Here’s why the PointsBet (ASX:PBH) share price is surging ...
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The Pointsbet (ASX:PBH) share price is up 170% in 2020 ...
Why the PointsBet (ASX:PBH) share price is jumping higher
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AV1 - Follow up DD
Alright guys and gals, a fair bit has happened since my last DD. See link here. https://www.reddit.com/ASX_Bets/comments/jug60z/av1_follow_the_smart_money/?utm_medium=android_app&utm_source=share But the tldr is invest in stonks that smart rich people invest in. Like how you would when Bevan Slattery buys into something. But in this case, we're following Mark Mcconnel. Recap on who Mark Mcconnel is and why he joined AV1 in following links: https://stockhead.com.au/tech/why-this-nine-time-young-rich-lister-joined-the-board-of-a-14m-adtech/ https://stockhead.com.au/aftermarket/nothing-beats-hard-work-three-pieces-of-advice-for-traders-from-a-nine-time-young-rich-liste Ok so the reason for this DD is that since my DD at 12.5c around 2 months ago (current SP is 18c, high of 22c as recent as 13th Jan 2021, low of 16.5c 29th Jan 2021, current market cap $64M) the following events have unfolded. • Mark bought another $1.12M worth of shares at 14c. • Petra Capital bought 2.4M shares at 17c on 25th or 26th November 2020 (forgot which) • Morgan Stanley recently accumulated $245k worth or shares at 19c. I say accumulated instead of bought because I'm speculating they didn't want the price to run and just scooped up whatever retailers were selling, which hasn't been much as volume has been quite low lately. • Av1 scores big institutional supporter in Wilsons https://www.afr.com/technology/adveritas-scores-big-institutional-supporter-20201202-p56jt3 • TrafficGuard was recognised as the Most Effective Anti-Fraud Solution at the 11th Effective Mobile Marketing Awards, which was attended virtually by more than 150 representatives from brands, agencies and mobile marketing firms. • I found out (but didnt include in first dd so am mentioning it here) that Mark spent circa $100k on external consultants to audit AV1 and make sure it had the goods. • Announcement came out 4th Feb about their contract with Deezer. Deezer is bigger than Spotify in Europe. And deezer have an exclusive agreement with fitbit. And fitbit was purchase by Google recently. • Also, this bit of news came out recently https://www.skynews.com.au/details/_6227480537001 basically saying a "fresh legal battle is brewing against Google over claims the tech giant is turning a blind eye to 'click fraud'. 'Click fraud' occurs when a bot imitates a legitimate user and clicks on an ad. This drives up the cost of advertising as it is based on a pay-per-click system. Lawfirm Matrix Legal says it has been approached by a number of small businesses citing growing concerns over the practice." Not much of a leap to see how AV1 will be involved since they have partnered with Google already. All we need is news and details of the partnership for rockets but they're tightlipped about this... for now. • Just like they've been tightlipped about all of their other partnerships, bloody tucked away on their website rather than announced the the market. On this link you'll see names such as Instagram and Snapchat. Fukn huge! https://www.trafficguard.ai/partners/ I had someone else do some research on AV1 for me and they came up with something pretty juicy. No segue, just gonna shoehorn it here: Recently applovin acquired Berlin's adjust platform. https://www.bloomberg.com/news/articles/2021-02-03/applovin-is-said-to-acquire-berlin-s-adjust-in-1-billion-deal Adjust are an MMP ; Mobile measurement platform. These are the guys that usually determine where the download came from and then provide analytics. Fraudsters now send synthetic signals and make the MMP believe it was them that drove the download. This is called misatribution. These MMB Companies are valued in the billions (as seen in the Bloomberg article Adjust is purely sitting in mobile. Rumour has it TrafficGuard have beaten them many times when clients are comparing the two. Does this make Av1 an aqisition target aswell considering as they can be the perfect bolt on for any of the following : IAS Moat Appsflyer Double verify Adjust Major game publishers. It would be silly to discount the fact that if billion dollar acquisitions are taking place for companies that have less than half the capability that Av1 is not in the cross hairs aswell (this is purely speculation but it just makes sense to me). The huge issue facing the advertising industry atm and why “TrafficGuard multi point (pre bid, impression, click, download/event) system is so important is because they look at every single interaction of the consumer. MMPs only look once the install has occurred. So usually they use a last click attribution system which fraudsters cram with click spamming, click hijacking, click injection) With TrafficGuard as a pre filter to the MMP if is able to determine what click to send on to the MMP so it can do it’s job better Ad fraud is a $42b problem and growing to $100b by 2023 (juniper research) Fraud exists across ALL digital marketing channels. These billion dollar MMPs only exist in mobile. If you have a website, they can’t help you. If you spend on google, they can’t help you. If you spend on programmatic channels, they can’t help you. Ias, moat and Double verify all worth billions can only help you on programmatic. They only look at the impression so they miss all the fraud. So there you have it. My personal price prediction using tea leaves is 40c to 50c within 4 to 6 months when the quarter is due on their next quarterly update, as per their annual presentation they are expecting this quarter to be when their land and expand contracts with in their own words "some of the biggest companies in the world are under trail" and believe a large number of them will convert to paying customers. Get on it.
