# Long term investors (retirees?) -- Stick with banks?



## Muschu (9 April 2008)

Hi
I've been retired for a few years and we have about 25% of our portfolio with the banks.
Yes, their dividends are good.  However, if I read the views of the experienced ASF contributors, I get the impression that the growth factor will be low for quite some years.
Are there any opinions out there along the lines of switching to other "solid" / low risk shares - ones which also have a good dividend return but with better growth potential over, say, the next 3-5 years?  If so, which shares would you consider?
I would be interested in your views, whether you're retired or not.  Most of you are far more knowledgeable than I am.
With thanks
Rick


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## josjes (9 April 2008)

HI Rick

I wouldn't say I am more knowledgeble than you. But I'd like to mention a few stocks that warrant consideration in your long term portfolio:
WES, QBE (at <$24 price), TAH all are paying > 5% fully franked dividend. 
I don't think you can go wrong with these companies. I hold all three in my super. Have a look at the discussion thread of these 3 companies to get a glean at what people in this forum are saying, they currently all have issues that the market doesn't like, WES (high debt to pay in current tough credit condition), QBE (current financial crisis), TAH (perceived as consumer discretionary stock heading into economic recession) but in my view these issues are surmountable and with good management in place, I am sure they can ride them out.


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## Muschu (9 April 2008)

josjes said:


> HI Rick
> 
> I wouldn't say I am more knowledgeble than you. But I'd like to mention a few stocks that warrant consideration in your long term portfolio:
> WES, QBE (at <$24 price), TAH all are paying > 5% fully franked dividend.
> I don't think you can go wrong with these companies. I hold all three in my super. Have a look at the discussion thread of these 3 companies to get a glean at what people in this forum are saying, they currently all have issues that the market doesn't like, WES (high debt to pay in current tough credit condition), QBE (current financial crisis), TAH (perceived as consumer discretionary stock heading into economic recession) but in my view these issues are surmountable and with good management in place, I am sure they can ride them out.



Many thanks for that.  I already have WES and QBE.  TAH has been suggested to me by a very experienced person.  I was contemplating CTX but the thread discussion makes me hesitate.  Other thoughts [of my own or other people] concerning shares I do not have include:  LEI, WOR, WDC, TTS, TOL and TLS.
Any thoughts on switching from the banks though -- or just hold on for the ride?
Rick


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## nomore4s (9 April 2008)

Muschu said:


> Many thanks for that.  I already have WES and QBE.  TAH has been suggested to me by a very experienced person.  I was contemplating CTX but the thread discussion makes me hesitate.  Other thoughts [of my own or other people] concerning shares I do not have include:  LEI, WOR, WDC, TTS, TOL and TLS.
> Any thoughts on switching from the banks though -- or just hold on for the ride?
> Rick




Rick just keep in mind alot of the discussions on the threads here are generally based on shorter timeframes.

If you plan on holding the banks for a number of years, I can't see any benefit in changing to the stocks mentioned especially if you original entry price on the banks is low.

My personal opinion is while there might be some downside and limited growth to the banks in the next 12-24 months, if you're willing to hold for 3-5 years the banks are a lower risk investment (depending on original entry price & things could always go wrong of course) also consider that they will have a pretty solid D/E during that time.

But please DYOR, this is for discussion only and is not advice in any way.


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## Muschu (9 April 2008)

nomore4s said:


> Rick just keep in mind alot of the discussions on the threads here are generally based on shorter timeframes.
> 
> If you plan on holding the banks for a number of years, I can't see any benefit in changing to the stocks mentioned especially if you original entry price on the banks is low.
> 
> ...





Thanks for this.  I got into ANZ and WBC at a lower price a few years ago.  CBA and MQG were purchased last year and are significant losers right now.


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## MRC & Co (9 April 2008)

nomore4s said:


> Rick just keep in mind alot of the discussions on the threads here are generally based on shorter timeframes.
> 
> If you plan on holding the banks for a number of years, I can't see any benefit in changing to the stocks mentioned especially if you original entry price on the banks is low.




First point is very true.  

However, I personally would add more weight to the commodity bull, really a stage in the global economy unparalleled and great for commodities over the long-term.  

Second point, I don't see the difference whether your original entry was low or not.....we are only looking at the future.


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## motorway (9 April 2008)

> Second point, I don't see the difference whether your original entry was low or not.....we are only looking at the future.




If you bought the banks in the last  crisis

eg WBC something like $3 

Then it might be a consideration --------> Tax

Yes the future is what counts
But that is judged from one's own position and needs


motorway


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## tech/a (9 April 2008)

If you can handle the can handle the capital erosion?
If you firmly believe and am prepared to back that belief with your money (Not taking a loss doesnt mean you havent got one!).
You cant find better capital appreciation or at least minor erosion elsewhere.
Then stay as you are.


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## MRC & Co (9 April 2008)

motorway said:


> Then it might be a consideration --------> Tax
> 
> Yes the future is what counts
> But that is judged from one's own position and needs




Yes, tax considerations are needed. 

I agree, best to judge from your own position and needs.  I prefer capital appreciation (hence commodities), rick appears to enjoy his dividends.  

Good luck!


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## nomore4s (9 April 2008)

MRC & Co said:


> Second point, I don't see the difference whether your original entry was low or not.....we are only looking at the future.




As Motorway has said, tax might be a consideration. Also your D/E yield will be higher if you have a low entry price.


