How much have you lost on shares in the last 3 days?

[Realist]

BHP and RIO climbing big time today, more than what I bought them for last week.

Some were shorting them...

I've been vindicated!!

(for now )

 

[tech/a]

So far in this down move My portfolio's traded on margin are $65K lower than a month ago. But as of Friday over 90K higher than this time last year.

Short term discretionary trades -$6,300 and buying some I'm still in.
with one SRK trading suspended.$15k in that.

Cost of doing business.

 

[Kipp]

Up $5K for May, and $2K for June...

yeah right ... from the sweet days of early May I've been in hell with BMO, MCR, and ZFX... but sold half of them when they started falling so not that bad off. Made the classic newbie move of selling my few stocks in the green today (MAP and MCR), in case the All Ords shave a few hundred more in June.

But stuff it, although this period has been stressful for all us in the market (pros and newbies alike) at least it has gone someway to removing the money hungry craze/ASX obsession that I was living a few months ago. So hopefully it means I will turn my mind on to other things.

But I wish I was in tech/a position of having a longer trading history. A 10% loss in May is nothing if you've ridden the bull in 04 and 05.

 

[Realist]

But I wish I was in tech/a position of having a longer trading history. A 10% loss in May is nothing if you've ridden the bull in 04 and 05.

Very true.

It is like buying a house at the very peak of the market, and ending up with negative equity.

Buyer beware...

 

[Sean K]

In the end the long term players will survive as long as you've diversified and haven't put 100% of your cash on some company yet to make any money. Everyone loses money during certain periods of the market - on paper. The market is still sound and there's cash still to be made. In the long run.

 

[The Mint Man]

did anyone see the report on 7 news tonight??....thats right a full report
They were saying how 100b had been wiped off the market over the past few weeks ect, however they also said that while the market may go down a little further expert analyst (I think they said comsec ) are suggesting to hold on as the market will pick back up.
Anyone see this? any thoughts?

 

[tech/a]

It is like buying a house at the very peak of the market, and ending up with negative equity.

Not even remotely like it!

 

[Realist]

Not even remotely like it!

It is!!

Buying BHP at $32 is like paying too much for a house.

Wait until you get a better deal..


Your thoughts?

 

[ducati916]

tech/a

Of course it is.

Valuation of a residential property = Rent per room * 52weeks, capitalized, and discounted by the interest rate.

Then taking your investment valuation, you can estimate the *speculative component* [or commonly known in housing as the intangible value] by comparing the investment valuation with the most recently sold house price on your street.

If the price you paid is far above the investment value, then in any market downturn, should you want to sell, or are forced to sell due to financial pressures, you may be *forced* to take a loss.

If you have overpaid, but do not need to sell, then the fluctuation is of no concern, but you will have to allow time to increase capital gains, as you have overpaid in the short term.

This is no different to buying an overvalued share.
The price you paid is not reflected in the earning power of the business.

The difference between the two asset classes is volatility
The volatility in the financial markets is several orders higher than in the *property markets*

This is due in no small part to liquidity & transaction costs.

jog on
d998

 

[pacer]

Went for a shower yeserday and ended up taking a bath on the stocks going short....whaaaaaaa mmmuuummmmmyyyyyy.....went long again and made it back.
Today going long but its freaky and not even friday, might take the verry small profit to the track and spend it on a good day out ...tooo many big players are back in....

Will the cat bounce?

Is the bear still hungry?

Who knows ....Who Cares?.....I quit till next week.....

 

[Realist]

Pacer, you are a mad man by the sounds of it.

Take it easy dude.

How much have you lost in June?

 

[Smurf1976]

tech/a

Of course it is.

Valuation of a residential property = Rent per room * 52weeks, capitalized, and discounted by the interest rate.

Interesting. Could you provide a worked example for, say, a property that rents for $250 per week?

 

[tech/a]

So far in this down move My portfolio's traded on margin are $65K lower than a month ago. But as of Friday over 90K higher than this time last year.

Short term discretionary trades -$6,300 and buying some I'm still in.
with one SRK trading suspended.$15k in that.

Cost of doing business.

Your reference I thought was related to my situation.
If so then---

Didnt buy anything at a peak.
Portfolio peaked and drawdown is relative to correction/downturn.
Selling the portfolio and re buying isnt part of the methodology.
Buy price for most components of the portfolio are well below the corrected/downturned current value.

However there is a case worthy of investigation based around Exits relative to equity curve.
Another topic.

 

[ducati916]

tech/a

Sure; let's say the asking price was $200K and an 8% mortgage rate.
The calculation would be $250 * 52 * 100 * 0.08%
$250 * 52 = 13000 * 100 = 1300000 * 0.08% = $104,000.00

The investment value would be $200,000.00 - $104,000.00 = $96,000.00
If we said the mortgage rate was 6.5%;
Then $250 * 52 * 100 * 0.065%

Then $200,000.00 - 84,500.00 = $115,500.00 investment value
Obviously, the lower the interest rate, the higher the investment value at the same rental income

The investment value = the earning power of the business [in this case a residential property] which varies in the same way as does a *share* in respect to *earnings & interest rates*

You can then easily see the *premium* being placed on the *intangible value* The trick, as with a P/E multiple, is not to overpay for the intangible value component, viz. a growth stock.



jog on
d998

 

[tech/a]

Smurf asked the question.

