# CASH is King



## MR. (30 January 2009)

Is Cash still king?

Have any cash?  If it’s in a term deposit what term is it on?  3mths or maybe 6?  
Either people want to keep their funds not far from reach (to re-enter markets) or (they just haven’t thought that far ahead)   I wonder what rates the banks will offer in just 3 months time! 

If you are just waiting “short term” to re-enter the markets just be aware there appears to be many of you.... That spells Volatility! 

Have you held cash for several years waiting for this moment?  Several years ago didn’t you decide not to invest in shares and hold cash “await a crash perhaps” now tempted back in because of the massive drop?   Are shares that much lower than when you decided not to buy them “several  years ago?”   Don’t miss out!

Cash is not King anymore!  Don’t miss out!  .... Did you think of that yourself?  Is a Financial Planner behind it?  Financial Planners could have never made everyone rich?   What is the use of cash if you don’t use it when the time is right, like NOW!

It’s appears to be most often the most simplistic of thoughts that make the most sense but we seem to resemble sheep at times.   For example:  For China to de-couple from America is it likely to have happened during a boom or bust?  Hint, does China appear to follow the S&P or Dow, they were during the boom?   To me it must be a bust then,....  but not just yet I feel.  If the “West” is in recession surely China would be effected, exports,  incoming foreign funds, sentiment in general.  What?   China’s effected???? 

So the ones who saved some cash or were lucky enough to bail back in September all flood back into the share market sooner rather than later.  Maybe finally buy some property as well as its down a little and when interest rates go down property goes up!  I'm told!  The share market is at the lowest for years.  Shares are half price and dividends outweigh bank interest.  The charts are looking so attractive, just need a change in direction perhaps!  

Another simplistic question which we will all ignore:   
Is everyone now anywhere near being out of debt?   
The government has not written off a part of everyone’s debt just yet!   And I don’t think people have worked it off yet.  

So far I have locked 40% in term deposit for 3 years.  I am one of very few!  This will not be over anytime soon.  But we all know this!
Cash remains King while the mass’s carry heavy debts.  
Don’t believe.... Wait and see.........


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## Trevor_S (30 January 2009)

MR. said:


> Cash remains King while the mass’s carry heavy debts.
> Don’t believe.... Wait and see.........




So, we have two school of thought,  MR vs Warren Buffett

http://www.nytimes.com/2008/10/17/opinion/17buffett.html



> *You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.*






> What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up.




In particular...



> Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.







> Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”




I guess "time" will tell who was a better "investor", MR or Buffett ?

Don't shoot me, I am just the messenger, I don't have enough alacrity to pick the future...

Declaration: My portfolio is about 60% cash, 30% shares and 10% investment property (PPOR ignored) and own a small business with no debt.  I have a small loan over the shares, about 1/5 the size of my cash reserves so debt is very serviceable),  what the hell would I know.


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## MR. (30 January 2009)

Trevor_S said:


> http://www.nytimes.com/2008/10/17/opinion/17buffett.html
> 
> I guess "time" will tell who was a better "investor", MR or Buffett ?




Good, anothers point of view.  Even if it is Buffett's!  

So we are all going to buy up like s.....  I mean Buffett???.  
Ofcoarse we are, just my point. 

You are an investor but you are not going to try and pick the future?  

I will wait and see........ 3 years.  

Thanks for your input.


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## beerwm (30 January 2009)

Locking your money away for 3 years doesnt seem very prudent.

While you can 'try' and predict the future, unless you respond to changes it wont do you any good.

Cash maybe the flavour of the moment but 3 years is along time, is 5% pa. going to make you happy?

My interests lie in trading, btw. 

I cant seen any upside to investing, that cant be improved by intelligently trading the same stock. 

Investors to me seem lazy and more hopeful than wise.


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## nunthewiser (30 January 2009)

hahahahah WOULD like to point out to all the buffet worshippers THAT cash has OUTPERFORMED mr buffets publicised entrys of late and i pointed this out in another thread but it was not recieved well ......

personally happy to be in cash rather than sitting on wozzas current losses and anyone that disagrees with that FACT  is obviously deluded and too one eyed to notice that even wozza gets his timing wrong at times


anyways  im sure this may upset the more fanatical worshippers of buffets quotes but hey one cant deny the fact of the matter that CASH has outperformed his entrys of late



bless yas all


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## nunthewiser (30 January 2009)

Geeeeez ...........i killed yet another convo .......... this always happens when i point out something simple.


sorry guys will just bat my eyelashes and agree with everyone instead


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## Julia (30 January 2009)

> Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.



I am utterly tired of seeing this Buffet quote repeated ad nauseam.

It assumes that people presently holding cash intend to do this for the long term (....."a terrible long term asset").
If a lot more people had gone to cash a year or so ago, then there would a hell of a lot less misery and griping now.

But hey, let's not expect anyone to take responsibility for looking after themselves here.  I was talking with some people today who shared a common moan that "Super is just a big con".  One person said "Remember Peter Costello telling us to put more into Super?  Well, we did that, and look what has happened". etc etc.

My mutterings that Super was simply a vehicle in which to hold assets in a favourable tax environment were ignored.  As was the suggestion that they could - on appreciating that the world was coming down around our ears - have instructed their Funds to move to the cash option at that time.

There will undoubtedly be another substantial interest rate drop next week, at which stage new term deposits are going to be less than a viable proposition.  

I will nonetheless keep at least 70% in cash and continue with some short term trades in the meantime to generate some income.

Wouldn't be happy to lock it away for 3 years, or even one year, but good luck to anyone who is comfortable with that.


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## Trevor_S (31 January 2009)

nunthewiser said:


> Geeeeez ...........i killed yet another convo .......... this always happens when i point out something simple.




Seems a nonsense, more so then simple, so not much to respond to from me. 

As "Wozza" points out, he doesn't bother with market timing per se, only if he sees fair value in what he purchases... and often pays (on paper) for it, short term.  I am not sure why you try and deride that, he is quite open about it ? His "skill"  is being able to value and identify a great business and waiting for it to get to about that value before purchasing.. and then holding, seems to have worked for him so far.

Let's re-vist this in 10 years and see where it's at ie. whether you're ahead or he is.  I guess... my "money" is on Wozza being WAY ahead, and possibly you owning shares that you purchased after the market has risen significantly and you feel "comfortable".  

I am not particularly a WB "fan" but I do listen to what he has to say.

and he "ain't" the only one, (and I don't me me and my purchases in December) this back late last year

http://www.iht.com/articles/2008/11/16/business/16fund.php?page=1



> If that's the case, why did GMO begin to buy stocks in this market? Because Grantham doesn't believe in trying to time short-term market moves.
> 
> Grantham says that although he doesn't know how well he timed his purchases, "we do know that seven years out, these will be good purchases for us."


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## Wysiwyg (31 January 2009)

Trevor_S said:


> Let's re-vist this in 10 years and see where it's at ie. whether you're ahead or he is.  I guess... my "money" is on Wozza being WAY ahead, and possibly you owning shares that you purchased after the market has risen significantly and you feel "comfortable".




I think nunny`s trying to convey that he is better at picking market bums and will wait until the perfect moment for a dart at it.


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## CanOz (31 January 2009)

Julia said:


> I am utterly tired of seeing this Buffet quote repeated ad nauseam.
> 
> It assumes that people presently holding cash intend to do this for the long term (....."a terrible long term asset").
> If a lot more people had gone to cash a year or so ago, then there would a hell of a lot less misery and griping now.
> ...




Julia, at times your logic falls in the domain of those that also may hold physical gold, but yet i suspect that may not yet be the case. Why?

Cheers,


CanOz


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## MR. (31 January 2009)

Julia said:


> My mutterings that Super was simply a vehicle in which to hold assets in a favourable tax environment were ignored.  As was the suggestion that they could - on appreciating that the world was coming down around our ears - have instructed their Funds to move to the cash option at that time.





Without my permission my super provider “T----“  change my super’s position. It changed  just over one year ago from “mostly cash” to an “aggressive fund”.   From their response “to why did they change it”,  they  claimed that I seemed to fall into an age group which should be taking on higher risk so they  took the liberty of changing my portfolio without my request.  It had come to my attention last February when I received their annual statement.   

I did not request that they changed the fund back as the market had already taken a tumble.   Classic....   I’m looking forward to the next one anytime now.  If it was the majority of my assets I would be obtaining legal advice.  (But they know what they’re doing)  I’m going to find out any day now and I can’t imagine how on earth they have managed to protect my funds in a “a top heavy market”  by choosing an “aggressive fund.”       
Classic.......... (at my expense)


Perhaps I should also look towards some gold!  Thought I'd do some trading and explains in part term deposit on 3mths but I believe it's going to be hard to turn profits with "everyone else"


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## wayneL (31 January 2009)

Julia said:


> I am utterly tired of seeing this Buffet quote repeated ad nauseam.
> 
> It assumes that people presently holding cash intend to do this for the long term (....."a terrible long term asset").
> If a lot more people had gone to cash a year or so ago, then there would a hell of a lot less misery and griping now.
> ...




A very good post Julia.

I'm also sick of the Buffet thing being trotted out. The parallels between Buffett and the individual investor do not exist; or are very slim at best.

IF folks want to do a Buffet, just buy BRKA, otherwise ignore Buffett, he's in a different category.

___________

I like to look at the cash is king maxim a little differently, ie "liquidity" is king.

Cash is good because it's liquid... unless you go and lock it up in a term deposit. I'm prepared to suffer a lower return on cash in exchange for liquidity, so when something I like turns up... bang, I'm in.





I like to look at


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## noirua (31 January 2009)

Cash appears the King when you've lost just about everything.  Later new investors will arrive and so the cycle starts all over again.


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## wayneL (31 January 2009)

noirua said:


> Cash appears the King when you've lost just about everything.  Later new investors will arrive and so the cycle starts all over again.




Eh?

So the person who went to cash, anticipating this collapse, has lost just about everything?

Do explain your logic.


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## MrBurns (31 January 2009)

wayneL said:


> Cash is good because it's liquid... unless you go and lock it up in a term deposit.




Cash is never "locked" away in a term deposit, you can draw it down any time you like , you just lose some interest in the adjustment if you take it early.


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## wayneL (31 January 2009)

MrBurns said:


> Cash is never "locked" away in a term deposit, you can draw it down any time you like , you just lose some interest in the adjustment if you take it early.




Jesus, is metaphor dieing in Australia since I left?


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## nunthewiser (31 January 2009)

Trevor_S said:


> Seems a nonsense, more so then simple, so not much to respond to from me.
> 
> As "Wozza" points out, he doesn't bother with market timing per se, only if he sees fair value in what he purchases... and often pays (on paper) for it, short term.  I am not sure why you try and deride that, he is quite open about it ? His "skill"  is being able to value and identify a great business and waiting for it to get to about that value before purchasing.. and then holding, seems to have worked for him so far.
> 
> ...




