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dark side ??

i would call it the slow(er ) lane

but OK a decision is a decision

point 1. can be harder than it looks , look at how many fund managers crow about consistently growing returns

the only successful formula for me in this regard , i buy early and hope ( the company survives the early growth period )

take as an example TNE ( purchased November 2011 @ $1.10 )

the div. yield at current SP is around 1.1% ,

DIVIDEND TYPEDIVIDEND AMOUNT ($)FRANKEDEX-DIV DATEPAY DATE
Final0.14960.00%30/11/202315/12/2023
Interim0.04660.00%01/06/202316/06/2023
Final0.12860.00%01/12/202216/12/2022
Interim0.04260.00%02/06/202217/06/2022
Final0.10160.00%02/12/202117/12/2021
Interim0.03860.00%03/06/202118/06/2021
Final0.09460.00%03/12/202018/12/2020
Interim0.03559.00%28/05/202012/06/2020
Final0.08860.00%28/11/201913/12/2019
Interim0.03275.00%30/05/201914/06/2019
Final0.08275.00%29/11/201814/12/2018


however the return on $1.10 outlay ( and a lot of patience ) is reasonable

2. franking ,

franking credits are in the lap of the gods ( actually the government and board of directors ) future directors might steer more investment internationally and those profits will carry less ( most likely no ) franking credits

there are exceptions like say BHP who seem to determine dividends by available franking credits ( and retain surplus cash for future investment )

3.capital gains

capital gains in a scenario of higher inflation ( and accompanying taxes ) you risk some disappointment here , but good luck there will still be some five and ten baggers over the next ten years , i hope you get your share

an extra thought you may have to adjust the perspective of your maths when making investing decisions , for example , do you bank your gains( dividends) or compound via DRPs ( i do a mix , including partial DRP participation in some shares )

remember the answer is always ... what is best for you ( not me or the tax office )

but welcome and i wish you all the success
 
ducati916 said:
And how did you select these 'out of favour or under pressure' companies?

Care to list any of them, I have some time off coming up over Christmas, I'd love to break 1 or 2 of them down fundamentally.

jog on
duc
Click to expand...

@ducati916, I've purchased established companies with a history of paying consistent dividends and potential for long-term capital growth, intending to generate a liveable wage through dividend and franking credits.

I wanted to purchase roughly the dollar amounts below:
$800k of BHP - The world needs steel - to make renewables, you need a ton of the stuff.
$400k of FMG - Twiggy has some ambitious ideas, that he might just pull off
$400k of ANZ - The Australian Government protects our four-pillar banking system (if the banks go bust, it's all over for Australia)
$400k of CBA - for the same reason above. Banks are considered stable (for me at least)
$100k of MFG - it's underperforming with an exceptionally strong performance capability. (Currently unloved)
$100k of WDS - It's a transitional fuel that has long-term contracts in place. (Currently unloved)

I ended up roughly with these - which are close to my original amounts
ANZ.AX $383k
BHP.AX $832k
CBA.AX $394k
FMG.AX $398k
MFG.AX $123k
WDS.AX $86k



Early days
I'll post up the Dashboard after the close.

Skate.
 
Last edited:
Skate said:
I've made a switch to the dark side
Click to expand...

Awesome there @Skate. Your funds and you've invested them according to your principles. Obviously, it doesn't matter one whit what I or others may think of either your decision or choices. It's not our funds for a start.

Hope it goes well for you. Now lose the bloody spreadsheet!
 
Great Start Today "OLD FRIEND"
Well Done !
I hope with your great writing skills I/we will enjoy reading your logs


"It seems appropriate at this time again to insert the description of an actual storm we encountered on our 10 year adventure in the open oceans on the ASX Decades and Decades and many more Decades ago

This is particularly directed to the novice sea-cadet who for some un-explainable reason believes she’ll be right in the long term if onboard tall ships. It is also relevant to the seasoned veteran who after a magnificent season often forgets the principles of seamanship and lets his adrenalin's rule.

Storm is that time all deep-sea yachtsmen must be prepared to face and sometimes without any warning. As we were sailing six tall ships all nearby in the ASX20 it made it possible to analyse the situation more closely afterwards.


