@Habits: MSFT and Google have reported and are up 4 per cent after hours. Gee, they're 9 per cent of the S&P 500. Onwards and upwards...
But that's so boring. All the excitement is in the OCA thread.
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@Habits: MSFT and Google have reported and are up 4 per cent after hours. Gee, they're 9 per cent of the S&P 500. Onwards and upwards...
But that's so boring. All the excitement is in the OCA thread.
Black-Scholes Model celebrating 50 years with big conference in June
Black-Scholes made options trading respectable ….most thought options was gambling
Options trading was a lot of fun, didn't even have to know much about Black-Scholes Model, only that they were derivatives of a real company and would trade in price along with the head share. I really liked long dated call options on producing gold miners at the time, and did very well. Nowadays, I can't be bothered staying up all night or trying to guess a limit buy or stop loss for when I'm asleep. Butterfly spread trades were particularly cool.
:)
No, disappointing. Oil is crashing, also disappointing. My international dividend ETFs VYM and VYMI are both 10 per cent big oil. Love big oil.
Yes, I think I saw that. Honestly, I think the break even for these big companies where they get to fund everything including dividends is $40 to $50 oil. So we've got plenty of headroom. I seem to recall Pioneer boss saying it's breakeven was $39. Holy cow!
Big day tomorrow. Exxon and Chevron. I'm no baller though, I have a slight tilt in that direction and nothing more.
nice day on US markets esp meta going gangbusters the second 2 bagger for bull in the last 6 mths
Don't disclose in hindsight ...shud have disclosed your position or view when it was $ 90 ....it will have more creditability ....if I remember right ...I can be totally wrong as I am not professing I follow all your posts ...U were pretty negative about markets and tech when meta was below $ 100 ....lol :p
not quite right bearish overall at time but i also said nasdaq looked at bottom in december for a bounce also say i told family to go hard meta as was way overdone downside , probably getting overdone soon though
and for you i also say on the thread of fph 20$ fph was good value to and it still looking good but as i say i didnt listen to my own opinion and missed that one as invested else where at time ... my bad need more money
actuall whole rall y in us market mainly nasdaq is from only few stocks
Hi Bobdn, it's really the marginal cost of production that's important as this is the first production to be cut if the price doesn't support the cost or risk associated. Fracking production is probably the most at risk and is the easiest to turn off & on. $80/bbl is probably what's required to support that marginal production.
Yes, ok the pure fracking needs more. But for the Exxons and Chevrons, they're still printing money with oil over say $60 USD I assume.
I don't know a great deal about it. Just surface knowledge. Loving the history of oil at the moment. Just about to finish the Oil Kings (published in 2011) "How the U.S., Iran, and Saudi Arabia Changed the Balance of Power in the Middle East" and my next book is The New Map by D. Yergin.
I have this fantasy that oil stocks will be like tobacco stocks, unloved for the next 20 years but making obscene profits. With dividend reinvestment into my oil heavy dividend funds, in 20 years, assuming I haven't died, I hope to come back onto this forum and declare victory.
Vanguard's energy ETF, VDE, which is dominated by Exxon and Chevron, has a P/E of 7.5.
Vanguard's VYM (US dividends) is 14 and VYMI, international, is 9.
Well, lets hope so. In actual fact, the S&P will probably out perform this tilt, which is fine too.
I'm not so sure it will from here, particularly over the next 10 years. All depends on how long oil equities stay lower for your reinvestment of dividends.
For your consideration, WTI oil price averaged $71.76 from 2005 to 2010 and from 2010 to 2015 it averaged $91.80.
Think of how much every cost component has risen since then... Not to mention demand.
Oil is dirt cheap.
That's what I'm hoping too.
I just read this on Twitter from this guy called Eric Nuttal:
"Bernstein: even if EV's = 25% of total global car sales by 2025 and 50% in 2030, we will still consume the same amount of oil as we do today in 15 years (2038). Where exactly is the required production going to come from???"
