Dump it Here

[Skate]

mining super-cycle can't last forever - I'm not so sure.

Fortescue (ASX: FMG)
Twiggy impresses me with his planned vision of the future and if I wasn't a part of his vision, I would kick myself. It's worth noting that "Fortescue" benefits substantially when there is a surge in Iron Ore prices and the share price falls when the iron ore price is under pressure. I don't like China's manipulation of iron ore's future contracts but that has always been the case and I can live with that. The only negative is that Fortescue has a large exposure to China’s troubled real estate sector, given that almost all of its iron ore is sold to customers in China.

Lately, the dividend picture has been less positive but it's fully franked at least. For 2024, the dividend may drop further but who knows? However, on the flip side, if iron ore prices rise it could be good news for investors like me. One thing that I do know is that Fortescue is increasingly focused on dividends with a heavy focus on debt and cost reductions. I believe FMG is a "no-brainer" because of its sound balance sheet.

Skate.

 

[Skate]

Magellan, a money management firm, that has a significant change in management after a losing year.

Magellan (ASX: MFG)
Owning shares of Magellan provides me with exposure to overseas markets because it offers international investment. Having Global investments in various assets outside of Australia I can indirectly gain exposure to the performance of these international.

I like how Magellan's investment strategies are designed to diversify across different regions and sectors globally, which can help spread risk and potentially offer growth opportunities that may not be available in the Australian market. Simply by investing a small dollar amount in Magellan, there are potential returns from global markets. Magellan is unloved at the moment and rightly so, but there is potential simmering under the surface.

Skate.

 

[divs4ever]

Magellan (ASX: MFG)
Owning shares of Magellan provides me with exposure to overseas markets because it offers international investment. Having Global investments in various assets outside of Australia I can indirectly gain exposure to the performance of these international.

I like how Magellan's investment strategies are designed to diversify across different regions and sectors globally, which can help spread risk and potentially offer growth opportunities that may not be available in the Australian market. Simply by investing a small dollar amount in Magellan, there are potential returns from global markets. Magellan is unloved at the moment and rightly so, but there is potential simmering under the surface.

Skate.

brave in my opinion , but i hold several rivals , and you probably need some growth to resist inflation

 

[Skate]

Woodside (ASX: WDS)
Woodside’s latest dividend was impressive but I expect the dividend to drop over the next two years. As gas is the transitional energy source with long-term contracts signed it was another "no-brainer". Anyone who thinks "renewables" is the immediate solution they are fooling themself. Despite this, Woodside has "strong cash flows" the lifeblood of any business and a healthy balance sheet to support the "ongoing dividend payments".

Furthermore, Woodside has been able to adapt and thrive in a rapidly changing industry. The merger with BHP and possibly with Santos will allow Woodside to expand its growth opportunities across its three pillars of oil, gas, and new energy. As a footnote, Woodside is progressing with several growth opportunities, including the "Sangomar" project, which is targeting first oil in mid-2024. The Scarborough project is expected to deliver its first LNG cargo in 2026. The pipeline of projects is exciting, not only for me but for all investors.

Woodside's success story serves as an example of what can be achieved when companies embrace the energy transition and commit to sustainability coupled with its diverse portfolio has positioned the company for success in the energy transition. As the world continues to grapple with the challenges of meeting growing energy demands, companies like Woodside will play a critical role in shaping the future of the energy industry.

Skate.

 

[Skate]

@divs4ever and @qldfrog, thank you for reading my post. I appreciate your input!

I know my pivot to investing might seem sudden, but I've been planning this move for a while now. I'm used to having unpopular opinions, so it's no surprise that my ideas don't always align with the majority. I'm willing to take the risk and try something different, and I'm excited to see where this new path leads.

Skate.

 

[Belli]

I know my pivot to investing might seem sudden, but I've been planning this move for a while now. I'm used to having unpopular opinions, so it's no surprise that my ideas don't always align with the majority. I'm willing to take the risk and try something different, and I'm excited to see where this new path leads.

Skate.

I don't know why the majority, or even the minority, would be given the slightest consideration where investing is involved. It's your money, it's your choice and the outcome, whatever it may be, is entirely your responsibility. A fabulous situation and it works for you.

Now to reach in for that feeling of calm.

 

[divs4ever]

@divs4ever and @qldfrog, thank you for reading my post. I appreciate your input!

I know my pivot to investing might seem sudden, but I've been planning this move for a while now. I'm used to having unpopular opinions, so it's no surprise that my ideas don't always align with the majority. I'm willing to take the risk and try something different, and I'm excited to see where this new path leads.