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## Muschu (9 April 2008)

MRC & Co said:


> First point is very true.
> 
> However, I personally would add more weight to the commodity bull, really a stage in the global economy unparalleled and great for commodities over the long-term.
> 
> Second point, I don't see the difference whether your original entry was low or not.....we are only looking at the future.




Thanks for all the contributions / comments.  I probably should have outlined the rest of the portfolio, but it is strong and still profitable in BHP, RIO, NVT, WPL and WOW in particular.  These five [plus QBE, WES and OXR - more recent acquisitions] make up the other 75% of our SMSF.

Looks like I'm in for a ride with the banks... thanks everyone.


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## Julia (9 April 2008)

Muschu said:


> CBA and MQG were purchased last year and are significant losers right now.



I wouldn't regard CBA and MQG as being in the same category.


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## Muschu (9 April 2008)

Julia said:


> I wouldn't regard CBA and MQG as being in the same category.




Me either Julia.  And they weren't intended to be.  My typing finger was getting tired.....
Ta
Rick


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## Julia (10 April 2008)

josjes said:


> WES, QBE (at <$24 price), TAH all are paying > 5% fully franked dividend.
> I don't think you can go wrong with these companies.



Depends why you are buying them, josjes, perhaps?  If it's for the dividend/franking, yes, quite good, but not for the capital gain going by the last couple of years.  Even before the debt became an issue for WES, the SP wasn't doing much.
Re TAH, ditto re the SP, though it has actually being steadily dropping for most of the last year.  If there's a recession, there's a school of thought that says that - although, yes you're right, it is consumer discretionary - sometimes in economic downturns gambling does very well as people seek escape from financial anxiety.
QBE has also been disappointing this year, but I'm still holding this.
Wouldn't have the other two.

And back to the original question:  here are some further  negative remarks about the banks.
http://business.smh.com.au/banks-become-haves-and-havenots/20080409-24wp.html?sssdmh=dm16.310158

Maybe have a look at some of the coal companies, Rick?


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## Muschu (11 April 2008)

_And back to the original question: here are some further negative remarks about the banks.
http://business.smh.com.au/banks-bec...mh=dm16.310158

Maybe have a look at some of the coal companies, Rick?_

Thanks Julia.  Got any in particular in mind?  
My thinking was more along the lines of what "blue chip" companies to invest in, other than the financial sector / banks, for the next several years?  I'm already heavily into BHP and, to a lesser extent, RIO and WPL.  Also WES - where there is a coal component.
Short-list is leaning me towards one of LEI, WOR, WDC, TOL -- or to further top-up QBE.  [Why do I keep liking CTX?]
Anyway, I really don't know enough yet and will probably observe for a bit longer - checking for further experienced comments.
Rick


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## Judd (11 April 2008)

You could always just buy the index where you get the good, the bad but not the ugly as they drop out of the index.  Have a look at STW.  Total of last two distributions was $3.29 per unit.

I don't have access to a computer during my working day (flog groceries at the inverted M), so I don't have time to look at individual shares.  I simply buy index funds or LICs when we have the money (send off an email in the morning and hope! )


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## Julia (11 April 2008)

Muschu said:


> Thanks Julia.  Got any in particular in mind?
> My thinking was more along the lines of what "blue chip" companies to invest in, other than the financial sector / banks, for the next several years?  I'm already heavily into BHP and, to a lesser extent, RIO and WPL.  Also WES - where there is a coal component.
> Short-list is leaning me towards one of LEI, WOR, WDC, TOL -- or to further top-up QBE.  [Why do I keep liking CTX?]
> Anyway, I really don't know enough yet and will probably observe for a bit longer - checking for further experienced comments.
> Rick




Any particular reason it has to be blue chip?

Re coal:  discussion on this thread:
https://www.aussiestockforums.com/forums/showthread.php?t=2294&highlight=Coal

Take a look at FLX e.g. - (Noirua:  thanks for comments).


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## Whiskers (11 April 2008)

Good Question!

My Mother is retired and has about 1/3rd of her portfolio, in banks. 

I've been scrounging around some research for my mother (ASPECTHUNTLY - Etrade) and noticed, BBI - Babcock & Brown Infrastructure and ENV - Envestra, both > 12% dividend yield and HDF - Hastings Diversified Utilities > 10%, current and estimated.

I don't know much about these, in fact only heard of BBI, cos I focus mainly on small cap mining stocks... the other end of the volatility spectrum. 

My Mother has no other income so tax won't be a problem. 

Any Experience with these, anyone?


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## Muschu (11 April 2008)

Julia said:


> Any particular reason it has to be blue chip?
> 
> Re coal:  discussion on this thread:
> https://www.aussiestockforums.com/forums/showthread.php?t=2294&highlight=Coal
> ...




Well it's prettier than red,Julia.  No, seriously:  by the quote marks that I put around the words "blue chip" I guess I meant something along the lines of lower [not zero] risk.  I don't want speculative stocks for the major part of our retirement portfolio.

I've been doing some very basic research, partly using FNArena that a very kind person put me on to, and TOL, LEI, WOR, NWS, QBE [which I have and could increase] and even CTX look good.

I now need a prophet to tell me where the "bottom" is.  All of these stocks are, to varying degrees, quite a lot above their 12 month lows.

Thaks for FLX - will check it out!

