Questions from a stock market beginner

[Chasero]

Chasero, I wouldn't have thought it made a difference but have you tried making the 'X" a capital letter rather than the lower case you have suggested above.

I've just been assigned a new HIN because I've changed the trustee on my a/c and its ten characters following the "X" start with "00".

Best to phone your broker.

Yep I've tried all upper case/lower case. Even went to their help which says the HIN is not case sensitive.

I think I know the problem. I have bought the shares on 31 August 2011, and the settlement date is 5 September 2011. That means the share registry has not updated my info yet? I thought it was only 2 days to settle the shares but I guess I was wrong.

 

[Starcraftmazter]

I have a question regarding what takes precedence when carrying out orders - time (first come first served) or price?

In particular, if we have something like:

We have a company trading at $10, with 2 would-be sellers and 2 would-be buyers - all if which are buying and selling an identical amount of shares. The market is a few minutes before open and there are no trades yet.

First
Seller A puts in a sell order for $10
Buyer A puts in a buy order for $10

A minute later
Seller B puts in a sell order at $9
Buyer B puts in a buy order at $11


What happens?


Also, if we reverse the situation...

First
Seller B puts in a sell order at $9
Buyer B puts in a buy order at $11

A minute later
Seller A puts in a sell order for $10
Buyer A puts in a buy order for $10

What happens?


Thanks

 

[tech/a]

I have a question regarding what takes precedence when carrying out orders - time (first come first served) or price?

In particular, if we have something like:

We have a company trading at $10, with 2 would-be sellers and 2 would-be buyers - all if which are buying and selling an identical amount of shares. The market is a few minutes before open and there are no trades yet.

First
Seller A puts in a sell order for $10
Buyer A puts in a buy order for $10

A minute later
Seller B puts in a sell order at $9
Buyer B puts in a buy order at $11


What happens?


Also, if we reverse the situation...

First
Seller B puts in a sell order at $9
Buyer B puts in a buy order at $11

A minute later
Seller A puts in a sell order for $10
Buyer A puts in a buy order for $10

What happens?


Thanks

If there are no other bidders then in A
B gets filled at $9
In B
A gets filled at $10

 

[Starcraftmazter]

So, price always takes precedence and time only matters between people who put in an order at the same price - is that right?

Does that also mean that the lowest sell and highest buy orders get matched up first?

 

[skc]

If there are no other bidders then in A
B gets filled at $9
In B
A gets filled at $10

That's wrong. In both scenarios everybody gets matched up at $10 with no remaining volume.

So, price always takes precedence and time only matters between people who put in an order at the same price - is that right?

Does that also mean that the lowest sell and highest buy orders get matched up first?

Yes price always take precedence and time only matter when price is the same. If you want your order filled you can put in as high/low a price as needed, but your volume might move the match price.

 

[Wysiwyg]

There is an algorithm. http://www.asx.com.au/products/calculate-open-close-prices.htm

 

[tech/a]

That's wrong. In both scenarios everybody gets matched up at $10 with no remaining volume.



Yes price always take precedence and time only matter when price is the same. If you want your order filled you can put in as high/low a price as needed, but your volume might move the match

Yeh your right.
Same average

 

[Starcraftmazter]

Just read that algorithm thing, quite interesting.

Thanks for the help all.

 

[Chasero]

Just 2 quick questions:

I've researched ex dividend dates and record date. Some sites say you have to hold the shares till the record date to be entitled to the dividend.

Other sites say you can sell shares after the ex-div date but before record date and still be entitled to the dividend.

Which one is true?

Also, regarding the franking credit entitlements, do I have to own the shares for 45 days to be entitled to franking credits? I thought this was only IF you had more than 5000 dollars of franking credits, then this rule applies?

Thanks.

 

[MovieManiac]

Not sure if this has been asked before, and wasn't sure of appropriate search terms. Wondering if anyone can point me to some useful resources (books or online) the describes the whole franking credits thing.

I read a book published around '93 the other day (The Art of Investment), and it kind of explained it but I still don't 100% get it. The way the ASX online course made even less sense to me.