Skate.

sudden isn't a problem for me , my concern ( even when investing on my own behalf ) is .. could it have been better timed

for example , i am trying to hoard ( some ) cash , but mindful any major contagion could affect bank transactions

 

[peter2]

I'm with @Belli, ditch the spreadsheet. These investments have no value other than providing income.

I do hope you keep a little cash available for a few systems, just to keep your skills tuned.

 

[ducati916]

Fortescue (ASX: FMG)
Twiggy impresses me with his planned vision of the future and if I wasn't a part of his vision, I would kick myself. It's worth noting that "Fortescue" benefits substantially when there is a surge in Iron Ore prices and the share price falls when the iron ore price is under pressure. I don't like China's manipulation of iron ore's future contracts but that has always been the case and I can live with that. The only negative is that Fortescue has a large exposure to China’s troubled real estate sector, given that almost all of its iron ore is sold to customers in China.

Lately, the dividend picture has been less positive but it's fully franked at least. For 2024, the dividend may drop further but who knows? However, on the flip side, if iron ore prices rise it could be good news for investors like me. One thing that I do know is that Fortescue is increasingly focused on dividends with a heavy focus on debt and cost reductions. I believe FMG is a "no-brainer" because of its sound balance sheet.

Skate.

So I have just undertaken a first pass analysis of FMG.

It is likely manipulating its earnings. Specifically around capitalising expenses. Which of course makes earnings look better.

I'm going to dig in deeper over the next few days.

jog on
duc

 

[Belli]

One can only hope listed companies are applying these and any assessment individuals undertake recognises that.

Accounting Standards

aasb.gov.au

 

[investtrader]

Bloody hell. This thread took a big U turn in a few days. Skate, I made a similar decision two years ago. I may still trade a small part of my Portfolios, but I am recently retied after selling my business and I don't really want to be stuck trading. Plus I don't think our market is going to trend well for quite a few years yet.
My only advice - "The only free lunch in investing is diversification" Harry Markowitz.

 

[ducati916]

From trading to investing
1. 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.

2. 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.



Skate.

1. So buying 'fundamentally sound companies' during a general market break is the way to buy them. Agreed. Buying companies at market 'highs' is fraught with disappointment. It would seem, correct me if I am wrong, that you have filled these positions recently. This is not a general market break situation. If (when) we get another general market break, they will collapse with the rest of the market. Correlations always rise to 1.0 in general market breaks. Their superlative fundamentals will not protect them from 'panic'. Just how sure are you in their fundamentals? That is all you will have to hang onto.

2. Sure when they compound higher over time it gives you a nice warm fuzzy feeling. Much like a kitten. If they get chopped in half, then it's more like Cocaine Bear rampaging through your kitchen. I remember discussing drawdowns in 2020 and open profits that got chopped. That was a miserable experience. Now imagine $1M evaporating in a market collapse. You think that you are prepared mentally for that? I doubt it. Why do you think so many sell at the bottom, giving rise to the technical term, exhaustion bottom? Because mentally, they can no longer take the pain.

Accounting issues. The reason that clean accounting is a major issue is that if discovered, which will usually happen when there are performance issues with growth going forward, is that the share price is heavily discounted. That happens pretty much overnight.

FMG looks to have capitalised expenses. I'll look more closely at this over the w/e. My guess, as an industrial, it would be within repair and maintenance costs. Resource companies generally don't like recessions. We have a doozy approaching next year.

Massive red flags appear in inventory and receivables accounts. If you see those, time to jump ship with the Cap'n. Problem is that you hold banks, which require another level of expertise altogether in analysis. Buffett got badly burned in Insurance (General Re) on its derivative exposure (banks hold massive derivative exposure) and it's all off balance sheet. Also Salomon Brothers. He eventually unloaded that onto Sandy Weil who shut it down with massive losses.

jog on
duc

 

[qldfrog]

One can only hope listed companies are applying these and any assessment individuals undertake recognises that.

Accounting Standards

aasb.gov.au

You are an eternal optimistic Mr @Belli
Let's just say that with a few billions in the bank and a few more at risk , standards tend to have a very shifting geometry when processed by highly skilled and experienced teams.

 

[Belli]

You are an eternal optimistic Mr @Belli
Let's just say that with a few billions in the bank and a few more at risk , standards tend to have a very shifting geometry when processed by highly skilled and experienced teams.