Rick


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## Aussiejeff (11 April 2008)

Julia said:


> Depends why you are buying them, josjes, perhaps?  If it's for the dividend/franking, yes, quite good, but not for the capital gain going by the last couple of years.  Even before the debt became an issue for WES, the SP wasn't doing much.
> *Re TAH, ditto re the SP, though it has actually being steadily dropping for most of the last year.  If there's a recession, there's a school of thought that says that - although, yes you're right, it is consumer discretionary - sometimes in economic downturns gambling does very well as people seek escape from financial anxiety.*
> QBE has also been disappointing this year, but I'm still holding this.
> Wouldn't have the other two.
> ...




TAH down over 20% today on news the VIC Gov't has broken the pokies duopoly enjoyed by TAH and Tattersalls. TAH apparently going to try and sue for $1 Billion in compensation. IMO I don't like their chances of legal success (which would murder the SP at that point in time if that were the case) and I don't think the SP will go anywhere *nice* in the meantime anyways with such a massively risky court case hanging over them ..

All in all, I would regard TAH currently as V. High risk until the court case scenario is resolved one way or the other - whenever that may be.


Chiz,

AJ


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## freddy2 (11 April 2008)

With competition coming to the pokies and racing TAH are finished. All they will have with-in 10 years is crappy casinos on the Gold Coast and in Sydney. They got cosy with their monopoly ripping off customers (approximately 20% takeout vs 5% for Betfair) instead of innovating and becoming a leader in the field. Good article about this situation:  http://www.news.com.au/perthnow/story/0,21598,23516989-5005406,00.html . 

As for a good reliable stock I would suggest WOW


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## Julia (11 April 2008)

Whiskers said:


> Good Question!
> 
> My Mother is retired and has about 1/3rd of her portfolio, in banks.
> 
> ...



Whiskers, I had BBI for a while.  Sold it when the SP wasn't going up.
If you have a look at this and ENV over two years (including of course the rampant bull market) the SP has gone sideways or down.  I guess you'd have to do the calculations to decide whether the dividends outweigh the loss of capital.  Couldn't your mother access a greater income by (when stability and growth return to the market) buying good growth companies, and simply selling a few shares when she needs some injection of funds?  If she has no other income she's unlikely to be worried by the tax factor unless she has very large holdings.


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## vishalt (12 April 2008)

Would you rather buy CBA at $62 or $40?

Would you rather buy Westpac/ANZ at $31 or around $22? 

I know what I would choose!

These things are hotcakes for a long-term buy, I think we still got further in the turmoil to go though but I would like to see the banks forming a base around these SP's which would give confidence about stepping in the water so to speak!


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## Bill M (12 April 2008)

It is very hard to be positive about the banks when many factors are against you. The charts, sub prime, bad loans, investor sentiment etc isn't good. I tend to think long term and never short term and as such make my investments accordingly. I agree with vishalt why would anyone buy CBA at $62 but not at $42? I don't know but to me there is great value in them for the long term and during this crash you just baton down the hatches and collect the dividends until the good times come along again.

Some facts, this is the second worst banking/financial crash since the 1950's. Only the 1974 era was worse. Things were really much worse then, the banking sector dived buy -67%. Following on from there the period from 1974 to 1987 the banking sector increased by a massive +1,068%. Then came the 1987 crash and the banking sector dived again -39%. From 1987 to 1990 it went up +86%. There have been several ups and downs since then but the ups are many many times better than the downs.

To me this is the golden opportunity to buy the banks and I have been doing so. I would never have bought CBA at $62 and didn't but at $41 it's a steal. 

I bought CBA for $10.30 in 1996. Today it is $41 even with all the Doom and Gloom around, that's a 400% increase in 12 years. They always paid good dividends in the mean time (tax free too), you need to be doing something a lot better to beat this. You can go on Commsec or any other broker site and just check back to the dividends paid to any year you like and you will see that almost every year they keep going up. Sure the share price capitulates from time to time but they always pull out their slump and surpass their previous highs. Think not next week or next Month just ask yourself where do you think the share price will be in 5 years or 10 years time, good luck with your investments.


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## Sean K (12 April 2008)

News coverage on this topic here:



> *Safe as a bank, but give it time *
> 
> WEEKEND FORUM: Tim Blue | April 12, 2008
> 
> ...


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## Nicks (12 April 2008)

In response to the original question posed, here are my thoughts:

*TOL* - excellent stock (I own) but the dividends are crappy. Buy for growth especially at current prices.

*TCL* - this will give you great and safe returns. Dividends are high yielding and the investment is safe (people need to drive on roads). The have growth potential too as they make inroads (pun) into toll roads overseas.

*AFI* - Great diversified stock. Gives good reliable dividends and is relatively safe as it is diversified. Expert investors and Management fees are low.

*APA* - Another high yielding dividend stock that is safe and I think will have excellent share price growth from current levels. Dividend yield is something around 9% at the moment and it is a fairly safe growth bet at current prices (people need Gas and Gas usuage is growing).


My picks for your requirements TCL and APA. High dividend yields with growth potential. Good for retirees and non retirees!


Cheers and hope this helps
Nicks


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## Bill M (12 April 2008)

kennas said:


> News coverage on this topic here:




Kennas, that is probably the best article yet on the banks. Thanks for posting it, a very informative and well balanced view from several experts, cheers.


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## vishalt (12 April 2008)

Nice post Bill M and thank you for sharing that article Kennas, good spotting . 

