# The Exceptional Wealth Accumulation Ideas and Thinking Thread



## tech/a

My views on Business Property and in regard to this topic of Trading are I have found more radical than most.

My own view is that a very high ratio of wealth accumulators will operate within their comfort zone---which is a great deal lower than even they expect. Warm and fuzzy is good but you wont see *EXCEPTIONAL* results.

*EXCEPTIONAL* results only show themselves when there is *EXCEPTIONAL* thinking.

(1) We had a 7 yrs bull run and while many took advantage of it many have lost any advantage they had accumulated. Many simply watched!

(2) We had a 7 yr property boom and while many picked up "A" single investment property few took advantage of this *EXCEPTIONAL* opportunity in an *EXCEPTIONAL WAY*. Many simply watched

(3) We have seen an *EXCEPTIONAL* down turn well documented and shifting indexes by 40-50% but few have taken advantage of it. Many simply watched.

(4) We have seen OIL trade from $25 a barrel to $140 a barrel and back to $50 a barrel Many simply watched.

(5) We have seen gold traded from $270 an ounce to $1000 an ounce and many simply watched.

(6) We have seen the AUD trade from 50c to 90c and we pretty well watched.

I too have been one who has watched SOME of those events but those I have taken part in--in an EXCEPTIONAL way have changed my life's direction!

Pyramiding is one of those strategies which can *SET YOU UP* for EXCEPTIONAL results.

Once risk is understood (Its minimisation and in many cases eradication) it should release everyone from the burden of FEAR.

It is EXCEPTIONAL thinking and implementation which I'd like to see discussed in a practical sense.
Putting yourself.
(1) In front of the train
(2) On the train.
(3) Fueling the train.
(4) Maintaining and or leaving the train.


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## Mr J

Always plenty of opportunities in hindsight. However, many do not have the capital, skill or motivation to take advantage of them. How many people could afford multiple mortgages? Not most. How many would have shorted if you had convinced them that the market was going to plummet? Not most. The evidence suggests that these were exceptional opportunities because most are incapable of taking advantage of them. Exceptional opportunities generally limited to exceptional people?


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## tech/a

Don't know about that.
I wouldn't describe myself as exceptional.
In fact during the property boom friends described me as a crazy.

(1) You don't have to have as much capital as you might imagine.
(2) Ability to recognise opportunity most have--many without hind site.
     Ability to take advantage of opportunity most need to aquire.
     Ability to Pull the trigger is where the great majority fail due to fear.
Fear of loss---remove that and you *WILL* release yourself.



> The evidence suggests that these were exceptional opportunities because most are incapable of taking advantage of them.




Gold rising from $250- $1000 had little to do with the in capacity of people to take advantage of the rise! Same can be said for everything else. Unless of course you have this "evidence?"



> Exceptional opportunities generally limited to exceptional people?




I think people can be seen as exceptional due to their actions.
Those same people can and do look totally different if they don't take care of RISK appropriately.

Perhaps we can investigate a $5000 trader taking advantage of this opportunity on a continuous timeframe as an exercise to prove (Hopefully) a point.
There are opportunities just like this EVERY week.

*CLICK TO EXPAND*


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## Uncle Festivus

Tech/a

Perhaps some need to recognise that there is a train to begin with?

A nice summary of what has happened, but it will take an Exceptional minority again to recognise which train to line up for, which is the hard part in this climate. A minimum starting point would be getting compound interest on idol cash while deciding on the train - a minimum of 4.5% at call?

Perhaps you can start off with a suggestion for a train and why?


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## tech/a

Uncle Festivus said:


> Tech/a
> 
> Perhaps some need to recognise that there is a train to begin with?




I guess my target audience is here.Limited I know but I would expect that those here would at least know a train if it went by them.



> A nice summary of what has happened, but it will take an Exceptional minority again to recognise which train to line up for, which is the hard part in this climate. A minimum starting point would be getting compound interest on idol cash while deciding on the train - a minimum of 4.5% at call?
> 
> Perhaps you can start off with a suggestion for a train and why?




I'm not suggesting this thread as a personal exercise in how clever I can be wether that be in hindsite or live.
But as an open discussion in how I am doing it when I see it and how ANYONE else can as well.
It's (Taking advantage of exceptional circumstances) perfect from the point of view of releasing fear.

But many cannot be foreseen.
In the above example you can and will often place yourself in front of a "Potential" run away train only to see it fly past,pull up and even reverse.

The point is that you must place yourself *in front* of opportunity.
No point in looking back at it!

Opportunity will present itself at a micro level like the example above and a macro level like a freight train.

The NEXT freight train I see is Inflation in the form of Inflation/Stagflation.
So I'm looking for 
(1) Increase in AU$
(2) Rise In Commodity prices.
(3) Decrease in buying power of cash due to hikes in prices.

I'm looking at Commodities (Micro and Macro) and Property (Macro).


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## Mr J

> I wouldn't describe myself as exceptional.




Most of us wouldn't, but exceptional acts make exceptional people, at least in that area.



> (1) You don't have to have as much capital as you might imagine.
> (2) Ability to recognise opportunity most have--many without hind site.
> Ability to take advantage of opportunity most need to aquire.
> Ability to Pull the trigger is where the great majority fail due to fear.
> Fear of loss---remove that and you WILL release yourself.




These are simple for you, but not for most. It's not just fear, it's also ignorance. Humans have a habit of jumping into the deep end unprepared. If most people were capable of it, these opportunities would not exist in the way that they do. Inability to pull the trigger might be where most fail, but only because they don't pull the trigger. If they did, many would end up failing for one of many other reasons.



> Gold rising from $250- $1000 had little to do with the in capacity of people to take advantage of the rise! Same can be said for everything else. Unless of course you have this "evidence?"




Who knew it would go from $250 to $1000? Who knew it was going to continue from $500? How is average Joe aware of all of this happening? It's a lot more complicated than you make it sound. As for evidence, I can point to the billions who haven't been financially successful.



> Perhaps we can investigate a $5000 trader taking advantage of this opportunity on a continuous timeframe as an exercise to prove (Hopefully) a point.




All you will prove is that an informed and skillful person can make a lot of money by taking advantage of opportunities that most pass up. This makes this person an exception, which adds further evidence to my statement that exceptional opportunities are for exceptional people. 



> There are opportunities just like this EVERY week.




Yes, but the smooth, sharp trader will snap it up, not Joe Public :.



			
				Uncle Festivus said:
			
		

> but it will take an Exceptional minority again to recognise which train to line up for




Agreed. Opportunities are there if you're good enough to spot them and then take advantage of them. Most people are not, even when they try. I'm not trying to be elitest, but if the world is a pie, most are destined to only receive a very, very small slice.


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## MrBurns

Thats great but tell me what's going to happen *NEXT* week.


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## Timmy

Thanks Tech, good thread.  ASF is a great community, great board, amazing diversity of topics and opinions.  

But the main aim of being here, for me anyway, is to find ways to grow the wallet (specifically through trading financial markets).  I think we can grow this thread with that goal in mind.


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## tasmart

tech/a said:


> I guess my target audience is here.Limited I know but I would expect that those here would at least know a train if it went by them.
> 
> 
> The point is that you must place yourself *in front* of opportunity.
> No point in looking back at it!
> 
> Opportunity will present itself at a micro level like the example above and a macro level like a freight train.
> 
> The NEXT freight train I see is Inflation in the form of Inflation/Stagflation.
> So I'm looking for
> (1) Increase in AU$
> (2) Rise In Commodity prices.
> (3) Decrease in buying power of cash due to hikes in prices.
> 
> I'm looking at Commodities (Micro and Macro) and Property (Macro).




I like your line of thought but don't underestimate fate luck & chance! And it always easy looking backwards.

Preparing for inflation I think is really sensible - those that remain cashed up will loss out!

Commodites & Aus $ are very closely correlated.

I also think that oil is going to go through the roof (and higher) - I've been reading a lot about peak oil - which should give some opportunity not only in oil but also as alternative energy sources are developed.

Food & agriculture must also become a prime area - but seems to be poorly developed from an investment point of view to date and is heavily associated with chance & luck & weather - and has been infected with financial innovation!

I have weathered the GFC relatively well - partly because I cashed up heavily early on, partly because I took profit out of my financial stocks and partly pure luck! I topped up quite a bit early in the year and am heavy in commodities & oil stocks and banks. I am starting to be interesting in being a bit more speculative again so am interested in any thoughts!

I should add all my share portfolio is now in my SMSF with about 10 years to go before retirement but already quite a decent amount.

I would love some left field suggestions!


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## Trembling Hand

tech/a said:


> The NEXT freight train I see is Inflation in the form of Inflation/Stagflation.
> So I'm looking for
> (1) Increase in AU$
> (2) Rise In Commodity prices.




These two will counter each other for the Aussie punter. The theme may well play out but making AUD out of it will be a very tricky game, I reckon.

Have a look at AUD gold. Killer for commodities bulls in an Aussie paddock :


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## ojm

MrBurns said:


> Thats great but tell me what's going to happen *NEXT* week.




My thoughts too. Hindsight is easy.


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## kincella

My 2 cents worth....I started off being smart in 2000 and bought all these cheap little properties....just because I could, and intended to hold for many years into retirement.....no one else seemed to be interested in property at the time......then by 2004 I was being offered some wonderful figures ....so I sold half of them....and lets say I made some very good profits....
I did take out about 1/3rd of my stocks by Dec 07....with some more nice profits.....but I should have taken the lot out...in hindsight.....
I have had the feeling/ intuition that we were heading back into another little property boom......but look at this in Melbourne....its too much and too soon...
now my advice.....be in a position to borrow funds...take advantage of the low interest rates and lock in at around 5%.....if that means getting your tax in order early...so its ready for the bank or the broker...
you borrow as much as you need, being conservative, when the rates are low...
oh and have cash in the kitty for the rainy days...that will come...or ready for an opportunity.....
extract from the article........
*Record auction rate sparks growing concernChris Vedelago
June 28, 2009 *

MELBOURNE'S auction clearance rate has held its ground at the second-highest level on record, with this latest performance fuelling speculation the market could be heating up too much, too fast.

The Real Estate Institute of Victoria reports this week's clearance rate was 86 per cent for 425 auctions. The results of another 31 scheduled auctions were unreported.

This is the seventh consecutive week when the clearance rate has been above 80 per cent, while private sale transactions have continued to surge ahead of even 2007 levels.

"There's no doubt that consumers are showing strong confidence in Melbourne's property market, judging by the results we're seeing for both auctions and private sales," said REIV chief executive Enzo Raimondo.

The overall sales performance, and increasingly common reports of prices being achieved well above reserve, is sparking plenty of confusion and some concern.

"It's not just supply and demand any more. You look at some sales and people are paying these prices with seemingly no logic behind the price they pay … they're buying properties just because they can afford to," said buyer's advocate Michael Ramsay.

In Brunswick, a crowd of about 400 watched, stunned, as the sale price of 10 Charles Street soared 61 per cent ”” or nearly $1 million ”” above its reserve.
Intense competition between four bidders saw the 1525-square-metre block sell for $2.58 million against a reserve of $1.6 million. Barry Plant real estate quoted the property at $1.5 million to $1.6 million.

http://business.theage.com.au/business/record-auction-rate-sparks-growing-concern-20090627-d0k5.html


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## Gordon Gekko

tasmart said:


> I like your line of thought but don't underestimate fate luck & chance! And it always easy looking backwards.
> 
> Preparing for inflation I think is really sensible - those that remain cashed up will loss out!
> 
> Commodites & Aus $ are very closely correlated.
> 
> I also think that oil is going to go through the roof (and higher) - I've been reading a lot about peak oil - which should give some opportunity not only in oil but also as alternative energy sources are developed.
> 
> Food & agriculture must also become a prime area - but seems to be poorly developed from an investment point of view to date and is heavily associated with chance & luck & weather - and has been infected with financial innovation!
> 
> I have weathered the GFC relatively well - partly because I cashed up heavily early on, partly because I took profit out of my financial stocks and partly pure luck! I topped up quite a bit early in the year and am heavy in commodities & oil stocks and banks. I am starting to be interesting in being a bit more speculative again so am interested in any thoughts!
> 
> I should add all my share portfolio is now in my SMSF with about 10 years to go before retirement but already quite a decent amount.
> 
> I would love some left field suggestions!





Correct me if I'm wrong but most here have the opinion that inflation is set to take hold and when most people are of the same mindset the market has a nasty way of surprising everyone. Does anyone consider that there may be a period of deflation? With allot of people due to retire in the next decade around the world and many having been stung in the tech bubble, housing bubble, GFC. Its seems to me that most will not re-enter aggresivley  with what little they have left. At least not on the scale we have seen in the past in both property and shares speculation.
So I will be looking for prices to come down or stagnate  but certainly not shoot up in a v shape recovery from here.
If you believe like I do the deflation will manifest from here then there is no better place to be then in cash?
Best
G


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## Nyden

Gordon Gekko said:


> Correct me if I'm wrong but most here have the opinion that inflation is set to take hold and when most people are of the same mindset the market has a nasty way of surprising everyone. Does anyone consider that there may be a period of deflation? With allot of people due to retire in the next decade around the world and many having been stung in the tech bubble, housing bubble, GFC. Its seems to me that most will not re-enter aggresivley  with what little they have left. At least not on the scale we have seen in the past in both property and shares speculation.
> So I will be looking for prices to come down or stagnate  but certainly not shoot up in a v shape recovery from here.
> If you believe like I do the deflation will manifest from here then there is no better place to be then in cash?
> Best
> G





You sound a little contradictory there, Gordon.

*Everyone* is expecting inflation / a new bubble, yet most people will not re-enter?


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## tech/a

Mr J said:


> These are simple for you, but not for most. It's not just fear, it's also ignorance. Humans have a habit of jumping into the deep end unprepared. If most people were capable of it, these opportunities would not exist in the way that they do. Inability to pull the trigger might be where most fail, but only because they don't pull the trigger. If they did, many would end up failing for one of many other reasons.




Ignorance plays a big part. But ignorance in thinking is the main reason people dont act. They just dont have the capacity to evaluate a situation/opportunity let alone analyse the risk.

*I expect this thread *to go someway in helping those who wish to travel the road---formulate a map or blue print for engaging opportunity with limited/deminished or no risk.



> Who knew it would go from $250 to $1000? Who knew it was going to continue from $500? How is average Joe aware of all of this happening? It's a lot more complicated than you make it sound.




No one knows or knew how far it would travel. But many knew (Those informed or took the time and effort to be informed) that the train was leaving the station.If you werent on it at 300/400/500/600 or any other number then you were never going to be in a position to take advantage of THAT opportunity.



> As for evidence, I can point to the billions who haven't been financially successful.




Sure but its not those who we target in this discussion---only those here.



> All you will prove is that an informed and skillful person can make a lot of money by taking advantage of opportunities that most pass up. This makes this person an exception, which adds further evidence to my statement that exceptional opportunities are for exceptional people.




Well I was rather hoping to demonstrate how a relatively ordinary person can take a relatively abnormal situation and become involved in placing it in front of him at little and eventually *NO risk* so as to take advantage of micro exceptional opportunities. I dont expect this normal person to get it spot every time infact I know it will be a rare accasion. But Losses will be cut very short and winners will be belted along and once or twice a year you can expect something *EXCEPTIONAL*.



> Yes, but the smooth, sharp trader will snap it up, not Joe Public :.




see above.



> Agreed. Opportunities are there if you're good enough to spot them and then take advantage of them. Most people are not, even when they try. I'm not trying to be elitest, but if the world is a pie, most are destined to only receive a very, very small slice.




So lets just worry about US!



MrBurns said:


> Thats great but tell me what's going to happen *NEXT* week.




You or I dont have to. We just have to keep placing ourselves infront of opportunity and when we catch it belt it!!. 



> But the main aim of being here, for me anyway, is to find ways to grow the wallet (specifically through trading financial markets).  I think we can grow this thread with that goal in mind.




My aim as well.



tasmart said:


> I like your line of thought but don't underestimate fate luck & chance! And it always easy looking backwards.




Ah

Cant agree more --but if your not o the train when it turns into a Rocket then you have no hope of finding YOUR OWN luck do you?



> Preparing for inflation I think is really sensible - those that remain cashed up will loss out!
> 
> Commodites & Aus $ are very closely correlated.
> 
> I also think that oil is going to go through the roof (and higher) - I've been reading a lot about peak oil - which should give some opportunity not only in oil but also as alternative energy sources are developed.
> 
> Food & agriculture must also become a prime area - but seems to be poorly developed from an investment point of view to date and is heavily associated with chance & luck & weather - and has been infected with financial innovation!
> 
> I have weathered the GFC relatively well - partly because I cashed up heavily early on, partly because I took profit out of my financial stocks and partly pure luck! I topped up quite a bit early in the year and am heavy in commodities & oil stocks and banks. I am starting to be interesting in being a bit more speculative again so am interested in any thoughts!
> 
> I should add all my share portfolio is now in my SMSF with about 10 years to go before retirement but already quite a decent amount.
> 
> I would love some left field suggestions!




How would you place yourself NOW in the position to take advantage of any massive surge in oil? With minimal or no risk?



ojm said:


> My thoughts too. Hindsight is easy.




Sure is and thats all most look at.
The aim here is to turn those intersted into more of a minority than they currently are (They are currently looking for answers) lets find some.

*T/H *Agree.
Any long term measures for peak performance you are looking at or have implemented?


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## Gordon Gekko

Nyden said:


> You sound a little contradictory there, Gordon.
> 
> *Everyone* is expecting inflation / a new bubble, yet most people will not re-enter?




Is it?

I think most people are expecting inflation but I don't think it will happen. Maybe a little short term but I think prices will fall mid to long term As workers compete for scarce jobs and firms underbid each other for sales, wages and prices will come under pressure. Most people due to retire in the next decade will think twice about how much exposer  they can manage and adjust there level of risk accordingly.


Best
G


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## tech/a

Gordon Gekko said:


> Is it?
> 
> I think most people are expecting inflation but I don't think it will happen. Maybe a little short term but I think prices will fall mid to long term As workers compete for scarce jobs and firms underbid each other for sales, wages and prices will come under pressure. Most people due to retire in the next decade will think twice about how much exposer  they can manage and adjust there level of risk accordingly.
> Best
> G




Its ok to have a contradictory opinion to others I often do.
Provided you take care of your own blueprint who cares if others DONT see your opportunity.
Many have got it right and many have got it totally wrong when it comes to any opportunity.
Ive been spectacular in both sides of the Story!

If your wrong just brush yourself off and go again---you can because you deminished RISK.


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## Mr J

> Well I was rather hoping to demonstrate how a relatively ordinary person




Yes, but I would argue that if they start taking advantage of great opportunities that most don't, then they become exceptional.



> So lets just worry about US!




No problem .


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## Trembling Hand

tech/a said:


> *T/H *Agree.
> Any long term measures for peak performance you are looking at or have implemented?




I'm moving to Hong Kong to earn Chinese Yuan before they pull their fingers out of the dyke and the flood gates break open.


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## kincella

the most important advice might be......only 10% of the population are very, very wealthy, 90% are not....
so if everyone you know is doing something the same...ie buying shares, props etc...then you should make a mental note to yourself...do not do that, or follow the crowd...they will not become wealthy.....


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## tasmart

kincella said:


> the most important advice might be......only 10% of the population are very, very wealthy, 90% are not....
> so if everyone you know is doing something the same...ie buying shares, props etc...then you should make a mental note to yourself...do not do that, or follow the crowd...they will not become wealthy.....




The figures are actually worse than that!

This was posted some time ago:



> The average Australian will earn approximately 1.8 million dollars during an average working life. For every Australian working today 8% will become "Financially Independent" when they retire. Out of 100 people aged 15 today, by the age of 65
> 
> 38 will be deceased
> 38 will be living in poverty
> 16 will still be working
> 7 will be retired on a livable income
> and 1 will be wealthy.




ATM I am still working but would have a livable income if I needed to retire (just turned 55) but I really enjoy my job, lead a balanced lifestyle and have a lot of fun. 

It is obvious that all the 'recipes' for becoming wealthy, in general, do not work. We have to find out own way, some will get there, unfortunately most won't. 

However, I belived that forums such as this, with the sharing of ideas, experiences, failures and wins are all useful as part of our education. But we still individually have to make it work - for us.

Keep up the posts ..... starting to get interesting.


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## awg

kincella said:


> the most important advice might be......only 10% of the population are very, very wealthy, 90% are not....
> so if everyone you know is doing something the same...ie buying shares, props etc...then you should make a mental note to yourself...do not do that, or follow the crowd...they will not become wealthy.....






According to the figures below, approx 129,000 millionaires.

These days, anything under that does not cut the mustard.

so 129,000 / 21,000,000 = approx 0.62% of the total population are wealthy.


http://news.my.msn.com/business/article.aspx?cp-documentid=3410626


The global financial crisis has sent the number of millionaires in Australia plunging and forcing it out of the world's top 10, according to a new survey.

Despite escaping the worst of the downturn so far, Australia's number of high-flyers dropped 23.4 percent to 129,000 by the end of 2008, placing it 11th out of 71 countries, the Merrill Lynch-Capgemini study said.

Australia had been a member of the exclusive top-10 club since 2006, said Capgemini Financial Services senior manager Wayne Li.

"The decline in our high net worth population meant that Australia slipped in its global ranking from number 10 in 2006 and 2007 to number 11 in 2008," Mr Li said.

The total net worth of Australia's elite -- people with net assets of one million US dollars excluding their home -- also slipped 29.7 percent to 379.8 billion US last year, Li said.


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## ThingyMajiggy

awg said:


> so 129,000 / 21,000,000 = approx 0.62% of the total population are wealthy.




It wouldn't be quite that bad would it? 129,000 / the working population. Wouldn't be from EVERY single person in Australia, as not everyone is working or has an income, kids etc?


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## MrBurns

What's wealthy ?
Net worth of ?


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## Mr J

> The average Australian will earn approximately 1.8 million dollars during an average working life. For every Australian working today 8% will become "Financially Independent" when they retire. Out of 100 people aged 15 today, by the age of 65
> 
> 38 will be deceased
> 38 will be living in poverty
> 16 will still be working
> 7 will be retired on a livable income
> and 1 will be wealthy.




Sounds like rubbish to me. Wealthy is typically described as higher income, and while the very, very wealthy make up far less than 10%, the plain old wealthy might make up about that. 

38 deceased? The average life expectancy is over 80, and who knows how far that will rise with advances in medical science. Do you know how long the rest of us would have to live to balance out those 38 'premature' deaths?

38 living in poverty? Do 38% of 65 year olds nowdays live in poverty? Even if they do, current 15 year olds will have paid super their entire lives, and should be in a better position than current 65 year olds. Shouldn't be too bad if the parents don't spend the inheritance.

7 retired on a livable income? No wonder 38% are dead - their incomes weren't "livable" .

1% wealthy? Please  x2. It's the 'wealthiest' group out there.

These figures seem like complete rubbish, unless I'm missing that this is in a post-WW3 scenario.


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## Uncle Barry

Good evening,
T/A.
Mate, this is without a doubt the most informed thread on ASF's I've read,
in fact I will have my son over here tomorrow and have him read the complete thread (because Dad knows nothing). 
And I will direct two of his friends to also read the thread !
(I am trying to educate them .... very trying )

If someone tells him the very same as silly old Dad has been saying for years he just might change his ways. And if this can take place, I owe you deeply.

T/A, EVERYTHING you are saying is 100% correct, the only problem being 99.9% of the people of this country expect to spend more than they earn on a blo...y plastic card and then retire and THEN put their hand out, AGAIN !

Again, someone said something about retire,,,,,,, why, if you enjoy what your doing ?
I am so called retired, well over the age, but my good sweet wife now thinks, he will never retire.. (at long last.)
Why should I ?
Some people curl up and retire, some then go to bowls or something,
Myself, this is retire type of stuff,,,,, learning and maybe making some dollars more.

opps, sorry of the track, please forgive, as I an a old retire fa.t.......

Kindest regards, 
UB


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## MRC & Co

Gordon Gekko said:


> Correct me if I'm wrong but most here have the opinion that inflation is set to take hold




Actually, I would say the mood of the market about inflation or deflation is very mixed at the moment.  As seen by both movements in the yield curve and gold.


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## tech/a

*You* may never reach retirement.

At 55 I still think I'm 30.
Look at chicks and wish I was still 30 they still look the same to me as they did when I was 30!
Play just as hard as I did when I was 30!
But know I'm 55.

Ive lost 4 good mates to Accidents/Cancer/Drugs.
I have a really great Girlfriend currently accepting the challenge of cancer aged 57--She and her Husband "were" looking at retirement---in the next few years! God I hope they get it!

Ive watched others retire and turn into boring old farts.
I see even more who will never get off struggle street.

There is one thing a few of us want to achieve which in itself I believe to be exceptional.

We want to look back on life and honestly say with a huge grin and sense of satisfaction.

*"Life--What a blast!"*


*BE EXCEPTIONAL*---you have a choice.

Back on topic tommorow.--apologies.


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## tasmart

Mr J said:


> Sounds like rubbish to me. Wealthy is typically described as higher income, and while the very, very wealthy make up far less than 10%, the plain old wealthy might make up about that.
> 
> These figures seem like complete rubbish, unless I'm missing that this is in a post-WW3 scenario.




These figures were posted on this forum a few months ago and apparently are based on ABS figures and I think are relatively realistic:



> The way that the ABS (Australian Bureau of Statistics) defines "Livable income"? - In retirement your income is 60% or greater of your last year's pay. "Wealthy" is defined as your retirement income is greater than 80% of your last years pay.




Looking at the ABS site the latest figures on Household Wealth are for 2005/06 before the bubble and burst and really show how low most peoples assets actually are - and this is mostly as their main house rather then income producing assets.



> Wealth is a net concept and measures the extent to which the value of household assets exceeds the value of their liabilities. In 2005-06, the mean value of household assets was $655,000. The corresponding value of mean household liabilities was $92,000, resulting in mean household net worth of $563,000







> Balances in superannuation funds were the largest financial asset held by households, averaging $85,000 per household across all households. 76% of households had some superannuation assets, but the distribution was very asymmetrical. While the average (mean) value of superannuation for those households was $111,000, half had superannuation assets under $44,000.





It is hard to find actual figures on the number of self-funded retirees in Australia but again from the ABS 2005 Year Book this was only 5.1% of households with 14.5% on age pensions and 13.5% on other government pensions or benefits. The definition of the self-funded group is:



> Self-funded retiree households (i.e. those households whose principal source of income is superannuation or property income and where the Household Expenditure Survey (HES) defined reference person is 'retired' (not in the labour force and over 55 years of age)).





So I would not dismiss the figures in a hurry!


----------



## Temjin

Isn't that list of "exceptional" opportunities that you pointed out were in one way or the other (or rather directly!) connected to the global credit boom phenomenon that was started by Alan Greespan when he lowered the US rate to a low level for an extended period of time. This caused a worldwide credit boom followed by an unprecedented relaxation of lending criteria that boost up asset prices even further.

I've been reading alot of commentaries from those who are already rich and in a way, some of them DID NOT really take part in the global boom since they knew it was totally unsustainable. Do we call them "exceptional" them since they did not take the full advantages of it but still, from others point of view, they are already rich and successful? 

Whereas, those who participated the phenomenon utilising full leverage and gain massive wealth at the expense of others, but refuses to acknowledge that this boom was sustainable, would be considered "exceptional"? 

But yes, I agree that those who did take advantage of the boom and still came out intact after the bust (i.e. sold out) would surely be "exceptional" for various reasons. 

I'm not going to speculate on the future because it is simply too cloudy at the moment. There are convincing evidences and arguments coming from the inflation-camp in which commodities such as energy/agriculture/precious metals would present huge amount of opportunities. On the other hand, the deflation camp also put up an equally convincing argument where the recovery may not be as "boom-like" as what most would be expecting. However, they too do not rule out the opportunities in the same commodities that the inflation"ists" are recommending. 

So I'm taking the ideas on both side.  

Has anyone read Timothy's book "4 Hours Work Week" and his concept of NEW RICH? 

It's certainly a very enlightening book to read.

Ohh, and I forgot to mention this. I personally see there are SO MUCH opportunities for me to act on, but I can only afford to focus on just one particular one to make that "exceptional" wealth. I mean has anyone seen someone "exceptional" who has developed a really successful business and generate million of dollars of revenue but is also regarded as a legendary level full time future/option traders and at the same time, buy/speculate/renovate properties at the professional level? All these take considerable effort and time to get to that stage. 

Is anyone facing the same kind of dilemma?


----------



## tasmart

Temjin said:


> I'm not going to speculate on the future because it is simply too cloudy at the moment. There are convincing evidences and arguments coming from the inflation-camp in which commodities such as energy/agriculture/precious metals would present huge amount of opportunities. On the other hand, the deflation camp also put up an equally convincing argument where the recovery may not be as "boom-like" as what most would be expecting. However, they too do not rule out the opportunities in the same commodities that the inflation"ists" are recommending.




I agree that the future is very murky - the quandry is how best to position yourself to take advantage of opportunities - but not be too exposed to much risk (I personally am very risk tolerant).


----------



## Mr J

Tasmart said:
			
		

> So I would not dismiss the figures in a hurry!




Perhaps not dismiss them, but I'm extremely skeptical, if only because they are applying recent figures to the far future. Example, current retirees have not paid super for most of their lives, while 15 year olds will have done so. If they're willing to overlook this, then that throws the credibility out the window, as there are many reasons why recent stats cannot be applied to young and future generations.

Who knows how "livable" and "wealthy" are defined, and then what about the 38% that are dead? Life expectancy for that group is in the 80's. If one-third died at 65 and another third died at 80, the remainder would have to each 95. I can't imagine one-third of people dying before 65.



> Looking at the ABS site the latest figures on Household Wealth are for 2005/06 before the bubble and burst and really show how low most peoples assets actually are - and this is mostly as their main house rather then income producing assets.




Which includes people that have not yet reached retirement. We assume that these people will add to their net worth by that stage.



			
				Temjin said:
			
		

> Do we call them "exceptional" them since they did not take the full advantages of it but still, from others point of view, they are already rich and successful?




They can be exceptional in some ways, and not in others. For the purposes of the recent boom, no they were not exceptional. If they're rich and successful, then they have clearly been exceptional at other times, or in other ways.


----------



## Trembling Hand

Hindsight!! Bloody hell!

Guys if your comments are "it all looks easy in hindsight" but its too hard to look into the future. And that's it  well,

What is that telling you about the tools you are using? About the information you seek? About the peers you keep? About what you learn from previous missed opportunities? About even your approach to the problem of positioning yourself?

So here is my "Exceptional Wealth Accumulation Ideas and Thinking"

Smarten the F up guys and do some work. 

If you still cannot see how to do these things in hindsight thats your problem.* Your tools are rubbish and need replacing.*

Hindsight is, I think, used as an excuse more than as a real problem. Yes its hard but not impossible.


----------



## tech/a

I want to try and keep the thread on track.

Rather than discussing what/who is classified as exceptional---my focus of the discussion is this---

Conservative thinking and conservative investment at best will bring conservative results---nice smooth equity curves---wonderful diversification--that glowing homely feeling that everything is going to be OK--over the long run.

And thats *FINE*---for 90% of the population.

But there are 10% or so of us who recognise that EXCEPTIONAL wealth growth doesnt come from conservative investment---*UNLESS* in exceptional times*.

*MOST* equate the opposite to conservative as "Maverick" or Gung Ho with complete disregard to quantification of risk. No doubt MOST do not consider risk when rushing in where "Angels fear to tread"

Which brings me back full circle to the crux of this thread.

*EXCEPTIONAL *wealth creation ideas with the highest regard to risk. How we can place ourselves in the position to be sweapt along by those* OUTLIER* moves in all aspects of wealth creation.
Those *SPIKES* in out nett wealth that seem like we have won the lottery!

The ones that change the course of our lives and of those around us. *Without* taking risks that could send us to ruin. 

To have truely exceptional wealth we must find these.
* There is always option (2).


----------



## tech/a

*T/H

ASF'S GORDON RAMSEY!
love it!*


----------



## ojm

Trembling Hand said:


> Hindsight!! Bloody hell!
> 
> ...
> 
> Hindsight is, I think, used as an excuse more than as a real problem. Yes its hard but not impossible.




I don't think any one person would have got all the items listed in the original post correct. Who could have predicted with 100% accuracy that gold would go from $250-1000. Or any of the others.

Hindsight gets it right every time.

That doesn't mean that we aren't trying to get these correct now, for the future. I think everyone on these forums is trying.


----------



## Mr J

Trembling Hand said:
			
		

> Guys if your comments are "it all looks easy in hindsight" but its too hard to look into the future




It is for many people. Some will see these as clear opportunities, but most people would be bumbling about trying to find their way around a dark room. Most of the public has little to no experience with a business/trading/investing mindset, so the opportunities aren't going to be obvious to them. The solution would be to tell the public to pay more attention to their financial decisions, but that's unlikely to happen. There are too many excuses to use, but in the end it comes down to laziness and/or ignorance. 

It does amaze me that people spend so much of their time working for money, a little to no time thinking about what they should do with it. It's like saving for tools to build a house, but then not building the house! Perhaps that is the problem; we see money as a tool to build wealth, while most see it as something to exchange for goods.



> I want to try and keep the thread on track.




Sorry, this is hard for me but I will try.


----------



## tech/a

You dont need to get them all.
Just 1

I'm hoping that this discussion will bring to light HOW we can place ourselves in the position WITHOUT debilatating RISK ---  to take advantage of these opportunities BOTH long and short term.
You may get 50 wrong and 1 right and that 1 could well alter your life perminently!

I'm with T/H

*TOUGHEN UP!*

Stop thinking like the 90%



> Most of the public has little to no experience with a business/trading/investing mindset, so the opportunities aren't going to be obvious to them. The solution would be to tell the public to pay more attention to their financial decisions, but that's unlikely to happen. There are too many excuses to use, but in the end it comes down to laziness and/or ignorance.
> 
> It does amaze me that people spend so much of their time working for money, a little to no time thinking about what they should do with it.




I can absolutely equate with this.
I remember a BBQ after I had a handful of properties in 2000.
2 at the BBQ were F/A's ---good friends---the ones that suggested I put $70k a year into super--I'd declined.

They just couldnt fathom WHY I was buying Property like it was running out (their words). my response is that property which could self finance was indeed "running out". I had 6 properties with NO cost returning me a positive cash flow AND a capital gain.----Looks of bewilderment.