If it's 100% franked, it just means you don't have to pay tax on the dividend received right? Similarly, if its 70% franked, you have to pay tax yourself on the extra 30%?

Also, on asx prices and research. i.e. ANZ: http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&allinfo=&asxCode=anz#dividends

it says 100% franked in the % franked column, and in the further information column: 64C FRANKED @ 30% D.R.P. & B.O.P.

In the case of being a part of DRP, means you have to pay tax on the 70% extra?

Thanks for any info.

 

[skc]

Just 2 quick questions:

I've researched ex dividend dates and record date. Some sites say you have to hold the shares till the record date to be entitled to the dividend.

Other sites say you can sell shares after the ex-div date but before record date and still be entitled to the dividend.

Which one is true?

Also, regarding the franking credit entitlements, do I have to own the shares for 45 days to be entitled to franking credits? I thought this was only IF you had more than 5000 dollars of franking credits, then this rule applies?

Thanks.

You only need to hold past ex-date.

The 45-day rule only applies if you claim more than $5k of franking credits.

Not sure if this has been asked before, and wasn't sure of appropriate search terms. Wondering if anyone can point me to some useful resources (books or online) the describes the whole franking credits thing.

I read a book published around '93 the other day (The Art of Investment), and it kind of explained it but I still don't 100% get it. The way the ASX online course made even less sense to me.

If it's 100% franked, it just means you don't have to pay tax on the dividend received right? Similarly, if its 70% franked, you have to pay tax yourself on the extra 30%?

Also, on asx prices and research. i.e. ANZ: http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&allinfo=&asxCode=anz#dividends

it says 100% franked in the % franked column, and in the further information column: 64C FRANKED @ 30% D.R.P. & B.O.P.

In the case of being a part of DRP, means you have to pay tax on the 70% extra?

Thanks for any info.

Your franking credit is also known as franking coupon... now imagine an invisible coupon attached to your dividend cheque. This amount is tax already paid by the company. When you detach that 'coupon' you can redeem it at the tax office to pay your tax, although you also need to include the value of that coupon in your taxable income.

So...say with ANZ paying 63c dividend franked at 100%. Which means there is an invisible coupon of 27c franking credit.

Your taxable income is 63c + 27c = 90c.
If your marginal tax rate happens to be 30%. Your tax liability is 30% * 90c = 27c.
Now you can detach that invisible 27c coupon and pay the tax office. So your net tax is 0c. This will only be the case as your personal tax rate of 30% = company tax rate.

Work it out for yourself what happens if your tax rate is 19% or 45%. The calculation is the same but in one case you have a net credit with the tax office (which they pay you in cash) and in the other, you have to pay additional tax.

The operation of a DRP doesn't change your tax or how franking credits work.

 

[bears]

Hello,

would someone be able to explain to me what tax loss selling is and what effects it has (on stock prices as well)?

 

[MovieManiac]

Your franking credit is also known as franking coupon... now imagine an invisible coupon attached to your dividend cheque. This amount is tax already paid by the company. When you detach that 'coupon' you can redeem it at the tax office to pay your tax, although you also need to include the value of that coupon in your taxable income.

So...say with ANZ paying 63c dividend franked at 100%. Which means there is an invisible coupon of 27c franking credit.

Your taxable income is 63c + 27c = 90c.
If your marginal tax rate happens to be 30%. Your tax liability is 30% * 90c = 27c.
Now you can detach that invisible 27c coupon and pay the tax office. So your net tax is 0c. This will only be the case as your personal tax rate of 30% = company tax rate.

Work it out for yourself what happens if your tax rate is 19% or 45%. The calculation is the same but in one case you have a net credit with the tax office (which they pay you in cash) and in the other, you have to pay additional tax.

The operation of a DRP doesn't change your tax or how franking credits work.

Oh ok cool. Thanks. That makes a bit more sense. How do you calculate that the coupon on the 63 cents is equal to 27 cents?