Personally I believe there will be some more to come, the banks may halve in price (or a little bit worse) but they will have the strongest recovery when things stabilise. 

Personally I am going to pump in the cash into Westpac & BoQ slowly and steadily so I don't hog it all at one price incase Westpac goes down to $17 and BoQ to $11. 

What I am amazed at though is how most US banks have not been as heavily hammered as the Aussie banks.. except for Citigroup, check out JPMorgan, Bank of America, Royal Bank of Canada and such and they have been nowhere as scathed as us even though they have performed nearly as good.

But the British banks like HBOS are under media speculation, Barclays is down 50%, Deutsche Bank is down from 110E to 75E.


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## Muschu (12 April 2008)

Thanks Nicks, kennas and Bill.  Good to read a variety of views.  Informative article link kennas -- there seems to be some consistency of view there, in amongst the differences.
I haven't had shares for as long as Bill and some major holds, such as CBA, were bought only last year.  I've had WBC and ANZ for longer.
I've also been looking at some of the shares you mentioned Nicks.  I've been watching TOL in particular.
My original thinking was [a] whether to take some, not all, funds out of banks and move them to shares such as TOL, LEI .. etc.
And another corner of my mind was thinking of * switching - specifically - selling ANZ and moving to WBC.
I could do [a] and/or  or [c] -- nothing.
Interesting days aren't they?*


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## rhen (13 April 2008)

vishalt said:


> Personally I am going to pump in the cash into Westpac & BoQ slowly and steadily so I don't hog it all at one price incase Westpac goes down to $17 and BoQ to $11.




Any reason why BOQ over, say, SGB which has better value (according to some experts), and better dividends, to mention a couple of criteria retirees would be, perchance, interested in?


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## Knobby22 (13 April 2008)

The time for selling banks has past. If you still own them you might just as well keep them. Bank of Queensland and Commonwealth are the best and safest. I sold mine a yeat ago and bought back Commonwealth recently when the got to $28.

I would also hold stocks that can handle the A$ dropping long term.
e.g. CSL and Woodside.


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## overule (13 April 2008)

Knobby22 said:


> Bank of Queensland and Commonwealth are the best and safest. I sold mine a yeat ago and bought back Commonwealth recently when the got to $28.




CBA didn't dropped to $28 this year and last year. Probably, you mean $38 ?


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## vishalt (13 April 2008)

rhen said:


> Any reason why BOQ over, say, SGB which has better value (according to some experts), and better dividends, to mention a couple of criteria retirees would be, perchance, interested in?




Firstly I don't listen to "experts", I listen to amateurs (mainly elderly columnists) who have been investing like me but for a long time and ol - have they had better recommendation than analysts ever have. 

I like BoQ simply because the company has good liquidity and a lot of retail deposits from Queensland and logically - Queensland is a booming state full of mines and rich people happy to splurge on McMansions to bask in the year-round sunshine (not to mention the coast). It is also a takeover target.

I like Westpac because the bank is a very liquid major, I'm happy with their business units. Also with Gail Kelly onboard the bank is bound to get good publicity! Also because my dad has Commonwealth Bank and we don't like NAB or ANZ. 

St George is a good bank with a solid mortgage unit and wealth management but it was either this or BoQ and I like BoQ more.


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## davo8 (14 April 2008)

Muschu said:


> Hi
> I've been retired for a few years and we have about 25% of our portfolio with the banks.




Then you're hurting, and there's more pain to come. The credit crunch and deleveraging of the US economy are generating astronomical losses that will hurt banks worldwide, and ours are not immune. 

The financials sector is toxic and we definitely haven't seen the bottom yet. Check the XXJ if you don't believe me.


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## Muschu (14 April 2008)

davo8 said:


> Then you're hurting, and there's more pain to come. The credit crunch and deleveraging of the US economy are generating astronomical losses that will hurt banks worldwide, and ours are not immune.
> 
> The financials sector is toxic and we definitely haven't seen the bottom yet. Check the XXJ if you don't believe me.




Thank you Prophet Davo8.  I have no reason to disbelieve you although others disagree with your general advice.

I admit to having some difficulty with the way in which you express your opinion.  The banks have recovered before and I posted this thread in the context of long-term, perhaps retired, investors. 

It is very clear [obvious, apparent etc], and none of us need to be told, that the financials sector is suffering.

Perhaps you have a more definitive answer as to the context in which to the question was posed? Or to where the bottom is?

With 25% of our portfolio, over several years, in finance stocks -- with some ins and outs - yep, that sector has suffered.   The other 75% has, in the main, over several years, held its own.

R


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## dalek (15 April 2008)

Rick62
The obvious truth is that no-one knows what the bottom could be for Aust. banks, but if you are a long term investor / retiree with an income stream from investments and a cash stash to tide you over for the next couple of years, it is purely an academic exercise. Even if banks go another 15-20% next week / month which some of the prophets so gleefully suggest, they will be back, which is more than can be said for a great many other ASX romances encouraged by "experts"


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## Muschu (15 April 2008)

dalek said:


> Rick62
> The obvious truth is that no-one knows what the bottom could be for Aust. banks, but if you are a long term investor / retiree with an income stream from investments and a cash stash to tide you over for the next couple of years, it is purely an academic exercise. Even if banks go another 15-20% next week / month which some of the prophets so gleefully suggest, they will be back, which is more than can be said for a great many other ASX romances encouraged by "experts"




I'm inclined to agree completely dalek.  I found the previous post pretty useless and one which was not making an attempt to address the question asked.  
Thanks
Rick


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## davo8 (15 April 2008)

Muschu said:


> Thank you Prophet Davo8.  I have no reason to disbelieve you although others disagree with your general advice.R




Nobody currently investing has any experience of a situation like the current one. We and the world have had 20+ years of credit-fuelled growth, which has produced spectacular returns in businesses whose assets are money rather than goods, and few people here have been investing longer than that. 
The credit crunch is changing that model, probably permanently.