In 2002 The was another BBQ with the SOLE purpose of explaining IN DETAIL to the same 6 couples how "To Do it".-----One did it to an extent and---Looks of bewilderment---these people arent stupid!


----------



## prawn_86

I guess it depends on your definition of 'exceptional' but one of my ideas (and actions) recently has been to pick up stocks that meet my investment criteria and have a current (after the downturn) div yield of 10% or higher.

10% pa compounded is pretty awesome over the long term, and of the stocks i have picked up, one would hope there is very little downside left (like any investment it must still be monitored however)

EDIT - Due to my low capital base these investments are not going to be the ones that i can retire on, but you have to work with what you have got


----------



## MrBurns

tech/a said:


> You dont need to get them all.
> Just 1
> 
> I'm hoping that this discussion will bring to light HOW we can place ourselves in the position WITHOUT debilatating RISK ---  to take advantage of these opportunities BOTH long and short term.
> You may get 50 wrong and 1 right and that 1 could well alter your life perminently!
> 
> I'm with T/H
> 
> *TOUGHEN UP!*
> 
> Stop thinking like the 90%
> 
> 
> 
> I can absolutely equate with this.
> I remember a BBQ after I had a handful of properties in 2000.
> 2 at the BBQ were F/A's ---good friends---the ones that suggested I put $70k a year into super--I'd declined.
> 
> They just couldnt fathom WHY I was buying Property like it was running out (their words). my response is that property which could self finance was indeed "running out". I had 6 properties with NO cost returning me a positive cash flow AND a capital gain.----Looks of bewilderment.
> 
> In 2002 The was another BBQ with the SOLE purpose of explaining IN DETAIL to the same 6 couples how "To Do it".-----One did it to an extent and---Looks of bewilderment---these people arent stupid!




Sorry but to save me sifting through your previous posts, what your view on property now ?

Inflated, stay out ?


----------



## MrBurns

Exceptional Wealth Accumulation requires leveraging to the max and risk taking, there's no other way to make serious money.

You have to be totally fearless, unfortunately I've seen to many on the scrap heap to indulge to that extent myself.


----------



## wayneL

On the one hand we must be careful not to be Fooled By Randomness*, but just like the lottery, you have to be in it to win it.

However, as credit is the only fundamental, loose credit conditions will result in a bubble... somewhere. Where individuals can kick goals is in trying to select the best manifestation of the same.

Likewise, a tightening of credit causes those bubbles to deflate or pop... exit time. Plenty over here rode the bubble, but didn't see the lance coming right at them. As a result, several "exceptional" fortunes became exceptionally spectacular bankruptcies.

The trick from here is detecting credit conditions and where capital wants to go. If accurate (and just a little bit lucky), you can go for the slap shot.

But nothing wrong with hitting singles until then.

I had a view that manufacturing could be the beneficiary of capital inflows in the next cycle. I'm not so sure now.







*


> Taleb sets forth the idea that modern humans are often unaware of the very existence of randomness. They tend to explain random outcomes as non-random.
> Human beings:
> overestimate causality, e.g., we see Mosques in the clouds instead of understanding that there are just random clouds that appear to our eyes as Mosques (or something else);
> tend to view the world as more explainable than it really is, i.e., we look for explanations even when there are none.


----------



## tech/a

MrBurns said:


> Sorry but to save me sifting through your previous posts, what your view on property now ?
> 
> Inflated, stay out ?




You bought a smile to my face.

I had just clicked SEND to one of my property agents for the first time in 2 yrs.



> Jackie.
> 
> Hi
> We are just completing our own home at Moana espy
> In a few months we will be actively looking for
> developement opportunities. Our interest will be
> in properties West of Commercial road
> West of Dyson Road with our without a building on it
> with 1000 square meters min corner sites.
> 
> Jackie if you find any I'd be happy to hear from you.




Will run through the "No Brainer" reasoning tonight as I'm busy if you want (My reasoning and plan of action.)


----------



## tech/a

MrBurns said:


> Exceptional Wealth Accumulation *requires leveraging to the max and risk taking, there's no other way to make serious money.*
> 
> *You have to be totally fearless,* unfortunately I've seen to many on the scrap heap to indulge to that extent myself.






*RUBBISH*


You have to alter *YOU*R thinking and become creative and entrepeneurial.

Burns'y your limiting yourself---your the classic 90% er.


----------



## MrBurns

tech/a said:


> You bought a smile to my face.
> I had just clicked SEND to one of my property agents for the first time in 2 yrs.
> Will run through the "No Brainer" reasoning tonight as I'm busy if you want (My reasoning and plan of action.)




No thanks that's fine my guess is you're familiar with a niche' market in that location and are targeting that, you would probably feel it will be safe even with a severe downturn AND you arent leveraging to any great extent.
good luck, I need to get back into it, it's been a while but Melbourne is different.


----------



## MrBurns

tech/a said:


> *RUBBISH*
> You have to alter *YOU*R thinking and become creative and entrepeneurial.
> Burns'y your limiting yourself---your the classic 90% er.




I've done that in the past and made heaps, but not in property, did that too but I got out in time and my partners went down to gurgler a long time ago, timing is everything in property.


----------



## jersey10

Mr J said:


> There are too many excuses to use, but in the end it comes down to laziness and/or ignorance.




I think a lot of people just don't have the fortitude.  They are society's puppets and are brainwashed into working 9-5 till they are 65 whinging about doing it the whole time.


----------



## MrBurns

This is a very good thread, very important that it stays focussed and on topic otherwise it will be lost.


----------



## MrBurns

jersey10 said:


> I think a lot of people just don't have the fortitude.  They are society's puppets and are brainwashed into working 9-5 till they are 65 whinging about doing it the whole time.




Those types and I've seen a lot of them have NO tolerance for risk at all, they cant see past the contents of their pay packet.


----------



## jersey10

tech/a said:


> You bought a smile to my face.
> 
> I had just clicked SEND to one of my property agents for the first time in 2 yrs.
> 
> 
> 
> Will run through the "No Brainer" reasoning tonight as I'm busy if you want (My reasoning and plan of action.)




I would be interested in hearing your reasoning and plan of action Tech/a


----------



## ThingyMajiggy

Is it just me, or does it seem like a waste of time telling people they should think differently and do things differently, but not actually telling them HOW? 

"Your just another 90%er"
"Toughen the F up" 

How does this actually help anyone? 

Like showing the picture for a nice meal, but not telling you what to do with the ingredients. Might as well make this thread truly helpful and tell people HOW to do things, not just tell them to do things,  most people know they need work in different areas, and we would all dearly love to pick those exceptional moves. 

Seems like it will be a good thread.


----------



## Mr J

MrBurns said:


> Exceptional Wealth Accumulation requires leveraging to the max and risk taking, there's no other way to make serious money.
> 
> You have to be totally fearless, unfortunately I've seen to many on the scrap heap to indulge to that extent myself.




I don't agree. Outstanding growth can be experienced with responsible capital management; it's a matter of finding good opportunities and enough of them. Just take a look at TH's nothing to something thread. It is extremely good, but even a fraction of that performance would make someone a fortune reasonably quickly. Perhaps we differ in our definitions of serious money, but I don't consider 8-9 figures to be lunch money.

There's also the fact that leveraging to the max and overly-aggressive risk taking will likely lead to blowing up. To suggest that exceptional wealth accumulation requires being overly aggressive is to suggest that anyone who has had exceptional success has simply been lucky.



ThingyMajiggy said:


> Is it just me, or does it seem like a waste of time telling people they should think differently and do things differently, but not actually telling them HOW?
> 
> "Your just another 90%er"
> "Toughen the F up"
> 
> *How does this actually help anyone?*




It doesn't unless it provokes thought, and in my opinion, if they don't think they don't deserve the help.


----------



## Trembling Hand

ThingyMajiggy said:


> Is it just me, or does it seem like a waste of time telling people they should think differently and do things differently, but not actually telling them HOW?




Yes you are right for 90% or more of people it would seem to be a waste. 

But you have completely missed my point. If you think that you haven't the tools to fix a problem then that's a good start, you need to set about getting new ones.

If you are looking to be force feed or handed the tools then you are completely lost and have no hope. IMHO.


----------



## ThingyMajiggy

Trembling Hand said:


> Yes you are right for 90% or more of people it would seem to be a waste.
> 
> But you have completely missed my point. If you think that you haven't the tools to fix a problem then that's a good start, you need to set about getting new ones.
> 
> If you are looking to be force feed or handed the tools then you are completely lost and have no hope. IMHO.





I think someone could be a lot more help than " You're a 90%er" etc, without being "force fed". 

Oh BTW.....get used to people "missing your points". Exactly what I'm referring to. 

Anyway, back on topic. This discussion isn't for here or now


----------



## Temjin

tech/a said:


> *RUBBISH*
> 
> 
> You have to alter *YOU*R thinking and become creative and entrepeneurial.
> 
> Burns'y your limiting yourself---your the classic 90% er.




That's a bit harsh there.

Burn has a point though.

You can only make exceptional wealth either using somebody else money or somebody else time. And you LEVERAGE ON THEM through "creativity" and "entrepreneurship". Of course, there are obvious exceptions where successful people have created "exceptional" wealth through practicising innovative business processes or products. (i.e. $1 million pixel website is one example, founder of twitter/facebook, etc) 

But from the original list of opportunities that you initially listed, it would only be possible to create exceptional wealth through them if you utilise leverage properly. (not necessary be totally fearless and have a lack of plan) 

However, I agree that one only need to focus on ONE NICHE market.

It's no point in pondering all these opportunities out there if the person don't really take actions on it. Any informed person would be totally overwhelmed with the number of options out there. (the number of ways to invest or trade, the different options in how to start a business, etc) The best way is to just focus on one that you "feel" it suits your personality and your perception of reality, and spend all your time educating yourself more on the subject and just do it. 

Regardless, there are no "best" opportunities to make their exceptional wealth because every one would eventually lead to it. 

And these are my beliefs.


----------



## Mr J

> I think someone could be a lot more help than " You're a 90%er" etc, without being "force fed".




The right type of person will start asking questions that put themselves on the right path. That "you're a 90%" comment is still quite helpful to someone who is willing to dwell on it. Maybe the experienced person is willing to open up a little when they are asked the right questions, rather than being asked for the tools.


----------



## Temjin

Mr J said:


> The right type of person will start asking questions that put themselves on the right path. That "you're a 90%" comment is still quite helpful to someone who is willing to dwell on it. Maybe the experienced person is willing to open up a little when they are asked the right questions, rather than being asked for the tools.




What IS the right path?????

The individual opportunity itself or the person's willingness and ability to act on it? 

If the person have the will to do it, then any opportunities (or most rather) would lead to exceptional wealth. And it doesn't have to be just property alone. 

It's pointless to talk about how my opportunity is a better way to generate more wealth than yours. It's about how you actually go about in doing it. Are you committed to it? Do you have a plan? Have you done your research? Do you understand the risks involved? Do you actually have the skills for it? Are you motivated enough to do it too?

And more importantly, why are you doing it? Why do you want to achieve exceptional wealth in the first place? After you have achieved it, what do you want to do with it?


----------



## Mr J

The right path could arguably be both. I would say that it's the point at which we develop the ability recognise opportunities and take advantage of them.



> It's pointless to talk about how my opportunity is a better way to generate more wealth than yours.




An opportunity is like perspective - everyone's is different. You may see a lucrative opportunity, I may not see one at all. My methods may work for me, but be useless to you.


----------



## kincella

FIND OUT HOW THE RICH PEOPLE HAVE DONE WHATEVER THEY DO TO BECOME WEALTHY  ..thats a start...
look at this kid...

THE software entrepreneur Simon Clausen is Sydney's most active property investor, having bought $34 million worth since last October.

Mr Clausen, who made his debut on the recent BRW Rich List with a $180 million fortune, has snapped up nine properties since selling his business last year.

The 32-year-old recently added another Clareville beachfront to his portfolio, paying $2,789,000 for a property listed with $3.5 million hopes.

He has also bought a Balmain East property listed at $2.49 million for $1.73 million.

http://business.smh.com.au/business/tech-tycoon-bets-on-houses-20090626-cztn.html


----------



## wayneL

kincella said:


> FIND OUT HOW THE RICH PEOPLE HAVE DONE WHATEVER THEY DO TO BECOME WEALTHY  ..thats a start...
> look at this kid...
> 
> THE software entrepreneur Simon Clausen is Sydney's most active property investor, having bought $34 million worth since last October.
> 
> Mr Clausen, who made his debut on the recent BRW Rich List with a $180 million fortune, has snapped up nine properties since selling his business last year.
> 
> The 32-year-old recently added another Clareville beachfront to his portfolio, paying $2,789,000 for a property listed with $3.5 million hopes.
> 
> He has also bought a Balmain East property listed at $2.49 million for $1.73 million.
> 
> http://business.smh.com.au/business/tech-tycoon-bets-on-houses-20090626-cztn.html




Ahem!

We can deduce from this that to get wealthy, build a business and sell it. 

Buying the property is incidental and had nothing to do with how he got there. It *may* turn out to be a poor decision.

Not quite the point you intended was it?

Confirmation bias can be a killer.


----------



## Mr J

Software entrepreneur? What is his property investment track record? Without knowing more about him, I couldn't consider his opinion or actions to be any more intelligent than those of anyone else.


----------



## --B--

this is a great thread which ive thoroughly enjoyed reading.

the concept that one must take control of their own destiny appeals to me greatly. its the DOING that is difficult however i hold hope that pesistence will pay off.

Tech - you refer to minimising risk to the extent that fear is gone. this in my opinion is the key to giving oneself the chance to take the opportunities as they are presented. i am still trying to hone my skills however i belive that most success is achieved though this strategy as more and more opportunities are opened up. How does someone acquire the knowledge though? or is it the experience?

again, great thread.


----------



## Uncle Festivus

Define Exceptional Wealth? To me it's being included in the BRW Rich 200 or similar. 

Perhaps the goal should be 'how to make a million in one year' for starters? A million isn't much these days, but it _is_ in this climate? New fin year, put your strategies forward to be tallied in 12 months time?

When I first started trading/investing I had a 'shotgun' approach to most things ie having a bit on everything, but slowly I have come to realise that less is more by specialising in one thing ie a group of stocks like the ASX20; one currency pair like the USD/AUD; one commodity like gold.

It's not to say there isn't the discretionary trades on the hot bubble of the day, but patience for the right entry at the right time more than makes up for lot's of time consuming smaller plays. I'm sick of watching the screen all day & night, so now just do the nightly stock scan using Bullcharts and wait for the right opportunitym then start the accumulation phase, long or short.

I think the 'flation we have now is decidedly of the 'de' type while China exports wage deflation and lowers global living standards. 

Oil will only rise due to currency aberations, not due to any underlying supply/demand price discovery mechanism.

In fact, commodities in general will only be rising because of a weak USD, which in itself will cap any meaningful global recovery.

For the poster above about nobody knowing gold would go from 250 to 1000 - if you do your homework things like this become screaming buys. The fact that the same conditions are not only present now but are several orders worse are still telling us there is still exceptional wealth to be made?


----------



## Mr J

> you refer to minimising risk to the extent that fear is gone. this in my opinion is the key to giving oneself the chance to take the opportunities as they are presented.




Responsible capital management will maximise the chance of being around to take advantage of the opportunities, but I think heavy losses early on teach lessons that cannot otherwise be properly appreciated. For me it started with card counting, and I was significantly overbetting. The fluctuations were massive, and so were the multiple blowups. It allowed me to develop a lot of tolerance and patience, and I consider the experience invaluable. Of course that is personal and it might be better for some to not go through it, while others may not need it; for me it was a wake-up call.


----------



## Timmy

Trembling Hand said:


> *If you think that you haven't the tools to fix a problem then that's a good start, you need to set about getting new ones.*




Re a few posts back.
This (in bold) is the point.
Hope this helps.


----------



## skc

To me there are 2 parts to the exceptional wealth ideas...

1. Identify the opportunity
2. Capture the opporunity *with minimal risk*

It is the bold part that is most difficult, and in most direct contradition to the notion of "exceptional" wealth.

(1) - Identify the opportunity
Assuming that peak oil is a great opportunity. It is not just a once-in-a-life time opportunity; it is, in fact, a great opportunity on a geological time scale. 

(2) Capture the opportunity with minimal risk
One can buy oil futures, buy WPL, Shell, buy alternative energy shares etc etc. There are many ways to capture the opportunity. 

But how do you minimise risk? 

Can I use a stop loss and risk 2% of my capital? That will definitely not deliver exceptional result. 

May be there are option products out there? But they are expensive to start off and will expire before the peak oil really hit?

I would really like to hear how risk minimisation can be done... while achieving exceptional wealth.


----------



## skyQuake

skc said:


> Can I use a stop loss and risk 2% of my capital? That will definitely not deliver exceptional result.




*Incorrect. *

This will probably not deliver exception results in the short term, but once in a while, a 'normal' trade will exceed all expectations and take you to the moon.

Sure if you're convinced enough about something, you can commit lots of capital, then hold & pray.

And just hope that _markets will remain irrational_ *shorter* _than you will remain solvent_


----------



## Mr J

> I would really like to hear how risk minimisation can be done... while achieving exceptional wealth.




Small size and massive volume. A good day-trader will make far more than a good investor, with far less and with smaller fluctuations in capital.


----------



## skc

skyQuake said:


> *Incorrect. *
> 
> This will probably not deliver exception results in the short term, but once in a while, a 'normal' trade will exceed all expectations and take you to the moon.
> 
> Sure if you're convinced enough about something, you can commit lots of capital, then hold & pray.
> 
> And just hope that _markets will remain irrational_ *shorter* _than you will remain solvent_




I guess it depends on how you define exceptional result. To me it is something along the lines of *double / treble your entire capital*.

To risk 2% and get 200% return, the market has to move 100 times your initial stop.

Using the oil example, say $70 a barrel with a stop of $10, then price of oil need to rise to $1000+. May be possible, but sounds quite a stretch. 

Sure, if I had stop of $1, then oil only needs to go up to $170. This sounds realistic, but who's to say peak oil prices will happen before my stop is hit? This will rely a lot on good luck, even if you have correctly identified the opportunity.

I agree that a great 10R+ trade will happen if you position yourself correctly. But in this thread we are talking about "exceptional" result, not just a great result.

Again back to the oil example, it is a bit more realistic again to say if I'd risk 20% of my capital. In which case 200% return only require 10x my stop distance. We then fall into an argument about what constitute minimal vs acceptable vs substantial vs excessive risk.

Let's take identification of the opportunity out of the equation. Suppose God himself told me that oil price will rise to $250 per barrel. 

How would you capture this opportunity? After you have done that, work back and see how much you were risking if GOD hasn't told you so. I would be delighted to hear if the risk can actually be considered minimal.


----------



## skyQuake

skc said:


> I guess it depends on how you define exceptional result. To me it is something along the lines of *double / treble your entire capital*.
> 
> To risk 2% and get 200% return, the market has to move 100 times your initial stop.




Or place 100 trades in a year..



> Using the oil example, say $70 a barrel with a stop of $10, then price of oil need to rise to $1000+. May be possible, but sounds quite a stretch.
> 
> Sure, if I had stop of $1, then oil only needs to go up to $170. This sounds realistic, but who's to say peak oil prices will happen before my stop is hit? This will rely a lot on good luck, even if you have correctly identified the opportunity.




You can adjust how much capital to put into the oil trade. Say you want to put a 5% stop on your oil trade, but with the 2% rule, you can only allocate 40% of your capital to the trade. If oil hits $100 again thats a 42% gain on that trade or a 16% return on your total capital.

While the gains are not spectacular, the amount you can pour into this trade is thanks to liquidity. IMO you're better off buying some junior oilers. While the oil price is currently below their cost of production, they're very much like Out of the Money options - can run much harder than oil itself if oil does take off.



> Again back to the oil example, it is a bit more realistic again to say if I'd risk 20% of my capital.




Agree, the 2% rule is portfolio risk or money u are prepared to lose. Sure prices can gap past stops at times esp if stops are tight, but if you're risking 20% capital, the 2% rule means u can have a stop loss of 10% on that particular trade.


----------



## skc

skyQuake said:


> Or place 100 trades in a year..
> 
> You can adjust how much capital to put into the oil trade. Say you want to put a 5% stop on your oil trade, but with the 2% rule, you can only allocate 40% of your capital to the trade. If oil hits $100 again thats a 42% gain on that trade or a 16% return on your total capital.
> 
> While the gains are not spectacular, the amount you can pour into this trade is thanks to liquidity. IMO you're better off buying some junior oilers. While the oil price is currently below their cost of production, they're very much like Out of the Money options - can run much harder than oil itself if oil does take off.
> 
> Agree, the 2% rule is portfolio risk or money u are prepared to lose. Sure prices can gap past stops at times esp if stops are tight, but if you're risking 20% capital, the 2% rule means u can have a stop loss of 10% on that particular trade.




They are all true / valid opinion. But I am waiting for someone to show how to capture exceptional opportunity with minimal risk. 

And I am not really talking about "doing 100 trades a year" type opportunity. I was assuming that we are talking about macro opportunities like peak oil, the china boom, historical low interest rate, great depression etc.


----------



## Mr J

> But I am waiting for someone to show how to capture exceptional opportunity with minimal risk.




Short during a crash.


----------



## skyQuake

skc said:


> They are all true / valid opinion. But I am waiting for someone to show how to capture exceptional opportunity with minimal risk.
> 
> And I am not really talking about "doing 100 trades a year" type opportunity. I was assuming that we are talking about macro opportunities like peak oil, the china boom, historical low interest rate, great depression etc.





The point i'm making is that you'll never be 100% certain that THIS IS THE BIG THING. (if you are, then well done, and just hold it and sell your tulip bulb later)

With the gold example $250~$100, you can do 100+ trades easy jumping in and out of gold, and trading with your view (ie bullish) so you're only focusing on longs.

No-one has ever gotten rich and stayed rich from 1 big trade (except the gamblers). Better to have the hand of midas imo - reusable. Be they patterns in fundamental trades, or technical trades.


----------



## prawn_86

skyQuake said:


> No-one has ever gotten rich and stayed rich from 1 big trade (except the gamblers). Better to have the hand of midas imo - reusable. Be they patterns in fundamental trades, or technical trades.




I think thats rather disputable.

FMG, PDN etc etc over the last 5 or so years have provided huge returns for those who bought and held (and monitored).

Perhaps that is one way this could be done. Spread your risk across X amount of small to micro caps and hope 1 (or more) hits it big. Educated gambling really.


----------



## skc

skyQuake said:


> The point i'm making is that you'll never be 100% certain that THIS IS THE BIG THING. (if you are, then well done, and just hold it and sell your tulip bulb later)
> 
> With the gold example $250~$100, you can do 100+ trades easy jumping in and out of gold, and trading with your view (ie bullish) so you're only focusing on longs.
> 
> No-one has ever gotten rich and stayed rich from 1 big trade (except the gamblers). Better to have the hand of midas imo - reusable. Be they patterns in fundamental trades, or technical trades.




You know we are actually agreeing. Previous posts in this thread (not by you) has suggested that there are *exceptional opportunities out there that can be captured with minimal risk to create exceptional wealth*. 

Let's just wait for someone to demonstrate how that can be done.


----------



## tech/a

prawn_86 said:


> I think thats rather disputable.
> 
> FMG, PDN etc etc over the last 5 or so years have provided huge returns for those who bought and held (and monitored).
> 
> Perhaps that is one way this could be done. Spread your risk across X amount of small to micro caps and hope 1 (or more) hits it big. Educated gambling really.




Yes you CAN do this.
And no its not gambling.

lets say I buy a 10c stock with a 1c risk.
It trades to 13c I raise the stop to 10.5c I now have NO RISK.

More later.


----------



## mazzatelli1000

tech/a said:


> Yes you CAN do this.
> And no its not gambling.
> 
> lets say I buy a 10c stock with a 1c risk.
> It trades to 13c I raise the stop to 10.5c I now have NO RISK.
> 
> More later.




I second this
Maintaining positive expectancy


----------



## kingcarmleo

I'm only a young amateur at 18 but I think there is plenty of opportunities around for someone of my age with a long term outlook. I am being aggressive in these times and positioning myself for the future rather than being conservative. 

What do people think about buying the Yuan with a 5 year or so outlook? China seem destined to become an economic powerhouse that may well overtake the US economy somewhere in the future. Will their currency be worth a lot more in 5 years time than it is today? I am tempted to use a bit of capital to but the Yuan now. Any thoughts would be appreciated.


----------



## el caballo

Trembling Hand said:


> I'm moving to Hong Kong to earn Chinese Yuan before they pull their fingers out of the dyke and the flood gates break open.




TH,

That's quite a step - best wishes with it!


----------



## Mr J

prawn_86 said:


> I think thats rather disputable.
> 
> FMG, PDN etc etc over the last 5 or so years have provided huge returns for those who bought and held (and monitored).




And some people win lotto. I'm sure the strategy works for some, but I doubt it is more profitable than any other strategy, risk management being equal.



> lets say I buy a 10c stock with a 1c risk.
> It trades to 13c I raise the stop to 10.5c I now have NO RISK.




There was initial 1c risk, so yes it was gambling. Otherwise it's like saying if we win a single bet, we're playing with the house's money. No, we're playing with our profit. We've had this kind of discussion though. If you admit there is some risk, then we can move on the defining gambling. The proper defintion of gambling (as opposed to the widely-held belief) is placing a stake on an uncertain outcome, regardless of whether or not it is +ev. The only way to not gamble is to bet on a certainty. 



> Maintaining positive expectancy




It's still gambling, though in my experience it is never productive to debate on the definition of gambling.



> I'm only a young amateur at 18 but I think there is plenty of opportunities around for someone of my age with a long term outlook.




There are opportunities for all ages right now. I don't have my software open, but if I did there's a reasonable chance I'd place a trade, especially with the FTSE recently coming online.



> I am being aggressive in these times and positioning myself for the future rather than being conservative.




Aggressive early is good, assuming that in the future your earning power will increase and easily make up for any early losses. Don't be too aggressive though - remember the hare and the tortoise, though blowing an account or two will probably do you good.



> What do people think about buying the Yuan with a 5 year or so outlook? China seem destined to become an economic powerhouse that may well overtake the US economy somewhere in the future. Will their currency be worth a lot more in 5 years time than it is today?




Just my opinion, but I'd prefer my money tied up momentarily for a short-term gain than have to wait years to reap the reward. There's a lot of opportunity cost in long-term investments.


----------



## mazzatelli1000

Mr J said:


> It's still gambling, though in my experience it is never productive to debate on the definition of gambling.




I should clarify that I agree with the methodology of raising the stop once unrealised profits are procured, and leave the trade with home run potential.

Indifferent with regards to the small cap strategy, I am a poor delta trader


----------



## johnnyg

Trembling Hand said:


> What is that telling you about the tools you are using? About the information you seek? About the peers you keep? About what you learn from previous missed opportunities? About even your approach to the problem of positioning yourself?
> 
> 
> If you still cannot see how to do these things in hindsight thats your problem.* Your tools are rubbish and need replacing.*




I've recently been in discussion with a family friend who runs a Real Estate Business. He has just purchased a commercial property for ~600K and has a good tenant lined up to rent the place for $90000 a year. 

He said to me that after all these years of doing the same thing, he's just treading water as such, living an OK lifestyle, but as the thread states, nothing exceptional.

He had to borrow money from family and friends to get a good deposit so that the bank would finance the rest of the amount.

I guess that there was an element of luck or good timing in it that he has a tenant lined up ready to go and one that will pay good $$$.

Reading threw the thread I can see similarities. 

He obviously realized to get an exceptional result, he had to do something different to what he has been doing for all these years (I think he is around 50). 

I probably wouldn't say that he took a minimized risk, however he saw that his tools were rubbish and replaced them, he saw an opportunity and hoped on the train.


----------



## Mr J

mazzatelli1000 said:


> I should clarify that I agree with the methodology of raising the stop once unrealised profits are procured, and leave the trade with home run potential.




I agree with it only so far as letting it ride as long as it still looks good. To maximise profit, trades need to be managed appropriately for the situation. If I'm properly managing my trades, I'll pick up nearly as many home runs, but be stopped out far less.


----------



## MrBurns

> I've recently been in discussion with a family friend who runs a Real Estate Business. He has just purchased a commercial property for ~600K and has a good tenant lined up to rent the place for $90000 a year




15% return ? Where ?


----------



## Portfolio

tech/a said:


> Yes you CAN do this.
> And no its not gambling.
> 
> lets say I buy a 10c stock with a 1c risk.
> It trades to 13c I raise the stop to 10.5c I now have NO RISK.
> 
> More later.




Thats not risk free.  Your stop will get hit 3 times for every time you make it 13c and have this so called "NO RISK" opportunity. So in getting to 13c you have already bourne the risk!!

My exceptional suggestion is that the free lunch on offer at the moment is res housing collapse. This is a no brainer as there is massive reward but little risk.

The other one is trying to be first onto the inflation play but this is still too early to call and the downside in getting it wrong it large.


----------



## MRC & Co

wayneL said:


> However, as credit is the only fundamental, loose credit conditions will result in a bubble... somewhere. Where individuals can kick goals is in trying to select the best manifestation of the same.
> 
> Likewise, a tightening of credit causes those bubbles to deflate or pop... exit time. Plenty over here rode the bubble, but didn't see the lance coming right at them. As a result, several "exceptional" fortunes became exceptionally spectacular bankruptcies.
> 
> The trick from here is detecting credit conditions and where capital wants to go. If accurate (and just a little bit lucky), you can go for the slap shot.
> 
> But nothing wrong with hitting singles until then.
> 
> *




No comment on this?

I think, this is the most useful post in the entire thread in relation to the topic.

Where to next?


----------



## Portfolio

FWIIW  My previous play was shorting GTP all the way down. (and there were a few of us that did this).  Once the yields were known this was only a matter of time.  With GTP and the reason i also like the res property trade is that there has to be a trap.  The trap with GTP was the low PE was constantly sucking people into the stock (people didn't realise it was low because the business was unsustainable).  The trap with res is that people think "the property markets never go down" and most people still dont understand the correlation between asset prices and credit.  Because of these myths people think that if credit decreases (its known this is going to happen) property can somehow still go up.


----------



## MRC & Co

Portfolio said:


> Thats not risk free.  Your stop will get hit 3 times for every time you make it 13c and have this so called "NO RISK" opportunity. So in getting to 13c you have already bourne the risk!!
> 
> My exceptional suggestion is that the free lunch on offer at the moment is res housing collapse. This is a no brainer as there is massive reward but little risk.
> 
> The other one is trying to be first onto the inflation play but this is still too early to call and the downside in getting it wrong it large.




Another good post which expands on Waynes post on credit/liquidity and actually points to an outcome (inflation play) if you are the first on it (if it is seen inflation is becoming a concern), or a housing boom fuelled by credit?  

An idea from myself: how about a crash in Chinese stocks, a large reciever of their stimuli, whilst the economy actually looks in a bit more trouble than thought..........?  Little stimuli going to 'real' assets or consumption?  Perhaps prooven by the divergence between energy consumption and GDP growth in China?  Are we seeing another divergence in their stock market from the 'real' economy, fuelled by credit and a current prevailing bias (world to be lead out of recession by China)?  It is not just the boom that can be important, one can also trade the bust in a credit cycle.


----------



## tech/a

Hmm

I can see I am way out of my league here.
I will refrain from comment and simply learn.


----------



## MRC & Co

tech/a said:


> Hmm
> 
> I can see I am way out of my league here.
> I will refrain from comment and simply learn.




Don't see the point of that post, but typical.

I see 5 pages, without one (sorry, there are a few, but not many) idea for the future.  Funny considering the name of the thread:  The Exceptional Wealth Accumulation Ideas and Thinking Thread.

Where are the ideas and thinking behind them?  I don't see any.

How is anybody going to position themselves to get on one of these exceptional ideas, when they don't even know what they are?  Where are they?  What are they?  How do you idenfity one?  How do you get on one?  Where is the stop-loss?  Where do you pyramid?  Too many questions, absolutely no answers............


----------



## tech/a

MRC & Co said:


> Don't see the point of that post, but typical.
> 
> I see 5 pages, without one (sorry, there are a few, but not many) idea for the future.  Funny considering the name of the thread:  The Exceptional Wealth Accumulation Ideas and Thinking Thread.
> 
> Where are the ideas and thinking behind them?  I don't see any.




Let me be typically blunt.
Why bother.
All experts full of pre concieved ideas.
Your input in particular has been outstanding.

Most here wouldnt know a no brainer if they fell over it.

The thinking displayed here cannot be altered---doesnt wish to be altered.
We all rise to our level of in competence.

Carry on.
You'll survive without me.



> How is anybody going to position themselves to get on one of these exceptional ideas, when they don't even know what they are? Where are they? What are they? How do you idenfity one? How do you get on one? Where is the stop-loss? Where do you pyramid? Too many questions, absolutely no answers............




Feel free to begin whenever convienient.


----------



## skc

MRC & Co said:


> Don't see the point of that post, but typical.
> 
> I see 5 pages, without one (sorry, there are a few, but not many) idea for the future.  Funny considering the name of the thread:  The Exceptional Wealth Accumulation Ideas and Thinking Thread.
> 
> Where are the ideas and thinking behind them?  I don't see any.
> 
> How is anybody going to position themselves to get on one of these exceptional ideas, when they don't even know what they are?  Where are they?  What are they?  How do you idenfity one?  How do you get on one?  Where is the stop-loss?  Where do you pyramid?  Too many questions, absolutely no answers............




Totally agree with your observation. And there are people who think this is a great thread. 

To me the biggest challenge is minimising the risk. 

I believe there are plenty of macro trends 

- Peak oil is a great opportunity, so is green energy
- The collapse of Eastern european credit, as well as collapse of South American individual country are both pretty real

Locally, the residential property collapse is in play, and so is the consolidation of many industries that are not in duopoly.

If only someone can show me how to minimise the risk!


----------



## wayneL

One must develop a thick skin when posting ideas on forums. Not everybody will agree with them or even think them valid. "Toughen the f*** up" was a phrase I think someone used a while back.

However, one really, really, REALLY great way to *guarantee* opposition is to infer everybody else is a loser.

Human Relations 101 (*not* an expert in this field incidently ).


----------



## Trembling Hand

Nah it was smarten the ..............


