2023 Returns

[SailorRob]

Returns for the calendar year 2023 across all financial assets. You can leave out the family home but that's it.

So you can't have 100k with 50k in a term deposit and 50k in stocks and then post about your stocks returns, you have to count the lot.

Value at the beginning of the year vs the end. If you have added significant money or withdrawn then this needs to be factored in by the 'time weighted' calculation (not easy). As the USD NZD was practically a wash it shouldn't matter much in calculations.

I returned just over 20%, this is not including my Sberbank position which was up 43% in USD (as I can't sell it). Quite a significant underperformance but that's in the context of having outperformed by over 30% last year.

The biggest factor by far however is that in returning 20% vs the market 24/25% my portfolio trades at less than 10 x earnings vs the market at North of 25 I believe. Thus returns have been driven by multiple expansion rather than EPS performance. This point is absolutely critical to understand going forward.

[thegreatestben]

Honestly would be too difficult, but I know it hasn’t been a good year. Mostly flat but added ~75k.

2 year anniversary for our new build rental investments in June 24. Hoping to hold so I can give SR some real life comparison data at year 10 ;)

Edit* Sharesight tells me I managed 2.8% for the year on my portfolio.

[SailorRob]

Honestly would be too difficult, but I know it hasn’t been a good year. Mostly flat but added ~75k.

2 year anniversary for our new build rental investments in June 24. Hoping to hold so I can give SR some real life comparison data at year 10 ;)

Edit* Sharesight tells me I managed 2.8% for the year on my portfolio.


Cheers for the contribution.

Well unless multiples paid to rent income less all expenses compound out from here (historically highest in recorded history) all you'll get is the cash return less all expenses. Be pretty difficult to compound out more than GDP plus inflation and could be less. Inflation adjusted they could well be worth significantly less in 10 years - unless you pump in capital to improve them and to increase rent far faster than GDP. No different to any other business. Leverage could complicate matters somewhat.

[Bobdn]

13 per cent, net of tax and fees.

[SailorRob]

13 per cent, net of tax and fees.


Cheers,

Sorry I should have stipulated mine are Gross returns.

[Bobdn]

My PIR is currently the lowest rate - 10.5 per cent thanks to that crushing bear market in 2022. So net or gross doesn't make much difference to me. Will go back up next year I guess.

[audiav]

8% net approx, sold some investments near end of year to pay down floating rate mortgage which has also been running about 8%. Almost done.

[Toddy]

I can't compete with you SailorRob. But I can learn off you and get better.

Over all of my asset classes the honest return would struggle to be 5 percent.

The share portfolio was 14 percent.

[Ferg]

Interesting thread.....good to know I'm not the only one who does this annually. For the sake of participating in this thread +5% for me across everything....not one of my better years, but there is something else I want to explore.

Per the Black Monday thread IIRC SailorRob you mentioned that equities (i.e. S&P500) outperform property over a long enough time period or words to that effect. I then posted a link to the S&P500 returns and an inflation calculator. I recall having this debate with my father eons ago re shares vs property and I took your position then. But then life and marriage got in the way and one just 'had' to buy a house. I ran my numbers from mid 1997 to mid 2023 (which is a long enough timespan for such a measurement) on my family home transactions. Nominal return was +8% CAGR, after deducting ownership opex and adjusting for 2 x equity injections. This reduces to +5.6% CAGR when adjusted for NZ inflation.

IMO there is NO WAY I could have achieved this level of return on equities over that timeframe and the S&P calculator confirms it. It helped being mortgage free since 2006 and I was lucky enough to ride a couple of waves despite the awful first 5-6 years for NZ property. No interest or rent payments since 2006 has been liberating and likely destroys the own vs rent argument from a weekly cashflow viewpoint. I'm sure others have had a similar experience and whilst my father did not articulate well the 'why' to buy eons ago....I can see why now. Counterpoint: this is simply my anecdote and it may not be representative of broader market data. Something I have focussed on since 2000 was "profits are in the buying"...the selling confirms/crystallises your earlier decision. I'm no property guru; I was lucky.

[SailorRob]

I can't compete with you SailorRob. But I can learn off you and get better.

Over all of my asset classes the honest return would struggle to be 5 percent.

The share portfolio was 14 percent.

Cheers but I wouldn't pay much attention to a couple of years! Really the minimum time frame is 5 years to have any actual idea how you're going with equity investments, preferably 10.

[Bjauck]

Interesting thread.....good to know I'm not the only one who does this annually. For the sake of participating in this thread +5% for me across everything....not one of my better years, but there is something else I want to explore.

Per the Black Monday thread IIRC SailorRob you mentioned that equities (i.e. S&P500) outperform property over a long enough time period or words to that effect. I then posted a link to the S&P500 returns and an inflation calculator. I recall having this debate with my father eons ago re shares vs property and I took your position then. But then life and marriage got in the way and one just 'had' to buy a house. I ran my numbers from mid 1997 to mid 2023 (which is a long enough timespan for such a measurement) on my family home transactions. Nominal return was +8% CAGR, after deducting ownership opex and adjusting for 2 x equity injections. This reduces to +5.6% CAGR when adjusted for NZ inflation.

IMO there is NO WAY I could have achieved this level of return on equities over that timeframe and the S&P calculator confirms it. It helped being mortgage free since 2006 and I was lucky enough to ride a couple of waves despite the awful first 5-6 years for NZ property. No interest or rent payments since 2006 has been liberating and likely destroys the own vs rent argument from a weekly cashflow viewpoint. I'm sure others have had a similar experience and whilst my father did not articulate well the 'why' to buy eons ago....I can see why now. Counterpoint: this is simply my anecdote and it may not be representative of broader market data. Something I have focussed on since 2000 was "profits are in the buying"...the selling confirms/crystallises your earlier decision. I'm no property guru; I was lucky.

Owning your own home can be tax efficient too - no income tax is charged on its net imputed rent (after costs) value to you. Plus no capital gains tax, nor stamp duties are payable. Whereas rent is paid from net income (after tax) . So as income tax as a proportion of income continues to rise, and if pension fund tax, capital and capital gains continue as they are now, housing will be even more attractive as a repository of wealth.

1997-2023 was a good time to own a house. Median value Houses now cost more multiples of median income than back in 1997. In the next 26 years, I wonder How likely will it be to see a similar growth in multiples of median incomes to buy a median house?

According to sharesight my financial portfolio return was 7.5% gross, about the same as the return from Smartshares NZTop 10 ETF. So I am content, as I had several large term deposits for most of the year, one of which was invested in the last few months in NZ shares. My largest holding(IFT) and second largest now (MCY) certainly helped pull the average up. I sold my remaining ATM at the beginning of the year which helped too.

[iceman]

I've had the worst year in decades. Have property and shares spread over 5 countries so a bit hard to be exact. But I believe my returns are somewhere between 2-5%. Much of it good but 39% of my share portfolio in NZ is in 1 stock that went backwards 18% this year, after going up roughly 160% in the last 2 years.
All about time frames. 2023 looked at in isolation, was a bad one for me.

[Muse]

I've had the worst year in decades. Have property and shares spread over 5 countries so a bit hard to be exact. But I believe my returns are somewhere between 2-5%. Much of it good but 39% of my share portfolio in NZ is in 1 stock that went backwards 18% this year, after going up roughly 160% in the last 2 years.
All about time frames. 2023 looked at in isolation, was a bad one for me.

all about time frames indeed. 2023 was a sensational year for my portfolio. 2022 was tough work. preceded by 3 good to v good years before that.

[JBmurc]

Returns for the calendar year 2023 across all financial assets. You can leave out the family home but that's it.

So you can't have 100k with 50k in a term deposit and 50k in stocks and then post about your stocks returns, you have to count the lot.

Value at the beginning of the year vs the end. If you have added significant money or withdrawn then this needs to be factored in by the 'time weighted' calculation (not easy). As the USD NZD was practically a wash it shouldn't matter much in calculations.

I returned just over 20%, this is not including my Sberbank position which was up 43% in USD (as I can't sell it). Quite a significant underperformance but that's in the context of having outperformed by over 30% last year.

The biggest factor by far however is that in returning 20% vs the market 24/25% my portfolio trades at less than 10 x earnings vs the market at North of 25 I believe. Thus returns have been driven by multiple expansion rather than EPS performance. This point is absolutely critical to understand going forward.


I can't recall what my portfolio was at the start of the year(pure guess around 10% up mostly from this month) .... will have an exact Taxable position for 23/24Fy mid next year.. see if I can keep the 50% av gain going .... I did realise a large gain from a stock I had been sitting on for sometime

Property going of homes down around 5%

[SailorRob]

I can't recall what my portfolio was at the start of the year(pure guess around 10% up mostly from this month) .... will have an exact Taxable position for 23/24Fy mid next year.. see if I can keep the 50% av gain going .... I did realise a large gain from a stock I had been sitting on for sometime

Property going of homes down around 5%


Yeah would be great to be able to keep the 50% CAGR going.

Buffett - the world's greatest investor when in his prime managed 31.6% for 13 years.

50% CAGR has turned 100k into nearly 14 million in just 10 years.

Bloody good going.

Would be ridiculous to have any money in property when you can average 50% a year in the stock market though.

[SailorRob]

all about time frames indeed. 2023 was a sensational year for my portfolio. 2022 was tough work. preceded by 3 good to v good years before that.


Yes the one year return doesn't mean a lot, what do you call sensational roughly speaking?

[SailorRob]

I've had the worst year in decades. Have property and shares spread over 5 countries so a bit hard to be exact. But I believe my returns are somewhere between 2-5%. Much of it good but 39% of my share portfolio in NZ is in 1 stock that went backwards 18% this year, after going up roughly 160% in the last 2 years.
All about time frames. 2023 looked at in isolation, was a bad one for me.


Yep it's the long term that matters - one year in isolation for anyone doesn't mean much. Process vs outcome.

[SailorRob]

Interesting thread.....good to know I'm not the only one who does this annually. For the sake of participating in this thread +5% for me across everything....not one of my better years, but there is something else I want to explore.

Per the Black Monday thread IIRC SailorRob you mentioned that equities (i.e. S&P500) outperform property over a long enough time period or words to that effect. I then posted a link to the S&P500 returns and an inflation calculator. I recall having this debate with my father eons ago re shares vs property and I took your position then. But then life and marriage got in the way and one just 'had' to buy a house. I ran my numbers from mid 1997 to mid 2023 (which is a long enough timespan for such a measurement) on my family home transactions. Nominal return was +8% CAGR, after deducting ownership opex and adjusting for 2 x equity injections. This reduces to +5.6% CAGR when adjusted for NZ inflation.

IMO there is NO WAY I could have achieved this level of return on equities over that timeframe and the S&P calculator confirms it. It helped being mortgage free since 2006 and I was lucky enough to ride a couple of waves despite the awful first 5-6 years for NZ property. No interest or rent payments since 2006 has been liberating and likely destroys the own vs rent argument from a weekly cashflow viewpoint. I'm sure others have had a similar experience and whilst my father did not articulate well the 'why' to buy eons ago....I can see why now. Counterpoint: this is simply my anecdote and it may not be representative of broader market data. Something I have focussed on since 2000 was "profits are in the buying"...the selling confirms/crystallises your earlier decision. I'm no property guru; I was lucky.


Thanks for the contribution,

Regarding the property - a few points. You have taken one single property and compared against an index of 500 companies. There will always be thousands of examples both ways that come out far better off and you do suggest this in your post.

Your situation is interesting however, you talk about ownership OPEX but not CAPEX and over 26 years I would expect that you would have spent many hundreds of thousands on upgrades and maintenance but some do get away with not doing this.

A friend of mine bought a place in Whangarei for $344k in 2016. Sounds great but he needs to sell for $610k to break even with what he has spent on Capex and adjusting for inflation. Currently no offers.

The biggest point I would like to make is that you are comparing perhaps the worst 26 year return for the market in 100 years (or close to it, generally over 26 years the return would approximate 10%) and the best 26 years for property in 4 to 500 years of data, which has come about from massive multiple expansion from 3 x median incomes to 9/10 times and to 40 to 60 times earnings.

Point being the market can spit out 8% for the next 26 years, but consider this. Let's call the median house in NZ 800k. For it to compound nominal for the next 26 years at 8% you are talking 6.4 million for the Joe blogs house in the suburbs.

Now the only way this can happen is for NZ median income to skyrocket due to massive productivity gains, huge inflation (then it's not real anyway) or deeply negative interest rates with banks willing to lend. The median income to prices would have to be higher than they have ever been anywhere in the world in history by many times.

Remember the SP500 calculator only tells you what your return would have been from 1997, in reality you pumped money into the house investment over the whole time period and this would need to be compared to dollar cost averaging into an equity index fund.

My overall point is that yes NZ property has kept up over the last 25 years somewhat - but to do so it has had to increase in multiples to the highest we have data for, where the market has not. This for obvious reason cannot continue.

[Bjauck]

…
My overall point is that yes NZ property has kept up over the last 25 years somewhat - but to do so it has had to increase in multiples to the highest we have data for, where the market has not. This for obvious reason cannot continue.
However bear in mind that this is NZ, and any talk of tax reform to tax the wealthier by way of capital gains, inheritance, wealth, stamp duties, gift duties is currently electorally toxic.

So it is possible that home ownership rates could drop below 50% with the wealthy owning the rest as tax efficient investments. In that case the multiples of median or average household income it takes to buy a median house would be less relevant.

