Arvida update not that flash ….looks like underlying profit going to be down on last year
Some say Oceania perform more like Arvida than Summerset
Let’s hope that not the case this year ….know more late next month
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Arvida update not that flash ….looks like underlying profit going to be down on last year
Some say Oceania perform more like Arvida than Summerset
Let’s hope that not the case this year ….know more late next month
I am loaded up, just under $2m - we can afford it, there is risk in terms of possible impacts but we manage the likelihood of problems happening.
I checked what my servicing is like compared to an average household with a mortgage of 650k and our monthly payments are comparable - about $500 a week currently but 7% interest rate will put us around $1000 a week.
Main thing is we haven't got all our eggs in one basket either.
Generally speaking I guess the more leveraged a company or a person is. They need to be on point where they think the direction of the market is going and/or cashflow easily covers debt repayment. Otherwise why leverage up/ the return on equity may turn negative.
By the sounds of it you done your DD and you have got a exit strategy if required. Everyones case is different. I think debt is fluid and it pays to actively monitor it.
The whole point I was trying to encourage others to take up, is that this is totally meaningless.
The amount of debt a business has to its equity really doesn't mean a lot and is a very lazy method of analysis.
Many of the best businesses in the world require no equity at all as Buffett often reminds us, others that are absolute piles of rubbish are loaded with 'equity' like the refineries billion dollars plus of property plant and equipment.
All that matters is the amount of cash the business can produce in relation to their capital employed and how sustainable it is. Equity cannot be used to service debt unless you try and liquidate it and I can tell you that if you are liquidating equity to pay off a debt you cannot pay any other way then your equity wont be worth much.
So taking the Raws rule, Apple Inc is uninvestable due to solvency risk. Now perhaps it's expensive and one would not want to invest on that basis, but because of solvency risk??????????? With their 60 billion in equity against their massive comparable liabilities including nearly double their equity in interest bearing debt... Wow I am scared. Better I invest in a refinery that has lots of solid equity assets.
This is just one example, there are many other issues that I don't have time to go into, but what of insurance float?
So over 40% gearing could be the best thing in the world or it could mean imminent solvency risk, but some stupid rule is not going to tell you that.
If Apple was bought by another company for cash suddenly it would have TRILLIONS of dollars in equity, where as now it has basically none.
Remember in most of the great businesses... the equity is invisible and in most of the worst businesses, the equity is easily identifiable.
I would also suggest that ValueNZ need not anyone's wishes or luck. He is going the other route and putting in massive amounts of work and beginning the compounding journey at such an age that it's very unlikely that he will not do extremely well even if he falls short of the goal of outperforming the SP500.
Regarding the currency offset with that as your index, it matters not. The NZD will never continually appreciate against the USD, it will go up and down range bound, thus all come out in the wash over many years, however there is every chance that the USD will compound against us thus improving local returns over the long term, and if that's the case then well deserved and I would count it. If the USD weakens against NZD over the long term, what I'd do is get your eyes checked.
SRob calm down.. we were talking about using leverage for growth.
I'm on the rums again and difficult to contain myself.