----------



## nunthewiser

wayneL said:


> One must develop a thick skin when posting ideas on forums. Not everybody will agree with them or even think them valid. "Toughen the f*** up" was a phrase I think someone used a while back.
> 
> However, one really, really, REALLY great way to *guarantee* opposition is to infer everybody else is a loser.
> 
> Human Relations 101 (*not* an expert in this field incidently ).








anyways on a side note 

once in a country city there was a nightclub area with no food available in 5 kms........ an opportunity sticking out like dogs nuts ......... stayed like that for 5 years! ....... then some bogan put a humble establishment outside nightclubs and killed the so called pig 

same city 

taxi plates and car . 150k . weekly take on said car average 3k ........ tax advantages  too many too mention .do the maths

same city

same bogan used to sit on his front porch all redeyed and watching the port loading iron ore and building sheds and storage for a lil midwest iron ore co .....he thought wow there doing something here so he went and checked it out . same bogan poured all cash available and more into said unknown lil listed co and waited .......... waited , waited , waited .watched co grow FUNDAMENTALLY and as an actual bizzness 

silly bugga had over 50% of his stock portfolio in said co that he had watched grow from a seed 

returned 20 bags on the oppies and 12 on the mother stock

moral of story is ...OPEN YA EYES have a look , grow some nuts and give it a go 

dont have to spend a million to make one 

amen


----------



## MRC & Co

Where to enter:  Either at an inflection point, one whereby the Government itself recognises the need for a tightening of credit (when rates begin to rise as is the cause of most crashes) or even when regulation starts towards further protectionism.  Of course, you will have to be on top of fundamentals for these.  

Or in the FMG example, how about once iron ore quality was recognised as poor?  Or was this too late........

How about a break a final trendline in a parabolic trend (usually the sign of a boom/bust sequence):  Stop above the high (the steeper the final trendline, the less risk as the tighter the entry, however the stop will generally be wide, but the reward incredible on a boom/bust sequence).  Hard part is, choosing the right pivot highs and lows to use for the trendlines, if the pivot high or low is not a major one, you may be taking the wrong signal. 

Where to pyramid?  That is a tough question, for me, it would be on a pullback after a clear break has been established (i.e. ensure the first pullback does not come back to test the trendline, which would be above your entry).  This way, you establish the break is severe and the first pullback is like in the chart below, far from testing the final trendline.  

All easier in theory, than in practice.  But it is a start for a beginner.


----------



## wayneL

Trembling Hand said:


> Nah it was smarten the ..............




Ah yes, but thanks for the inspiration however!


----------



## MrBurns

No it was toughen the f... up. Chopper knows 

http://www.youtube.com/watch?v=8_PFtBfqmZw


----------



## So_Cynical

skc said:


> Can I use a stop loss and risk 2% of my capital? That will definitely not deliver exceptional result.






skyQuake said:


> *Incorrect. *
> 
> This will probably not deliver exception results in the short term, but once in a while, a 'normal' trade will exceed all expectations and take you to the moon.




U mean 2% of the moon...or maybe 4% with pyramiding 

-------------------

On Topic...this thread gives me the feeling that someones gona try and sell me something. :dunno:


----------



## Aussiest

tech/a said:


> We want to look back on life and honestly say with a huge grin and sense of satisfaction.
> 
> *"Life--What a blast!"*
> 
> 
> *BE EXCEPTIONAL*---you have a choice.




Yep, that's *choice *for you. Don't be a slave to somebody else's ideal, unless you whole heartedly *believe* in it. Live the life you want and tech/a is right, you will be able to look back and identify almost every step as one of *choice *rather than of slavery!


----------



## tasmart

MRC & Co said:


> I see 5 pages, without one (sorry, there are a few, but not many) idea for the future.  Funny considering the name of the thread:  The Exceptional Wealth Accumulation Ideas and Thinking Thread.
> 
> Where are the ideas and thinking behind them?  I don't see any.




Ok - my 10 cents worth -  looking at this in a broader longer term sense so really am not offering a quick fix!

Firstly my take on loosely defining "Exceptional Wealth" is being in a situation where your annual gain in personal equity (Assets - Liabilities) is currently well above $AUD1 million (per year) and your income producing assets eventually allow you to 'retire' (a nebulous concept), lead a comfortable life, and not erode your equity in real terms.

I think there are two aspects to this. The first, mainly focussed on in these forums, is a recipe for gaining the wealth (and I'll discuss this below). The second part though is just as important and that is maintaining and protecting the wealth once gained. This is that part of the financial planning process that includes insurance, estate & succession planning and is part of the risk minimisation process. There are many people who seem to achieve 'exceptional wealth' status but are soon parted from it. This risk minimisation process is worthy of a separate thread at some stage.

In regard to recipes for gaining exceptional wealth my experience from meeting a lot of successful (and otherwise) people is that there really are only three broad methods of gaining it.

1. Inheritance!
Most 'seriously rich' people inherited it (I would class this above the exceptional wealth level).  However, many squander it because they do not address the risk minimisation part of the balance.

2. Unique business idea
This is a large group of people, sometimes with poor initial education, that develop a business idea that escalates and they have underlying skills & attitudes that leverage the risk, have a vision, develop the idea and become quite rich. However their initial competitive advantage is often not durable so many have a chequered life - including a bankruptcy or two on the way - and may have little life outside their business. Estate & succession planning are often a longer term problem as well.

3. Professional education
This group is also quite large. They invest significant time and monies into their professional qualification & experience and many earn high incomes. This group includes legal, financial, medical, engineering and other professions. Many equate income to wealth, and do not develop their own financial education and are often led astray by their high cash flow, poor leverage decisions and overzealous financial planners! Those that remain salaried, generally seem to do worst. Some (and it is not a large number) go onto run successful businesses, and are the well paid CEOs and successful entrepreneurs.

I personally use shares as part of 'risk mininimisation' strategy as well as developing some wealth. My underlying asset has come from real estate and my cash flow comes from my professional education. I am seriously developing my own financial education as the 'Financial Planning' sector is in a poor current state.

Sorry - no quick get rich recipe - but there is also much more in life than just money!


----------



## skyQuake

Buy an OzLotto ticket 

1:45 Mil odds to win first division.

$90 Mil prize.

RR 2:1

GOOD TRADE!


----------



## Frank D

There is a difference between large profits and exceptional wealth.

The only way for main street to achieve exceptional wealth is 
through 'compounding' via accumulation and investing.

I’m not seeing *'compounding' returns *mentioned in this 
thread.

If you can compound your returns at least 15% over the next 
30-40years, then you’ll achieve exceptional wealth. And that's the trick.


Most of the posts in this thread are the usual:- "I traded this once, or I 
know someone who did this once, or  I traded this with ‘NO Risk’…"

NO risk trading….. I’ve heard that before, but sadly it doesn’t exist.

And sadly, no one is probably going to pick Gold going from $250 to 
$1000, but they might take chunks out of the trend along the way. And I'm
 not seeing too many masters of the universe in ASF.

I’ve read these types of posts many times before, which in the 
context of the thread of *achieving exceptional wealth *mean little.

Once again large profits and exceptional wealth are two totally 
different concepts.

A portion of Large profits should be moved into an area that has been set aside to acheive compounding growth over the long term.

Large profits should be used to increase ones own standard of living 
'now', but it still doesn't mean that exceptional wealth will be acheived.

Just my thougths


----------



## Aussiest

ojm said:


> Hindsight gets it right every time.




Well, i won't go on, but an example is, after losing an exorbidant amount of $$ in the share market last year due to my own stupidity, i came to a cross-roads. 

My decision: to stick what i had left into a fixed term deposit account earning <5% interest, 

or...

to take the 2nd biggest risk of my life and re-enter the market.

After thinking about it carefully and researching, i decided to take the risk and re-enter the lions cage with greater risk control.

The result? An exponentially larger return on my capital, as opposed to the 4% (on average), i would have received in fixed term interest.

What was going through my head?

"What if i don't?"
"What if i lose more?"
"What if, what if, what if"...

But, i worked out what i was prepared to lose and at what point i would exit the market if it all went against me.

I don't think that what i did was "exceptional". Nowhere near it. As somebody else mentioned, exceptional to me would be doubling my capital in a year or two. However, somebody asked how risks can be taken and my answer is in several ways.

By preparing yourself mentally and working out a plan that incorporates risk and reward. And, setting a bottom line... No pain, no gain, lol. Also, don't take your eye off the ball like i have today.


----------



## Timmy

nunthewiser said:


> anyways on a side note
> 
> once in a country city there was a nightclub area with no food available in 5 kms........ an opportunity sticking out like dogs nuts ......... stayed like that for 5 years! ....... then some bogan put a humble establishment outside nightclubs and killed the so called pig
> 
> same city
> 
> taxi plates and car . 150k . weekly take on said car average 3k ........ tax advantages  too many too mention .do the maths
> 
> same city
> 
> same bogan used to sit on his front porch all redeyed and watching the port loading iron ore and building sheds and storage for a lil midwest iron ore co .....he thought wow there doing something here so he went and checked it out . same bogan poured all cash available and more into said unknown lil listed co and waited .......... waited , waited , waited .watched co grow FUNDAMENTALLY and as an actual bizzness
> 
> silly bugga had over 50% of his stock portfolio in said co that he had watched grow from a seed
> 
> returned 20 bags on the oppies and 12 on the mother stock
> 
> moral of story is ...OPEN YA EYES have a look , grow some nuts and give it a go
> 
> dont have to spend a million to make one
> 
> amen




Good stuff


----------



## Mr J

skyQuake said:


> Buy an OzLotto ticket
> 
> 1:45 Mil odds to win first division.
> 
> $90 Mil prize.
> 
> RR 2:1
> 
> GOOD TRADE!




How did it get that large? So large I'd guessed it was probably +ev at that stage. I'm in it .


----------



## tasmart

Frank D said:


> There is a difference between large profits and exceptional wealth.
> 
> The only way for main street to achieve exceptional wealth is
> through 'compounding' via accumulation and investing.
> 
> I’m not seeing *'compounding' returns *mentioned in this
> thread.
> 
> If you can compound your returns at least 15% over the next
> 30-40years, then you’ll achieve exceptional wealth. And that's the trick.
> 
> 
> Once again large profits and exceptional wealth are two totally
> different concepts.
> 
> A portion of Large profits should be moved into an area that has been set aside to acheive compounding growth over the long term.




This is the critical part in a long term strategy - and the big difference that you get from 'just' having your money in a superfund earning perhaps 4.5% real return (if you are lucky) versus more active share & property investment strategies. With only 1,000 at 15% for 30 years will be $57,575 whilst at 7.5% (assume 3%CPI) only $8,144 ! That is a massive difference!

And 15% is not that hard to achieve. Since I started looking at this 10 years ago I have attained an average of 22% annual growth in income assets (despite the last two years being negative), and 12% increase annually in equity.


----------



## Frank D

tasmart said:


> This is the critical part in a long term strategy - and the big difference.... Since I started looking at this 10 years ago I have attained an average of 22% annual growth in income assets (despite the last two years being negative)...




Nice work!!!

And that's the trick, and that's why I love when bear markets come 
around.

It's time to add value stocks at cheaper prices (accumulation), which is a 
big difference to 'trading' stocks.

Sometimes traders can't seperate the two, therefore they don't 
employ 'wealth creation' via compounding returns over the long term.


----------



## Mr J

Frank D said:


> It's time to add value stocks at cheaper prices (accumulation), which is a
> big difference to 'trading' stocks.
> 
> Sometimes traders can't seperate the two, therefore they don't
> employ 'wealth creation' via compounding returns over the long term.




Could you clarify, as I might have misunderstood. Are you suggesting that a shorterm trader should be making longterm investments? Is his trading not a longterm investment itself, compounding returns?


----------



## Frank D

Take a portion of your profits, say between 10-20% per year and put 
aside into a compounding strategy.

For example, buying banking stocks or any stocks that have a decent 
div yield which helps increase the return over the long term. You don’t 
need the cash for the div, take  the extra shares

Then  apply long term charts and BUY into major pullbacks each year. 
This will help increase the return in the long run, as it allows you to 
purchase more. And keep repeating the process every year.

Just make sure you’re not buying the ‘tops’ of the market, which is 
easy to do if you don’t understand the Primary trends of the market.

It will take about 13 years for the strategy to kick into gear, but you’ll be 
on your way after that.

That’s just an example for a long term compounding strategy, by using 
a portion of trading profits or savings and investing and accumulating for 
the long term.

*For main street, the trick is accumulation, & not trading.*


----------



## Frank D

Mr J said:


> Are you suggesting that a shorterm trader should be making longterm investments? Is his trading not a longterm investment itself, compounding returns?




No, that's income, which is based on standard of living.

What is that trader doing with the income from trading?

Investing it, or spending the proceeds on cheap wine and expensive women, or expensive women and cheap wine?

That trader hasn't set him or herself up with a compounding strategy, just 
a lot of hangovers.


----------



## Mr J

That is good advice for some, but it's not something I would consider for myself at this point in time. In theory it sounds good - use unused portions of capital for capture some nice longterm growth. In reality - and I'm only speaking for myself - those long-term profits will be insignificant to the gains of my short-term trading, and time spent on the long-term strategy would be better spent (for me) on more short-term trading. 

I also find long-term positions extremely inefficient, as there's no reason to be holding a stock during a pullback. If I'm going to be selling those pullbacks, then it becomes a medium-term strategy. I could argue the same about that medium-term strategy since I'm already in the markets every day; and now I'm back to short-term trading. 

Compounding isn't an issue, as I'll compound no matter what timeframe I trade.



> For main street, the trick is accumulation, & not trading.




Main Street equals the public? Possibly. I have no idea whether they would have been better off trying to ride booms and sell busts compared to just buy and hold. Trading is obviously the trick for traders though.



> No, that's income, which is based on standard of living.
> 
> What is that trader doing with the income from trading?




You reinvest by not withdrawing all trading profits. The way for traders to get rich is to try and minimise the profits they withdraw (allowing for massive compounding), or to trade OPM (other people's money). No-one ever said that a trader has to spend all of their profit. I intend only to spend a fraction.


----------



## Frank D

The thread reads:- *exceptional Wealth accumulation.*

One of the only proven methods of wealth creation is via 
compounding returns.

$12,000 invested annually @ 11% compounding by 30th year is over
$ 2 million

by the 30th year it’s  4.5 mill

by the 40th year it’s 7.8 mill

7.8mill returning 6% yield is over 450k per year for doing nothing, but
 simply starting a compounding strategy when you had the chance.

The sooner you start the better.



Mr J said:


> those long-term profits will be insignificant to the gains of my short-term trading, and time spent on the long-term strategy would be better spent (for me) on more short-term trading.




I don't think so!


Question Mr J:- How long have you been trading?


----------



## David123

nunthewiser said:


> anyways on a side note
> 
> once in a country city there was a nightclub area with no food available in 5 kms........ an opportunity sticking out like dogs nuts ......... stayed like that for 5 years! ....... then some bogan put a humble establishment outside nightclubs and killed the so called pig
> 
> same city
> 
> taxi plates and car . 150k . weekly take on said car average 3k ........ tax advantages  too many too mention .do the maths
> 
> same city
> 
> same bogan used to sit on his front porch all redeyed and watching the port loading iron ore and building sheds and storage for a lil midwest iron ore co .....he thought wow there doing something here so he went and checked it out . same bogan poured all cash available and more into said unknown lil listed co and waited .......... waited , waited , waited .watched co grow FUNDAMENTALLY and as an actual bizzness
> 
> silly bugga had over 50% of his stock portfolio in said co that he had watched grow from a seed
> 
> returned 20 bags on the oppies and 12 on the mother stock
> 
> moral of story is ...OPEN YA EYES have a look , grow some nuts and give it a go
> 
> dont have to spend a million to make one
> 
> amen




Hey Nun! that bogan, watching the Iron Ore get loaded was you wasn't it?!


----------



## Mr J

> Question Mr J:- How long have you been trading?




Not long, but this is a mathematical debate, not one that requires an extensive experience of trading.



> One of the only proven methods of wealth creation is via
> compounding returns.




Yes, and like I said I compound every day with my trading capital. I'm not sure why you think this isn't possible. It's the same as what is done with investing, just on a far shorter timescale.



> I don't think so!




That 11%pa might take little of my time, but so would just one more short-term trade per day. Over the course of the year, those extra shorterm trades would be worth more than 11%, and with far less exposure. I'd prefer to turn 300% into 330% than 300% with an extra 11% from the investment portfolio.


----------



## MRC & Co

What happens if main street bought Citi or Lehman?

What about finding a great money manager with tight risk controls (i.e. hedge fund)?

My take of the thread was to find exceptional trades to create wealth, not a longer-term plan.  But now I see I may have missed the point of the topic.  

P.S  Nice work Nun ya bogan!


----------



## brettc4

As highlighted previously in this thread, there have been some spectacular rises in a number of different markets for a varitey of reasons. If you had the knowledge/foresight that these markets could grow to start a large state, you would be happy to invest while keeping Risk at a level you are happy with.

In the future, we will be moving from Technology Age, to the BioTechnology Age.  This will provide a variety of opportunities for businesses, as well as investors in those businesses.

Some areas I think will boom in the future are:
- Nanotechnology (both in manufacturing, technology and health)
- Space Related businesses (Tourism, Mining)

The hard part is identifying which companies (some which may not exist yet) will be able to benefit, and when. We have already seen Virgin Branch into this area, Universitites doing lots of research around it, so it will happen, I just don't know when it will really take off.


----------



## nunthewiser

MRC & Co said:


> What happens if main street bought Citi or Lehman?
> 
> What about finding a great money manager with tight risk controls (i.e. hedge fund)?
> 
> My take of the thread was to find exceptional trades to create wealth, not a longer-term plan.  But now I see I may have missed the point of the topic.
> 
> P.S  Nice work Nun ya bogan!





its got nothing to do with boganism but must admit we are very special

its all to do with ones outlook i spose . opportunities EVERYWHERE one looks if one keeps there eyes open 

currently here in geraldton , just off top of head 

needed ....... limousine service

more short term accomodation 

more taxis

seaweed recycling/cleanups(into fertilizer) 

quad bike hire

jet ski hire

watersports galore



man and thats without thinking to hard

have a look around where YOU live .....opportunities abound if one can see past what they dont know

and dont say .yeah yeah thats already done here ........... nothing left .blah blah blah .......

make your own idea ......


----------



## nunthewiser

could always become a rock star if all else fails


----------



## wayneL

nunthewiser said:


> its got nothing to do with boganism but must admit we are very special
> 
> its all to do with ones outlook i spose . opportunities EVERYWHERE one looks if one keeps there eyes open
> 
> currently here in geraldton , just off top of head
> 
> needed ....... limousine service
> 
> more short term accomodation
> 
> more taxis
> 
> seaweed recycling/cleanups(into fertilizer)
> 
> quad bike hire
> 
> jet ski hire
> 
> watersports galore
> 
> 
> 
> man and thats without thinking to hard
> 
> have a look around where YOU live .....opportunities abound if one can see past what they dont know
> 
> and dont say .yeah yeah thats already done here ........... nothing left .blah blah blah .......
> 
> make your own idea ......




And a flipping pizza joint on the north side.

It used to piss me off to drive all the way from Wandina to (I can't remember the suburb, but across the road from Bunnings) to wait 45 minutes get a lousy pizza...


----------



## nunthewiser

wayneL said:


> And a flipping pizza joint on the north side.
> 
> It used to piss me off to drive all the way from Wandina to (I can't remember the suburb, but across the road from Bunnings) to wait 45 minutes get a lousy pizza...





 well well well ,

the pizza,s are still lousy there .......... the suburb is wonthella 

pizza joints galore now m8 .. even got wood fired ones 


still no licensed brothels tho ................  see theres a million bucks right there !


----------



## moses

The word is that everyone is shedding debt, cash is king, etc etc.

A contrary investor might say its a good time to borrow; borrow long and deep and buy hard?

Curiously I've just sold my house on acreage for more than I ever expected, more than I was even asking for it, essentially because in a flat market nobody was buying and I had to get inventive. My estate agent was too slack to negotiate or think laterally. After negotiating directly with interested buyers we eventually swapped the property for a higher value IP in a city and am now renting elsewhere as I look around for my next opportunity. Swapping meant we didn't have to negotiate lower property values, and the high value sale meant I could increase my credit limit.

I don't qualify as an exceptional investor by any means, but Tech has a point about looking around for opportunities that others miss.


----------



## tech/a

There is endless opportunity if you know how to take on Leverage *WITHOUT* Excessive and often very quickly *NO RISK*.

It appears that this---the most important characteristic of all for exceptional investment either escapes most or isn't understood.

The *PERCEPTION* is indelibly tattooed into peoples psyche particularly those here who are on this and no doubt other boards searching for answers.---Exceptional Investment--exceptional Risk.

I would have thought there would have been some *PRACTICAL APPLICATION *of risk strategies in a discussion like this.

No discussion--no experience then!


----------



## doctorj

Is this tech/a becoming fundamental/a?

The roads to wall street is lined with the bodies of people that were right too soon.  The price you pay for the potential upside of fundamental positions is the opportunity cost you have to wear along the way. 

That's not to say it's impossible, but it does mean you need to adjust position sizes accordingly.


----------



## prawn_86

tech/a said:


> No discussion--no experience then!




This whole thread sounds to me as though you want us to beg you to show us the way. You obviously think you know, but enjoy being the centre of attention so dont actually want to share your own thoughts. You were the thread starter, why not kick off the discussion you so crave?


----------



## wayneL

tech/a said:


> I would have thought there would have been some *PRACTICAL APPLICATION *of risk strategies in a discussion like this.
> 
> No discussion--no experience then!




Not cessanarily Tech. I suspect most like to hold their cards close to their chest. Not everybody wants to be a guru.


----------



## tech/a

doctorj said:


> Is this tech/a becoming fundamental/a?
> 
> The roads to wall street is lined with the bodies of people that were right too soon.  The price you pay for the potential upside of fundamental positions is the opportunity cost you have to wear along the way.
> 
> That's not to say it's impossible, but it does mean you need to adjust position sizes accordingly.




Doc.
Exactly my point.Not placing yourself in a position of becoming a statistic.Surely there are people out there who have found how to do it---in their own way---and are posters here? (Stock Market or other wise.).



prawn_86 said:


> This whole thread sounds to me as though you want us to beg you to show us the way. You obviously think you know, but enjoy being the centre of attention so dont actually want to share your own thoughts. You were the thread starter, why not kick off the discussion you so crave?




No I'm looking for discussion.
I have eliminated risk in my own areas of interest but am more interested in seeing what others have done or are doing.
There are over 25,000 members I'd have thought there would be a few in on the topic.
If I was simply interested in seeing my own stuff I would have just posted it up.



wayneL said:


> Not cessanarily Tech. I suspect most like to hold their cards close to their chest. Not everybody wants to be a guru.




Typical.
My observation is from evidence presented.

While I feel its possible to have exceptional results from deminished or zero risk techniques I feel the real Exceptional Wealth Accumulation Strategies require a larger initial capital--- not however beyond Joe average.

There are certaintly things that hindsite has taught could have been done better---even if at the time they seemed pretty good---and were pretty good!

If others dont have any working examples how about what you have learnt and HOW you'd go about it differently---I'm really interested in risk mitigation for larger Plays--Trading or other areas. Sure I have my own.But interested in other ideas.
Hence the thread.


----------



## wayneL

tech/a said:


> If others dont have any working examples how about what you have learnt and HOW you'd go about it differently---I'm really interested in risk mitigation for larger Plays--Trading or other areas. Sure I have my own.But interested in other ideas.
> Hence the thread.




Options are one way... on both stocks and property. In fact options (not lease options) are common in the real estate development arena. I'm sure you know that though.

In property you can make a de facto option contract via conditions clauses. 

Just a couple of ideas to throw out there.


----------



## doctorj

tech/a said:


> Doc.
> Exactly my point.Not placing yourself in a position of becoming a statistic.Surely there are people out there who have found how to do it---in their own way---and are posters here? (Stock Market or other wise.).



There are obviously plenty of people that have.

I think the people that succeed are the ones that generally know something different (whether that is through inside knowledge, expertise that are not common or sheer hardwork and research) rather than the folk that try their hand at elevator analysis - this goes up therefore this should go down.

YT is a clear example of people that put in the hard yards and reap the benefits from a part of the market that isn't well understood.

I know numerous others that have made significant sums of money by taking their expertise to a part of the world that lacks it.

The trouble is most that have a significant fundamental edge are not likely to share it.


----------



## tech/a

Doc

I agree re people like Bill Gates (Microsoft),Larry Page,Sergie Brins(Google),Mark Zuckerburg(Facebook),Jack Dorsey(Twitter).

But ordinary people like these guys who became extra ordinary---in fact Legendary---can have extraordinary results in their investing---compared to the general populace.

Luck has a tremendous part to play *BUT even MORE *important is being able to place yourself squarely in the face of "Luck" in a *capacity and quantity* which could be life changing when luck or good judgement strike.---In my view.

I have been fortunate enough to be involved in 2 such events.
(1) In Trading 
(2) In Property

I wish to bring 4 examples to the board as food for thought and discussion---*not* for self acclaim.

2 related to equities trading One past example and a possible "Now Strategy"
Which will in my view be available to all at all times.

2 related to Property Investment One in the past and one Now.
Which in my view will be available at various times it is now in my area.

I wish to post all of these at the one time so as not to be distracted in the presentation of each. It will take a while as I want the examples and the Risk Management discussion from my side to be extensive.

Will be back in a while--could be a week.---bit of work in it.


----------



## doctorj

I WAIT *with *baited _*breath*_, as I'm SURE are *many others*.


----------



## Uncle Barry

Good morning
T/A


> Luck has a tremendous part to play BUT even MORE important is being able to place yourself squarely in the face of "Luck" in a capacity and quantity which could be life changing when luck or good judgement strike.




You are 100% correct with that statement !

Too many people sit back and cry, your just lucky when they could have done the same thinking, if they had of WORKED HARD AT BEING LUCKY and never lost sight of the end target and potential.

Which results in the old saying, "the harder I work, the luckier I am", is true today as it was years ago.

Luck, I really think luck in most cases of business is something others think of as an excuss for not doing what the so callled lucky person did.

Kind regards,
UB


----------



## Dr.Stock

Uncle Barry said:


> Good morning
> T/A
> 
> 
> You are 100% correct with that statement !
> 
> Too many people sit back and cry, your just lucky when they could have done the same thinking, if they had of WORKED HARD AT BEING LUCKY and never lost sight of the end target and potential.
> 
> Which results in the old saying, "the harder I work, the luckier I am", is true today as it was years ago.
> 
> Luck, I really think luck in most cases of business is something others think of as an excuss for not doing what the so callled lucky person did.
> 
> Kind regards,
> UB




I agree with "the harder I work, the luckier I am", and also the creed 
"the smarter I work the luckier I become"


----------



## tech/a

Important additions to the discussion and the examples will be.

(1) Risk mitigation and possible elimination.
(2) Leverage
(3) Compounding
(4) Time


----------



## It's Snake Pliskin

tech/a said:


> Doc
> 
> I agree re people like *Bill Gates (Microsoft)*,Larry Page,Sergie Brins(Google),Mark Zuckerburg(Facebook),Jack Dorsey(Twitter).
> 
> But ordinary people like these guys who became extra ordinary---in fact Legendary---can have extraordinary results in their investing---compared to the general populace.
> 
> Luck has a tremendous part to play *BUT even MORE *important is being able to place yourself squarely in the face of "Luck" in a *capacity and quantity* which could be life changing when luck or good judgement strike.---In my view.




Bill Gates was in the right place at the right time with the right influence. He was born in the right year for software developers. 

It is all about special circumstances. 

It was the same for Bill Joy of Sun Microsystems.

For trading the biggest threat is social decay and the growing groups that are against capitalism.


----------



## ThingyMajiggy

Just change your name to Bill and you'll be right


----------



## Temjin

tech/a said:


> Important additions to the discussion and the examples will be.
> 
> (1) Risk mitigation and possible elimination.
> (2) Leverage
> (3) Compounding
> (4) Time




(1) Agree, but there are only so much risks you can eliminate. That's why I previously had argued (in a long time ago thread) on multiple trading systems run by other professionals as well as your own. Like I said, I may have complete control if I put all my eggs in my own basket (i.e. trading systme), but I cannot eliminate my own personal risks. 

(2) A must, with money and with other people's time. 

(3) Most people totally underestimate the importance of this to build wealth. Anyone who can trade 10 times a day and still only make 1% out of it would generate EXTRAORDINARY wealth in merely 5 years through compounding alone. (especially in a tax free environment) And of course, reality is quite different, but nonetheless, it shows the power of compounding. 

(4) This is a big one and it comes down to your perception of being successful. If you can only generate and maintain such exceptional wealth by working 70 hours a week nonstop, would you be willing to accept less wealth by working only 4 hours per week instead? 

Automation is a fantastic thing, and almost every part of a business, if structured properly and in the right industry, can be fully automated. (P.S: Read 4 Hours Work Week if anyone hasn't already) 

Of course, I also agree with Van Tharp's comment on that if you wish to be successful in any business, you should spend thousand of hours and be an expert with it. (especially trading) But does it mean you need to go along without a life in order to keep up the wealth generation? No, I don't think so.

Another comment on time is that I don't believe in generating exceptional wealth within an unrealistic timeframe. (i.e. a month or two) Let the compounding works for you over time and don't get suck in those potential opportunities you see on the market and hope to take full advantage of leverage to give you that ONE BIG WIN. For example, how anyone would wish they brought 100 contracts worth of gold and roll it over from $200 range and sold it at $1000. Or how they wished they could have short sold oil futures when it collapsed from $140 to $40, or long them from $40 to $70. Don't get too "put off" by missing these opportunities because they wouldn't be the one that make you the wealth. 

It's the slow, systematic accumulation of wealth that works over time.


----------



## Trembling Hand

It's Snake Pliskin said:


> Bill Gates was in the right place at the right time with the right influence. He was born in the right year for software developers.
> 
> It is all about special circumstances.
> 
> It was the same for Bill Joy of Sun Microsystems.




Yes a perfect example of missing the whole story to push just one point. 

Lots of people are as smart as the Bills and done just as much work, even better work, But failed. 

survivorship bias


----------



## Mr J

And variance, but then humans are typically results-oriented.


----------



## tech/a

While spending a little time on the topic last night I need to add another ingredient.


(1) Risk mitigation and possible elimination.
(2) Leverage
(3) Compounding
*(4) Duplication*
(5) Time


----------



## ducati916

tech/a said:


> Yes you CAN do this.
> And no its not gambling.
> 
> lets say I buy a 10c stock with a 1c risk.
> It trades to 13c I raise the stop to 10.5c I now have NO RISK.
> 
> More later.




Incorrect.

That stock could gap down past your stop, be placed in a trading halt, or have the exchange close.

jog on
duc


----------



## ducati916

*et al*

The thread should try to deliver two outcomes:

*Identify macro-trends that offer potentially large rewards.
*Offer a methodology that minimises risk, allowing participation.

Wayne has already identified a couple of important points.

*Understand the macro-economic picture
*Understand that the subsequent results will likely be random

Assuming no knowledge of economics, simply monitor multiple markets that you could [if required] participate in, via LONG TERM CHARTS. As an example a hindsight look at Gold. A knowledge of economics will at least focus your research somewhat...but beware random outcomes, best keep an eye on as many markets that you can.

Now 30+ yrs is possibly not required, but certainly an appropriate timeframe would help, not less than 10yrs

In a real time example: http://leduc998.wordpress.com/2009/02/20/looks-like-another-commodity-stabilising/#respond

For the associated fundamental analysis, simply view under *Oil* on the blog.

The problem with _real time analysis_ is that the opportunity never looks good at the point of lowest risk. It will [if going long] always be at the bottom of a scary decline. Second, confirmation of a mega-trend can only be established in hindsight, which is useless.

Thus, we move swiftly onto part two of the problem. Managing _risk._ Here, as I suppose previously, personal preferences, knowledge and bias plays a large part.

jog on
duc


----------



## ducati916

*et al*

A current _real time _example.

US Treasury 10yr Bonds. 

Essentially, yields to rise, or prices to fall. That is the trade. The structure of the trade might be a variety of ways.

jog on
duc


----------



## tech/a

*WHY*

(1) Its not taught.
(2) You cant get a straight answer from an F/P or accountant or a salesman as they all have agenda's
(3) Our Kids need to know. You need to know.
(4) People make it more complicated than it is.
(5) We are fortunate enough to have this country as our home---opportunity abounds---take advantage of it--- many will never have the opportunity YOU do.

*(1) Risk mitigation and possible elimination.*

While its often not possible to eliminate risk we can all do better at mitigating it.

*CONTROL*
Controlling your investments is the single most efficient way of mitigating RISK I know of. You just need to read the Storm Financial Thread!
I have a number of simple rules this is top of the list.
If I cant control my investment to a large degree then I'm not in it. I have had friends and family who wish to join us (Princess) in investments---happy to help but NEVER invest.

So in the examples to follow I will show details of how I have mitigated risk and retained as much control as possible in the examples and how I would in other examples.
RISK CONTROL is the biggest factor in successful investing in my view.

*(2) Leverage*

I'm aware most equate leverage to increased RISK.*This is just plain wrong*.
Sure you CAN leverage and take on ridiculous risk---why wouldn't you use leverage if you could do so with NO MORE or far reduced RISK than a fully Personally cashed investment? In fact you can use it to totally eliminate risk,faster than you can using your own money.Other peoples money is cheap. Questions are how, when ,why. I hope to answer these questions in my own way with examples.

*(3) Compounding*
Then we all know the power of compounding growth---just do more of it.

*(4) Time* 

Two things with time.
Allowing time to take its course and then answering the question of WHEN is the RIGHT time.

*(5)Duplication*

Buying one home and paying it off will at best make you feel all warm and fuzzy and place you in the river tracking inflation. Buying 2/3/4+ places you on top of the river with an out board motor.


EVERYTHING you ever invest in will do THIS 
THIS is WHERE YOU START.

Like all charts click to expand


----------



## motorway

Tech/a's chart
clearly demonstrates

That the MOST important thing we control

IS THE ENTRY

THIS is the TIMING  ( The only form of time that matters )

And that all else

risk control/ use of  leverage & duplication etc
FOLLOWS

It is not the other way around

HOW important is it to know the technical POSTION

As tech A said 
just make your self available by 
being in front of the right WAVES
at around the right time

Capture The large scale FORCED MOVES

The proper name for TECH/a's chart
is the "EVERYBODY should be Rich Chart"
   WHY because SO many will always use that chart UPSIDE DOWN

Hence why their use of leverage & their willingness to duplicate
becomes so destructive


motorway


----------



## ducati916

*motorway*



> That the MOST important thing we control
> IS THE ENTRY
> 
> THIS is the TIMING ( The only form of time that matters )
> And that all else risk control/ use of leverage & duplication etc
> FOLLOWS
> 
> It is not the other way around




The entry, defines your risk * your position size [leverage] Thus essentially they are one and the same. There should be zero confusion on this point.




