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  1. #41
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    Quote Originally Posted by SBQ View Post
    You make some statements but with what backing or reference?

    What does Bill English know? He knows how to screw the average NZ worker with Kiwi Saver as it's a proven money tree for IRD to tax year after year.. while the smarter investor looks to buying tax free real estate. Show me where assets prices are elevated? Oil? = nope, precious metals? = nope, houses? = nope. In my view, prices have deflated as the 'money supply' has vaporised. If there was no gov't printing of $, we would be in great serious state to the point of having wars.

    Again, where's the proof of rampant inflation? In 2008 the US gov't did massive QE and have prices ran out of control? Nope. In recent events is the $3T in monetary printing in the US going to cause inflation? Again, look at the 'money supply'. Easily over $3T has been lost out of thin air through assets vaporisation.

    https://www.thebalance.com/causes-of...prices-3306094

    Above link talks of 2 key causes of inflatio - also worthy to click on the link on 'Quantity Theory of Money'.

    But the average NZ investor doesn't read this kind of stuff. They coddle around, see and hear what others say and bode along agreeing (such as at any point gov'ts go on a spending spree = inflation).

    The NZD currency is not going to hold value. That's because we're too small of a country and what we have to offer is 2 tricks. One = agriculture resource extractions and Two = Tourism. You can bet tourism won't come back any time soon and it would take AirNZ several years to regain what they last recently in global flights (as globally disposable incomes disappears). If you want a strong NZD, you need LESS of it's currency exported (as locals buy imported products because NZ doesn't make many things), and / or have more of NZ products exported as more currency flows into NZ than going out.


    Not sure where you mean about asset valuations in a negative interest rate environment. What negative rates really mean is savers of cash are punished and those that borrow are rewarded. So the person that has more incentive to borrow funds from the bank to buy more houses will stand in a much better position than the person that has cash (a solution where the rich get richer). Banks aren't going to give $ to anyone... just those that meet the requirement and the same would apply to corporate shares that try to vie for bank loans instead of borrowing privately from the public. There is no free lunch even at negative interest rates, meaning the banks (lenders) will gain more in the spread.
    I am just providing an opinion. I lack the time, resources or intelligence to provide balanced journalism backed by facts and figures, but I think the thread was asking for people’s opinions and I provided mine. I would recommend you put me on ignore.

    You are really onto Bill English about Kiwisaver but as already explained it was Labour and Michael Cullen who brought it in.

    You are right Oil is low, precious metals (gold) not so much, houses -really?? (where is your backing or reference for this statement) look at the reserve banks inflation calculator. 2009 to 2019 a 6% compounding increase in housing. compared to the CPI of 1.5% over the same period you are full of s**t if you don't think house prices have been rising at a rate much higher than the CPI.
    When I say "inflation", I am generally referring to asset prices as this is an investment related website. You are correct CPI was only 1.5% for the last 10 years but that is irrelevant to an investor if electronics and clothing have been dropping in price while asset prices have been rising and continue to be supported by monetary policy.
    I am not the only one to consider inflation.

    To Quote (see post #19) “holding gov't bonds that pay insane low interest rates - what does that mean when you factor inflation? Look at the 10 year bond rates?”

    I do only regurgitate what I read and lack the brain power for original thought but there are a number of valuation metrics that indicate stock prices are at historically high levels. Also, you can check for yourself whether companies are cutting or reducing dividends.

    You are probably right about the NZ$ we are small fry and with large US hedge funds buying up successful NZ companies and exporting dividends the $NZ possibly won't hold up internationally.

    I was thinking NZ govt debt to GDP was lower than some other countries and our central bank money printing might not be as extreme so there might be more reason to have faith in the $NZ but due to our small size that may be irrelevant.

    Did you not realise your house price growth for the last 30 years is at least in part to falling interest rates?

    You raise a good point (I have chopped up your sentence a little)

    "What negative rates really mean is savers of cash are punished and those that borrow are rewarded. Banks aren't going to give $ to anyone, borrow funds from the bank to buy more houses will stand in a much better position than the person that has cash (a solution where the rich get richer)."

    I think you have hit the nail on the head with that statement. You own houses and enjoy central banks supporting house prices. It makes you wealthy and you don’t want it to change, perfectly understandable.
    Last edited by Aaron; 07-05-2020 at 12:57 PM.

  2. #42
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    Quote Originally Posted by Aaron View Post
    I am just providing an opinion. I lack the time, resources or intelligence to provide balanced journalism backed by facts and figures, but I think the thread was asking for people’s opinions and I provided mine. I would recommend you put me on ignore.

    You are really onto Bill English about Kiwisaver but as already explained it was Labour and Michael Cullen who brought it in.

    You are right Oil is low, precious metals (gold) not so much, houses -really?? (where is your backing or reference for this statement) look at the reserve banks inflation calculator. 2009 to 2019 a 6% compounding increase in housing. compared to the CPI of 1.5% over the same period you are full of s**t if you don't think house prices have been rising at a rate much higher than the CPI.
    When I say "inflation", I am generally referring to asset prices as this is an investment related website. You are correct CPI was only 1.5% for the last 10 years but that is irrelevant to an investor if electronics and clothing have been dropping in price while asset prices have been rising and continue to be supported by monetary policy.
    I am not the only one to consider inflation.