YAWN................... same boring reply you gave before.........um i didnt mention holding cash for 10 years , merely stated how cash has out performed wozzas latest entrys .

i too listen to warren buffet and as with all stock market oracles , i listen to the parts that make sense not the parts that suit them because of the hand that they have played.

my argument re cash .IS that , that whole paragraph you keep posting is only worth a pinch of poo IF HIS alternative investments were outperforming cash and frankly HIS investments of late havent..


i couldnt care less what his name is , how many books he has , how big his wang is..the fact is .......... IF one had followed his call to escape cash  and follow him into where he invested . one would be sitting on some sertious losses currently ........ LOL as far as come back in 10 years and see as you stated ....good luck 

have a niceday


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## nunthewiser (31 January 2009)

Wysiwyg said:


> I think nunny`s trying to convey that he is better at picking market bums and will wait until the perfect moment for a dart at it.




No i think nunny conveying that what wozza did by PUBLICALLY saying NOW is the time for investing in quality when he did was irresponsible and a totallly amatureish move on his behalf ...... lol catching falling knives ....because THAT is exactly what he done ..

why not pick up a paper , read his entrys , pull out a chart and have a squiz actually .


my argument has nothing to do with HIS personal investment strategy ..if it works for him GREAT .......... 

my argument is regarding the fact cash HAS ..NOT will ...........outperformed his investment strategies of late 

most here seem to overlook what i just said .......... wozza seems to be a bit of a no go zone when one points out that maybe he actually got it wrong re cash  AT THE TIME


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## MrBurns (31 January 2009)

wayneL said:


> Jesus, is metaphor dieing in Australia since I left?




Most people who say that actually believe you cant get the money til the end of the term.


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## noirua (31 January 2009)

wayneL said:


> Eh?
> So the person who went to cash, anticipating this collapse, has lost just about everything?
> Do explain your logic.



 First sentence explains what cash is seen as when nearly everything is lost. Not when you still have lots of it.

The cycle returns when new investors arrive, not having experienced what has happened before.  Eventually many fall into the same trap again.


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## Julia (31 January 2009)

CanOz said:


> Julia, at times your logic falls in the domain of those that also may hold physical gold, but yet i suspect that may not yet be the case. Why?
> 
> Cheers,
> 
> ...



Probably a good and very logical question, CanOz.   Best I can say in response is that I only put money in what I understand and I've simply never been attracted to learning about gold, or gold stocks for that matter.
Your question might prompt me to stir myself into taking more interest.
Cheers
Julia


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## MR. (31 January 2009)

noirua said:


> Cash appears the King when you've lost just about everything.  Later new investors will arrive and so the cycle starts all over again.



I understand what you mean.  One assumes one has already lost!  This is not the case at all here.  Over the past 15 months including losses due to share holdings I am not ahead nor behind.  



wayneL said:


> I like to look at the cash is king maxim a little differently, ie "liquidity" is king.




Are shares not liquid?   Cash is still King



MrBurns said:


> Cash is never "locked" away in a term deposit, you can draw it down any time you like , you just lose some interest in the adjustment if you take it early.




That is a point I made as well on another thread.  Three years is a long time and perhaps too long, but I can break it.  It also perhaps protects part of my assets which will not easily be caught in a bad decision.  Next 2-3 years don't look good to me at all!

-------
No wrong or right here and trading is not my game.


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## nunthewiser (31 January 2009)

I always thought that the number one rule in ANY portfolio was to protect ones CAPITAL .......... if that means sitting on current term deposit larfable rates and waiting for a bit more safety out there so be it ......


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## Julia (31 January 2009)

nunthewiser said:


> I always thought that the number one rule in ANY portfolio was to protect ones CAPITAL .......... if that means sitting on current term deposit larfable rates and waiting for a bit more safety out there so be it ......



Agree with your No. 1 rule, but the problem occurs when that capital is what you use to generate an income.   If deposit rates fall to 2%, that being equivalent to inflation, then you're effectively not receiving an income.


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## MR. (31 January 2009)

Julia said:


> Agree with your No. 1 rule, but the problem occurs when that capital is what you use to generate an income.   If deposit rates fall to 2%, that being equivalent to inflation, then you're effectively not receiving an income.



And is made worse by the interest being received is taxable.

-------

Interesting that if you invested 10,000 in 2004 in cash or Aord's the outcome is very similar just now.  

The All Ord's investor was a lot richer at times and their cost of living (most likely) rose as a result.


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## MR. (31 January 2009)

Cash invested at say 5% will return 3.5% tax paid at 30 cents in the dollar.
A P/E of 28 guaranteed by our government.
------
Instead we all pooled together and invested these funds into a company. 

We purchase a company with our $50 million. (you're putting alot more in than me) We leverage that by 50% and turned our investment into 75 million.

The companies income less direct costs per year is $14.3 million.
From that we deduct 
Overheads                 $3 million
Interest @ 10%          $2.5 million
Repayment (15 years)  $1.67 million
                               =========
                                $7.13 million left. After tax of 30 cent in the dollar = $5 million or a P/E of 10

The following has been my concern and continues to be.
Suddenly sales drop by 25% which results in the income less direct expenses dropping to $10.75 million. It dropped our fully franked profit down to $2.5 million.  The P/E just blew out to 20.  So the "Share price" responds and is now half back to a P/E of 10.

If the sales dropped by 50% our company is not making anything.  Ofcoarse  we tighten "overheads" and the government helps by reducing interest rates. 
But we are on the verge of going under.  
At this stage what is the share price? 

Leverage is everywhere.  Reading through the Storm thread. Leveraged people investing into the leveraged Storm.  A double whammy.  
But we still consider investing into Leveraged companies selling products to the highly leveraged consumers.  

------
On a side note:  I would assume if the bank was strapped for cash at the time of attempting to break a term deposit they could refuse! 
Which would be fair enough.


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## nunthewiser (31 January 2009)

Julia said:


> Agree with your No. 1 rule, but the problem occurs when that capital is what you use to generate an income.   If deposit rates fall to 2%, that being equivalent to inflation, then you're effectively not receiving an income.




yep totally agree re income .BUT does that validate sitting on a potential capital loss to collect the divies etc ?

tis one of those chicken and the egg kind of scenarious .


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## robots (31 January 2009)

hello,

and for those able to, optimizing/improving your income is where the CASH will roll in year after year

thankyou
robots


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## Trevor_S (31 January 2009)

Julia said:


> I am utterly tired of seeing this Buffet quote repeated ad nauseam.
> 
> It assumes that people presently holding cash intend to do this for the long term (....."a terrible long term asset").




I don't take that quote as meaning that at all.  Having Cash in a CMT that rolls over each month is to me indicative that you haven't made a decision and will reinvest when you feel comfortable with it and identify opportunities... which is considerably different to putting your cash in a 3 or 5 year fixed term deposit... to my mind that was what WB was on about... you obviously see it differently ?



Julia said:


> If a lot more people had gone to cash a year or so ago, then there would a hell of a lot less misery and griping now.




Of course but those in misery  are those who used inappropriate levels of leveraging or poorly thought through strategies.  No way in hell did I even consider selling my WBC shares that I bought for $3 or my $18 BHP shares for example, the Dividend return on the WBC shares can't even come close to being matched by any term deposit. 

My "strategy" is to accumulate enough shares for an excellent dividend stream for retirement (I am semi retired at the moment), I receive more in dividends then many people make as a wage and I still earn much more as a salary then I need to live from year to year, so I accumulate cash, then buy when I am comfortable, it's pretty boring to most people.  I have been doing that since the very early '90's in my very early 20's.  The work I do with investing is identify excellent companies and fair value, I am not that good at it though.   I have had IP's over the years (and still have 1) so I am not immune to real estate but I don't make a good residential landlord.


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## tech/a (31 January 2009)

Hmm

Lets suppose you have 10,000 WBC share which had a value of $310,000
Now a value of $160,000.
$150,000 down the gurgler in a year.
Thats one hell of a lot of dividends.
Havent bothered with BHP.

While its a plan (The one you have) dont know its fool proof.


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## noirua (31 January 2009)

"CASH is King".  But what cash?  Australia is a small economy when all the worlds currencies are considered.
Sitting in the Aussie, especially in the last 12 months, has been bad news indeed for travelers.  Unless you're holidaying in the very few destinations that are worse than the Aussie$, very few of them.


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## MR. (31 January 2009)

Trevor_S said:


> Having Cash in a CMT that rolls over each month is to me indicative that you haven't made a decision and will reinvest when you feel comfortable with it and identify opportunities... which is considerably different to putting your cash in a 3 or 5 year fixed term deposit. to my mind that was what WB was on about...






> Warren Buffet 16/10/08:
> Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
> 
> Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”




Cash is a terrible long-term asset and I totally agree. However my 3 years is not 5 nor 10 either.  Reading the article do you think WB was put up to it?  Try and calm a few down? 
BUY AMERICAN, I AM 
No mistake where to buy!

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Here is a chart which I posted in the XAO thread a year ago.




The graph is the movement in the price of Australian shares *less inflation *over the past 80 odd years.

Observation by added RED line: Between Approx 1930 and 1980 (50 years) Australian shares as an average was equal to inflation. 

Observation by BLACK and White lines: Is the range in the long term trend as I understood it.

We do seem to be in that long term trend range now at 3500. 
-----------

We have what 17 years expansion in Australia.  (Your first trade was 18 - 19 years ago? WBC? $3-) What does the fine print always say? "Past returns are not any indication of future returns" Not trying to be smart we are both similar in age and I am a little out on a limb here.

Everyone for years has been drumming CASH is a waisted investment.  Do many not preach buy "what is out of favour"  Everyone keeps accepting leveraging.  I never have!  

What Financial Planner has ever told you to buy or just keep cash? 

As for the invitation to compete with WB I take up the challange. 
My 5.5% term deposit for 3 years will outperform the Dow / S&P over the same term from the 16/10/08.


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## Julia (31 January 2009)

nunthewiser said:


> yep totally agree re income .BUT does that validate sitting on a potential capital loss to collect the divies etc ?
> 
> 
> tis one of those chicken and the egg kind of scenarious .



I don't see the potential capital loss as the only available option.
And will not buy anything for the dividends.  These may well be cut if this mess gets nasty enough, as has already happened with some companies.

I've been doing some short term trades with BHP which moves in sufficiently large amounts to make it worthwhile.  Somewhat of a departure from my previous longer term holds, but if I can generate a 10% gain on each trade using $100K each time, then that's OK.
And if the world falls over, then BHP is big enough to come back when it rights itself again.