I sold all my banks, property trusts, insurance and similar, at prices higher than they are now. I may buy back in, but the bottom is months away. 
I expect the sector in future to deliver boring dividends and low growth, on P/E's of around 10-12. Since we don't know what earnings will be, we don't know the price yet. There may even be a disaster lurking.

>>>With 25% of our portfolio, 

Many investors (including myself) had far more. Right now, bank interest of 8% looks quite good. There is a tsunami of losses circulating around the world, and I don't want any more than I've had!

The same goes for traders. I venture to suggest that there is not a single trend-follower making money on financial stocks. All they're doing is feeding money into the market so the big players can sell the peaks.

If you want some dismal reading, here is as good a place as any to start.
link


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## vishalt (16 April 2008)

when you hear people like dave08 mention all the gloom, its time to buy imo, slowly and steadily


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## Julia (16 April 2008)

vishalt said:


> when you hear people like dave08 mention all the gloom, its time to buy imo, slowly and steadily




Vishalt, could you explain why Dave08's remarks prompt you to feel it's time to buy?

Do you think we've reached the bottom?

Where has all that debt gone?


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## numbercruncher (16 April 2008)

Debt to GDP has never ever been so great, what happens in the great unfolding ?  Its all a giant debt ridden pyramid scheme, massive borrowing from the future for an unsustainable present (well the near past was unsustainable, readjustment underway?).





Inflation has got to be the only hope for a way out of this quagmire.


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## nomore4s (16 April 2008)

davo8 said:


> The same goes for traders. I venture to suggest that there is not a single trend-follower making money on financial stocks. All they're doing is feeding money into the market so the big players can sell the peaks.




Um, if you are a trend following trader, I dare say you wouldn't be long financials.


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## chops_a_must (16 April 2008)

vishalt said:


> when you hear people like dave08 mention all the gloom, its time to buy imo, slowly and steadily




Given some of your _brilliant_ calls, I'd be inclined to fade you moreso.

There is simply no rush for financials. Yeah, trade them... but buying for the long term?  The information that is coming out would seem to be the sort that precipitates multi year bear markets in sectors.

Having said that, my personal view is that financials will be flat until the market heads back into the 4000s.


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## Whiskers (16 April 2008)

Julia said:


> Whiskers, ...
> Couldn't your mother access a greater income by (when stability and growth return to the market) buying good growth companies, and simply selling a few shares when she needs some injection of funds?




Hi Julia.

My mum is a reluctant trader/seller... or at least she was. While her portfolio is still in the black because she has held them for about 5 years, she has recently said I should have sold the banks last year when you (one of my brothers and I) mentioned it. But she had a lot of condidence in her (bank based) financial adviser. 



Julia said:


> Vishalt, could you explain why Dave08's remarks prompt you to feel it's time to buy?
> 
> Do you think we've reached the bottom?
> 
> Where has all that debt gone?




I'm also of the view that the correction cycle has about bottomed. (See XAO thread, Immenent & Severe Market Correction and Cycles thread.) For me fundamentals were not that bad, basically because Australian stocks are not near as exposed to the credit defaults as the US financials, but seem to have corrected more. The other issue re the debt levels is that I think it's just the changing dynamic of what a lot of people accept to basically get everything they want and keep up with the Joneses. I've predicted that particular bubble, 'residue' will carry over for another day. Uncle Festivous coined this phrase a 'classic', so I hope it lives up to expectations now. 

From a more technical viewpoint the XAO 32.8% fibonacci pretty well agrees with my proportion analysis and the long term median Standard Deviation trend line. Then there are the more obscure various cycle analysis that some of us use that also tends to point to a change in the cycles. 

My personal position is that the US markets will stabalise to recover moderately and the USD is soon to regain some strength which will equate to exponential gains for Australian stocks, resources in particular, where the Australian market will outperform the US, as it did before the US credit crunch, on the strength of solid resource sales in a higher AUD to USD conversion.


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## explod (16 April 2008)

Whiskers said:


> Hi Julia.
> 
> My mum is a reluctant trader/seller... or at least she was. While her portfolio is still in the black because she has held them for about 5 years, she has recently said I should have sold the banks last year when you (one of my brothers and I) mentioned it. But she had a lot of condidence in her (bank based) financial adviser.
> 
> ...




On what basis of fact have you formed the view that the Banks have just about bottomed?

Why do you believe the US dollar will soon gain some strength?

Did you happen to look at the new thread posted by Metric this morning. "The Black Death of Financial Collapse"   The looming problems of the world financial markets as enumerated are well reasoned, can you back your own claims above with similar substantive reasoning.

This thread would be very much followed by older newcomers to the Forums who would be vulnerable to suggestion.   Your assertions border on financial advice and unless you are so qualified I feel compelled to suggest that it be toned down.   I am surprised that moderators have seen fit to sit by on this.


