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Julia, you may have missed my question on another thread. I asked what term have you locked your cash into?
It appears you arn't looking at buying shares!
I've been in cash only for the last year
As I said, I probably would only hold onto Toll and BHP out of the stocks you mentioned. I don't like banks and don't think they can ever be judged as quality. They're to her to put a value on.
Sorry, MR, I did miss your question.Julia, you may have missed my question on another thread. I asked what term have you locked your cash into?
It appears you arn't looking at buying shares!
I had a heap of fkp about 30% of my holdings but I sold out at just under $5, The only FKP shares I hold now were from a dividend reinvestment plan that was paid after I had sold out because I sold out after the ex div date.
I don't usally trade but I sold the FKP shares because they had gone to nearly $5 after I bought in near $3, at the time the div yeild droped to under 8% and APA was at circa $2.70 with a better div yeild so I bought into them and QGC with the profits.
the rest I have being buying parcels of shares for months so my original parcels were expensive in retrospect, however were low compared to the highs and I continue to invest on a monthly basis.
You may get better returns by owning bank stocks than having the money in the bank at current prices and interest rates.
You look at the cash rate as well in Aus and it is surely going to come down a lot. It is at about 5% now, you would think it would go down to 2 - 3% within the next few months because of interest rates (ours are 4%, UK is 1% and the US is 0%. We've still got along way to go if you believe our economy will drop as much as the US&UK) and other government factors. Then you have to factor in inflation (you would say inflation would run at 3% minimum because of all this money creation) and then the hit from the tax man. Cash would probably give you a negative return with in the next few years.
Now look at the stock market. Current yield is 8.7%, I'm going to be really conservative and say that yields are going to be halved to 4% which includes inflation. That is saying that basically company profits are going to half by 50%. You all ready have a positive return without any change to the company's stock price. Stocks will win unless you believe the market is going to go even more spastic. It is common sense. Cash is not king anymore and the argument against equity investment is not logical, unless you believe in a complete melt down.
Yes I know that you'll get better returns in the market compared to having it in the bank. I've all ready written that in another thread ....
Multiple individual lots is a good idea. If you need or more like want to break one you will not be hit with too much of a penalty if you don't require the lot. I'm just banking that it is some time off before I want to spend/invest tis money. We are still at a point that interest is being offered at a fair rate and decisions need to be made. Can lock in 3mths at 5.25 but in 3 months the best might just be 2.5% to re-invest.Sorry, MR, I did miss your question.
I have a second six month term maturing at the beginning of April this year.
I'll continue fairly short term deposits in order to have the cash available when I'm ready to start buying again. It may well be that it's years until we see a market recovery but I'm not prepared to bank on that for the sake of about an extra 1%, only to forfeit interest earned if the deposit is broken.
Have deposited the cash in multiple individual lots so I can gradually feed it into the market without penalty.
I think Tysonboss1 has started an interesting thread. It's pretty brave to put your most important decisions up for public review. It is excellent to see what other people think of various stocks.
No-one else has responded with a portfolio in kind (well, except for those in cash). Maybe we're all in cash. I'll be brave too. Here is mine. A bit of background first.
Was active in stock market from 1994 to 2001. Sold out completely for reasons unrelated to the sharemarket. Have held cash for several years now, and after many months of patient research I recently put 50% back into shares. How recently? Actually last Friday, in the last hour of trading. Picked up most stocks very close to their closing lows. I don't know if this is the bottom or not (hence only 50% committed) but I intend to hold most for 10-15 years. Time will tell if this was really stupid or really lucky. Here it is:
BHP 15%
CSL 10%
SHL 10%
IPL 8%
ORG 8%
QBE 8%
UGL 8%
WBC 8%
WOW 8%
WPL 8%
NHC 5%
AOE 4%
(Note % are of all stocks - at the moment stocks 50% cash 50%)
Comments?
Hi wonderman
how can you be sure inflation is at 3%?
i havent done much research on the topic, but all i can see is deflation,
cars,electronics,commodities,oil,house prices
arent most things getting cheaper?
regarding services, i wouldnt be suprised if the reduction of mining jobs creates some oversupply.
At the moment you can pick up first rate, primary companies with dominant market positions at great prices.
You may get better returns by owning bank stocks than having the money in the bank at current prices and interest rates.
Off topic...
but Wondermann, google 'real inflation' and have a read. Some people argue that inflation is closer to 10% due to a changed consumption basket
Prawn, this doesn't make sense to me ?
Wouldn't a change in consumption basket suggest an upward bias in the CPI ?
I think Tysonboss1 has started an interesting thread. It's pretty brave to put your most important decisions up for public review. It is excellent to see what other people think of various stocks.
No-one else has responded with a portfolio in kind (well, except for those in cash). Maybe we're all in cash. I'll be brave too. Here is mine. A bit of background first.
Was active in stock market from 1994 to 2001. Sold out completely for reasons unrelated to the sharemarket. Have held cash for several years now, and after many months of patient research I recently put 50% back into shares. How recently? Actually last Friday, in the last hour of trading. Picked up most stocks very close to their closing lows. I don't know if this is the bottom or not (hence only 50% committed) but I intend to hold most for 10-15 years. Time will tell if this was really stupid or really lucky. Here it is:
BHP 15%
CSL 10%
SHL 10%
IPL 8%
ORG 8%
QBE 8%
UGL 8%
WBC 8%
WOW 8%
WPL 8%
NHC 5%
AOE 4%
(Note % are of all stocks - at the moment stocks 50% cash 50%)
Comments?
Date: 21/1/2009
Author: Jo Clarke; Ayesha de Kretser
Source: The Australian Financial Review --- Page: 14
The price of coking coal is forecast to fall dramatically in 2009. The pricetripled in 2008 but Macquarie Group predicts that it will decline by 63 per centto $US110 a tonne. Steelmakers have been forced to delay or halt shipmentsbecause of the slowing of the global economy. Coal miners are meeting withJapanese steel makers in mid-January
Howso? Higher divs which are hardly safe, diminished further by your capital loss?
PPI out today, much much higher than expected (in relation to the CPI responses).
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