Kazataprom (world's largest producer of Uranium) announced reduced production guidance (as of 1st Feb 2021) for 2021 after significantly impacted 2020.
Covid is affecting almost all of the world's largest mines with Cameco closing their two largest mines in Canada (Mac Arthur River and Cigar Lake) until Covid is brought under ontrol in the region (who knows when). and Kazataprom having now 128 workers out of 666 at their Katco mines now return positive result for covid. i.e. 1 in 5 workers having covid - will likely lead to mine closure or limitation of future works if not brought under control. Solactive Index for Global Uranium & Nuclear - update effective 1st Feb
The two largest uranium/nuclear ETFs updated their shopping list with addition of some ASX listed uranium companies to add to their ETF portfolios - effective 1st Feb, buying dates unknown.
URA (Global X) added LOT, PEN, BMN and BOE
HURA added LOT, PEN, BMN
ERA has been removed from the index Quarterly's For DYL, PEN, LOT and BOE have been released in the last 2 weeks. Below is quick summary of company and key quarterly points. + Rocket Rating 🚀🚀🚀
Market Cap: $181.46M Share Price: 0.099 Shares on Issue: 1.83B Rocket Rating: 4x 🚀 https://preview.redd.it/03ch962j20f61.png?width=1060&format=png&auto=webp&s=dd08ec4c6690259c73133a94dcd92aed0fcfddbb https://preview.redd.it/ckp3vgn630f61.png?width=1054&format=png&auto=webp&s=1f7dd3b99b6c4a7b95629c5263a3db22a2e7d790 Boss Energy Quarterly - 20th Jan 2021 Some great progress from PEN, LOT, DYL and BOE for the last quarter and some exciting milestones and announcements coming up in this quarter and the next. Just as the whole Uranium Market is starting to get more and more attention from large ETFs and fund management groups. Each week there are more analysts being brought on for consultation on the Uranium market. There is some ETF buying from URA and HURA due in coming weeks after most of the above stocks were added to their portfolio shopping lists. The biggest catalyst now to spark the next big uranium run is once new long-term contracts ) are signed at higher prices (and thus spot price) by the utility companies (power stations) and inventory builders. Production has been cut from last 10 years due to no mining investment (i.e. supply is down) but demand has continued to grow at rapid rates. For more on the Uranium market and economics See here for Uranium market DD and feel free to look through previous post history for more individual stock DD. Happy investing and may your radioactive tendies be plentiful ☢☢☢📈💲💰👌
A Brief Look at Harnessing the Power of the Crowd to Drive Investment Decisions
A Brief Look at Harnessing the Power of the Crowd to Drive Investment Decisions
Disclaimer: None of this constitutes financial advice. I have no formal training or education in anything related to finance, accounting, investments, etc. Everything in this post is purely for entertainment. This post is going to be a bit longer than your average Reddit post. I have tried to make it interesting to read, or at the very least entertaining, and I would encourage you to read all of it. But if you just want to skip my pontifications and head straight to the pretty graphs, see the Results section. Estimated read time: 15 minutes.
