350 square metre section


Yes I know, my point is farms right next to this area are selling for $400 per 350 square meter section equivalent (or less).


$400k for a 350 square section is over 11 million dollars a hectare.


The best farms in NZ sell for $25,000 a hectare.

[mike2020]

Yes I know, my point is farms right next to this area are selling for $400 per 350 square meter section equivalent (or less).


$400k for a 350 square section is over 11 million dollars a hectare.


The best farms in NZ sell for $25,000 a hectare.

I will say this, you sure know how to value sheep country. Decent dairy or cropping in some of the areas south of Auckland or North of Hamilton. Mate. Tell him hes dreaming. Sections northern Hamilton making 750k. Nearby houses selling at 50 to 70% land value, last time I built it would have been 35%.
I watched a couple of subdivisions getting developed in Canterbury. The work involved is huge. Excavation drainage compaction etc took a year and they dug at least a meter down and finished over a meter above the starting point. The costs involved.

[SailorRob]

I will say this, you sure know how to value sheep country. Decent dairy or cropping in some of the areas south of Auckland or North of Hamilton. Mate. Tell him hes dreaming. Sections northern Hamilton making 750k. Nearby houses selling at 50 to 70% land value, last time I built it would have been 35%.
I watched a couple of subdivisions getting developed in Canterbury. The work involved is huge. Excavation drainage compaction etc took a year and they dug at least a meter down and finished over a meter above the starting point. The costs involved.


Yes totally agree, lots of costs plus land loss with roading and all the rest.

I went through the latest bayleys 'country' magazine and studied all the prices that farms had sold for recently, not a lot out there much over that. And that's prime dairy with improvements and probably subdivision potential priced in which is what you are talking about really.

[mike2020]

Incredible that you have posted this comment as you have paraphrased one of my favorite Buffett quotes, I'm not sure if you have done so deliberately but I suspect not.

"People start being interested in something because it's going up, not because they understand it or anything else. But the guy next door, who they know is dumber than they are, is getting rich and they aren't," he said. "And their spouse is saying can't you figure it out too? It is so contagious. So that's a permanent part of the system."

And another version he uses;

“You can’t stand to see your neighbor getting rich. You know you’re smarter than he is and he’s doing these things and he’s getting rich.”


I'm certainly no smarter than you are I've just though things through more thoroughly and done 20 x more work.

I have considered the implications where tradesmen and nurses are all driving around in new Rangers and putting new bathrooms and kitchens in there second homes and appearing extremely affluent over the last 10 years when they live in a 2 crop agrarian state that is going backwards.

I then study the situation very carefully and follow the money and understand where it came from and how and what is required for it to continue, look at history and other countries etc...

But you hit the nail on the head with your post, sometimes the dumber you are the more money you make, this has happened time and time again through history and Buffetts quote first appeared in the late 50's

End result always the same.

It was not intentional at all, just my own observation of people's mentality around property. I know a lot of Chinese and the mantra of property always going up used to rile me. Ive seen it drop or stagnate for years and I tried explaining it to them vigorously. A couple of the houses I quoted today sold for less in the mid 2010s than they did in the mid/late 2000s.

The masses want another property boom, a couple of years pass quickly and the hard times are forgotten. The banks and governments make nothing out of ashes. Join the dots.

[SailorRob]

It was not intentional at all, just my own observation of people's mentality around property. I know a lot of Chinese and the mantra of property always going up used to rile me. Ive seen it drop or stagnate for years and I tried explaining it to them vigorously. A couple of the houses I quoted today sold for less in the mid 2010s than they did in the mid/late 2000s.

The masses want another property boom, a couple of years pass quickly and the hard times are forgotten. The banks and governments make nothing out of ashes. Join the dots.

I get the frustration and the theory but when have governments and banks been able to control markets for extended periods.

China is starting to realise the consequences now.

Even if they can just pump them up at will, it then creates political issues and pits one section of the population against another.

It's just simple maths, you cannot have debts to incomes continually rising without continually falling rates.

At some point you'll blow up the entire banking system.

[Ggcc]

Yes I know, my point is farms right next to this area are selling for $400 per 350 square meter section equivalent (or less).


$400k for a 350 square section is over 11 million dollars a hectare.