The storm took place just south of New Zealand in an area not notorious for extremely fierce gales. However we were quite aware gales there may come suddenly and last for long periods. We weren’t concerned as each ship was toughly built and of heavy displacement. They were the pride of the ASX. Each and every broker in our network with research teams on many floors suggested the big three. BHP, NAB, and NCP and stressed a “diverse and balanced portfolio.”

Julius the only cadet on board asked

“What is the difference?”

Jack replied

“It’s a safety formula so that if any one or two get into trouble the other four will pull us through.” Henry quickly added

“Only if you have equal chips on all.”

We had opted for three industrials and three resources. Jack recommended BPC for its attractive price earning ratio and yield. Benji added WMC because he had fond memories. Henry added MIM as he considered her price a good value bet being the cheapest in the top 20. I abstained from joining the selection table as I saw my responsibility solely as the skipper and navigator.

We had already by now earned an excellent racing record and gained much ground, sailed through many spring gales and came through undamaged.


The NAB was far to the west and by chance the rest of our fleet were bunched together to the east.


On the 20th Dec 93 the chart of the NAB showed a bearish weather pattern and was first hit. There was no hint of a depression forming.


Yet with in 2 weeks the storm was establishing itself amongst the ships.

At midnight the storm caught us.


As the barometer plummeted (the white indicator, refer any chart later), violent wind gusts struck the yacht. All the sails were lowered and the boat put in the trough of the sea while we watched for any change. After one day the barometer had checked its fall and the wind’s mean easterly direction was unaltered. The torrential rainfall and screeching gusts all suggested we might be in the path of a revolving storm, or hurricane. The normal instructions for avoiding such storms could no longer be carried out, as the wind was too violent for any canvas to withstand.


The situation as it appeared at 1.00 am. in the middle watch was the very one we had studied most carefully. Not because it seemed likely, but because it was the worst possible position we could imagine for a sailing ship in the open sea.


I assessed that the loss of the tall mast was probable. In this lonely part of the ocean, 500 miles from America and with no engine, survival needed the preservation of all food and water. Nothing could be discarded to lighten the ship. I assessed that crew fatigue would be a danger should a breaking wave smash over the deck or cabin. Finally came the danger of crew being washed overboard. This seemed the greatest hazard of all.


It was clearly best to direct the end of the boat on to the sea to reduce the chance of a wave breaking over her. With such a strong crew I felt a helmsman could always be kept on deck. Even without sails the wind on the bare mast was driving us through the water at near maximum speed.


The night was black. My outlasting impression was noise. The shriek of the wind in the riggings, the din of the waves all blending into one devilish clamour and the pelting rain hammered against one’s head.


Moving around was not easy in these conditions. A novice helmsman could easily be caught off guard while shifting into position. Suddenly, a sea came pounding over the deck, filled the cockpit and slammed against the cabin. The ship was battened down so little water went below. Until one had been on deck for some time it was hard to believe that each succeeding wave would not wash over. If the helmsman could meet each wave squarely with the stern she would rise quietly with the sea and nothing but spray would come aboard.


The problem became chiefly a psychological one. As we were all quite experienced helmsmen by this stage no exceptional difficulty was found in steering the stern into the seas even in the dark. But it was decidedly frightening to hear the furious snarl of a wave breaking astern above the continuous roar of wind, rain, spray and waves hurling themselves at the boat.

I prayed earnestly for the dawn and went down below to look at the barometer. It was still falling steadily. There was a slight easing of the wind but it was still blowing a full gale. As man is a creature of daylight I felt that if we could just survive the night unharmed all will be well. However when dawn should have broken the angry darkness held its own.


Slowly the light seeped through the rain and spray. The dawn was much more frightening than the night. The sight of those huge waves building up astern was devastating. The surface took on a dull dirty and frothy white washing machine character. In the driving spray and rain one could scarcely see beyond the next crest even when on top of a wave.


I had been up all night and the sheer horror of looking at the seas I went below to check all the charts instruments, ate a block of chocolate and write up the log.


If on deck had felt overwhelmingly hostile, the cabin felt like a prison cell. The worst impression was one of utter helplessness. There nothing I could do except trust my instruments.


A spurt of water shot through the tiny peephole left for the helmsman to communicate with those below. I looked out and saw Jack signal me to come up. Conversation was impossible on deck but it was obvious he just wanted some support. He too was frightened by the sight and noise of the seas. Curiously, I found his anxiety reassuring. It did not seem to matter being afraid if a man of his calibre was feeling the same. In any case it felt better to be lending support to another. Strengthened in this way one could think and look around more objectively.