Introduction
Some of you may have already seen my u/asx__bot. Also for those that missed it, here is what I have planned to do next with it (this image was entirely auto-generated). The u/asx__bot version evolved from several different things before it came to be in its current form. Although before we go any further, this write-up will not discuss the current ASX Bot. But instead, my experiences in a previous iteration where I tried to use sentiment analysis to build an investment portfolio. I will refer to this version as Bot 1.0 or otherwise just the bot. I will repeat this once again. This write-up will not focus on the existing u/asx__bot but instead a previous iteration I was working on. Initially, I decided to embark on this journey because I was inspired by this post here. Despite the applications being completely different, I was intrigued by the idea of using programming to augment investment decision making. Secondly, I was also somewhat inspired by this u/BigJimBeef post about doing proper due diligence and not just listening to what is most popular or what has 🚀🚀🚀 next to it. I was curious to find out what would happen if you just listened to the crowd hype. Lastly, I needed a real-world problem to practice several things I wanted to learn. If you are getting deja vu reading any of this, it is because I already posted some results from Bot 1.0 in a thread a few weeks ago that got like 20 upvotes. But it did not include a full write-up, it was kinda shit, and I deleted it.
Method
Let me preface this section by saying that Bot 1.0 was very stupid. But I am yet to scratch the surface of what may be possible with it. This was an early prototype, and it was more about seeing if what I wanted to do was technically feasible. The term bot is also quite disingenuous and gives it an air of sophistication that does not exist. In reality, the code looked like the Python version of this or this. But it operated like a fucking Rube Goldberg machine. I overwrote a lot of the code half by choice and half mistakenly. I should have done a better job with my version control, but I really had no plan coming back to this project, so I was being a bit careless. But since a few people were tagging me and wanting to get various tidbits of information I have picked it up again. I have learnt that people really ❤️ data. Which would explain why those Spotify yearly wrap-ups are so popular or why someone who can wrangle data to create reports for executives and such will have a long and successful career. Bot 1.0 begins by analysing sentiment for all comments over a given period. It uses a very robust library called VADER (Valence Aware Dictionary and sEntiment Reasoner). This library determines how positive or negative a sentence is. From this data, the bot ranks which stocks more frequently appear in positive sentences and then creates a portfolio based around these. At the end of the given period, the bot then readjusts based on the data it has monitored over the previous period. That is it. As you can see, it is very primitive. I loaded it up with a modest sum of $100 million, I also set it up to take the top 20 shares of the given period. The period, in this case, was every calendar month.
You can see when shares get dropped in favour of the latest and greatest. You may even notice top performers getting dropped just because the bot did not consider them to be hyped up enough anymore. So with a starting sum of $100 million, the bot managed to double its money. Take that VDHG and VAS!
Discussion
I was honestly quite surprised. In this case, the crowd was not as stupid as you might believe. Initially, a part of me was expecting (and hoping) the bot would lose 50% to 100%, so I could conclude that listening to investment advice from this subreddit and other online forums (I am looking at you too HotCopper) is ill-fated. And it is in your best interest to just log out, leave it to the pros, and cop that S&P 500 ETF. But no matter how many times I tweaked settings and re-ran it, I never saw the bot finish any lower than a few percentage points and most of the time it was in the green. It reminds me of something a maths teacher told me, and that was that an individual is usually quite bad at estimating. But if you take the average of several estimates, you may be surprised with how accurate it is. An example of this is the classic competition where one must guess how many lollies there are in a jar. A strategy to win these competitions is to take an average of everyone's guesses. This assumes that most of those guesses are people trying to win. The same is true for this subreddit, this bot only works on the assumption that most people here are trying to make money, even if their portfolio says otherwise. I think that is a fair assumption though and when there is money on the line, people behave differently. The person who hypes XYZ in a thread every day (I may or may not be talking about u/SlaughterRain) would most likely only be bothered to do so because they rationally (or irrationally) believe their shares in XYZ will make them money. Even if XYZ is going nowhere anytime soon. To further tie this back to my original point, much like the lolly jar competitions, if you ask an individual to pick the top stock that they think will moon, it will probably be a dud. But if you could aggregate everyone's picks, the likelihood of making money goes up significantly. For Bot 1.0, the sentiment analysis seems to work best over four weeks. I tried periods of one to eight weeks. A period of one week was way too volatile, as the bot could not gauge sentiment nearly as well and it would be all over the place. Whereas eight weeks seemed too slow and it was way too late to the party. I will talk more about this in Limitations. Every time I did run it though, there have been some big gains but hardly many big losses. The biggest losses I have seen over any given interval were usually like 15% to 20%. The biggest gain I saw was a flukey triple bagger over a couple weeks or a month (APT related I think).