The trick, as with a P/E multiple, is not to overpay for the intangible value component, viz. a growth stock.

As you have shown in your Fundamental trading example.
But we are back to the merry go round of Open Equity losses arent losses unless taken and open equity gains arent gains until taken.

A pointless endless arguement.
Your happy to sit on losses un realised and profit realised and known regardless of the size of the unrealised loss.
Im happy to take known losses and sit on un realised profit regardless of the size of the unrealised profit.

 

[Bobby]

Smurf asked the question.



As you have shown in your Fundamental trading example.
But we are back to the merry go round of Open Equity losses arent losses unless taken and open equity gains arent gains until taken.

A pointless endless arguement.
Your happy to sit on losses un realised and profit realised and known regardless of the size of the unrealised loss.
Im happy to take known losses and sit on un realised profit regardless of the size of the unrealised profit.

Go Tech.

A manifest of reality did like your last sentence.

As for Duc's quasi-scientific dog'ma , seems like a capital desuitory half plan in action with rhetoric rave : ,.

Your turn Duc .

Bob.

 

[ducati916]

tech/a & Smurf

First off, let me correct my error.

The investment value would be $200,000.00 - $104,000.00 = $96,000.00
If we said the mortgage rate was 6.5%;
Then $250 * 52 * 100 * 0.065%

Then $200,000.00 - 84,500.00 = $115,500.00 investment value
Obviously, the lower the interest rate, the higher the intangible value at the same rental income

The investment value = the calculated figure, viz. $104,000.00 & $84,500.00 Therefore the Intangible value = $200K - $104K = $96K

Sorry about that, should never post late at night under the influence.


No, just that as an asset class, as Realist posted, property can be overvalued on the basis of very high intangible values

It is this high valuation within the intangible values that equate to the speculative excess valuations within share values at the top of Bull markets, or Bull runs in individual issues.

Intangible value especially in property will have a value.
The trick is to assign a rational value to it.
The short cut method, which is the same method as comparing dividend yields is to divide the rental stream by the purchase price, and calculate the rental yield

Therefore;

$13,000/$200,000 = 6.5% yield
If the investor requires a 10% yield, then this house is overpriced.
It's fast, but lacks any thought to valuations.
If the investor actually started placing valuations on individual *intangible* elements, for example, *location* you could then break down location into component parts, schools, shops, cul-de-sac, airports, hospitals, etc and assign values to each.

The result would be that you could then more accurately value property across widely diverse regions, and spot bubbles very quickly.

Peanut

Climb back into your shell peanut, it's all above you.

jog on
d998

 

[tech/a]

The result would be that you could then more accurately value property across widely diverse regions, and spot bubbles very quickly.

This is of course only at a point in time.
Yesterdays over valuation could be next months bargain.

Accuracy of valuation at any one point of time being the critical judgement.

 

[ducati916]

tech/a

I think somewhere we agreed that valuations are not static, they vary, or fluctuate. In the stock market, they fluctuate possibly with greater volatility than the property market.

However, *prices paid* for those valuations have far greater volatility than the earnings, or values associated with them, thus you will incur relative undervaluations and overvaluations.

Therefore, if you can value, reasonably accurately the investment value, you can see quite easily the speculative heat in the market, or individual investment.

Returning to property.
If you valued property simply on a yield basis, you would lose out on much valuable information.

By valuing the same hypothetical property we can illustrate the difference;

Price asked $200K
Rent = $250/week
% Rate 8.3%
Investment value = $107,900.00
Intangible Value = $92,100.00

Required yield 8.3%
@ $200K yield = 6.5%.......therefore overpriced

Therefore, we start to examine via our Intangibles weighting, the value of the intangibles. We look at schools etc.
What is found that the area contains either a high component of intangibles that are not reflected in the rent, thus the rent could be raised, thus increasing the investment value, or, the area contains nothing of value within the intangibles, and the rent seems unduely high, and possibly would need to be lowered to prevent vacancies.

By simply looking at yield, the information contained in the price tells you nothing that is worth knowing.

This is similar to *price* in technical analysis.
You can elucidate that price is higher or lower than in a previous period, but so what..........there is no quality information contained in that knowledge.

jog on
d998

 

[Realist]

Let's clarify one thing, you can value both houses and shares, and there are times when bthey are overvalued and undervalued.

Obviously you buy when they are undervalued and sell when they are overvalued.

Simple as that.

I have been vindicated buying BHP and RIO last week - they are rocketing today!!!

If RIO goes over $100 or BHP over $38 I am selling though.