[kiora]

Reasonable boost over the last month

Portfolio over the last year
Equities:11.4%
FUM:18.14%

Over last 9 years as yearly too short a time period
Rural properties/syndicates
9.9% compounding annually since 2014

The direct equity portion of the investment portfolio has consistantly underperformed FUM over last 10 years but I'm relaxed about that.
There are other reasons to have direct equity investments (transparency,liquidity,knowledge of the markets)

[ValueNZ]

OCA +0%, 78% of my portfolio
STLA +19.5%, 16.5% of my portfolio
PARA +20.7%, 2.5% of my portfolio
JXN +25.9%, 1.9% of my portfolio
DVA +31.7%, 1.1% of my portfolio

Total return this year 4.6% compared to the SP500 24.7% is a 20.1% underperformance. Most would look at that and say that it is a very disappointing performance, but in reality one year return is irrelevant over the long term for obvious reasons. The stock market in the short term is a voting machine whilst in the long term it is a weighing machine. So I remain unbothered entirely.

[Maverick]

OCA +0%, 78% of my portfolio
STLA +19.5%, 16.5% of my portfolio
PARA +20.7%, 2.5% of my portfolio
JXN +25.9%, 1.9% of my portfolio
DVA +31.7%, 1.1% of my portfolio

Total return this year 4.6% compared to the SP500 24.7% is a 20.1% underperformance. Most would look at that and say that it is a very disappointing performance, but in reality one year return is irrelevant over the long term for obvious reasons. The stock market in the short term is a voting machine whilst in the long term it is a weighing machine. So I remain unbothered entirely.
I’m very interested Value, why do you have such an inordinate measure of OCA.
My own views on OCA are blatant and my weighting is easy to guess. I’m curious why would a smart young fella like yourself , in the age of diversification, go allmost “ all in” .
So why such conviction and why only OCA in the RV sector?
( if you do reply , maybe pop it onto the OCA thread)

[Bjauck]

OCA +0%, 78% of my portfolio
STLA +19.5%, 16.5% of my portfolio
PARA +20.7%, 2.5% of my portfolio
JXN +25.9%, 1.9% of my portfolio
DVA +31.7%, 1.1% of my portfolio

Total return this year 4.6% compared to the SP500 24.7% is a 20.1% underperformance. Most would look at that and say that it is a very disappointing performance, but in reality one year return is irrelevant over the long term for obvious reasons. The stock market in the short term is a voting machine whilst in the long term it is a weighing machine. So I remain unbothered entirely.

As this is a thread within the NZX category with respect to the returns in 2023, your return has still has exceeded the approx 1.6% return from the NZX50 index. Your foreign shareholdings compensated for the lacklustre performance of your main NZ listed stock.

Sure it is the long term performance that counts, but sometimes you need to sell asap.

[Ferg]

Thanks SR for your reply. I do not disagree with what you say but some additional context is required.


Regarding the property - a few points. You have taken one single property and compared against an index of 500 companies. There will always be thousands of examples both ways that come out far better off and you do suggest this in your post.
Agree 100% except for context we had a series of family homes (not just one) and as I touched on earlier the gains were made in the buying (real estate "D"s include distress, death, divorce etc which present good buying opportunities) as well as the market multiple expansion you touched on. I agree anecdotes do not trump larger data sets, but as you know I was working with my own experience.


Your situation is interesting however, you talk about ownership OPEX but not CAPEX and over 26 years I would expect that you would have spent many hundreds of thousands on upgrades and maintenance but some do get away with not doing this.
Understood. My definition of ownership opex includes house maintenance and this was in my calculations. Early upgrades were captured via 2 x subsequent equity injections in my calculations. Since 2006 realised gains were recycled into the upgrades on the next property so any property capex was self funding. I didn't want to mention this earlier but we released equity on the last 3 sales and purchases, not all of which was recycled into the family home. Actual returns would be significantly higher had I included those equity releases. The values released were enough to buy a freehold property for my son. So yes I am very overweight in property.


The biggest point I would like to make is that you are comparing perhaps the worst 26 year return for the market in 100 years (or close to it, generally over 26 years the return would approximate 10%) and the best 26 years for property in 4 to 500 years of data, which has come about from massive multiple expansion from 3 x median incomes to 9/10 times and to 40 to 60 times earnings.
Understood. Trouble is I cannot invest in shares outside of my personal investment horizon, so I just kept stepping off one property elevator and onto the next while I had to own a family home. If I was going to have equity tied up in a non-income producing asset, then I wanted to ensure that was not wasted. The opportunity presented itself and the rest is history. Like I said, I was lucky and I learned from my first mistake without losing too much.


Point being the market can spit out 8% for the next 26 years, but consider this. Let's call the median house in NZ 800k. For it to compound nominal for the next 26 years at 8% you are talking 6.4 million for the Joe blogs house in the suburbs.

Now the only way this can happen is for NZ median income to skyrocket due to massive productivity gains, huge inflation (then it's not real anyway) or deeply negative interest rates with banks willing to lend. The median income to prices would have to be higher than they have ever been anywhere in the world in history by many times.
Understood and I agree. I'm not talking about a single median house - we had a series of family homes where we stepped off one elevator and onto the next. So I agree a simple buy and hold strategy will not provide an 8% CAGR over the same time period in future for a single property. We will look to release more equity again either 2024 or 2025 and I will put that capital to work elsewhere. We aren't traders by any definition, just lucky (and we can spot a good bargain).


Remember the SP500 calculator only tells you what your return would have been from 1997, in reality you pumped money into the house investment over the whole time period and this would need to be compared to dollar cost averaging into an equity index fund.

My overall point is that yes NZ property has kept up over the last 25 years somewhat - but to do so it has had to increase in multiples to the highest we have data for, where the market has not. This for obvious reason cannot continue.
100% concur with the second half but we have not pumped any other funds into property since 2006 as per my comments above.

I don't disagree with any of what you say regarding future potential returns and the relativities of the 2 markets over that time frame. But property (including the dreaded family home) can yield these sort of returns without relying on excessive leverage. I see people I know making dumb decisions on property purchases and they could take decades to get a return, if at all. I watched extended family members buy and hold over the years to only fall behind those that moved every 5-9 years. So I copied that. It was a simple yet effective strategy.

[Leemsip]

Hard for me to calculate as I do an annual wrap up in July. Roughly tho

KiwiSaver 25% of portfolio 5%,gain. Mostly in cash fund till nov.

Cash and bonds 40% of portfolio 5% gain. Bonds locked in for long term at 6% plus in good companies so happy with this. Cash either already deployed or rolling off term deposits Jan to june 24.

Stonks 35% of portfolio on average for the year, 10% gain. Some big winners and loosers here which have netted out. Got some private companies which I haven’t included. My stonk portfolio is up to 50% of total portfolio now as I have put some more risk on since nov. Aiming to get this up to 60% in 2024 if I have the courage.

So overall 7% ish gains maybe. Sounds trash but I’m somewhat happy with this as I took risk off the table early and hid in cash. Also learned a few hard lessons without getting beaten too badly. Goal is a low risk 10% per year. I’ll be in better shape to answer this next year with proper calcs.

[Leemsip]

Forgot to add that I thought I was a genius in 2021 and 2022 as had amazing returns. Quite a sobering 2023 and have come back to earth now.

I do think there should be some sort of risk measure on gains as well… which gets back to SR point on 5 or 10 year returns are the ones that matter. Anyone can take risks and win once.

[Muse]

Forgot to add that I thought I was a genius in 2021 and 2022 as had amazing returns. Quite a sobering 2023 and have come back to earth now.

I do think there should be some sort of risk measure on gains as well… which gets back to SR point on 5 or 10 year returns are the ones that matter. Anyone can take risks and win once.

That's why I like sharesight....you can look at your 1 year returns and think that's great, but if you make it a 2 year return and some of those component returns are lower, it reminds you those gains were reversal from an underperformance in the prior year. Like I said earlier I found 2022 tough work, but this year was rather good as some of my dogs came right and I put a lot of cash to work into equities which (so far) seem to be working well.

Snapshot of my listed equity portfolio - 1 year total returns (capital gains plus net dividends, FX, and fees - realised + unrealised). Listed equities are just one component of my overall investment portfolio but am here to just talk listed shares.

Australia
Acrow (medium holding) +73.8%
Atlas Pearls (small) +52.8%
Block (M) +28.3%
Harmoney (S) +13.9%
Insignia Financial (S) -23.5%
Infomedia (S) +25.2%
Link Admin (S) +102.1%
Liontown (M) + 123.0%
Netwealth (S) +33.8%
Pexa (XS) -12.5%
Praemium (M) -50.7%
Smartpay ASX (M) +43.5%
Supply Network (S) +36.5%
Universal Store (M) + 57.7%
Webjet (XL) +20.5%
Wisetech Global (M) +50.3%


NZ
2CC (S) +18.9%
AFT (S) -3.8%
AIA (XS) +13.4%
ALF (XS) +9.1%
ARV (M) +2.7%
CEN (M) +8.8%
EBO (M) -14.5%
FRW (S) -6.7%
GNE (M) +0.7%
HGH (L) -3.3%
IFT (M) +18.9%
MFT (L) +7.8%
RAK (XS) +23.2%
SCL (M) -5%
SKC (M) -10.7%
SKL (L) +3.8%
SKT (XS) +24.3%
SPK (M) +5%
Smartpay NZX (M) +42.8%
SUM (M) +7.05%
THL (M) +17.3%
TRA (XL) +46.2%
VSL (XS) +4.1%

USA
AVUV (XXXL) +24.8%
VOO (XXXL) +26.6%

Waiting for those fireworks to go off, so rockstar I've become that I pass time on sharetrader doing this.

Happy new year everyone - may 2024 be a healthy, happy, prosperous time for all.

[percy]

That's why I like sharesight....you can look at your 1 year returns and think that's great, but if you make it a 2 year return and some of those component returns are lower, it reminds you those gains were reversal from an underperformance in the prior year. Like I said earlier I found 2022 tough work, but this year was rather good as some of my dogs came right and I put a lot of cash to work into equities which (so far) seem to be working well.

Snapshot of my listed equity portfolio - 1 year total returns (capital gains plus net dividends, FX, and fees - realised + unrealised). Listed equities are just one component of my overall investment portfolio but am here to just talk listed shares.

Australia
Acrow (medium holding) +73.8%
Atlas Pearls (small) +52.8%
Block (M) +28.3%
Harmoney (S) +13.9%
Insignia Financial (S) -23.5%
Infomedia (S) +25.2%
Link Admin (S) +102.1%
Liontown (M) + 123.0%
Netwealth (S) +33.8%
Pexa (XS) -12.5%
Praemium (M) -50.7%
Smartpay ASX (M) +43.5%
Supply Network (S) +36.5%
Universal Store (M) + 57.7%
Webjet (XL) +20.5%
Wisetech Global (M) +50.3%


NZ
2CC (S) +18.9%
AFT (S) -3.8%
AIA (XS) +13.4%
ALF (XS) +9.1%
ARV (M) +2.7%
CEN (M) +8.8%
EBO (M) -14.5%
FRW (S) -6.7%
GNE (M) +0.7%
HGH (L) -3.3%
IFT (M) +18.9%
MFT (L) +7.8%
RAK (XS) +23.2%
SCL (M) -5%
SKC (M) -10.7%
SKL (L) +3.8%
SKT (XS) +24.3%
SPK (M) +5%
Smartpay NZX (M) +42.8%
SUM (M) +7.05%
THL (M) +17.3%
TRA (XL) +46.2%
VSL (XS) +4.1%

USA
AVUV (XXXL) +24.8%
VOO (XXXL) +26.6%

Waiting for those fireworks to go off, so rockstar I've become that I pass time on sharetrader doing this.

Happy new year everyone - may 2024 be a healthy, happy, prosperous time for all.

Thanks for sharing.

[alokdhir]

That's why I like sharesight....you can look at your 1 year returns and think that's great, but if you make it a 2 year return and some of those component returns are lower, it reminds you those gains were reversal from an underperformance in the prior year. Like I said earlier I found 2022 tough work, but this year was rather good as some of my dogs came right and I put a lot of cash to work into equities which (so far) seem to be working well.

Snapshot of my listed equity portfolio - 1 year total returns (capital gains plus net dividends, FX, and fees - realised + unrealised). Listed equities are just one component of my overall investment portfolio but am here to just talk listed shares.

Australia
Acrow (medium holding) +73.8%
Atlas Pearls (small) +52.8%
Block (M) +28.3%
Harmoney (S) +13.9%
Insignia Financial (S) -23.5%
Infomedia (S) +25.2%
Link Admin (S) +102.1%
Liontown (M) + 123.0%
Netwealth (S) +33.8%
Pexa (XS) -12.5%
Praemium (M) -50.7%
Smartpay ASX (M) +43.5%
Supply Network (S) +36.5%
Universal Store (M) + 57.7%
Webjet (XL) +20.5%
Wisetech Global (M) +50.3%


NZ
2CC (S) +18.9%
AFT (S) -3.8%
AIA (XS) +13.4%
ALF (XS) +9.1%
ARV (M) +2.7%
CEN (M) +8.8%
EBO (M) -14.5%
FRW (S) -6.7%
GNE (M) +0.7%
HGH (L) -3.3%
IFT (M) +18.9%
MFT (L) +7.8%
RAK (XS) +23.2%
SCL (M) -5%
SKC (M) -10.7%
SKL (L) +3.8%
SKT (XS) +24.3%
SPK (M) +5%
Smartpay NZX (M) +42.8%
SUM (M) +7.05%
THL (M) +17.3%
TRA (XL) +46.2%
VSL (XS) +4.1%

USA
AVUV (XXXL) +24.8%
VOO (XXXL) +26.6%

Waiting for those fireworks to go off, so rockstar I've become that I pass time on sharetrader doing this.

Happy new year everyone - may 2024 be a healthy, happy, prosperous time for all.

Happy New Year mate ...U r going great as expected but what surprises and impresses me the most that U can hold and track so many stocks ...must be having great time everyday just looking at market data ...lol Real Rockstar :t_up:

[alokdhir]

https://www.nzherald.co.nz/business/global-stock-markets-record-best-year-since-2019/A53VS4XHJNA4REX5BHDEOQK57Q/

This helped boost returns for all non NZX investors ...dogs of 2023 were NZX / ASX ...maybe they will catch up as leaders go sideways . Just like in any bull run first the large caps run then small caps catch up ...what actually happened in USA with Russel 2000 ....on bigger scale ASX/ NZX are the Russel 2000 of the world indexes

[Azza]

Surprised myself looking at this, 32% for shares overall for the year but property (according to homes so probably not that accurate... ) Was -10% for the year and given I'm hugely overweight in property because of my stage of life it would probably net out...