> HOW important is it to know the technical POSTION
> 
> As tech A said
> just make your self available by
> being in front of the right WAVES
> at around the right time
> 
> Capture The large scale FORCED MOVES




The question that requires an answer is where to locate these potential opportunities. In the financial markets, you have to monitor as many markets as you can legitimately follow and trade.

It's no use following Wheat, if you can't gain exposure to Wheat.

*tech/a* chart is an interesting chart, in that it is possibly exactly the wrong chart to be looking at currently. It is the ASX from what, about 1982/1983 to the current.

Bubbles, which is illustrated clearly via the parabolic pattern, if you subscribe to technical analysis, would suggest a basing pattern, taking many years, within a fairly wide range. This is not the opportunity being sought. Leverage into a range-bound market will multiply your losses.

If that analysis is compared to a macro-economic analysis, that the weighting of the ASX is heavily resource and banking, early stage production, which overinvested based on a distortion of interest rates by Central Banks and a massive credit expansion via the banking sector, will not be leading a fast recovery.

It is this very fact however that makes the actual commodities an opportunity. Due to the requirement of a huge volume of voluntary saving, by which the natural rate of interest falls, driving capital expansion in early stages of production, the current PV of commodities may tend to rise, due to the continued efforts of Central Banks worldwide to expand credit in the face of a not yet high enough fall in the demand for consumer goods.

Thus the technical & fundamental analysis tend to support each other. Both are not necessary, you can get by on simply a technical basis, however, if you are looking for big wealth creating trends, you need a big picture chart.

This of course doesn't even start to address risk, leverage, etc. We are still at the trying to identify the opportunity stage.

jog on
duc


----------



## motorway

Gold is an obvious ( much talked ) about possibility

Energy too

Drill down here and imo you will find opportunity

Energy RELATIVE to the general market

consolidating for further out performance ?

Chart covers ~ 10years

What Gold ( index ) does here at support
will be interesting too...

Any accelleration maybe should be jumped on....



motorway


----------



## ducati916

*motorway*

With respect to energy I'm pretty much in agreement, although, possibly again a little late to the party? It will be difficult to enter and manage a position from these levels. When you state _energy_ any particular part of the energy complex?

With respect to Gold, have we not rather missed the boat on this one? The Gold bull has been going for quite some time, and price appreciation. As such, does it really qualify? Or, are you advocating a SHORT position?

jog on
duc


----------



## motorway

Yes both have been themes already

But the thread is only new 

Always should be mindful of how far above the cost of production
a commodity is ..
but there are always other considerations too

Esp with GOLD versus something like sugar or corn

Gold could easily go to $1500 (USD) or $500

There are other considerations when investing on the ASX as well
eg AUD..

hence

A look at these relative charts
It tends to suggest only a retracement in a bull market
hence this theme might have some way to go


Being  relative charts -- the actual numbers do not mean much
But the relative strength and weakness
reveals how interest (Money ) is flowing into or out of the theme
relative to other opportunity
I would expect at least a  test of the ( relative ) highs with Gold
and breakout to new ( relative ) highs with energy..

dyor 

motorway


----------



## MRC & Co

motorway said:


> I would expect at least a  test of the ( relative ) highs with Gold




Sheesh, I hope not!  I am short gold (for pure fundamental reasons and a shift in underlying sentiment I see coming into the picture).  Sorry bugs.


----------



## Gordon Gekko

MRC & Co said:


> Sheesh, I hope not!  I am short gold (for pure fundamental reasons and a shift in underlying sentiment I see coming into the picture).  Sorry bugs.





Is that because you feel the chilling winds of a deflationary spiral?

Just curious!!

G


----------



## ducati916

MRC & Co said:


> Sheesh, I hope not!  I am short gold (for pure fundamental reasons and a shift in underlying sentiment I see coming into the picture).  Sorry bugs.




Are you saying *sentiment* is a fundamental?
If not, what fundamentals are you referring to?

jog on
duc


----------



## ducati916

*motorway*



> Gold could easily go to $1500 (USD) or $500




Is that not a random outcome? Are you happy to trade random setups?

jog on
duc


----------



## MRC & Co

ducati916 said:


> Are you saying *sentiment* is a fundamental?




No, I am talking of sentiment relating to fundamentals.


----------



## ducati916

MRC & Co said:


> No, I am talking of sentiment relating to fundamentals.




Ok.

So the fundamentals are deteriorating. In what way/respect? Or are we talking a 2'nd derivative type of thing?


Enzo, baby, switch-off the visual verification, GOOGLE still hates me!

jog on
duc


----------



## motorway

ducati916 said:


> *motorway*
> 
> 
> 
> Is that not a random outcome? Are you happy to trade random setups?
> 
> jog on
> duc




No , Just price levels with different probabilities,,

And in reference to the popular press sentiment
( Bit wary of the visibility of the Gold theme all the rationales )

Smaller scale chart 50 pt

Just focusing on the "correction" from the high

I note the actual shape of demand and supply
and where the volume is

Positions are being taken
A zone of expectations is here

Lows seem rejected

IF price accelerates from this "High Pressure" system

then



> Any accelleration maybe should be jumped on....




Low risk is as the train leaves the station..

Differences of opinion
build the stations and the destinations

Value itself is slippery

Too much of the expected "fundamentals" are just linear projections

motorway


----------



## tech/a

My aim is to show how (In a practical way) everyone can move away from conventional thinking and *FEAR* moving toward recognising and placing yourself in a position to take advantage of opportunity----before it becomes opportunity in HINDSITE.

By the application of
(1) Risk mitigation and Control.
(2) Leverage
(3) Compounding
(4) Time 
(5) Duplication


*Firstly Property* (as my database is currently showing 2 bars on a chart!).

Everything you invest in is governed by Supply and Demand,and always on a micro and macro scale.

Its the macro scale we look to be in sync with.
In the 2 times I have caught the Macro scale once in property and once in trading,I had no idea they were coming.
I did know *I had to be exposed to opportunity*.

*Yesterday*

Its happened twice in my lifetime where purchasing a fully established home is far cheaper than purchasing a new home.
Where rent exceeds the repayments on the property holding costs.
Even on zero down.
Where demand way outstrips supply.
Where the balance is clearly out of whack.
We can achieve positive gearing today with 50% or more down but at times in your life you'll find Perfect conditions.
Clearly the less down to hold an investment at zero or very low cost the better the investment.

Whilst holding positively geared property I noticed blocks rising dramatically in price and getting smaller!
600 square meters had gone from $80k to $160k in my area.
Commercial Land was $35/ square meter so 4000 square meters was $140K
Clearly there was an in balance Domestic $260/square meter and Commercial $35 Again it was clear
a balance was to return.



*Today.*

Builders are screaming for work.
Project builders are being offered amazing deals on product.
In SA the average,average building cost was/is around $1000 to $1200 per square meter.
Today Project builders are offering $490 (Single story)-$660(Double story)/Square meter.
I look for corner blocks 1100 square meters or more for a 3 duplex development. 2 will work but you want to be very good.

Land with or without house in my area. Allow $270K
allow 3 Duplex development $92K each land value.
2 story 240 square meters $158K building cost.
45K each for other costs (holding Cost,Sub division,Landscaping) that's $295K each.
Selling for $395K at the low end and $495K at the top end in my area
Its a no brain er.


So looking at the opportunities.
No problems with control---no one else involved.

Risk
*"Yesterday"*
3 and 4 bed homes were 90-120k with rent of $220/week
Interest 6.5% so it wasn't hard to Positively gear.
By having a larger portfolio its possible to sell off the weaker performing properties
and invest back into those better performing. Exposure can be dramatically diminished.
Rents of course rise and the average is now $300-340/week.
Very large drops in the market price can be sustained as can considerable increases in 
interest rates.

*More importantly what about "TODAY!"?*

I like 3 or more dwelling developments.
with 20% down initially finance isn't an issue.

270K less $50k initial outlay at say 6.5% for ease of calculation
gives an initial holding cost of $14,300 a year.
Other costs will amount to around 40K if your sub dividing.
Plus of course building costs.
I have standard designs from my builder ready for application.
I also have a performance clause with liquidated damages if not adhered to.
As soon as the approval is granted I place the development for sale.
I only want to sell 2 and I work on an option to purchase after 14 mths
to minimise capital gains tax. I'll keep 1.

Clearly you can see after 1 yr the holding costs and risk are almost zero.
I wont go through the exact figures but hope you see how to virtually
eliminate risk.

We can see pretty easily where we are in cycles.In property we are at in the down trend 
stage with many areas in a consolidation stage. *If my holding costs are negligible* I know that at some 
time in the future demand and inflation are going to affect my holdings.I want to have holdings
exposed to these influences WELL before they come into play.

So we can see that we utilize.
Risk mitigation
Leverage
Compounding
Duplication and
Time


----------



## Uncle Festivus

tech/a said:


> *(4) Time*
> 
> Two things with time.
> Allowing time to take its course and then answering the question of WHEN is the RIGHT time.




Expanding the _time_line for the market that moves all else?, and considering the 3 states of existence for any entity (up/down/sideways?), then the probability of at least one state is remote, sideways likely, and further down possibility? Range bound with negative bias is not a time for leveraged buy and hold _investing_?



motorway said:


> Tech/a's chart
> clearly demonstrates
> 
> That the MOST important thing we control
> 
> IS THE ENTRY
> 
> THIS is the TIMING  ( The only form of time that matters )
> motorway






ducati916 said:


> *tech/a* chart is an interesting chart, in that it is possibly exactly the wrong chart to be looking at currently. It is the ASX from what, about 1982/1983 to the current.
> 
> Bubbles, which is illustrated clearly via the *parabolic pattern*, if you subscribe to technical analysis, would suggest a basing pattern, taking many years, within a fairly wide range. This is not the opportunity being sought. Leverage into a range-bound market will multiply your losses.
> 
> If that analysis is compared to a macro-economic analysis, that the weighting of the ASX is heavily resource and banking, early stage production, which *overinvested based on a distortion of interest rates by Central Banks and a massive credit expansion via the banking sector, will not be leading a fast recovery.*
> 
> 
> jog on
> duc




The biggest picture, with a couple of parabolic's thrown in - not an accumulation phase - yet?


----------



## Uncle Festivus

tech/a said:


> *Firstly Property* (as my database is currently showing 2 bars on a chart!).
> 
> Everything you invest in is governed by Supply and Demand,and always on a micro and macro scale.




Not sure about that, as Governments have and are distorting the markets at the moment with stimulis, and qaunt & algo traders are distorting the equity markets? It's all about getting on the right gravy train or insider? As long as Big Kev keeps pumping then the freak show will continue. What happens when the music stops is where the big money will be made ie extreme wealth? Go short....


----------



## motorway

Uncle Festivus said:


> Expanding the _time_line for the market that moves all else?, and considering the 3 states of existence for any entity (up/down/sideways?), then the probability of at least one state is remote, sideways likely, and further down possibility? Range bound with negative bias is not a time for leveraged buy and hold _investing_?
> 
> 
> 
> 
> 
> The biggest picture, with a couple of parabolic's thrown in - not an accumulation phase - yet?





major problem with logarithmic chart
is it is useless over such a large move 
to identify possible zone of accumulation

The half way point is invisible and becomes meaningless

You would think looking at your chart
That the only way was UP


ENTIRE HISTORY DOW CHART
full corrective move back to the HALFWAY point
With demand overcomming supply

ALSO the DOW is a very managed instrument
with constant additions and removals


WHO is talking HINDSIGHT ????

ENERGY ENERGY ENERGY !!!!

FORESIGHT FORESIGHT FORESIGHT  
dyor 

motorway


----------



## matty2.0

Wanna know my "Exceptional Wealth Accumulation Idea?"

Save your money more, and don't spend it on luxurious items.
Get rich slow.


----------



## tech/a

Uncle Festivus said:


> Not sure about that, as Governments have and are distorting the markets at the moment with stimulis, and qaunt & algo traders are distorting the equity markets? It's all about getting on the right gravy train or insider? As long as Big Kev keeps pumping then the freak show will continue. What happens when the music stops is where the big money will be made ie extreme wealth? Go short....




No my charts actually showing 2 bars--literally.
My data is currently corrupt and cant fix until I get a history disk!

I wasn't being cryptic


----------



## matty2.0

Regarding inflation ... I can see where you're all coming from, but there are arguments against too. What makes you so sure that we'll have massive inflation?

The only big reason why people think we're gonna have inflation is b/c the US is printing their bills. 
However here's the thing;
- not every country in the world has zero interest rates and is printing ... it's an American phenomenom. Aussie rates are at 3% ... and rba looking to increase if prices get out of hand. 
- and two, Japan never experienced any inflation after their "quantitative easing" programs in the 90s, infact they experienced further deflation after all the money they printed. 

you can bet on your gold but there's huge downside risk given how far it's run up.


----------



## Ato

matty2.0 said:


> - and two, Japan never experienced any inflation after their "quantitative easing" programs in the 90s, infact they experienced further deflation after all the money they printed.




As far as Japan vs the US go, there were some fundamental differences between the position Japan was in and the position the US is in with regard to QE. Imho about the only similarity between the two places is that they used QE. Here is a link to get you started on reading:
http://www.financialsense.com/editorials/lee/2009/0702.html
After you can search around for various articles on the web, or in books that go into more detail.

As far as Oz, I dunno. Again, it's in a very different place to either Japan or the US. At a very rough and newbie guess I'd say Oz will continue to have strong growth, which I guess means a bit of inflation. But very different from the US may go through. Dunno?


----------



## So_Cynical

matty2.0 said:


> Regarding inflation ... I can see where you're all coming from, but there are arguments against too. What makes you so sure that we'll have massive inflation?
> 
> The only big reason why people think we're gonna have inflation is b/c the US is printing their bills.
> However here's the thing;
> - not every country in the world has zero interest rates and is printing ... it's an American phenomenon.




The Europeans are printing to...and the whole 1st world is borrowing, well except the 
Chinese and Japan....anyway the debts will have to be somewhat inflated away, there's 
just no other road to go down.

Now back to the exceptional Wealth Accumulation Ideas and Thinking.


----------



## beerwm

First of all, GREAT thread tech/a.
-weatlh of knowledge



tech/a said:


> Yes you CAN do this.
> And no its not gambling.
> 
> lets say I buy a 10c stock with a 1c risk.
> It trades to 13c I raise the stop to 10.5c I now have NO RISK.
> 
> More later.




wow, i cant believe no one called you out on this;
you have 13c - SL ( 10.5 ) = 2.5c risk.

-saying you have NO RISK, in this circumstance is just a mind game you are playing with yourself.

---------



> I'm aware most equate leverage to increased RISK.This is just plain wrong.




did you mean, the ratio of Reward:Risk remains the same,

eg 5:1 x2(leverage) = 5:1

---------

duplication I believe is a great point you meantioned-

exposure is the term i would use,

great stuff,


----------



## Mr J

beerwm said:


> wow, i cant believe no one called you out on this;
> you have 13c - SL ( 10.5 ) = 2.5c risk.




There was one just after his post. Not only is the profit at risk, there was an initial risk of 1c.

I didn't address leverage, but I also disagree with it. Increased leverage brings increased risk unless the amount risked remains static, but all that would serve is to magnify the movement with potential drawbacks.

Example, I trade 1 SPI contract risking 10 ticks. If I leverage to 5 contracts then my risk becomes 50 ticks. To maintain my initial level of risk I must drop down to risking 2 ticks per contract, for the initial 10 ticks of risk overall. I don't gain anything by using leverage (in fact it may hurt me, as the 10 ticks will probably outperform the 5x 2 ticks ), and I still leave myself open to the 'black swans' (such as stops not triggering, broker going down etc).

I believe leverage is really only used for two things:
1. To minimise the amount needed for a trade/account, allowing simultaneous trades or investments, to use otherwise unused funds.
2. To magnify movement, allowing a move of x size to become meaningful. Effectively boosting volatility artificially. E.g. I may usually trade 10 tick moves, but 200% leverage allows me to trade 5 tick moves for the same profit.


----------



## beerwm

I dont think the use of leverage in itself should change a system's dynamics

-ie, just magnify losses/gains; - allow greater exposure.[even diversification]

Ofcourse the availibility of leverage can lead to the creation on shorter term systems - which make smaller moves meaningful,

-which i think you were getting at;

just found tech/a's comment intriguing


----------



## MR.

Trembling Hand said:


> I'm moving to Hong Kong to earn Chinese Yuan before they pull their fingers out of the dyke and the flood gates break open.






kingcarmleo said:


> What do people think about buying the Yuan ..... Will their currency be worth a lot more in 5 years time than it is today? I am tempted to use a bit of capital to but the Yuan now.




Ahh the Yuan.....  Not easily purchased though.....  However, I bet the Yen strengthens with any strengthening of the Yuan. Holding the Yen is also government guaranteed. There's a bit of a build up behind that Chinese finger, yes, but they're hardly going to remove the finger on purpose with their faces so close. So in the mean time wonder how much stronger the AUD will become? 

So cash is now king in Yen at 0% interest?


----------



## MRC & Co

MR. said:


> However, I bet the Yen strengthens with any strengthening of the Yuan.




Why?


----------



## Mr J

beerwm said:


> I dont think the use of leverage in itself should change a system's dynamics
> 
> -ie, just magnify losses/gains; - allow greater exposure.[even diversification]
> 
> Ofcourse the availibility of leverage can lead to the creation on shorter term systems - which make smaller moves meaningful,
> 
> *-which i think you were getting at;*
> 
> just found tech/a's comment intriguing




Yep, magnifiy the smaller moves. Even then, if the risk size is kept consistent, our risk is still really larger since our stops and exit are not completely secure. If they don't execute for some reason, we're exposed to greater losses.


----------



## ducati916

matty2.0 said:


> Regarding inflation ... I can see where you're all coming from, but there are arguments against too. What makes you so sure that we'll have massive inflation?
> 
> The only big reason why people think we're gonna have inflation is b/c the US is printing their bills.
> However here's the thing;
> - not every country in the world has zero interest rates and is printing ... it's an American phenomenom. Aussie rates are at 3% ... and rba looking to increase if prices get out of hand.
> - and two, Japan never experienced any inflation after their "quantitative easing" programs in the 90s, infact they experienced further deflation after all the money they printed.
> 
> you can bet on your gold but there's huge downside risk given how far it's run up.




*matty*

First, the current policies will need to remain or continue to expand. Should the Federal Reserve change course and start withdrawing the created liquidity, then an inflation might be avoided. That potential window of opportunity is fast closing currently.

Currently, we are still seeing Bank failures amongst banks deemed too small to save. This while patently unfair, is simply what really should have happened to the larger failures that have been propped up, Citi et al. 

Eventually the bank failure rate will slow and end. At that point we will be left with healthy banks that survived on their own merits, primarily the smaller regional banks and the large, artificially saved money centre banks that are puppets of the Federal Reserve, itself a puppet of government.

Capital will be assigned to the relatively more profitable stages of production. Unless we continue to see sustained voluntary saving from the consumer, that area will be consumer goods. Even in a heightened saving environment, consumer goods will be relatively more profitable.

That being the case, we should expect in the future to see some increase in employment within this sector.

Within the initial data series we can see that retail/food sales dropped significantly. While the employment picture was also bad, it has held up relatively well when compared and contrasted within two capital goods intensive industries, consumer durable goods and mining.

Profits, while they may well be diminished within consumer goods, will remain higher relatively than they are in capital intensive industry due to the tighter credit conditions imposed by the banking sector. Labour will relative to capital become cheaper. Thus, the increased profitability of the consumer goods will attract a relative expansion in this sector, and a severe contraction in stages of production furthest from consumption.

The outcome will be a gradual absorbtion of inventory levels, which currently are still high. This high inventory level will cap currently any inflationary pressures within the consumer goods.

We can see from the PMI data however that purchases are starting to pick-up from the plunge initiated from the credit freeze-up.

As this trend continues, we will hit a snag. Productivity will have been hamstrung via the poor choices manifested via the manipulated interest rates. The demand will start to exceed the supply, thus prices will start to rise to reflect this imbalance. Capital will have been consumed. The productivity cannot just be switched back on. Therefore the shape and depth of productive capability are inappropriate for the emerging and artificially stimulated consumer demand.

The stimulus packages by creating a new and increased money supply underpin this demand for consumer goods. The stage is set for a rapidly escalating inflationary scenario and new problem for the Federal Reserve – whose traditional response is to raise the short-end of interest rates, thus pushing up the long-term interest rates.

Various raw commodities also act as consumer goods, viz. oil [coal, gas] that produces petrol, electricity, heating etc. In an inflationary environment, they will maintain their exchange values, thus matching and in another potential speculative frenzy, possibly exceeding [again] real exchange values.

In summary, inflation always is insiduous, markets are always hyper. That there is little detectable inflation currently, although it is already there in some commodities – oil, agriculture, it has not yet invaded the public domain in CPI based calculations. Due to forces already in play, launched via the Federal Reserve and government, these forces are set to increase.

For associated charts: http://leduc998.wordpress.com/2009/07/05/where-will-the-inflation-manifest/#respond

jog on
duc


----------



## ducati916

motorway said:


> No , Just price levels with different probabilities,,
> 
> And in reference to the popular press sentiment
> ( Bit wary of the visibility of the Gold theme all the rationales )
> 
> Smaller scale chart 50 pt
> 
> Just focusing on the "correction" from the high
> 
> I note the actual shape of demand and supply
> and where the volume is
> 
> Positions are being taken
> A zone of expectations is here
> 
> Lows seem rejected
> 
> IF price accelerates from this "High Pressure" system
> 
> then
> 
> 
> 
> Low risk is as the train leaves the station..
> 
> Differences of opinion
> build the stations and the destinations
> 
> Value itself is slippery
> 
> Too much of the expected "fundamentals" are just linear projections
> 
> motorway




*motorway*

So your _probabilities_ exceed the 50/50 probability, or stated another way, _random outcome?_

Herein lies one problem with technicals. Their existence without a fundamental context, pretty much always boil down to random, as that is the only way you can get paid.

Value in gold is _subjective_ which I am using in a fundamental analysis context. Thus, at these levels of $900oz, fundamentals are not providing much if any insight. The same could be argued at any price level.

However, if we add to our subjective analysis, an additional _objective metric_ then, at certain levels, lower levels, we can start to offer some probabilities that exceed random. These would be based on the proposition that government will continue to expropriate property, and partake in general theft via inflation.

The problem then is simple. We have seen the last credit expansion collapse. It collapsed so badly, that government has embarked on immediately attempting to expand credit again.

There is no way that I am aware of in which we can subjectively, objectively measure an accurate price for gold currently. Further, it is near impossible to state that gold is either fairly valued, or, conversely overvalued.

We are left with T/A which is random.

Thus, in the context of this thread, which is the recognition [early] of new trends and the capitalization thereof to create wealth, is gold, for the newer trader, an appropriate vehicle?

jog on
duc


----------



## ducati916

tech/a said:


> My aim is to show how (In a practical way) everyone can move away from conventional thinking and *FEAR* moving toward recognising and placing yourself in a position to take advantage of opportunity----before it becomes opportunity in HINDSITE.
> 
> By the application of
> (1) Risk mitigation and Control.
> (2) Leverage
> (3) Compounding
> (4) Time
> (5) Duplication
> 
> 
> *Firstly Property* (as my database is currently showing 2 bars on a chart!).
> 
> *Everything you invest in is governed by Supply and Demand,and always on a micro and macro scale.*
> 
> Its the macro scale we look to be in sync with.
> In the 2 times I have caught the Macro scale once in property and once in trading,I had no idea they were coming.
> I did know *I had to be exposed to opportunity*.
> 
> *Yesterday*
> 
> Its happened twice in my lifetime where purchasing a fully established home is far cheaper than purchasing a new home.
> Where rent exceeds the repayments on the property holding costs.
> Even on zero down.
> Where demand way outstrips supply.
> Where the balance is clearly out of whack.
> We can achieve positive gearing today with 50% or more down but at times in your life you'll find Perfect conditions.
> Clearly the less down to hold an investment at zero or very low cost the better the investment.
> 
> Whilst holding positively geared property I noticed blocks rising dramatically in price and getting smaller!
> 600 square meters had gone from $80k to $160k in my area.
> Commercial Land was $35/ square meter so 4000 square meters was $140K
> Clearly there was an in balance Domestic $260/square meter and Commercial $35 Again it was clear
> a balance was to return.
> 
> 
> 
> *Today.*
> 
> Builders are screaming for work.
> Project builders are being offered amazing deals on product.
> In SA the average,average building cost was/is around $1000 to $1200 per square meter.
> Today Project builders are offering $490 (Single story)-$660(Double story)/Square meter.
> I look for corner blocks 1100 square meters or more for a 3 duplex development. 2 will work but you want to be very good.
> 
> Land with or without house in my area. Allow $270K
> allow 3 Duplex development $92K each land value.
> 2 story 240 square meters $158K building cost.
> 45K each for other costs (holding Cost,Sub division,Landscaping) that's $295K each.
> Selling for $395K at the low end and $495K at the top end in my area
> Its a no brain er.
> 
> 
> So looking at the opportunities.
> No problems with control---no one else involved.
> 
> Risk
> *"Yesterday"*
> 3 and 4 bed homes were 90-120k with rent of $220/week
> Interest 6.5% so it wasn't hard to Positively gear.
> By having a larger portfolio its possible to sell off the weaker performing properties
> and invest back into those better performing. Exposure can be dramatically diminished.
> Rents of course rise and the average is now $300-340/week.
> Very large drops in the market price can be sustained as can considerable increases in
> interest rates.
> 
> *More importantly what about "TODAY!"?*
> 
> I like 3 or more dwelling developments.
> with 20% down initially finance isn't an issue.
> 
> 270K less $50k initial outlay at say 6.5% for ease of calculation
> gives an initial holding cost of $14,300 a year.
> Other costs will amount to around 40K if your sub dividing.
> Plus of course building costs.
> I have standard designs from my builder ready for application.
> I also have a performance clause with liquidated damages if not adhered to.
> As soon as the approval is granted I place the development for sale.
> I only want to sell 2 and I work on an option to purchase after 14 mths
> to minimise capital gains tax. I'll keep 1.
> 
> Clearly you can see after 1 yr the holding costs and risk are almost zero.
> I wont go through the exact figures but hope you see how to virtually
> eliminate risk.
> 
> We can see pretty easily where we are in cycles.In property we are at in the down trend
> stage with many areas in a consolidation stage. *If my holding costs are negligible* I know that at some
> time in the future demand and inflation are going to affect my holdings.I want to have holdings
> exposed to these influences WELL before they come into play.
> 
> So we can see that we utilize.
> Risk mitigation
> Leverage
> Compounding
> Duplication and
> Time




*tech/a*

_Everything you invest in is governed by Supply and Demand,and always on a micro and macro scale_

For the moment, let's say I agree. How then will you analyse in relation to your example in Property [I assume residential]:

*Drivers of Supply
*Drivers of Demand
*In a micro/macro context.

The example you provide is not an analysis of supply/demand. It is simply an exposition of projected costs and revenues.

jog on
duc


----------



## tech/a

ducati916 said:


> *tech/a*
> 
> _Everything you invest in is governed by Supply and Demand,and always on a micro and macro scale_
> 
> For the moment, let's say I agree. How then will you analyse in relation to your example in Property [I assume residential]:
> 
> *Drivers of Supply
> *Drivers of Demand
> *In a micro/macro context.
> 
> The example you provide is not an analysis of supply/demand. It is simply an exposition of projected costs and revenues.jog on
> duc





Duc

Its not meant to be.
All I need to know is in *MY AREA*
(1) Rentals have 30 or so at opens often tenants out bid each other.
(2) Average sale time here is 46 days
I don't procrastinate and analyse a deal to death.
I do it.

I'm just adding carriages to the train. 

How people quantify their own investments are up to them----just create your own train!




> wow, i cant believe no one called you out on this;
> you have 13c - SL ( 10.5 ) = 2.5c risk.
> 
> -saying you have NO RISK, in this circumstance is just a mind game you are playing with yourself.




There is going to be nothing life chaging about small gains on small capital bases. We all look at the immediate picture and rarely (Most never) join the ride on the bigger picture.

If I have massive capital on the bigger picture with a maximum downside of as close as possible to B/E then I can allow the bigger picture to play out without stress.

*It only has to play all the way out once or twice in a lifetime to PERMIN ENTLY ALTER your life.*

Most think Micro
*The Money comes from Macro thinking.*


----------



## beamstas

beerwm said:


> wow, i cant believe no one called you out on this;
> you have 13c - SL ( 10.5 ) = 2.5c risk.
> 
> -saying you have NO RISK, in this circumstance is just a mind game you are playing with yourself.




Risk is what you stand to lose on a trade.
If your s/l is in profit you can't lose any capital on the trade. You are risking open profit but that occurs in any trade. 

If you open a position with a $100k account and risk 1% of your account you stand to lose $1000. if you make the stop loss even you stand to lose $0 of your capital, hence no risk.



> did you mean, the ratio of Reward:Risk remains the same,
> 
> eg 5:1 x2(leverage) = 5:1
> 
> ---------




No, he means Risk stays the same.


----------



## Temjin

Mr J said:


> There was one just after his post. Not only is the profit at risk, there was an initial risk of 1c.
> 
> I didn't address leverage, but I also disagree with it. Increased leverage brings increased risk unless the amount risked remains static, but all that would serve is to magnify the movement with potential drawbacks.
> 
> Example, I trade 1 SPI contract risking 10 ticks. If I leverage to 5 contracts then my risk becomes 50 ticks. To maintain my initial level of risk I must drop down to risking 2 ticks per contract, for the initial 10 ticks of risk overall. I don't gain anything by using leverage (in fact it may hurt me, as the 10 ticks will probably outperform the 5x 2 ticks ), and I still leave myself open to the 'black swans' (such as stops not triggering, broker going down etc).
> 
> I believe leverage is really only used for two things:
> *1. To minimise the amount needed for a trade/account, allowing simultaneous trades or investments, to use otherwise unused funds.*
> 2. To magnify movement, allowing a move of x size to become meaningful. Effectively boosting volatility artificially. E.g. I may usually trade 10 tick moves, but 200% leverage allows me to trade 5 tick moves for the same profit.




In essential, I think that's what he meant. Increased leverage does not necessary equate to higher risk if you can manage your position properly.

If I had the ability to play an account with a leverage ratio of 1000, it does not mean it has to be ultra risky if I can adjust my position size properly. Like you said, with that kind of ratio, I would be able to create more positions and diversify with a less starting capital. 

In the old days (at least from the books I've read), a lot of the legendary traders say you need a minimum account size of $100,000+ to trade futures in order to be "economically" viable or to utilise their position sizing strategy properly. It's no longer the same nowdays when leverage has become easily accessible to a lot of retail traders and that commission has been competitively driven down so low.

I guess you know what I mean here since you already mentioned it.


----------



## beerwm

beamstas said:


> *Risk is what you stand to lose on a trade*.
> If your s/l is in profit you can't lose any capital on the trade. You are risking open profit but that occurs in any trade.
> 
> If you open a position with a $100k account and risk 1% of your account you stand to lose $1000. if you make the stop loss even you stand to lose $0 of your capital, hence no risk.
> 
> 
> 
> No, he means Risk stays the same.




13c - SL 10.5c = *2.5c* - what you stand to lose.

make a million $$ and lose it all... - and tell yourself you've lost nothing.


----------



## beamstas

beerwm said:


> 13c - SL 10.5c = *2.5c* - what you stand to lose.
> 
> make a million $$ and lose it all... - and tell yourself you've lost nothing.




A stop at breakeven means a no risk trade, tell me how you are going to lose your capital. My 14 year old brother could probably even work that one out. 

All trades risk open profit.

If you could get all trades to break even you'd be a squillionaire, because you're not risking any of your capital to trade.


----------



## beerwm

beamstas said:


> A stop at breakeven means a no risk trade, tell me how you are going to lose your capital. My 14 year old brother could probably even work that one out.
> 
> All trades risk open profit.
> 
> If you could get all trades to break even you'd be a squillionaire, because you're not risking any of your capital to trade.




capital/open profit;

open your eyes- they are the same thing.


----------



## Mr J

Temjin said:
			
		

> In essential, I think that's what he meant. Increased leverage does not necessary equate to higher risk if you can manage your position properly.




As long as position size isn't altered, I don't have a problem with it. Many people do see leverage as a way to increase their position size, and are ignorant of the increased risk.



> Risk is what you stand to lose on a trade.
> If your s/l is in profit you can't lose any capital on the trade. You are risking open profit but that occurs in any trade.




And it can be argued that our unrealised profit is ours to lose, since we have the decision to close the trade for that amount of profit. Consider the same situation, but instead of a trade we have the trading career. If we make 2 million and then lose it all, have we broken even or have we lost 2 million? We've done both.

Personally, I do move my stops up quickly, but I always consider open profit to be an amount I risk. Technically, it's not ours until the profit is realised, but going by that logic our trading capital is not ours until we've finished our trading careers. There multiple ways of seeing these things.



> A stop at breakeven means a no risk trade




Even if you argue that it is now a risk-free trade, it did have initial risk, so it is not a risk free trade.


----------



## beamstas

beerwm said:


> capital/open profit;
> 
> open your eyes- they are the same thing.




So what do you do? Sell for 2.5c profit because you believe your opinion on the price actually counts for something? Or put your stop loss at break even and let it do whatever the hell it wants.

All you can do is manage risk, putting your stop at break even (note the term used break even implying that if the trade now goes against you, you will break even  ) is a great way to manage your risk.

When calculating the profit or loss for a trade do you calculate how high the sp got then deduct the actual sale price? For example you buy at 10c with s/l at 9c. It gets to 11c and you move stop to 10c (break even) and then the price reveses to 10c and stops you out. Did you make 0c (10c - 10c) or lose 1c (11c-10c). You made 0c. You were break even and while the stop was at 10c you couldn't make a loss on that trade.

Simple as that.


----------



## --B--

seems like semantics now fellas.

both explanations are sound in that they are not incorrect and it clearly depends on which was you prefer to look at it. 

one can view the loss of only thier unrealised profits as zero loss (zero risk) given they have lost nothing of their initial stock of capital. one can equally view the loss of unrealised profits as risky as this component of THEIR money was clearly at risk and lost.