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## dalek (16 April 2008)

explod said:


> This thread would be very much followed by older newcomers to the Forums who would be vulnerable to suggestion.




Maybe mods don't share your views that this thread would be an attractor to older, and therefore naive, stupid people fresh out of a CAE course on "how to turn on a computer"


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## cuttlefish (16 April 2008)

explod said:


> On what basis of fact have you formed the view that the Banks have just about bottomed?
> 
> Why do you believe the US dollar will soon gain some strength?




I'm also of the view that there's plenty more pain to be felt yet by the Australian banks over the coming year (I'm short again but perhaps a little prematurely). But I thought Whiskers comments were well enough reasoned - basically arguing that the Aus banks are reasonably insulated from the US sub prime, and that resources will continue to show strength.  

I'm less optimistic - I think the banks will need at the very least need to show some profit declines in response to the US and general credit/liquidity situation but also hold out that its likely there will also be some nasty surprises/skeletons (like the recent example of ANZ's unexpected exposure to stock lending etc.) to come as well over the coming year.

We also have the situation where cash yields are improving and so the relative attractiveness of bank yields, given the increased level of risk in banking at the moment, also loses its appeal.


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## professor_frink (16 April 2008)

explod said:


> This thread would be very much followed by older newcomers to the Forums who would be vulnerable to suggestion.   Your assertions border on financial advice and unless you are so qualified I feel compelled to suggest that it be toned down.   I am surprised that moderators have seen fit to sit by on this.




ummmm, no. The post can stay.


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## Muschu (16 April 2008)

explod said:
			
		

> This thread would be very much followed by older newcomers to the Forums who would be vulnerable to suggestion.




That sounds very patronising quite frankly.  Perhaps some of us older newcomers can bring a tad of extra maturity to the topic.  It is also quite an assumption that being new to the forums means being new to investment.
Regards
Rick


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## explod (16 April 2008)

Muschu said:


> That sounds very patronising quite frankly.  Perhaps some of us older newcomers can bring a tad of extra maturity to the topic.  It is also quite an assumption that being new to the forums means being new to investment.
> Regards
> Rick




My apologies.   There was a time when I was wet behind the ears and got burnt badly be professional fiancial advisers.   As a result 5 years ago I became my own adviser and have not looked back.   In the begginning though I made a lot of mistakes, some of them from newsletters such at Rivkins, Fat Profits et. al.   I was vulnerable to suggestions and learnt the hard way.  Just trying to be honestly helpful.

A lot of posters on the forum seem to take some of the spin, for example Bloomberg on Wall Street as concrete fact almost.   I am not intending to put down but when I notice support for such garbage I become upset and have to jump in.   I will try to be more restrained and proper in future.   

ps.   Having said that sometimes the stuff from Bloomberg is ok


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## Muschu (16 April 2008)

explod said:


> My apologies.   There was a time when I was wet behind the ears and got burnt badly be professional fiancial advisers.   As a result 5 years ago I became my own adviser and have not looked back.   In the begginning though I made a lot of mistakes, some of them from newsletters such at Rivkins, Fat Profits et. al.   I was vulnerable to suggestions and learnt the hard way.  Just trying to be honestly helpful.
> 
> A lot of posters on the forum seem to take some of the spin, for example Bloomberg on Wall Street as concrete fact almost.   I am not intending to put down but when I notice support for such garbage I become upset and have to jump in.   I will try to be more restrained and proper in future.
> 
> ps.   Having said that sometimes the stuff from Bloomberg is ok




The honesty and sentiments are greatly appreciated Explod.  Thanks.  By no means do I know it all and hence the question.  Retirees may be in a different position to younger people when it comes to investment choices or strategies, but even within the retiree "category" I am sure there are many "sub-types".  And I understand what you are saying about advisors and newsletters.  Finding quality advice can be quite a grind.
All the best
Rick


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## Julia (16 April 2008)

explod said:


> On what basis of fact have you formed the view that the Banks have just about bottomed?
> 
> Why do you believe the US dollar will soon gain some strength?
> 
> ...



Explod, I share your view about the bad news not all being out yet.
Also respect Whiskers' view.
We will all look at the same set of facts from our own, and different, points of view.  The bottom line is that none of us know.

Also, I'd just like to say that I doubt Whiskers meant to be offering advice.
I read his post as being an expression of his own opinion and nothing more.

And, as noted by Rick, I don't think you need to be concerned about older investors who may happen to be new to this forum being vulnerable to suggestion.  Most of them seem to me to be pretty smart.  Just that they are honest enough to ask questions.


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## vishalt (16 April 2008)

chops_a_must said:


> Given some of your _brilliant_ calls, I'd be inclined to fade you moreso.




You're right, my calls are brilliant. I had Rio Tinto $90, and I bought long-term non-margin BHP @ $33 while everyone was thinking it was the end of the world and it would head back to $23, I laughed. Your fear, my pleasure. 

Short-term rally for the banks comign right up, mainstream media is now switching on to "Fed restoring global confidence" headlines. And why wouldn't you buy them for the long-term?  That is the most paranoia filled statement I have ever heard, you make it sound like we are using a primitive financial system from 200 BC. 

If you want to buy CBA when it breaks $50 or $60 or NAB as it heads up to $40 be my guest, I'm not saying dump all your cash into the one stock right now, but do it partially because it *MAY* fall a bit lower but there has been a bit of support lately which indicates a good point to buy. 