[Toddy]

Happy New Year mate ...U r going great as expected but what surprises and impresses me the most that U can hold and track so many stocks ...must be having great time everyday just looking at market data ...lol Real Rockstar :t_up:

That's a good thought re the time commitment. Would therefore be interesting to know investors occupations. I. E full time employees versus self employed, semi retired, retired etc.

I was an accountant now turned farmer. I have plenty of downtime to follow the markets but have only recommited in the past 18 months.

[Bjauck]

Surprised myself looking at this, 32% for shares overall for the year but property (according to homes so probably not that accurate... ) Was -10% for the year and given I'm hugely overweight in property because of my stage of life it would probably net out... That is a very good return for the shares. Mostly US listings?

[Azza]

Yes roughly 70% US 20% NZX 10% ASX

[Leemsip]

Muse, awesome ozzie results. Shows how tough Nz was in 23. What do you like in oz for 2024, or sticking with this portfolio?

[Muse]

Happy New Year mate ...U r going great as expected but what surprises and impresses me the most that U can hold and track so many stocks ...must be having great time everyday just looking at market data ...lol Real Rockstar :t_up:

Ha I probably spend the same amount of time on the portfolio as many people here do, on most days. Typical day spend ~30m drinking coffee and reading announcements at ~9.30am, after school run. Am semi retired so go about my day with whatever work projects I have on, otherwise work on the property, chores and a bit of exercise. Browse through some aussie announcements quickly at lunch. That's it for the day unless I go down the rabbit hole researching a company which I don't usually get to till late after family commitments, and not common. It helps to have an investor mindset with a number of my shares held long term, so I'm totally unbothered by day to day fluctuations in price, and I probably only execute a fraction of the buy/sell orders that most here will do. Fairly familiar w/ the portfolio companies as been in most for a while but I have a little folder on my computer for each one where I save bits of research and BOE analysis i've done on them over the years so I can quickly revisit.

For reasons very specific to me it's not efficient for me to own NZ/AU ETFs, so I invest directly. NZ market is tiny so not hard to stay across, aussie is relatively large with a lot of under researched small caps, and I enjoy looking at companies. I am in effect just trying to make my own diversified Australasian ETF. Offshore markets are staggering large and my hit rate on picking direct investments there was mixed so I just have two ETFs now.

Portfolio a bit smaller by # of companies vs last 2 years as I did a bit of tidy up, and still more to do. I don't pay equal care and attention to all the stocks. Sometimes that's served me well as it let me let a few runners run. But has bitten me in the bum a few times. Case in point early 2020 I invested into Afterpay after I saw first hand how it turbocharged sales for those who started offering it. I invested on that basis and then in early 2022 it was merged/acquired by Block. It was a big return so I sold the excess capital gain on market and left my original $ investment in shares, which were acquired by Block who issued me shares in themselves as consideration. I thought just leave it and not watch. The SP plummeted into one of the most vicious downtrends ever. I obviously see that on the graph but reminded myself it was just my initial capital and to just let it do its thing over the years, and I was in effect trying to emulate an Australasian ETF which has individual shares go up and down all the time. Finally it started to really bother me so I opened some financial statements for the first time and I sickened - horrified I hadn't looked at the books once over the last 18 months while all this was going on. Got pretty close to selling on a few occasions and it really tested my resolve to accept large capital losses on individual shares even if it didn't really move the dial on what my portfolio was doing. Fortunately the founder stepped back into the business and started cutting costs and improving profitability. That coupled with the recent tech run set the SP up nearly 90% to where I had considered selling. I will probably retire that investment and roll into an ETF or something more blue chip that offers less surprises in the new year. It was a good learning experience for me and the strengths and weaknesses of my investment style.

From a time commitment perspective I've done a lot of work on companies and not gone on to invest in them, which can feel like a waste (but still a worthwhile thing if that was the right call). And others where I dived into the detail a bit much and it tanked...harmoney for instance I wasted a lot of time back in what early 2022 for a loss (so bad time investment and bad financial investment). I reflect on that as part of my learning experience and how to balance time, effort and reward.

sharesight has been a godsend for tracking the dividends and the investments.

[Muse]

Muse, awesome ozzie results. Shows how tough Nz was in 23. What do you like in oz for 2024, or sticking with this portfolio?

Most of it will stay. I am out of Liontown and Netwealth. I really like Smartpay, Webjet & Wisetech. Supply network a great company too but I lack conviction on how it'll travel long term. I thought Link had become well oversold when I bought but has been a rollercoster and happy to see the back of it with it being taken over. Pexa was an in specie distribution of shares held in it by Link. Acrow I quite like but I can't grasp how its continued to perform so well with the macro picture so I might do some risk mgmt there. Infomedia a nice little company that pays a respectible divy for a tech stock and probably will be taken over at some point but has been an opportunity cost for me. My residual holding in harmoney I imagine will be with me for a while. Insignia hasnt been flash for me and I reckon oversold. Most pay divies but can't use the franking credit and yields below that achieved in NZ.

One I am gutted about is Praemium which had been travelling nicely to my plan. Then out of the blue mgmt announced a spending binge which I was totally not expecting and mkt reaction was brutal. That may have flown in 2020 but certainly not now. At the current SP optically it looks attractive with respective to its industry peers (Hub24 and NWL), long term tailwinds etc but have lost trust and faith in mgmt so in a bit of a quandary. Think it'll come right and has takeover appeal if it doesn't - but famous last words for someone potentially holding onto a dud.

[ValueNZ]

I’m very interested Value, why do you have such an inordinate measure of OCA.
My own views on OCA are blatant and my weighting is easy to guess. I’m curious why would a smart young fella like yourself , in the age of diversification, go allmost “ all in” .
So why such conviction and why only OCA in the RV sector?
( if you do reply , maybe pop it onto the OCA thread)

Some loaded questions there, when I get the chance in the next few days I'll take the time to write out a proper response and I'll put it in the OCA thread.

[ValueNZ]

As this is a thread within the NZX category with respect to the returns in 2023, your return has still has exceeded the approx 1.6% return from the NZX50 index. Your foreign shareholdings compensated for the lacklustre performance of your main NZ listed stock.

Sure it is the long term performance that counts, but sometimes you need to sell asap.

Thanks, but I really don't care what the NZX50 returns. The opportunity cost of picking stocks is owning some SP500 index fund, as I have no doubt the long term returns of the SP500 will outperform the NZX50 in real terms.

[alokdhir]

Ha I probably spend the same amount of time on the portfolio as many people here do, on most days. Typical day spend ~30m drinking coffee and reading announcements at ~9.30am, after school run. Am semi retired so go about my day with whatever work projects I have on, otherwise work on the property, chores and a bit of exercise. Browse through some aussie announcements quickly at lunch. That's it for the day unless I go down the rabbit hole researching a company which I don't usually get to till late after family commitments, and not common. It helps to have an investor mindset with a number of my shares held long term, so I'm totally unbothered by day to day fluctuations in price, and I probably only execute a fraction of the buy/sell orders that most here will do. Fairly familiar w/ the portfolio companies as been in most for a while but I have a little folder on my computer for each one where I save bits of research and BOE analysis i've done on them over the years so I can quickly revisit.

For reasons very specific to me it's not efficient for me to own NZ/AU ETFs, so I invest directly. NZ market is tiny so not hard to stay across, aussie is relatively large with a lot of under researched small caps, and I enjoy looking at companies. I am in effect just trying to make my own diversified Australasian ETF. Offshore markets are staggering large and my hit rate on picking direct investments there was mixed so I just have two ETFs now.

Portfolio a bit smaller by # of companies vs last 2 years as I did a bit of tidy up, and still more to do. I don't pay equal care and attention to all the stocks. Sometimes that's served me well as it let me let a few runners run. But has bitten me in the bum a few times. Case in point early 2020 I invested into Afterpay after I saw first hand how it turbocharged sales for those who started offering it. I invested on that basis and then in early 2022 it was merged/acquired by Block. It was a big return so I sold the excess capital gain on market and left my original $ investment in shares, which were acquired by Block who issued me shares in themselves as consideration. I thought just leave it and not watch. The SP plummeted into one of the most vicious downtrends ever. I obviously see that on the graph but reminded myself it was just my initial capital and to just let it do its thing over the years, and I was in effect trying to emulate an Australasian ETF which has individual shares go up and down all the time. Finally it started to really bother me so I opened some financial statements for the first time and I sickened - horrified I hadn't looked at the books once over the last 18 months while all this was going on. Got pretty close to selling on a few occasions and it really tested my resolve to accept large capital losses on individual shares even if it didn't really move the dial on what my portfolio was doing. Fortunately the founder stepped back into the business and started cutting costs and improving profitability. That coupled with the recent tech run set the SP up nearly 90% to where I had considered selling. I will probably retire that investment and roll into an ETF or something more blue chip that offers less surprises in the new year. It was a good learning experience for me and the strengths and weaknesses of my investment style.

From a time commitment perspective I've done a lot of work on companies and not gone on to invest in them, which can feel like a waste (but still a worthwhile thing if that was the right call). And others where I dived into the detail a bit much and it tanked...harmoney for instance I wasted a lot of time back in what early 2022 for a loss (so bad time investment and bad financial investment). I reflect on that as part of my learning experience and how to balance time, effort and reward.

sharesight has been a godsend for tracking the dividends and the investments.

U make it sound easy ...its not easy what u doing and on top of that U doing so well ...great job mate :t_up:

[Leemsip]

Yeah thanks Muse. Found that a useful read. Love hearing about how the more experienced folks handle things. Alok , winner, SR or anyone with a decent size portfolio care to share how you are approaching 2024 and how much time you spend, % in the market vs cash, risk tolerance, Nz vs oz vs US allocation? Any individual shares you think have potential for 2024. Do you set goals for the year?

[SailorRob]

Thanks SR for your reply. I do not disagree with what you say but some additional context is required.


Agree 100% except for context we had a series of family homes (not just one) and as I touched on earlier the gains were made in the buying (real estate "D"s include distress, death, divorce etc which present good buying opportunities) as well as the market multiple expansion you touched on. I agree anecdotes do not trump larger data sets, but as you know I was working with my own experience.


Understood. My definition of ownership opex includes house maintenance and this was in my calculations. Early upgrades were captured via 2 x subsequent equity injections in my calculations. Since 2006 realised gains were recycled into the upgrades on the next property so any property capex was self funding. I didn't want to mention this earlier but we released equity on the last 3 sales and purchases, not all of which was recycled into the family home. Actual returns would be significantly higher had I included those equity releases. The values released were enough to buy a freehold property for my son. So yes I am very overweight in property.


Understood. Trouble is I cannot invest in shares outside of my personal investment horizon, so I just kept stepping off one property elevator and onto the next while I had to own a family home. If I was going to have equity tied up in a non-income producing asset, then I wanted to ensure that was not wasted. The opportunity presented itself and the rest is history. Like I said, I was lucky and I learned from my first mistake without losing too much.


Understood and I agree. I'm not talking about a single median house - we had a series of family homes where we stepped off one elevator and onto the next. So I agree a simple buy and hold strategy will not provide an 8% CAGR over the same time period in future for a single property. We will look to release more equity again either 2024 or 2025 and I will put that capital to work elsewhere. We aren't traders by any definition, just lucky (and we can spot a good bargain).


100% concur with the second half but we have not pumped any other funds into property since 2006 as per my comments above.

I don't disagree with any of what you say regarding future potential returns and the relativities of the 2 markets over that time frame. But property (including the dreaded family home) can yield these sort of returns without relying on excessive leverage. I see people I know making dumb decisions on property purchases and they could take decades to get a return, if at all. I watched extended family members buy and hold over the years to only fall behind those that moved every 5-9 years. So I copied that. It was a simple yet effective strategy.


Yes great discussion. You are downplaying it but you have been very shrewd and active in the property market and this shrewdness coupled with skill and massive macro and cultural tail winds have produced incredible results for you, reading between the lines, much better even than you suggest here.

[SailorRob]

Hard for me to calculate as I do an annual wrap up in July. Roughly tho

KiwiSaver 25% of portfolio 5%,gain. Mostly in cash fund till nov.

Cash and bonds 40% of portfolio 5% gain. Bonds locked in for long term at 6% plus in good companies so happy with this. Cash either already deployed or rolling off term deposits Jan to june 24.

Stonks 35% of portfolio on average for the year, 10% gain. Some big winners and loosers here which have netted out. Got some private companies which I haven’t included. My stonk portfolio is up to 50% of total portfolio now as I have put some more risk on since nov. Aiming to get this up to 60% in 2024 if I have the courage.

So overall 7% ish gains maybe. Sounds trash but I’m somewhat happy with this as I took risk off the table early and hid in cash. Also learned a few hard lessons without getting beaten too badly. Goal is a low risk 10% per year. I’ll be in better shape to answer this next year with proper calcs.


Great post Leemsip thanks.

When you say you have some private companies, what do you mean by this exactly?

When you say 'you have put on more risk since Nov' I would counter that you have taken off risk. Unless you have no idea what you are doing then selling cash and bonds to buy businesses is a massive de risking move. A term deposit is an immensely risky investment as you are guaranteed to lose purchasing power over time - it's just less volatile.

'Aiming to get this up to 60% in 2024 if I have the courage'. I would counter that you need immense courage to be sitting in cash or bonds which are going to do f all for you over time and that it is an implicit market timing call - which needs huge courage. Currently with so much value to be found outside the Mag 7, you need courage NOT to be buying.