----------



## beerwm

beamstas said:


> So what do you do? Sell for 2.5c profit because you believe your opinion on the price actually counts for something? Or put your stop loss at break even and let it do whatever the hell it wants.
> 
> *All you can do is manage risk*, putting your stop at break even (note the term used break even implying that if the trade now goes against you, you will break even  ) is a great way to manage your risk.
> 
> Simple as that.




LOL!

you just spent the last 3 posts telling me that there is NO RISK.

so - im managing risk... in a NO RISK trade?

you're totally contradicting yourself, you say "opinion on price doesnt matter" but than you support a B/E stop. - 
which is a stop which is set by the trader, and has no relevance to the market

MR J. has it right, we can debate open profit as being money gained or not,

the price and date at which I buy a share has no relevance to me as how I play that trade out
- It seems you are saying it does - dont know how the helps you.


----------



## beamstas

beerwm said:


> the price and date at which I buy a share has no relevance to me as how I play that trade out
> - It seems you are saying it does - dont know how the helps you.




Of course the price has relevance, it forms the basis of whether you made profit or loss.

Risk is Entry Price minus Stop Loss. If entry price is the same as stop loss then risk is 0. Current Price doesn't come into it.


----------



## beerwm

beamstas said:


> Of course the price has relevance, it forms the basis of whether you made profit or loss.
> 
> *Risk is Entry Price minus Stop Loss.* If entry price is the same as stop loss then risk is 0. *Current Price doesn't come into it.*




Current PRice = $11.
Entry = $9
SL = $10

Entry - SL = Risk
9 - 10 = -1.

-1 RISK... nice beama, not only have you eliminated RISK, but now we are operating in NEGATIVE RISK.

So now you're telling me that current price doesnt effect your StopLoss?

lets just leave it at that,


----------



## beamstas

negative risk
commonly known as gain


----------



## ducati916

*tech/a*



> Duc
> 
> Its not meant to be.
> All I need to know is in MY AREA
> (1) Rentals have 30 or so at opens often tenants out bid each other.
> (2) Average sale time here is 46 days
> I don't procrastinate and analyse a deal to death.
> I do it.
> 
> I'm just adding carriages to the train.
> 
> How people quantify their own investments are up to them----just create your own train!




Your area however will be effected or influenced by the macro/micro factors that you highlighted as forming part of your analysis. Said analysis, I assume, to identify potential rewards/risks that constitute the basis of the opportunity.

Essentially, from the quote above, minimal analysis is undertaken. Therefore, by definition minimal appreciation of potential rewards/risks.

You would seem to be operating on a deterministic basis, based on historical data gleaned from an arbitrary lookback period. Would you recommend this approach to all and sundry?

jog on
duc


----------



## tech/a

Absolutely.

Once risk is taken care of there is little concern.
Of course most will complicate opportunity and disguise fear and indecision with "Reseach"  or "Analysis".
One of the most common causes of Procrastination.

I'm wrong more often than I'm right.
When wrong I'm wrong very quickly.
When Right I'm right for a very long time.

I could drop dead tommorow.
Korea could take on the US.
An asteroid may hit.

Worst of all duc.
You could be dead tommorow.


----------



## moreld

ducati916 said:


> For the moment, let's say I agree. How then will you analyse in relation to your example in Property [I assume residential]:
> 
> *Drivers of Supply
> *Drivers of Demand
> *In a micro/macro context.
> 
> The example you provide is not an analysis of supply/demand. It is simply an exposition of projected costs and revenues.
> jog on
> duc




Wonderful thread, full of some great advice. I've wanted to reply to many posts, but time is short. I reckon I could guess the age and experience of many of the posters here just by comments on this thread. 
Young or new investors often fail to realise the power of compounding. They may understand how it works theoretically, but they really don't get it and very few implement it. Any young person with a reasonable brain should end up very wealthy. It is incredibly easy to do so if you utilise compounding and there is not even any need to engage a financial advisor or invest in anything more complex than a broad market fund. What ever you do DON"T invest in any structured product.  BUT that's not what I wanted to talk about.

Duc asked about supply and demand in residential real-estate. I am not a property expert, yet I'll happily disagree with the "experts" who are promoting the next bull run in RR. 
The experts are pointing out that there is more demand than supply for RR in many parts of Australia. Immigration/population growth and a shortage of land are the two main drivers behind that. However, what they and most economists seem to fail to realise is that nothing moves in a straight line. Supply and demand matter in the long term, but not in the short term. There is no average return and caucasian distribution does not exist in the real world markets. 

The experts seem to ignore that Australian property is over priced in relation to its long term trend line and now to international property markets. They are declaring it is different this time; it's different due to supply and demand. That does not cut the cheese.

Australian property prices have been propped up by government funding for new home buyers and the ripple effect that has caused. Falling interest rates have been the other kicker. Both the funding and interest rates will reverse and property prices will fall to below their long term trend line. It is so freaking inevitable that if anyone can figure out how to profit from it they will get their exceptional wealth. Assets always move around their long term lines, above and below. Buying when they are above is a dangerous game.

I haven't managed to figure out how to profit from the coming fall or whether the fall will be a fall or a more traditional period of stagnation as wages catch up to prices. If someone has a suggestion I'd love to hear it, but I'm not too stressed as life is long and at some point in the future RR will again be relatively inexpensive and I will buy. Like all assets the key is to buy low and sell high. Those buying into RR at the moment are hoping to buy high and sell higher.

tech/a seems to have a good strategy, the trick will be ensuring he is not over leveraged when rates rise and prices fall. I love leverage, but only to buy undervalued assets.

All the above is for amusement only. Kids at elbow, no time to check this post. Thanks for so many great posts. I hope it's OK that I "borrowed" that great chart of the DJIA, let me know if not. I just wanted to make sure I would keep it forever.


----------



## ducati916

> Everything you invest in is governed by Supply and Demand,and always on a micro and macro scale.
> 
> Its the macro scale we look to be in sync with.
> In the 2 times I have caught the Macro scale once in property and once in trading,I had no idea they were coming.
> I did know I had to be exposed to opportunity.
> 
> Yesterday
> 
> Its happened twice in my lifetime where purchasing a fully established home is far cheaper than purchasing a new home.
> Where rent exceeds the repayments on the property holding costs.
> Even on zero down.
> Where demand way outstrips supply.
> Where the balance is clearly out of whack.
> We can achieve positive gearing today with 50% or more down but at times in your life you'll find Perfect conditions.
> Clearly the less down to hold an investment at zero or very low cost the better the investment.
> 
> Whilst holding positively geared property I noticed blocks rising dramatically in price and getting smaller!
> 600 square meters had gone from $80k to $160k in my area.
> Commercial Land was $35/ square meter so 4000 square meters was $140K
> Clearly there was an in balance Domestic $260/square meter and Commercial $35 Again it was clear
> a balance was to return.




You have in your analysis created _ideal circumstances._ Possibly these were the very conditions you took advantage of. But now let's look at some of the risks that you have ignored within this ideal scenario.

*Liquidity. Housing is notoriously illiquid. If you _need_ to sell, how quickly can you sell? 

*Markets change. The market that you buy in, may not be the market that you want, or need to sell in.

*Transaction costs. These are high in real estate. They can seriously alter a marginal investment.

*Your calculations assume a continuous rise in capital values.
*Your calculations assume a continuous rise in rental values.
*Your calculations assume demand continuing to be higher than supply.

All of these assumptions, if incorrect, do what to your position?
Certainly I would argue that real estate actually fulfills none of your assumptions.

*Change in nature of the neighborhood
*Black Swan event [macro/micro]

Essentially, you are highlighting hindsight factors. Yes, you may have partaken, and you may well have profited, yes, you may even have posted about them. The fact is though, although the historical record bears you out, this is in point of fact a perfect example of *survivorship bias*

By that I mean this. By sheer luck, or skill, we can't at this point tell the difference, you profited from said property conditions. Without a detailed analysis of the risks, and the means of mitigating or offsetting the risks, I have to assume you were simply lucky.

Previously, you have mentioned that in property, you were unlucky, and nearly went under. Assuming for the moment that you learned valuable lessons from the debacle, they [the lessons] should be apparent in the analysis that you provide.

At the moment I am reading, don't think too much, jump in feet first and leverage your ****-to-the-max - is that unfair?

jog on
duc


----------



## It's Snake Pliskin

Tech I have some questions on what you have put together.


> I like 3 or more dwelling developments.
> with 20% down initially *finance isn't an issue.*



Why isn't finance an issue? Some will have trouble getting it.



> 270K less $50k initial outlay at say 6.5% for ease of calculation
> gives an initial holding cost of $14,300 a year.
> Other costs will amount to around 40K if your sub dividing.
> Plus of course building costs.
> I have standard designs from my builder ready for application.
> I also have a performance clause with liquidated damages if not adhered to.
> As soon as the approval is granted I place the development for sale.
> I only want to sell 2 and I work on an option to purchase after 14 mths
> to minimise capital gains tax. I'll keep 1.
> 
> *Clearly you can see* after 1 yr the holding costs and *risk are almost zero.*
> I wont go through the exact figures but hope you see how to *virtually
> eliminate risk.*



Risk is _almost_ zero? You _virtually_ eliminate risk?

So there is risk? Or there is no risk at all?


----------



## ducati916

> Duc asked about supply and demand in residential real-estate. I am not a property expert, yet I'll happily disagree with the "experts" who are promoting the next bull run in RR.
> 
> The experts are pointing out that there is more demand than supply for RR in many parts of Australia. Immigration/population growth and a shortage of land are the two main drivers behind that. However, what they and most economists seem to fail to realise is that nothing moves in a straight line. Supply and demand matter in the long term, but not in the short term. There is no average return and caucasian distribution does not exist in the real world markets.




*moreld*

I was interested to see if tech/a, who is I believe a specialist in property had any particular analysis that he thought was worth sharing. As you have picked up the baton, I shall pick up on your initial analysis.

First in any cycle it behooves us to identify correctly the sector that we are going to invest in. Housing, residential property, one would assume, is a _consumer durable good._ Consumer durable goods have a lifespan that is used up both in real terms and accounting terms [depreciation]

Thus, consumer durables, are by definition, capital.

If they simply remain as a capital good, economic calculations that bear close proximity to reality can be made, and economic agents through these calculations will keep the supply more or less in line with demand due to reasonably efficient market forces.

However, in a business cycle engendered via an expansion of credit through the banking system, where the object of speculation becomes housing, the nature of housing changes from being capital to becoming a _consumer good [consumable]_

This fact strongly alters the market forces that guide supply to match demand. 

First, relatively higher accounting profits appear in the consumer goods sector which is the last stage, compared to higher stages of production. This draws capital from economic agents who place on hold or liquidate capital investments that show less profit, and redirect it to the stage closest to consumption.

In addition, the rise in prices exceeds the rise in wages, prompting a reverse Ricardo effect, that drives expansion through labour and a reduction in capital goods.

This in effect speeds the rate of supply to match the increase in demand from the increase in speculation [flipping etc] and price signals. Thus the supply chain expands.

The increased demand however is driven by an artificial credit expansion, that unless maintained at a faster pace than the rising prices, will engender the bust at some point.

This is of course what happened in most residential real estate markets around the world. With the bust, the now surplus labour are laid off adding to the unemployment.

What happens next is a function of what government doesn't do, rather than what it does. Unfortunately, government is committed to creating a further credit expansion, and providing subsidies, and make-work schemes, all poor policy decisions. Thus, real estate I agree does not present as an attractive investment choice currently.

jog on
duc


----------



## brty

Duc,



> Housing, residential property, one would assume, is a consumer durable good




So you don't like Tech's assumptions, but you make them yourself.

What other "consumer durable good" returns rent??

I also have experience in multiple properties for nearly 30 years, and know how  true is Tech's post.

Every investment is based on some assumptions, walking across the road with a green light is done with assumptions. TechA's  assumptions are much better than yours.

brty


----------



## moreld

I thought I'd posted a few charts on residential property a few months back and here they are. http://www.fusioninvesting.com/2009/05/is-australian-residential-property-the-last-bubble/

I'm posting the link now as property spruikers seem to be in full-on promo mode at the moment and I hate seeing lambs being led to the slaughter. NO tech/a I'm not referring to you (just in case you're paranoid). The spruikers have a great story to sell at the moment. Bubbles are always created and momentarily sustained by great stories.

For the first time in a many years it is possible to positively gear into Australian cities without too onerous a deposit. Rents are high and "predicted" to go higher. Interest rates are low. It's all beer and skittles. The problem is interest rates will inevitable go higher and rents have a natural ceiling as portion of income. As duc pointed out property is illiquid and when over leveraged punters who are years late to the party start to hurt and dump their properties, prices will fall, or at best stagnate for years.

There was a great post earlier in this thread which pointed out the normal ways of achieving wealth. Inherit, business, work smart or invest (I added that one). Most really rich people fall into the first two categories. It is impossible to get really wealthy just by working smart, but by combining that with investing it can be done. Personally I'd say why bother, there's no need to be exceptionally wealthy, but each to their own.

I pursued what I consider the lowest risk path. As I don't seek great financial wealth and view wealth as friends, family, health and happiness I decided setting up a business was not for me. I did not have the luxury of inherited wealth, but did receive a good education. The secret is there is no secret.
Maximise your hourly rate doing something you like and are good at. Continuously save and invest more than you earn and spend more time on financially educating yourself than watching sport and you'll end up wealthy. While nothing is risk free there, educating yourself has a high probability of success. If you learn something from everyone you come into contact with you'll be a success. 

*Time*. It has been noted that time is the secret to wealth and I totally agree with that. I think most people were talking about compounding, which is the greatest force in nature. There is another important aspect to time and that is time management. If you want to wealthy or successful the number one thing you have to do is maximise your time. You have to practice and study whatever you've chosen to do more than anyone else, or as much as other people who are switched on to time. I don't mean simply working longer hours, it is what you do in those hours that matters. Anyway, I digress and probably bore you, so I'll finish with one time management/learning tip.

*How to read an book*
If you want to learn as much as possible from reading a book then do not read it from cover to cover.
First read the Title, then the contents. That takes a couple minutes at most. This gets your mind into synch and thinking about the concepts in the book. You probably already some things about the topic or related to it and your brain will start bringing those thoughts from "storage" into "memory".

Then read the summary for each chapter, that's usually the first or last paragraph or two. You brain will start indexing the concepts and creating links to your existing knowledge.

At this point which will have taken less than an hour, you'll have learnt as much as most people who will spend days reading the book cover to cover. You'll also be in a better position to know if it is worth reading the book cover to cover. 

If the book is worth reading then go ahead and do so. As you now read the book your brain will continue to index it and you'll think "I already know that" and everything will seem to be easier to comprehend and remember.       

There is no such thing as a free lunch. While volatility/beta has absolutely nothing to do with risk, there is no doubt that risk always exists. Investing in yourself is the lowest risk activity I know of.

Trends to watch:

Oil, coal, natural gas and the companies that service them.
Electric cars are inevitable as we have passed peak oil. BYD is the best play I know of there, but the shares are now overpriced.
As oil rises AE will have a second wave in it's current growth path. Vestas wind and GE in turbines. STP is the lowest cost producer in solar. These are not recommendations, you should look and wait for good entry points if you are interested. Solar is the riskiest.
The fall of the USD, especially against commodity based currencies like AUD.
The final end of this commodity boom. Wealth is made the fastest on the way down. 

Nothing is inevitable, but if you're well versed and watch then opportunities present themselves. My problem is I'm easily distracted and forget to watch


----------



## Ageo

Interesting thread, Duc your posts are very informative but jeeez they are a hard read for the average reader.


Tech just to simplify things are we taking about investment or business?

You see i find the 2 different but essential to most for exceptional wealth.

Business can create exceptional cashflow if structured properly (and if in the right industry sold for a capital lump sum).

Investment can create exceptional capital gains (and modest cashflow returns).

For me its a bit like this:

* The pipline of water is my cashflow which needs to come in month in month out. Any excess needs to flow onto another holding tank (investment) which then grows and compounds accordingly. You see Return on Investments are essential but not as essential as compounding your rate of return. 

For example id rather make 3% on $10million then 500% on $50,000. The reason being is its so much easier to continue to top up the investment tank (portfolio) and continue compounding your returns each yr and do it for a long period of time then making high gains from a smaller capital base.

But for me the main driver is cashflow from my business's, and without it the process to wealth accumulation is much slower.

Another thing for me psychology is about 95% of the job, if you dont have the right frame of mind all the deals in the world still wont help you.


----------



## Mr J

> walking across the road with a green light is done with assumptions




Only if one doesn't think about the possible risk.



> Every investment is based on some assumptions




I make no assumptions when I place a trade. It could profit, it could lose, my stop may not be transmitted, the exchange could go down, I could lose my secondary connection, account etc. I don't even assume the entry will be transmitted, or that when it is closed it is actually closed (I check for trade confirmations). Perhaps a nuclear warhead takes out Sydney, or the sun doesn't rise tomorrow. No assumptions, just possibly overlooked events. We shouldn't be making assumptions if we can help it.



> For example id rather make 3% on $10million then 500% on $50,000. The reason being is its so much easier to continue to top up the investment tank (portfolio) and continue compounding your returns each yr and do it for a long period of time then making high gains from a smaller capital base.




So would I, because it is $50,000 more. Compounding has nothing to do with it, as both amounts can be compounded. We can't say that the larger capital strategy won't actually outperform the smaller capital strategy, as you haven't given enough informtion. From the sounds of it though, the smaller strategy will significantly outperform the larger strategy in the longrun.


----------



## moreld

If one believes in sector rotation then "consumer durable goods" are towards the end of the investment cycle not the beginning.

Here's a cut and paste from a post of mine from March.
"Coming out of a recession the leaders are likely to be materials, consumer discretionary and information technology. I’ve ignored Financials as they are a special case this time. Though I do find it interesting that some pundits say whatever led us down will lead on the way up, while others like Jim Rogers say financials are not going to recover for five to seven years. 

Sectors that logic and sector rotation believers suggest will lag include consumer staples, health care and utilities. Now you may think I’ve simply picked the three best and three worst sectors to illustrate my point, but if you think about it for a few minutes and look at any sector rotation theory you’ll see both the logic and that I have not cherry picked the data. There is one exception, industrials. They are expected to outperform early in the recovery, while they are showing slight out-performance my issue with that group is its diversity. "

I am agnostic on sector rotation, though take a look at Tech on this chart
http://finviz.com/map.ashx?t=sec&st=ytd


----------



## Ageo

Mr J said:


> So would I, because it is $50,000 more. Compounding has nothing to do with it, as both amounts can be compounded. We can't say that the larger capital strategy won't actually outperform the smaller capital strategy, as you haven't given enough informtion. From the sounds of it though, the smaller strategy will significantly outperform the larger strategy in the longrun.




So your saying you could earn 50% yr in yr out on your capital invested? (not trading as thats a business im talking investing which is long term)

If you can then you are truly exceptional!

You see what im talking about has nothing to do with outperforming other strategy's, what im talking about is that if people understood money management, risk management and the power of compounding they would understand you dont need super returns to become wealthy over time.

 * How many people today earn 100k per yr yet there expenses = almost that *money management.*

* When they invest into something its usually a poor choice with high risk (negative gearing property comes to mind)  *risk management*

How many people compound their returns yr in yr out over 10-20yrs on their own (excluding super) *the power of compounding*


The reality is people are impatient and always try to skip 1 or 2 simple rules (i know because i have many times).

The funny thing is the 1st million is the hardest/longest, after the the rate of compound starts on its exponential curve.


----------



## kincella

extract from an article comparing shares to property...thought some of the highlighted stuff might help some to understand .....the difference being, one can be ordinary when it comes to investing in property thats leveraged, but one needs to be above average to achieve the same results, consistently with shares, and create a greater income of 16% versus the average of 12%

this post is not about shares versus property....its about the difference between an ordinary investor and an above average investor....
......................................
What if you really cranked up the gearing on property to say 95%? I’ll let you do your own sums, 
but you’d need a return of around 16.5% from 50% geared shares to match the outcome over 20 years and your equity only catches up very late in the day. 
Meaning a lot of lost opportunity cost from not having the equity earlier to deploy in further investments. I might add that if you can do 16.5%pa year in, year out over 20 years you should immediately march up to a large fund manager and demand they give you an 8 figure salary, massive bonuses and a big office with harbour views
Of course if you’re the next Buffett and can do 28%pa on ungeared shares for 20 years then you’ll trounce the opposition and make a motza. But bear in mind you’ll only catch up in the equity stakes by year 12…

Conclusion

So, apart from having some fun with modelling the future, what can we learn from these projections?

A very average property with good leverage can beat a sharemarket expert with less leverage over the long term.

Just as we all think we’re above average drivers, most investors think they’re above average when it comes to investment. Of course that cannot be true.
So if we assume we’re about average when it comes to investing then when it comes to property, highly leveraged, maybe, just maybe, that’s okay. 

We can be average when it comes to property selection provided we gear to 80% or more and hold on for the long term. Which I guess is what authors like Jan Somers have been saying all along. To achieve the same results as a pretty ordinary property investor with shares requires above average skills over the long term.

So, perhaps the question should be, why are we holding shares/managed funds instead of property? The analysis above would suggest the only correct answers to that would be:
a) I’m using it to provide cashflow for my negatively geared properties; and/or
b) I’m using it as a saving vehicle to get the deposit for my next property.

Perhaps the third acceptable answer is that we’re holding shares/funds to have ready access to some liquid assets rather than holding cash.

Ultimately then, the answer to the title of this post is that the REAL story of property vs shares is a story of different permitted levels of leverage. 
http://www.invested.com.au/75/property-vs-shares-real-story-34626/


----------



## Mr J

> So your saying you could earn 50% yr in yr out on your capital invested? (not trading as thats a business im talking investing which is long term)




A trading business is an investment. 50% on longterm trades? I have no idea, probably not. It's probably not productive to compare the examples, as I don't think any of us will accept 3% on 10 million as a worthwhile investment. I can only say that if they were _trading_ results, the smaller strategy will scale well enough to significantly outperform the higher capital strategy.



> one can be ordinary when it comes to investing in property thats leveraged




Property and shares have their advantages and disadvantages, but I think we need to be better than ordinary in both to truly get ahead.



> A very average property with good leverage can beat a sharemarket expert with less leverage over the long term.




With greater exposure, perhaps.


----------



## tasmart

moreld said:


> I pursued what I consider the lowest risk path. As I don't seek great financial wealth and view wealth as friends, family, health and happiness I decided setting up a business was not for me. I did not have the luxury of inherited wealth, but did receive a good education. The secret is there is no secret.
> Maximise your hourly rate doing something you like and are good at. Continuously save and invest more than you earn and spend more time on financially educating yourself than watching sport and you'll end up wealthy. While nothing is risk free there, educating yourself has a high probability of success. If you learn something from everyone you come into contact with you'll be a success.




This is my strategy as well although the concept of hourly rate / high income/ business have become a bit overlapped.

My experience is that a lot of 'wealthy' retirees reap the rewards of this strategy. Nothing special. The odd major windfall (like holding from the initial CBA or CSL float). Involved in both real estate & shares. Good financial education. Making use of the changing tax environment. Long term investments with rebalance according to the cycles. Certainly not all eggs in one basket! And not risking large sections of their investments.

Time and compound interest are hard to beat - especially if not leveraged (eventually) and especially if don't need the capital - just income.   

I'll let you know how I'm going in 30 years time


----------



## ducati916

brty said:


> Duc,
> 
> 
> 
> So you don't like Tech's assumptions, but you make them yourself.
> 
> What other "consumer durable good" returns rent??
> 
> I also have experience in multiple properties for nearly 30 years, and know how  true is Tech's post.
> 
> Every investment is based on some assumptions, walking across the road with a green light is done with assumptions. TechA's  assumptions are much better than yours.
> 
> brty




What other consumer durable returns rent - how about an automobile if you rent it out as a taxi during the week? How about a lawnmower that you hire out? How about a set of golf clubs that you hire out? The examples are numerous.

Actually, it wasn't an assumption, I was simply being conversational.

Well of course you are entitled to your preference.

jog on
duc


----------



## tech/a

> tech/a seems to have a good strategy, the trick will be ensuring he is not over leveraged when rates rise and prices fall. I love leverage, but only to buy undervalued assets.




Yes very true and something I'm anal about.
Currently at 38%. Could be much lower but that would decrease my leverage to a point which to me is unacceptable in this environment.
Unlike many here I see opportunity---I'm glad others don't see what I see.
More so "How I see it" (Make opportunity).

When developing anything held long term is designed to bring down the total leverage % rather than add to it.
Sure it does in the short term but not in the long term.
Now developments only represent a small portion of nett worth so even leveraged exposure for a few years only adds 10-15% as I don't do developments which push anything to breaking point if a black swan event did occur.

Point here is that someone using ideas (which will come from discussion in Trading ) can go on to exceptional wealth accumulation say $5k to $10k---100% that's exceptional to their nett worth and eventually be doing what I and many others do----same game---different stakes.

*Most appear to be missing the strategy*

Move in get it done and reduce exposure to an absolute minimum while adding freehold or near to freehold carriages to the train. Ones which add passive income to the fuel supply.

*Are we talking Business or investing.*

Investing is a business to me.
In fact at times investment profit out performs my own company profits.

**Your calculations assume a continuous rise in capital values.*

Yes. I have been on this planet 55 yrs and noticed that everything is higher than it was when I started working.

**Your calculations assume a continuous rise in rental values.*

Yes.

**Your calculations assume demand continuing to be higher than supply.*

In my area and in the small Zone 50 Sq Km I work in----Yes.
I'm not seeing anything to the contrary---



> What other consumer durable returns rent - how about an automobile if you rent it out as a taxi during the week? How about a lawnmower that you hire out? How about a set of golf clubs that you hire out? The examples are numerous.




Yes but when they turn to dust--my dust will still appreciate in value!

My examples in the trading arena will certainly have discussion at a max if property is anything to go by.


----------



## ducati916

*tech/a*



> *Your calculations assume a continuous rise in capital values.
> 
> Yes. I have been on this planet 55 yrs and noticed that everything is higher than it was when I started working.
> 
> *Your calculations assume a continuous rise in rental values.
> 
> Yes.
> 
> *Your calculations assume demand continuing to be higher than supply.
> 
> In my area and in the small Zone 50 Sq Km I work in----Yes.
> I'm not seeing anything to the contrary---




Therefore would it not bear an exposition upon the fundamental factors driving those assumptions?

Housing capital values and rents rise due in part to the inflationary policy of governments seeking to abrogate property rights and control the supply of money through debasement. While they continue to do so, I agree that real property will inflate to match/exceed/trail that expansion. 

In addition, there are favourable tax treatments of various components. While this is not unimportant, tax benefits can be had elsewhere, thus, for the moment we'll consider tax treatment a wash.

Thus an investment that returns circa the inflationary rate, isn't really that much of a wealth creating vehicle, rather, a wealth preserving vehicle.

Which brings us onto the only valid point in regards to the useage of residential real estate, the ability to acquire 100% leverage, and sometimes a little more, *without facing a mark-to-market margin call*

Thus the gains within this asset class are essentially are gains of leverage.

So for this thread to truly live up to it's title of *exceptional thinking* we would need to consider the possibilities of leverage within other asset classes to this level, and whether the returns are generated [outside of the leverage] would exceed the gains of an inflationary nature.

jog on
duc


----------



## It's Snake Pliskin

ducati916 said:


> *tech/a*
> 
> 
> 
> Therefore would it not bear an exposition upon the fundamental factors driving those assumptions?
> 
> Housing capital values and rents rise due in part to the inflationary policy of governments seeking to abrogate property rights and control the supply of money through debasement. While they continue to do so, I agree that real property will inflate to match/exceed/trail that expansion.
> 
> In addition, there are favourable tax treatments of various components. While this is not unimportant, tax benefits can be had elsewhere, thus, for the moment we'll consider tax treatment a wash.
> 
> Thus an investment that returns circa the inflationary rate, isn't really that much of a wealth creating vehicle, rather, a wealth preserving vehicle.
> 
> Which brings us onto the only valid point in regards to the useage of residential real estate, the ability to acquire 100% leverage, and sometimes a little more, *without facing a mark-to-market margin call*
> 
> Thus the gains within this asset class are essentially are gains of leverage.
> 
> So for this thread to truly live up to it's title of *exceptional thinking* we would need to consider the possibilities of leverage within other asset classes to this level, and whether the returns are generated [outside of the leverage] would exceed the gains of an inflationary nature.
> 
> jog on
> duc



Duc,

Minus the word "_thus_" and its overuse, you have written some good stuff of late.


----------



## ducati916

It's Snake Pliskin said:


> Duc,
> 
> Minus the word "_thus_" and its overuse, you have written some good stuff of late.




Obviously a nervous tic.

jog on
duc


----------



## ducati916

> Trends to watch:
> •Oil, coal, natural gas and the companies that service them.
> •Electric cars are inevitable as we have passed peak oil. BYD is the best play I know of there, but the shares are now overpriced.
> •As oil rises AE will have a second wave in it's current growth path. Vestas wind and GE in turbines. STP is the lowest cost producer in solar. These are not recommendations, you should look and wait for good entry points if you are interested. Solar is the riskiest.
> •The fall of the USD, especially against commodity based currencies like AUD.
> •The final end of this commodity boom. Wealth is made the fastest on the way down.




I've reproduced the analysis that first was posted on the blog, as such, some of the prices obviously are a little out of date.

Certainly from the chart we can see that oil the commodity, fell to $20/barrel during the 2001-2002 recession. As this recession is likely to be both deeper and longer, holding off for the time being would be prudent. At some point however, a longer term investment within this sector is likely to pay off.

Year……………….%Capitalization…………S&P500……Compounded gain
1929…………………..8.48%………………..30.10
1932………………….10.86%………………..7.12
1949………………….16.0%………………..15.29
1982………………….12.6%……………….109.70
2008………………….8.53%……………….876.77
……………………………………………………………………4.36% [not including dividends]

The oil majors were always within the first three sectors and very often the largest sector within the S&P500; thus their growth has been consistent with both the market and the economy.

While by comparison other “major sectors” have faded through the years, automobile, aircraft, rails and a host of other sectors that have simply disappeared. While it is true that alternative energy must become a focal point, oil is critical to so many products that it’s ultimate demise will take time.

Inflation.
With the incredible monetary stimulus that is now worldwide, there will be inflation, and possibly a very serious out of control inflation. China, who has amassed some $2 Trillion in foreign reserves, predominantly denominated in USD, with a rapidly slowing economy, due to contraction in demand from both the US & Europe, will do what with them?

Looked at another way, China will not be amassing further reserves at the rate that they had been. Thus an immediate consequence will be a rise in interest rates across the part of the curve where China was accumulating US Treasury paper. Should they also start to sell reserves, to fund their economy in a Keyenesian manner, again, interest rates will rise across that part of the curve.

In an inflationary environment, the purchase a real assets and commodities can hedge the inflationary pressures providing real returns. Oil, although subject to any number of risks, political, war, terrorist, environmental and supply/demand shocks, still provides an attractive commodity to invest in.

Should the bear market deepen, where would the likely purchasers come from? For the actual commodity, oil itself, the buyers would have to be the economies themselves, in the form of products, be that energy generation or as a component in product manufacture. With a recession of potential depth forming, economies could well cut back for the indeterminate future.

With equity, the buyers might likely be corporations themselves. In an inflationary environment, rising prices of land, plant, reserves, and other input costs, rise with inflation. The price of equity however tends to fall, thus making it cheaper to consolidate, rather than expand.

Therefore, in an inflationary environment, it would be more rational to look to purchase equity that will appreciate in real terms in either scenario.

We would want in trying economic conditions one of the majors, who has the ability to withstand the economic downturn and capability to expand through consolidation, acquiring competitors at advantageous prices.

Exxon Mobil Corporation (Exxon Mobil) through its divisions and affiliates is engaged in exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. Exxon Mobil is a manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a range of specialty products. Exxon Mobil also has interests in electric power generation facilities. Affiliates of Exxon Mobil conduct research programs in support of these businesses. Exxon Mobil Corporation has several divisions and affiliates, many with names that include Exxon Mobil, Exxon, Esso or Mobil. The Company operates in three segments: Upstream, Downstream and Chemicals. In April 2008, Galp Energia SGPS S.A. has acquired Exxon Mobil Corporation’s businesses in Spain and Portugal. 

First some of the problems.

It would seem that management are capitalising a portion of receivables onto the Balance Sheet. I would suspect that these are potential writedowns at some point in the future. Assume the worst and adjust for them as writedowns at $0.29/share

Management are also capitalising Operating expenses. This of course directly enhances the bottom line, and inflates Net Income. This is particularly obvious in the forthcoming 2008 financials, where I have adjusted for potential results [obviously they may be slightly better or worse] thus I have adjusted by $0.16/share

Total adjustments = $0.45/share

Positive adjustments.

Management have discretionary cashflows through squeezing suppliers of some $0.21/share that has offset the deductions.

Adjusted per share adjustments = $0.21 – $0.45 = [-$0.44/share]
Adjusted Net Income = $9.80 – $0.44 = $9.36/share

The margins, notwithstanding the adjustments are outstanding. With a six year aggregate of 16.5% on a primarily common stock capitalization, this represents an outstanding return.

The common stock capitalization at 90%+ shows very low leverage. This in the current climate in part accounts for the relative out performance of XOM to it’s peers.

Pension liabilities = $34.5 Bil
Pension Assets = $27.8 Bil

While underfunded, this is not at a point of danger with XOM’s earning power taken into consideration.

Reserves are at 21.5 Bil bbs [oil/gas] which represents circa 22.6 yrs based on the current 2.6 Mil daily production. Thus, there is a substantial timeframe of safety currently.

Reserves are being replaced at a 1.74% compounded rate. They are thus growing at 0.74% compounded. This represents value for common share holders.

Common shares are [and have been] the subject of repurchase. To date the ownership base has been reducing at a 2.8% compounded basis. Thus, holders are benefitting from this management policy.

That XOM is a resource company, oil & gas, thus the investor must account for the depletion of the assets, including plant. The amounts charged off by the company are quite likely to be irrelevant for the individual investor, thus, he should make his own.

If we place the reserves at a optimistic 20 yrs and a conservative 11 yrs, we can then amortize the value in the ground and ascertain whether we are buying value.