    To Quote (see post #19) “holding gov't bonds that pay insane low interest rates - what does that mean when you factor inflation? Look at the 10 year bond rates?”

    I do only regurgitate what I read and lack the brain power for original thought but there are a number of valuation metrics that indicate stock prices are at historically high levels. Also, you can check for yourself whether companies are cutting or reducing dividends.

    You are probably right about the NZ$ we are small fry and with large US hedge funds buying up successful NZ companies and exporting dividends the $NZ possibly won't hold up internationally.

    I was thinking NZ govt debt to GDP was lower than some other countries and our central bank money printing might not be as extreme so there might be more reason to have faith in the $NZ but due to our small size that may be irrelevant.

    Did you not realise your house price growth for the last 30 years is at least in part to falling interest rates?

    You raise a good point (I have chopped up your sentence a little)

    "What negative rates really mean is savers of cash are punished and those that borrow are rewarded. Banks aren't going to give $ to anyone, borrow funds from the bank to buy more houses will stand in a much better position than the person that has cash (a solution where the rich get richer)."

    I think you have hit the nail on the head with that statement. You own houses and enjoy central banks supporting house prices. It makes you wealthy and you don’t want it to change, perfectly understandable.
    With respect to housing prices, i'm in full agreement that they rise far faster than what the CPI figures claim to say. The US market is definitely different to the NZ market in terms of house prices and inflation. The 2008 crisis certainly placed a huge dent in US housing prices and many banks went bankrupt ; even today, i'm certain the majority of housing prices have barely recovered to peak 2006/2007 levels. However during the same time, NZ housing prices were largely 'unaffected' by the 2008 GFC and continued their insane projections as in previous decades. With avg income x years to buy avg price house in the Auckland market, we're talking prices similar to NYC, SanFran, top top cities in the USA. So on the US front in terms of inflation, it's a LOT LOT less than the inflation i've seen in NZ. As you mentioned when it comes to prices of vehicles, electronics, etc. America consistently brings those products priced CHEAPER than what the NZ consumer could ever buy. These small differences in price do add up over 20 or 30 years of inflation ; but in terms of what the US has experienced, there is no better place for a person to consume, and having a high level of disposable income.

    Most nations in the OECD have lower debt / GDP than the US. But does that mean investing in America is a riskier bet? We can look at this at a local level. Look at your neighbours or the people around you that have made their wealth in a BIG way? They take risks by leveraging, borrowing larges sums - perhaps buying NZ residential properties and amassed a huge amount of wealth in a period of 10 or 20 years ; far more than the average working person could earn. This is the same view as in the US, their ability to go more in debt means they're going to be more productive and create more businesses, etc. When we look at places like Africa, there's good reason why no one invests there because it's simply not productive enough - not to mention very risky / with political issues. So when the US issues bonds, the rest of the world kinda lines up ; including China. But in previous crisis say the Greek crisis over leaving the EU, they issue bonds that very few buyers around the world would care to invest in. As Buffet recently mentioned, Argentina is having troubles now with debt.

    House price growth in NZ or in the US? The latter I would say for most parts have not risen past the 2008 pricing level, especially in the high end market where the rich celebrities / 1% own. In NZ? As I mentioned before in other threads, that's a horse of a different colour because we have little or no tax applied to ownership of residential properties. I would not put all that down to low interest rates, especially in the US. You recall the reason for all the banks there owning toxic debt? We saw banks doing sub-prime mortgages (loans that had lower than prime rates ; JUST to get any person to sign up into a house - regardless of any merit). Banks were incentivized because they could profit off it by selling the loan contracts onwards.. and so on ; it didn't matter what rate of interest rate was applied as the focus then was to get anyone in.
    Last edited by SBQ; 08-05-2020 at 08:04 AM. Reason: wrong year

  3. #43
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    Reading this a dead cat bounce may be less likely as we see assets continue to rise with currency devaluation.

    https://www.linkedin.com/pulse/chang...o/?published=t

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    Non-farm Payrolls tonight in the US (announced pre-market open), which will be a biggy. Always the most closely watched monthly economic indicator, it will be particularly important this time, showing the first full month of covid-effected numbers.

    Pre-covid the monthly change might be in the region of +200,000 new jobs. Last month it was a huge -701,000 jobs lost. This time around the market is expecting -21,500,000. Yes, you read that right. 21.5 million jobs lost in a month and the markets are climbing. Lapping it up.

    So that's the expected Non-farm Payroll number. WATCH OUT BELOW! if the actual numbers turn out worse than that.

    Interesting that the overnight futures markets are climbing steeply in anticipation. Pump & dump...?

  5. #45
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    Quote Originally Posted by Aaron View Post
    Reading this a dead cat bounce may be less likely as we see assets continue to rise with currency devaluation.

    https://www.linkedin.com/pulse/chang...o/?published=t
    Not sure I follow you, Aaron - can you expand?