Your last sentence where you 'took risk off the table' well in hindsight you put risk on the table perhaps.

If your goal is a low risk 10%, that is very easy to achieve right now.

[SailorRob]

Ha I probably spend the same amount of time on the portfolio as many people here do, on most days. Typical day spend ~30m drinking coffee and reading announcements at ~9.30am, after school run. Am semi retired so go about my day with whatever work projects I have on, otherwise work on the property, chores and a bit of exercise. Browse through some aussie announcements quickly at lunch. That's it for the day unless I go down the rabbit hole researching a company which I don't usually get to till late after family commitments, and not common. It helps to have an investor mindset with a number of my shares held long term, so I'm totally unbothered by day to day fluctuations in price, and I probably only execute a fraction of the buy/sell orders that most here will do. Fairly familiar w/ the portfolio companies as been in most for a while but I have a little folder on my computer for each one where I save bits of research and BOE analysis i've done on them over the years so I can quickly revisit.

For reasons very specific to me it's not efficient for me to own NZ/AU ETFs, so I invest directly. NZ market is tiny so not hard to stay across, aussie is relatively large with a lot of under researched small caps, and I enjoy looking at companies. I am in effect just trying to make my own diversified Australasian ETF. Offshore markets are staggering large and my hit rate on picking direct investments there was mixed so I just have two ETFs now.

Portfolio a bit smaller by # of companies vs last 2 years as I did a bit of tidy up, and still more to do. I don't pay equal care and attention to all the stocks. Sometimes that's served me well as it let me let a few runners run. But has bitten me in the bum a few times. Case in point early 2020 I invested into Afterpay after I saw first hand how it turbocharged sales for those who started offering it. I invested on that basis and then in early 2022 it was merged/acquired by Block. It was a big return so I sold the excess capital gain on market and left my original $ investment in shares, which were acquired by Block who issued me shares in themselves as consideration. I thought just leave it and not watch. The SP plummeted into one of the most vicious downtrends ever. I obviously see that on the graph but reminded myself it was just my initial capital and to just let it do its thing over the years, and I was in effect trying to emulate an Australasian ETF which has individual shares go up and down all the time. Finally it started to really bother me so I opened some financial statements for the first time and I sickened - horrified I hadn't looked at the books once over the last 18 months while all this was going on. Got pretty close to selling on a few occasions and it really tested my resolve to accept large capital losses on individual shares even if it didn't really move the dial on what my portfolio was doing. Fortunately the founder stepped back into the business and started cutting costs and improving profitability. That coupled with the recent tech run set the SP up nearly 90% to where I had considered selling. I will probably retire that investment and roll into an ETF or something more blue chip that offers less surprises in the new year. It was a good learning experience for me and the strengths and weaknesses of my investment style.

From a time commitment perspective I've done a lot of work on companies and not gone on to invest in them, which can feel like a waste (but still a worthwhile thing if that was the right call). And others where I dived into the detail a bit much and it tanked...harmoney for instance I wasted a lot of time back in what early 2022 for a loss (so bad time investment and bad financial investment). I reflect on that as part of my learning experience and how to balance time, effort and reward.

sharesight has been a godsend for tracking the dividends and the investments.


Great post, what did you do professionally before you semi retired?

[SailorRob]

Thanks, but I really don't care what the NZX50 returns. The opportunity cost of picking stocks is owning some SP500 index fund, as I have no doubt the long term returns of the SP500 will outperform the NZX50 in real terms.


Well said. It might sound odd at first, not indexing to NZX50 when we live here, but what difference does that make? You may as well index to Denmark or something.

We are a 2 crop agrarian state with a penchant for culture and policy that to me look an awful lot like the former USSR.

You should benchmark to something that is the most sensible easy opportunity cost for you, which has nothing to do at all with where you live.

The industry standard the world over is and always has been the S&P500.

[SailorRob]

Yeah thanks Muse. Found that a useful read. Love hearing about how the more experienced folks handle things. Alok , winner, SR or anyone with a decent size portfolio care to share how you are approaching 2024 and how much time you spend, % in the market vs cash, risk tolerance, Nz vs oz vs US allocation? Any individual shares you think have potential for 2024. Do you set goals for the year?

how you are approaching 2024

Exactly as every other year - Truly believing that I have absolutely ZERO ability to predict anything at all in the Macro economy, I have no idea if rates will go up or down, no idea what the market will do, no idea about recession or not, no idea about inflation, nothing. This is the most liberating thing ever in investing and the f'd up thing is that everyone would be like me if they spent 5 minutes thinking back to all their prior thoughts about these matters over time. Or at least from now on writing down all your thoughts about 2024 so you can see for yourself how wrong you were and will continue to be. Think about it, of any of us had any ability to forecast any of those things I brought up... We would be able to print our own money...

How much time you spend

Currently I'm in the middle of a refit on an offshore yacht and this is taking up a massive amount of time, working all day every day. Still probably finding 10 - 15 hours a week, that includes reading books, fund letters, quarterly reports/annual reports, articles, talking to people, doing research etc... but usually that would all be 40 hours a week or more depending what else I have on. I have a number of close friends who have identical portfolios to me and most of them large in relation to their net worth, so essentially I manage their equity portfolios. So have to take it seriously and keep them up to date etc..

% in the market vs cash

The only time you should ever hold cash is if you need to spend money sometime in the next couple of years that you cant get from elsewhere (working etc). For us managing less than 100 million there is always opportunity no matter what the general market level is, holding cash means you are waiting for an opportunity to buy but that's BS as the opportunity is always there. But right now there is opportunity everywhere.

Nz vs oz vs US allocation?

I just go where the value and opportunity is.

[Leemsip]

Thanks SR.

Private companies I mean non listed investments early stage Nz companies.

My large cash anmd bond allocation has been due to expectations of a recession in 2023. I was 110-120% invested in 2020 and 2021 (took out mortgage), so I’m not always filled with caution. I continue to expect recession in 2024, I can see it playing out now and will be exacerbated by govt pulling back spending, construction down etc all very pro cyclical for a deeper recession than most expect. Bonds should perform pretty well in this environment and I will take capital gains if they are decent.

Have resolved this year to remain much more invested throughout the cycle and just pick either different countries or recession proof stocks eg SCL which exports most products or bond proxies eg Spk. Agree with your sentiments on holding cash for too long.

Appreciate the details and the advice. You can see I’m not taking some of it lol, as I can’t get away from forecasting macro.

Let’s hear from some other veterans….

[Bjauck]

Well said. It might sound odd at first, not indexing to NZX50 when we live here, but what difference does that make? You may as well index to Denmark or something.

We are a 2 crop agrarian state with a penchant for culture and policy that to me look an awful lot like the former USSR.

You should benchmark to something that is the most sensible easy opportunity cost for you, which has nothing to do at all with where you live.

The industry standard the world over is and always has been the S&P500. Why put the thread in the NZX category then? Sure, NZ government policies have made the NZ listed stock exchange into a small defensive enclave. However a significant proportion of potential NZ investors would not want to invest in foreign exchanges given the different tax regime for foreign investments and currencies. Hence the relevance of the NZX indices to a post in the NZX threads.

[Leemsip]

Would love to hear if others forecast macro and use this for portfolio selection. Seems like a key point from SR and a habit I can’t seem to kick.

[mistaTea]

What would happen if you just picked 10 - 20 high quality businesses that you understand, dollar cost averaged into them and then just held then forever, never looking up the quoted value (because it is of no interest given you are holding forever) or measuring ‘progress’ over arbitrary timeframes against arbitrary benchmarks (or indeed against other people’s portfolios).

[RupertBear]

Great posts Muse, thanks for sharing, I found them very interesting. Well done on your investments and I hope 2024 is another cracker year for you :)

[SailorRob]

Why put the thread in the NZX category then? Sure, NZ government policies have made the NZ listed stock exchange into a small defensive enclave. However a significant proportion of potential NZ investors would not want to invest in foreign exchanges given the different tax regime for foreign investments and currencies. Hence the relevance of the NZX indices to a post in the NZX threads.

Yes, the NZX category simply has far more following than any other section.

I want to invest where I can actually do well and then pay tax on my earnings, rather than pay less or no tax by investing in the second world.

[SailorRob]

Thanks SR.

Private companies I mean non listed investments early stage Nz companies.

My large cash anmd bond allocation has been due to expectations of a recession in 2023. I was 110-120% invested in 2020 and 2021 (took out mortgage), so I’m not always filled with caution. I continue to expect recession in 2024, I can see it playing out now and will be exacerbated by govt pulling back spending, construction down etc all very pro cyclical for a deeper recession than most expect. Bonds should perform pretty well in this environment and I will take capital gains if they are decent.

Have resolved this year to remain much more invested throughout the cycle and just pick either different countries or recession proof stocks eg SCL which exports most products or bond proxies eg Spk. Agree with your sentiments on holding cash for too long.

Appreciate the details and the advice. You can see I’m not taking some of it lol, as I can’t get away from forecasting macro.

Let’s hear from some other veterans….


Yes as you allude to here, it's not the ability to forecast what happens that matters, it's the ability to forecast better than the market.

Here you are saying that 'I can see it playing out now' but you could also see it playing out last year. I guess you mean you are more certain now. You are saying that you are financially positioned to profit from being able to forecast a deeper recession than what is currently priced in. If bonds in fact do well and you take capital gains then you have to do something with them. Bond yields will then be low, can you get them into equities cheaply? Or will the forward looking market have priced you out?

For me there is no chance at all of making money out of predicting a recession this year, let alone predicting a deeper one than the market can see given the reasons you highlight that anyone can plainly see.

I don't understand going through all of this when you are currently getting an extremely safe and long duration 10% plus return handed to you on plate!

If you are positioned for a deeper recession than the bond market expects ( this alone is a massive call) then what if there isn't even a recession?

[Daytr]

Would love to hear if others forecast macro and use this for portfolio selection. Seems like a key point from SR and a habit I can’t seem to kick.

Well it depends. The company still has to have good fundamentals & outlook but sure the macro could be why you look at a certain sector and then try and select a company within that sector you think had the credentials to perform.

It could be the AI space, Gold or other commodities. With lower interest rates where the discount rate is a big factor in the valuation, could be another area to look at.

[winner69]

Winner69 still recoiling from the results of listening to investors and economists predictions for 2023 refuses to participate in '2023 returns' thread.




From another thread - Rob was kind enough to put this in big bold letters

Rob, I’d love to praticipate in this discussion but as I have no idea of my net worth (or even $ value of shares) at the beginning and end of 2023 even if I was inclined to I can’t calculate my ‘2023 Return’ but I’m sure it’s a positive number

I gave up counting such things years ago and that makes me feel good…..and guite honestly I don’t really care. Leave that to the accountant to sort out.

My Mum always kept reminding me that the love of money can be the root of evil ….and that while recognising the role that money can play in our lives it is important to use it wisely and keep focusing on what is truly important and avoiding the trap of greed and materialism etc

Suppose some would say I’m lucky to be one of those ‘boomer’ generation of accidental millionaires …..starting with very little except loving parents and family to where I’m at today …but would modestly say I have to a some extent have had a say in my destiny.

So Rob …all I can say is the ‘2023 Return’ for me has been another satisfying and rewarding year….and with that I hope that you respect me for that and don’t hassle / deride me any more

[percy]

From another thread - Rob was kind enough to put this in big bold letters

Rob, I’d love to praticipate in this discussion but as I have no idea of my net worth (or even $ value of shares) at the beginning and end of 2023 even if I was inclined to I can’t calculate my ‘2023 Return’ but I’m sure it’s a positive number

I gave up counting such things years ago and that makes me feel good…..and guite honestly I don’t really care. Leave that to the accountant to sort out.

My Mum always kept reminding me that the love of money can be the root of evil ….and that while recognising the role that money can play in our lives it is important to use it wisely and keep focusing on what is truly important and avoiding the trap of greed and materialism etc

Suppose some would say I’m lucky to be one of those ‘boomer’ generation of accidental millionaires …..starting with very little except loving parents and family to where I’m at today …but would modestly say I have to a some extent have had a say in my destiny.

So Rob …all I can say is the ‘2023 Return’ for me has been another satisfying and rewarding year.

A fantastic note on how life and investing should be .

[mistaTea]

From another thread - Rob was kind enough to put this in big bold letters

Rob, I’d love to praticipate in this discussion but as I have no idea of my net worth (or even $ value of shares) at the beginning and end of 2023 even if I was inclined to I can’t calculate my ‘2023 Return’ but I’m sure it’s a positive number

I gave up counting such things years ago and that makes me feel good…..and guite honestly I don’t really care. Leave that to the accountant to sort out.

My Mum always kept reminding me that the love of money can be the root of evil ….and that while recognising the role that money can play in our lives it is important to use it wisely and keep focusing on what is truly important and avoiding the trap of greed and materialism etc

Suppose some would say I’m lucky to be one of those ‘boomer’ generation of accidental millionaires …..starting with very little except loving parents and family to where I’m at today …but would modestly say I have to a some extent have had a say in my destiny.

So Rob …all I can say is the ‘2023 Return’ for me has been another satisfying and rewarding year….and with that I hope that you respect me for that and don’t hassle / deride me any more

Amen. I couldn’t agree with this approach/philosophy more.

[mistaTea]

What would happen if you just picked 10 - 20 high quality businesses that you understand, dollar cost averaged into them and then just held then forever, never looking up the quoted value (because it is of no interest given you are holding forever) or measuring ‘progress’ over arbitrary timeframes against arbitrary benchmarks (or indeed against other people’s portfolios).

Who would have ever thought winner and I could be on the same page about something!

[RupertBear]

From another thread - Rob was kind enough to put this in big bold letters

Rob, I’d love to praticipate in this discussion but as I have no idea of my net worth (or even $ value of shares) at the beginning and end of 2023 even if I was inclined to I can’t calculate my ‘2023 Return’ but I’m sure it’s a positive number

I gave up counting such things years ago and that makes me feel good…..and guite honestly I don’t really care. Leave that to the accountant to sort out.