At 5.45 am. on the 25 May, the wind fell dead.

The sudden change was staggering. We had run into a patch of blue sky, colour sparkled, the rain dried up and the spray ceased to drive. On deck our voices were freed. Words no longer vanished in the storm.

“Look at that mountain of sea sir” Jack shouted, forgetting that his voice had not to compete with the elements,

‘It’s breaking in all directions at the top.”

The sea was hopelessly confused. Pinnacles of water would surge up without any form or rhythm. It seemed Mother Nature had developed a taste for modern art. One longed for some wind to steady her but dreaded the return of its overwhelming power. The boats motion was chaotic in the heavy air. Yet Henry and Ben below had somehow wedged and lashed themselves into their bunks. It takes a seaman to rest in such conditions. Every moment they could lie down strengthened our defence.




“I suppose we’re all right, sir,” said Jack doubtfully, “it really scared me to look at those huge curlers astern.”

“Yes, we’re all right,” I replied without much enthusiasm,

“But the real thing is what happens next.”

‘What does happen next, sir?”

‘We seem to be in the eye of a storm, Jack. The strongest wind comes after the calm.”

“I bet no one else has looked into the eye of storm of this size.

“What are we going to do now, sir?”

“Can she stand any more of this ****?”

“She’s stood it so far, Jack. We’ve done all we can. We’re all well trained and ready. There’s nothing left but to pray.” The urge to prey was deep and we were both silent for a minute.

“We’ll pull her through, sir.” warm hearted, loyal Jack said. No finer man could exist to share the pressure. At last there was colour and blue sky, but the mental relief that had come when the wind no longer blew, fizzled out like a spent rocket.

All around swirling, angry, black curtain walls of sea hemmed us in. Seven minutes of a pregnant pause seemed ages.

Savagely the wind pounced again.

It was still from the east. I struggled to check the course from my second compass. (Daily charts explained later) I was surprised to discover they both did not point in a different direction. We were still heading south with the wind astern. I thought of St. Jude and the hope of the hopeless as we sped further from land.

The clock clung to every minute, but at last an hour had passed. The instruments were pumping up and down vigorously as we dived and soared. My obsession with safety was instinctive. My passion for life, insatiable. The hope for some rising indicators never came. At times their fall was checked and then slowly fell again. This was a bitter disappointment. Although I thought the skipper should constantly be on the alert there was nothing I could do about anything and went below to write up the log.

Perhaps the depression is still deepening?

Bon Voyage and Gods' speed


"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.
NB: There is No Fundamental Analyst onboard this "HMAS Ship of Fools" So ALWAYS DYOR
 

@Captain_Chaza, the passages you’ve shared from the book, “Southern Cross - The Ship that Bound an Australian Family to the Sea” by James Lawrence would be an intriguing read. I'm impressed by how you masterfully intertwined elements of a sea adventure and financial market analysis. It’s particularly compelling how you employed the metaphor of a tumultuous sea storm to depict the volatility of the stock market.

The excerpt detailing the experiences of the skipper and navigator aboard the yacht Southern Cross during a severe storm south of New Zealand is especially poignant. In the short few passages, you have been able to compare the vivid account of the crew’s meticulous preparations and their resilience in the face of daunting sea conditions. It appears sailing and trading have many similarities.

This narrative of your post has not been lost on me.

Skate.
 

Mr Skate, OMG.

You have based your investment decisions on reward: dividends, franking credits and capital gains.

Where is your analysis on the RISK?

In your trading, you exhibited intolerance to risk, having at least 3 exit strategies to remove capital from excessive loss.

What is your exit strategy here to protect capital?

Circle of competence.

Now I may be wrong, but what do you actually know about fundamental analysis of individual companies? Are you planning to mix in TA with FA? That is pretty tricky. Which set of analysis will drive decisions?

If the decision is no decision, just hold for 10yrs or whatever, that runs the risk of a position going to zero. Lehman, Bear Stearns, Enron, Kodak, Sears, the list is long and glorious.