Oil demand has got a long way to go. Don't write off oil.
But to be clear, I'm probably just a little above "market weight" if we're looking at the S&P 500 as a reference. The NZX50 has next to zero exposure to fossil fuels - plenty of "energy" but no black gold. So, because I own the NZX50, I've just added a bit here and there to make sure I'm not missing out.
My Australian dividend fund is helpful because of Woodside and the coal producers. And Kernel's Global 100 fund, which I adore, has a good amount - all the oil majors in good dollops. Plus I use it's infrastructure fund so I get a swag of energy exposure in that. Kinder Morgan, Enbridge, Cheniere. A ton of others. Not producers I guess but they do well when oil and gas is doing well.
VDE is a belts and braces, icing on the cake.
It sounds to me like you need to get yourself a good dose of the greatest fund in the world, BRK.
Your strategy is sound and will beat most people including most professionals but it won't touch BRK.
I doubt the Kernal fund will differ too much from the S&P500 which you could buy for ten times lower fees.
BTW - its Kernel. Just interesting you mention the fees. It sounds like you are an expert in this field, knowing all the fund fees. The Kernel Global 100 charges 0.25% p.a. in fees.
Are you saying your fund charges really only 1/10th of that - i.e. 0.025%? ... and comparing apples with apples, they still would help you to fit into the NZ tax system without playing the FIF lottery?
This what you are saying?
My fund has zero fees.
The fund I was talking about, yes around 3 basis points. 0.25% is theft.
FIF is not a lottery and without studying the situation I can't comment on that aspect.
I am nothing of an expert, but in the space of less than 3 seconds I could see Kennel, sorry Kernel fees were very high compared to what you can pay on a proper fund.
We are a third of our way through the 2020's.
First Republic Bank gone today ( Sunday US time )? Wall Street Journal has breaking news re FED seeking bids in an effort to resolve before Asian markets open.
Absolute bargain at $3.50. The big banks are feasting like sharks on a boil up as these smaller banks gets undermined by lack of confidence.
I shorted the S&P500 a few days ago as similar to banks I think it will be the smaller caps that will be hurt by increased funding costs. Russell 2000 has underperformed the other indices lately as well.
WSJ notes that FRB share price was $122.50 on March 1 and fallen to $3.51 on April 28. Says JP Morgan and PNC Financial services have submitted bids by the deadline and Bank of America may have done so. Likely FDIC will seize assets later on Sunday US time.
WSJ says if so it will be the second largest bank failure in US history.
One could argue this isn't a bank failure but purely a run on confidence as I don't think they were losing money, however the contagion effect to run to bigger is better has overrun them. This is is a consolidation & potentially a huge windfall to the purchaser. The analysis of their loan book will be interesting, however as there is a 30 year bond market in the US I would assume it was fully hedged. I haven't looked at this in detail, but it reminds me of the banking asset grab post 2008 where the big banks swallowed up smaller banks as the compliance & capital costs over ran them.
I think the analysis from the 99 year old is better than the YouTube clip
I agree too.
Yep, First Republic Bank is officially gone, acquired (mostly) by JP Morgan with all 84 branches to open on Monday US as JP Morgan, which has assumed all $92b in deposits and bought most assets including $173b in loans and $30b in securities. Estimated cost to FDIC is $13b (SVB was estimated at $20b and Signature Bank at $2.5b) to resolve. These are mindboggling numbers.
Hopefully some stability will now prevail - or is there more to follow?
bit yucky at the moment , regional bank jitters some of them down double digits
US sovereign debt risk highest ever ..... is the US going to default ?
http://www.worldgovernmentbonds.com/...ssential%20...
Small banks taking more hits. HGH might have pressure on it today
The US debt limit reportedly has to be raised by early June. Suspect sentiment will be in the pita until its resolved. Otherwise….
Play the traders’ game :
Move ‘em up and sell ‘em down.
Then buy ‘em up and move ‘em up.