My Mum always kept reminding me that the love of money can be the root of evil ….and that while recognising the role that money can play in our lives it is important to use it wisely and keep focusing on what is truly important and avoiding the trap of greed and materialism etc

Suppose some would say I’m lucky to be one of those ‘boomer’ generation of accidental millionaires …..starting with very little except loving parents and family to where I’m at today …but would modestly say I have to a some extent have had a say in my destiny.

So Rob …all I can say is the ‘2023 Return’ for me has been another satisfying and rewarding year….and with that I hope that you respect me for that and don’t hassle / deride me any more

Kudos to you Winner, love your philosophy on life :)

[Maverick]

Great job Winner!...has to be " post of the year"

[mistaTea]

Great job Winner!...has to be " post of the year"

Post of the century more like.

[Bobdn]

I didn't know what my returns were for many years so decided to bite the bullet and work it all out. Predictably I was consistently underperforming the market eg Vanguard's VT (world fund). With 9600 stocks, nothing is more "the market" than that index.

That's when I decided to go fully into passive funds, apart from 1000 GNE shares

If one has made ones nut and doesn't really need the money, then I can understand why one wouldn't bother working out the numbers.

However if you're starting off investing its an essential reality check. If you're not beating the market then maybe it's better to buy the whole market. Investing is the one area in life where you get to beat the professionals with next to zero effort.

Simplicity has extremely low cost (by NZ Standards) hedged and unhedged international share funds and local funds. Kernel does a good job too.

Smartshares/Superlife has a great range but need to trim their fees a bit now.

I own all three plus some Hatch funds. I have a slight oil itch I have to scratch so allow myself an energy tilt (VDE) - no one's perfect. It's still an ETF but a slight rule bend;). And of course my tilt has failed to out perform the market. No surprise there!

[Curly]

From another thread - Rob was kind enough to put this in big bold letters

Rob, I’d love to praticipate in this discussion but as I have no idea of my net worth (or even $ value of shares) at the beginning and end of 2023 even if I was inclined to I can’t calculate my ‘2023 Return’ but I’m sure it’s a positive number

I gave up counting such things years ago and that makes me feel good…..and guite honestly I don’t really care. Leave that to the accountant to sort out.

My Mum always kept reminding me that the love of money can be the root of evil ….and that while recognising the role that money can play in our lives it is important to use it wisely and keep focusing on what is truly important and avoiding the trap of greed and materialism etc

Suppose some would say I’m lucky to be one of those ‘boomer’ generation of accidental millionaires …..starting with very little except loving parents and family to where I’m at today …but would modestly say I have to a some extent have had a say in my destiny.

So Rob …all I can say is the ‘2023 Return’ for me has been another satisfying and rewarding year….and with that I hope that you respect me for that and don’t hassle / deride me any more
Yep, Winner by name and winner by post.
All the best for 2024 to all. Hope to see less ego and more collegial posts this year.

[Bjauck]

Yes, the NZX category simply has far more following than any other section.

I want to invest where I can actually do well and then pay tax on my earnings, rather than pay less or no tax by investing in the second world. I am sure your thread would have been found no matter where it was posted.

It is not only a question of more or less tax but that the rules are different, and especially so if shares in foreign companies are directly owned. Such that the full proceeds from demergers, the takeover of shares in a foreign company, etc. may or may not be taxable for NZ residents if NZ court clearance has not been obtained. That unrealised movements in the NZD value of foreign currency may or may not be taxable. And the general FIF process even if funds, as opposed to shares in individual companies, investing overseas are owned.

No, NZ is not communist second World, not even at the nadir of the previous government - Agrarian country centred in land ownership - maybe. I have several funds, comprising a minority of my portfolio, investing off-shore, but I am quite prepared to receive a slightly lower return from investing in my own country not only for the administrative ease. In any case the returns over the longer term (10+ yrs) from NZ shares have exceeded returns from Europe. This century the per annum gross returns from NZX50 have only been a couple of percentage points below the gross returns from the s&p500. Allowing for imputation credits, the after tax return would be closer. Have a handful of mega-performing companies skewed the S&P500?

[Bjauck]

From another thread - Rob was kind enough to put this in big bold letters

Rob, I’d love to praticipate in this discussion but as I have no idea of my net worth (or even $ value of shares) at the beginning and end of 2023 even if I was inclined to I can’t calculate my ‘2023 Return’ but I’m sure it’s a positive number

I gave up counting such things years ago and that makes me feel good…..and guite honestly I don’t really care. Leave that to the accountant to sort out.

My Mum always kept reminding me that the love of money can be the root of evil ….and that while recognising the role that money can play in our lives it is important to use it wisely and keep focusing on what is truly important and avoiding the trap of greed and materialism etc

Suppose some would say I’m lucky to be one of those ‘boomer’ generation of accidental millionaires …..starting with very little except loving parents and family to where I’m at today …but would modestly say I have to a some extent have had a say in my destiny.

So Rob …all I can say is the ‘2023 Return’ for me has been another satisfying and rewarding year….and with that I hope that you respect me for that and don’t hassle / deride me any more
I raise a cup o’ kindness to you. All the best.

[Daytr]

Well said Winner! Life sure ain't all about money. As I said that would be a very sad way to live.

The most satisfying returns I have ever made was $750k over about three years & I didn't benefit a cent from it, it was all for a charity.
Set the charity up nicely & being a charity they didn't have to pay any tax on it.
And the charity is still running strongly today living off those proceeds & donations.

[iceman]

Great response & philosophy winner69

[SCOTTY]

Well said Winner. Great philosophy :)

[mistaTea]

I didn't know what my returns were for many years so decided to bite the bullet and work it all out. Predictably I was consistently underperforming the market eg Vanguard's VT (world fund). With 9600 stocks, nothing is more "the market" than that index.

That's when I decided to go fully into passive funds, apart from 1000 GNE shares

If one has made ones nut and doesn't really need the money, then I can understand why one wouldn't bother working out the numbers.

However if you're starting off investing its an essential reality check. If you're not beating the market then maybe it's better to buy the whole market. Investing is the one area in life where you get to beat the professionals with next to zero effort.

Simplicity has extremely low cost (by NZ Standards) hedged and unhedged international share funds and local funds. Kernel does a good job too.

Smartshares/Superlife has a great range but need to trim their fees a bit now.

I own all three plus some Hatch funds. I have a slight oil itch I have to scratch so allow myself an energy tilt (VDE) - no one's perfect. It's still an ETF but a slight rule bend;). And of course my tilt has failed to out perform the market. No surprise there!

Yeah fair enough most people will get higher returns by just indexing.

But winners post applies to everyone regardless of wealth.

If you don’t want to just index, and buy individual stocks - you will almost certainly get better long term results if you don’t measure your d1ck every year and compare it to the benchmark average (and you are definitely in for a world of emotional pain if you start trying to compare to the blessed Africans!).

Measuring will make it more likely that you will do something stupid and hurt your long term gains compared to if you just sat on your ass and watched the world go by.

If you are managing people’s money then you have to flop it out at least once a year and measure to justify your fees. That’s the name of the game. If it’s bigger than the benchmark you can pat yourself on the back and your clients feel happy too as when they are at the next bbq they can brag about how they found the new Warren buffet who managed to grow their wang 4 points more than the average bloke this year.

When you manage to shrink your clients wang this year compared to the average then you just insert a convincing bs story as to why your clients Willy will almost certainly still be longer and thicker in the long term with you.

But for the average person just picking stocks for themselves - winner has the right of it I feel.

[Valuegrowth]

From another thread - Rob was kind enough to put this in big bold letters

Rob, I’d love to praticipate in this discussion but as I have no idea of my net worth (or even $ value of shares) at the beginning and end of 2023 even if I was inclined to I can’t calculate my ‘2023 Return’ but I’m sure it’s a positive number

I gave up counting such things years ago and that makes me feel good…..and guite honestly I don’t really care. Leave that to the accountant to sort out.

My Mum always kept reminding me that the love of money can be the root of evil ….and that while recognising the role that money can play in our lives it is important to use it wisely and keep focusing on what is truly important and avoiding the trap of greed and materialism etc

Suppose some would say I’m lucky to be one of those ‘boomer’ generation of accidental millionaires …..starting with very little except loving parents and family to where I’m at today …but would modestly say I have to a some extent have had a say in my destiny.

So Rob …all I can say is the ‘2023 Return’ for me has been another satisfying and rewarding year….and with that I hope that you respect me for that and don’t hassle / deride me any more

You have posted some very important points which is rare in today’s world.

Overall, 2023 was a better managed year for me. I don’t know about 2024 but have a plan to succeed in things that I have in my mind. Short term anything can happen.

May you fly high in life and achieve success in everything!

[Bjauck]

I didn't know what my returns were for many years so decided to bite the bullet and work it all out. Predictably I was consistently underperforming the market eg Vanguard's VT (world fund). With 9600 stocks, nothing is more "the market" than that index.

That's when I decided to go fully into passive funds, apart from 1000 GNE shares

If one has made ones nut and doesn't really need the money, then I can understand why one wouldn't bother working out the numbers.

However if you're starting off investing its an essential reality check. If you're not beating the market then maybe it's better to buy the whole market. Investing is the one area in life where you get to beat the professionals with next to zero effort.

Simplicity has extremely low cost (by NZ Standards) hedged and unhedged international share funds and local funds. Kernel does a good job too.

Smartshares/Superlife has a great range but need to trim their fees a bit now.

I own all three plus some Hatch funds. I have a slight oil itch I have to scratch so allow myself an energy tilt (VDE) - no one's perfect. It's still an ETF but a slight rule bend;). And of course my tilt has failed to out perform the market. No surprise there!

Thanks for sharing your experience.

I thought I would compare the gross returns from Vanguard VT and FNZ Smartshares NZ Top 50 ETF on the sharesight site in NZD terms of course.

Term with performance (in % per annum) from VT followed by FNZ.

1yr. 22.5% 4.0%
2yr. 3.9% -4.1%
5yr. 12.8%. 6.6%
10yr. 10.0%. 9.2%
14yr. 8.7% 8.7%

So NZ performed better until these last five years or so.

[Bobdn]

Yes NZ, Australian and US market have been the top three generally...but I can't give a timeframe. Did I see the chart in a Pensioncraft YouTube video? Or was it in Stocks for the Long Run by Jeremy Siegel? I can't recall.

Between 2010 and around 2018 I was almost entirely in NZ shares.

I'm rereading Siegel's book just now. Different markets have their day in the sun at different periods and he provides many examples of why diversification works well.

I still have home country bias so have 15 per cent in NZ shares (Simplicity's NZ share fund has fees of just 0.1 per cent which are as low as they get) and 45 per cent in the US market, give or take. I'm ok with that especially considering how much NZ dominated my portfolio in the past.

[Bjauck]

Yes NZ, Australian and US market have been the top three generally...but I can't give a timeframe. Did I see the chart in a Pensioncraft YouTube video? Or was it in Stocks for the Long Run by Jeremy Siegel? I can't recall.

Between 2010 and around 2018 I was almost entirely in NZ shares.

I'm rereading Siegel's book just now. Different markets have their day in the sun at different periods and he provides many examples of why diversification works well.

I still have home country bias so have 15 per cent in NZ shares and 45 per cent in the US market, give or take. I'm ok with that especially considering how much NZ dominated my portfolio in the past. You switched your weightings at a good time. My current weighting are the reverse of yours! I am comfortable with that too. My NZ holdings being in individual shares; my foreign investment in funds. The rest of my portfolio being in a Medium growth KiwiSaver, a European fund and NZ bonds and fixed interest.

As W69 alluded to, I try not to get too hung up on having the best returns.

[Bobdn]

Honestly, it might have been a bit later - I don't want to give the impression that I timed any of this well. Also, I lost a ton on some individual names before I went passive. Seriously, all's well that ends well but I shudder looking back. On retirement I should have shoved it all in an index.

It's very easy to undo some excellent years with some bad years. I was a great one for piling in and averaging down.

I have no business anywhere near individual stocks, all joking aside.

Once one reads Jeremy Siegel's Stocks for the Long Run, there's no going back. One emerges, reformed:)

[lawson]

I had an ok 2023 but I had a not so ok 2022 so really it was just a "boomerang" year for me. Still I'm happy to have my boomerang back and to be back where I was at the end of 2021. I always struggle with investing, I have the wrong temperament, I perservere when you shouldn't and always end up buying and selling things at the wrong time. I've tried my best to work within my limitations and like you Bobdn I have etf's and people managing my money for me aka funds, and a pretty conservative portfolio over all. I am only posting this for all the people who read this site and based on some of the posts would think everyone does well and might beat themselves up for not being better at it. It's hard, be kind to yourself, it takes time and everyone makes plenty of mistakes.

[JBmurc]

Yeah would be great to be able to keep the 50% CAGR going.

Buffett - the world's greatest investor when in his prime managed 31.6% for 13 years.

50% CAGR has turned 100k into nearly 14 million in just 10 years.

Bloody good going.

Would be ridiculous to have any money in property when you can average 50% a year in the stock market though.

well I'm not averaging 50% per FY to FY compounding etc as my company must pay me for my full-time work running the trading company $100k+ pa (need to pay the personal bills) + taxes outgoing costs etc ..

I reckon if I'm not making 20% FY EBIT on the Capital position I'd have to give up the full-time trading as after costs and my wages I'll be near on heading backwards and would have to look for a part-time job to top up my income and drop the company paid wage..

Yes at this stage not looking very likely for 24Fy to push the ongoing average higher (5yrs) could well drag it down into the 40's

I stopped being so lazy and just checked my portfolio Share Position value 31MAR23 to present and it's sitting at 21.5% up at present ..