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## nunthewiser (31 January 2009)

Julia said:


> I don't see the potential capital loss as the only available option.
> And will not buy anything for the dividends.  These may well be cut if this mess gets nasty enough, as has already happened with some companies.
> 
> I've been doing some short term trades with BHP which moves in sufficiently large amounts to make it worthwhile.  Somewhat of a departure from my previous longer term holds, but if I can generate a 10% gain on each trade using $100K each time, then that's OK.
> And if the world falls over, then BHP is big enough to come back when it rights itself again.




ah ha but now we talking a different matter from what was first discussed , BUT you STILL are in cash ...just trading the short term moves for a hopeful faveourable outcome .i also trade for an income . my point previously was why would one flee from cash to investment in current climates and the fact that cash has outperformed MOST stock market investments since that buffet paragraph first started doing the rounds.

also are you saying that if your trade is not favourable ie goes up that you are willing to ride it out no matter how long rather than lose a portion of your capital as a stoploss ?if so, that will quickly put a stop to your " income " from trading as it will be parked up in the stocks until they come back to profibility/break even


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## Julia (31 January 2009)

Trevor_S said:


> I don't take that quote as meaning that at all.  Having Cash in a CMT that rolls over each month is to me indicative that you haven't made a decision and will reinvest when you feel comfortable with it and identify opportunities... which is considerably different to putting your cash in a 3 or 5 year fixed term deposit... to my mind that was what WB was on about... you obviously see it differently ?



The quote says *"cash is a terrible long term asset"*
That doesn't indicate to me a CMT with reconsideration every month, but rather something you stuff away in a bank account and pretty much forget it because you're too afraid to take any risks.  I know people who do this. They think the share market is like a casino.







> Of course but those in misery  are those who used inappropriate levels of leveraging or poorly thought through strategies.



No, it's absolutely not just those who used inappropriate levels of leverage.
It's the vast majority of the public who think "Super" is an investment of itself rather than a tax advantaged vehicle for holding assets.  They didn't have a strategy and they simply didn't understand that their "Balanced Portfolio" was less safe than "Cash" so didn't ask their Super funds to switch them to the Cash option when the sky began to fall.  Most of these people have lost about half their super balance in the last eighteen months.

It also includes people who were actually advised to switch to Cash about a year ago and who looked vaguely disbelieving and essentially chose not to take any personal responsibility.
Now they're crying.



> No way in hell did I even consider selling my WBC shares that I bought for $3 or my $18 BHP shares for example, the Dividend return on the WBC shares can't even come close to being matched by any term deposit.



Well no, perhaps not.  But did you consider locking in your profits when WBC was way higher than it is at present? 

 The 52 week range is $27 to $14.

If you'd sold at $27, having e.g. 1000 shares, then that's $27,000.
Less tax (if you hold them in a SF at 15%, if SF is in pension phase no tax.)

If you're holding the 1000 shares at present, at approx $15, then you have $15,000.
Difference of $12,000 which you could have used to buy about 800 more WBC shares approx at present price.

You're happy with the dividends.   And yes, they are much better than bank interest at present.   But:

Call the yield 10% and you get $1500 plus the franking credits.
Considerably less than your $12,000 profit in the previous example.

I know which option I'd be taking.







> My "strategy" is to accumulate enough shares for an excellent dividend stream for retirement (I am semi retired at the moment),



so you'd be able to utilise the T.R.A.P. option and save on tax?



> I receive more in dividends then many people make as a wage and I still earn much more as a salary then I need to live from year to year, so I accumulate cash, then buy when I am comfortable, it's pretty boring to most people.



Fair enough.  Why bother going to any trouble to make more money than you need.


----------



## Julia (31 January 2009)

nunthewiser said:


> ah ha but now we talking a different matter from what was first discussed , BUT you STILL are in cash ...just trading the short term moves for a hopeful faveourable outcome .i also trade for an income . my point previously was why would one flee from cash to investment in current climates and the fact that cash has outperformed MOST stock market investments since that buffet paragraph first started doing the rounds.



OK.  I don't have any argument with what you're saying.
And yes I know the thread title is "Cash is King" but I've assumed the thread was started to discuss options for making the most of difficult choices.
So if falling interest rates mean that cash of itself is no longer king for now, then we need to consider alternatives.





> also are you saying that if your trade is not favourable ie goes up that you are willing to ride it out no matter how long rather than lose a portion of your capital as a stoploss ?if so, that will quickly put a stop to your " income " from trading as it will be parked up in the stocks until they come back to profibility/break even



I wouldn't do it with some penny stock.   Using e.g. BHP is essentially similar to having a long term hold but just making some profit in the meantime.
And yes, I'd hold until there was a profit.  The yield of 3.2% with 100% franking is probably better than cash deposit rates will be in a month or so.


----------



## MR. (1 February 2009)

Julia said:


> So if falling interest rates mean that cash of itself is no longer king for now, then we need to consider alternatives.




If share prices keep falling, even at 0% interest rates "Cash is still King!"  But other alternatives could be the likes of eg: gold.



Julia said:


> Using e.g. BHP is essentially similar to having a long term hold but just making some profit in the meantime.
> And yes, I'd hold until there was a profit.  The yield of 3.2% with 100% franking is probably better than cash deposit rates will be in a month or so.




So no stop loss!

BHP:
75 billion in assets
36 billion in Liabilities
Earnings per share of 9.4%
P/E of 10

(BHP the market darling?)

12 month high of $50- and is $30- now. (Is it a warning that BHP was $30 in 2007?)

Isn't BHP just like the example I gave above as an alternative to cash?

The question is:
*Is CASH King while the mass’s carry heavy debts? *
Maybe I've just lost the plot.


----------



## nunthewiser (1 February 2009)

MR. said:


> So no stop loss!
> 
> BHP:
> 75 billion in assets
> ...





No you havent lost the Plot , i do not think much of julia's above plan either .as as she quoted earlier  divies DO get cut etc etc .
No stoploss whilst trading in THIS arena currently could see ones capital tied up for an awfully long time
But each to there own and good luck to her , hopefully its only wins she gets while trading BHP


----------



## mayk (1 February 2009)




----------



## Julia (1 February 2009)

nunthewiser said:


> No you havent lost the Plot , i do not think much of julia's above plan either .as as she quoted earlier  divies DO get cut etc etc .



Now let's have a reality check here:  I don't think anyone would be buying BHP for its dividend at about 3%.  I merely made mention of it in comparison to what deposit rates are likely to be very shortly.  



> No stoploss whilst trading in THIS arena currently could see ones capital tied up for an awfully long time



Another reality check:  I'm doing this with a very small proportion of my capital, such that I'd be entirely happy to keep in BHP for the next couple of decades.    Most of it will remain unprofitably tucked away in the bank.


I'm very conservative but believe in these times we need to be prepared to look outside our traditional views and practices.

And thanks for the good luck wishes (whether sincere or not).  I've never been much of a believer in luck actually, and doubt that it was luck that allowed me to be self funded many years before most people are starting to think about retirement.

And btw, nun, what's your own survival strategy in these times?


----------



## pilots (1 February 2009)

Julia said:


> Now let's have a reality check here:  I don't think anyone would be buying BHP for its dividend at about 3%.  I merely made mention of it in comparison to what deposit rates are likely to be very shortly.
> 
> 
> Another reality check:  I'm doing this with a very small proportion of my capital, such that I'd be entirely happy to keep in BHP for the next couple of decades.    Most of it will remain unprofitably tucked away in the bank.
> ...




Julia, you say you believe in LUCK, we went to the USA 26 June, sold up our WPL at $55, our dollar was about 92c to the US, came home three months later to see WPL way down, and our Dollar down, LUCK is a big part of trading I believe. Our money is in the bank getting only 5.55% and 5.75%, but we still have all our money. You think things are bad here go the states and see how bad things are, we are VERY VERY Lucky to be living here.


----------



## MR. (1 February 2009)

pilots said:


> Julia, you say you DON'T believe in LUCK, we went to the USA 26 June, sold up our WPL at $55, our dollar was about 92c to the US, came home three months later to see WPL way down, and our Dollar down, LUCK is a big part of trading I believe. Our money is in the bank getting only 5.55% and 5.75%, but we still have all our money. You think things are bad here go the states and see how bad things are, we are VERY VERY Lucky to be living here.




Correction think "Pilots" left out DON'T

Julia, I know what you are saying and Pilots yes IMO "Luck is a big part of trading!"


----------



## nunthewiser (1 February 2009)

Julia said:


> And thanks for the good luck wishes (whether sincere or not).  I've never been much of a believer in luck actually, and doubt that it was luck that allowed me to be self funded many years before most people are starting to think about retirement.
> 
> And btw, nun, what's your own survival strategy in these times?




was sincere.

my portfolio is comprised of cash , physical gold , yen and a small handful(% of stock)

i got lucky  in march 07 when seeing the writing on the wall and shifted from stock to majority cash (i still hold a small investment stock portfolio of which i add to on panicked dips BUT none at stoploss points with the exception of TRY which i resigned myself to being a silly move as capital been tied up with them at a loss for over a year now and still not looking at break even scenario (for some time)unless something extraordinary happens)

i trade on a monthly/weekly to day basis for my income BUT not gunna hold past my stoploss points and sit there and wait an indefinate time to recoup my capital unlike others .

i also have other business intrests that supply me an income

i am also self funded and have been for a long time , i rely on no handouts, benefits, charity or any other form money that MYSELF has not provided .

just because i dont agree with your methods re BHP and holding regardless of losses doesent mean it cant be right for you

ps.  just because i may not agree with your strategy on BHP does not mean i am correct 

takes allsorts of plans to make a market work


----------



## nunthewiser (1 February 2009)

I also hold property but thats for another thread


----------



## nunthewiser (1 February 2009)

Just on a side note 


i wonder if those holding " blue chips" or whatever there called in japan feel the same way about there long term investments now from there dizzy heights or even if they bought 1 year after the crash

long time to sit on a loss waiting hey

could never happen in oz tho hey  ?

but each to there own


----------



## MR. (1 February 2009)

nunthewiser said:


> I also hold property but thats for another thread




Perhaps, wouldn't want to fill this thread with all those opinions.  But property is a very interesting subject. Is property better than cash? 
Is your property for pure investment?  Or is it your home/home investment?  

I've made my decisions there and sold not long ago. Not at the best time either, was in the middle of advertising when the s--- hit the fan.  
Now,.... that decision was hard.

now calm down robots, bee???
-------
Hard to understand how Japanese hold term deposits in the last decade at 1-2% interest.  Something made so many of them completely flee to cash.  Ahhh  No not here.  If we are the United States "It will not happen to us either we just flooded the markets with cash" Is that what Japan did wrong?


----------



## nunthewiser (1 February 2009)

MR. said:


> Perhaps, wouldn't want to fill this thread with all those opinions.  But property is a very interesting subject. Is property better than cash?
> Is your property for pure investment?  Or is it your home/home investment?
> 
> I've made my decisions there and sold not long ago. Not at the best time either, was in the middle of advertising when the s--- hit the fan.
> Now,.... that decision was hard.