Meanwhile, the global economy keep a trucking on.
purchased good chunk of SNAS(short ETF NASDAQ) end of last week .. should be in the money today and if we continue to see weakness in the NASDAQ with the debt ceiling issues ..and really the bigger picture the higher rates affects on the ever increasing DEBT at some stage just the interest on the debt will be much harder to manage ..
more I look at the markets the mass lay offs , the more funds I want to shift to the short side for the US markets ... and invest more into Gold Producers
US Published National Debt
$43,263,412,281,359
https://www.truthinaccounting.org/ab...YaAurfEALw_wcB
https://markets.businessinsider.com/...-estate-2023-5
Even the man himself said it is scary out there.
Looks like the red crayons are real busy today ..
can't be another US bank shaking in the breeze surely, after the weekend picnic got done and dusted :)
Guess Orr be increasing rates for sure now next meeting after the unemployment figures and most likely the govt will blow out spending to buy votes in the budget therefore my guess a while back of 6% terminal rate might be close to the mark
Statistics New Zealand says the unemployment rate remained the same in the March quarter, while there were 22,000 jobs added, the labour force participation rate hit a new high and private sector ordinary hourly wage growth rose to 8.2%
https://www.interest.co.nz/business/...-quarter-while
What employment stats don't tell you is how many people left NZ for Australia or other parts of the world.
From what I have read their loan book was pretty safe as they specialized at lending to high wealth individuals at admittedly cheaper margins. I think Jamie Diamond is playing it down when he said it only adds minor value to their business. Secretly I think he was rubbing his talons together as a hawk does over roadkill & a free feed.
I was trying to figure out how much they paid for and perhaps how much it was valued at. There was definitely some concessions being made.
Apart from deposit holders not being guaranteed. I have read comments that they didn't manage their funding risk that well. So it all led to contagion (bank run). Scary to see that SP drop that fast.
They paid 10.6Bln which all went to the Government as partial payout on the 'bailout'.
Not bad for a bank that was valued at $120bln only months ago. My sense is that it wasn't about their risk management but purely a run on confidence. But could be wrong on that. Jamie Diamond doesn't buy lame ducks.
You are right this is a sweet deal. There is nothing wrong with the operation at all, if there was it won't be anymore. Basically the FDIC is plugging the funding gap. They get the loan book and they said it will generate a $500mill net profit p.a. I think this is an conservative fig. Plus you get the bank operation and if I recall some concessions for some future losses. Mr Diamond is no mug.
I do wonder does this mean will there be further consolidation in the US market.
Fed increases rates a quarter point and signals a potential end to hikes
https://www.cnbc.com/2023/05/03/fed-...may-2023-.html
market down on the news , guess nz50 may be down again today
HLG will drag the nz50 up :0
yep
Berkshire Hathaway, where Munger serves as vice chairman, has largely stayed on the fringe of the crisis despite its history of supporting American banks through times of turmoil. Munger, who is also Warren Buffett’s longtime investment partner, suggested that Berkshire’s restraint is partially due to risks that could emerge from banks’ numerous commercial property loans.
“A lot of real estate isn’t so good anymore,” Munger said. “We have a lot of troubled office buildings, a lot of troubled shopping centers, a lot of troubled other properties. There’s a lot of agony out there.”
makes you wonder if NZ property companies and banks will face issues in the future
utures tanking again on rumours another bank is about to go bust
I think they will at the peak many NZ commercial properties(like RES) were selling on very low yields 3-5% ... then Tenants had lock-downs to deal with along with high inflation in costs ...
Now we have much higher rates of lending .. also much of NZ commercial property is sub 67% NBS(pretty much everything built pre 80's) and needs HUGE investment ..
That has only got more expensive ..often more costs than property is worth..
NZ Banks have gone septic to risk(COVID) ,,,and have always been hard to deal with around commercial property lending .. now with NZ RES falling in value right across the nation ,,thats not going help the environment for growth in commercial property..