But of course, this isn't the realised gross FY trading taxable profit I've been using :) as this was just the easiest way to work at my average % FY return looking through my books - take the Capital position of the share portfolio start of FY ~how much EBIT did the company make from share trading for the FY..

..I agree on Property outside the personal home, when interest rates head back down to lower levels will prob sell the commercial property and take the Cap gain to pay off what debt is left over .. whatever my profit is will be from only investing minimal amount of my own capital so will be a impressive percent return I could never do in the market but that's lending leverage + high net yield return

My target sell price will see around 1,900% return on invested funds pre-tax over 6-7yr hold ...

This is why the rich can get so much richer using equity

[pedro.nz]

Interesting thread...
Have averaged 9.99% over the last 23 years playing the market directly with what I call my play money. (Most of our funds have been with fund managers as in reality, it's not all mine to play with anyway. (Have been happily married 52 years and counting so... :)))
Anyway, moving on, have traded mainly on the NZ and AX markets over the first 21 years but have since switched my attention to the NASDAQ for the last couple of years as trading via Hatch with their very low fee of US$3 per trade has made short term trading much more profitable for me. The biggest issue on this platform is that the after-hour market can go hard against you if results or some announcement made outside the normal trading hours has an immediate negative affect on a share price.
Have also joined IBKR where you can trade after hours as well but so far have only done some buy and hold on this platform.
It's quite a sophisticated platform and I am only slowly learning what you can do on it - will see how it goes...

2023 has been an average year so far both with our managed funds (5.9% invested at 50% Growth, 50% Fixed interest/Bonds) and with my personal trading running at around 7% so far ( pre tax)

As for 2024, who knows, but at my age, my motto is "Do it while you can" so hoping to do a lot more travelling this year...

Best wishes to you all for 2024, hope it all goes really well for you :t_up:

[Muse]

Great post, what did you do professionally before you semi retired?

Was a Sky TV customer services team member. I took great pride in refusing to answer the phone or efficiently process cancellation requests.

[kiora]

Was a Sky TV customer services team member. I took great pride in refusing to answer the phone or efficiently process cancellation requests.

Classic Muse
First belly laugh I,ve seen on ST for a while :)

[kiora]

Interesting to me
1) That STers seem to imply that a trading strategy is required to make their "expected" returns out of shares
2)That STers appear to be happy to use interest bearing investments as a strategy but not leverage through a credit facility

How do the "filthy rich" get rich? If not by using others money?

3) That the more companies a portfolio is invested in the less risky it is

4)That portfolio returns are not impeded by investing in so many different companies rather than narrowing the number to improve returns

Is STers strategies of trading just another job/hoby they've taken on,albeit one they enjoy so why not?

[ValueNZ]

What would happen if you just picked 10 - 20 high quality businesses that you understand, dollar cost averaged into them and then just held then forever, never looking up the quoted value (because it is of no interest given you are holding forever) or measuring ‘progress’ over arbitrary timeframes against arbitrary benchmarks (or indeed against other people’s portfolios).
The price you pay for those high quality businesses is important. If you bought Microsoft at it's peak in 1999 you would have to wait 16 years just to break even...

[mistaTea]

The price you pay for those high quality businesses is important. If you bought Microsoft at it's peak in 1999 you would have to wait 16 years just to break even...

I don’t think that is quite right because they started paying dividends in 2003.

And I think younger just made my point.

If MSFT was a business you liked and understood, you bought MSFT in 1999 at what was then the peak SP of around US$40 a share, and then just forgot about it…never bothered with the Willy measuring contest etc…

Well, 25 years later those shares would be worth US$369 today plus all of the dividends you received since 2003.

That ain’t bad. About 9 doubles.

So about 8% CAGR in terms of SP plus dividends. Total return north of 10% CAGR.

I think that is pretty solid for a stress free approach personally and you would do just fine.

[SailorRob]

The price you pay for those high quality businesses is important. If you bought Microsoft at it's peak in 1999 you would have to wait 16 years just to break even...


Of course completely correct and correct on Microsoft, takes a lot of dividends to make up a 75% price decline. The subsequent recovery wasn't of course certain and the base rates for companies that then go on to perform like Microsoft did are practically non existent.

misaTea strategy would still work perfectly fine but how hard is it for most people to pick ONE high quality durable business that they understand let alone 10 or 20 and then in doing so if you don't outperform the index then you might well have just indexed. The idea of measuring against an index is that's the cheap easy option anyone can do with the click of a button, no thought required.

[mistaTea]

Of course completely correct and correct on Microsoft, takes a lot of dividends to make up a 75% price decline. The subsequent recovery wasn't of course certain and the base rates for companies that then go on to perform like Microsoft did are practically non existent.

misaTea strategy would still work perfectly fine but how hard is it for most people to pick ONE high quality durable business that they understand let alone 10 or 20 and then in doing so if you don't outperform the index then you might well have just indexed. The idea of measuring against an index is that's the cheap easy option anyone can do with the click of a button, no thought required.

Yes all correct.

But I just wonder if the constant measuring would perhaps run the risk of you doing something that turns out to be sub optimal.

Most people here seem to have picked a basket of stocks.

You measure year 1, 2 and 3… and find you lagged the index. Oh no! I am really sh1te at this…better sell out and just index…

Nothing wrong with that…but I think there is every chance that if the companies you bought were solid businesses (even if you paid a little too much for then) if you just sat on your ass for decades you would come out on top of the index.

I have not back tested any of this before you ask, but it is just a ‘hunch’ I have. I think activity is what ultimately ruins people’s returns.

[SailorRob]

From another thread - Rob was kind enough to put this in big bold letters

Disingenuous Winner? I put it in the same font and size as your message I was replying to about economists predictions for 2024...

Rob, I’d love to praticipate in this discussion but as I have no idea of my net worth (or even $ value of shares) at the beginning and end of 2023 even if I was inclined to I can’t calculate my ‘2023 Return’ but I’m sure it’s a positive number

It would certainly be very easy to calculate as you know, to state that it's beyond your ability is not honest. But you are 'sure' it's a positive number? Ok. I don't buy it Winner.

I gave up counting such things years ago and that makes me feel good…..and guite honestly I don’t really care. Leave that to the accountant to sort out.

Why then do you focus so much on trying to desperately predict the near term future for your stocks and the economy, you seem incredibly interested in what is going to move your portfolio, more than perhaps anyone? You seem to be extremely distressed by your bag holding in OCA? This just does not add up...

My Mum always kept reminding me that the love of money can be the root of evil ….and that while recognising the role that money can play in our lives it is important to use it wisely and keep focusing on what is truly important and avoiding the trap of greed and materialism etc

The love of money is what drives innovation and productivity. While it can sometimes lead to 'evil' more generally as Adam Smith taught us all in 1776, it is the individuals self interest and love for money that creates all wealth. Someones love for money drove them and others to develop the technology that allows a woman in her 80's to be gardening a week after a major knee operation where in the 70's she would have been crippled for the rest of her life. Every single thing you enjoy in your standard of living was due to someone's self interested love for money.

Suppose some would say I’m lucky to be one of those ‘boomer’ generation of accidental millionaires …..starting with very little except loving parents and family to where I’m at today …but would modestly say I have to a some extent have had a say in my destiny.

Who knows peoples individual circumstances. If you can honestly say that you have not had any money from inheritance and have got to where you are from saving and investing your own capital then good on you.

So Rob …all I can say is the ‘2023 Return’ for me has been another satisfying and rewarding year….and with that I hope that you respect me for that and don’t hassle / deride me any more

Having a satisfying and rewarding year and the financial performance this thread is about are of course two very different things. I can certainly respect you for that.

​The reason I deride you is for your constant crying and immature posts on OCA thread where you make childish comments in reply to many incredible posts. You contribute absolutely nothing but scoff at anyone who has anything positive to say. You are clearly a massive bag holder and for someone who doesn't care about returns as they have so much money it doesn't add up... You also constantly post ridiculous things about the macroeconomic future that you are desperately trying to predict, but you have so much money you dont even bother to measure if you are going forwards or backwards...



Post of the bloody year, well I am glad it's only the 3rd.

[SailorRob]

Yes all correct.

But I just wonder if the constant measuring would perhaps run the risk of you doing something that turns out to be sub optimal.

Most people here seem to have picked a basket of stocks.

You measure year 1, 2 and 3… and find you lagged the index. Oh no! I am really sh1te at this…better sell out and just index…

Nothing wrong with that…but I think there is every chance that if the companies you bought were solid businesses (even if you paid a little too much for then) if you just sat on your ass for decades you would come out on top of the index.

I have not back tested any of this before you ask, but it is just a ‘hunch’ I have. I think activity is what ultimately ruins people’s returns.


You are absolutely right and there is a lot of data out there to back up what you say.

There are some amazing statistics out there from the various investing platforms that the highest performing portfolios belong to the dead!

Another incredible thought exercise is that you could start out as an investor after having studied for 10 years - and studied all the real stuff. You could then randomly buy the same stocks in similar proportions to David Einhorn (without even knowing who he was) and by coincidence you could mirror him for 5 or 6 years.

After this time, you realise that you are rubbish and sell everything and index. Where the reality was that you were actually up there with the very best in the world. You just never knew it.

This is why process beats outcome, and why you need a full cycle plus before you can really measure. 15 years.

[SailorRob]

I am quite prepared to receive a slightly lower return from investing in my own country not only for the administrative ease. In any case the returns over the longer term (10+ yrs) from NZ shares have exceeded returns from Europe. This century the per annum gross returns from NZX50 have only been a couple of percentage points below the gross returns from the s&p500. Allowing for imputation credits, the after tax return would be closer. Have a handful of mega-performing companies skewed the S&P500?

What data are you using to calculate the total returns for the respective indexes?

A couple of percentage points over a quarter century....

That's the difference between turning 100k into 677k in 24 years

vs

1.1 million.


A couple of percentage points is absolutely massive.


A fair bit of the NZX returns have been from our semi emergence from Communism - state assets sold cheaply, but to think that NZ will perform anything like the US going forward the next quarter century....

Good luck.

[RupertBear]

Post of the bloody year, well I am glad it's only the 3rd.

WOW did you really need to attack everything Winner said?

Did it make you feel better?

Worst post of the year so far IMO

[SailorRob]

WOW did you really need to attack everything Winner said?

Did it make you feel better?

Worst post of the year so far IMO

Not an attack, just a quest for the truth.

Go read the last 100 posts made by winner and then come back.

[RupertBear]

Not an attack, just a quest for the truth.

Go read the last 100 posts made by winner and then come back.

I have read every post Winner has made for many years

How is this not a personal attack??

The reason I deride you is for your constant crying and immature posts on OCA thread where you make childish comments in reply to many incredible posts. You contribute absolutely nothing but scoff at anyone who has anything positive to say. You are clearly a massive bag holder and for someone who doesn't care about returns as they have so much money it doesn't add up... You also constantly post ridiculous things about the macroeconomic future that you are desperately trying to predict, but you have so much money you dont even bother to measure if you are going forwards or backwards...

[SailorRob]

I have read every post Winner has made for many years

How is this not a personal attack??

The reason I deride you is for your constant crying and immature posts on OCA thread where you make childish comments in reply to many incredible posts. You contribute absolutely nothing but scoff at anyone who has anything positive to say. You are clearly a massive bag holder and for someone who doesn't care about returns as they have so much money it doesn't add up... You also constantly post ridiculous things about the macroeconomic future that you are desperately trying to predict, but you have so much money you dont even bother to measure if you are going forwards or backwards...

It is an explanation for my behaviour and an observation of 'winners'.

It's just bloody ridiculous.

[Daytr]

I have read every post Winner has made for many years

How is this not a personal attack??

The reason I deride you is for your constant crying and immature posts on OCA thread where you make childish comments in reply to many incredible posts. You contribute absolutely nothing but scoff at anyone who has anything positive to say. You are clearly a massive bag holder and for someone who doesn't care about returns as they have so much money it doesn't add up... You also constantly post ridiculous things about the macroeconomic future that you are desperately trying to predict, but you have so much money you dont even bother to measure if you are going forwards or backwards...

And then there is this.

"The love of money is what drives innovation and productivity. While it can sometimes lead to 'evil' more generally as Adam Smith taught us all in 1776, it is the individuals self interest and love for money that creates all wealth. Someones love for money drove them and others to develop the technology that allows a woman in her 80's to be gardening a week after a major knee operation where in the 70's she would have been crippled for the rest of her life. Every single thing you enjoy in your standard of living was due to someone's self interested love for money."

What a sad and skewed outlook. Most innovation isn't driven by money, its driven by passion, pride, the aspiration to achieve and help others etc.
Do you think Galileo was driven by money? Einstein, Newton, Steve Jobs? Elon Musk?

Sure, ideas get monetized, however the pure love of money can also stifle innovation as if it's not profitable then in that narrow lense it's not worth it.
This is one of the problems with corporate medical research, it looks towards what's profitable not necessarily what is ethical.

Interesting that you invite & to be fair, beg people to join your new thread then you ridicule what some of them say.

[Snoopy]

I finish the year in the stock picking competition in the 'James Bond' position of 007. That is my best performance for a while, although to some extent a one year performance is not relevant to a multi year strategy. My real secret is to run a defensive strategy all the time to avoid negative draw-down. Not by charts, but by careful stock selection in the first place. This means I tend to underperform the market in good years by a couple of percentage points, but out perform in bad years. I see the NZX50 was up 1.28% over 2023 compared to my 17.75%. So at worst that kind of 'one off outperformance return' should keep me ahead of the markets for the next 8 years or so, even if I do nothing with my portfolio. That return does not include fixed interest which currently makes up about 20% of my total NZ portfolio

My actual NZX return was a bit less than 17.75%, because the competition entry is only over five shares which I try to choose as representative of the 12 I actually own. For example I own a residual 'free carry' holding in Restaurant Brands' that had a shocker of a year. But I haven't included Restaurant Brands' as a competition entry for a while, even when I made my biggest ever sharemarket investment profit a few years ago in teh partial takeover. So my competition return is 'swings and roundabouts' and over a multiyear time horizon compounds fairly accurately. I can't be bothered calculating my actual return on a portfolio basis. My attitude being if I look after the eggs, the 'basket' will take care of itself.

