Australian (ASX) Stock Market Forum

Dump it Here

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Captain_Chaza said:
Congratulations Dear Old friend!!!


However I am having a Carl Marx type Struggle with Your new Direction

According to Marxism, there are two main classes of people: The bourgeoisie controls the capital and means of production, and the proletariat provide the labour. Karl Marx and Friedrich Engels say that for most of history, there has been a struggle between those two classes. This struggle is known as class struggle.


When it Comes to Sailing the Global Exchange There is not 2 but 3 Classes of people

1st we have the Technical Analysts

2nd we have the Fundamental Strategists

Matthew 6:24-26 ​

“You can’t worship two gods at once. Loving one god, you’ll end up hating the other. Adoration of one feeds contempt for the other.

The 3rd is Fantasists 'nuf said
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@Captain_Chaza, I appreciate your unique perspective and the way you express your thoughts. Your refreshing point of view always makes for an enjoyable read.

I understand that transitioning from a weekly trader to a long-term investor may have caused some confusion, but I'm excited to explore this new approach.

At the end of the day, the name of the game is to make a profit, and there are different ways to do it. For me, taking a break from trading (which has been extremely good to me over the years) and adopting a more hands-off approach feels like the right move at this point.

Skate.
 
ducati916 said:
Mr Skate,

Horrible.

ROE has been falling for 10yrs. Not a good sign. Slight uptick this year.

Leverage has been increasing at a 7% compounded clip for the last 10yrs. With ROE falling, in the face of higher leverage, dangerous.

Loan loss provisions: Loan loss provisions are measured in basis points for an average of 0.66bp

What does an average recession look like?

View attachment 167371



You would need (to be safe) to calculate on about 2.5% which is the blow-out number.

View attachment 167369

Which is interesting because ANZ lends more to corporates than to retail (mortgages). This to me is the most important number.

View attachment 167370

So you are buying banks at the top of their cycle. The Fed won't cut immediately, probably March 2024. However when they do cut, it will likely be in a panic at 50bps increments, I wouldn't rule out an initial 75bps or in real extremis, 100bps.

jog on
duc
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@ducati916, I'm not too concerned about the frequent fluctuations in CBA's share price. Over the long term, the impact of buying at the top seems insignificant. I'm confident in the company's fundamentals and its ability to weather any short-term market volatility.

CBA's frequent fluctuations

CBA Price Chart.jpg


What I'm more worried about
When I see reports of large insider trading transactions. On further investigation, the sale of the shares of BHP (CEO) Mike Henry was related to his divorce, including the reorganisation of the holdings.

BHP.jpg

Skate.
 
he is betting that the Federal Government won't let CBA fail ( because the government will itself be in a heap of stress if it did , )think of all the automatic payments and deductions frozen it it did , for a start

the rest is up to fate ( the Hayne Royal Commission showed it wasn't management success )
 
Skate said:
@ducati916, I'm not too concerned about the frequent fluctuations in CBA's share price. Over the long term, the impact of buying at the top seems insignificant. I'm confident in the company's fundamentals and its ability to weather any short-term market volatility.

CBA's frequent fluctuations








Skate.
Click to expand...


Fluctuations. LOL.

Banks, as I said before have huge issues with off balance sheet assets/liabilities.

For example:

FASB Interpretation No. 41 which is to do with Repo netting.
FASB 140, what is a true sale and Repo-to-Maturity (this blew up MF Global)
Lehman with Repo 105, which blew them up. Only one legal jurisdiction would clear this interpretation and allowed Lehman to move $50B of netted assets (so actually probably closer to $100B) off balance sheet. Obviously when Lehman failed in 2008, that rule was revised. LOL.

Of course the game has moved on.

The point is: you have no clue how big or small the risk is. If they can't even manage their visible balance sheet and income statement, what makes you think the off balance sheet stuff is any better managed?

When they take a hit...and they will take a hit, dividends will evaporate, share price will collapse, which in a bank effects their regulatory capital ratios and oh dear....poof...they are gone.

If your risk management is as Mr divs suggests, TBTF, remember bail outs are gone. Bail-ins are the new regulation. Whether they would actually stick to that, I have my doubts, but I wouldn't be placing my capital at risk to test it.

Bankers are cretins.

jog on
duc
 
ducati916 said:
Fluctuations. LOL.

Banks, as I said before have huge issues with off balance sheet assets/liabilities.