    If we agree that a stock market plummet into recession is deflationary (followed by inflationary emergency $-printing measures), why are you expecting the value of assets to rise? Or do you mean other assets, such as gold. Or possibly you're taking a much longer term view?


  6. #46
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    Quote Originally Posted by Aaron View Post
    Reading this a dead cat bounce may be less likely as we see assets continue to rise with currency devaluation.

    https://www.linkedin.com/pulse/chang...o/?published=t
    Ray Dalio makes a lot of comparisons of the past to what we've seen today. In a different video of him he kept saying the 'ingredients of the 1929 stock market crash' is the same what happened 2 months ago. However, he's left out some key issues because the gov'ts of 1929 did not have many tools to avert major crisis. We live in a far more efficient market society and issues like QE, FDIC, the spread of information, etc. meant crashes are not as significant. There are far more monetary tools today than 50+ years ago so despite what Mr Dalio claims, I would only take it with a grain of salt.

    He's a big fan of gold or tells others to invest in a diversified way by holding multiple different assets. He would be right about market fear pushing gold prices up - but historically, it has not risen much more than inflation. Warren Buffet has be critical about owning gold as it's value is purely speculative and produces nothing to the economy ; vs owning a business, it creates far more for the economy in terms of GDP than what precious assets would ever do. His phrase was, "You can look at it.. you can fondle it... it just sits there... and nothing more".

    If you read Ray Dalio - again he talks plentiful about historical data, the past, what happened etc.. but not for once i've seen him say people should buy this TODAY or say what asset class is going to be superior for the next 6 months or 2 years etc. All investment gurus won't put their profile on the line because they could be wrong and you don't become famous by being wrong too many times. Easy to talk about what could happen, how the currency would devalue or ? But in the whole article I fail to see the 'opportunity cost' of holding something else? He's a big bear against people holding cash deposits ; but the rich will say you NEED cash in order to make opportunities. During times of crisis, 99% of the people don't have the liquid cash to take advantage of investing. Likewise with all the fund managers that get paid a lot for (and I like to say this...) for merely breathing air.

    Markets are pointing up and if you look at the DOW around 24K level, it's not a lot less than the all time peak of 29K. So many of these gurus are saying wait for the next major crash.... and a month goes buy... they say the same thing... and again until so and so guru is forgotten. Post 2008 was no different as we had these experts say the same thing... wait.. wait and the market goes up.. and then they say wait and wait and the train has left. The only thing that is certain is, as I posted in the link before that "Human Innovation Trumps Fear" and you can bet Ray Dalio is a strong believer in this view despite how much of a bear he's been on currencies.

    Again, I say consider your options. What ARE the options for people nowadays when it comes to investing? More than ever the younger generation are starting to get an idea. They have the internet and can make their own judgement and the vast majority do believe holding cash does nothing. Holding real estate (overall in all markets) doesn't rise much more than inflation. Owning gold doesn't increase productivity in the economy. I would say, investors are scared about holding cash or bonds and view the only de facto option is buying equities. No matter how bad the economy is or how high unemployment is etc.. and the saying goes, never let a crisis go to waste!!!

  7. #47
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    Target 3 achieved
    My work is done

    Attachment 11518


    And, yes... yes
    PatontheBack.JPG
    For clarity, nothing I say is advice....

  8. #48
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    "As markets collapsed on Covid-19, what has the media been reporting (financial media included) – death, job losses, infections, shutdowns, market declines, toilet paper pandemic – anything and everything that is a sensationalized headline. And it is what we see and react to. Magicians always say – “what the eyes see and the ears hear, the mind believes”."
    https://www.sharecafe.com.au/2020/05...the-headlines/

  9. #49
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    Quote Originally Posted by kiora View Post
    "As markets collapsed on Covid-19, what has the media been reporting (financial media included) – death, job losses, infections, shutdowns, market declines, toilet paper pandemic – anything and everything that is a sensationalized headline. And it is what we see and react to. Magicians always say – “what the eyes see and the ears hear, the mind believes”."
    https://www.sharecafe.com.au/2020/05...the-headlines/
    A strange article, best explained by reading it in terms of a swing-trader's views, as opposed to an investor's.

    Sure, the US is experiencing a short-covering rally brisk enough to make your eyes water, and well done to the author for riding that wave. But does he really expect it to last forever? S&P500 at 3,000 perhaps? Or 4,000? And, when the rally surely peters out, what then?

    Yes, the press & media have been full of doom & gloom, but then, we are experiencing a global pandemic compounded by an economic shut-down. What does he want, feel-good articles on gardening and upcoming movies?

    Fundamentals still apply. The 'Earnings' part of PE ratios will still eventually drive the markets lower when reality kicks in. Maybe sooner rather than later, given the fact that the S&P is now back at the pre-covid levels of October, and the Nasdaq at early Feb levels!

    Or does the author think that 'this time it's different'? Heard that one before...

  10. #50
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    The other alternative, of course, is that the author is 'talking his book'. A lot of that going round...

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