'Shaken not stirred' is probably a fair reflection of CY2023. But I am hoping for another rough year over CY2024 for most people. That will suit my own investment style just fine.

SNOOPY

[Bobdn]

@Snoopy 17.75 per cent - outstanding!

[Snoopy]

@Snoopy 17.75 per cent - outstanding!

Yes but for the CY2022 year my portfolio change in value portfolio multiplier was 0.9088, which meant I lost nearly 10%. So despite finishing 30th in the CY2022 competition, the two yearly growth figure is not so flash!

SNOOPY

[SailorRob]

And then there is this.

"The love of money is what drives innovation and productivity. While it can sometimes lead to 'evil' more generally as Adam Smith taught us all in 1776, it is the individuals self interest and love for money that creates all wealth. Someones love for money drove them and others to develop the technology that allows a woman in her 80's to be gardening a week after a major knee operation where in the 70's she would have been crippled for the rest of her life. Every single thing you enjoy in your standard of living was due to someone's self interested love for money."

What a sad and skewed outlook. Most innovation isn't driven by money, its driven by passion, pride, the aspiration to achieve and help others etc.
Do you think Galileo was driven by money? Einstein, Newton, Steve Jobs? Elon Musk?

Sure, ideas get monetized, however the pure love of money can also stifle innovation as if it's not profitable then in that narrow lense it's not worth it.
This is one of the problems with corporate medical research, it looks towards what's profitable not necessarily what is ethical.

Interesting that you invite & to be fair, beg people to join your new thread then you ridicule what some of them say.

No surprise that you lack understanding of the basics of how the entire economic system works and have an unhealthy penchant for communism.

Not to mention another person who has so much money they have the slightest clue what their returns are but they're enjoying life instead.

I'll wait for ValueNZ to school you.

If it's driven by passion and pride and wanting to help, then why does your economic system lead to death and despair instead?

Never have I seen Adam Smith described as sad and skewed before.

[SailorRob]

And then there is this.

"The love of money is what drives innovation and productivity. While it can sometimes lead to 'evil' more generally as Adam Smith taught us all in 1776, it is the individuals self interest and love for money that creates all wealth. Someones love for money drove them and others to develop the technology that allows a woman in her 80's to be gardening a week after a major knee operation where in the 70's she would have been crippled for the rest of her life. Every single thing you enjoy in your standard of living was due to someone's self interested love for money."

What a sad and skewed outlook. Most innovation isn't driven by money, its driven by passion, pride, the aspiration to achieve and help others etc.
Do you think Galileo was driven by money? Einstein, Newton, Steve Jobs? Elon Musk?

Sure, ideas get monetized, however the pure love of money can also stifle innovation as if it's not profitable then in that narrow lense it's not worth it.
This is one of the problems with corporate medical research, it looks towards what's profitable not necessarily what is ethical.

Interesting that you invite & to be fair, beg people to join your new thread then you ridicule what some of them say.

Yes I an guilty of BEGGING people to join this thread.

I have even offered money to people.

I'm considering offering lap dances like X men too.

[SailorRob]

Remember nobody serious has any interest whatsoever in anyone's equity portfolio when they are crapping themselves in fixed income.

It's what your return was overall that matters.

The index return was some 26%.

Unless you're very old or stupid or both don't hold debt.

[Daytr]

No surprise that you lack understanding of the basics of how the entire economic system works and have an unhealthy penchant for communism.

Not to mention another person who has so much money they have the slightest clue what their returns are but they're enjoying life instead.

I'll wait for ValueNZ to school you.

If it's driven by passion and pride and wanting to help, then why does your economic system lead to death and despair instead?

Never have I seen Adam Smith described as sad and skewed before.

Here we go again. I'm the only communist who trades international markets. Feeble argument.

You confuse altruism with communism.
There are a lot of things you have never seen or experienced but it doesn't stop you commenting on them and it was Adam Smith I wasn't calling sad.

[SailorRob]

Here we go again. I'm the only communist who trades international markets. Feeble argument.

You confuse altruism with communism.
There are a lot of things you have never seen or experienced but it doesn't stop you commenting on them and it was Adam Smith I was calling sad.

Ok I commend you for admitting that it was Adam you were calling sad. That's a big call but you're entitled to it.

I've never experienced losing a teste but I feel able to comment on it.

[RTM]

Here we go again. I'm the only communist who trades international markets. Feeble argument.

You confuse altruism with communism.
There are a lot of things you have never seen or experienced but it doesn't stop you commenting on them and it was Adam Smith I was calling sad.

Oh dear. Lets not turn this thread into another Daytr v Rob one. Keep it for the Black Monday one. That is more than enough.

[Daytr]

Oh dear. Lets not turn this thread into another Daytr v Rob one. Keep it for the Black Monday one. That is more than enough.

Don't worry RTM.
I am more than happy to ignore this thread.

[Snoopy]

Remember nobody serious has any interest whatsoever in anyone's equity portfolio when they are crapping themselves in fixed income.

It's what your return was overall that matters.

The index return was some 26%.

Unless you're very old or stupid or both don't hold debt.


Actually there is a very good reason to hold some debt, particularly at the moment when the bank is offering you a decent interest rate (term deposits) AND when the potential of falling interest rates can see capital growth in a fixed interest portfolio (bonds). The counterfactual to that 'bond option' being that if interest rates do not fall, then you will be 'forced' to endure high interest returns with no capital growth while you wait until interest rates fall (not too bad as a second choice scenario option).

Yet in the longer term equity markets do outperform bond markets. So in this sense I agree with SR on the wasted investment potential of fixed interest / bonds. But the advantage of holding fixed interest in the short to medium term is that such investments provide a 'holding pen' for your cash that is waiting to be deployed, while paying you to 'hold the pig' to boot.

Equity investments require careful evaluation of operational downside risk. There is no point in investing in a company that you are not happy with just becasue it is an 'equity investment'. The mantra that 'equity always performs better' does not apply to all stocks, all of the time. Even the likes of Buffett only turns up with one or two serious investment opportunities per year from all Berkshire's researched potential opportunities out there.

SR considers Berkshire relatively undervalued. But another way of looking at it is to say that Berkshire is fairly valued and the DOW is overvalued. Of course your expected returns going forwards from Berkshire do not look so good if you view things this way.

As for judging NZ based investments against an American sharemarket index, that is just inappropriate in my view. Generally you are looking at entirely different kinds of businesses both in scale, industry classification and yield 'over there' compared to 'here'.

SNOOPY

[mike2020]

I made a loss last year. Around 6%. I wrote a dissertation on how that came about, it was therapeutic to see it but of no use to anyone. Basically I had some very good luck 2019/20/21 and held. When I say luck I think I was lucky just to find two fairly obvious opportunities, one I went very heavily into and the other I started so small and followed it up, then down. Rebalanced one stock I was overweight in at a peak, also luck but maybe I am learning. All my much loved div payers have lead me to despair the last 18 months.

I think my theme song for this year is going to be "the wheels on the bus". Call me an optimist.

[Daytr]

Actually there is a very good reason to hold some debt, particularly at the moment when the bank is offering you a decent interest rate (term deposits) AND when the potential of falling interest rates can see capital growth in a fixed interest portfolio (bonds). The counterfactual to that 'bond option' being that if interest rates do not fall, then you will be 'forced' to endure high interest returns with no capital growth while you wait until interest rates fall (not too bad as a second choice scenario option).

Yet in the longer term equity markets do outperform bond markets. So in this sense I agree with SR on the wasted investment potential of fixed interest / bonds. But the advantage of holding fixed interest in the short to medium term is that such investments provide a 'holding pen' for your cash that is waiting to be deployed, while paying you to 'hold the pig' to boot.

Equity investments require careful evaluation of operational downside risk. There is no point in investing in a company that you are not happy with just becasue it is an 'equity investment'. The mantra that 'equity always performs better' does not apply to all stocks, all of the time. Even the likes of Buffett only turns up with one or two serious investment opportunities per year from all Berkshire's researched potential opportunities out there.

SR considers Berkshire relatively undervalued. But another way of looking at it is to say that Berkshire is fairly valued and the DOW is overvalued. Of course your expected returns going forwards from Berkshire do not look so good if you view things this way.

As for judging NZ based investments against an American sharemarket index, that is just inappropriate in my view. Generally you are looking at entirely different kinds of businesses both in scale, industry classification and yield 'over there' compared to 'here'.

SNOOPY

Totally agree Snoopy, re the holding pattern in cash etc whilst interest rates are high & until equities look attractive enough again to re-enter.
This is based on an index investment rather than any particular stock.
I'm currently in that holding pattern now, on the sidelines effectively.

It's served me well in the last year or so.

[winner69]

I made a loss last year. Around 6%. I wrote a dissertation on how that came about, it was therapeutic to see it but of no use to anyone. Basically I had some very good luck 2019/20/21 and held. When I say luck I think I was lucky just to find two fairly obvious opportunities, one I went very heavily into and the other I started so small and followed it up, then down. Rebalanced one stock I was overweight in at a peak, also luck but maybe I am learning. All my much loved div payers have lead me to despair the last 18 months.

I think my theme song for this year is going to be "the wheels on the bus". Call me an optimist.

Always good to write a dissertation to clear your thoughts

One of the kids came home from a school trip years ago saying the teacher had told them off for singing ‘the wheels on the bus are falling off, falling off’ …hope not the case this year for you lol

[mike2020]

Wheels coming off was 22 and most of 23 was grinding along the tarmac on the hubs. Was not all bad, I got a full allocation in the HGH raise :t_up:

On a side note I am 57 this year and I am going to start thinking seriously about passive funds over the next 3 years.

[SailorRob]

Totally agree Snoopy, re the holding pattern in cash etc whilst interest rates are high & until equities look attractive enough again to re-enter.
This is based on an index investment rather than any particular stock.
I'm currently in that holding pattern now, on the sidelines effectively.

It's served me well in the last year or so.

ValueNZ, do you want to take this or shall I?

[ValueNZ]

ValueNZ, do you want to take this or shall I?

Go for it. I'm in Vancouver at the moment on holiday which is why my posts have been less frequent and also don't have access to a laptop.

[alokdhir]

Holding debt especially TD at peak of rates is a very big temptation which should be avoided ....when the TD rates are highest around that time stocks are most UNLOVED ...thus in the long run making a 5 years TD at peak will almost certainly give less returns then getting into a managed fund or even ETF like FNZ ...I experienced it myself in 2010 thus will totally recommend not to fall for the lure of assured returns with capital safe ...

Now the question of holding bonds ....rates go down then u get capital growth ...but u wud have got more in stocks for similar rate falls ...rates dont go down then u get yield but one can still get both yield and capital appreciation in TRA type stocks ....then how to find Bonds attractive in any scenario ...holding OCA bonds or OCA stock ...IFT bonds or IFT stock ...imo choice is simple ...but all can have their own views and circumstances .

All seasoned or not so seasoned players here know by now that rates are surely cyclical ...its timing can be only tricky part ...law of averages support looking for lower rates ahead ...sometime ...when is that sometime ...6 months or 1 year is the only question ...if one is looking at next 5 years or more then its almost certain that one will see OCR of 2.5% or lower sometime in next 5 years ...then one should hold stocks or debt of OCA / IFT etc ??

[SailorRob]

Actually there is a very good reason to hold some debt, particularly at the moment when the bank is offering you a decent interest rate (term deposits) AND when the potential of falling interest rates can see capital growth in a fixed interest portfolio (bonds). The counterfactual to that 'bond option' being that if interest rates do not fall, then you will be 'forced' to endure high interest returns with no capital growth while you wait until interest rates fall (not too bad as a second choice scenario option).

You are thinking in nominal rates which to me are meaningless. When thinking of real rates you can forget CPI as well, inflation for the average consumer when measured properly will eat your term deposit and then some.

Yes if you can predict future rates then bonds are fine. Nobody can however and perhaps you missed the biggest point of all when you said 'if interest rtes do not fall' well what if they rise dramatically? When everyone KNOWS that rates are coming down this year... Look out.

I would not take a term deposit offering 15% right now, no chance, probably not even 20% as this would mean selling equities to fund it and I have no idea what price I could buy them back at.

https://www.podbean.com/ea/pb-pmi9u-14f0abc Listen to this from the 23 minute mark, really good debate on why NOT to hold debt of any type, from a very clever dude.

Yet in the longer term equity markets do outperform bond markets. So in this sense I agree with SR on the wasted investment potential of fixed interest / bonds. But the advantage of holding fixed interest in the short to medium term is that such investments provide a 'holding pen' for your cash that is waiting to be deployed, while paying you to 'hold the pig' to boot.

Implying the ability to time the markets or switch between at opportune times. I cannot do this. Everyone else can with ease but not me!

Equity investments require careful evaluation of operational downside risk. There is no point in investing in a company that you are not happy with just becasue it is an 'equity investment'.

Massively correct.


The mantra that 'equity always performs better' does not apply to all stocks, all of the time.

Correct of course


Even the likes of Buffett only turns up with one or two serious investment opportunities per year from all Berkshire's researched potential opportunities out there.

You highlight someone who is one of the worst positions of any investors in the world due to the size of funds to deploy. Buffett with less capital was leveraged and would not hold cash/debt.

SR considers Berkshire relatively undervalued. But another way of looking at it is to say that Berkshire is fairly valued and the DOW is overvalued. Of course your expected returns going forwards from Berkshire do not look so good if you view things this way.