The best farms in NZ sell for $25,000 a hectare.
Very interesting. Imagine the money someone is making to convert into smaller sections, also their outgoings. Then the rates councils can now receive for a long time to come.

[SailorRob]

It was not intentional at all, just my own observation of people's mentality around property. I know a lot of Chinese and the mantra of property always going up used to rile me. Ive seen it drop or stagnate for years and I tried explaining it to them vigorously. A couple of the houses I quoted today sold for less in the mid 2010s than they did in the mid/late 2000s.

The masses want another property boom, a couple of years pass quickly and the hard times are forgotten. The banks and governments make nothing out of ashes. Join the dots.

Sounds like we're on the same page. It's just that you've trusted your instinct and common sense for so long and seen yourself be proven wrong, that you have finally capitulated at the worst possible moment.

Unless the property goes up faster than their debt costs then they are going backwards.

Only way that can happen is if others are borrowing even more underneath them.

Mortgage is Latin for death pledge for a reason.

They will send their entire working lives paying it off and then be left with something worth who knows what, but probably a multiple of 4 times a nurses earnings at that time.

[Getty]

Caution is being advocated by some.

But who is listening or wants to see?

Time to invest in Specsavers?

Or are they not doing a very good job?

[Relaxed]

Unless the property goes up faster than their debt costs then they are going backwards.

Only way that can happen is if others are borrowing even more underneath them.


So, assuming what you are saying plays out, what then are you suggesting should be done?
Are you advocating that no one buys houses? I think you probably aren't, but what is your position on what an average person should do next?

[mike2020]

Sounds like we're on the same page. It's just that you've trusted your instinct and common sense for so long and seen yourself be proven wrong, that you have finally capitulated at the worst possible moment.

Unless the property goes up faster than their debt costs then they are going backwards.

Only way that can happen is if others are borrowing even more underneath them.

Mortgage is Latin for death pledge for a reason.

They will send their entire working lives paying it off and then be left with something worth who knows what, but probably a multiple of 4 times a nurses earnings at that time.
My only property capitulation has been reentering oca at 74 cents. I was out for long enough. See how it works out over the next 18 months. I think it will be at least 6 months before a fresh breeze blows through the retirement sector. I have no intention of ever owning another rental property.
Maybe sell the house, buy a motor home, put it all on oca for the win. See how that idea goes down over dinner one night.

[Daytr]

This is what I'm saying. The last 40 years have been a dream run of never to be repeated rates consistently decreasing with ever expanding multiples and you still have only got a 3% real return over the 40 years.

Think about it.

Unless you're telling me nurses can borrow more and more multiples of their income over time then any price rises will be matching income rises. Will a nurses income compound at 6% for a decade against an economy doing a goose egg in real per capita terms?

Maybe.

But sure, get your kids to lever themselves up to the hilt to buy nz property, as it has worked in the past it will continue.

I thought the same about the Sydney market 15 years ago. The average property back then around a $700K on wages from 15 years ago plus they have a considerable stamp duty.

The suburb I lived in, the median house price is now $5.7M. 10 years ago it was around $1.7M.

Across Sydney the median property has well more than doubled in that time.

Why? Rampant immigration.
If NZ keeps running immigration at 50 - 70k prr annum & not building enough houses they can indeed double again.

I'm not saying they will, but they could purely on the lack of supply.

So we either need to bring immigration back to around 20 - 30K per annum or increase housing supply dramatically, the latter is not easy to achieve.

But at some point the unaffordability factor has to kick in but the back of Mum & Dad has helped some lucky first home buyers to get a foothold.

[Snoopy]

But at some point the unaffordability factor has to kick in but the back of Mum & Dad has helped some lucky first home buyers to get a foothold.


As long as the young uns don't break the back of Mum and Dad as they are climbing all over them?

SNOOPY

[SailorRob]

I thought the same about the Sydney market 15 years ago. The average property back then around a $700K on wages from 15 years ago plus they have a considerable stamp duty.

The suburb I lived in, the median house price is now $5.7M. 10 years ago it was around $1.7M.

Across Sydney the median property has well more than doubled in that time.

Why? Rampant immigration.
If NZ keeps running immigration at 50 - 70k prr annum & not building enough houses they can indeed double again.

I'm not saying they will, but they could purely on the lack of supply.

So we either need to bring immigration back to around 20 - 30K per annum or increase housing supply dramatically, the latter is not easy to achieve.