Not really. If companies are not complying with accounting standards it implies they have free reign to put whatever they like in the financial statements. It follows that entities such as AFI, ARG, DUI, AUI and other groups which may hold those companies are not able to decipher skulduggery in the accounts or, putting on the tinfoil hat, they are all in collusion to deceive investors.

 

[divs4ever]

not able to decipher skulduggery in the accounts

yes that has happened before , and that has also tricked the financiers ( very large banks )

now the 'old' LICs have some very experienced analysts , but can they be expected to see what is concealed from major lenders ( who often have the opportunity to inspect the accounts closely and deeply ) ... although say WBC royally messed up with Christopher Skase ,

would LIC managers make a LOT of fuss if they suspected skull-duggery or calmly move investment capital elsewhere ( i suspect mostly the later )

active collusion in the older LICs seems less likely , but sometimes a person yields to corruption , ... not as likely as being blind-sided by slick accounting ( remember the major accounting firms have endured decades of scandals over 'creative accounting ' for clients )

 

[Skate]

Why do you think so many sell at the bottom, giving rise to the technical term, exhaustion bottom? Because mentally, they can no longer take the pain.

@ducati916, your posts are always inciteful and they are always intertwined with subtle questions. Before I attempt to respond I want to relate a true story about a large investor.

In August 2016, I was a year into my trading journey and doing quite well. One day, I found myself conversing with a man named Big AL, who stood 5 feet tall but had a towering presence. He was part of a wealthy family, and his three brothers were all big investors. As we talked, Big AL recounted how during the Global Financial Crisis (GFC), his brothers had all sold their investments at the bottom of the market, unable to stomach the losses. But Big AL had taken a different approach. Despite the pain and pressure to sell, he held his nerve and refused to give up on his investments.

Big AL's family regarded him as a genius for his ability to weather the storm, but what he said next surprised me even more. "I didn't need the money," he said with a shrug. Those words have stayed with me ever since. It was a moment of realisation that sometimes, the best investment strategy is not about making a quick profit, but about having the courage and conviction to hold onto your beliefs, even when everyone else is running for the hills.

Big AL's story taught me that sometimes, the most important thing in investing is not the money, but the mindset. It's about having the strength to stick to your guns, even when the market is screaming at you to do otherwise. It's a lesson I've carried with me ever since, and I hope to pass it on to others.

Skate.

 

[Skate]

Renewed Interest
Since turning over a new leaf, I'm delighted to see renewed interest in our small community in this thread, with new contributors like @Belli and occasional contributors like @investtrader, and even @Country Lad stopping by to read a post or two. Our regular members are the backbone of this thread, and their continued participation is invaluable. Thank you all from the bottom of my heart.

Skate.

 

[divs4ever]

@ducati916, your posts are always inciteful and they are always intertwined with subtle questions. Before I attempt to respond I want to relate a true story about a large investor.

In August 2016, I was a year into my trading journey and doing quite well. One day, I found myself conversing with a man named Big AL, who stood 5 feet tall but had a towering presence. He was part of a wealthy family, and his three brothers were all big investors. As we talked, Big AL recounted how during the Global Financial Crisis (GFC), his brothers had all sold their investments at the bottom of the market, unable to stomach the losses. But Big AL had taken a different approach. Despite the pain and pressure to sell, he held his nerve and refused to give up on his investments.

Big AL's family regarded him as a genius for his ability to weather the storm, but what he said next surprised me even more. "I didn't need the money," he said with a shrug. Those words have stayed with me ever since. It was a moment of realisation that sometimes, the best investment strategy is not about making a quick profit, but about having the courage and conviction to hold onto your beliefs, even when everyone else is running for the hills.

Big AL's story taught me that sometimes, the most important thing in investing is not the money, but the mindset. It's about having the strength to stick to your guns, even when the market is screaming at you to do otherwise. It's a lesson I've carried with me ever since, and I hope to pass it on to others.