How many investors would even want to invest in the sector now with much safer rates from bonds , term deposits ... I see SBS bank bond offering 7.5% for 10yrs
see pac west bank down 53% in after market , might be scary tomorrow night
That's something I have been thinking this morning. I had a look into the First Republic takeover abit more last night (after Daytr pointed it was bought for about $10b). It looks like a sweet deal. Because it was setup as a tender. I wonder if there it's abit collusion involved with the big banks in the US. Implying like you say more will be going bust. Why bid top dollar when you can signal to your competitors that they can go for the next one that will go bust. Such situations has happened, I can think of the nz auction of frequencies that involved the telecoms.
This whole thing about bank deposit guarantee only encourages deposits to go towards the banks with the guarantees.
I think there is a bigger risk at play but it is difficult to quantify as yet. That's to do with climate change. The RBNZ are responsible with managing this risk. Which is quite the opposite to the Feds, as they are not interested therefore not part of their mandate. You see it in some US states the insurers have stopped insuring some homes. So the state themselves have become a insurer of last resort. On the face of it, if a private insurer pulls out you know it is not economically viable. But thats the world we live in.
I do have an inkling that we follow the approach of those certain states. Perhaps an extension of the role of EQC. The market will need to recalibrate to incorporate those changes but at the same time make sure credit continues to flow.
When you take the approach that worked so well for Russia (shock therapy) there's bound to be some broken things.
Should be easier on the rate hikes so people can actually adjust to it.
From the guy who said he can read any chart.
If oil was dirt cheap then, what is it now?
I have actually gone long this morning. I hopefully there is a short covering rally, but we will see.
Sorry to bring down the tone, but this guy takes the cake for slagging everyone else. 12 screens!🤣
Depends on many factors ..but have you ever tried to sell a commercial property aka maybe your tenant went belly up and you just want to exit ? the value of that property of course nose dives without tenants ... getting 7.5% might well look very solid once we head back into a deflation enviro...
Nz>>MoM
Attachment 14571
NZ>>
Attachment 14573
aus>>
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Red Crayons out again in force today too ..
A lot more money to be sucked out of the NZ economy yet. Talking to a mortgage broker the other day and he reckoned less than 50% of his book had rolled onto higher rates yet. And this is why the Reserve Bank should wait to see the impact of what they have already done. However my faith in Adrian Orr has been shot to pieces in the last few years.
Yeah their mortgage market is quite different with a lot less fixing longer term.
I think a few will have whiplash overnight. Fridays are always good for a short covering rally. Inspired by Apple & jobs Data. I wouldn't be surprised tosee the market reinterpret that jobs number as a negative due to the inflationary impact and hence more rate rises.
Swapping out my short S&P for long oil proved to be very profitable. Out of both for now, but thinking of reshorting US equities.
yep nice big rally last night been trading the range myself all week. be interesting if nzx can get any sort of bounce next week
Something to learn from great value investor. Sold 8 stocks and bought 2 stocks. Has sold off most of its holdings in semicondutor(TSM), cut its investment in U.S. Bancop(USB) by 91% and in Bank of New york Mellon(B) by 56%.
https://www.kiplinger.com/investing/...ng-and-selling
Suppose many different interpretations of this chart
@TaviCosta on Twitter says -
As shown in the chart below, the ratio between tech stocks and the S&P 500 is now over 2 standard deviations above the historical mean.
During other times when this indicator also reached such high levels, the tech sector significantly underperformed in the following decade.
It's unlikely that this time will be any different.
Looking back as a predictor of the future is a dangerous game in my view, particularly when it comes to the tech space. Always going to be high risk & volatile are but over time tech is going to grow to be part of all areas of the market with the development of AI, nano bots, advances in medicine etc. The list is endless. My prediction a few years ago is the NASDQ will be higher than the DOW at some point.
I am not saying it's all doom and gloom. But things go in cycles. Because of the higher finance rate, companies that are not generating a profit or adequate return will be punished more. Typically those are the tech stocks. Hence the volatility.
