Banks and BS advice

[MrBurns]

Well there we go the market was down today mostly it seems because of the banks.

NAB raised $3B in a placement neatly undercutting their existing shareholders and watering down their share price by about 9% (Ithink)

Other banks foillowed suit because they may also have to raise capital, so all along I was told "get into the banks no problem there" again it was all BS, the fact is nothing in the share market is air tight.

I still hold no shares and can't think of one reason to change that.

At least with unencumbered property you can still see it , touch it, live or work in it no matter what happens to the market, unlike some shares.

 

[nomore4s]

While I'm also doing limited trading atm, there are alot of advatages shares have over property as well.

I actually in the process of selling a property now and to tell the truth it's a bit of a pain in the @rse.

 

[MrBurns]

While I'm also doing limited trading atm, there are alot of advatages shares have over property as well.

I actually in the process of selling a property now and to tell the truth it's a bit of a pain in the @rse.

I agree there are people out there making a fortune the problem is I'm not one of them, it's like gambling, yeah I know do your research, a bit hard when all the advice you get contradicts the other.

With property at present it will take a while to sell but that's the way it is now, just bide your time and be prepared to bite the bullet to some extent when a buyer pops up.

 

[sammy84]

NAB raised $3B in a placement neatly undercutting their existing shareholders and watering down their share price by about 9% (Ithink)

The extra shares were sold at a 9% discount, but this hasn't diluted the total shareholder value by 9%. The capital raising brought in an extra 3b, when compared to the current market cap of 38b. This equates to about 7% of their total market cap sold at a 9% discount. So really in reality the actual dilution to the price is really only around .6 of a percent.

 

[nomore4s]

With shares you need to find a method that works for you - this is not easy, you need to identify alot of different things first.

On my property - I'm in Darwin and things are still selling relatively quickly, the unit next door to mine sold on first open, so I shouldn't have too much trouble hopefully. The pain in the @rse is dealing with real estate agents and preparing the unit for sale.

 

[nomore4s]

The extra shares were sold at a 9% discount, but this hasn't diluted the total shareholder value by 9%. The capital raising brought in an extra 3b, when compared to the current market cap of 38b. This equates to about 7% of their total market cap sold at a 9% discount. So really in reality the actual dilution to the price is really only around .6 of a percent.

How many extra shares are they issuing? And how many are already on issue?

 

[MrBurns]

The extra shares were sold at a 9% discount, but this hasn't diluted the total shareholder value by 9%. The capital raising brought in an extra 3b, when compared to the current market cap of 38b. This equates to about 7% of their total market cap sold at a 9% discount. So really in reality the actual dilution to the price is really only around .6 of a percent.

No I think thats wrong, cant find where I read it and in any case their shares dropped to the issue price about 9% lower.

 

[Nashezz]

I still hold no shares and can't think of one reason to change that.

Then why Dear Burnsy are you not lurking around the Aussie Property Forums instead of here. I think you will find most of us here can find a lot of reasons to hold stock vs property.

For instance
- greater liquidity
- tax effective income
- higher historical returns
- greater flexibility and ability to choose from a vast range of countries/sectors and individual stocks based on personal or strategic preference and risk profile
- lower initial outlay (and/or income) required
- no maintenance, rates or taxes to worry about
- no bad tenants
- no need to find tenants
- no impending property bubble bursting
- far far easier to hold a 'diversified' portfolio
- numerous strategies that can be employed and timeframes that can last from holding for seconds to lifetimes

 

[MrBurns]

Then why Dear Burnsy are you not lurking around the Aussie Property Forums instead of here. I think you will find most of us here can find a lot of reasons to hold stock vs property.

For instance
- greater liquidity
- tax effective income
- higher historical returns
- greater flexibility and ability to choose from a vast range of countries/sectors and individual stocks based on personal or strategic preference and risk profile
- lower initial outlay (and/or income) required
- no maintenance, rates or taxes to worry about
- no bad tenants
- no need to find tenants
- no impending property bubble bursting
- far far easier to hold a 'diversified' portfolio
- numerous strategies that can be employed and timeframes that can last from holding for seconds to lifetimes

Well hello Nashezz what a pleasant suprise - I hang round here in hopes of learning something that gives me confidence to dive in, still waiting.

For instance
- greater liquidity

Yes but you can always borrow against property if you need to.

- tax effective income

Plenty of tax deductions with property which might include claiming the paint job on your own house by mistake.

- higher historical returns

Debatable depends on how much you know before you buy.