The propertys i have remaining have all been previous homes which were bought some time ago . they are all were bought in the cheaper price ranges at the time with the exception of a hobby farm adjacent to the proposed "oakagee development" just north of geraldton.This place i now reside in but have rented out previously whilst away from wa 

i am in  a different position to those that want to invest now up here as my property owned is with a negligable mortgage which was actually only got to further a small development in southern tasmania 

as far as property being a better current investment than cash ??
i think NO , not currently 

but for me and the returns to purchase price paid and capital growth to that purchase price .definately outperformed

i also have sold property within the last 12 months and yes with the exception of some riverfront blocks i had(which are not actually settled as yet , only sold as the huon valley council is a little bit slow in the release of separate titles) , it was definately no picnic and took a 20% discount to my original asking price just to get it gone


----------



## MR. (1 February 2009)

nunthewiser said:


> The propertys i have remaining have all been previous homes
> 
> i am in  a different position to those that want to invest now up here as my property owned is with a negligable mortgage which was actually only got to further a small development in southern tasmania
> 
> ...




Your money has to find a "home" somewhere.  Low cost housing.  *Would keep as well if I owned some if with little debt.*

An interesting thought which you no doubt have considered:
Are your houses that much different to Trevor_s's BHP or WBC.  
All purchased a long time ago?  

*so we both nun the wiser?*

I hold no property other than the family home.  But will buy perhaps in "3 years"  Geez my fingers stink!


----------



## beerwm (1 February 2009)

_Hubris_; Excessive pride, presumption or arrogance which usually leads to the downfall

3 years... in a term deposit

when you decided to do this, did you consider the alternate at all?
how things may turn out in the future, if what you have predicted are not correct?

-I'm not saying that you are or arent correct.


----------



## nunthewiser (1 February 2009)

MR. said:


> An interesting thought which you no doubt have considered:
> Are your houses that much different to Trevor_s's BHP or WBC.
> All purchased a long time ago?




Good luck to trev with his WBC and BHP holds , i have never queried why or how on his holds and actually can see why he is no rush to let go of WBC regardless of how high its been as others have pointed out everything wrong wih him holding but neglected to mention his tax implications if he sold , and where else would he get the current yield he is getting again , not like WBC gunna see 3 bucks again ...... bhp tho MAY see 18 agin before this correction finished but thats pure speculation and nothing to do with current topic really

i too hold MTS at a much lower average than current prices and with the divvies paid over the years , its turned out to be a nice lil earner 

and to answer the question .NO its no differrent


----------



## MR. (1 February 2009)

beerwm said:


> _Hubris_; Excessive pride, presumption or arrogance which usually leads to the downfall



Does it?



beerwm said:


> 3 years... in a term deposit
> 
> when you decided to do this, did you consider the alternate at all?




No...  fly by the seat of my pants....  thats why it is going to return 5.5% Government Backed and sleep soundly at night.... Ofcoarse I did!



beerwm said:


> how things may turn out in the future, if what you have predicted are not correct?




Ahhh "*we wouldn't want to be left behind now, would we*"  
Is that not exactly why so many people are and will be in finiancial trouble!

Your remark can be used in so many contexts as well.  Why make any decision (for it could be wrong) Funny how a simple 3 year term deposit is of such concern of "losing money".  So this money could have been better spent?  Maybe!  What are the answers then?  

Not buying the yen is my only real regret of late.  I really do not think locking into a term for 3 years is going to be one of my worst regrets in the future.  Remember it is 40% not 100%.  Perhaps my regret will be not locking more in???
Perhaps by keeping the rest "liquid" (the 60%) "in a cash deposit account"  sets you ready for a pounce as which most seem to agree with. And thus why 40% is in not 100%


----------



## Julia (1 February 2009)

pilots said:


> Julia, you say you believe in LUCK, we went to the USA 26 June, sold up our WPL at $55, our dollar was about 92c to the US, came home three months later to see WPL way down, and our Dollar down, LUCK is a big part of trading I believe. Our money is in the bank getting only 5.55% and 5.75%, but we still have all our money. You think things are bad here go the states and see how bad things are, we are VERY VERY Lucky to be living here.



Pilots, obviously you meant to include "don't" in your initial sentence.
OK, that might seem lucky, but didn't you think about what best to do and then make a reasoned decision to take your profit on WPL?
Congratulations on such a good decision.  
Perhaps it's about how you define 'lucky'?  I'd say you'd be lucky if an out of control aircraft crashed to the ground and just avoided you and your property.
Ah but then you could say you'd have been unlucky to have even been in the vicinity of a crashing aircraft!
But hopefully I've made a bit clearer what I mean.

On living in Australia, I couldn't agree more.


----------



## Julia (1 February 2009)

beerwm said:


> _Hubris_; Excessive pride, presumption or arrogance which usually leads to the downfall
> 
> 3 years... in a term deposit
> 
> ...



Let's remember that MR can always break the term deposit, forfeiting some of the interest.
So I can quite see why he'd have locked in a rate so much better than what will be available in a few months' time.   If the market fails to recover in the next three years then he will be very much better off.   And if there is a clear recovery, and he judges he can derive more profit from investing/trading then he can choose to release the money.


----------



## Julia (1 February 2009)

nunthewiser said:


> i got lucky  in march 07 when seeing the writing on the wall and shifted from stock to majority cash



Interesting.   The market continued to rise until about November of that year.   Can you say a bit more specifically what 'writing on the wall' in March prompted you to sell in a rising market?


----------



## beerwm (1 February 2009)

MR. said:


> Does it?
> 
> 
> 
> ...




Woah!! 5.5%... aren't your ambitions high!!

The exact reason people are in financial trouble now is because they didnt react to what was happening. A firm buy & hold strategy where they locked the money in.... sound familiar?

I'm not knocking your decision to go into cash, but its a tad narrowminded to suggest 'CASH IS KING FOR 3 YEARS!!' 

-so you've basically told yourself,
;there will not be any good investing /recovery opportunities for atleast 3 years
;interest rates will not reach 5.5% on a savings account until 3 years
;a 1-4% premium of that money [in comparison to a variable savings account] is worth the risk of the 2 above.

my 

Fair point Julia, but isnt the rate like >2.00% if you pull out?


----------



## MR. (1 February 2009)

Julia said:


> And if there is a clear recovery, and he judges he can derive more profit from investing/trading then he can choose to release the money.




And the bank, more likely then not, will release me from my term if things are looking alot better.  Will add I should have divided into smaller parcels at the same rates. Have 2 or 3 instead of 1.  Now that I didn't give enough thought.  



nunthewiser said:


> i have never queried why or how on his holds and actually can see why he is no rush to let go of WBC regardless of how high its been as others have pointed out everything wrong wih him holding but neglected to mention his tax implications if he sold.




Ok...  my post did seem to imply these were your thoughts which they are clearly not.

I seem to have a tremendous amount of speculation with regards to Property and Shares and think times will be better for buying these assets at a later date.


----------



## nunthewiser (1 February 2009)

Julia said:


> Interesting.   The market continued to rise until about November of that year.   Can you say a bit more specifically what 'writing on the wall' in March prompted you to sell in a rising market?




Yes i definately missed the cream of the top and really regret not being as good as most here who seem to buy at the very bottom and sell at the very top 

my reasons for selling was because of the influx of hype , parabolic trends and the fact that every man and his dog reckoned the stock market was a guarenteed win situation .LOL ......my reason for selling probably very diffrent to your reasons but either way im happy i excited where and when i did as i live to play again  unlike some of the more unfortunate newer bright eyed bushy tailed punters that thought markets only went up

again im glad so many were able to sell at the very top unlike myself and have placed a stickitt note on my screen to become a better trader/investor so i can keep  up with others here

have a niceday


----------



## nunthewiser (1 February 2009)

MR. said:


> I seem to have a tremendous amount of speculation with regards to Property and Shares and think times will be better for buying these assets at a later date.




Totally agree re better buying .not on all but on most........... personally dont think theres any hurry for much as yet

these cycles take there own sweet time


----------



## Julia (1 February 2009)

nunthewiser said:


> Yes i definately missed the cream of the top and really regret not being as good as most here who seem to buy at the very bottom and sell at the very top



Clearly you're being sarcastic.   I don't think there would be a single person on ASF who would claim they always sell at the very top and buy at absolute bottom.



> my reasons for selling was because of the influx of hype , parabolic trends and the fact that every man and his dog reckoned the stock market was a guarenteed win situation .LOL ......my reason for selling probably very diffrent to your reasons but either way im happy i excited where and when i did as i live to play again  unlike some of the more unfortunate newer bright eyed bushy tailed punters that thought markets only went up



Thanks for explanation.   As you say, pity more didn't follow your example.





> again im glad so many were able to sell at the very top unlike myself and have placed a stickitt note on my screen to become a better trader/investor so i can keep  up with others here
> 
> have a niceday



I think most of us are just trying to have a constructive discussion here.  I'm unaware of anyone who has claimed to have a superior strategy or to have sold at the top, so I'm not sure that sarcasm really furthers anyone's knowledge or understanding.


----------



## nunthewiser (1 February 2009)

Julia said:


> Thanks for explanation.   As you say, pity more didn't follow your example.
> 
> 
> 
> ...




People dont want to listen 90% of the time when the going is good . but some view that as a warning when the going is TOO good.

just on a side note a few ppl close to me DID follow the exit signs , and actually sold rather nearer the top than me but hey they had been of the notion that the market was overcooked when we breached 5000 but just trailed along there stops.


MY trading /investing plans/actions are of no use to anyone BUT me .. ppl would have (and did) scoffed at me for saying we had hit close to the top around march and it was time for care .

like i said ppl only wanna hear what they want to hear and after the facts are proven ONLY then do they look back and wonder why they didnt act sooner


----------



## Julia (1 February 2009)

beerwm said:


> Woah!! 5.5%... aren't your ambitions high!!
> 
> The exact reason people are in financial trouble now is because they didnt react to what was happening. A firm buy & hold strategy where they locked the money in.... sound familiar?
> 
> I'm not knocking your decision to go into cash, but its a tad narrowminded to suggest 'CASH IS KING FOR 3 YEARS!!'



I don't see that MR is necessarily suggesting that.   Clearly, for his own reasons, he's most comfortable knowing he has the money earning the 5.5% that he has on his 3 year deposit.   And if the recovery is in fact three years away, then he'll be feeling pretty damn good.




> -so you've basically told yourself,
> ;there will not be any good investing /recovery opportunities for atleast 3 years
> ;interest rates will not reach 5.5% on a savings account until 3 years
> ;a 1-4% premium of that money [in comparison to a variable savings account] is worth the risk of the 2 above.



Well, there isn't such a thing as a perfect decision.  Especially at present.
All any of us can do is consider all the advantages and disadvantages and reach the compromise with which we will feel most OK.