For example:

FASB Interpretation No. 41 which is to do with Repo netting.
FASB 140, what is a true sale and Repo-to-Maturity (this blew up MF Global)
Lehman with Repo 105, which blew them up. Only one legal jurisdiction would clear this interpretation and allowed Lehman to move $50B of netted assets (so actually probably closer to $100B) off balance sheet. Obviously when Lehman failed in 2008, that rule was revised. LOL.

Of course the game has moved on.

The point is: you have no clue how big or small the risk is. If they can't even manage their visible balance sheet and income statement, what makes you think the off balance sheet stuff is any better managed?

When they take a hit...and they will take a hit, dividends will evaporate, share price will collapse, which in a bank effects their regulatory capital ratios and oh dear....poof...they are gone.

If your risk management is as Mr divs suggests, TBTF, remember bail outs are gone. Bail-ins are the new regulation. Whether they would actually stick to that, I have my doubts, but I wouldn't be placing my capital at risk to test it.

Bankers are cretins.

jog on
duc
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i do hold MQG ( free-carried ) which is basically a high-roller casino for financial gambling and smaller banks like ABA , MYS and KSL ( and SUN if they remain a bank ) mainly because they have other avenues of income apart from banking

but bail-ins or back-door government rescues ??

i think the government will pick winners if financial disaster is obvious ( aka can no longer be papered over )

will the government let any/all of the big 4 fail ?? that is the billion dollar question ... or will the carnage be so severe that the BIS/IMF rush in with vampiric rescues ( and make them literally the walking dead )
 
divs4ever said:
i do hold MQG ( free-carried ) which is basically a high-roller casino for financial gambling and smaller banks like ABA , MYS and KSL ( and SUN if they remain a bank ) mainly because they have other avenues of income apart from banking

but bail-ins or back-door government rescues ??

i think the government will pick winners if financial disaster is obvious ( aka can no longer be papered over )

will the government let any/all of the big 4 fail ?? that is the billion dollar question ... or will the carnage be so severe that the BIS/IMF rush in with vampiric rescues ( and make them literally the walking dead )
Click to expand...
They(governments) do not have to let them fail, they just take the collapsing banks over, and all shares as well as hybrids are worthless.
Australians will be relieved and the government celebrated
A bank has no significant assets (but trust) when you think about it, so there are no fire sale of assets and cents in the dollar returns to shareholders .
CBA will be taken over, some of the balances will be guaranteed by gov..up to a probably too small number, and access to cash/bank accounts withdrawal restricted...all well oiled processes.
 
qldfrog said:
They(governments) do not have to let them fail, they just take the collapsing banks over, and all shares as well as hybrids are worthless.
Australians will be relieved and the government celebrated
A bank has no significant assets (but trust) when you think about it, so there are no fire sale of assets and cents in the dollar returns to shareholders .
CBA will be taken over, some of the balances will be guaranteed by gov..up to a probably too small number, and access to cash/bank accounts withdrawal restricted...all well oiled processes.
Click to expand...
well the government owned the Commonwealth years ago when auntie worked there , the Government might be embarrassed to take it back ( and clean out the deadwood they hid there )

but it would be a tough call to trust the Government more than CBA ( especially as a banker )
 
divs4ever said:
well the government owned the Commonwealth years ago when auntie worked there , the Government might be embarrassed to take it back ( and clean out the deadwood they hid there )

but it would be a tough call to trust the Government more than CBA ( especially as a banker )
Click to expand...
The gov has infinite $ creation, even more than banks..after all, the job of a commercial bank is to create money out of nothing
 
divs4ever said:
money they can create ... trust is much harder ( and if nobody trusts the currency .. well there are several examples of that )
Click to expand...
True, but people will still trust the government more than CBA so the ass ustralian government taking over CBA a very realistic scenario and a disaster for shareholders
 
UMike said:
With this portfolio and around the 5% dividends plus franking you should be on over $150,000 (tax free) per year without depreciating the value of your investment.

To retire on I think this is more than most need.
Click to expand...

@UMike that's the plan. The pivot from trading to investing was a spur-of-the-moment decision but many months in the planning.

Skate.
 
ducati916 said:
So you are buying banks at the top of their cycle.
Click to expand...