In your later posts, you detail your portfolio. Some comments:

(a) it is a concentrated portfolio, one bad egg will make a serious dent;
(b) it includes some banks. Banks are notoriously opaque, dishonest and misleading. Add to that badly managed. They are at the centre of every financial crisis since the year dot;
(c) resource companies, which are hard to value accurately as their value partially resides in their remaining mine life etc;
(d) a money management firm, that has a significant change in management after a losing year.

As you may gather, I am concerned. Particularly by the banks.

Banks are horribly intertwined with the Shadow banking system, which is horribly overleveraged. Many will blow-up. Guaranteed. The impact on the regulated banking system will be ugly. Throw in commercial RE, housing, what is the exposure?

Have you read your own thread? Study. Learn. Research. Risk management. Etc.

I wish you the best of British.

My advice: liquidate the entire portfolio and start from scratch if you are serious.

What would your advice be to a novice today, seeking to enter the market to trade with 100% or close to his liquid net worth?

jog on
duc
 
To add to my concern, on the area I know, mining , you selected the very single major which has had a unique history of always ******* it up and always buying at peak to divest at low.
Just look at the history of bhp in the last 20y:
Phosphate, natural gas in the US then divested at a huge loss, then refocusing on coal and iron divesting S32. And then getting rid of the best met.coal on earth just before coal price boomed again..arrrrrggg
Hard to get worst top management strategic decision, but they got the green hair rainbow HR and vote for the Voice campaign
I am genuinely worried you put all your mining asset in that dud.
Then FMG ?in 2023?
Rio is at least properly managed .which does not mean it can not fail or be hit by bad luck or mining woes..
And I see bright future for S32
Playing big like this, I would use secter etc but to each his her own
PS I do not own any of Rio FMG S32 BHP currently
 
the Portfolio you chose looks similar in strategy ( not actual share selection ) to my first investment plan of selecting large ( too big to fail ?? ) companies as a core to build from over time

my original selections went badly ( but did exit most of them in profit , as i could see they were going poorly )

good luck with your selections

( i hold BHP and WDS ) ( and S32 )
 
ducati916 said:
Mr Skate, OMG.

You have based your investment decisions on reward: dividends, franking credits and capital gains.
Click to expand...

I understand your concerns, @ducati916. I've tried various methods to extract my share from the markets, including investing in LICs and companies that I believe have value. While I've learned from my experiences, I recognise that no one enjoys reading about another trader's escapades. I'll strive to keep my answers concise and to the point over many posts, but I tend to get carried away sometimes.

From trading to investing
When COVID-19 struck, I decided to go directly to cash and wait for the markets to recover. While I was waiting, I invested $800k equally in ANZ, BHP, CBA, and MQG - what I call "beaten-up large caps." My thinking was that if these companies could reclaim their former glory over the next two years, with dividends along the way, they would represent a good risk/reward investment that would meet my criteria and hopefully exceed it.

I know it's not always easy to stay the course, especially when the markets are volatile. But I've found that investing can sometimes be a little easier to mentally handle than trading. There's something to be said for taking a long-term view and letting your investments compound over time. When the investments lost their momentum, I simply jumped off and went straight back to trading. Of course, there are no guarantees in the stock market, and there's always a risk of loss as you have pointed out.

Post Reference
Anyone wanting to verify my posts and revisit them - the two links are below:

Dump it Here

Hello Skate, None of what I use is based on Ehlers work or indicators. This is something that I have been working on for 15 years originally based on the work of Hurst and James Maggio and has undergone a lot of trial and error. As mentioned to a reply in another thread about repainting. One...
www.aussiestockforums.com

Dump it Here

All trades are taken at the close of the market – difficult to achieve without good tools – ie automation. I've only skimmed your logic, so if this comment is incorrect just ignore it... But, if your system has backtested market on close (MOC) orders, and if you can pre-calculate what the...
www.aussiestockforums.com

Skate.
 
ducati916 said:
Now I may be wrong, but what do you actually know about fundamental analysis of individual companies?
Click to expand...

@ducati916, I'm a facts and figures kind of guy, and when I saw the potential for a return on investment with minimal effort, it became a viable option for me. Trading was taking up too much of my time and energy, so I decided to take a break and focus on other opportunities.

In my next few posts
I'll summarise the reasoning behind the positions I've taken and share my thought process with you. Of course, no one knows what the future holds, and there are always risks involved.

Skate.
 