…………………………………………………6 yrs………………..Current
Paid for entire company……………….$363822……………$423958
Less Cash Assets……………………….$26051……………..$38434
Paid for company………………………$337771……………$385524

Earnings before amortization………..$60320………………$91406
Earnings required on cash @ 5%……$1302……………….$1921
Balance earned on drilling……………$59017……………..$89484
% earned before amortization……….17.4%………………..23%

Investors amortization
11 yrs [maximum]……………………$5311……………….$8053
20yrs [minimum]…………………….$3016………………..$4474

Earned after amortization
Minimum earnings…………………..$53705………………$81431
Maximum earnings………………….$57304………………$85010

% earned on investment
Minimum……………………………..15.9%…………………21%
Maximum…………………………….17.4%…………………22%

Valuation = $136.52/share
This is a conservative valuation, and thus trading at circa $77.00/share represents a 76% discount from fair value.

In summary, barring some management manipulation, Exxon represents a conservatively capitalised, highly profitable and massively undervalued investment common stock.

jog on
duc


----------



## tech/a

I have no interest in expert opinion other than amusement value.

I have seen enough expert opinion proven so far out of whack that I just ignore it.

Ive *never *seen "experts" headlining 
Buy as much property as you can now!
Sell all your equities in Super now and beat the crash.
Buy GOLD
Sell OIL

*Endless argument*
Just look at the housing threads on this site!!
*Argument is safer!*


All I'm interested in is my own micro field of Business/Investment with a macro outlook.*TIME* will ensure I get it *RIGHT*.

The best I can do is place a train on the tracks (Investment Portfolio),own as much of it as I can (Equity),Keep adding carriages to the train (Portfolio).

It will at times move backwards.(Draw down)
Sometimes do Nothing.(Time)
Often move slowly forward.(Growth)
Perhaps 4-5 times in a lifetime belt ahead full steam never to return to the same position on the track.(Exceptional Wealth Accumulation.)

Now If I dont have a train!???


----------



## ducati916

*tech/a*

As you seem happy in your real estate box, I'm quite prepared to leave the subject.

For those who joined the thread potentially interested in looking at means to generate wealth, then perhaps it's time to move forward.

The one big advantage of real estate, is the non-mark-to-market ability to gain leverage. This leverage is normally provided with a major limiting factor however. The leverage is granted against a combination of income and collateral, both, in the early days may well limit the amount of leverage that you can initially access.

There is an interesting source however of financial market based leverage, that essentially is unlimited, and has no mark-to-market component when correctly structured.

The Hedge Fund, or rather Limited Partner Investment Trust. Here, you, leverage your skill base to provide returns to outside money for a 2/20 structure + lockdown period.

So you gain a 2% management fee + 20% of the profits for managing money in the financial markets. Of course you need an audited track record, that demonstrates the validity of your claims to return XYZ.

Money available for such ventures can start around $10M - $100M. Thus assuming the upper-end, as it's just so much more exciting, you stand to earn $2M as a management fee + 20% of let's say a 30% return is another $6M for a total of $8M in your first year.

That sort of leverage, no pesky interest payments to the bank, just pure gravy, are the sort of _big idea's _that will make you wealthy. There are of course a few others...

jog on
duc


----------



## matty2.0

ducati916 said:


> *tech/a*
> 
> 
> So you gain a 2% management fee + 20% of the profits for managing money in the financial markets.
> duc




lol ... who the heck is gonna pay you 2/20 + lockdown ... industry averages are like 0.5-1.0% + free flight ... 99% of funds don't ever go over 1%. You've been reading to many newbie investment books. hahah ... You're dreaming ... living in a fantasy world. Those days are gone.  :nuts:


----------



## tech/a

> As you seem happy in your real estate box, I'm quite prepared to leave the subject.




There was some doubt?



> Money available for such ventures can start around $10M - $100M. Thus assuming the upper-end, as it's just so much more exciting, you stand to earn $2M as a management fee + 20% of let's say a 30% return is another $6M for a total of $8M in your first year.




30% on 10-100 mill.
20% management fee.
Proven track record of the 30% return.

Vast difference between dreaming and doing Ducster.


----------



## matty2.0

tech/a said:


> There was some doubt?
> 
> 30% on 10-100 mill.
> Vast difference between dreaming and doing Ducster.




lol ... :nuts::nuts:


----------



## moreld

tech/a. I think we all totally agree you need a train. I like your analogy.

duc, nice writeup on XOM. Have you looked at COP? Oil is not my in my wheelhouse, but I'm slowly trying to get up to speed. I mention COP as Buffett took a stake at considerably higher prices.
A quick comparison http://finance.yahoo.com/q/co?s=COP shows it has half the revenues and almost half the EBITDA of XOM yet sells for 28% of the price based on EV. That makes me want to dig deeper into COP.

Sorry all, I know this should be on a different thread, but still finding my way around ASF.


----------



## ducati916

tech/a said:


> There was some doubt?
> 
> 
> 
> 30% on 10-100 mill.
> 20% management fee.
> Proven track record of the 30% return.
> 
> Vast difference between dreaming and doing Ducster.




*tech/a*

Come now, the title of this thread placed emphasis on *exceptional and thinking* Property is hardly exceptional.

Leverage via a HF is to the proprietor, risk free. It also substantially exceeds the leverage available to property based on the previous caveats. That is an important point when you enter into the consideration of risk. Leverage into real estate most certainly is not risk free.

Due to the rather poor showing of many [majority] of HF's during the past market volatility, some feel that the 2/20 model is no longer realistic. I would disagree, 2/20 is quite easily obtainable to the right person/strategy.

With regard to your numbers:



> 30% on 10-100 mill.
> 20% management fee.
> Proven track record of the 30% return.
> 
> Vast difference between dreaming and doing Ducster.




I'm not sure I follow you here.

With regard to doing and dreaming, certainly I agree. Certainly without the ability to generate whatever returns necessary to gain you the capital, you'll have problems.

Here though, actually what is far more important to institutional investors, is not the absolute returns generated, rather the drawdown. The more volatile your fund, the smaller in dollar terms will be the interest in investing. With a small drawdown, and reasonable return, 8%, you'll easily draw your $10M start.

Where you can start.

Couple of possibilities: Prop Shop, where you have access to lot's of mark-to-market leverage, but also lot's of rules etc. But if you are consistent, they will relax them after a time. Or, an institutional trading desk. Probably not so easy currently.

The third and final way is keep an audited record with a third party of real trades. Ensure that the trades are scaleable, in that placing an order for 100 shares in XYZ may not be practiable if you need 1,000,000 shares of XYZ. You'll need at least three years, and then you do the rounds.

jog on
duc


----------



## ducati916

moreld said:


> tech/a. I think we all totally agree you need a train. I like your analogy.
> 
> duc, nice writeup on XOM. Have you looked at COP? Oil is not my in my wheelhouse, but I'm slowly trying to get up to speed. I mention COP as Buffett took a stake at considerably higher prices.
> A quick comparison http://finance.yahoo.com/q/co?s=COP shows it has half the revenues and almost half the EBITDA of XOM yet sells for 28% of the price based on EV. That makes me want to dig deeper into COP.
> 
> Sorry all, I know this should be on a different thread, but still finding my way around ASF.




*moreld*

I've looked at COP in the past. Here's the analysis.

The problem area is the Balance Sheet. The excess of Current Liabilities over Current Assets for a Current Ratio of 0.96 and a 5yr average of 0.92 is a concern in the current [and any future] credit environment. In essence you would require no exogenous events have the ability to cripple the business.

The second area that gives pause for concern is that [excepting current results which are understated] the Income Statement has been overstated. The discrepancy arises within the discretionary cashflows associated with CapEx. Some $362 Million are available at managements discretion to allocate to “pump” the earnings. This accounts for $0.23/share and the $0.04/share in earnings discrepancy over five years.

Actually compared to some of the outright “theft” that occurs on other financial statements, the accounts are some of the cleanest that I’ve ever seen.

Depreciation has matched Revenues and indicates that reserve figures should be as accurate as reserve figures can be, never an exact science in oilfields. Re-investment and maintanence has exceeded depreciation charges, with replacement of reserves.

Returns to capital have been extraordinary. Profit margins averaging 12.5%, including the weak pricing of the last recession. Returns to have obviously jumped with the price spike enjoyed this year, but nonetheless, over time have been remarkably consistent. Dividends have compounded at a 24% rate.

The price spike also preserved reserves. There has been a significant drop in the amount of reserves accessed this year [during the huge run-up] and for a longer term outlook, this is a positive.

The calculated intrinsic value I have at $197-$265/share, which is far below the current market.

In summary, it is only the weakness in the Balance Sheet and Current Ratio that puts me off. The management would seem to have performed an excellent stewardship. Thus I shall complete an analysis of both CVX & XOM and finally a comparative analysis of all three. It may be that buying a partial position in all three might be an idea.


jog on
duc


----------



## Mr J

matty2.0 said:


> lol ... who the heck is gonna pay you 2/20 + lockdown ... industry averages are like 0.5-1.0% + free flight ... 99% of funds don't ever go over 1%. You've been reading to many newbie investment books. hahah ... You're dreaming ... living in a fantasy world. Those days are gone.  :nuts:




You can charge whatever you want providing the performance is good enough.


----------



## tech/a

> Property is hardly exceptional.




Could be said of all initial investments.

How you structure investments will see either so-so return (the majority who invested in no or 1 IP) or spectacular those who have multiple holdings with low exposure and still building their portfolio.

1 short SPI contract is pretty un impressive unles you had it at 6700 and bought a couple more on the way down and sold out at 3300.

Or
50,000 FLX 
It becomes exceptional if you had them at 26c and sold out at $20.

That of course is another/next topic.


----------



## Temjin

tech/a said:


> *2%* on 10-100 mill.
> *20% incentive*fee.
> Proven track record of the 30% return.
> 
> Vast difference between dreaming and doing Ducster.




Just a bit of corrections. 

But yes, I have been following CTAs from various brokers over the past 2 years and I can assure you that getting even to the first $10 million under management (especially for the newer funds with little track record) is NOT AN EASY TASK at all. 

The one that I considered the best so far has only managed $15-$18 million over the past 3 years with a very respectable return / drawdown. (though he specially change the subscription rule from $250k min to $500k min due to soaring demands, perhaps that's limiting his fund under management growth)

Anyway, I also agree that drawdown is the biggest appeal to insitutional investors, which are where most of the money comes from when managing hedge funds. 



			
				matty 2.0 said:
			
		

> lol ... who the heck is gonna pay you 2/20 + lockdown ... industry averages are like 0.5-1.0% + free flight ... 99% of funds don't ever go over 1%. You've been reading to many newbie investment books. hahah ... You're dreaming ... living in a fantasy world. Those days are gone




That shows that you know very little about the hedge funds industry, especially managed futures. Newbie investment books don't mention a single word about these niche products because they are totally out of bound for them. 

Note 2/20 is only a rule of thumb. CTAs may charge a different rate depending on the structure of the fund and potential return/risk, or length of track record. You may see 3/30 on even some of them, ridicious, yes, but you will be surprised how many people do invest in those funds for the potential reward. 

These are EXCEPTIONAL investment vehicles for the REAL rich, not your typical "industry average" managed funds for poor mums and dads.


----------



## matty2.0

tech/a said:


> Originally Posted by tech/a  View Post
> 
> 2% on 10-100 mill.
> 20% incentivefee.
> Proven track record of the 30% return.
> 
> Vast difference between dreaming and doing Ducster.






Temjin said:


> Just a bit of corrections.
> 
> 
> That shows that you know very little about the hedge funds industry, especially managed futures. Newbie investment books don't mention a single word about these niche products because they are totally out of bound for them.
> 
> Note 2/20 is only a rule of thumb. CTAs may charge a different rate depending on the structure of the fund and potential return/risk, or length of track record. You may see 3/30 on even some of them, ridicious, yes, but you will be surprised how many people do invest in those funds for the potential reward.
> 
> These are EXCEPTIONAL investment vehicles for the REAL rich, not your typical "industry average" managed funds for poor mums and dads.




_"That shows that you know very little about the hedge funds industry"_

lmao ... you don't realize how funny that sounds to me ... honestly. You crack me up buddy, big time. I applaud your macho-ness however. 

Mate everyone wants to be the next cohen, paulson, soros, druckenmiller, simons, griffin et al, I hear it over and over and over again ... heck! i don't even think they charge that much *after they have large AUM ... fees get reduced once large fum is realized.*

But nearly all wanna-be's really end up like this:



You should honestly not delude yourself. 
But since you're a dreamer, I'll let you dream on. 
Yes you my friend, my macho-man, can be a hero ... "just for one day ...." HIT IT! ---> http://www.youtube.com/watch?v=zQFuNHCMF2Y

But don't let me stop you from dreaming. This is after all ... the "exceptional wealth idea" thread, whatever that means. You are EXCEPTIONAL you are the REAL rich, and you are "not your typical "industry average" poor mum and dad. Forgive me for sire ... for being a rude smart-ass. 
Don't let me burst your bubble. 
I say ... fight for your dreams dammit!! *_Matty pounds his fist on the table_* ... and don't let anybody else tell you otherwise!  *_Matty points a finger and hand to the sky and screams "Fight, fight ... fight"! Pumping his fists with emotion and enthusiam_

I dedicate this song to you my friend:
http://www.youtube.com/watch?v=BYojs78Tf9Y

Dream on.


----------



## ducati916

tech/a said:


> Could be said of all initial investments.
> 
> How you structure investments will see either so-so return (the majority who invested in no or 1 IP) or spectacular those who have multiple holdings with low exposure and still building their portfolio.
> 
> 1 short SPI contract is pretty un impressive unles you had it at 6700 and bought a couple more on the way down and sold out at 3300.
> 
> Or
> 50,000 FLX
> It becomes exceptional if you had them at 26c and sold out at $20.
> 
> That of course is another/next topic.




*tech/a*

Somewhere you mentioned *control* as being an important component. A HF offers you plenty of control. More control than property?

The control that I mentioned above, was control over the leverage, and in point of fact the entire business, leveraging your IP. 

I'm not really discussing how to generate returns. If you can't generate consistent returns in any market, then this strategy will not be of any use. It is for the exceptional thinker's who want exceptional results. 

jog on
duc


----------



## skyQuake

matty2.0 said:


> _"That shows that you know very little about the hedge funds industry"_
> 
> lmao ... you don't realize how funny that sounds to me ... honestly. You crack me up buddy, big time. I applaud your macho-ness however.
> 
> Mate everyone wants to be the next cohen, paulson, soros, druckenmiller, simons, griffin et al, I hear it over and over and over again ... heck! i don't even think they charge that much *after they have large AUM ... fees get reduced once large fum is realized.*
> 
> But nearly all wanna-be's really end up like this:
> 
> 
> 
> You should honestly not delude yourself.
> But since you're a dreamer, I'll let you dream on.
> Yes you my friend, my macho-man, can be a hero ... "just for one day ...." HIT IT! ---> http://www.youtube.com/watch?v=zQFuNHCMF2Y
> 
> But don't let me stop you from dreaming. This is after all ... the "exceptional wealth idea" thread, whatever that means. You are EXCEPTIONAL you are the REAL rich, and you are "not your typical "industry average" poor mum and dad. Forgive me for sire ... for being a rude smart-ass.
> Don't let me burst your bubble.
> I say ... fight for your dreams dammit!! *_Matty pounds his fist on the table_* ... and don't let anybody else tell you otherwise!  *_Matty points a finger and hand to the sky and screams "Fight, fight ... fight"! Pumping his fists with emotion and enthusiam_
> 
> I dedicate this song to you my friend:
> http://www.youtube.com/watch?v=BYojs78Tf9Y
> 
> Dream on.




If you're an analyst at a respectable IB you should have been warned about looking at averages. What your graph fails to show is the skew of returns. Secondly check your source carefully if those returns are pulled down due to collapsed entities in the data sample.
While I agree with you that the majority of funds are crap, there are a fair few that do consistently outperform. 
Also plenty of private funds out there open to sophisticated investors only.


----------



## motorway

ducati916 said:


> *motorway*
> 
> So your _probabilities_ exceed the 50/50 probability, or stated another way, _random outcome?_
> 
> Herein lies one problem with technicals. Their existence without a fundamental context, pretty much always boil down to random, as that is the only way you can get paid.
> 
> Value in gold is _subjective_ which I am using in a fundamental analysis context. Thus, at these levels of $900oz, fundamentals are not providing much if any insight. The same could be argued at any price level.
> 
> However, if we add to our subjective analysis, an additional _objective metric_ then, at certain levels, lower levels, we can start to offer some probabilities that exceed random. These would be based on the proposition that government will continue to expropriate property, and partake in general theft via inflation.
> 
> The problem then is simple. We have seen the last credit expansion collapse. It collapsed so badly, that government has embarked on immediately attempting to expand credit again.
> 
> There is no way that I am aware of in which we can subjectively, objectively measure an accurate price for gold currently. Further, it is near impossible to state that gold is either fairly valued, or, conversely overvalued.
> 
> We are left with T/A which is random.
> 
> Thus, in the context of this thread, which is the recognition [early] of new trends and the capitalization thereof to create wealth, is gold, for the newer trader, an appropriate vehicle?
> 
> jog on
> duc




You need to define

random & TA

And then tell me if that the sequence  of Boxes in that energy chart
is a random series by your definitions

Is there a memory process at work ?
Or a simply a drunkard with no mind  stumbling around a lamp post.

Your answer will then ... define risk and reward , and value
and what a stop loss is and what for..

If there is a memory process
Then it matters how it unfolds
and entering at the right time becomes important
and the right location ( SAME THING )

Close to Value


Markets are driven by cycles in money & debt
profitable niches are always being created identified and filled
But this is a process---> else bull and bear markets would start and finish EVERY DAY instead in multi year stages


motorway


----------



## ducati916

motorway said:


> You need to define
> 
> random & TA
> 
> And then tell me if that the sequence  of Boxes in that energy chart
> is a random series by your definitions
> 
> Is there a memory process at work ?
> Or a simply a drunkard with no mind  stumbling around a lamp post.
> 
> Your answer will then ... define risk and reward , and value
> and what a stop loss is and what for..
> 
> If there is a memory process
> Then it matters how it unfolds
> and entering at the right time becomes important
> and the right location ( SAME THING )
> 
> Close to Value
> 
> 
> Markets are driven by cycles in money & debt
> profitable niches are always being created identified and filled
> But this is a process---> else bull and bear markets would start and finish EVERY DAY instead in multi year stages
> 
> 
> motorway




*motorway*

Random is defined as an unknowable future, thus outcomes will be random. Or another way of stating the same thing: events are independent.

TA can be defined as charts, trendlines, oscillators, volume etc. They can be alternatively defined as dependent, or, trend forming.

Obviously the two definitions contradict one another. One may predominate over the other for greater or lesser periods. The problem is that you can never predict with consistency, nor great accuracy just when one will cease to predominate.

Value is subjective. That objective mathematical constructs try to measure and quantify value does not actually add a great deal to the picture for defining value.

Thus, value can join randomness, weighting the odds against TA, itself a value laden analysis.

jog on
duc


----------



## Temjin

matty2.0 said:


> _"That shows that you know very little about the hedge funds industry"_
> 
> lmao ... you don't realize how funny that sounds to me ... honestly. You crack me up buddy, big time. I applaud your macho-ness however.
> 
> Mate everyone wants to be the next cohen, paulson, soros, druckenmiller, simons, griffin et al, I hear it over and over and over again ... heck! i don't even think they charge that much *after they have large AUM ... fees get reduced once large fum is realized.*
> 
> But nearly all wanna-be's really end up like this:
> 
> 
> 
> You should honestly not delude yourself.
> But since you're a dreamer, I'll let you dream on.
> Yes you my friend, my macho-man, can be a hero ... "just for one day ...." HIT IT! ---> http://www.youtube.com/watch?v=zQFuNHCMF2Y
> 
> But don't let me stop you from dreaming. This is after all ... the "exceptional wealth idea" thread, whatever that means. You are EXCEPTIONAL you are the REAL rich, and you are "not your typical "industry average" poor mum and dad. Forgive me for sire ... for being a rude smart-ass.
> Don't let me burst your bubble.
> I say ... fight for your dreams dammit!! *_Matty pounds his fist on the table_* ... and don't let anybody else tell you otherwise! *_Matty points a finger and hand to the sky and screams "Fight, fight ... fight"! Pumping his fists with emotion and enthusiam_
> 
> I dedicate this song to you my friend:
> http://www.youtube.com/watch?v=BYojs78Tf9Y
> 
> Dream on.




Fine, the only thing I've made a mistake in my last post is that I should not have criticised anyone for anything. So in a way, I kidna of expect that kind of reaction from you. So I will apologise on that one first. 

Now let's get back to some civilised discussion. 

The table you have provided simply list the benchmark performance of each specific macro strategy/index which is only based on a "SELECTED" number of funds that CREDIT SUISSE has chosen. There are plenty more benchmarks out there that would try to illustrate the same point but there is a lack of standard out there for such benchmark. 

Similarly to the equity index, it is only an average of a number of selected funds out there and to BELIEVE that "managed future" would only ever provide such return would amount to saying that the only return you get from investing in the share market is the INDEX market. And ignoring the potential reward from investing individual companies (especially small caps) or a selected portfolio of it. 

In reality, it's practically infeasible to produce a similar return of those individual hedge fund index because most funds would require a hefty minimum account balane (in order of millions) to open one. Not to mention that most may already been closed to new investors and that the index would ignore smaller funds that have larger drawdowns but much larger returns. (and give much much better return/risk ratio) 

Like skyQuake said, the results would be "averaged" and "skewed". And I agree again that the majority of the funds are CRAP. This goes the same as most investments are CRAP, you just need to pick the right one. 

I would not so simply reject "hedge funds" as an investment vehicle to create exceptional wealth. This goes the same for rejecting any other ones like properties, etc. 

I would never reject one by only just looking at it from the surface. There are plenty more gems "hidden" where most people would easily overlook.


And the part of dreaming.

One of the trait of a successful wealth creator / entrepreneur is to DREAM BIG and then be committed and motivated to achieve that goal. 

There is nothing WRONG about dreaming on stuff that appeals unrealistic to most people. It is only a joke if one just dream about it but take no actions toward it.


----------



## Temjin

ducati916 said:


> . If you can't generate consistent returns in any market, then this strategy will not be of any use. It is for the exceptional thinker's who want exceptional results.
> 
> jog on
> duc




I agree on the point that generating consistent return instead of hoping to gain big through one BIG bet, is one way of making exceptional wealth. 

Of course, I'm sure there would be people who would disagree because they have done so through such BIG bets and attribute it mostly to their skill and timing. There are certainly MANY legitimate examples that people have done it this way and with limited risk. 

On the other way, there are just as many examples that people have done it through compounding with consistent returns.


----------



## Ageo

Duc so are you saying a hedge fund is the only vehicle to exceptional wealth? what might seem risky to you is opportunistic to others? i know many very wealthy real estate developers and too them shares are evil (and vica versa). There is no better path, because in the end all that is left is wealthy and non wealthy (in terms of financial).

Tech/a:

I know many developers build say 10 commercial factories, sell 9 at a discount (so they sell fast) and have 1 payed off (adding carriages to your train eh?) Is this something you do?

As the reason development has interested me is because of the discounted rate you can acquire assets at. You see if you can apply that logic, then imagine doing a project 10x the size and having 10 factories paid for (and rented) and so on......... The developer who my dad works for does this with residential property and he is not short of a quid let me tell you.


But again i dont see the point in limiting the types of asset classes you use to acquire wealth (and hopefully exceptional weath) but risk minimization to acquire each asset is of great importance.


----------



## tech/a

Ageo.

Similar.
Started in 96 buying established housing and positive gearing was a given.
Kept buying as properyies were re valued.
Stopped in 2002 and sold some in 2003-2008.
Freeholded some and decreased lines of credit in others.
Now 38% geared.

New developements (Ive done 2 in that time) one 2 and another 3 have me retaining 1 of the 5 freehold.
The next will have 1:3 retained.
The whole idea is to increase holdings not liability.

Similar can be done with shares.
With the added benifit of moving a $350k buy or sell in a click of a mouse!
Next topic.


----------



## nunthewiser

dunno about you guys but from a personal experience have found subdividing one of the most profitable means of gaining wealth /assets out there 

eg 1 bogan buys 14 acres riverfront block with old livable farmhouse in southern tasmania for 170k FLAT LAND no retaining

spends 70k on surveyors fees , council fees , public space donations , sewerage connections , water connections , driveways, fencing and a host of misellaneous fees that pop up 

splits land into 5 titles 

sells 3 for 90 k each  ( what a bargain ! 2 acres of prime riverfront for 90k !!!)

keeps ole farmhouse with 3 acres as a rental returning $190/week

keeps 5 acres as a hideaway for stashing his uzi,s and gold  and for a rainy day

agists same 5 acres for $ 100 / month as bountiful feed and fresh running water on block

now i bet you all gunna say " yeah bud bet ya bought years ago " 

this happened in 2008 proprty purchased 2007 


open ya eyes its out there


----------



## brty

I've just spent a few hours going back over this thread from the beginning. There are lots of things to agree and disagree with, however I think we should look at the beginning, "exceptional" compared to average (or below).

What does the "average" investor do that makes them "unexceptional". The average ones I know may buy some shares, may buy an investment property, they seek advice from a financial planner, invest in funds, invest in super. 

They tend to have diversification to reduce risk, do what is advised, jump on the latest bandwagon in a small controlled way.

Exceptional, does/do things differently. 

Concentrated investment, highly specialised in one area. Be it IT (Gates et al), specializing in a future growth area, that paid off.
Soros, taking outsized risk when warranted. 
Lowry, ponying up a growth investment in one speciality.

To me, exceptional comes from doing things differently to normal investment. Taking risk in an area where few have trodden. Obviously there are many who take risks in areas that never reach fruition, so we do have the survivorship bias that TH talks about.
The trick is to take enough risk, but not too much to stay liquid enough if something does not work. This is where speciality comes into the picture. The more knowledge of an investment, be it property, business or start up share, then the less the risk. If you only know what everyone else does (ie announcements of companies via exchange) then you are not specialised, not going to be exceptional. 

Hence why knowledge, as in what TechA knows about property in his 50 sq km, is going to be far superior to Duc's knowledge of XOM, and probably produce far superior results for lower risk.

brty


----------



## ducati916

Ageo said:


> Duc so are you saying a hedge fund is the only vehicle to exceptional wealth? what might seem risky to you is opportunistic to others? i know many very wealthy real estate developers and too them shares are evil (and vica versa). There is no better path, because in the end all that is left is wealthy and non wealthy (in terms of financial).




*Ageo*

No, of course not.

What I'm saying is that predominantly the advantage being offered to people through real estate [via bank lending] is one of high leverage. If high leverage is the key, and in addition you require control, and you have skills that are not available to Mr Average, then a vehicle [or train if you will] is an HF.

jog on
duc


----------



## ducati916

brty said:


> I've just spent a few hours going back over this thread from the beginning. There are lots of things to agree and disagree with, however I think we should look at the beginning, "exceptional" compared to average (or below).
> 
> What does the "average" investor do that makes them "unexceptional". The average ones I know may buy some shares, may buy an investment property, they seek advice from a financial planner, invest in funds, invest in super.
> 
> They tend to have diversification to reduce risk, do what is advised, jump on the latest bandwagon in a small controlled way.
> 
> Exceptional, does/do things differently.
> 
> Concentrated investment, highly specialised in one area. Be it IT (Gates et al), specializing in a future growth area, that paid off.
> Soros, taking outsized risk when warranted.
> Lowry, ponying up a growth investment in one speciality.
> 
> To me, exceptional comes from doing things differently to normal investment. Taking risk in an area where few have trodden. Obviously there are many who take risks in areas that never reach fruition, so we do have the survivorship bias that TH talks about.
> 
> The trick is to take enough risk, but not too much to stay liquid enough if something does not work. This is where speciality comes into the picture. The more knowledge of an investment, be it property, business or start up share, then the less the risk. If you only know what everyone else does (ie announcements of companies via exchange) then you are not specialised, not going to be exceptional.
> 
> Hence why knowledge, as in what TechA knows about property in his 50 sq km, is going to be far superior to Duc's knowledge of XOM, and probably produce far superior results for lower risk.
> 
> brty




*brty*

It would seem after all your reading, you have unfortunately reached the wrong conclusions. In summary, you seem to be asserting that *knowledge* is the vital differentiating component within success.

The concatenation of the market is an outcome of the activities of entrepreneurs, promoters, speculators, and of dealers in futures and arbitrage. In an economic system in which every actor is in a position to recognize correctly the market situation with the same degree of insight, the adjustment of prices to every change in the data would be achieved at one stroke.

In reality, prices do not behave in such a manner. Thus a priori we can state that perfect knowledge does not exist. If that is so, then knowledge will not be the differentiating factor in the success of a strategy that seeks to profit where market prices are a factor.

By eliminating knowledge as the differentiating factor [knowledge in the market formation of prices allowing profit] we need to actually identify the factors that are responsible.

We have identified one, viz. leverage. There are others, which I think we are slowly progressing towards.

jog on
duc


----------



## ducati916

Temjin said:


> I agree on the point that generating consistent return instead of hoping to gain big through one BIG bet, is one way of making exceptional wealth.
> 
> Of course, I'm sure there would be people who would disagree because they have done so through such BIG bets and attribute it mostly to their skill and timing. There are certainly MANY legitimate examples that people have done it this way and with limited risk.
> 
> On the other way, there are just as many examples that people have done it through compounding with consistent returns.




*Temjin*

Of course there are the big winners, the outliers. By definition they are rare. The point regarding HF is that you open your own HF to take advantage of the free leverage on offer.

We have [more or less] established that leverage is an important requirement, thus why not use the best form of leverage available which is far superior to real estate leverage, if, you have the necessary skills.

With regard to compounding, it works the same magic here as well.

There is a further component that is statistically speaking, a huge component of this methodology and thread. I'm just waiting to see if anyone actually identifies it and a methodology by which to harness this component.

jog on
duc


----------



## Trembling Hand

Ha same old same old game. It doesn't take long before the experts who* up-chuck *their condescending drivel start to contradict themselves just so they can out point each poster.



ducati916 said:


> It would seem after all your reading, you have unfortunately reached the wrong conclusions. In summary, you seem to be asserting that *knowledge* is the vital differentiating component within success.
> 
> In reality, prices do not behave in such a manner. Thus a priori we can state that perfect knowledge does not exist. If that is so, then *knowledge will not be the differentiating factor* in the success of a strategy that seeks to profit where market prices are a factor.
> .






ducati916 said:


> We have [more or less] established that leverage is an important requirement, thus why not use the best form of leverage available which is far superior to real estate leverage, if, *you have the necessary skills.*


----------



## Ageo

Trembling Hand said:


> Ha same old same old game. It doesn't take long before the experts who* up-chuck *their condescending drivel start to contradict themselves just so they can out point each poster.




Different type of knowledge TH :


----------



## tech/a

Ageo said:


> Different type of knowledge TH :




Necessary knowledge.
UN Necessary knowledge


----------



## brty

Duc,

You are very good at taking something and twisting it out of context. Here is what I stated...



> The more knowledge of an investment, be it property, business or start up share, then the less the risk.




Please note it had nothing to do with perfect knowledge, it is in the context of risk reduction and an understanding of the probabilities of a likely outcome for whatever type of investment undertaken.

Knowledge (necessary knowledge as TechA states is what I'm referring to) plus leverage will be far more successful than just leverage alone.

With just leverage and no knowledge an investor could easily have poured money into GTP and TIM because they were both asset rich (according to published NTA) far in excess of sharemarket valuation. In fact many investors did pour large sums into these companies. Real knowledge helped save many others from doing likewise, perhaps better investors.

brty


----------



## Timmy

brty said:


> The more knowledge of an investment, be it property, business or start up share, then the less the risk.




Let me start by agreeing 100% with your statement.  All else being equal those with better knowledge of the market in which they are dealing will be better off.  This is a simple statement brty, but it is gold.

I have a huge rant I could go on but will bite my tongue, or whatever the keyboard equivalent is.

Plenty of gems on this thread thanks.


----------



## It's Snake Pliskin

brty said:


> Please note it had nothing to do with perfect knowledge, it is in the context of risk reduction and an understanding of the probabilities of a likely outcome for whatever type of investment undertaken.
> 
> Knowledge (necessary knowledge as TechA states is what I'm referring to) plus leverage will be far more successful than just leverage alone.
> 
> With just leverage and no knowledge an investor could easily have poured money into GTP and TIM because they were both asset rich (according to published NTA) far in excess of sharemarket valuation. In fact many investors did pour large sums into these companies. *Real knowledge helped save many others from doing likewise, perhaps better investors.*brty



Knowledge and _information_ helped these people. Which could be said "Due to my knowledge I was able to find some things out and be aware of the situation. I had _knowledge of_ the situation." (I had information to act on.) 
Just regarding risk,


> The more knowledge of an investment, be it property, business or start up share, then the less the risk.



_Chaotic risk_ can be mitigated to a small degree but it is in the hands of nature. Knowledge plays no part after the mitigation, and the information on it is hindsight. One's knowledge of it may be as far as being prepared for it without any knowledge of, or information on the arrival date.


----------



## ducati916

brty said:


> Duc,
> 
> You are very good at taking something and twisting it out of context. Here is what I stated...
> 
> 
> 
> Please note it had nothing to do with perfect knowledge, it is in the context of risk reduction and an *understanding of the probabilities of a likely outcome for whatever type of investment undertaken.*
> 
> Knowledge (necessary knowledge as TechA states is what I'm referring to) plus leverage will be far more successful than just leverage alone.
> 
> With just leverage and no knowledge an investor could easily have poured money into GTP and TIM because they were both asset rich (according to published NTA) far in excess of sharemarket valuation. In fact many investors did pour large sums into these companies. Real knowledge helped save many others from doing likewise, perhaps better investors.
> 
> brty




Understanding the probabilities. Surely that particular canard is dead and buried. You have just witnessed one of the larger collapses into ignominy of the Gaussian distribution underlying the majority of risk models.

Mandelbrotian distributions, while correct, are yet to yield useable findings. [That's not entirely true] So when you talk about probabilities, essentially they are theoretically worthless.

Knowledge according to tech/a seems to along the lines of don't think at all, just jump in with lots of leverage.

Your hindsight analysis is undoubtably correct. So what. If you made the analysis in real time, congratulations, I'm all ears for you next analytical piece. However this thread I'm assuming was not initiated for novices, rather those already in possession of some market experience. We are looking for some big opportunities, something to make big money on.

jog on
duc


----------



## tech/a

Duc

I feel the pain.