Limitations
Failing to Understand Nuance
I did not get time to do as much inspection of comment data as I would like. But I did see the bot producing a considerable amount of false positives and false negatives. A notable one was a sentence like “fuck yeah cunts! XYZ is going to the moon!”, which was associated with negative sentiment. Due to the words “fuck” and “cunt”. As Australians, I feel like either of those words can be positive depending on the context. For example, "fuck yeah cunt" compared to "fuck you cunt.” A free and open-source sentiment analysis library (like VADER) will expectedly fail in some instances at understanding comments made on an Australian investment forum focused on memey micro-cap stocks. There is also the issue of someone saying something like “fuck my life, I should have bought more XYZ.” This will be considered a negative sentence due to the tone. But is this really the case? The user is saying that most likely because the stock is performing well and they regret not getting more when it was cheaper. Because of this, it may be best to categorise comments from here myself. Then train a model on this data to predict the sentiment. Compared to just using a publically available library.
Sometimes the crowd is not always right. When people stop thinking for themselves, the house of cards falls down. If everyone here blindly believes XYZ is next to rocket because HypeBeast69420 said so, then the bot will crumble in on itself. But with Reddit and the Internet usually being a place of anonymousness and openness, it provides the perfect environment for people to speak their minds. Of which those same people may be less likely to do so in real life. Such as at a work meeting or during dinner with the extended family. On the Internet, for every HypeBeast69420, there is at least someone dying to prove them wrong.
Chasing Rainbows and Being Late to the Party
There was no guarantee Bot 1.0 would not liquidate its entire portfolio at a 50% loss to chase the latest and greatest hype. Then slowly lose more and more money as the rockets fall down to Earth. Repeating the process until it has $10 spare and can only trade pennies stocks. The rainbow chasing and volatility became a lot more pronounced when I used either a smaller fund size (three to five stocks) or made more frequent trades, i.e. making decisions off less data. But regardless, since the bot was always basing investment decisions off the previous weeks or months, it was guaranteed to be a little bit late. So at the moment, I have two ideas to combat this. The first idea is to have the bot leverage the crowd data as well as market data. So the bot might get a list of stocks that are generating interest, it then takes these stocks and uses market metrics to determine if it should buy or sell. For example, the penny miner that has shot up 50% in a week might not be a smart play. Although, when it comes to valuing a stock and deciding when to buy or not, there are many different schools of thought. Such as the Buffet-esque value investor who sifts through financials and actually does proper DD. The brah who makes sure his chakras are aligned before he bases his decision on what his tea leaf reading says. Or the chartist who creates their own take on some sort of modernist art and manages to rival the likes of a Basquiat or a Picasso. So deciding how to value stocks and what metrics to consider would require further thought. Which is not where my expertise lies. Now, the second idea is in contrast with the previous paragraph. The bot would purely be using the data generated by this sub to form its decisions. All the bot is doing is understanding what it is being told and then buying/selling accordingly. Which means efforts would need to be heavily concentrated in making sure sentiment is analysed correctly. More accurate sentiment analysis and greater comment volume will allow the bot to make decisions more accurately and more frequently. Trades could occur weekly, bi-weekly, or daily as opposed to monthly. The low volume of daily and weekly comment data during periods of 2020 was also an entire limitation in itself. But with the sharp increase in total comments being made, it seems my prayers are being answered.
Unrealistic and Simplified Trading
The buying/selling functionality was not very realistic. Much like a politician's Cayman Islands shell company, this bot was not paying any taxes. Furthermore, it was not paying any sort of brokerage fees. As mentioned above, the bot just liquidates its entire portfolio and then tries to rebalance its portfolio on the same day. Obviously, this is not very realistic. It is not looking at market depth or volume either. It just takes the open price of any given day and buys and sells at that price. The bot was just buying and selling shares of ASX listed companies. It was not involved in anything like short-selling, derivatives, or using leverage. Nor was it trading instruments like bonds, foreign currencies, cryptocurrencies, or ETFs. These may or may not be limitations depending on how you look at it. Furthermore, stuff like stock splits/consolidations and long-term trading halts (fucking DOU) really screwed with the bot. I have not implemented a way to handle stock splits or consolidations. So I just ignored companies that have had these during the 2020 period. There are probably a few more gotchas I have not considered either.