All you have to remember is that Americans are greedy wankers who are happy to commit corporate fraud for more money, our banks, and most Euro ARE cleaner and we have reported no net losses. 

The old "buy in gloom, sell in boom" kicks in here, this is exactly why Buffet is rich, simple methodology and its kicking day trading ass at the moment.

Anyway, some of you really make it sound like all seven of our banks are going to be packed up and bailed out by the RBA and run by the government or something, please have some quiet time lol.


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## cuttlefish (16 April 2008)

And the DOW opens with a nice jump upwards tonight on the following great news:

JP Morgan earnings down by 50% vs last year
Housing starts at 17 year low
Oil prices at record highs
Inflation up

woohoo!  </sarcasm>

ah well, looks like my bank shorts are toast  but at least golds started the night looking good.


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## chops_a_must (17 April 2008)

vishalt said:


> Firstly I don't listen to "experts", I listen to amateurs (mainly elderly columnists) who have been investing like me but for a long time and ol - have they had better recommendation than analysts ever have.
> 
> I like Westpac because the bank is a very liquid major, I'm happy with their business units. Also with Gail Kelly onboard the bank is bound to get good publicity! Also because my dad has Commonwealth Bank* and we don't like NAB or ANZ. *



 13/3/08



vishalt said:


> Lol same, ANZ really is looking like the cheapest.
> 
> I wanted to buy BoQ too buy it surged too much today and it hasn't suffered as much as the other banks or Bendigo.






vishalt said:


> ANZ has almost surged 20% in the last 4 sessions, I'll keep my cool, if there's one lesson I've learnt is keep your cool!
> 
> Hopefully ANZ retests that level or near abouts.



25/4/08

So what happened between you buying that top in ANZ, and pouring scorn on it the other day?

So much for long term buying hey?



vishalt said:


> You're right, my calls are brilliant. I had Rio Tinto $90, and I bought long-term non-margin BHP @ $33 while everyone was thinking it was the end of the world and it would head back to $23, I laughed. Your fear, my pleasure.



Whoopdee doo!

2 out of about 20 it looks like. 

The point I was making is that you can't insult another person's calls, if you aren't prepared to stick to your own yourself. Especially if they aren't any better than the average joe's.

So what's with the switch from ANZ to BOQ? FWIW, it's probably the Home deal that gave them the pop in deposits.



vishalt said:


> The old "buy in gloom, sell in boom" kicks in here, this is exactly why Buffet is rich, simple methodology and its kicking day trading ass at the moment.



Buffett is a master, and he value things a little differently than saying companies are "very liquid". Water is very liquid, should I invest in it? The most overused term in finance right now.

And I'm guessing you mean your short term trading is not going well? For mine, there has been very little in the way of longer term trades happening, it's been rather boring. All the money has been made in short term and swing trading of late.



vishalt said:


> Anyway, some of you really make it sound like all seven of our banks are going to be packed up and bailed out by the RBA and run by the government or something, please have some quiet time lol.




Nah I wont, but perhaps you can. At least some consistency if you are going to attack people, would be good.

Thanks.

P.S. - financials well under performing yet again.


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## explod (17 April 2008)

Julia said:


> Explod, I share your view about the bad news not all being out yet.
> Also respect Whiskers' view.
> We will all look at the same set of facts from our own, and different, points of view.  The bottom line is that none of us know.
> 
> ...




Thanks Julia and points taken.    At times it is an emotional and streesful business.    It was in fact a my super fund that I put in the hands of advisers.  Have gradually rescued myself but perhaps get things a bit out of proportion sometimes as a result.

If we can survive perhaps a bad experience is a good one

cheers explod


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## davo8 (17 April 2008)

cuttlefish said:


> I'm also of the view that there's plenty more pain to be felt yet by the Australian banks over the coming year (I'm short again but perhaps a little prematurely). But I thought Whiskers comments were well enough reasoned - basically arguing that the Aus banks are reasonably insulated from the US sub prime...




Agreed (both). Banks are probably insulated and strong BUT: (a) there are liars loans out there, just not so many (b) a dip in the housing market and a few foreclosures would hurt (c) banks are exposed to business risk and to off-balance sheet stuff like derivatives (d) banks have to borrow so are vulnerable to credit conditions (e) there are "unknown unknowns" like ANZ. All banks are highly leveraged and these things hurt their business model. 

By any conventional theory this is not a correction but a bear market in most sectors and especially financials. August was a correction but Jan and Mar were lower lows. The trend is down. A simple indicator like EMA x-over said SELL in Jan and it says "DON'T BUY" now. Bear markets are not over in 4 months.

My conclusion on banks is: not yet a while. My facts are as above. If you disagree, I'd like to know what facts you base a different opinion on.


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## vishalt (17 April 2008)

chops_a_must said:


> 13/3/08
> So what happened between you buying that top in ANZ, and pouring scorn on it the other day?
> 
> So much for long term buying hey?




I think you lost me already, I might have liked ANZ at one point but I do not have the money to invest in banks yet (I am trying to save up to a certain limit first) as I think ANZ is trying to be a wannabe HSBC and its bad debt provisions are probably the worst. Good time to buy when you want to be a flogged/dead horse though, but like I said my preference is with BoQ/WBC. 



chops_a_must said:


> Whoopdee doo!
> 
> 2 out of about 20 it looks like.



or 2/2? I only traded BHP and Rio medium term last year, and I killed most of my day-trades in them? I had some fantastic calls for Orica also. My only bad call was Virgin Blue Airlines but that hit my trailing stop and bailed out with a profit. I also made a bad call on Caltex but got bailed out thanks to a stop as well. 