When people who are in the "must be right" camp come to the stark realisation that you dont have to actually be right---*just be ready*---it can be terribly frustrating.



> Knowledge according to tech/a seems to along the lines of don't think at all, just jump in with lots of leverage.




Duc.
Silly comment.


----------



## wayneL

tech/a said:


> Duc
> 
> I feel the pain.
> 
> When people who are in the "must be right" camp come to the stark realisation that you dont have to actually be right---*just be ready*---it can be terribly frustrating.




I sense a bit of survival bias in that statement. There are many many people who were ready, but wrong... and broke.

Never forget main point of that tedious bore Taleb - Don't be fooled by Randomness.


----------



## tech/a

Nothing wrong with being wrong.
I am often.
But placing yourself in a position of ruin--


----------



## wayneL

tech/a said:


> Nothing wrong with being wrong.
> I am often.
> But placing yourself in a position of ruin--




The thing is that information available is incomplete and/or skewed.

The general meme before last year was:

Property never goes down
Property doubles every 7 years
You can't lose with bricks and mortar
Demand outstrips supply so housing can't go down
The government will never let property crash.
etc etc

These myths are aggressively promoted by vested interests and promulgated by all and sundry at BBQs and dinner parties. It was a "no lose bet", backed up by social proof. Everybody was doing it, everybody was an expert, everybody thought they were making money.

Guys like me who cautioned that, based on valuation vectors, property was overpriced and should correct, were openly scoffed at and laughed at... social pariahs even. A freakin' heretic. 

In conclusion, these people had no idea they were placing themselves in a position of ruin. Their premise was based on the wrong assumptions and wrong information, "eruditely" instructed by industry experts and boom benefactors.

Good strategy (property), and they were "ready", but wrong on timing, price and gearing. Incomplete and/or incorrect knowledge kills.

How much do we see this in the general business community? The official figures are 95% failure - eventually.

"Ready", by itself just doesn't cut the mustard. You have to be at least partly right and have a hedge against the wrong... just to survive.


----------



## wayneL

OK here's an example I alluded to before.

A friend of mine who developed large chunks of Sunnybank Hills & Browns Plains in Brisbane taught me this.

Find a property that could possibly be redeveloped. He knocks on their door and asks if they will sell and gets them to name a price. 

He offers a higher price if they will sign a contract for sale, with the condition that the property is rezoned (with owners cooperation) and that the contract is tranferable, to settle at 12-24 months. He gives them a small cash (folding stuff) deposit of 1-3k.

What he has just created is a _de facto_ OTM call option. If the property goes ITM by getting the rezoning, he either develops himself or sells the contract on if he doesn't want further risk.

Cash risk is limited to 1-3k... genius. Much smarter than the simultaneous call option/put option used by most developers.

But the whole thing is predicated on specialist knowledge. It's not rocket science, it's quite easy really, but you need knowledge of how the whole rezoning deal works and a working knowledge of contract law. Without the knowledge, it ain't possible.

But the *hedge* against getting it wrong, not able to get rezoning etc, makes the risk small change.


----------



## kincella

oh dear, 
I have  a friend, he just loves property as an investment....who knows how much he is worth...about 10 years ago he was valued at about 10 million...
I know he has been developing and using his tried and proven method extensively since then....
but you will never read about him in the media....he will never be seen in the BMW top 200...he shuns the spotlight, and all the big boys toys, what ever...

when you first meet him, without knowing anything about him...you may mistake him for a nobody, or even a moron...he is so low key....
and he plays at being 'the simple person'.......he loves driving the old beat up old ute around.....whenever he goes to an auction....
he hates the merc's, but drives the latest Lexus 

if you are a friend or associate, that he has taken into his confidence....he will take you to only the best restaurants in Melb,...insist on only the best of everything for you.....
he loves taking 'the mickey' out of you....he loves playing games, he is deadly serious about his love of property, he will suss you out.....he admires smart people....
he has no real need for money.....he already has more than enough of it....he just likes doing what he does best...and he loves to outsmart...the so- called smarties....
he just cannot help himself...he is driven to what drives him...that is his knowledge of the property market, developing property..and his attitude to people.....
oh and he would never ever, say a bad word against you.....but you may be unlikely to ever hear from him again.....


----------



## wayneL

...and the point is?


----------



## tech/a

wayneL said:


> The thing is that information available is incomplete and/or skewed.
> 
> The general meme before last year was:
> 
> Property never goes down
> Property doubles every 7 years
> You can't lose with bricks and mortar
> Demand outstrips supply so housing can't go down
> The government will never let property crash.
> etc etc
> 
> These myths are aggressively promoted by vested interests and promulgated by all and sundry at BBQs and dinner parties. It was a "no lose bet", backed up by social proof. Everybody was doing it, everybody was an expert, everybody thought they were making money.
> 
> Guys like me who cautioned that, based on valuation vectors, property was overpriced and should correct, were openly scoffed at and laughed at... social pariahs even. A freakin' heretic.
> 
> In conclusion, these people had no idea they were placing themselves in a position of ruin. Their premise was based on the wrong assumptions and wrong information, "eruditely" instructed by industry experts and boom benefactors.
> 
> Good strategy (property), and they were "ready", but wrong on timing, price and gearing. Incomplete and/or incorrect knowledge kills.
> 
> How much do we see this in the general business community? The official figures are 95% failure - eventually.
> 
> "Ready", by itself just doesn't cut the mustard. You have to be at least partly right and have a hedge against the wrong... just to survive.




Frankly I'm not going to argue with you guys.
The evidence you present is overwhelming.
fortunately I live happily in my own little world which evidently doesnt obey those theories and predictions which have all been full filled.

But thats OK because your world does.
You continually make decisions which save you from the ruin those around you suffer.
OK for me too as in my world my decisions also save me from the ruin those around me suffer.

Win Win.


----------



## brty

Wayne,



> The general meme before last year was:
> 
> Property never goes down
> Property doubles every 7 years
> You can't lose with bricks and mortar
> Demand outstrips supply so housing can't go down
> The government will never let property crash.




The thing is, that these general things (quite a few I agree with ), are not the type of knowledge needed for "Exceptional Wealth Accumulation".

How about these memes...

Property does not go down for long in an inflationary environment.
Average property (with land ie separate title) tends to rise 1%+ above the rate of inflation in cities with growing population over the medium term (in Australia).
Demand outstripping supply tends to reduce risk of falls in property prices.  
Knowledge of specific areas and likely changes within these areas is more valuable than city wide 'median anything'.

Duc,

If you think markets/investment opportunities are random, your dreaming.
If you think markets/investment opportunities follow a normal distribution, your dreaming..  
Back to the ivory tower you go..

brty


----------



## Temjin

Again, we should avoid discussing the "merits" of each person's strategy. I thought we have already agreed (at least in general) that it is rather pointless to do so.

Tech/A has already given examples that HIS strategy had worked and that he has the confident that it will continue to work despite not having 100% knowledge of what the future might bring. This is the risk that everybody has to take. 

The end result is to just take action with what you got. If you ever wait to be "100% sure" first, then you will only be frozen by fear and the end result would be inaction. 

I will continue to pursue my own strategy knowing that the assumptions I have made will never be 100% correct. The future is impossible to predict. 

If my assumptions were incorrect, the best I can do is to adapt to the new reality. Of course, I also need to be fully aware of the risk of ruin in that the assumptions I previously made and the strategy I've taken wouldn't put myself to total financial ruin. That's like taking on low risk ideas.

And going back to this thread of "wealth creation ideas", I guess the merit of it would be that one could be exposed to ideas that they previously would regard as too risky, too impractical or just don't fit their perspective of "reality". The aim is to be open minded and at the very least, be ready to agree to disagree. 

I've already said that investing in managed futures is one potential way to make exceptional wealth. Especially if you could pick the right winners. Anyone can disagree with me, but the fact remains that people HAVE become rich before this way and that itself is enough for anyone to really look into it more to see if it will work for you.

I will avoid properties not because I don't think it cannot be a vehicle for wealth generation, but rather it does not fit my own beliefs and personality, and that my current perspective of reality is focused on elsewhere. I'd rather focus on my own strength than venturing into something I'm unfamiliar with.


----------



## moreld

sensible words Temjin
Hopefully people can continue putting ideas out.

One of the saying that changed my direction over the last few years came from the CEO of a company I invest in. He said "_*Wealth is acquired by concentration and kept by diversification*_". 

While that may not sound too earth shattering I believe it to be a powerful statement and one completely at odds to 95% of the investment communities' vested interest. Manged funds, index funds, investing newsletters et al, all push the diversification message as it is in their best interest. While I agree the majority of people would be best diversifying, that is simply because they are too lazy or distracted or not focused on financial wealth.

So the second general rule I'd like to put forward is concentration. Did we all agree Time was the first rule?

Concentrate on your circle of competence. 
Concentrate your your cash into your best investment opportunities. Whether that be property, stocks, derivatives or further education.

1. Time
2. Concentration.

I'm sure I've missed other rules put forward. Can we collect them up as we go?

oh yeah

3. Leverage (that's another one most people love to hate)

do I hear four?


----------



## moreld

kincella said:


> oh dear,
> I have  a friend, he just loves property as an investment....




kincella, how about an introduction. I live in Melbourne. I like to think I'm both smart and clever, at the least I'm certainly not a LOBBARD. I want to get knowledgeable in property on the chance that property becomes a cheap asset again.

and I absolutely love good food.

Is that being too forward? I skipped forum etiquette class.


----------



## wayneL

No comments on my post #245? 

Here's another "maxim" I've heard repeated often:

"Sell to the classes, eat with the masses - Sell to the masses, eat with the classes."

OK we can all immediately think of examples where the opposite is true. But as a general principle... discuss?


----------



## ducati916

tech/a said:


> Duc
> 
> I feel the pain.
> 
> When people who are in the "must be right" camp come to the stark realisation that you dont have to actually be right---*just be ready*---it can be terribly frustrating.
> Duc.
> Silly comment.




*tech/a*

It would seem that you still remain blissfully unaware of my argument. 

We have so far from you:
*Claimed risk free trades in stocks that were no such thing
*macro/micro analysis for property, that is non-existent
*Superficial advice on numerous topics - "just jump in with lots of leverage

There probably are a few other lurking out there.

The point that is being made by a few on this thread is of the non-linear outcomes, thus by definition, risks and rewards on offer.

First off, you don't seem to understand non-liear outcomes. If that is so, there is zero chance for you to manage this. If you do understand it, then management is possible, although possibly a little counter-intuitive.

jog on
duc


----------



## ducati916

tech/a said:


> Frankly I'm not going to argue with you guys.
> The evidence you present is overwhelming.
> fortunately I live happily in my own little world which evidently doesnt obey those theories and predictions which have all been full filled.
> 
> But thats OK because your world does.
> You continually make decisions which save you from the ruin those around you suffer.
> OK for me too as in my world my decisions also save me from the ruin those around me suffer.
> 
> Win Win.




*tech/a*

Herein lies your difficulty. You start a thread that promises XYZ. It would seem that you have based your thread on your little patch of the world. 

You have extrapolated your little patch as a generic. Unfortunately, your little patch might just be an outlier, which means that you will encounter resistance from those outside your little patch.

As you have no economic understanding, in a theoretical sense, either micro or macro, you cannot build a case, except in the most superficial throwawy terms, as to why the information you are trying to promulgate actually has any value or merit.

As statistics also seems a closed book to you, we enter a further fruitless round of discussion as the inevitable hackneyed idea of probabilities is mooted. Using an isolated example, viz. yourself, has absolutely zero causative or correlatory significance at all. Yet, you persist in putting forward your little homilies as if they did.

To put forward this thread as an example of _how to do it_ is disingeneous if we are all required to relocate to Adelaide to join the fun, don't you think?

jog on
duc


----------



## It's Snake Pliskin

wayneL said:


> OK here's an example I alluded to before.
> 
> A friend of mine who developed large chunks of Sunnybank Hills & Browns Plains in Brisbane taught me this.
> 
> Find a property that could possibly be redeveloped. He knocks on their door and asks if they will sell and gets them to name a price.
> 
> He offers a higher price if they will sign a contract for sale, with the condition that the property is rezoned (with owners cooperation) and that the contract is tranferable, to settle at 12-24 months. He gives them a small cash (folding stuff) deposit of 1-3k.
> 
> What he has just created is a _de facto_ OTM call option. If the property goes ITM by getting the rezoning, he either develops himself or sells the contract on if he doesn't want further risk.
> 
> Cash risk is limited to 1-3k... genius. Much smarter than the simultaneous call option/put option used by most developers.
> 
> But the whole thing is predicated on specialist knowledge. It's not rocket science, it's quite easy really, but you need knowledge of how the whole rezoning deal works and a working knowledge of contract law. Without the knowledge, it ain't possible.
> 
> But the *hedge* against getting it wrong, not able to get rezoning etc, makes the risk small change.



Interesting strategy there Wayne.


----------



## ducati916

brty said:


> Duc,
> 
> If you think markets/investment opportunities are random, your dreaming.
> If you think markets/investment opportunities follow a normal distribution, your dreaming..
> Back to the ivory tower you go..
> 
> brty




*brty*

Yes, I do believe that markets/investments are random. Essentially for the fact that the future is unknowable.

No, I don't believe they follow a normal distribution. Quite the opposite. Obviously you are confused.

jog on
duc


----------



## nunthewiser

tech/a said:


> fortunately I live happily in my own little world which evidently doesnt obey those theories and predictions which have all been full filled.
> 
> But thats OK because your world does.
> You continually make decisions which save you from the ruin those around you suffer.
> OK for me too as in my world my decisions also save me from the ruin those around me suffer.
> 
> Win Win.




i think one day we should meet 

i like your  style

yours sincerely


a nun


----------



## nunthewiser

ducati916 said:


> *brty*
> 
> Yes, I do believe that markets/investments are random. Essentially for the fact that the future is unknowable.
> 
> No, I don't believe they follow a normal distribution. Quite the opposite. Obviously you are confused.
> 
> jog on
> duc




you are wrong

the future as far as investment is concerned is as predictable and open as far as you let it be

now i dont profess to  be a swami into the greast unknown but my line of thought will open a lot more doors than any one eyed view you seem to have aquired


----------



## tech/a

*Duc/Wayne*

Your both absolutely correct.

(1) My own situation is my own perception and reality.
(2) My financial future lives and dies by (1).

My message isn't about following what I do but.
Get a train.
Put it on some tracks
Add carriages to the train
Own as much of it as you can.
Let Leverage/Compounding and Time do the rest.

Don't be paralyzed with fear.
Don't be paralyzed by Analysis.
Don't be paralyzed by in decision.

Be creative and start building as soon as you can.
My own example is simply my own example.

I'll touch on MY reality of Trading/Train building next.


----------



## doctorj

It seems there are a few consistent messages in this thread:
1/ Don't confuse the survivorship bias of others with a strategy or wisdom
2/ Building exceptional wealth is more often than not luck, keeping it and growing it steadily is skill


----------



## tech/a

doctorj said:


> It seems there are a few consistent messages in this thread:
> 1/ Don't confuse the survivorship bias of others with a strategy or wisdom
> 2/ Building exceptional wealth is more often than not luck, keeping it and growing it steadily is skill




Your perception---one which fits well with you.

There are others.
People will take from the thread that which they find useful in their own situation. Most will not benifit at all.


----------



## moreld

wayneL said:


> No comments on my post #245?
> "Sell to the classes, eat with the masses - Sell to the masses, eat with the classes."
> OK we can all immediately think of examples where the opposite is true. But as a general principle... discuss?




wayneL - I really liked your friends strategy, thanks for sharing. In general I think that type of creative thinking is what delivers exceptional wealth.

Isn't your above quote simply "buy low - sell high"? The idea being the masses are always late to the party and end up holding the bursting bubble or at best get a very low return. While the classes (smart money) bought early, so if you sold to them you where selling low.

Maybe the quote it is a prompt to be a contrary thinker. The masses are most often ultimately wrong so you need to be doing the opposite to them.


----------



## ducati916

nunthewiser said:


> *you are wrong*
> 
> the future as far as investment is concerned *is as predictable and open as far as you let it be*
> 
> now i dont profess to  be a swami into the greast unknown but my line of thought will open a lot more doors than any one eyed view you seem to have aquired




There always has to be one total muppet on each thread.

Obviously you have probably cottoned onto the fact that I hold your post in rather low esteem. This is simply due to the lack of any logical argument as to why you feel I am wrong, and any argument as to why you feel that _investment is as predictable etc_

I'm not holding my breath.

jog on
duc


----------



## nunthewiser

LOL 

"muppet"

good luck watching the world pass you by darl

have a niceday


----------



## Timmy

ducati916 said:


> There always has to be one total muppet on each thread.




Calling someone else a muppet could be construed as psychological projection on your part.  

I found nun's posts to this thread very practical and positive.  And, with respect Duc, a lot of your posts I found to make as much sense as the Swedish Chef does.  But maybe its just me, have to be room for another muppet on this thread, right?

Anyway, he's a bogan, not a muppet.


----------



## brty

Duc,



> Yes, I do believe that markets/investments are random.




I always believed that so called 'random events' were totally independent of each other, like rolls of an equally weighted dice, no memory involved.

In markets I believe that the actions of participants are visible to others, so that some/many participants actions are based on what happened before. In other words a memory.

I think there is a discrepancy right there between 'random events' and 'markets'.

By the way, I am yet to see any proof that anything is random, and think the concept is floored.

brty


----------



## ducati916

brty said:


> Duc,
> 
> 
> 
> I always believed that so called 'random events' were totally independent of each other, like rolls of an equally weighted dice, no memory involved.
> 
> In markets I believe that the actions of participants are visible to others, so that some/many participants actions are based on what happened before. In other words a memory.
> 
> I think there is a discrepancy right there between 'random events' and 'markets'.
> 
> By the way, I am yet to see any proof that anything is random, and think the concept is floored.
> 
> brty




*brty*

You are referring to a random walk in a price series. And you are quite correct, each price would require independence to provide a random series. Stock prices are not independent, so they do trend for periods.

However markets [as opposed to a price series] are random in that who can predict the next big winner or loser.

A new product may launch next week and turn out to be the next MSFT or whatever. Where will the next secular bull market be?

As yet, no-one can predict the future. The future unfolds and by definition is random. Some might argue that the future is influenced by human action, and is as predictable as human action. This is definitely something that I would consider reasonable, as there are theories that already work on this premise.

The other thread that is mulling economists currently, would be one example of this train of thought.

jog on
duc


----------



## ducati916

Timmy said:


> *Calling someone else a muppet could be construed as psychological projection on your part.*
> 
> I found nun's posts to this thread very practical and positive.  And, with respect Duc, a lot of your posts I found to make as much sense as the Swedish Chef does.  But maybe its just me, have to be room for another muppet on this thread, right?
> 
> Anyway, he's a bogan, not a muppet.




*Timmy*

Referring to the highlighted section, a psychological projection you say?

My initial reaction to your post is that you haven't the faintest idea what you are talking about. However, let's just assume for the moment that you do, in point of fact have a vague notion.

You are through your statement, in effect making a diagnosis of my psychological state. I assume that you are medically qualified to do so, you have access to my medical notes?

But by all means continue and prove me wrong, because yes, you too can join the muppets.

jog on
duc


----------



## motorway

ducati916 said:


> *brty*
> 
> 
> However markets [as opposed to a price series] are random in that who can predict the next big winner or loser.
> 
> A new product may launch next week and turn out to be the next MSFT or whatever. Where will the next secular bull market be?
> 
> jog on
> duc




---> and not even the developers of this know anything about it ?



> Problem of adverse selection ( Or information is really valuable )




Do any people have any useful information ?

If so do they act on it ?

The future unfolds but not from random nothings
But particular somethings...Maybe known at first by the very few..

But they still have to act on their knowledge


Only what _becomes_ scarce can become of exceptional value..

So be careful ( adverse selection ) of what is easy to obtain.



> When a trading opportunity is presented to a group of traders, Those who accept are on average less smart




So the next bull market most likely will occur
In what is becoming harder to obtain

As those more informed act ( Life cycle---> early adopters to laggards
S-Curve Dynamics )

And because this is process 
The Exceptional Ideas unfold over time

How long was MSFT a Growth Stock 
Did you have to Buy it on day one ?

For very good reasons 
It takes Time

motorway


----------



## ducati916

motorway said:


> ---> and not even the developers of this know anything about it ?
> 
> 
> 
> Do any people have any useful information ?
> 
> If so do they act on it ?
> 
> The future unfolds but not from random nothings
> But particular somethings...Maybe known at first by the very few..
> 
> But they still have to act on their knowledge
> 
> 
> Only what _becomes_ scarce can become of exceptional value..
> 
> So be careful ( adverse selection ) of what is easy to obtain.
> 
> 
> 
> So the next bull market most likely will occur
> In what is becoming harder to obtain
> 
> As those more informed act ( Life cycle---> early adopters to laggards
> S-Curve Dynamics )
> 
> And because this is process
> The Exceptional Ideas unfold over time
> 
> How long was MSFT a Growth Stock
> Did you have to Buy it on day one ?
> 
> For very good reasons
> It takes Time
> 
> motorway




*motorway*

Herein we encounter a pernicious version of survivorship bias, in that looking back in hindsight, we think we could have spotted MSFT in the early days of 1982 at $0.10/share or slightly higher, and stayed with it to the $100/share.

Difficult to do.

As to known by a discreet few. They don't *know* anymore than we know, they by being insiders are highly invested, and stand to profit commensurately if it turns out well, or lose a lot if it doesn't. This tends to generate the illusion that they knew more than we did, not at all, they just were joined with their company.

There is however a way of using past historical data, in real time, to *predict* future outcomes, however it is fraught with difficulty and of course comes without a 100% guarantee.

Bubbles.

Bubbles inflate for a multitude of reasons [to date] and collapse. Betting on the collapse via short positions [in the best outcome] can return up to 100%. This is not a strategy that I'd personally try, but, if you are dead set on trying to predict the future, this due to the signal, can get you in near the top.

jog on
duc


----------



## ducati916

*Only what becomes scarce can become of exceptional value..
*

Value.

A very slippery construct.

Value, and the method of determination, viz. a valuation, are subjective, and as such are not necessarily subject to increases or decreases, due to objective measurements.

Thus we could use the current state of affairs with the increase in Base Money supply as a case in point. Base Money has increased exponentially, yet perversely, it's value has also risen.

This is because the subjective factors driving actions of economic agents currently seek the fungability of money in preference to XYZ.

It is this phenomena that drives the debate surrounding inflation/deflation currently, and which [is likely] will predominate moving into the future. The answer of course is vital, as if you knew the answer unequivocably, you could make your fortune.

jog on
duc


----------



## Trembling Hand

ducati916 said:


> Herein we encounter a pernicious version of survivorship bias, in that looking back in hindsight, we think we could have spotted MSFT in the early days of 1982 at $0.10/share or slightly higher, and stayed with it to the $100/share.
> 
> Difficult to do.






ducati916 said:


> A new product may launch next week and turn out to be the next MSFT or whatever. Where will the next secular bull market be?




Ducie Ducie Ducie

So if the next MSFT is floated tomorrow do you need to be at ground zero to win? 

If the next bull market does start on Monday with a life changing technology do you really have to be a shareholder of the technological discoverer? Do you actually have to participate in the sector?

Nope, you just have to be in the game so as to catch a little of the flow on benefits. And be leveraged into the game at the right time.

As you have already stated you need to be leveraged with OPM, your example a HF, to milk what is a reasonable expectation of a move to use your skill(knowledge), again your example. 

but jog on making it as complicated with whatever you like.


----------



## ducati916

Trembling Hand said:


> Ducie Ducie Ducie
> 
> So if the next MSFT is floated tomorrow do you need to be at ground zero to win?
> 
> If the next bull market does start on Monday with a life changing technology do you really have to be a shareholder of the technological discoverer? Do you actually have to participate in the sector?
> 
> Nope, you just have to be in the game so as to catch a little of the flow on benefits. And be leveraged into the game at the right time.
> 
> As you have already stated you need to be leveraged with OPM, your example a HF, to milk what is a reasonable expectation of a move to use your skill(knowledge), again your example.
> 
> but jog on making it as complicated with whatever you like.




*TH*

The MSFT example was in context of prediction and the future. You categorically seem to have missed the point. However in response to your query: no we don't have to be in on the entire ride to profit, rather basic really, I'm surprised you felt the requirement to state something so trivial.

As to your second point. Yes, possibly you do, unless of course the product/service is duplicated sector wide like the dot.com bubble.

As to your last comment, you obviously find the entire process it would seem, entirely simple and uncomplicated. Very beneficial for yourself no doubt. You would then I assume not mind indicating to the rest of us, or only to myself, the next big thing that is currently underway - I wouldn't expect to get in on the ground floor after all.

jog on
duc


----------



## tech/a

Duc.

Is it really that hard?

Nett short currently *IS* the next big thing.
We have many stocks and many indexes all showing the same signs of weakness.(They are technical signs Duc) They were shown clearly at the beginning of its recent down turn and are very similar to those which you dismissed as utter nonsense when I opened a thread years ago "Perhaps this isn't the top" I presented evidence there which played out.
Presented evidence for the 6880 correction The 3200 wave 3 end wave 4 and now the final wave 5 in this pattern.

All appropriately scoffed at.

If it was all about being right Duc
Then there wouldn't be any Millionaire Muppet's----But there are.
Every academic would be way in front of the Muppet's---they aren't.

But you are right if we unequivocally knew an out come we would benefit.

Life's not like that it often shows ambiguity---so we must become experts in anticipation.
Masters in taking quick and decisive action and patron saints of patience as life plays out with no regard to our own time constraints.

If I find a very busy highway and walk on to it--- pretty soon I'll be hit.
Most Muppets can grasp this.
We dont need to know how its made---where its going----why it was made,--who made it,---what it cost to build---wether it was profitable to build---or what it was built of.
Just that we *WILL* at sometime be hit.


----------



## Trembling Hand

ducati916 said:


> As to your last comment, you obviously find the entire process it would seem, entirely simple and uncomplicated.




I know you don't have to make it so complicated that you have to think the only path to success is by being on the next big thing.

Its not hard to see when we are moving from an asset inflation/risk taking phase to asset deflation/risk averse phase. And getting on board in some measure. In these periods growth flows from a sector out to the general economy as a whole whether it be techno change, demographic change or just good old fashion money printing. Either way you don't have to pick winners. You just have to be in the game and avoid hanging onto the losers too long and adding to your winners (more carriages  ). Doubly so as you leverage up.

But don't take my word for it. Take your own that you don't have to be right just in the game and know when you were wrong.



ducati916 said:


> Judged purely on the numbers generated by MD, the experiment must be judged a failure, no question.
> 
> However, as tech-a suggested way back when... a simple exit criteria could turn these numbers around very quickly, so an easy lesson to be absorbed.
> 
> However, the initial argument that I promulgated was the absence of a stop-loss. In it's current form, as previously stated, that must be judged a failure.
> 
> However, again, there are some easy lessons learned, that allow a "no stop" rule, that does not result in the above numbers.




Jump on,

TH


----------



## ducati916

tech/a said:


> Duc.
> 
> Is it really that hard?
> 
> Nett short currently *IS* the next big thing.
> We have many stocks and many indexes all showing the same signs of weakness.(They are technical signs Duc) They were shown clearly at the beginning of its recent down turn and are very similar to those which you dismissed as utter nonsense when I opened a thread years ago "Perhaps this isn't the top" I presented evidence there which played out.
> Presented evidence for the 6880 correction The 3200 wave 3 end wave 4 and now the final wave 5 in this pattern.
> 
> All appropriately scoffed at.
> 
> If it was all about being right Duc
> Then there wouldn't be any Millionaire Muppet's----But there are.
> Every academic would be way in front of the Muppet's---they aren't.
> 
> But you are right if we unequivocally knew an out come we would benefit.
> 
> Life's not like that it often shows ambiguity---so we must become experts in anticipation.
> Masters in taking quick and decisive action and patron saints of patience as life plays out with no regard to our own time constraints.
> 
> If I find a very busy highway and walk on to it--- pretty soon I'll be hit.
> Most Muppets can grasp this.
> We dont need to know how its made---where its going----why it was made,--who made it,---what it cost to build---wether it was profitable to build---or what it was built of.
> Just that we *WILL* at sometime be hit.




*tech/a*

First of all, technical signs are 50/50 outcomes. So you may well be correct in that SHORT is the place to be. Only in hindsight will the answer be known.

_They were shown clearly at the beginning of its recent down turn and are very similar to those which you dismissed as utter nonsense when I opened a thread years ago _

What are you waffling about? In 2006 when the commodities boom was booming and all and sundry were waffling on about BHP, I presented a series of arguments on this forum in relation to those valuations. You are obviously confusing me with someone else.

You obviously can't read. I'm arguing the point that being right is not necessary, that randomness [luck] plays a huge part in any analysis. The analysis may, in point of fact be absolutely correct, yet, you still lose money.

Again, with your highway example you confuse the role that statistics has to play by the dint of utilising an inappropriate analogy. Cars, highway, individual sum the variables involved, thus a case could be built for Gaussian distributions. Financial markets do not correlate to Gaussian distributions.

jog on
duc


----------



## ducati916

Trembling Hand said:


> I know you don't have to make it so complicated that you have to think the only path to success is by being on the next big thing.
> 
> *Its not hard to see when we are moving from an asset inflation/risk taking phase to asset deflation/risk averse phase. *
> 
> And getting on board in some measure. *In these periods growth flows from a sector out to the general economy as a whole whether it be techno change, demographic change or just good old fashion money printing.*
> 
> Either way you don't have to pick winners. You just have to be in the game and avoid hanging onto the losers too long and adding to your winners (more carriages  ). Doubly so as you leverage up.
> 
> But don't take my word for it. Take your own that you don't have to be right just in the game and know when you were wrong.
> 
> 
> 
> Jump on,
> 
> TH




*TH*

Some analysis. Nice.

Your initial analysis of _asset inflation/risk taking phase to asset deflation/risk averse phase._ certainly describes what has happened. Is that still your current analysis going forward?

If it is, I totally disagree with your position, however, be as that may. What then is your thinking in how to capitalise on your analysis?

_In these periods growth flows from a sector out to the general economy as a whole whether it be techno change, demographic change or just good old fashion money printing_

So in a deflation/risk averse phase, growth flows from a sector out to the general economy?

What does that actually mean?

What sector?
What growth?
To the general economy?

jog on
duc


----------



## tech/a

Duc.

Do you trade/invest in anything?

Or do you just have a massive interest in analysis?

If so what,why and for how long?
If not what,when and for how long?


----------



## ducati916

tech/a said:


> Duc.
> 
> Do you trade/invest in anything?
> 
> Or do you just have a massive interest in analysis?
> 
> If so what,why and for how long?
> If not what,when and for how long?




*tech/a*

I've known you through the various forums for what, almost nine years now. Yes analysis in all of it's forms interests me, as I find it challenging.

However in answer to your question, I am in the financial markets 100% and have been ever since you first encountered me on Reef early 2001.

It is tragic that you would think otherwise. As I have replied on many occasions I am an arbitrageur, although I started out as a directional stocktrader [as you are aware]

jog on
duc


----------



## Trembling Hand

ducati916 said:


> _In these periods growth flows from a sector out to the general economy as a whole whether it be techno change, demographic change or just good old fashion money printing_
> 
> So in a deflation/risk averse phase, growth flows from a sector out to the general economy?
> 
> What does that actually mean?




No no. I haven't set out very well what I was getting at there.

Two things,

1. It anit that hard to see when we are in asset inflation/risk taking phase to asset deflation/risk averse phase. The cause of each is in part irrelevant more important to recognise each phase and the possible change.

2. You don't have to pick *the *winner. When we are in the asset inflation/risk taking phase you don't have to be directly linked to what is causing the asset inflation/risk taking phase. You don't have to be in the specific game/sector. You don't have to sit back trying to be always right. Money flows from that boom into the economy generally. I made money out of the late 90s tech/housing boom by being in a bakery business of all things . You could just pick $100 notes off the ground that had fallen out of the pockets of those that were involved directly. I didn't pick the winners I just got myself positioned to let their successes flow to me.

Very uncomplicated.


----------



## tech/a

> I am in the financial markets 100% and have been ever since you first encountered me on Reef early 2001.




This means?



> *If so what,why and for how long*?




You must be an expert exponent of Gann as your evasive argument displays a mastery not often seen.


----------



## ducati916

Trembling Hand said:


> No no. I haven't set out very well what I was getting at there.
> 
> Two things,
> 
> 1. It anit that hard to see when we are in asset inflation/risk taking phase to asset deflation/risk averse phase. The cause of each is in part irrelevant more important to recognise each phase and the possible change.
> 
> 2. You don't have to pick *the *winner. When we are in the asset inflation/risk taking phase you don't have to be directly linked to what is causing the asset inflation/risk taking phase. You don't have to be in the specific game/sector. You don't have to sit back trying to be always right. Money flows from that boom into the economy generally. I made money out of the late 90s tech/housing boom by being in a bakery business of all things . You could just pick $100 notes off the ground that had fallen out of the pockets of those that were involved directly. I didn't pick the winners I just got myself positioned to let their successes flow to me.
> 
> Very uncomplicated.




*TH*

Well I would argue that recognition of inflationary/deflationary phases is not clear cut at all. If it were, we would have concensus through a variety of market analysts, pundits etc.

That is far from the case currently. The case is split down the middle, half arguing deflation, half arguing inflation. Case in point, you are advocating _deflation_ while I advocate _inflation_

As to being in the right sector etc. Some benefit to a far greater extent than others. Technology in the last bubble was pretty flat, commodities exploded, and so on.

Not as simple as you allude.

jog on
duc


----------



## ducati916

tech/a said:


> This means?
> 
> 
> 
> You must be an expert exponent of Gann as your evasive argument displays a mastery not often seen.




*tech/a*

This means that I trade capital in the financial markets, and have done since 2001. I have in the past discussed specific securities, I no longer do so for a variety of reasons. One being that I really have no requirement to discuss my individual positions, nor any great interest in knowing anyone elses specifics.

I am interested in macro themes, and will discuss specifics and analysis ad infinitum. Answer your query in a non-Gann manner?

jog on
duc


----------



## tech/a

Yeh.

Pretty well as I expected.