- greater flexibility and ability to choose from a vast range of countries/sectors and individual stocks based on personal or strategic preference and risk profile

So what, dont want to conquer the world Australia is challenge enough,

- lower initial outlay (and/or income) required

Ok

- no maintenance, rates or taxes to worry about

that's the price you pay for owning something that cant disappear.

- no bad tenants

see above

- no need to find tenants

see above

- no impending property bubble bursting

No share market bubble thats already bursting ? at least with property you get time to get out it doesnt crash over the period of a week.

- far far easier to hold a 'diversified' portfolio

yes.

- numerous strategies that can be employed and timeframes that can last from holding for seconds to lifetimes

I guess if you're that serious , yes.

 

[sammy84]

No I think thats wrong, cant find where I read it and in any case their shares dropped to the issue price about 9% lower.

The maths behind it doesn't lie, so no it isn't wrong. The only thing that has been diluted is the EPS, however one would assume that with the extra capital NAB could put it to good use in order to achieve greater profits. The prices have fallen 9% , but this is due to the market reaction, and is only an indirect result of the capital raising. Smart investor investors will make up their own mind whether the 9% drop was an overreaction or not. It is no reason to advocate that property is a better investment than equities.

How many extra shares are they issuing? And how many are already on issue?

They issued 3b at $20 per share. Number of shares, current market cap is 38b corresponding to a share price of around $20.30, so 38b so around 190,000,000 shares I think.

 

[sammy84]

Quote:
- higher historical returns
Debatable depends on how much you know before you buy.


I dont know what this means. But if your invested in the ASX200 indice and didn't touch your funds, your historical return would be around 10%. So you don't need to know a hell or a lot to achieve stronger returns.

 

[MrBurns]

Quote:
- higher historical returns
Debatable depends on how much you know before you buy.


I dont know what this means. But if your invested in the ASX200 indice and didn't touch your funds, your historical return would be around 10%. So you don't need to know a hell or a lot to achieve stronger returns.

Yes I meant if you know what you're doing rather than just buying anything you can make a lot in real estate, I guess the same applies to shares. except with property if you make a mistake you don't lose everything.

 

[sammy84]

Horses for courses I guess. I just don't understand why it always seems like property advocates feel the need to rubbish equities and not the other way around. Whilst I prefer equities, this doesn't mean I have the urge to post on every property thread about the perils of property investment,

 

[MrBurns]

Horses for courses I guess. I just don't understand why it always seems like property advocates feel the need to rubbish equities and not the other way around. Whilst I prefer equities, this doesn't mean I have the urge to post on every property thread about the perils of property investment,

Not rubbishing equities just ponting out what I see as the weaknesses wondering what the answers are,. I havent heard any to convince me that they are either safe or predictable.

 

[numbercruncher]

Yes I meant if you know what you're doing rather than just buying anything you can make a lot in real estate, I guess the same applies to shares. except with property if you make a mistake you don't lose everything.

Tyically property investors are leveraged to the bone ... Prices down 5pc last quarter that would have plenty of recent buyers in big fat negative equity so on paper lost more than everything !!

But you guys go for gold, catch that RE mega bubble falling knife ....

 

[MrBurns]

Tyically property investors are leveraged to the bone ... Prices down 5pc last quarter that would have plenty of recent buyers in big fat negative equity so on paper lost more than everything !!

But you guys go for gold, catch that RE mega bubble falling knife ....

Not true, I know one guy owns a Harvey Norman store, no mortgage.

You're talking about developers or syndicates that buy redevelop or renovate and re sell, did that myself once we would buy a property present a plan to the financier and get all funds back including the deposit, we had nothing in, very sweet in a rising market when there are deals around, they were the good old days.

Anyone geared in commercial property now is already a gonner whether they realise it yet or not.

 

[dhukka]

They issued 3b at $20 per share. Number of shares, current market cap is 38b corresponding to a share price of around $20.30, so 38b so around 190,000,000 shares I think.

Nomore4s asked the right question. Forget market cap it has nothing to do with it.

Shares on issue 1,717,627,050
additional capital 150,000,000

That's an increase in capital of 8.7%, the net dilution of which comes out as 8%.

The only thing that has been diluted is the EPS,

What else is there? That is what a dilution is.

however one would assume that with the extra capital NAB could put it to good use in order to achieve greater profits.,

Actually if 'one' had been paying attention you wouldn't assume that at all. You'd understand that NAB needs more capital to absorb future losses. That's not to say that they won't try to do an acquisition, but that to spin this as though it were a positive to raise $3 billion in capital when the share price was more than double 12 months ago, is absurd.