 

[skc]

Oh ok cool. Thanks. That makes a bit more sense. How do you calculate that the coupon on the 63 cents is equal to 27 cents?

Corporate tax rate = 30%.

Gross up dividend = 63c / 0.7 = 90c

Franking credit = gross up dividend x corporate tax rate = 27c.

 

[Chasero]

You only need to hold past ex-date.

The 45-day rule only applies if you claim more than $5k of franking credits.

Thanks! Makes sense now..

 

[KurwaJegoMac]

Hello,

would someone be able to explain to me what tax loss selling is and what effects it has (on stock prices as well)?

Sometimes when nearing the end of financial year investors will sell shares that are at a loss in order to offset capital gains from other investments (capital losses on shares can be used to offset capital gains on shares).

In effect they reduce their tax bill. In certain cases they will sell the shares at a loss just prior to the end of financial year and buy them back shortly after at roughly the same price (if possible). That way they get an immediate reduction to their capital gains tax bill and still hold the same stock for roughly the same price. Note that this practice is called 'white washing' and is punishable by the ATO.

It's effect on stock prices is that it can dampen prices in June as higher than normal volume of selling occurs - but this is not a given. From memory there was no significant statistical correlation between the two.

 

[Diggs1]

Re: Queries from a newbie

Hi I'm Newbie Trader,

I'm 18 and am currently studying law. I will finish my degree when I am about 23. Over the next few years I have planned (since I was about 15) to work earning money which I can invest into the stock market (have after 3 years of reading, watching, paper trading just begun investing). Once my degree is completed and provided I have enough money I hope to buy some kind of rental property. Whilst I have some idea about trading stocks (have come up with my own trading strategy as basic as it may be), I really have no idea about property investing (something which I hope to change over the next couple of years). Hence I have two questions...

(now i do realise this is the 'Aussie STOCK forum' but I am sure some of you own or have knowledge on property)

Why do people choose to invest in property over shares?

Why do people choose to invest in shares over property?

(I would be grateful for any opinions no matter how bias) :

Hope I havn't embarassed myself by asking anything to stupid but we all have to start somewhere right?

N.T

How good is this. He's 18 and already been learning and paper trading for 3 years, and now doing a law degree. This kid is going to be very successful. I wish I knew what trading was at his age!!

Well done mate. Much success to you

 

[jonafern]

Hi,

I'm planning to start investing in shares shortly, I'm quite new and trying to learn as much as I can. I'm also trying to get a gig at a prop shop.

I was wondering if some of you could recommend some magazine subscriptions, newspapers and websites, that I may find useful and help me get started. Also wondering which websites people use for news and updates on the market.

Thanks

 

[joea]

Hi,

I'm planning to start investing in shares shortly, I'm quite new and trying to learn as much as I can. I'm also trying to get a gig at a prop shop.

I was wondering if some of you could recommend some magazine subscriptions, newspapers and websites, that I may find useful and help me get started. Also wondering which websites people use for news and updates on the market.

Thanks

jonafern.
Everything you asked for is probably on this forum already.
Go to Forum Jump, click the menu, and happy hunting.
Its all there.
If you want a jump start and would like to trade the wyckoff method go to::
www.readTheTicker.com and there is a list of books.
After 81 years it is thought this is a good method.
joea p.s. that will keep you busy full time for 2 weeks with no sleep.

 

[bailx]

Hi,

I'm planning to start investing in shares shortly, I'm quite new and trying to learn as much as I can. I'm also trying to get a gig at a prop shop.

I was wondering if some of you could recommend some magazine subscriptions, newspapers and websites, that I may find useful and help me get started. Also wondering which websites people use for news and updates on the market.

Thanks

Fair Go! Jonafern, here's the heads up! on a few sites I know of to help you get started. All the best on your trading journey. My best tip would be to keep digging around the internet. There's a lot of good educational stuff out there that shouldn't cost you a cent.

http://www.tradingroom.com.au/apps/index.ac
http://www.news.com.au/
http://www.incrediblecharts.com/sitemap.php?cluster=16
http://informe.com/go/?domain=stockbrokers.com