You can see it, companies are not pursuing growth and focusing on improving margin. I am starting to see evidence of standardising of goods and services across different industries.
No doubt innovation will continue. But at the moment companies arent prepared to support these endeavours at the same level as previously.
At some point tech will outperform in the future. The question is when.
"Berkshire Hathaway Chairman and billionaire value investor Warren Buffett said that the conglomerate has sold the entirety of its equity position in the U.S. airline industry. The prior stake, worth north of $4 billion in December, included positions in United , American , Southwest and Delta Air Lines .2/05/2020"
"Why did Buffett sell airline stocks?
But last spring, the Omaha-based conglomerate sold these holdings for far less than the $7 billion to $8 billion it had paid for them, and Buffett called his decision to invest in air travel a “mistake,” arguing it could take years for airlines to fully recover from Covid-19.1/05/2021"
Buffett said that investing in air travel was a mistake. I would also add that divesting his air travel stocks was a huge mistake at the covid pivot point. One year later airlines had tripled in value. From that you can conclude that investors and instos don't follow Warren to the letter
@Winner, it's funny I was just reading that TaviCosta tweet about 15 minutes ago, and then I see your reference to it here.
Twitter is so addictive.
Not at all.
Process vs Outcome.
Be extremely worth your while spending a whole day studying this move alone, read all the transcripts and the 10Q's and the K.
Then write an essay with your findings, will improve you massively as an investor.
With this logic it was a massive mistake not to have bought ****coin and in hindsight it was.
Buffett annual meeting had some good nuggets
buffett admitting their earnings are likely to decline going forward
selling way more stocks first quarter than buying ie building up there cash position
which all makes sense
here's a shortened take of a good interview by daiio on what he thinks is a head too
Ray Dalio's Warning for The U.S. Economy and The Coming Crisis
https://www.youtube.com/watch?v=EWDNCKHhfls
Over what period was he talking about?
Give us a rough idea of the math required for earnings to decline while retaining 35 billion a year of equity within the operating business and a further 17 billion a year retained within the common stock portfolio, you can decrease the figures as you see fit.
What would ROE's have to fall to in order for earnings to decline in the medium term.
of course he is talking about the yr ahead. i do not need to work out numbers as the statement is from the horses mouth so working out numbers is futile cause then your saying you know buffetts businersses better than him.
as far as the future beyond that goes buffett will update you again next annual meeting
another interesting comment was munger saying value investors will have to get used to earning less going forward
And what did Buffett say in reply to Munger?
Yes he was talking about the year ahead, but what earnings was he talking about? Berkshire as a whole, or the operating earnings? How often inthe past has he said such things and overdelivered?
I don't doubt that operating earnings will decline off the sugar high, but lots on nuance there
Warren Buffett - 'I don't have the faintest idea what yields are going to do in the future'
What an idiot, doesn't he not know he can just log into Sharetrader and people there will tell him.
Robin williams on banking bail outs ... same joke works for the US treasury debt ceiling
https://www.youtube.com/watch?v=etQeFJ2lbbo
Janet Yellen: US treasury secretary warns of debt ceiling 'catastrophe'
https://www.bbc.com/news/business-65522169
Anyone out there have any idea how a leveraged overseas portfolio would be treated under FDR tax regime?
How would the leverage affect the tax calculation.
Cheers
Where is the leverage levered. Within New Zealand or offshore?
IMHO ...Foreign equity are deemed to provide 5% dividend return even if they provide less ...so 5% income minus interest cost shud be final income of that portfolio for tax purposes ...most likely as margin lending rates are higher then 5% at present ...it shud result in loss for tax purposes ...mind u I am not tax expert.... just my thoughts ...
The most important thing Warren Buffett said Saturday, and it isn’t good news for the economy
https://www.cnbc.com/2023/05/08/the-...e-economy.html
“Nothing is sure tomorrow, nothing is sure next year, and nothing is ever sure, either in markets or in business forecasts, or in anything else,” Buffett said.