But at some point the unaffordability factor has to kick in but the back of Mum & Dad has helped some lucky first home buyers to get a foothold.

Yes I can see the logic here, immigrants will flood into the land of 2 million dollar average houses, $1400 rents... Won't be able to stop the flood!

Doesn't matter how many people come in or how many houses there are or are not... You have to be able to pay double for them to be double.

[Daytr]

As long as the young uns don't break the back of Mum and Dad as they are climbing all over them?

SNOOPY

Or the bank! 😅

[Rawz]

Just remember… real rates is the number one important factor. Not nominal

Could be a good idea to structure your off balance sheet debt the same as the US govt debt.

I.e it’s going to be inflated away via yield curve control

[Daytr]

Yes I can see the logic here, immigrants will flood into the land of 2 million dollar average houses, $1400 rents... Won't be able to stop the flood!

Doesn't matter how many people come in or how many houses there are or are not... You have to be able to pay double for them to be double.

Your dripping sarcasm is lost in your inaccuracy. You insult and then agree.
Nothing changes, just the arrogance grows.

The median price for NZ property is $780k not $1M & was only $750kish a few months ago, very similar to the prices I was seeing in Sydney 10 - 12 years ago.

And I think you will find it does matter how many people come in the country, the immigrants on the whole might not be the buyers that's all.The people that already own property will be the buyers either for their children or as investors.

In saying that I know a few recent immigrants who are looking to do just that, buy their first home in NZ.

[alokdhir]

Comparing prices of Sydney with all NZ average which includes many places where no immigrant will ever go as it doesn't have jobs !!!

Auckland prices are super high compared to median wages vs Sydney prices and their median wages and job opportunities ...plus cost of living is much easier in Sydney then AKL ...

Overall it stands that not a cake walk for immigrants to walk into Akl and then capture it ...they need first get opportunity to get work visa after screening then they need be willing to do the hard yards to just have a small foothold ....

Why we need immigrants to run our country from down up ? As no resident / citizen is willing to WORK HARD ...all including our young are so entitled and laid back in their approach that all jobs requiring hard work is being done by immigrants ..at least in AKL . All need work hard to grow or succeed ...but our local people think it's their right to enjoy life without need to work hard or show focus or dedication .

NZ needs immigrants period .

[Fortunecookie]

At least the ABs are in the finals.

[SailorRob]

Your dripping sarcasm is lost in your inaccuracy. You insult and then agree.
Nothing changes, just the arrogance grows.

The median price for NZ property is $780k not $1M & was only $750kish a few months ago, very similar to the prices I was seeing in Sydney 10 - 12 years ago.

And I think you will find it does matter how many people come in the country, the immigrants on the whole might not be the buyers that's all.The people that already own property will be the buyers either for their children or as investors.

In saying that I know a few recent immigrants who are looking to do just that, buy their first home in NZ.


Your investment bank didn't teach you the difference between average and median?

Or is it that they didn't teach you how to read?

Which one?

[SailorRob]

Comparing prices of Sydney with all NZ average which includes many places where no immigrant will ever go as it doesn't have jobs !!!

As was highlighted by a lot of people during my ban, this Day Trader is a real hard case. Everyone saw through him finally.

[SailorRob]

My only property capitulation has been reentering oca at 74 cents. I was out for long enough. See how it works out over the next 18 months. I think it will be at least 6 months before a fresh breeze blows through the retirement sector. I have no intention of ever owning another rental property.
Maybe sell the house, buy a motor home, put it all on oca for the win. See how that idea goes down over dinner one night.

Yep, sell the house invest the proceeds into 100% BRK, massive life changing move. Let's see how that has played out in 10 years time.

Before the forum shyster posts about investing 100% into one company as being foolish... I would point out that is what the greatest investor of all time has done for 60 years. 99.9% of net worth in one company the whole time.

But it's totally fine to put 900% of your net worth in a house!

[SailorRob]

So, assuming what you are saying plays out, what then are you suggesting should be done?
Are you advocating that no one buys houses? I think you probably aren't, but what is your position on what an average person should do next?