The Rollercoaster Year of 2020
Nine months of comment data is not that much in terms of financial markets. I would honestly love to have 10 to 20 years worth of data. Or even data leading up to the covid dip of last year. But this year was such a fluke in many respects too. Some shares lost about 30% of their value over a few weeks. But returned to where they were by the end of the year like nothing happened. On the other hand, others are still yet to recover from 2008, let alone 2020.
Determining Ticker Codes
I saw WOW coming up a lot at the start of the year. Which kind of made sense. Because during peak covid, supermarkets never had any specials but were selling like crazy and could barely keep up with demand. After looking into it a bit further, although there were a few mentions of Woolworths Limited, mainly it was just a lot of comments with people exclaiming “WOW”, a la Owen Wilson. In addition to this, when the sentiment analyser sees WOW, it sees this as the word wow. Which it considers very positive. So if someone is actually just referring to Woolworths Limited, it will skew the data positively regardless of the actual sentiment behind the comment. So I think I just ended up filtering out WOW. This was similar for acronyms like ATH (all-time high), UBI (universal basic income), and TGA (therapeutic goods administration). All of those three-letter acronyms are ticker codes used by ASX listed companies too. If you view the portfolio breakdown, you may even notice some acronyms I have missed.
I started this to practice a bit of Python and AWS. I am a bit of an all-rounder but machine learning and the science behind all of it is far from my area of expertise. If it helps, my knowledge is more so situated in the red circle here. But I spent more time reading about the other parts of the pyramid, then what I had set out to learn in the beginning. This was fun, but it could get quite tedious at times. And it exposed where my skills are lacking. I am also even further away from my area of expertise when it comes to investments and finance. Truth be told, I am a basic bitch retail investor. I make my investment decisions based on macro themes, ensuring a company and its directors are not complete shams, then I hold my rosary beads during each trade. Truth be told, I have put together 10-leg NRL multis with better DD than some of my investments in days gone past.
Slow Runtimes
The library that I was using to retrieve data from Yahoo Finance was incredibly slow, which I ended up having to cache a lot of this information. But retrieving comment history was even slower. To download all 200k comments (this number is probably 250k now) from this sub, it took about two hours. I also cached these comments too. But it put a bottleneck on my development because small changes in my code could render cached data useless. This slow speed was one of the reasons I had thrown in the towel. During Bot 1.0, I spent time looking at ways to speed it up. But I couldn't crack it.
Conclusion
I am at a crossroads with the development of this project. The current u/asx__bot is a simple extract/transform/load process with some sprinkles on top. But there seems to be a demand for some of the features that were present in Bot 1.0, such as sentiment analysis and market data. If this is the case, I will need to really nail down what I need, because some foundational design decisions will have to be made before going forward. I am becoming more convinced that the crowd can generate quite useful information. The Internet is Gutenberg 2.0. And like the Printing Revolution, less and less knowledge is being hoarded and controlled by the 0.1%. Instead, it is being disseminated amongst the masses. The real challenge for anyone, particularly myself, will be figuring out how to harness this increasingly decentralised knowledge.
Us have just gone nuts smashing all time highs and are still rising, all the while the little asx is being a wimp and cowering around 6000 after following the us’ every move for the last 6 months. Thoughts on why this is? I know vic is still under heavy lockdown but cases are dropping and the rest of aus seems to be doing okay.