... so , this investing trend is not carved in stone ( for you )

interesting , but then you have developed trading skills to use in favorable times

IMO having options to choose from is good

good luck
 
ducati916 said:
Where is your analysis on the RISK?
Click to expand...

@ducati916, I've been working on shifting my focus to investing for the past year. I've been diligent in considering risk and have chosen a mix of stable and growth-oriented companies that I'll be sharing in my next few posts. Before I do that, I wanted to give a quick recap of my thought process.

Skate.
 
Skate said:
I wanted to give a quick recap of my thought process.
Click to expand...

The question - Is it feasible to live off dividends?
I've been thinking about living off dividends and whether it's feasible. In theory, it is, but the challenge is structuring a portfolio that won't run out of money is the "Achilles heel" behind this idea.

I've chosen six companies with an expected total yield of 6.64%. In the pension phase of superannuation, retirees don't pay taxes on dividend income and get a refund from franking credits which is a real bonus. However, dividends aren't guaranteed and will fluctuate. To mitigate this risk, I'll naturally be holding cash as part of the process.

The theory behind this strategy is that living off the income generated by a dividend and franking credits means that the market's fluctuations won't impact too much as long as dividends are paid. This approach relies on the income generated from the assets held in a portfolio, and if these assets are never sold, they continue to provide a source of income. (well, that is the premise behind my idea)

Skate.
 
ducati916 said:
Which set of analysis will drive decisions?
Click to expand...

I have a responsibility to myself to justify the actions that drive my decisions. I'll make a short post in alphabetical order to justify the position I've taken.

ANZ (ASX: ANZ)
The outlook for ANZ’s dividend is very positive and if they can execute their acquisition plan it can only be a bonus in the long run. The bank is in a sound capital position with $3.5 billion in surplus capital which is at the top end of ANZ’s target range. I expect the average earnings per share will grow in the foreseeable future.

I also personally like how Shayne Elliot (CEO) has revamped his senior management team and simplified the bank's procedures to exceed the requirements placed on them. The focus on retail, commercial, and institutional banking is expected to improve earnings over the long term with less emphasis on Asia which is a positive in my opinion.

ANZ remains in good shape and I expect solid profit growth broadly in line with growth in the economy. Admittedly, my thoughts are at odds with @ducati916 but in all fairness, I believe Duc was relating his position based on the U. S. Banking system.

Skate.
 
Skate said:
I have a responsibility to myself to justify the actions that drive my decisions.
Click to expand...

BHP (BHP: ASX)
@qldfrog has given me some helpful advice from his experience that is well worth considering. Here I was thinking BHP was a "no-brainer" as an investment. But the facts don't lie - BHP is the "heavyweight" of the ASX with a nice dividend thrown in.

Admittedly, BHP dividends have dropped in 2023 after two strong years of dividends. Despite the reduced payout, the dividend is still expected to be higher than in 2023. One piece of good news - "BHP" is in strong financial shape with modest debt levels. This financial flexibility should allow BHP to continue to return cash to shareholders provided earnings hold up. The main driver of investing in BHP is that everything that is produced (including renewables) requires steel and a "ton of it" deep into the foreseeable future.

Skate.
 
Skate said:
CBA is a "no-brainer"
Click to expand...

Commonwealth Bank of Australia (ASX: CBA)
CBA is another dividend heavyweight in the ASX. The outlook for higher dividends at this stage looks positive and I expect the dividend to grow in 2024 and 2025. CBA is committed to maintaining capital above the regulatory minimum which "impressed me" and does not intend to spend money on expensive acquisitions or risky expansion plans. The bank is currently sitting on "$3.1 billion" in surplus capital which is above the top-end of CBA’s target range. That leaves plenty of cash for dividend payments, which is a positive by any stretch.

Skate.
 

i had the same opinion under the Kloppers leadership , but since that i am swinging more to @qldfrog point of view , but currently hold a comfortable amount of BHP ( but no rush to add more at current pricing )

while BHP may be too big to fail ( despite the current down-sizing trend ) is it also too big to be efficient ( the divestment of S32 was supposed to correct that issue )

but at the current rate of divestments BHP may shower you with hidden gems ( outcasts ) , you might win for unexpected reasons

( remember BSL and OneSteel were art of BHP in the past )

one confusing factor will be FX with BHP divs. they may shrink in USD terms but remain healthy to Australian residents

also this mining super-cycle can't last forever
 
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