First of all, let's be clear on what I'm saying - I'm not forecasting a crash or anything like that, just saying that going forward returns are going to be very different and in real terms almost certainly negative for a very long period of time (with ups and downs). This could play out in a huge decline, a slow decline or no nominal decline at all but with a constant 3/4% haircut from inflation over many many years, or even a decent nominal rise with a real decline. Who knows, but what I am confident about it that prices will not continue to grow compared to wages and wages will not be able to grow in aggregate faster than the economy.

In the provinces when prices revert back to somewhat more normal price to income levels (3-5x) this isn't going to be good. How this happens who knows.

Am I advocating that nobody buys houses, and what is my position on what the average person should do next - well if we rephrase the question - am i advocating that the average person borrows 800/900% of their net worth to buy pretty much the most expensive housing assets anywhere in the world with mortgages topping 7% where they have no certainty of the value of the asset they are leveraging to buy and the returns going forward will almost certainly be less than the cost of their debt. Hell no.

So if like me, you could pay cash for a house, why the hell would you? What possible reason would I have for swapping my BRK shares with a likely 12% forward over the next decade for something that will likely be less than zero?

And then if I couldn't pay cash then why the hell would I borrow for the same thing? That would be even worse.

So yes I am advocating that no one buys houses unless you can specifically show me the math of how it will work out for you and give me a confidence interval. If you borrow to buy now then the pad will have to be worth more in the future than what you pay now less ALL your costs after netting out what rent would have cost you and maybe a factor for the security of not having to rent etc...

Show me the math.

[Getty]

Why we need immigrants to run our country from down up ? As no resident / citizen is willing to WORK HARD ...all including our young are so entitled and laid back in their approach that all jobs requiring hard work is being done by immigrants ..at least in AKL . All need work hard to grow or succeed ...but our local people think it's their right to enjoy life without need to work hard or show focus or dedication .

NZ needs immigrants period .

You point out a reality many don't want to accept.

The welfare system has become so generous to NZers that it is a safe lifestyle option for many that would otherwise be in the void filled by migrants.

The voters have just dumped a Labour government that had a philosophy of taking even more from the achievers and hard workers to give to the spongers who refuse to take the opportunities that the migrants can see.

That government also expanded an unproductive sector that sit behind computers, passing judgement and control on those who are prepared to get their hands dirty.

This trend needed to be reversed, and a mini revolution by way of dumping Labour hopefully has set that process in action.

Longer term, AI and robotics could displace many, leading to consideration of a Basic Minimum Income.

But NZ still can produce food, which means hands on the ground, currently done by many migrants.

Will this lead to a situation where most Kiwis are sitting back, watching the migrants beaver away?

Challenging eh?

[SailorRob]

You point out a reality many don't want to accept.

The welfare system has become so generous to NZers that it is a safe lifestyle option for many that would otherwise be in the void filled by migrants.

The voters have just dumped a Labour government that had a philosophy of taking even more from the achievers and hard workers to give to the spongers who refuse to take the opportunities that the migrants can see.

That government also expanded an unproductive sector that sit behind computers, passing judgement and control on those who are prepared to get their hands dirty.

This trend needed to be reversed, and a mini revolution by way of dumping Labour hopefully has set that process in action.

Longer term, AI and robotics could displace many, leading to consideration of a Basic Minimum Income.

But NZ still can produce food, which means hands on the ground, currently done by many migrants.

Will this lead to a situation where most Kiwis are sitting back, watching the migrants beaver away?

Challenging eh?

Great post, strongly agree.

[Daytr]

Comparing prices of Sydney with all NZ average which includes many places where no immigrant will ever go as it doesn't have jobs !!!

Auckland prices are super high compared to median wages vs Sydney prices and their median wages and job opportunities ...plus cost of living is much easier in Sydney then AKL ...

Overall it stands that not a cake walk for immigrants to walk into Akl and then capture it ...they need first get opportunity to get work visa after screening then they need be willing to do the hard yards to just have a small foothold ....

Why we need immigrants to run our country from down up ? As no resident / citizen is willing to WORK HARD ...all including our young are so entitled and laid back in their approach that all jobs requiring hard work is being done by immigrants ..at least in AKL . All need work hard to grow or succeed ...but our local people think it's their right to enjoy life without need to work hard or show focus or dedication .

NZ needs immigrants period .

I'm just correcting SailorRob's inaccuracy on the NZ median house price

[Valuegrowth]

BC too will come to the finals.
At least the ABs are in the finals.

