Achieving wealth through shares...how?
- Thread starter dajackal
- Start date
Yes I've been buying a parcel almost every month since late 2012 and I've developed the mindset to ignore the volatility of daily share prices. Whenever there's a dip in the market I spend the same in dollars but end up with more shares.
An example that solidified it for me is, say if I'm the unluckiest person on earth and purchased $1m in AFI (A listed investment company) in Nov 2007, on the eve of the GFC. That $1m would be worth approx $564K by late 2008.
However, AFI did not decrease its dividends during the course of the GFC. As long as I held, I would've earned almost $34K in fully franked dividends, or $48K grossed up dividends every year from 2007-2012, and more from 2013 onwards. The share price has now recovered and surpassed its previous peak. Meanwhile I would've collected $363K in grossed up dividends over this period.
Given this is the information resources forum, here are some resources to help anyone out there wanting to learn about shares, passive income and early retirement:
http://somersoft.com/forums/showthread.php?t=103296
http://www.somersoft.com/forums/showthread.php?t=32265
http://forum.mrmoneymustache.com/investor-alley/australian-investing-thread/
http://superannuationfreak.blogspot.com.au/
http://financiallyfreeaustralia.blogspot.com.au/
http://petewargent.blogspot.com.au/
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If you bought banks or telstra back then you would have made good money as I predicted. Property has been great also
I,m still wondering what happened to Sunfish,i was told he was holding GoldMiners when Gold was in the $1800.00 range,but you are right TLS-CBA woudl have put on smile on any -ones face..
hindsight is a wonderful thing...
Sorry if it is rehashing some old content, but I am relatively new to the forum, and finding some incredibly worthwhile discussions... Checking up on the outcome of Buffett investing in Tesco yielded this:
http://www.theguardian.com/business...admits-thumb-sucking-over-tesco-cost-him-444m
Cheers,
Grant.
Sorry if it is rehashing some old content, but I am relatively new to the forum, and finding some incredibly worthwhile discussions... Checking up on the outcome of Buffett investing in Tesco yielded this:
http://www.theguardian.com/business...admits-thumb-sucking-over-tesco-cost-him-444m
Cheers,
Grant.
Phiber, my preference is LICs below NTA, then ETFs. The big LICs have a history of outperformance, have ETF like fees, have ETF like portfolio turnover (approx. 5%) and have rock solid dividend stability, more so than ETFs. The ETFs will have higher yield in good times, lower yield in bad years. They are always at NTA....so I use ETFs when I need to DCA and none of the big LICs are at a discount.
Understand the way that ARG/AFI/MLT manage their portfolios is for the long term, they have sidestepped some shockers that the ETF has to hold and this is where the outperformance comes from. They really came into their own around 2000 by sidestepping the tech bubble for example. Long term, this has provided 1%+ outperformance. I'd say that ARG/AFI/MLT are almost like a smart beta ETF (ie. QOZ) as they are applying value type filters, but they are cheaper than QOZ (40bps). ETF and LIC are both valid though, you might come to a different view but I don't think its a subject worthy of raging argument . Bear in mind I am only talking about the oldest blue chip LICs...there are plenty of other recent entrants that are real dogs.
Understand the way that ARG/AFI/MLT manage their portfolios is for the long term, they have sidestepped some shockers that the ETF has to hold and this is where the outperformance comes from. They really came into their own around 2000 by sidestepping the tech bubble for example. Long term, this has provided 1%+ outperformance. I'd say that ARG/AFI/MLT are almost like a smart beta ETF (ie. QOZ) as they are applying value type filters, but they are cheaper than QOZ (40bps). ETF and LIC are both valid though, you might come to a different view but I don't think its a subject worthy of raging argument
. Bear in mind I am only talking about the oldest blue chip LICs...there are plenty of other recent entrants that are real dogs.I'd agree with all the above. And add that some LICs enhance their returns (slightly) using options. eg if they think CBA is a screaming bargain at $70 they will sell a PUT option for a few cents, and not really care if it gets exercised. Doing the opposite (buying PUTs) when stocks are overvalued allows them to avoid churning & the associated CGT.Phiber, my preference is LICs below NTA, then ETFs. The big LICs have a history of outperformance, have ETF like fees, have ETF like portfolio turnover (approx. 5%) and have rock solid dividend stability, more so than ETFs. The ETFs will have higher yield in good times, lower yield in bad years. They are always at NTA....so I use ETFs when I need to DCA and none of the big LICs are at a discount.