I strongly disagree with this, my expected forward returns don't change if I view things like that. It is relatively undervalued according to my own discount rate as well as Buffetts who will only repurchase shares when they are well below intrinsic value conservatively estimated and I can promise you that this is not based on the relative value of the Dow. My expected return is around 12% over the next decade and I don't think this is a fair value for the safest financial asset in the world (US Treasury much more risk as you will lose money in real terms guaranteed)


As for judging NZ based investments against an American sharemarket index, that is just inappropriate in my view. Generally you are looking at entirely different kinds of businesses both in scale, industry classification and yield 'over there' compared to 'here'.

This is the entire point. If you are a 50 year old prostitute in Hamilton, you may well see fit to judge yourself against other similar ladies however perhaps you should be comparing yourself to 20 year old Auckland ones.

SNOOPY

Good post Snoopy, cheers. When I read your first post on the thread a while back my thoughts were that you would have been far better off indexing, but that may not be true in the future.

[SailorRob]

Holding debt especially TD at peak of rates is a very big temptation which should be avoided ....when the TD rates are highest around that time stocks are most UNLOVED ...thus in the long run making a 5 years TD at peak will almost certainly give less returns then getting into a managed fund or even ETF like FNZ ...I experienced it myself in 2010 thus will totally recommend not to fall for the lure of assured returns with capital safe ...

Now the question of holding bonds ....rates go down then u get capital growth ...but u wud have got more in stocks for similar rate falls ...rates dont go down then u get yield but one can still get both yield and capital appreciation in TRA type stocks ....then how to find Bonds attractive in any scenario ...holding OCA bonds or OCA stock ...IFT bonds or IFT stock ...imo choice is simple ...but all can have their own views and circumstances .

All seasoned or not so seasoned players here know by now that rates are surely cyclical ...its timing can be only tricky part ...law of averages support looking for lower rates ahead ...sometime ...when is that sometime ...6 months or 1 year is the only question ...if one is looking at next 5 years or more then its almost certain that one will see OCR of 2.5% or lower sometime in next 5 years ...then one should hold stocks or debt of OCA / IFT etc ??


Well said. Of course you can't sit in debt and then wait for rates to decline and hop onto the equity horse.

[SailorRob]

Wheels coming off was 22 and most of 23 was grinding along the tarmac on the hubs. Was not all bad, I got a full allocation in the HGH raise :t_up:

On a side note I am 57 this year and I am going to start thinking seriously about passive funds over the next 3 years.


Go into passive funds and then let us know what you went into. If those investments then beat Berkshire over the following 3 years a $200 bottle of rum will be sent to you from me.

[SailorRob]

Totally agree Snoopy, re the holding pattern in cash etc whilst interest rates are high & until equities look attractive enough again to re-enter.
This is based on an index investment rather than any particular stock.
I'm currently in that holding pattern now, on the sidelines effectively.

It's served me well in the last year or so.


Yes this makes total sense, it's an easy way to get far better returns than what the index would give of you just stayed invested in the index.

I am surprised it hasn't served you well over 20 or 30 years - not just the last year 'or so'.

[mike2020]

Great offer. If it still applies 3 years from now all good. Know pretty much nothing about passive funds but later on I would prefer less volatility somehow.
My nzx portfolio is 100% in the green long term but I have seen capital losses over the last 18 months. I expect that will correct but time literally is money and if that could be avoided next cycle I would be happier. I have honestly never thought of passive funds until an earlier post in this conversation. Its food for thought. Poster did sound like he was happy with the results.

[SailorRob]

Great offer. If it still applies 3 years from now all good. Know pretty much nothing about passive funds but later on I would prefer less volatility somehow.
My nzx portfolio is 100% in the green long term but I have seen capital losses over the last 18 months. I expect that will correct but time literally is money and if that could be avoided next cycle I would be happier. I have honestly never thought of passive funds until an earlier post in this conversation. It's food for thought. Poster did sound like he was happy with the results.


My point was Mike, Buy Berkshire instead of passive funds (but offer also genuine)

I thought you meant you would now for the next 3 years, offer stands from now due to massive differences in valuations between passive products and Berkshire.

Who knows what price Berkshire will be in 3 years, could be an awful offer by then!

Well, I will extend the offer. No matter what you decide to do over the next 3 years - Berkshire beats you silly or you get the Rum.

[Daytr]

Yes this makes total sense, it's an easy way to get far better returns than what the index would give of you just stayed invested in the index.

I am surprised it hasn't served you well over 20 or 30 years - not just the last year 'or so'.

Well it served me well in previous times as well but I wasn't so interested when interest rates on the whole were lower.

[SailorRob]

Well it served me well in previous times as well but I wasn't so interested when interest rates on the whole were lower.

Well done mate.

[Snoopy]

You are thinking in nominal rates which to me are meaningless. When thinking of real rates you can forget CPI as well, inflation for the average consumer when measured properly will eat your term deposit and then some.

Yes if you can predict future rates then bonds are fine. Nobody can however and perhaps you missed the biggest point of all when you said 'if interest rates do not fall' well what if they rise dramatically? When everyone KNOWS that rates are coming down this year... Look out.

I would not take a term deposit offering 15% right now, no chance, probably not even 20% as this would mean selling equities to fund it and I have no idea what price I could buy them back at.

https://www.podbean.com/ea/pb-pmi9u-14f0abc Listen to this from the 23 minute mark, really good debate on why NOT to hold debt of any type, from a very clever dude.


That podcast is on the US debt market. I don't think it is directly applicable to draw from that what might happen in NZ. The NZ Reserve Bank, at least prior to the last labour government, has tended to be much more idealistic on their fight against inflation. And now that the Luxon lead government has refocussed all the attention back on inflation only, I think we will see a very concerted attempt to get inflation down, no matter what the economic and social cost is to the rest of the economy.

I don't look at CPI when I am considering interest rates, because I have no control over the CPI. It doesn't pay to worry about things you can't control. The high interest rates exist because the CPI is out of control. If you are looking for high interest rates in a low CPI environment (the holy grail of fixed interest investment) you are not going to find it. Or rather you are not going to find it without serious risk to the return of your capital, (which should more than temper any sugar rush you might feel from being offered a high return on your capital).

I don't claim to be able to predict exactly when interest rates will fall in NZ. And yes we all might get a shock if our reserve bank decides to put interest rates up and not down. However, I do think that over the medium term (say 3-5 years) interest rates in NZ will fall. Not to those super low post pandemic rates. But down a couple of percentage points from where we are now. And if they do rise from today's rates that rise will be a short term blip.

So in summary, I don't invest in fixed interest because I know exactly when interest rates will change. I invest when interest rates are near the top of their cycle, with inflation being disregarded. I have great -although not supreme- confidence, given the overzealous directive given to our reserve bank that we are near that interest rate peak now. The only consequence of being wrong in my timing of any interest rate falls is that I will have to wait for any bond capital gains a bit longer, while still 'enduring' high interest rate payments while I wait. The future angst of watching current fixed interest investments once again pay more than the rate of inflation I think I can take.

If this sounds to you like investment hell, I nevertheless believe that I can live there (for a while).

SNOOPY

[Snoopy]

Snoopy wrote:
"Yet in the longer term equity markets do outperform bond markets. So in this sense I agree with SR on the wasted investment potential of fixed interest / bonds. But the advantage of holding fixed interest in the short to medium term is that such investments provide a 'holding pen' for your cash that is waiting to be deployed, while paying you to 'hold the pig' to boot."

Implying the ability to time the markets or switch between at opportune times. I cannot do this. Everyone else can with ease but not me!


You have got why I established my significant fixed interest position wrong. I didn't time the market. The market timed me, by delivering me my largest ever cash payout from the partial takeover of Restaurant Brands a few years ago. Since then I have been through a pandemic and have been evaluating various investment opportunities that have arisen. I have endured agonisingly low term deposit rates and now much more favourable ones. I have topped up in a small way other share market investment positions. But I have not yet found that great opportunity that 'floats my boat' in your language: the right opportunity at, very importantly, the right price. So although the return on my 'returned capital' has been disappointing for a few years (given it is in fixed interest) it has provided and continues to provide that potential investment opportunity, without a need for me to sell any of my existing share investments. And at last I can report that, although I haven't finished my number crunching, I am now looking at a couple of NZX opportunities that show promise.



Snoopy wrote:
"Even the likes of Buffett only turns up with one or two serious investment opportunities per year from all Berkshire's researched potential opportunities out there."

You highlight someone who is one of the worst positions of any investors in the world due to the size of funds to deploy. Buffett with less capital was leveraged and would not hold cash/debt.


Well maybe, but Buffett has a whole string of underlings (175 by the Berkshire Partners 2021 count) who can crunch the numbers on his behalf too. If I had a workforce like that investigating my own investment ideas, my cash probably would not stick around in my accounts as long as it has.

SNOOPY

[Snoopy]

Snoopy wrote:
"As for judging NZ based investments against an American sharemarket index, that is just inappropriate in my view. Generally you are looking at entirely different kinds of businesses both in scale, industry classification and yield 'over there' compared to 'here'."

This is the entire point. If you are a 50 year old prostitute in Hamilton, you may well see fit to judge yourself against other similar ladies however perhaps you should be comparing yourself to 20 year old Auckland ones.


Well if you live in Hamilton, and don't have personal transport links to Auckland, you may well find a 50 year old prostitute in Hamilton that scrubs up well and satisfies your needs? The grass isn't always greener.....

SNOOPY

[mike2020]

Snoops. Do you have to pay more to drive a classic? Asking for a friend.
I do think he would prefer to put more money into oca. Long term the results could even out. Keep your cash and meet said hooker in the village. Some folk prefer aged cheeses.

[SailorRob]

Well if you live in Hamilton, and don't have personal transport links to Auckland, you may well find a 50 year old prostitute in Hamilton that scrubs up well and satisfies your needs? The grass isn't always greener.....

SNOOPY


Believe me between America and its thousands of companies and free market system, powerful military and liquid capital markets and NZ with our currency supported by two crops and a penchant for socialism that looks an awful lot like communism - as well as the relative value between decent companies - the grass sure is Greener, though here we have better Dak, well maybe.

We all have the personal transport links, we can easily and very cheaply access global markets as easily as we can our own.

But nothing stopping you focusing on the Hamilton darling, could be a dude though? Guess today that's a bonus though.

[mike2020]

My point was Mike, Buy Berkshire instead of passive funds (but offer also genuine)

I thought you meant you would now for the next 3 years, offer stands from now due to massive differences in valuations between passive products and Berkshire.

Who knows what price Berkshire will be in 3 years, could be an awful offer by then!

Well, I will extend the offer. No matter what you decide to do over the next 3 years - Berkshire beats you silly or you get the Rum.

I can't resist a good bet. I took a look at BRK over 10 and 40 years. The last 10 are outstanding. In relation to property I think you have mentioned a couple of times past returns can't be repeated and I am inclined to agree, do you think BRK can repeat the last ten years> Its something over 300% in a decade, possibly closer to 400%, I don't know it well in regards to currency movement or any sort of div reinvestment. I do sense there is huge opportunity in the global market. Is there an NZ listed fund that has large exposure to BRK?

I then looked at two funds, KFL and IFT, over 10 years. That was worth the exercise as I already felt positive about IFT long term but now view KFL as clearly cyclical and barely an active fund, not entirely their fault they have very limited choices in NZ. I expect both to perform very well over 12 to 36 months. It is hard to bet against BRK though.

[SailorRob]

I can't resist a good bet. I took a look at BRK over 10 and 40 years. The last 10 are outstanding. In relation to property I think you have mentioned a couple of times past returns can't be repeated and I am inclined to agree, do you think BRK can repeat the last ten years> Its something over 300% in a decade, possibly closer to 400%, I don't know it well in regards to currency movement or any sort of div reinvestment. I do sense there is huge opportunity in the global market. Is there an NZ listed fund that has large exposure to BRK?

I then looked at two funds, KFL and IFT, over 10 years. That was worth the exercise as I already felt positive about IFT long term but now view KFL as clearly cyclical and barely an active fund, not entirely their fault they have very limited choices in NZ. I expect both to perform very well over 12 to 36 months. It is hard to bet against BRK though.


No the last 10 have been very average indeed as BRK hasn't had any multiple expansion while the market has. But therefore when you buy now you're only paying 13 x earnings, far lower than the market.

Berkshire is the furthest thing from a good bet that you could imagine, it is probably the most sound investment you could make.

In USD it's around 225% over the last decade and I estimate around the same going forward or a 12% return. This will be higher if you get any significant multiple expansion and buybacks below intrinsic, then there is currency which nobody knows what will happen.

I have zero clue how Berkshire or anything else will perform over 12 to 36 Months.

[kiora]

I can't resist a good bet. I took a look at BRK over 10 and 40 years. The last 10 are outstanding. In relation to property I think you have mentioned a couple of times past returns can't be repeated and I am inclined to agree, do you think BRK can repeat the last ten years> Its something over 300% in a decade, possibly closer to 400%, I don't know it well in regards to currency movement or any sort of div reinvestment. I do sense there is huge opportunity in the global market. Is there an NZ listed fund that has large exposure to BRK?

I then looked at two funds, KFL and IFT, over 10 years. That was worth the exercise as I already felt positive about IFT long term but now view KFL as clearly cyclical and barely an active fund, not entirely their fault they have very limited choices in NZ. I expect both to perform very well over 12 to 36 months. It is hard to bet against BRK though.

Size matters
"To investigate fund size and performance, the authors use regression analysis and cross-sectional analysis and find that the common notions of declining expenses and returns are mostly true. Their analysis shows that a change in the size of a fund equal to a two-standard-deviation shock in the log of a fund's total assets yields a decline of 5.4 to 7.7 bps in monthly performance. This impact is approximately 65–96 bps annually before fees"
https://rpc.cfainstitute.org/en/rese...%2Dcap%20funds.

Picking leaders matters as does time frame

https://www.sharetrader.co.nz/showthread.php?12763-Warren-Buffett-Has-Underperformed-the-Stock-Market-for-the-Last-20-Years&p=1025271&highlight=#post1025271