[Valuegrowth]

I am ready to put all my eggs in one basket (cash rich, debt free, strong balance sheet company) who can create long term shareholder value. I prefer concentration rather than diversification.


Yep, sell the house invest the proceeds into 100% BRK, massive life changing move. Let's see how that has played out in 10 years time.

Before the forum shyster posts about investing 100% into one company as being foolish... I would point out that is what the greatest investor of all time has done for 60 years. 99.9% of net worth in one company the whole time.

But it's totally fine to put 900% of your net worth in a house!

[Valuegrowth]

Simply, experience investors have edge in the property sector in times like today. I bought my first home after doing research, reading a load of books, and inspecting many houses. In fact, I wish if I didn’t have to read some books. Market has cycles, volatility and even crashes but cannot predict in advance.

https://www.apimagazine.com.au/news/article/five-costly-mistakes-first-time-property-investors-need-to-avoid
Five costly mistakes first time property investors need to avoid



First of all, let's be clear on what I'm saying - I'm not forecasting a crash or anything like that, just saying that going forward returns are going to be very different and in real terms almost certainly negative for a very long period of time (with ups and downs). This could play out in a huge decline, a slow decline or no nominal decline at all but with a constant 3/4% haircut from inflation over many many years, or even a decent nominal rise with a real decline. Who knows, but what I am confident about it that prices will not continue to grow compared to wages and wages will not be able to grow in aggregate faster than the economy.

In the provinces when prices revert back to somewhat more normal price to income levels (3-5x) this isn't going to be good. How this happens who knows.

Am I advocating that nobody buys houses, and what is my position on what the average person should do next - well if we rephrase the question - am i advocating that the average person borrows 800/900% of their net worth to buy pretty much the most expensive housing assets anywhere in the world with mortgages topping 7% where they have no certainty of the value of the asset they are leveraging to buy and the returns going forward will almost certainly be less than the cost of their debt. Hell no.

So if like me, you could pay cash for a house, why the hell would you? What possible reason would I have for swapping my BRK shares with a likely 12% forward over the next decade for something that will likely be less than zero?

And then if I couldn't pay cash then why the hell would I borrow for the same thing? That would be even worse.

So yes I am advocating that no one buys houses unless you can specifically show me the math of how it will work out for you and give me a confidence interval. If you borrow to buy now then the pad will have to be worth more in the future than what you pay now less ALL your costs after netting out what rent would have cost you and maybe a factor for the security of not having to rent etc...

Show me the math.

[Daytr]

First of all, let's be clear on what I'm saying - I'm not forecasting a crash or anything like that, just saying that going forward returns are going to be very different and in real terms almost certainly negative for a very long period of time (with ups and downs). This could play out in a huge decline, a slow decline or no nominal decline at all but with a constant 3/4% haircut from inflation over many many years, or even a decent nominal rise with a real decline. Who knows, but what I am confident about it that prices will not continue to grow compared to wages and wages will not be able to grow in aggregate faster than the economy.

In the provinces when prices revert back to somewhat more normal price to income levels (3-5x) this isn't going to be good. How this happens who knows.

Am I advocating that nobody buys houses, and what is my position on what the average person should do next - well if we rephrase the question - am i advocating that the average person borrows 800/900% of their net worth to buy pretty much the most expensive housing assets anywhere in the world with mortgages topping 7% where they have no certainty of the value of the asset they are leveraging to buy and the returns going forward will almost certainly be less than the cost of their debt. Hell no.

So if like me, you could pay cash for a house, why the hell would you? What possible reason would I have for swapping my BRK shares with a likely 12% forward over the next decade for something that will likely be less than zero?

And then if I couldn't pay cash then why the hell would I borrow for the same thing? That would be even worse.

So yes I am advocating that no one buys houses unless you can specifically show me the math of how it will work out for you and give me a confidence interval. If you borrow to buy now then the pad will have to be worth more in the future than what you pay now less ALL your costs after netting out what rent would have cost you and maybe a factor for the security of not having to rent etc...

Show me the math.

I agree it's a big if that NZ property can double again in 10 years, but it's certainly not impossible especially as markets such as Auckland & Wellington are off around 18% of their highs only a few months ago.