None of us know what will happen in the next three years.  No idea.







> Fair point Julia, but isnt the rate like >2.00% if you pull out?



I honestly don't know, but yes I'd expect there would be a significant reduction to deter people from stuffing about with term deposits.





MR. said:


> And the bank, more likely then not, will release me from my term if things are looking alot better.  Will add I should have divided into smaller parcels at the same rates. Have 2 or 3 instead of 1.  Now that I didn't give enough thought.



Do you mean the bank will release you from the term without penalty?
Why would they do that?  

Re amounts invested:  I do individual term deposits of just $50K each.
The bank staff aren't very impressed about all the paperwork but it does mean you have more flexibility.


----------



## pilots (1 February 2009)

Julia said:


> Pilots, obviously you meant to include "don't" in your initial sentence.
> OK, that might seem lucky, but didn't you think about what best to do and then make a reasoned decision to take your profit on WPL?
> Congratulations on such a good decision.
> Perhaps it's about how you define 'lucky'?  I'd say you'd be lucky if an out of control aircraft crashed to the ground and just avoided you and your property.
> ...




Julia, sorry I missed the DON'T.


----------



## beerwm (1 February 2009)

Personally, i wouldnt feel comfortable with limiting my options for the next 3 years.

but each to his own, i'm sure your reasons suit your goals.
good luck MR.


----------



## nulla nulla (1 February 2009)

"And btw, nun, what's your own survival strategy in these times?"


Eat drink & be merry for tomrrow....................


----------



## nunthewiser (1 February 2009)

nulla nulla said:


> "And btw, nun, what's your own survival strategy in these times?"
> 
> 
> Eat drink & be merry for tomrrow....................




LOL amen !


----------



## MR. (1 February 2009)

nunthewiser said:


> Yes i definately missed the cream of the top and really regret not being as good as most here who seem to buy at the very bottom and sell at the very top






nunthewiser said:


> i live to play again  unlike some of the more unfortunate newer bright eyed bushy tailed punters that thought markets only went up






nunthewiser said:


> People dont want to listen 90% of the time when the going is good .
> 
> MY trading /investing plans/actions are of no use to anyone BUT me .. ppl would have (and did) scoffed at me for saying we had hit close to the top around march and it was time for care .
> 
> like i said ppl only wanna hear what they want to hear and after the facts are proven ONLY then do they look back and wonder why they didnt act sooner




(I have cut down the above a little)
Its all about greed.......  Knowing when enough is enough.......  regardless if they missed out or not.  I think I can use some of your comments even in this current climate. Alot strongly believe a term deposit rate at 5.5% is laughable!  Maybe they have had it too good?  

Also funny, I also have a sticky note. I have recently found it on my forehead and it appears to have a single  "L"  written on it?  
Suppose now I have to live with it, its only three years being hobbled.



Julia said:


> Well, there isn't such a thing as a perfect decision.  Especially at present.
> All any of us can do is consider all the advantages and disadvantages and reach the compromise with which we will feel most OK.
> 
> Do you mean the bank will release you from the term without penalty?
> Why would they do that?



a-men ..... now....."watch out for sticky notes!"

No, there will be a penalty.  I just wouldn't be completly suprised if they didn't let me break the term without a GOOD reason.  If times were really bad this might be the case.  I will say,  I have gone into this term with the intention of NOT breaking it.



beerwm said:


> Personally, i wouldnt feel comfortable with limiting my options for the next 3 years.
> 
> but each to his own, i'm sure your reasons suit your goals.
> good luck MR.




No-one here appears comfortable with this term except me.  
Its simple.  If the masses have huge debts "CASH is king".  
Hope I have planted at least a small seed.

How long do you really think it will be before the good times return?


----------



## beerwm (1 February 2009)

MR.

my interests are in trading,
so i guess there are always good times

i am comfortable with the term 'cash is king'
and while i learn and create a trading system, my money is in cash/ most of it.

its just not going to be king for ever,its the timeframe i am not comfortable with.

no one knows the future, the best you can do it react to the present.

i think it was julia who said she had her cash in 3/6 month term deposits, which rotated her availability - which i consider a better approach

but this is just my opinion


----------



## wayneL (1 February 2009)

MR. said:


> Are shares not liquid?   Cash is still King



Yes they are, and there are still opportunities in stocks (and their options).

Despite the state of the economy/market, it's still business as usual for me.

If cash is king, liquidity is God.

Cash => 2% PA

Stock/option trading => some figure hugely in excess of that.


----------



## Glen48 (1 February 2009)

What happens if the USD tanks? won't the yank up IR to get money in to help with the bail out , what is to stop USA paying 10% or much more?
That why I keeping my  cash handy.


----------



## nunthewiser (1 February 2009)

wayneL said:


> Cash => 2% PA
> 
> Stock/option trading => some figure hugely in excess of that.




 roll up roll up everyones a winner , step right up


----------



## MR. (1 February 2009)

wayneL said:


> Yes they are, and there are still opportunities in stocks (and their options).
> 
> Despite the state of the economy/market, it's still business as usual for me.
> 
> If cash is king, liquidity is God.




Yes I see, it would be God for some!




wayneL said:


> Cash => 2% PA
> 
> Stock/option trading => some figure hugely in excess of that.




+/-  ?   With every winner a loser.  
In a falling market = more losers than winners.


----------



## beerwm (1 February 2009)

MR. said:


> Yes I see, it would be God for some!
> 
> 
> 
> ...




i guess it depends which way you are trading

ie. short selling


----------



## MrBurns (1 February 2009)

wayneL said:


> .
> Cash => 2% PA
> Stock/option trading => some figure hugely in excess of that.




Yes but to beat cash you have to put ALL your cash into trading, a bit risky eh ?


----------



## nunthewiser (1 February 2009)

Dont get me wrong .i reckon wayne more than capable of making better than bank intrest in ANY market .but how many other normal odds and sods trader/investors would be ?


----------



## MR. (1 February 2009)

nunthewiser said:


> Dont get me wrong .i reckon wayne more than capable of making better than bank intrest in ANY market .but how many other normal odds and sods trader/investors would be ?



Yes my opinion is of the same.  However did even wayne disappear for a while just lately?  With a final post "You think you lost money"


----------



## Trevor_S (1 February 2009)

MR. said:


> No-one here appears comfortable with this term except me.




Which might tell you something. That aside, be contrarian and don't follow the masses   best of luck to you then (truly), you made a choice, sure I don't agree with it, but it ain't my money... I am too much of a pussy to predict 3 years out, I have no friggin' idea, 10 or 20 years, I am prepared to take a punt though and any discussion that makes you think (even if you don't necessarily agree with it) is good to my mind.



> How long do you really think it will be before the good times return?




Depends what your definition of good times is and what perspective you are looking at it from, eg lots of people are better off these days then 18-24 months ago, those that have a PPOR (what care they of retreating house prices)  and are paying it off and have a job where they drive to work, have it "pretty good".  Low variable mortgage rates, lots of welfare for them if they have kids, tax breaks coming up, fuel is much cheaper, input costs are coming down, so things like food etc are a little cheaper

Self funded retires on the other had.. low interest rates typically = crappy income.  When interest rates where high, they were happy, nice income stream, those paying off mortgages, whoa is me... shrug.... turns and round-a-bouts.


----------



## tech/a (1 February 2009)

For now for many cash maywell be the best option for many.

When and not if---inflation bites then cash will be the last place you'll want to be as its eroded,in value.

Personally I like it to be working for me---well most of it.


----------



## robots (1 February 2009)

MR. said:


> Yes my opinion is of the same.  However did even wayne disappear for a while just lately?  With a final post "You think you lost money"




hello,

thats why its a bit of a myth that people think banks arent lending at the moment!

spot on Nun, there are so many if's & but's, on writing, selling, calls, puts etc yet you rock up to work and the dollars just flow risk free brother

anything else a bonus

thankyou
robots


----------



## MR. (1 February 2009)

tech/a said:


> When and not if---inflation bites then cash will be the last place you'll want to be as its eroded,in value.




Yes have given that some thought well before the T/D.
And inflation will bite.
This is the reason I think the bank offers such a rate.  
My opinion is that inflation will not take off as quickly as many think with these very low rates.  So rates will stay low for longer.


----------



## wayneL (1 February 2009)

MrBurns said:


> Yes but to beat cash you have to put ALL your cash into trading,




No. I still have a lot of cash earning *un*princely sums



> a bit risky eh ?




Well this is where so many people have become confused in the boom. Generally, there is an interplay between risk, reward and probability.

There is no reward above "risk free" (which isn't really risk free) without risks greater than risk free. However, get your probabilities right and eventual reward is almost guaranteed. 

eg

risk = _x_
reward = 2 X _x_
probability = 1:1

= profit over a high number of transactions.

The hidden risk in the above is "knowledge risk". Not knowing the probabilities or how to skew them in your favour. Also capacity risk if you leverage yourself too highly.

I'm taking a few punts on direction, but most of my punts are on "non-direction".... where I don't think the price will go within a certain time frame, (via options) and shifting the goal posts when necessary.



			
				nunthewiser said:
			
		

> roll up roll up everyones a winner , step right up




Haha! Point taken. But for $5,000, you can buy my e-book, How To Be As Rich As Warren Buffett By The End Of The Month.


----------



## wayneL (1 February 2009)

MR. said:


> Yes my opinion is of the same.  However did even wayne disappear for a while just lately?  With a final post "You think you lost money"



Yes, with a reference to several high fliers who lost billions between them. It was not a reference to me. 

Losing money is part of making money in any trading plan. I lose money all the time.

I took a break to psychologically re-center myself after a few bruising encounters on the forum (AKA a dummy spit .


----------



## nunthewiser (1 February 2009)

wayneL said:


> Haha! Point taken. But for $5,000, you can buy my e-book, How To Be As Rich As Warren Buffett By The End Of The Month.




 So you gunna teach me how to make some losses ?


----------



## Julia (1 February 2009)

MR. said:


> Alot strongly believe a term deposit rate at 5.5% is laughable!  Maybe they have had it too good?



When rates drop to 0% I guess you'll be the one who is laughing, MR.





beerwm said:


> MR.
> 
> 
> i think it was julia who said she had her cash in 3/6 month term deposits, which rotated her availability - which i consider a better approach



Yes, I did, but when the present deposits at 7.5% mature, my option to roll over will probably be at 3% or less.  This is where MR's 3 year locked in option will look a lot healthier.




MrBurns said:


> Yes but to beat cash you have to put ALL your cash into trading, a bit risky eh ?



Maybe I'm missing something here?  If e.g. you had, say $500K in term deposit earning 3% (lucky to get that after RBA cuts rates again on Tuesday)
that's just $15,000 p.a. on the whole balance.