Understand the way that ARG/AFI/MLT manage their portfolios is for the long term, they have sidestepped some shockers that the ETF has to hold and this is where the outperformance comes from. They really came into their own around 2000 by sidestepping the tech bubble for example. Long term, this has provided 1%+ outperformance. I'd say that ARG/AFI/MLT are almost like a smart beta ETF (ie. QOZ) as they are applying value type filters, but they are cheaper than QOZ (40bps). ETF and LIC are both valid though, you might come to a different view but I don't think its a subject worthy of raging argument
And also the LICs aren't forced to rebalance every quarter or whenever the composition of the index changes - they can choose if (or when) to rebalance.
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Falcon, I would be very interested in concrete proof of this outperformance. I have gone through share price history and dividend history for whatever data was available on major LICs website and cannot come to this conclusion. Hence, my aversion towards investing in LICs.
I am genuinely interested in getting to the bottom of LICs having a track record of outperforming the index over say 20year period. Outperformance over 5-10 year period is of no interest to me.
Cheers,
Oracle.
Oh and AFI performance is after costs XJO is not.
Going back further is a lot tricky because before the imputation system bonus shares were issued.
I have said it before and will say it again most large LIC will outperform long term due to being underweight REITS, cyclicals and tend not to follow the fads.
Going back further is a lot tricky because before the imputation system bonus shares were issued.
I have said it before and will say it again most large LIC will outperform long term due to being underweight REITS, cyclicals and tend not to follow the fads.
Cheers Equitymate. That's it.
AFI VS XJO since 1990
AFI Wins
Speaking of outperformance, I looked up Platinum Asset Managements funds recently and was rather wowed:
https://www.platinum.com.au/Performance/
I am a younger index investor myself trying to accumulate. I have always been skeptical of managed funds that claim they can outperform the indexes over time. But every one of their funds has significantly outperformed the benchmarks in all markets! Also, in the case of their international share fund, it has more than doubled the performance of it's index benchmark over the last twenty years.
I am considering them to replace what I would be putting into my VGS holding in the future. Would gladly like to hear why I am wrong and be convinced otherwise
https://www.platinum.com.au/Performance/
I am a younger index investor myself trying to accumulate. I have always been skeptical of managed funds that claim they can outperform the indexes over time. But every one of their funds has significantly outperformed the benchmarks in all markets! Also, in the case of their international share fund, it has more than doubled the performance of it's index benchmark over the last twenty years.
I am considering them to replace what I would be putting into my VGS holding in the future. Would gladly like to hear why I am wrong and be convinced otherwise
JohnMichael I would argue 'Key man' risk is an issue the further you get away from vanilla investments.
You are welcome to do so, however you would be mistaken for thinking AFI, MLT, ARG are not inherently conservative.
What I would say is this ;
Bogle, Malkiel et al are wise men and they say a lot of good stuff. I recommend everyone read them. However, you need to understand that they are railing against a typical US unlisted mutual fund.....an open ended benchmark hugger charging 2%, or a hedge fund charging 2 & 20. What they say is correct. Lets not translate this to closed end funds (LICs) that have the same fees as an index ETF, are extremely tax aware (low turnover) and apply quality/value filters. Bogle himself has said that closed end funds below NTA are a valid investment. RAFI methodology is proven to work and guess what, the large Oz LICs already do this style of investing and cheaper than a RAFI ETF.
Yep. Also you get style risk of short term underperformance....PTM and MFG are both value style investment companies. They will underperform at times. Personally I like the MFG group vehicles but Kerr Neilson is a star and I think they will be wheeling him out of that company.
Would just like to add. If you were to value AFI from fundamental analysis point of view it is currently trading at P/E ratio of 25. BHP trades at 17 while CBA trades at 16.
EPS growth since 1997 (10.4 cents) to 2014 (24.3 cents) is 5.1% pa. Similar to what you expect the index to return over the long term. 5% CG and 4 to 4.5% dividend growth.
Hence, most of the outperformance of AFI seems to be from P/E expansion. If AFI were to trade at P/E of 17 it's price would be $4.10. To me this is a risk. I don't know how big though.
Cheers,
Oracle.
EPS growth since 1997 (10.4 cents) to 2014 (24.3 cents) is 5.1% pa. Similar to what you expect the index to return over the long term. 5% CG and 4 to 4.5% dividend growth.
Hence, most of the outperformance of AFI seems to be from P/E expansion. If AFI were to trade at P/E of 17 it's price would be $4.10. To me this is a risk. I don't know how big though.
Cheers,
Oracle.
You do know what a LIC is right? You cant value a LIC like a stock...
Good point also if you look at the the SP500 it is a diverse and different beast to XJO. Our top 10 stocks are over 50% of the index where as the US market the top ten is about 15%.