Skate.

now to me , the important part of the Big AL story was ' i didn't need ( NEED ) the money ' , that is NOT financially squeezed from other directions , now i was completely distracted during the GFC but March 2020 was the closest i have been to a real crash and in 2020 , with the help of a little stashed cash , was happily buying morsels discarded in the wreckage of panic-selling ( i had some cash i was down around 50% on the portfolio and divs were being suspended all over the place ... but i could hardly use my spare cash for an ocean cruise or even a movie theatre ... but some share prices didn't they get SMASHED .. 60 and 80 percent discounts if you were brave/confident ( often the ones with low lending value )


cheers


and thanks for the story/lesson

 

[Skate]

1. So buying 'fundamentally sound companies' during a general market break is the way to buy them. Agreed. Buying companies at market 'highs' is fraught with disappointment. It would seem, correct me if I am wrong, that you have filled these positions recently. This is not a general market break situation. If (when) we get another general market break, they will collapse with the rest of the market. Correlations always rise to 1.0 in general market breaks. Their superlative fundamentals will not protect them from 'panic'. Just how sure are you in their fundamentals? That is all you will have to hang onto.

2. Sure when they compound higher over time it gives you a nice warm fuzzy feeling. Much like a kitten. If they get chopped in half, then it's more like Cocaine Bear rampaging through your kitchen. I remember discussing drawdowns in 2020 and open profits that got chopped. That was a miserable experience. Now imagine $1M evaporating in a market collapse. You think that you are prepared mentally for that? I doubt it. Why do you think so many sell at the bottom, giving rise to the technical term, exhaustion bottom? Because mentally, they can no longer take the pain.

Accounting issues. The reason that clean accounting is a major issue is that if discovered, which will usually happen when there are performance issues with growth going forward, is that the share price is heavily discounted. That happens pretty much overnight.

FMG looks to have capitalised expenses. I'll look more closely at this over the w/e. My guess, as an industrial, it would be within repair and maintenance costs. Resource companies generally don't like recessions. We have a doozy approaching next year.

Massive red flags appear in inventory and receivables accounts. If you see those, time to jump ship with the Cap'n. Problem is that you hold banks, which require another level of expertise altogether in analysis. Buffett got badly burned in Insurance (General Re) on its derivative exposure (banks hold massive derivative exposure) and it's all off balance sheet. Also Salomon Brothers. He eventually unloaded that onto Sandy Weil who shut it down with massive losses.

jog on
duc

@ducati916, thank you for sharing your thoughts and concerns with me. I understand that investing can be a challenging and emotional experience, especially when it comes to dealing with market volatility and the potential for losses.

Firstly, I appreciate your recognition of the importance of investing in fundamentally sound companies, especially during times of market stress. While it's true that no company is immune to market downturns, investing in companies with strong financials, competitive advantages, and a proven track record of success can help to mitigate some of the risks associated with investing in the stock market.

Regarding your concerns about the potential for market collapses and the impact on your portfolio, it's important to remember that no one can predict with certainty what will happen in the future. However, it's precisely because of this uncertainty that diversification and risk management are so important. Spreading my investments over 6 positions and across 3 asset classes may help to reduce my exposure to any one particular company or market segment.

Finally, I appreciate your mention of Warren Buffett's experiences with General Re and Salomon Brothers. These are indeed valuable lessons for investors, and they highlight the importance of staying informed and being prepared for the unexpected.

In conclusion, while investing always carries some level of risk, I believe that a well-diversified portfolio of fundamentally sound companies can help to mitigate some of these risks. By staying informed, being patient, and avoiding emotional decision-making, you can help to ensure that your investments have the best chance of success over the long term.

Skate.

 

[Skate]

Not really. If companies are not complying with accounting standards it implies they have free reign to put whatever they like in the financial statements. It follows that entities such as AFI, ARG, DUI, AUI and other groups which may hold those companies are not able to decipher skulduggery in the accounts or, putting on the tinfoil hat, they are all in collusion to deceive investors.

One can only hope listed companies are applying these and any assessment individuals undertake recognises that.

Accounting Standards

aasb.gov.au

You are an eternal optimistic Mr @Belli
Let's just say that with a few billions in the bank and a few more at risk , standards tend to have a very shifting geometry when processed by highly skilled and experienced teams.

Regarding accounting issues that @Belli and @qldfrog have raised, I understand that these can be a major red flag for investors. However, many companies have complex accounting structures as @ducati916 has pointed out, and it's not always easy to identify potential issues. It's not uncommon for some CEOs and CFOs to massage the numbers or use creative accounting practices to present a more favourable financial picture.

My prime consideration in making my 6 investments was solely driven by the fundamentals of a company, rather than relying solely on financial statements. I find that understanding how a business operates and generates revenue is a better indicator of its potential for long-term success. Of course, this approach comes with its own set of challenges, that I am fully aware of.

Ultimately, the more you understand how a business operates, the more you become aware of how little you understand, which further compounds the investment's risk. However, my investment decisions align with my investment goals.

Skate.