But if you took just $100K of your $500K and traded it as per my earlier example of 10% per trade profit and did that several times a year, you've already exceeded for just that $100K what you'd be getting on the entire $500K in cash.

I might be missing your point, in which case I'm happy to be corrected.





Trevor_S said:


> Self funded retires on the other had.. low interest rates typically = crappy income.  When interest rates where high, they were happy, nice income stream, those paying off mortgages, whoa is me... shrug.... turns and round-a-bouts.



I'm finding it a bit hard to understand what you mean here, Trevor.
Firstly, I wouldn't think too many self funded retirees would depend on bank interest for their income.
Secondly, if they were, then interest rates until the last few months have been high (8 - 9%).
You might like to clarify this?





wayneL said:


> But for $5,000, you can buy my e-book, How To Be As Rich As Warren Buffett By The End Of The Month.



Whacko!!  How cheap is that for such a reward!  Sign me up, Wayne.

(Maybe you have a move to Nigeria planned - that sounds like the perfect offer to garner all the suckers.  I understand that - despite all the publicity about these scams - Australians are still outlaying many millions every month on these too good to be true offers.)


----------



## nunthewiser (1 February 2009)

Julia said:


> But if you took just $100K of your $500K and traded it as per my earlier example of 10% per trade profit and did that several times a year, you've already exceeded for just that $100K what you'd be getting on the entire $500K in cash.
> 
> I might be missing your point, in which case I'm happy to be corrected.




um ..thats taking for granted that EVERY trade you enter is a winner and like you said previously you said that you would not use a stoploss on the likes of BHP that means it only takes FIVE wrong trades  to kill this idea in one swoop.

personally yet to meet ANY trader that can say they never have a loss and if one is being sincere one would know that losses are part of the game

i could be wrong


----------



## wayneL (1 February 2009)

nunthewiser said:


> So you gunna teach me how to make some losses ?




Well, for only an extra $3000, I'll throw in my "You Idiot" file. 547 jam packed pages of amusing and novel ways of losing money. Each pearly anecdote is guaranteed to have you exclaiming the exact self deprecating words of the author - "YOU IDIOT".


----------



## Stormin_Norman (1 February 2009)

cash might be king. but what currency???


----------



## nunthewiser (1 February 2009)

wayneL said:


> Well, for only an extra $3000, I'll throw in my "You Idiot" file. 547 jam packed pages of amusing and novel ways of losing money. Each pearly anecdote is guaranteed to have you exclaiming the exact self deprecating words of the author - "YOU IDIOT".




hahahahah you didnt get my subtle meaning that i needed a few losses to be as rich as wozza 

ooops i just woke up


----------



## wayneL (1 February 2009)

nunthewiser said:


> hahahahah you didnt get my subtle meaning that i needed a few losses to be as rich as wozza




Ahhhhh!

Well my "You Idiot" file will come in handy then. 

(and the price has just gone up)


----------



## Julia (1 February 2009)

nunthewiser said:


> um ..thats taking for granted that EVERY trade you enter is a winner and like you said previously you said that you would not use a stoploss on the likes of BHP that means it only takes FIVE wrong trades  to kill this idea in one swoop.



How is it taking every trade being a winner for granted?   Where did I say that?
I haven't specified how many trades per year.






> personally yet to meet ANY trader that can say they never have a loss and if one is being sincere one would know that losses are part of the game



Nowhere have I claimed never to have losses.  Don't be bloody silly.
But what matters is that ultimately you have either more wins than losses or the amounts of your wins considerably exceeds that of your losses.


----------



## nunthewiser (1 February 2009)

Julia said:


> How is it taking every trade being a winner for granted?   Where did I say that?
> I haven't specified how many trades per year.
> 
> 
> ...




Excuse me! 

i am only commenting on what you posted earlier when i asked if you would use a stoploss on bhp .YOU said NO .IF that was the case like i just said it would only take 5 bad trades to tie up ALL your capital until they either broke even OR turned a profit 

i do apologise if my tone sounds annoyed but geez you asked for comments i gave them , you dont like them TUFF 

have a niceday


----------



## Julia (1 February 2009)

nunthewiser said:


> i do apologise if my tone sounds annoyed but geez you asked for comments i gave them , you dont like them TUFF



At no stage did I ask for comments.  

The thread is about cash being King.   
There have been thoughts exchanged for and against this philosophy, in the context of a useful and constructive discussion, barring your own contributions which seem designed to be primarily provocative.  

All I did was offer a possible alternative to holding one's entire asset base in cash, in putting  a small amount of that capital into the market.

I used BHP as an example because I believe it's a company that will still be profitable in decades to come and if what I have suggested doing as an interim measure doesn't work out, I would simply hold the shares for the long term.  

 To make it really simple for you, think of it as buying BHP shares for the purpose of a long term hold (at what many would say are bargain prices at present), but then - if the opportunity presents itself during that hold - selling at, say, 10% profit, then re-investing on the next dip, and so on.

Now, you may continue to raise all the objections you like.  It's immaterial to me.  I don't propose to continue to respond to your goading.

As Robots would say:
Thank you.


----------



## beerwm (1 February 2009)

fixed interest rate, variable interest rate, 5%, 7%, 3%, 2.5%...

lets put things in perspective...

correct me if im wrong but a trader can quite comfortably make a 10% gain on his capital in a year with a right know-how, and i would stress MUCH more if he/she knows what he/shes doing.

TRADING IS KING!


----------



## nunthewiser (1 February 2009)

Julia said:


> Maybe I'm missing something here?
> I might be missing your point, in which case I'm happy to be corrected.




now if thats not inviting comments i dont know what is !



Julia said:


> Don't be bloody silly.
> .





i view your previous post regarding constructiveness as highly hypocritical and i wish you well in all future endeavours 

thankyou 

darl


----------



## noirua (2 February 2009)

There is a tendency for most to want to be seen in a sensible light and by that pretend to have done well. Basically though, to have cash in Australia in the last 6 months was a poor decision, and as I have a lot of mine in Aussies that answers that.
I have quite a lot in US Dollars and that sounds good, but I put the money in as the greenback tumbled and therefore made little out of it.
Quite a lot is in £sterling and the least said about that the better. 
On stocks, "I'm holding for the long term" usually means "failed in the short term".


----------



## nulla nulla (2 February 2009)

IMO this thread is starting to sound like a peeing competition between some of the posters. Every investor would have read or heard at some time that the best investment portfolio is made up of "Cash, Property and Shares". 
The idea is that you can change the weighting between the categories as the prevailing economic conditions merit. Right now Gold looks more secure than volatile shares or retracing property prices, so it may be a good cautionary move to rearrange the weighting of your portfolio if you haven't already done so.
However, cash is only returning minimal interest rates. Investing in some of the so called Blue chips paying in excess of 10% yield with 100% franking gets a better return rate on your capital, the only down side being the requirement to 'take the risk' that the share price may fall further in the short term before it recovers in the long term. 
Bricks & mortar, dirt, always appreciates with time, the key being location, location, location. And you need to be prepared to hang in for the long term.
The Cany investor that moves his/her portfolio weighting arround as the economic conditions change, will outperform the investors that are reactive rather than proactive. 
Time heals all wounds (one way or the other) if you are down in the market, it is likely you will recover, it will just take time.


----------



## MR. (2 February 2009)

beerwm said:


> correct me if im wrong but a trader can quite comfortably make a 10% gain on his capital in a year with a right know-how, and i would stress MUCH more if he/she knows what he/shes doing.
> 
> TRADING IS KING!




IMO lets play "black or red" on Roulette wheel.  We will put a dollar on black.  It loses so we will put 2 dollars on black. (one for the one we just lost and one for that dollar I'm going to win) If we lose a second time lets just keep doubling and when black comes up we win. You can't lose!

But what happens when one day you find yourself putting the house on the line just to make that single dollar?  "how can so many reds keep coming up" So you put the house on the line because you don't except losing half the value of the house.  And red still turned up!  
(and the colours are correct)



noirua said:


> There is a tendency for most to want to be seen in a sensible light and by that pretend to have done well. Basically though, to have cash in Australia in the last 6 months was a poor decision, and as I have a lot of mine in Aussies that answers that.




So we didn't optimise our investments?   Was it such a poor decision to keep AUD?  This is what nunthewiser was referring to.  You don't have to pick exact highs and lows somewhere close is just fine.  The point you had cash would be better than your long termers at present.


----------



## MR. (2 February 2009)

MR. said:


> Is Cash still king?
> 
> Have any cash?  If it’s in a term deposit what term is it on?  3mths or maybe 6?
> Either people want to keep their funds not far from reach (to re-enter markets) or (they just haven’t thought that far ahead)   I wonder what rates the banks will offer in just 3 months time!
> ...




Back to the beginning.

My point is: while the masses carry heavy debts CASH must be king.  

Perhaps the majority agree, alot are holding cash but (short term)??? 
To make an example of the point, I put 40% locked in for 3 years. 
and I told you about it.

Will be very happy to outperform Buffet.  (in the way he referred to buy the market S&P OR DOW)
Now....... what to do with the other 60% ?????? ummmmmm gold? my own un-leveraged business. 

good luck people.

ps:  I do not need to take high risks with my money, although my super supplier T____ seems to think I should have according to their books.  And they stuffed that up good and proper.  Wonder why I didn't / don't give them more?


----------



## Julia (2 February 2009)

nunthewiser said:


> now if thats not inviting comments i dont know what is !



You are taking extracts completely out of context.  My "happy to be corrected" comment was in response to Mr Burns' remark below:



MrBurns said:


> Yes but to beat cash you have to put ALL your cash into trading, a bit risky eh ?






Julia said:


> I might be missing your point, in which case I'm happy to be corrected.


----------



## Bushman (2 February 2009)

nulla nulla said:


> IMO this thread is starting to sound like a peeing competition between some of the posters. Every investor would have read or heard at some time that the best investment portfolio is made up of "Cash, Property and Shares".
> The idea is that you can change the weighting between the categories as the prevailing economic conditions merit. Right now Gold looks more secure than volatile shares or retracing property prices, so it may be a good cautionary move to rearrange the weighting of your portfolio if you haven't already done so.
> However, cash is only returning minimal interest rates. Investing in some of the so called Blue chips paying in excess of 10% yield with 100% franking gets a better return rate on your capital, the only down side being the requirement to 'take the risk' that the share price may fall further in the short term before it recovers in the long term.
> Bricks & mortar, dirt, always appreciates with time, the key being location, location, location. And you need to be prepared to hang in for the long term.
> ...




Spot on mate. 