Industry Overview Domino’s competes in the quick-service restaurant (QSR) pizza industry with various competitors. The U.S. market is estimated to be ~$37.8bn and steadily growing. This is the second-largest category in the broader $279bn QSR market. The QSR pizza industry is primarily comprised of delivery, dine-in, and carryout. Unsurprisingly carryout and delivery are the two largest segments. Domino’s is the leading market share leader for U.S. pizza delivery and the second-largest market share for carryout. The four industry leaders, Pizza Hut, Papa John’s Pizza, Domino’s, and Little Caesars Pizza account for 61% of the U.S. pizza delivery market and 51% of the carryout market. The international pizza market is more underdeveloped than the United States. Domino’s is one of three companies with a global presence. Business Overview Domino’s was founded in 1960 by two brothers. The two brothers initially focused on opening stores near college campuses and military bases. Fast forward almost three decades and Bain Capital buys 93% of the business in 1998. A few years later, Bain proceeds to IPO Domino’s in 2004, and it’s been a public company ever since. Domino’s has three different revenue segments:
U.S. Stores
International Franchises
Supply Chain
We’ll dig into these different business lines and how they all work. U.S. Stores U.S. stores consist of both company-owned stores and franchised stores. Roughly 6% of all U.S. stores are company-owned. These stores are typically used for testing sites for new innovation as well as training and developing future talent. There are more than 6,100 U.S. stores, with ~340 stores being company-owned and ~5,800 being franchisees. The ~5,800 franchised stores are operated by 777 U.S. franchisees. These franchisees are able to benefit from Domino’s brand image with a low capital investment. The largest U.S franchisee operates more than 176 locations. Domino’s has a rigorous process for U.S. franchisees. Those interested in being a franchisee must manage a store for at least a year and graduate from its franchise management school program. This is successful as there is a 99% franchise agreement renewal rate. Franchisees must pay a 5.5% royalty fee on sales and certain technology fees. Stores must also contribute 6% of sales to fund national marketing and advertising campaigns. These contributions go into Domino’s National Advertising Fund, which is a not-for-profit advertising subsidiary of Domino’s. International Franchises Domino’s has more than 10,894 international franchises in more than 90 markets. The main source of revenue from these stores is royalty payments. Domino’s top ten international markets account for 63% of international stores. Domino’s grants franchisees exclusive rights to develop and sub-franchise stores and the right to operate supply chain centers in particular geographic regions. This means they can create their own Domino’s in international markets. They control the franchisee options, the supply chain centers, and other decisions. These franchisees pay an initial one-time franchise fee and a fee upon the opening of each additional store. The master franchisee pays a continuous 3.0% royalty fee on sales, Supply Chain Domino’s operates 19 dough manufacturing and food supply chain centers, 1 thin crust manufacturing center, 1 vegetable processing center, and 1 center providing equipment and supplies to U.S. and some international stores. The management team is continuously looking to expand and build more centers. Domino’s sells food and supplies to more than 6,600 stores. Domino’s believes that franchisees buy directly from them due to cost savings, efficiencies, quality offerings, and consistency. Franchisees also benefit from profit-sharing arrangements with supply chain centers. This program offers participating franchisees 50% of its regional supply chain center’s pre-tax profits. Total Addressable Market The global QSR pizza market is already well established with the biggest opportunity being in expanding in international markets and same-store sales growth in more established markets such as the U.S. One of my main concerns is just how big the pizza market can be. I feel as though the pizza market is already well-established, but Domino’s talks about their fortressing strategy which is adding more Domino’s stores within one area to improve on delivery times, customer service, and cost efficiencies (cheaper to deliver pizza the closer the customer), and other important areas. Competitive Advantages
BrandDomino’s is one of the strongest brands in the world. They benefit from brand recognition almost anywhere you go in the United States and I’d bet it’d be similar in some foreign countries. There are definitely some die-hard Domino’s fans and then there’s also your local pizza restaurants that arguably have better pizza than Domino’s but these companies can’t compete on price. Basically, when ordering from Domino’s you know what you’re getting.
ScaleSince Domino’s is the largest pizza company, it’s able to benefit from economies of scale through purchasing power over suppliers, can test changes on a small scale, and then roll these features out globally. Scale also gives Domino’s the benefit of operating leverage. As the international franchise store count grows, Domino’s will collect royalty fees that do not require extensive operating margins so operating margins grow slower than international royalty fees giving Domino’s operating leverage for this segment of the business. The same can be said for US stores that are not company-owned.