The only thing I regret was not being patient enough with BHP, that is one winner of a company/stock.



chops_a_must said:


> The point I was making is that you can't insult another person's calls, if you aren't prepared to stick to your own yourself. Especially if they aren't any better than the average joe's.



What insult? I was just saying when you hear the people around you frustrated in gloom and doom about to think the world is going to end - that IS a good buying point. 

Maybe you distinguished incorrectly?



chops_a_must said:


> So what's with the switch from ANZ to BOQ? FWIW, it's probably the Home deal that gave them the pop in deposits.




BoQ's a regional, Queensland is a strong growth area where even US superstars buy homes at because its so tropical, so its a "duh" investment imo. 



chops_a_must said:


> Buffett is a master, and he value things a little differently than saying companies are "very liquid". Water is very liquid, should I invest in it? The most overused term in finance right now.




His style of trading is simple but more than meets the eye though.



chops_a_must said:


> And I'm guessing you mean your short term trading is not going well? For mine, there has been very little in the way of longer term trades happening, it's been rather boring. All the money has been made in short term and swing trading of late.



I don't do short term trading anymore, an 8-6 job kind of stops you from that and hence I took a hit in January, but hey, thanks to short term trading I have been able to spend like an American woman going shopping with a credit card (cept I had all cash) and my savings filled up more than I imagined. 

Now using a no-debt approach I'm extremely comfortable that even if my investment collapses I won't owe the bank anything (except for broking fees). 




chops_a_must said:


> Nah I wont, but perhaps you can. At least some consistency if you are going to attack people, would be good.



What attack lol




chops_a_must said:


> P.S. - financials well under performing yet again.



That's a shame, we do tend to suck US d*ck and JPMorgan/Citi rallied hard last night, I'm extremely impressed we showed an awkward form of reslience.

Oh well I hope they go down even more for my long-term buying sake but I think in the short-term we will have some upside pressure till the media says "world confidence falters again"


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## vishalt (17 April 2008)

Julia said:


> Vishalt, could you explain why Dave08's remarks prompt you to feel it's time to buy?
> 
> Do you think we've reached the bottom?
> 
> Where has all that debt gone?



I don't know if we've reached the bottom, what is the bottom? I'm not Nostradamaus, all I'm saying is when everyone around you is losing the plot and preaching gloom and doom, for a cashed up person its a good time to buy. 

Worked for me for: Beach Petroleum, SP Ausnet, BHP ($33, score!), but I'm down on Neptune lol. 

I don't know where the debt has gone but I believe that its only US banks that are dirty whereas Aussie banks and most Euro/Canadian banks aren't. 

About the debt: I could be wrong but I reckon the hedgies have priced that in a fair bit and are probably moving onto pricing in the "worst is over and the banks are going to recover" bit.


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## Muschu (17 April 2008)

I'm not sure if this is an appropriate comment but:
If this thread has gone off the original question as posed [ie:  long term, possibly retirees, sticking with the banks or not] then is it perhaps time for this thread to go and for someone to start a new discussion under a different title?


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## davo8 (19 April 2008)

vishalt said:


> I don't know if we've reached the bottom, what is the bottom? I'm not Nostradamaus, all I'm saying is when everyone around you is losing the plot and preaching gloom and doom, for a cashed up person its a good time to buy.
> 
> Worked for me for: Beach Petroleum, SP Ausnet, BHP ($33, score!), but I'm down on Neptune lol.




Are you for real? I said banks and financials are doom and gloom, you said time to buy and promptly jumped into energy and tech.

This thread was supposed to be about banks. Since it started ANZ and NAB are down another $1. The XFJ is trending down. Even WES is in trading halt because it can't refinance its debt.

Do you really think it's time to buy banks, or even hold them for the long term, during a serious global credit crunch?


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## vishalt (19 April 2008)

davo8 said:


> Are you for real? I said banks and financials are doom and gloom, you said time to buy and promptly jumped into energy and tech.



Do you even read what I type? I said I don't have the cash at hand to buy BoQ and WBC, if I did I would jump all over them like bee on honey, I have already jumped onto the others as they got clobbered. 

Ofcourse financials are gloom and doom, but my argument, again, is I would *rather* buy Westpac at $21 than on the way up to $32, same with BoQ at $15 rather than $19, when share prices of high quality companies are distressed, IMO it is a good time to buy. 

As I argued you make it sound like we have a financial system that has a rigid way of working from something like before christ and that we are going to have a run on our banks, the basics nutrients of society because of some disaster that is mainly US centric. 



davo8 said:


> This thread was supposed to be about banks. Since it started ANZ and NAB are down another $1. The XFJ is trending down. Even WES is in trading halt because it can't refinance its debt.



I was correlating examples to the attitudes of gloom and doom.



davo8 said:


> Do you really think it's time to buy banks, or even hold them for the long term, during a serious global credit crunch?



Yes. 

Why, are we going to have a run them?

You buy them as they break their all time high, I'll keep buying the banks even if they halve in value. Although history is not an indicator of future performance, we live in a world that needs to borrow money to pay for the things we like and many of the world's economies are doing pretty well, hence $$ for the banks and they will probably head higher in the longer term.

ps I have no tech holdings?


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