For what its worth: 
- cash is likely to deliver negative real returns going forward; 
- property is a good inflation hedge so when all the bleaters stop fretting about [whisper] deflation it will pay off. However if you buy a bulky goods centre in west Sydney you deserve to be boiled alive. To quote Mr Nulla, it is 'location, location, location' in the long-run, nasty deleveraged valuation correction in the short-term. 
- fixed interest lookin' good for solid blue-chip citizens; my rule is if they were going to struggle debt-wise, the stress would now evident. 
- blue chip industrial and financials - fully franked +10% divvies looking good. Two things to watch out for - 1. the earnings recession; and 2. can they pay the divvies out of accounting profit that will be whacked by one-off write-offs of intangibles. Long-term, looking sweet mate; short-term will still be volatile. 
- gold & treasuries - what is you long-term outlook for USD, Euro and the Aussie. 

so yep,  tweak those portfolio. Then again if you cannot stomach risk anymore (ie losing your dosh), stay in those term deposits. Just don't lock them in for too long as inflation looms and you will get spanked in real terms; so, like deciding for or against a vasectomy, you might want the option of being able to change your mind again in the future due to a change in circumstance. 

Summary - cash - A man or woman can only bear what he or she can bear. At least with cash you don't have to subscribe to the Eureka Report 

My 2c again....


----------



## robots (2 February 2009)

hello,

great work bushman,

as the example of WBC indicates 310k down to 160k, now it "may" take 10yrs to get back to 310k,

and then as you track cash returns vs others, the preservation of capital is looking the major issue, 

ps i wouldnt have a clue

thankyou
robots


----------



## nunthewiser (2 February 2009)

You guys seem to take for granted that inflation will track higher than bank intrest ? whats the latest IMF guesstimation for OZ GDP?? in the negatives wasnt it ?? ..

anyways .......... Dear M.R you stick to your plans m8 .keep that term deposit cruising along , enjoying your outperforming returns compared to overall market . enjoy your preservation of your capital 


 BEST of all tho  ENJOY being set up to flee that deposit at ANY given time (- small % intrest penalty) and pouncing on them bargains that WILL appear a lil later rather than sooner


----------



## SoBadAtTrading (2 February 2009)

CBA is advertising a 5 yr term deposit of 6 % interest in AFR! I think other banks should be following suit soon.


----------



## nunthewiser (2 February 2009)

Just to add a lil something to my last post ........

any of you guys rang a plumber lately ??
 a year/2 years ago try and get a plumber may have been lucky to find one that was available there and then .then he rocked up , handed over a huge bill because he could 

i rang 6 plumbers in the last week for quotes ..... had 2 come out within the hour , the other 4 were there within 24 hours ...... i was able to negotiate a fair price .

anyone buy a brand new car a yearor 2 back ?

bet ya can buy another brand new car cheaper today 

only examples ........

hey i could be wrong and i just happen to have been lucky with some bargains lately


----------



## MR. (2 February 2009)

nunthewiser said:


> You guys seem to take for granted that inflation will track higher than bank intrest ? whats the latest IMF guesstimation for OZ GDP?? in the negatives wasnt it ?? ..
> 
> anyways .......... Dear M.R you stick to your plans m8 .keep that term deposit cruising along , enjoying your outperforming returns compared to overall market . enjoy your preservation of your capital
> 
> BEST of all tho  ENJOY being set up to flee that deposit at ANY given time (- small % intrest penalty) and pouncing on them bargains that WILL appear a lil later rather than sooner




Sure will.....  

and if I don't end up like my "Avatar" try not to end up like yours.  
In general people "Not sure how healthy it is." 

seeya in 3 yrs......  no hangon I've still got to invest 60% somewhere?


----------



## beerwm (2 February 2009)

MR. said:


> IMO lets play "black or red" on Roulette wheel.  We will put a dollar on black.  It loses so we will put 2 dollars on black. (one for the one we just lost and one for that dollar I'm going to win) If we lose a second time lets just keep doubling and when black comes up we win. You can't lose!
> 
> But what happens when one day you find yourself putting the house on the line just to make that single dollar?  "how can so many reds keep coming up" So you put the house on the line because you don't except losing half the value of the house.  And red still turned up!
> (and the colours are correct)




Thankyou for confirming my belief that you know nothing about risk, position sizing and general share trading.

If that is the way you have been trading then it is no wonder you find yourself in a safe 3yr. 5% pa. cash account.


----------



## nunthewiser (2 February 2009)

beerwm said:


> Thankyou for confirming my belief that you know nothing about risk, position sizing and general share trading.
> 
> If that is the way you have been trading then it is no wonder you find yourself in a safe 3yr. 5% pa. cash account.




Perhaps the dude is a long term investor sort and not an actual trader?


----------



## MR. (2 February 2009)

beerwm said:


> Thankyou for confirming my belief that you know nothing about risk, position sizing and general share trading.
> 
> If that is the way you have been trading then it is no wonder you find yourself in a safe 3yr. 5% pa. cash account.




Yes everything is a calculated risk..................


----------



## beerwm (2 February 2009)

MR. said:


> Yes everything is a calculated risk..................




i dont understand your sarcasm?


----------



## Bushman (2 February 2009)

nunthewiser said:


> You guys seem to take for granted that inflation will track higher than bank intrest ? whats the latest IMF guesstimation for OZ GDP?? in the negatives wasnt it ?? ..




US money supply has doubled in the last six-months - now most of it sits as deposits at calls while the encumbent banks eat themselves but Obama will move heaven and earth to get those cheap dollars out there so the US can continue to *'inflate the pain away, inflate the pain away' *(think of that grungy song from 90's to get the true audio experience I am having at the moment). 

But, yep, GDP is going to slide until the tsunami of money can be unleashed. How long will it take? NFI.... 12-24 months? My -0.003467 cents...


----------



## nunthewiser (2 February 2009)

Bushman said:


> My -0.003467 cents...




hahahahahahahahahah

have a great day


----------



## nunthewiser (2 February 2009)

nunthewiser said:


> You guys seem to take for granted that inflation will track higher than bank intrest ? whats the latest IMF guesstimation for OZ GDP?? in the negatives wasnt it ?? ..
> 
> anyways .......... Dear M.R you stick to your plans m8 .keep that term deposit cruising along , enjoying your outperforming returns compared to overall market . enjoy your preservation of your capital
> 
> ...






nunthewiser said:


> Just to add a lil something to my last post ........
> 
> any of you guys rang a plumber lately ??
> a year/2 years ago try and get a plumber may have been lucky to find one that was available there and then .then he rocked up , handed over a huge bill because he could
> ...




so no arguments/differing points of view to these posts?  ( except Bushman)
so are them term deposits set at 3 years and X % not so bad now ? 

any one even consider the fact that sometimes inflation grinds to a halt ?

Or it could never happen in australia and everyone should all  become traders and make a gigazillion bucks instead ?

so many questions....................


----------



## MR. (2 February 2009)

nunthewiser said:


> so no arguments/differing points of view to these posts?  ( except Bushman)
> so are them term deposits set at 3 years and X % not so bad now ?
> 
> any one even consider the fact that sometimes inflation grinds to a halt ?
> ...




You really can't help it can you?  I mean get off the computer?  
Although MR. Silly's back again as well.  Just reading a few posts/again


----------



## nunthewiser (2 February 2009)

MR. said:


> You really can't help it can you?  I mean get off the computer?
> Although MR. Silly's back again as well.  Just reading a few posts/again




LOL nah m8 . that av in my profile is a self portrait


been busy last few hours so now i came back to read up


----------



## MR. (2 February 2009)

nulla nulla said:


> The Cany investor that moves his/her portfolio weighting arround as the economic conditions change, will outperform the investors that are reactive rather than proactive.
> Time heals all wounds (one way or the other) if you are down in the market, it is likely you will recover, it will just take time.




How well do you do moving your portfolio weighting around during a crash?
I also hope people recover their loses as quickly as possibe "without" increasing their risk. 



Bushman said:


> To quote Mr Nulla, it is 'location, location, location' in the long-run, nasty deleveraged valuation correction in the short-term. -




Deleverage ?  Nasty!!! ?  Wouldn't put money in property just now!



Bushman said:


> fixed interest lookin' good for solid blue-chip citizens; my rule is if they were going to struggle debt-wise, the stress would now evident. Two things to watch out for - 1. the earnings recession; and 2. can they pay the divvies out of accounting profit that will be whacked by one-off write-offs of intangibles. Long-term, looking sweet mate; short-term will still be volatile.




So you mean by "now be evident"  any losses would be already factored into the price.  But Ahhh rule 1. watch out for the earnings recession!

you are doing such a good job convincing me to change my ways! 



Bushman said:


> Then again if you cannot stomach risk anymore (ie losing your dosh), stay in those term deposits. Just don't lock them in for too long as inflation looms
> 
> Summary - cash - A man or woman can only bear what he or she can bear.




What do you mean by "anymore"  are you directing your comments to me or are you just speaking generally?



robots said:


> hello,
> 
> great work bushman,
> 
> ...




Not much!!!!


Now for Beerwn,


beerwm said:


> Thankyou for confirming my belief that you know nothing about risk, position sizing and general share trading.
> 
> If that is the way you have been trading then it is no wonder you find yourself in a safe 3yr. 5% pa. cash account.




I know nothing about "risk" "position sizing" or "general share trading" because why?  I give an example of a near perfect solution to make money?  You can calculate the risk can't you?  Point being you might think you're going to do well but sometimes it just doesn't work. (but we all know that / nothing is done without some risk) Position sizing? So do I pick up a text book and position a portfolio according to its print (no matter what?) and finally I'm not interested in trading shares day in day out!  I try to be a long term holder.   

Perhaps back to your first post:


beerwm said:


> Locking your money away for 3 years doesnt seem very prudent.
> 
> While you can 'try' and predict the future, unless you respond to changes it wont do you any good.
> 
> ...



How much do you want (are you going) to make as a return?  Does the average trader make 10% and perhaps more? Do you know? Can (you) give me some "true" stats of how (you) have done over the past 24 months to help MR. Silly here!


----------



## nunthewiser (2 February 2009)

i can give you a couple of stats that been floating around a while

90% of stock market traders fail (daytraders was the quote i heard)

this next one was told to me by someone that should know

the average CFD account is closed within 6 months.might have been 4 but i was just being genourous by saying 6

lets just hope all these traders here are in the good 10% hey


----------



## MR. (2 February 2009)

nunthewiser said:


> i can give you a couple of stats that been floating around a while
> 
> 90% of stock market traders fail (daytraders was the quote i heard)
> 
> ...




No....... Comeon .......  they are well above 10%. Off memory the quote was "average of 10%"  so that could mean we would lose 10% and they win 20. Or is that visa versa? 

I put money into a term deposit and suddenly the roof just caved in!  Anyone would have thought I'd lost money in the stock market.  
No loses there from anyone of late!


----------



## Wysiwyg (3 February 2009)

nunthewiser said:


> the average CFD account is closed within 6 months.might have been 4 but i was just being genourous by saying 6
> 
> lets just hope all these traders here are in the good 10% hey




Well nun I can type that I have blown 2 accounts, *bad discipline and bad money management*.
Yes I have learned valuable lessons and yes they are embedded in every neuron (all 20 of them) never to be repeated again.At least I helped someone into the top 10%.