The driver though as I said previously is immigration but also tax. With the new Government reintroducing interest tax deductibility & reducing the Brightline test any capital gain is likely to be tax free. Kiwis love tax free investments.

I'm not advocating property over shares either, but I think there is certainly room for both in a portfolio.

Automation of basic tasks may see the need for immigration to decline. Otherwise the NZ Government would need to transform the economy dramatically so immigration is not the driver of economic growth that has been for the last 15 years or so.

[Valuegrowth]

https://www.youtube.com/watch?v=5Ryz11u2dl4

[SailorRob]

I agree it's a big if that NZ property can double again in 10 years, but it's certainly not impossible especially as markets such as Auckland & Wellington are off around 18% of their highs only a few months ago.

The driver though as I said previously is immigration but also tax. With the new Government reintroducing interest tax deductibility & reducing the Brightline test any capital gain is likely to be tax free. Kiwis love tax free investments.

I'm not advocating property over shares either, but I think there is certainly room for both in a portfolio.

Automation of basic tasks may see the need for immigration to decline. Otherwise the NZ Government would need to transform the economy dramatically so immigration is not the driver of economic growth that has been for the last 15 years or so.

It's possible in nominal terms in certain areas for sure. This type of thing happened in Japan and China.

Yes perhaps there is room for some type of property investment in a portfolio but you'd want to size it correctly, perhaps 10 or 15% but what I'm saying is most people size it 800%. So they take their entire net worth and then borrow 8 or 9 times more and dump it into a single property, one asset, one currency, one country....

Madness.

[Daytr]

It's possible in nominal terms in certain areas for sure. This type of thing happened in Japan and China.

Yes perhaps there is room for some type of property investment in a portfolio but you'd want to size it correctly, perhaps 10 or 15% but what I'm saying is most people size it 800%. So they take their entire net worth and then borrow 8 or 9 times more and dump it into a single property, one asset, one currency, one country....

Madness.

I think you will find most people size it at a maximum 400 - 500% and it provides a roof over their heads. I.e 20% deposit plus

[SailorRob]

I think you will find most people size it at a maximum 400 - 500% and it provides a roof over their heads. I.e 20% deposit plus

400 to 500% ah well that's fine then.

[Daytr]

400 to 500% ah well that's fine then.

Well yes it is for most regular people who have a day job & want security as well as an appreciating asset.

Not everyone has the skill set you have to do what you do.

[Snoopy]

https://www.youtube.com/watch?v=5Ryz11u2dl4


That was quite an interesting opinion piece from Larry Cheung CFA, It seems that Canada is much more a proxy of what might happen in NZ than the USA, as they have shorter duration fixed rate mortgages and around 20% of mortgages on variable rates. Sounds very like NZ in fact.

That muscle man guy who had his 25 year mortgage spun out to 47 years as a result of 'negative amortisation'! 'Negative amortisation' means that your monthly payments no longer cover your interest bills, so the capital you owe to your bank keeps compounding up higher. I have never heard of that in NZ. Wouldn't banks put in this position in NZ just do a mortgagee sale and be done with it? I know banks don't like tossing people out of their homes. But I would have thought if a bank had too many 'negative amortisation' loans on the books, that could affect the viability of the bank itself?

SNOOPY

[Getty]

That was quite an interesting opinion piece from Larry Cheung CFA, It seems that Canada is much more a proxy of what might happen in NZ than the USA, as they have shorter duration fixed rate mortgages and around 20% of mortgages on variable rates. Sounds very like NZ in fact.

That muscle man guy who had his 25 year mortgage spun out to 47 years as a result of 'negative amortisation'! 'Negative amortisation' means that your monthly payments no longer cover your interest bills, so the capital you owe to your bank keeps compounding up higher. I have never heard of that in NZ. Wouldn't banks put in this position in NZ just do a mortgagee sale and be done with it? I know banks don't like tossing people out of their homes. But I would have thought if a bank had too many 'negative amortisation' loans on the books, that could affect the viability of the bank itself?

SNOOPY

Your post illustrates the quandary banks and other money lenders have in fraught times.

Do they foreclose, sending a signal to the market that leads to more distressed sales, thereby leading to negative equity on other mortgages and loans, or sponsor borrowers through hard times.

Either way, they put themselves at risk.

More so, the person who makes this decision may be @ 35 years old or less, with no real experience or feeling of what real recessionary times are.