@ducati916, an overbought market, characterised by excess demand and surging prices, is not necessarily a sign of an impending downturn. In fact, historical data suggests that excess demand often indicates a robust and thriving market, presenting opportunities for investors to capitalise on the momentum and potentially earn significant returns.

But in my case, once I had made my decision to become an investor, I immediately placed an order in the pre-action the very next day accepting the opening price on offer.

It's worth noting that hindsight plays a significant role in evaluating investment decisions. Looking back two years from now, the specific buy price may not have had a significant impact on the overall progress of the investment portfolio as one would think.

Skate.
 
Skate said:
@ducati916, an overbought market, characterised by excess demand and surging prices, is not necessarily a sign of an impending downturn. In fact, historical data suggests that excess demand often indicates a robust and thriving market, presenting opportunities for investors to capitalise on the momentum and potentially earn significant returns.

But in my case, once I had made my decision to become an investor, I immediately placed an order in the pre-action the very next day accepting the opening price on offer.

It's worth noting that hindsight plays a significant role in evaluating investment decisions. Looking back two years from now, the specific buy price may not have had a significant impact on the overall progress of the investment portfolio as one would think.

Skate.
Click to expand...

Mr Skate,

I am not referring to the market price, rather, that the top in interest rates has been reached. The Fed will start cutting next year and benchmark rates all around the world will fall.

This will impact on profitability (again).

Australian banks ( I believe) adhere to Basel III rather than Dodd-Frank.

The Supplementary Leverage Ratio (SLR) is in both regulations at 3%, which means in theory that the maximum leverage is x33. Of course creative netting can push that much higher.

The point however is: the size of the balance sheet limits profitability.

All-in-all the new regulations make bank balance sheets more expensive. Assets have a higher marginal cost. If a bank wants to grow, it will be constrained by the SLR. Thus the bank must either (a) raise new capital or (b) shed assets. If the bank is cutting assets, then low ROA businesses are cut, usually the bank's sovereign/agency repo business (pretty safe, but low ROA).

Here is the issue: banks that kept their repo business moved from (relatively safe) Treasuries and Agencies into risky junk. When the problems start with liquidity, LOL, of course the junk is far less liquid than the sovereigns, but provide a higher ROA in good times.

Now 'Held-to-Maturity' repos are all OFF BALANCE SHEET, because, then you can leverage far higher than your x33 SLR limits.

So now you have unknown risks, off balance sheet, of questionable liquidity and leverage rising far, far above capital reserved.

I guarantee you, every bank you hold is insolvent.

If there is a market break due to a liquidity crisis, banks, as usual will collapse. The bigger the bank, the bigger the problem. Share price will collapse, dividends will be suspended, there will be negotiations on how to save/bail out/let fail various large commercial banks. That will be I suspect rather stressful to holders of bank equity.

jog on
duc
 
ducati916 said:
Australian banks ( I believe) adhere to Basel III rather than Dodd-Frank.
Click to expand...
closer to Basel III than many international rivals if you believe their official statements ... BUT , APRA seems to be intent of shifting the rules on hybrids again ( so maybe not for much longer )

one reason i don't take leftards seriously ( they are never happy unless they totally mess-up your life )

but let's face it if a big 4 bank implodes , it will be carnage and tears of blood ( but it could happen , no matter how unpleasant )
ducati916 said:
I guarantee you, every bank you hold is insolvent.
Click to expand...
sadly i think you are correct , nearly all the banks ( and not just in Australia ) have convinced their governments they are systemically vital to the nations economy , but if a BIG crisis can't be hidden will government pick winners ??

but without banks there will be no credit and most global economies are debt/consumer-driven
 
Merry Christmas.jpg

Not long now
As we celebrate Christmas, I hope you've had a successful year and your portfolio looks bright and merry. Yesterday I found myself reflecting on the past year with a sense of gratitude.

In the new year, I hope we all spot opportunities with setbacks as nothing more than stepping stones to greater success.

Skate.
 
Skate said:
View attachment 167744

Not long now
As we celebrate Christmas, I hope you've had a successful year and your portfolio looks bright and merry. Yesterday I found myself reflecting on the past year with a sense of gratitude.

In the new year, I hope we all spot opportunities with setbacks as nothing more than stepping stones to greater success.

Skate.
Click to expand...
Thankyou for taking the time and all your effort.
I appreciate it greatly.
Im sure others do as well whether we post or not
Cheers mate

And to others here … its good to learn from you all

Glad tidings!
 

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