----------



## Trembling Hand

ducati916 said:


> *TH*
> 
> Well I would argue that recognition of inflationary/deflationary phases is not clear cut at all. If it were, we would have concensus through a variety of market analysts, pundits etc.



 I do not give a toss about "consensus ". All I care about is my positioning. Its been good so far.



ducati916 said:


> Case in point, you are advocating deflation while I advocate inflation



 Rubbish. Where have I stated that. 



ducati916 said:


> As to being in the right sector etc. Some benefit to a far greater extent than others. Technology in the last bubble was pretty flat, commodities exploded, and so on.
> 
> Not as simple as you allude.



 WTF!! You have completely F up what I was saying!! I made no mention of liking Tech  let me make it clear.

*I don't care what the sector is.* To try and discount my point by misconstruding it is just desperate.


----------



## tech/a

> I made no mention of liking Tech  let me make it clear.




I'm cut deeply by this comment!


----------



## ducati916

Trembling Hand said:


> I do not give a toss about "consensus ". All I care about is my positioning. Its been good so far.
> 
> Rubbish. Where have I stated that.
> 
> WTF!! You have completely F up what I was saying!! I made no mention of liking Tech  let me make it clear.
> 
> *I don't care what the sector is.* To try and discount my point by misconstruding it is just desperate.




*Th*

Quite correct: _Its not hard to see when we are moving from an asset inflation/risk taking phase to asset deflation/risk averse phase. And getting on board in some measure._

You're not actually advocating anything. You're sitting on the fence I guess. Therefore I retract that you are advocating deflation, although the hint of implication is there.

No, I never stated that you liked technology. I simply observed that your generic advice was of no practical use, as even in a cyclical bull market driven by a credit expansion, not all sectors benfitted [or benfit] evenly. There are BIG winners and small winners. Identifying the BIG winners early enough is the purpose of this thread [or was once upon a time]

As to your _positioning_ if you say so. As you have no stated position, you'll never be held accountable.

jog on
duc


----------



## ducati916

tech/a said:


> I'm cut deeply by this comment!




*tech/a*

As well you should be, just consider yourself lucky that he didn't allude to you as a muppet.

jog on
duc


----------



## motorway

ducati916 said:


> *tech/a*
> 
> First of all, technical signs are 50/50 outcomes. So you may well be correct in that SHORT is the place to be. Only in hindsight will the answer be known.
> jog on
> duc




why ?  First define *ALL* how large a set is ALL Technical Signs

Are there Trends ?

If So are there Turning Points ?

Can these be identified ? Before the *next *Turning point ?

The magnitude of a trend 
Will be proportional to Two things

The ultimate size of the niche that the trend is filling ( + overshoot )
and the rate that energy ( work done ) can be utilized to fill it..

Even if we know where we are going
We still have to travel there




> Information (as a reduction of entropy) is costly, and cost increases with value.  ( Value = Scarcity eg Information known by Everyone is less Valuable )
> 
> The amount of information one can (intelligently) receive depends on: (1) how much information is available; and, (2) the ability to process it.
> 
> ( Which relates to how much information one already has and understands )
> 
> Evolution has hard-coded in human brains information processing capabilities repetitively important to survival. Other processing abilities are learned.
> 
> ( How many learn ? )
> 
> These principles explain investing-critical aspects of human psychology such as conservatism, framing, herding, overconfidence and loss aversion.
> 
> Price and volume patterns observed in financial markets derive from: (1) the distribution of costs different investors are willing and able to bear to obtain information; and, (2) differences in processing ability among investors.
> 
> 
> ( Hence opportunity ,the BOOM BUST sequence
> Hence Trends and Turning Points ) ( Price  Momentum  and Volume Patterns are the Signatures of the PHASE TRANSITIONS )
> 
> 
> Many of the market inefficiencies identified in behavioral finance flow naturally from this view of human information processing.




High Volume
Low Volume
Losers
Winners

Acceleration
Deceleration

Are the factors that make up the Price Volume Momentum Clock

Go long at 6.00 PM
Go Short at 12.00 AM

Technical Signs can be 

Shapes we think we see in clouds  eg H&S patterns 
Or the Shapes of the clouds  ie demand and supply

motorway


----------



## Trembling Hand

ducati916 said:


> As to your _positioning_ if you say so. As you have no stated position, you'll never be held accountable.
> 
> jog on
> duc



LOL is there anyone less accountable for taking a stated position than an arbitrageur. So fearful of being wrong they must make an each way bet. Just LOL!!


----------



## MRC & Co

ducati916 said:


> Case in point, you are advocating _deflation_ while I advocate _inflation_




So are we in a risk averse/inflationary environment?  Is the first, over-riding the later as far as what is being priced in by sentiment.........?  I.e. gold and UST yields falling?  

What do you arbitrage?


----------



## motorway

ducati916 said:


> *Only what becomes scarce can become of exceptional value..
> *
> 
> Value.
> 
> A very slippery construct.
> 
> jog on
> duc








> What Is the Problem?
> Prices in equity markets are much noisier
> than many people expected
> Black (1986):
> 
> “All estimates of value are noisy, so we can never
> know how far away price is from value. *However,
> we might define an efficient market as one in which
> price is within a factor of 2 of value, i.e., the price is
> more than half of value and less than twice value…*By this definition, I think almost all markets are
> efficient almost all the time. ‘Almost all’ means at
> least 90%.
> 
> ”




This is NOT the problem
naive "value" investing is the problem

This is not the problem because
This is really OPPORTUNITY

All investing is Arbitrage
between Price and Value

The KEY

Is what drives price between the value boundaries
And How to measure

motorway


----------



## wayneL

motorway said:


> All investing is Arbitrage
> between Price and Value




I think that's stretching the meaning of arbitrage a bit too far.

"Value" in your context is not a hard value, it's somebody's opinion, it nebulous.

True arbitrage is when two hard values that should be equal, such as the price of a stock on one exchange versus another, as discovered by locked option positions, etc (there are various forms), must become unequal. The arbitrage trade therefore has zero risk.

Value of the nebulous variety may never be attained, the price may trend counter to the perceived value, hence there is risk, _ipso facto_, not arbitrage.


----------



## motorway

wayneL said:


> I think that's stretching the meaning of arbitrage a bit too far.
> 
> "Value" in your context is not a hard value, it's somebody's opinion, it nebulous.
> 
> True arbitrage is when two hard values that should be equal, such as the price of a stock on one exchange versus another, as discovered by locked option positions, etc (there are various forms), must become unequal. The arbitrage trade therefore has zero risk.
> 
> Value of the nebulous variety may never be attained, the price may trend counter to the perceived value, hence there is risk, _ipso facto_, not arbitrage.




Possibly

But why does the value investor invest ?

He postulates a value that is distinct ( That is some distance ) from current price..

He does face the very real risks you point to



> In Short, Value Investing
> Has Its Limits:
> • Value plays require patience (Frankel and Lee,
> 1998)
> Abnormal returns are realized over 2 to 4 years
> • Value plays can be risky (Piotroski, 2001)
> *The median “value” stock underperforms the market*
> 
> • Value stocks tend to be negative momentum
> stocks
> 
> Buying them can be like catching a falling knife
> 
> • Often improvements in the valuation technique
> contribute only marginally to returns prediction:
> When a stock is really over- or under-valued, almost any
> valuation model will spot it; when a stock is only marginally
> over-valued or under-valued, it’s typically not in a hurry to
> correct




Particularly struck by the bold type

Buy one ( even the best ) value play
and the probability is that it underperforms the market---> For EVER..

Yet we should be in a "Value" investors paradise

( we all want to buy value to create "exceptional wealth" )

So ---> On to what you call 







> "Value" in your context is not a hard value, it's somebody's opinion, it nebulous




But not just "Somebody's"  

motorway


----------



## ducati916

Trembling Hand said:


> LOL is there anyone less accountable for taking a stated position than an arbitrageur. So fearful of being wrong they must make an each way bet. Just LOL!!




*TH*

Well that's certainly one way of looking at the outcome.

However, if you consider the context of the arguments I have put forward: viz. random outcomes, leverage, subjectivity of values, based on a skill set, etc, you'll see that the reasoning is logical and consistent, and that an arbitrage is a rational solution to the question.

jog on
duc


----------



## ducati916

MRC & Co said:


> So are we in a risk averse/inflationary environment?  Is the first, over-riding the later as far as what is being priced in by sentiment.........?  I.e. gold and UST yields falling?
> 
> What do you arbitrage?




*MRC*

Actually I simply advocated _inflation_ As to risk averse, there are thousands of traders seeking risk and engaging risk under a variety of forms of analysis, strategies, methodologies.

The big question currently is _inflation or deflation_ positions are being taken accordingly.

jog on
duc


----------



## ducati916

motorway said:


> why ?  First define *ALL* how large a set is ALL Technical Signs
> 
> Are there Trends ?
> 
> If So are there Turning Points ?
> 
> Can these be identified ? Before the *next *Turning point ?
> 
> The magnitude of a trend
> Will be proportional to Two things
> 
> The ultimate size of the niche that the trend is filling ( + overshoot )
> and the rate that energy ( work done ) can be utilized to fill it..
> 
> Even if we know where we are going
> We still have to travel there
> 
> 
> 
> 
> High Volume
> Low Volume
> Losers
> Winners
> 
> Acceleration
> Deceleration
> 
> Are the factors that make up the Price Volume Momentum Clock
> 
> Go long at 6.00 PM
> Go Short at 12.00 AM
> 
> Technical Signs can be
> 
> Shapes we think we see in clouds  eg H&S patterns
> Or the Shapes of the clouds  ie demand and supply
> 
> motorway




*motorway*

All, means all that I am aware of. That most likely includes all the traditional well documented technical computations.

Are there trends? Yes, quite obviously there are, as stock prices do not exhibit independence.

There are turning points.

Can they be identified prior to the turning point? No, not consistently. Some will do so, and attribute it to skill, method, analysis, etc. I call it luck or random.

_The magnitude of a trend 
Will be proportional to Two things

The ultimate size of the niche that the trend is filling ( + overshoot )
and the rate that energy ( work done ) can be utilized to fill it.._

I have to say I think this is nonsense. The reasons are that who can know beforehand the size of a niche, and you immediately invalidate any argument to the contrary by including + overshoot. As to the rate [energy] this concept is so nebulous as to be superfluous to any analysis.

jog on
duc


----------



## MRC & Co

ducati916 said:


> *MRC*
> 
> Actually I simply advocated _inflation_




Oh ok, so how do you explain the fall of gold recently and the falling of yields, as far as fundamental factors?  

What do you arbitrage?  I am no expert on this, but I gather it is not stat arb, but 'proper' arb, i.e. no risk?  If so, I would wonder how, considering this market is pretty much zipped up by high speed algo bots as far as I am aware.......

No attack, just valid questions.


----------



## ducati916

motorway said:


> This is NOT the problem
> naive "value" investing is the problem
> 
> This is not the problem because
> This is really OPPORTUNITY
> 
> All investing is Arbitrage
> between Price and Value
> 
> The KEY
> 
> Is what drives price between the value boundaries
> And How to measure
> 
> motorway




*motorway*

Value is a subjective concept. Take an example. 1 apple. You may value the apple very highly and be willing to exchange [in money terms] $1 for it. I may value it less and only offer $0.30 for the apple. Add in a couple thousand other people all with their own values and you have a market.

No value is either right nor wrong, they simply are. When we move into the valuation of financial assets, economics came up with the fallacious rational man and stated that under rational conditions, XYZ should be valued on cashflows, and/or utility, and/or historical cost, and/or production costs, etc.

As Wayne has already identified, arbitrage has nothing to do with values. Arbitrage deals with money prices.

jog on
duc


----------



## ducati916

MRC & Co said:


> Oh ok, so how do you explain the fall of gold recently and the falling of yields, as far as fundamental factors?
> 
> What do you arbitrage?  I am no expert on this, but I gather it is not stat arb, but 'proper' arb, i.e. no risk?  If so, I would wonder how, considering this market is pretty much zipped up by high speed algo bots as far as I am aware.......
> 
> No attack, just valid questions.




*MRC*

Let's start with the easy one first.

Falling Yields. Depending on which part of the yield curve you are looking at, you will have very different analysis.

At the SHORT end, which is controlled by Central Banks, they obviously can set any rate that they deem fit. Generally, from this rate, a spread is established at different maturities expressing a number of factors: risk, inflation, time value, etc.

Now you don't mention which maturity you consider to be falling. But if I assume the 10yr Note, I would actually say it is rising [from it's lows] This represents among many things, a perception of potential inflation as a risk.

As to the fall of Gold. Waynes chart of seasonal factors is as good explanation as I have seen. In a nutshell, gold fluctuates like all financial markets. I think, that gold is still in a bull market and has yet to see it's blow off top, which will coincide with possibly the bottom in the Bond market. But of course I could be totally wrong.

Now that is a real reversal on my part. I've tried in the past to value gold based on historical inflation rates, which actually works reasonably well. The inflation that is being potentially created currently however is several orders higher than anything we've seen in the past, including the 1930's.

GS and their front running is an example of high-tech arbitrage. They arb the order flow. Obviously I don't [and can't] do that, but there are plenty of opportunities available.



jog on
duc


----------



## Trembling Hand

ducati916 said:


> No, I never stated that you liked technology. I simply observed that your generic advice was of no practical use, as even in a cyclical bull market driven by a credit expansion, not all sectors benfitted [or benfit] evenly. There are BIG winners and small winners. Identifying the BIG winners early enough is the purpose of this thread [or was once upon a time]




And here is the fundamental choice that readers of this now full of BS thread have to choose from.

Try and wait to pick the next winner. And not acting until you know you are 100% right. To go with that all the paralisis by analysis that that will inevitably lead to. All the but this .... and Not that because ...... thinking. All the valid approaches thrown away because the need to be right and fear of failure greatly outweigh the odd hit to the ego of acting and getting the odd move wrong.

OR,

Approach the game with a entrepreneurial spirit. Knowing that you will not be able to pick exactly the next great theme but if you look after your own patch there is some great gains to be had. That inspite of the call of the apocalyptic ending to the world there is always opportunities to be caught. And unlike Mr need to be right above you don't have to pick the winner.

Quickest way to Exceptional Wealth Accumulation is start a business and build your income and add assets.


----------



## ducati916

Trembling Hand said:


> And here is the fundamental choice that readers of this now full of BS thread have to choose from.
> 
> Try and wait to pick the next winner. And not acting until you know you are 100% right. To go with that all the paralisis by analysis that that will inevitably lead to. All the but this .... and Not that because ...... thinking. All the valid approaches thrown away because the need to be right and fear of failure greatly outweigh the odd hit to the ego of acting and getting the odd move wrong.
> 
> OR,
> 
> Approach the game with a entrepreneurial spirit. Knowing that you will not be able to pick exactly the next great theme but if you look after your own patch there is some great gains to be had. That inspite of the call of the apocalyptic ending to the world there is always opportunities to be caught. And unlike Mr need to be right above you don't have to pick the winner.
> 
> Quickest way to Exceptional Wealth Accumulation is start a business and build your income and add assets.




*TH*

Quite amazing how you have managed to miss the entire point.

With regard to your suggestion:
*What is the success/failure rate of new small businesses?
*What is the timeperiod required?
*What exit strategy?
*What business skills?

The list could go on. 

jog on
duc


----------



## MRC & Co

ducati916 said:


> *MRC*
> 
> Now you don't mention which maturity you consider to be falling. But if I assume the 10yr Note, I would actually say it is rising [from it's lows] This represents among many things, a perception of potential inflation as a risk.
> 
> As to the fall of Gold. Waynes chart of seasonal factors is as good explanation as I have seen. In a nutshell, gold fluctuates like all financial markets. I think, that gold is still in a bull market and has yet to see it's blow off top, which will coincide with possibly the bottom in the Bond market. But of course I could be totally wrong.
> 
> GS and their front running is an example of high-tech arbitrage. They arb the order flow. Obviously I don't [and can't] do that, but there are plenty of opportunities available.




Yes, sorry, I was not talking of the short end.  You would call yields rising when for the past few weeks, they have been falling (10 year by nearly 75bps).  Ok.  Like to see you trade that one......

Gold has fallen a bit less than $100 on seasonal factors alone......... 

GS front running is front running, just as a scalper does so.  It's not arb, there are still many risks of a manual execution coming in at the same time or even another algo trader.

I doubt you have the capacity to arb in the way WayneL mentioned, for example, the Nikkei on the Singapore and Osaka exchanges.  

I still see no examples of valid arb you could (let alone do) undertake..........


----------



## ducati916

MRC & Co said:


> Yes, sorry, I was not talking of the short end.  You would call yields rising when for the past few weeks, they have been falling (10 year by nearly 75bps).  Ok.  Like to see you trade that one......
> 
> Gold has fallen a bit less than $100 on seasonal factors alone.........
> 
> GS front running is front running, just as a scalper does so.  It's not arb, there are still many risks of a manual execution coming in at the same time or even another algo trader.
> 
> I doubt you have the capacity to arb in the way WayneL mentioned, for example, the Nikkei on the Singapore and Osaka exchanges.
> 
> I still see no examples of valid arb you could (let alone do) undertake..........




*MRC*

GS is front-running, and I agree it's not a true arbitrage in that there is still risk associated, but it's a million miles from what a scalper does. GS buys and sells in a microsecond at the same price and pockets a fee from the exchange. It's pretty low risk. However execution risk remains for all market based arb. trades, so no major differences.

No, I only trade US markets. As I said to tech, I have no interest in discussing my trades, as it is highly competitive. Why expound on a strategy that might add competition. 

jog on
duc


----------



## mazzatelli1000

MRC & Co said:


> I still see no examples of valid arb you could (let alone do) undertake..........




I don't think he will discuss, but risk arbitrage [liquidation and pairs trading] is within the realm of retail traders


----------



## ducati916

mazzatelli1000 said:


> I don't think he will discuss, but risk arbitrage [liquidation and pairs trading] is within the realm of retail traders




I've written stuff and posted tidbits in the past on my blog.
http://leduc998.wordpress.com/category/arbitrage/

Have a look if interested.

jog on
duc


----------



## Trembling Hand

ducati916 said:


> The list could go on.




Yep,
I'm sure you could.


----------



## mazzatelli1000

ducati916 said:


> I've written stuff and posted tidbits in the past on my blog.
> http://leduc998.wordpress.com/category/arbitrage/
> 
> Have a look if interested.
> 
> jog on
> duc




Awesome!! Thanks I'll have a read
I see you cover Convertible arbs as well


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## MRC & Co

GS seeks out algo orders and then tries to frontrun them, it would not take a microsecond and once the order is filled, it is not guaranteed of being hit from the other side by the same algo and as such, leaves it exposed whilever that position is open.  Far from _execution risk remains for all market based arb. trades, so no major differences._
Low risk, but not exactly arbitrage.  I also fail to see how spread trading constitutes arbitrage.  Assuming the definition:

_The simultaneous purchase and sale of the same securities, commodities, or foreign exchange in different markets to profit from unequal prices._

On that note, Duc, you arb US markets from NZ?  

Risk arbitrage also entails HUGE risks, ask the 'father' of stat arb who blew up his fund.  Don't see any significant edge in it, as far as risk or profitability, as seen by results of top performing hedge funds (unless you can show me evidence to the contrary).........


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## ducati916

MRC & Co said:


> GS seeks out algo orders and then tries to frontrun them, it would not take a microsecond and once the order is filled, it is not guaranteed of being hit from the other side by the same algo and as such, leaves it exposed whilever that position is open.  Far from _execution risk remains for all market based arb. trades, so no major differences._
> Low risk, but not exactly arbitrage.  I also fail to see how spread trading constitutes arbitrage.  Assuming the definition:
> 
> _The simultaneous purchase and sale of the same securities, commodities, or foreign exchange in different markets to profit from unequal prices._
> 
> On that note, Duc, you arb US markets from NZ?
> 
> Risk arbitrage also entails HUGE risks, ask the 'father' of stat arb who blew up his fund.  Don't see any significant edge in it, as far as risk or profitability, as seen by results of top performing hedge funds (unless you can show me evidence to the contrary).........




*MRC*

As regards GS, no they hit the bid/ask in a microsecond, so their risk is tiny. Do I do this? I wish!

Simultaneous for me is two mouseclicks, how long to execute, a few seconds I guess, but, that's a risk I'm happy to take.

Risk arbitrage is a misnomer. It's not really an arb. at all, I don't tend to become involved in this at all.

Anyway, I'm not trying to sell you on arbitrage at all, far from it, the less who participate, the happier I'll be.

jog on
duc


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## motorway

ducati916 said:


> *motorway*
> 
> All, means all that I am aware of. That most likely includes all the traditional well documented technical computations.
> 
> Are there trends? Yes, quite obviously there are, as stock prices do not exhibit independence.
> 
> There are turning points.
> 
> Can they be identified prior to the turning point? No, not consistently. Some will do so, and attribute it to skill, method, analysis, etc. I call it luck or random.
> 
> _ The magnitude of a trend
> Will be proportional to Two things
> 
> The ultimate size of the niche that the trend is filling ( + overshoot )
> and the rate that energy ( work done ) can be utilized to fill it..
> 
> _
> 
> I have to say I think this is nonsense. The reasons are that who can know beforehand the size of a niche, and you immediately invalidate any argument to the contrary by including + overshoot. As to the rate [energy] this concept is so nebulous as to be superfluous to any analysis.
> 
> jog on
> duc




The problem I think probably lays with this



> All, means all that I am aware of




This possibly is such such a small "set" 
as to be statistically insignificant

Hence 



> I have to say I think this is nonsense.




I have 197 opportunities on the ASX ( Total market )
to drill down on as of this date

These meet criteria ( at a first blush )
That deal with the italicized text in the quote...

There are two aspects to such criteria

as a mean reverting market cycle signal
as a particular get on & off  opportunity cycle
of particulars

This is not predict and set

but more like weather forecasting

Like any energetic phenomena
structure anticipates flow and
flow anticipates structure

value is where flow builds structure ( for my purposes )
because from structure --> process FLOWS


I can see no benefit in
using a coin toss triggered by a random event
to guide my buy and sells of eg an index fund

No matter how leveraged with OPM  

About were you end up if you can never know ( anything worthwhile )

 As useless as a weather forecast may be

You would NEVER do some things without one
But the forecast is an ongoing process too...

And it is the relative changes
in the universe of opportunity
That is as important...



> Can they be identified prior to the turning point? No, not consistently. Some will do so, and attribute it to skill, method, analysis, etc. I call it luck or random.




Not so much prior to the turning point
But prior to the next turning point
as I stated

We do not want to buy the tops and sell the bottoms
( though many as revealed by P&V do )

motorway


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## ducati916

motorway said:


> The problem I think probably lays with this
> 
> 
> 
> This possibly is such such a small "set"
> as to be statistically insignificant
> 
> Hence
> 
> 
> 
> I have 197 opportunities on the ASX ( Total market )
> to drill down on as of this date
> 
> These meet criteria ( at a first blush )
> That deal with the italicized text in the quote...
> 
> There are two aspects to such criteria
> 
> as a mean reverting market cycle signal
> as a particular get on & off  opportunity cycle
> of particulars
> 
> This is not predict and set
> 
> but more like weather forecasting
> 
> Like any energetic phenomena
> structure anticipates flow and
> flow anticipates structure
> 
> value is where flow builds structure ( for my purposes )
> because from structure --> process FLOWS
> 
> 
> I can see no benefit in
> using a coin toss triggered by a random event
> to guide my buy and sells of eg an index fund
> 
> No matter how leveraged with OPM
> 
> About were you end up if you can never know ( anything worthwhile )
> 
> As useless as a weather forecast may be
> 
> You would NEVER do some things without one
> But the forecast is an ongoing process too...
> 
> And it is the relative changes
> in the universe of opportunity
> That is as important...
> 
> 
> 
> Not so much prior to the turning point
> But prior to the next turning point
> as I stated
> 
> We do not want to buy the tops and sell the bottoms
> ( though many as revealed by P&V do )
> 
> motorway




*motorway*

Probability theory states that the probabilities are calculated by taking the outcome, by the total number of possible outcomes.

Thus in the market what outcomes are possible?

*Up [price rises]
*Down [price falls]
*No change [price stays the same]
*Market closes for period of time 
*Market collapses [closes forever]

Most don't really consider the last 3 possibilities, and keep the calculation to the first 2. Therefore 1/2 = 50% probability that you will be right in market direction.

This is where the arguments start. Should *biases* be included in the computation of the probabilities?

What are biases?

*Technical analysis
*Fundamental analysis
*Government policy
*Behavioural Finance analysis
*Other

This question of course has motivated the quants forever. They take and analyse reams of data in expectation of identifying probabilities that will modify the initial probability.

Let's for arguments sake assume that this is valid. The probability calculated will be a derivative value, thus it's predictive capability is increased or decreased? It alters the probability of the original calculation how?

Of course this train of thought should lead down the road in the contemplation of risk and risk management.

Food for thought.

jog on
duc


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## ducati916

With regard to the intra-market indicator of volume that forms the basis of an analysis and changes or modifies the probabilities, consider this:

From John Maudlin

But first, I want to direct the attention of those in the US finance industry to a white paper written by Themis Trading, called "Toxic Equity Trading Order Flow on Wall Street." Basically, they outline why volume and volatility have jumped so much since 2007; and it’s not due to the credit crisis. They estimate that 70% of the volume in today’s markets is from high-frequency program trading. They outline how large brokers and funds can buy and sell a stock for the same price and still make 0.5 cents. Do that a million times a day and the money adds up. Or maybe do it 8 billion times. It requires powerful computers, complicity of the exchanges (because the exchanges get paid a lot), and highly proximate computer connections. Literally, the need for speed is so important that to play this game you have to have your servers physically at the exchange. Across the river in New Jersey is too slow. Forget Texas or California. This is a game played out in microseconds.

The retail world doesn’t get to play. This is a game only for big boys who can afford to pay for the "arms" needed to fight this war. But the rest of us pay for the game, as that half cent is like a tax on transactions, not to mention the increased daily volatility, which skews pricing. Think it doesn’t affect you? That "tax" is paid by mutual funds, your pension fund, and every large institution.

Frankly, this is outrageous. The more I read the madder I got. And it is going to get worse as computers get faster and software more intelligent. We need rules to level the playing field. Themis suggests one simple one: just make it a rule that all bids have to be good for at least one second. That would cure a lot of problems. One lousy second! In a world of microseconds, that is an eternity.

Goldman Sachs went after an employee who stole some of their latest and greatest software this last week. The US assistant attorney general said in the courtroom that the software had the potential to manipulate the market. Imagine that. I am shocked. There is gambling going on in the back room? Gee, commissioner, I had no idea.

All this "algo" (algorithmic) trading also gives a very false impression of volume. If you are a fund and see 10 million shares a day traded, you might feel comfortable that you could hold one million shares and exit your trade easily. But if 80% of the volume is false "algo" trading, that volume isn’t really there. You may have a position that will be a problem if you want to exit, and not know it.

"High-frequency trading strategies have become a stealth tax on retail and institutional investors. While stock prices will probably go where they would have gone anyway, toxic trading takes money from real investors and gives it to the high frequency trader who has the best computer. The exchanges, ECNs and high frequency traders are slowly bleeding investors, causing their transaction costs to rise, and the investors don’t even know it." (Themis Trading)

We are literally talking billions of dollars here. The SEC needs to step in and stop this, and soon. This is a lot more important than the salaries of investment professionals, for which the Obama administration today suggested new rules, which would allow the SEC to oversee salaries at member firms. Seriously? They don’t have enough to do already?

The link to the white paper is

http://www.themistrading.com/articl...ic_Equity_Trading_on_Wall_Street_12-17-08.pdf. Themis Trading is at http://www.themistrading.com/.

jog on
duc


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## tech/a

How are transaction costs avoided?


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## motorway

ducati916 said:


> *motorway*
> Thus in the market what outcomes are possible?
> 
> *Up [price rises]
> *Down [price falls]
> *No change [price stays the same]
> *Market closes for period of time
> *Market collapses [closes forever]
> 
> Most don't really consider the last 3 possibilities, and keep the calculation to the first 2. Therefore 1/2 = 50% probability that you will be right in market direction.
> 
> This is where the arguments start. Should biases be included in the computation of the probabilities?
> Food for thought.
> 
> jog on
> duc




50/50 with a fair coin

Not 50/50 with a *biased* coin

It is this bias that matters ( not the bias you are talking about )

The market trends
The moves of the market ( that I what to catch ) are NON random

The Number of up days to down day days are RANDOM in the sense of your 50/50
even in trends ( But the sizes ?  Key point here --->The coin is always being flipped but not the same number of times each day/week/month)

*Yes Volume can be noise too ... Volume does not  = Liquidity*

That said --> Absolute anything can be noise
But it is the relative changes that matter more
Small changes produce small Biases

That produce large trends..

If you know the starting point
How far and how much since
The rate of change
You have an idea of how far

And along the way .. how much further still ( stages )..

Far from equilibrium
close to Equilibrium
overshoot Equilibrium

The weather
the spread of ""swine Flue"
Trends in markets
propagation of memes
etc etc..

yes it is all random &
No it is not random

1-There is a starting place
and 2- a finishing place

We don't need ( but it would be nice ) number  2

Also the finish becomes  another start 
But be careful because there is a fork in the road
And the old travel a different way to the new

S curves ---> Bifurcate


Structure and Flow




motorway


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## motorway

> The Prime Mover in a financial market is not value or price, but price differences, not averaging, but arbitraging. People arbitrage between places or time------arbitrage assumes no intrinsic value---simply observation and forecast of a difference in price, and an attempt  to profit from it






> ---A full understanding --begins with the understanding that The Mean is not Golden






> That (intrinsic) Value has limited value, is slippery and vastly overrated




So what is Benoit Mandelbrot saying here ( pg249 on--> Misbehaviour of markets )

He is pointing to a value
That we can profit from

A value not so slippery
one defined by High and Low
& Before and After

He suggests that we are all Arbitrageurs ( successful or not )
And it is better that we realize this
Than worry to much about "intrinsic" Value and do nothing..

motorway


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## Kryzz

tech/a said:


> My views on Business Property and in regard to this topic of Trading are I have found more radical than most.
> 
> My own view is that a very high ratio of wealth accumulators will operate within their comfort zone---which is a great deal lower than even they expect. Warm and fuzzy is good but you wont see *EXCEPTIONAL* results.
> 
> *EXCEPTIONAL* results only show themselves when there is *EXCEPTIONAL* thinking.
> 
> (1) We had a 7 yrs bull run and while many took advantage of it many have lost any advantage they had accumulated. Many simply watched!
> 
> (2) We had a 7 yr property boom and while many picked up "A" single investment property few took advantage of this *EXCEPTIONAL* opportunity in an *EXCEPTIONAL WAY*. Many simply watched
> 
> (3) We have seen an *EXCEPTIONAL* down turn well documented and shifting indexes by 40-50% but few have taken advantage of it. Many simply watched.
> 
> (4) We have seen OIL trade from $25 a barrel to $140 a barrel and back to $50 a barrel Many simply watched.
> 
> (5) We have seen gold traded from $270 an ounce to $1000 an ounce and many simply watched.
> 
> (6) We have seen the AUD trade from 50c to 90c and we pretty well watched.
> 
> I too have been one who has watched SOME of those events but those I have taken part in--in an EXCEPTIONAL way have changed my life's direction!
> 
> Pyramiding is one of those strategies which can *SET YOU UP* for EXCEPTIONAL results.
> 
> Once risk is understood (Its minimisation and in many cases eradication) it should release everyone from the burden of FEAR.
> 
> It is EXCEPTIONAL thinking and implementation which I'd like to see discussed in a practical sense.
> Putting yourself.
> (1) In front of the train
> (2) On the train.
> (3) Fueling the train.
> (4) Maintaining and or leaving the train.






With everything happening in the global economy and markets, this post popped into my head. With billions being shed from markets of late,currencies tumbling at incredible rates, interest rates the lowest in recent years, to name a few. 

Are we in a position now to take advantage of them as tech/a mentions above (albeit not a 7 year t/f, in the near future)..?


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## So_Cynical

Kryzz said:


> With everything happening in the global economy and markets, this post popped into my head. With billions being shed from markets of late,currencies tumbling at incredible rates, interest rates the lowest in recent years, to name a few.
> 
> *Are we in a position now to take advantage of them as tech/a mentions above *(albeit not a 7 year t/f, in the near future)..?




There are always opportunities...always.

Its just that occasionally there seems to be more than usual and the opportunities stand out more...like now. 

But you can only take advantage of them if those opportunities are with in your comfort zone....some people just cant do it :dunno: Gold for example...just buy the significant pull backs over the last 8 years and you have cleaned up, goes for oil to ( i brought an oil stock today ) 160 stocks hit new 12 month lows today..how many will trade higher over the next 3 / 6 and 12 months?


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## Gundini

Kryzz said:


> Are we in a position now to take advantage of them as tech/a mentions above ..?






So_Cynical said:


> There are always opportunities...always.
> 
> Its just that occasionally there seems to be more than usual and the opportunities stand out more...like now.
> 
> But you can only take advantage of them if those opportunities are with in your comfort zone....




I think you have highlighted the escence of forum sharing digging up this great post. Not only is it apt, but it contains pearls of wisdom that will stand the test of time. The posters here are still here as you are, and still willing to help us less contributors in the quest for the holy grail, what is our comfort zone. 

Thanks Tech, Motorway, Duc, SC, and all you guys and girls who help to keep us afloat with you're generous offerings


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## psj02

Just read through this thread in one sitting! Not really.... just read through Tech's posts and skimmed the rest.

Tech, I know it was a while back but in case you have it typed up somewhere would you mind posting the next bit? Was interested in reading your examples about property and was looking forward to the trading bit but a bit disappointed that the thread was cut short (though I can understand).


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## tech/a

psj02 said:


> Just read through this thread in one sitting! Not really.... just read through Tech's posts and skimmed the rest.
> 
> Tech, I know it was a while back but in case you have it typed up somewhere would you mind posting the next bit? Was interested in reading your examples about property and was looking forward to the trading bit but a bit disappointed that the thread was cut short (though I can understand).




There is more than enough here.
Infact enough from the do,s and the wish I could do,s 

Tech's copious posting days are over.


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## Russtafaerian

*Real Estate in Africa*

Hi All,

My first post after joining this site - and congrats on the useful resources and discussions. I lived in China the past 7 years and am now in Kenya. For my money, I reckon real estate in Africa is going to be a decent investment over the next 5 years or so given the rapid rise of some of the countries in this region.

Cheers!


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