[Valuegrowth]

Thank you Snoopy for your clarification. At this moment there are people with negative equity in NZ. Specially, those who bought property over the last 2 years. Friend of mind who migrated from South Africa bought a house last year when she saw dropping prices from the peak. I would have advised her not to buy the property and to study the market first if she had told me before. I advised few of my friends (some of them are young parents who work hard) not to get into debt trap and not to buy over valued houses. Even during rising property market over the last 5 years they were able to buy below the market price. Value investment makes sense to me.


That was quite an interesting opinion piece from Larry Cheung CFA, It seems that Canada is much more a proxy of what might happen in NZ than the USA, as they have shorter duration fixed rate mortgages and around 20% of mortgages on variable rates. Sounds very like NZ in fact.

That muscle man guy who had his 25 year mortgage spun out to 47 years as a result of 'negative amortisation'! 'Negative amortisation' means that your monthly payments no longer cover your interest bills, so the capital you owe to your bank keeps compounding up higher. I have never heard of that in NZ. Wouldn't banks put in this position in NZ just do a mortgagee sale and be done with it? I know banks don't like tossing people out of their homes. But I would have thought if a bank had too many 'negative amortisation' loans on the books, that could affect the viability of the bank itself?

SNOOPY

[blackcap]

More so, the person who makes this decision may be @ 35 years old or less, with no real experience or feeling of what real recessionary times are.

I have a friend in this situation. 46 years old, his firm is working 80% at the moment, and his interest rates are going up. He recently applied to the bank for a hardship relief (or whatever they call it) and if interest rates rise another 1% he will be in the foreclose or negative amortisation group.

His problem is that he never (ever) puts aside anything during good times, for times such as these. Has no concept that things could get worse or economic conditions change. Very naive financially but it is these people that end up paying the price. (for context, his annual salary is $135k)

[mike2020]

More than once I have spent months dealing with someone new at the bank over the phone only to drop into the office and find they are barely out of school. And these people are responsible for potentially life altering choices. Some of the horror stories I had from the agri side of banking, the incentives to lend, sometimes on loans so marginal they would only survive with capital gains. I think I am probably a little conservative.

[SailorRob]

Yes I can see the logic here, immigrants will flood into the land of 2 million dollar average houses, $1400 rents... Won't be able to stop the flood!

Doesn't matter how many people come in or how many houses there are or are not... You have to be able to pay double for them to be double.


Your dripping sarcasm is lost in your inaccuracy. You insult and then agree.
Nothing changes, just the arrogance grows.

The median price for NZ property is $780k not $1M & was only $750kish a few months ago, very similar to the prices I was seeing in Sydney 10 - 12 years ago.

And I think you will find it does matter how many people come in the country, the immigrants on the whole might not be the buyers that's all.The people that already own property will be the buyers either for their children or as investors.

In saying that I know a few recent immigrants who are looking to do just that, buy their first home in NZ.



I'm just correcting SailorRob's inaccuracy on the NZ median house price


Did I say anything about median prices?

I said average... which currently stands around $960k.

You can find out the difference between a median and average by enrolling at your local intermediate.

[SailorRob]

Well yes it is for most regular people who have a day job & want security as well as an appreciating asset.

Not everyone has the skill set you have to do what you do.


If you can borrow 400-500% of your net worth and buy an asset than then appreciated faster than your costs, you will do extraordinary well.

You will destroy the returns of the greatest investors of all time.

I know many people who have achieved returns on equity of many thousands of % over the last 10 years. If this sounds normal then you should also jump in.

Why don't the big US funds just borrow money t buy NZ houses? Or indeed why doesn't a single listed NZ company?

[SailorRob]

More than once I have spent months dealing with someone new at the bank over the phone only to drop into the office and find they are barely out of school. And these people are responsible for potentially life altering choices. Some of the horror stories I had from the agri side of banking, the incentives to lend, sometimes on loans so marginal they would only survive with capital gains. I think I am probably a little conservative.


You don't sound conservative enough.

Basically all the loans will only survive with capital gains and outside capital, this is true for rental property for 20 years now and plenty of it in agri too.

What a great business, cant even cover the interest without outside capital. Why not find one of these gems and then borrow 400% of your net worth to buy?

The emperor has no clothes!