----------



## Bushman (3 February 2009)

MR. said:


> What do you mean by "anymore"  are you directing your comments to me or are you just speaking generally?





Speaking generally mate, my point being that if you are in cash then you don't have to worry about volatility while the markets come to terms with the extent of an earnings recession. Call it the 'sleep easy' factor. 

No offense intended. Cheers B'man


----------



## Trevor_S (3 February 2009)

I guess this is kinda why I put some of my money in banking shares (WBC not CBA) recently rather then bank deposits  (the majority of my portfolio is still in cash, a CMT with Rabobank at 5%, no doubt to tank tomorrow after the RBA decision today  ) 

http://business.smh.com.au/business/time-for-a-big-one-20090203-7vxp.html



> The Commonwealth Bank let the cat out of the bag after the market closed last night when it announced its banking profit in the first half would be up a massive 20%. It was just the funds management arm that looked like reducing the ``cash profit'' by 16%, but even that would be 20% more than banking analysts have been tipping.






> In a normal recession, the decline in lending would damage banks, but this time the Big Four are increasing market share by more than the market itself is shrinking.
> 
> The upside? The CBA might have just settled the great dividend sustainability debate at least for 2009. It looks like being a very rewarding time to be buying bank shares at their recent depressed levels.






> even if the dividends were halved, it would be paying a lot more than money in the bank




It all depends on the perceived risk I guess, I am "guessing" that in 3 years my investment will have earned more in dividends and seen more in capital appreciation then if the money was in the bank... but I am "guessing"...I am however more confident about 5 years and very confident about 10 years though    where as if I put the money in the bank, I know for sure I have no franking credits, maximum tax on the interest component and capital depreciation (due to CPI increases)


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## MR. (3 February 2009)

Trevor_S said:


> It all depends on the perceived risk I guess, I am "guessing" that in 3 years my investment will have earned more in dividends and seen more in capital appreciation then if the money was in the bank... but I am "guessing"...I am however more confident about 5 years and very confident about 10 years though    where as if I put the money in the bank, I know for sure I have no franking credits, maximum tax on the interest component and capital depreciation (due to CPI increases)




There is nothing worse than looking back and not doing something that you thought was right at the time.....  A major market correction does not happen very often at all, so go with your gut.....  You may only have a small window!  

ps : MR. vs Buffett,  he doesn't stand a chance.  
I feel I've taken advantage of the "poor" bloke! .... "America's Stuffed"

Cheers
MR. Sherlock Holmes
MR. Obiwan
MR. Laughable
MR. Silly 







Its a healthy plan and  I look forward to joining the fun.


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## gnh (4 February 2009)

[Half your luck still having some cash, good luck!

QUOTE=MR.;392234]Is Cash still king?

Have any cash?  If it’s in a term deposit what term is it on?  3mths or maybe 6?  
Either people want to keep their funds not far from reach (to re-enter markets) or (they just haven’t thought that far ahead)   I wonder what rates the banks will offer in just 3 months time! 

If you are just waiting “short term” to re-enter the markets just be aware there appears to be many of you.... That spells Volatility! 

Have you held cash for several years waiting for this moment?  Several years ago didn’t you decide not to invest in shares and hold cash “await a crash perhaps” now tempted back in because of the massive drop?   Are shares that much lower than when you decided not to buy them “several  years ago?”   Don’t miss out!

Cash is not King anymore!  Don’t miss out!  .... Did you think of that yourself?  Is a Financial Planner behind it?  Financial Planners could have never made everyone rich?   What is the use of cash if you don’t use it when the time is right, like NOW!

It’s appears to be most often the most simplistic of thoughts that make the most sense but we seem to resemble sheep at times.   For example:  For China to de-couple from America is it likely to have happened during a boom or bust?  Hint, does China appear to follow the S&P or Dow, they were during the boom?   To me it must be a bust then,....  but not just yet I feel.  If the “West” is in recession surely China would be effected, exports,  incoming foreign funds, sentiment in general.  What?   China’s effected???? 

So the ones who saved some cash or were lucky enough to bail back in September all flood back into the share market sooner rather than later.  Maybe finally buy some property as well as its down a little and when interest rates go down property goes up!  I'm told!  The share market is at the lowest for years.  Shares are half price and dividends outweigh bank interest.  The charts are looking so attractive, just need a change in direction perhaps!  

Another simplistic question which we will all ignore:   
Is everyone now anywhere near being out of debt?   
The government has not written off a part of everyone’s debt just yet!   And I don’t think people have worked it off yet.  

So far I have locked 40% in term deposit for 3 years.  I am one of very few!  This will not be over anytime soon.  But we all know this!
Cash remains King while the mass’s carry heavy debts.  
Don’t believe.... Wait and see.........[/QUOTE]


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## gfresh (6 February 2009)

Well ING Direct today dropped their savings rate to... 3.75% 

Term deposits dropped too: 

30 day is 3.75%
90 day is 5.00% (temporary?)
180 day is 3.10%
1 year is 3% (why would you bother?)

Quick look shows ANZ also following around these figures. Doesn't look they really want anybody's money anymore. 

Not sure cash is King really anymore.. more like Prince Charles :

Will be interesting where people will end up putting their cash  from now on in. 1 year deposits that may have been entered back in say March will be rolling off soon.. 6 months must be coming up soon for a lot of people.


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## GreatPig (6 February 2009)

BankWest are still advertising 4.81% for their 3 or 4 month term deposits, and RaboPlus are still advertising 5% for their business savings account.

Although for how much longer ...

GP


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## Julia (6 February 2009)

gfresh;395029) said:
			
		

> Quick look shows ANZ also following around these figures. Doesn't look they really want anybody's money anymore.



In commentary this evening about SUN's chopping of dividend, the suggestion was made that ANZ may soon do likewise.





> Will be interesting where people will end up putting their cash  from now on in. 1 year deposits that may have been entered back in say March will be rolling off soon.. 6 months must be coming up soon for a lot of people.



Yes, indeed.   But following the 1% RBA cut this week, there seems to be considerable thought that any further cuts will be further apart and significantly smaller.  So if the alternative to a secure cash deposit in the meantime (preserving capital) is the risk of buying shares which could further tank plus have reduced dividends, then many will opt for the security until there is some clarification of where markets are going.


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## MR. (20 February 2009)

View attachment CHART 1900-2009-A-a.bmp


The above chart is from http://stockcharts.com/charts/historical/djia1900.html

108 years of the DOW.  

The chart has been correctly plotted. 
ie: When the DOW doubles it is the same verticle distance on the chart no matter the number!

Plotted an average "red line".  Dow at 2009 is "3000"  today is "7555".

On the above website you can choose any 20 year segment.

1900 to 1920     50 - 107  .....   114% increase 
1920 to 1940     107 - 150 .....    40%  
1940 to 1960     150 - 680 .....    353%
1960 to 1980     680 - 840 .....     24%
*1980 to 2000     840 - 11500  .....  1269%*

From 1980 to 2000 what made PROFITS rise by so much?  
Technology?  Debts? ........?  ..........?

The average of the DOW in 2009 turned out at 3000 (as above) 
Is it fair that because companies have claimed profits in advance via debt that the DOW will go lower than that average line? ......  comments?


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## MR. (1 March 2009)

From Inside Business this morning:

Alan Kohler: 
Australian Shares over the last 10 years is now less than 6% per annum including dividends.

and



> Robert Buckland......  Citi Global Equity Strategist UK
> 
> “Equities have become the long term savings class of choice. “
> “Global bonds have outperformed Global Equities this decade. “
> ...


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## gfresh (1 March 2009)

MR. said:


> From 1980 to 2000 what made PROFITS rise by so much?
> Technology?  Debts? ........?  ..........?




Probably a combination of what you said, but don't forget demographics either  After WWII, the large burst known as "the baby boomers" were born, and by 1983 the first lot of them was turning 37, or where many of them start approaching maximum spending capacity. That is kids grown up, mortgage nearly paid off, better paying jobs - in early 80's time anyhow, things have shifted a bit now to kids not leaving until 25, larger mortgages, etc. 

So in that period there was some ~17 years of the "baby boomer" approaching 37-54, there was a large demographic shift which resulted in large consumption, larger company profits, etc. 

One explanation I have read anyhow.


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## robots (1 March 2009)

MR. said:


> From Inside Business this morning:
> 
> Alan Kohler:
> Australian Shares over the last 10 years is now less than 6% per annum including dividends.
> ...




hello,

so just plod along banging as much cash into the bank/super fund (cash option) as you can 

work on getting MASSIVE $ from your income and all is rosy

thankyou
robots


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## GumbyLearner (1 March 2009)

robots said:


> hello,
> 
> so just plod along banging as much cash into the bank/super fund (cash option) as you can
> 
> ...




From the ABC last Sunday

http://www.abc.net.au/news/stories/2009/02/23/2498999.htm?section=business


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## MR. (2 March 2009)

robots said:


> hello,
> 
> so just plod along banging as much cash into the bank/super fund (cash option) as you can
> 
> ...




I read some sarcasm there bots.  I'm not sure "all is rosy" at bank interest returns!  Are you still suggesting property being the answer?

From the Australian Job Loses thread:
Job Loses


> It will be the undoing of the property market here in Australia.


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## robots (2 March 2009)

MR. said:


> I read some sarcasm there bots.  I'm not sure "all is rosy" at bank interest returns!  Are you still suggesting property being the answer?
> 
> From the Australian Job Loses thread:
> Job Loses




hello,

no, no sarcasm, the answer for those able is concentrating on getting a big income 

then just save, save, save as much as possible 

income will get you to buying shares, property or $ in the bank (which maybe a serious consideration)

you see people with good super balances and typically its from "compulsory" savings, EASY 

thankyou
robots


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## Garpal Gumnut (23 January 2010)

Anyone who isn't in cash atm is very brave.

The markets are very jittery, the US is a basket case, the Chinese are going to put the screws on the rest of the World, the Islamist nutters are building up for a big surpisse attack and the tip sheets are doing mail outs again.

All sure signs of a new Bear, especially the tip sheets.

gg


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## Julia (23 January 2010)

I largely agree, gg.  I'm still more than two thirds in cash.

You're right about the tip sheets.  Huntleys have the best part of a page in 'The Weekend Australian' today.


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## Garpal Gumnut (23 January 2010)

Julia said:


> I largely agree, gg.  I'm still more than two thirds in cash.
> 
> You're right about the tip sheets.  Huntleys have the best part of a page in 'The Weekend Australian' today.




Funnily enough, I just read the OZ prior to logging back on just now, and as soon as I saw your name in the thread, I had a fair idea what your reply would be. lol.

gg


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