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The bet: Will these average 12% return including dividends in 1 year?

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Realist said:
When I say the Intelligent Investor - I mean Ben Graham's book, not the "trading newsletter".

That book for $45 is far better than any and every get rich quick scheme obviously. Yet it does not sell well and get rich quick schemes do.
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Agree. I rate it highly.
 
Shane Baker said:
I may have missed it but you didn't argue the point about 18% CAGR for the buy and hold strategy or its generous 15% tax rate.
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18% is a little high for a buy and hold investor to get consistently every year. 12% is a good return.

However after 10 years the tax may still infact be zero.

If you do not sell you do not pay tax!!
 
Shane Baker said:
25% is acheivable as an CAGR. Have a look at Ed Seykota returns here www.iasg.com\ He has acheived 26% return CAGR since 1987.

There are 47 funds with a CAGR of greater than 25% since inception. Some have been around for a long time.
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Well you are not talking about profit after all expenses, fees, brokerage, subscriptions and taxes are included.

And you are not talking about profit on all your capital reinvested and compounding.

I am!
 
25% per year is not a return traders consistently get on all their capital - otherwise there would be many billionainre traders and there certainly aint!
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You're right, there aren't many Billionaire traders, but there are some. Just like there aren't many Billionaire Buffet/Graham disciples, but there could be some of those too.

Have a look at this story about Steve Cohen.
http://www.businessweek.com/magazine/content/03_29/b3842001_mz001.htm
 
Dont have to be a genius just ask the guys who got YOU TUBE up and running!
 
Seneca60BC said:
If your a genius then you can make billions too - are you professor?
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Am I a genius or a billionaire? I'm not quite sure which your asking!

I suppose it doesn't matter, because the answer is NO to both
 
And you are not talking about profit on all your capital reinvested and compounding.

It is scary to see someone who advocates analysis using fundamentals with such a poor working knowledge of maths. CAGR is just that compound...annual....growth....return.....

The yearly return based on capital plus all profits invested. So the spreadsheets showed the CAGR of 25% and 18% respectively.

Returns are based on brokerage/fees etc etc being taken out prior to the calculation.

I would suggest you construct your own spreadsheet showing a borrowing of say 20% of capital base each year for reinvestment. As long as you deduct the interest costs at the start of the year you may be very pleasantly surprised at the results even after repayment of the loan. Run the spreadsheet for 35 years given your age......and compare to the base results of compounding. It will be illuminating
 

Oh dear!

Shane, if you expect to get 25% returns compounding on all your capital each year after all taxes and fees, then good on ya!!

You'll be a multi-billionaire in no time.
 
Realist,
It is fruitless to attempt to have an intellectual discourse with one so obviously at a disadvantage such as yourself.

I never mentioned including taxes in the CAGR. Sadly I cannot expect you to even bother having a close look at the spreadsheet data...changing some values and seeing the effect for yourself. Hopefully it has helped someone understand that there are ways to improve your returns after tax.

Cheers

Shane
 
I read the spreadsheet but it made no sense to me. The tax rates are wrong for personal traders, the returns are too high. It is of no use.

And too assume traders earn a far higher return than investors is a generalisation that is somewhat unfair, traders make more losses and get stopped out of trades, pay alot of brokerage, get slippage on both buys and sells and rarely get dividends. Investors have none of these problems.

Alot of experienced traders admit 90% of all traders lose money, and most buy and hold investors make money. If you compare the average investor to the average trader the investor gets a higher return and pays less fees and taxes no doubt about it. Only an excellent trader will get good results.

Besides even if your spreadsheet was correct you'd just be telling me something I already know about tax.
 
Marathon's little run today means I am up 1.3% so far....

CBH is also been a shining star.

However CQT is killing me, as is JPR..
 
Shane Baker said:
This simple spreadsheet shows the effect of deferring paying tax on returns.
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Hi Michael,

I've been paying my tax with a LOC for a number of years. I've never actually done any calculations on doing this so your spreadsheet is VERY interesting, thankyou.

I've a second job (so can do this): seems pyramiding capital, adding dividends and paying tax via LOC is a good way to accumulate!

SB

Edit: BTW the tax rate on the spreadsheet being 30% and 15% is fine. Increasing BOTH rates, returns will match.
Also, returns as a trader have been higher. Longer term may be different but think an average of 25% is achievable.
 
12% PA for a buy and hold stratergy of blue chips (dividends reinvested) is lame

more like 20%+

all the stocks you use as examples have returned way over 12%

IE CBA WDC FGL
 
clowboy said:
12% PA for a buy and hold stratergy of blue chips (dividends reinvested) is lame

more like 20%+

all the stocks you use as examples have returned way over 12%

IE CBA WDC FGL
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Work it out mate $100,000 at 20% for 30 years is $20 Million Dollars.

Do your maths again!!
 
Realist,

You make me laugh.

There was no maths involved.

I don't know about FGL and cant really be bothered looking it up but CBA and WDC have not been around for 30 yrs. (yes WDC was a merger).

CBA listed in 1991.

Etrade only has 10yr price history and it shows a price of under $12 10 years ago to a price above $46 currently which is around 16% (excluding div's) including div's it is above 20%. Granted FGL and WDC are not quite the same track record.

If you put $100k into the three stocks you mentioned and reinvested div's for the next 30 years, if past returns are indictive of future returns then yes it would be worth an awful lot

And BTW 20% compunded over 30 yrs is closer to 24 mill.
 
clowboy said:
If you put $100k into the three stocks you mentioned and reinvested div's for the next 30 years, if past returns are indictive of future returns then yes it would be worth an awful lot
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I agree. And that is roughly what I am doing... :
 
Get a grip.

Your supposedly trading about 20 stocks at the one time.All of them winners except for those that it seems have popped up as losers which you hold, and hold,and hold.
Youve used an example of $100K compounded over 30 yrs.
You dont have enough for a deposit on a house.
At 100K per share you must have a capital base of $2 million.

What the hell is it Realist make up your mind how the hell do you trade or are you still buggerising around and not so sure.

Full of theories my man but all over the place like a bull in a China shop.

If it works this week your doing it,if it doesnt on with the next theory which before you know it youve been doing for years.

Just pick something and trade it.
 
I sold IAG today at 5.50, and sold some PMH at .46.

Need the money, off to Europe for a month next week.

I still hold PMH - just reduced my holding.

IAG is not paying a dividend for 6 months and is higher than what I bought it for. I need the money so I sold. I made quite a bit on it, but mainly just from dividends. They've paid 3 dividends this year which is good.

Tech the only losers I have are FDL and JPR. I'm down $1400 on them, all the others are winners.

MTN, CBH and USA have made me alot in the past week. :
 
tech/a said:
Full of theories my man but all over the place like a bull in a China shop.
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I have investments (companies that make profits and pay dividends), shares I am trading (not charting and not day trading, merely shares I see potential in that may not make profits currently or pay dividends), and I have some Nasdaq shares.

Simple as that.

I diversify widely - hence in your eyes all over the place.

Why not have most in investements and some trading (gambling).

It seems to me you do something similar - QBE, ASX, BIL etc. are investments, KZL is a trade.

Infact it seems to me that you've entered boring investments in this comp. Yet you harp on about charting.. Seems you know better
 
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