99% of people in NZ including finance professionals will not only tell you its ok but that it's good to buy a business with massive leverage that cannot under any circumstances pay the interest on its debt without outside capital.

The emperor has no clothes.

[winner69]

Somebody on CNBC just exclaimed ITS HAMMER TIME …..and it wasn’t our mate bull….

That’s not good is it?

[blackcap]

Somebody on CNBC just exclaimed ITS HAMMER TIME …..and it wasn’t our mate bull….

That’s not good is it?

It wasn't old "booya" Cramer was it?

I think the best financial decision is normally the "Inverse Cramer" strategy seems to work best.

Apparently some PHD students did a study on Cramer's picks and concluded he had a negative alpha.

[Fortunecookie]

It wasn't old "booya" Cramer was it?

I think the best financial decision is normally the "Inverse Cramer" strategy seems to work best.

Apparently some PHD students did a study on Cramer's picks and concluded he had a negative alpha.

Bare in mind over 95% of active fund managers don't beat the market after fees. He's probably in good company.

[Fortunecookie]

Interesting discussion between home buying and investing. Tbh you could write a whole book pro and cons. What history has shown and what we will face in the future.

The banks stress testing wasn't really designed for volatile movement in interest rates. The last couple years was one of two periods was this volatile since the mid 80s. Banking was deregulated mid 80s, they are realised they loosened It to quickly hence they tightened immediately afterwards which explains the first period. Even pre GFC rates didn't move upwards as quick.
Two periods within a 40year period isn't too bad.

This is a simplistic comparison. When a company doesnt meet profit target or incurs a loss, in simplistic terms there is a drop in share price therefore investment performance. Say a person works for this company and has a mortgage. This person in likelihood will retain his or her position in light of the company performance therefore continues to pay the mortgage. As you know the salary is the company wage expense. So consider it from a risk perspective.

In the last few decades we have seen a change with household demographics, single income households to double and probably more dink households will become more apparent. So rates have gone down but there are other reasons to explain price increases.

Like I said you could write a whole book.

[Relaxed]

So yes I am advocating that no one buys houses unless you can specifically show me the math of how it will work out for you and give me a confidence interval. If you borrow to buy now then the pad will have to be worth more in the future than what you pay now less ALL your costs after netting out what rent would have cost you and maybe a factor for the security of not having to rent etc...

Show me the math.

but we are discussing two different scenarios. as others have pointed out, there is a difference between investing in houses (property) and buying the house to live in.
a very similar decision came about for a friend who bought the building his business was in because it ended up cheaper (with the other tenants paying their leases).

Because I live in the house I own, I don't actually care what it is worth. I l have to live somewhere, and this is it.
it is worth no more, or less, to me than the day I bought it. and it is cheaper then renting (now)

so I don't need to show anyone the maths on its' benefit as an investment.

on the other hand, an investment property is a completely different concept, and the investment assumptions become very important.

[Rawz]

Agree Fortunecookie. How do you put a value on a safe and secure roof over your kids head. Before we bought we were kicked out of 2 rentals due to the owners selling and moved out of a third because the owner was building a house in the backyard. It was 3 moves in 5 years and big cost and disruption to our lives.

Also good schools.. When we were buying I put $600k extra value on a house in a decile 10 state school zone vs buying in a lower decile school zone and then paying $40k per year in private school fees.. we live in Auckland.

These are some examples of the imbedded values in houses that don’t work in terms of a yield or a ROI calc.

[Fortunecookie]

Agree Fortunecookie. How do you put a value on a safe and secure roof over your kids head. Before we bought we were kicked out of 2 rentals due to the owners selling and moved out of a third because the owner was building a house in the backyard. It was 3 moves in 5 years and big cost and disruption to our lives.

Also good schools.. When we were buying I put $600k extra value on a house in a decile 10 state school zone vs buying in a lower decile school zone and then paying $40k per year in private school fees.. we live in Auckland.

These are some examples of the imbedded values in houses that don’t work in terms of a yield or a ROI calc.

Exactly Rawz. The intangible factor that cannot be captured in standard calculations.
The wife and I don't have kids. But we totally understand that providing kids with the opportunities from an early age is the best thing you can do. Because it compounds.
That's priceless.

[Valuegrowth]

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

[Valuegrowth]

https://www.youtube.com/watch?v=DAT3aXyectA