Financials Domino’s breaks down revenue into U.S. stores which include company-owned stores, franchise stores, U.S. franchise advertising, then supply chain, and international franchise royalties and fees. Other important financial numbers are global retail sales growth, same-store sales growth, and total store count. These numbers are all listed below. 2019:
Total revenue = ~$3.6bn
U.S. Store revenue = ~$1.3bn
Supply chain = ~$2.1bn
International franchise royalties and fees = $0.2bn
EBIT (Operating income) = ~$0.6bn
EBIT margin = 16.6%
Global retail sales growth = 8.0%
Total store count = 17,020
U.S. stores = 6,126
International stores = 10,894
2018:
Total revenue = ~$3.4bn
U.S. Store revenue = ~$1.3bn
Supply chain = ~$2.0bn
International franchise royalties and fees = $0.2bn
EBIT (Operating income) = ~$0.6bn
EBIT margin = 16.6%
Global retail sales growth = 10.8%
Total store count = 15,914
U.S. stores = 5,876
International stores = 10,038
2017:
Total revenue = ~$2.7bn
U.S. Store revenue = ~$0.8bn (but did not include advertising revenue)
Supply chain = ~$1.7bn
International franchise royalties and fees = $0.2bn
EBIT (Operating income) = ~$0.5bn
EBIT margin = 16.6%
Global retail sales growth = 13.0%
Total store count = 14,856
U.S. stores = 5,587
International stores = 9,269
What’s Interesting Domino’s has outperformed Facebook, Google, Microsoft, and many other companies since it’s IPO in 2004. This isn’t random. Domino’s has been able to build a brand and continue to expand in the U.S. and internationally while rewarding shareholders. Domino’s has a share repurchase program and also dolls out dividends each year. This combined with revenue and net income growth is a good recipe for any successful company. Domino’s also seems to be the original cloud kitchen model. Many of its stores do not include seating which would increase capital expenditures. The majority of Domino’s business is carryout or delivery. Future Questions
How long is Domino’s runway? Domino’s is already a mature company with more than 17,000 stores worldwide. Future growth will come from cost efficiencies and some store openings, but I feel like it’d be hard for Domino’s to make a case that store count can double worldwide because of how many stores are already in existence. International store count can probably double at some point in time, but going from even ~11,000 international stores to ~22,000 will be a big challenge. The good part is that royalties and other fees associated with international franchises are basically pure profit since international franchises are operated by a master franchisee that takes care of all the headaches in foreign countries. Through operating leverage, if the international franchise store count doubles, then the profit will more than double. Domino’s only has a market cap of ~$15bn meanwhile companies like McDonald’s have a market cap of ~$150bn. Domino’s definitely has room to expand, so if I were to do a deep dive on Domino’s I’d have to answer the question of how many stores can Domino’s operate throughout the world.
What effect does Uber, Grubhub, DoorDash, and the food delivery market have on pizza delivery and carryout? In the past, carryout and delivery were typically done by pizza companies. These companies often don’t have any seating in their stores and therefore benefit by having less capital tied up in stores rather than inventory, buying back shares, or paying dividends. Families, college students, and professionals would order a pizza rather than ordering a bunch of different food from a Chinese restaurant or whatever other food option there is available. How does the new wave of food delivery companies impact pizza’s delivery and carryout appeal? Do families increasingly order from somewhere else instead of the pastime of fresh pizza delivery? Are the costs of ordering from Grubhub, Uber Eats, DoorDash too expensive for a typical family of 4? Does the cheap cost of pizza relative to other options give Domino’s and its pizza staying power in this new age of food delivery?
Conclusion Domino’s is an interesting company that I’d have to put in the more mature bucket. It’d be interesting to figure out if food delivery is a net positive or net negative for Domino’s and other pizza companies. Domino’s has historically been a great investment for hopefully many people, but it might be too late for me. Domino’s is already at the stage of giving out dividends to its shareholder base and that’s not what I’m personally looking for. I’m a young investor so I’m looking for growth and I’m not worried about short-term volatility in the pursuit of long-term gains. Fun Facts There are international Domino’s franchises that are public companies. Not all of these companies are specific to Domino’s and these firms often combine various franchises into one holding company. But here’s a shortlist:
ASX: DMP - Domino’s Pizza Enterprises
BMV: ALSEA - Alsea
L: DOM - Domino’s Pizza Group
L: DPEU - DP Eurasia
NS: JUBLFOOD - Jubilant Foodworks
Domino’s has very different food options depending on local customs. Some of these were highlighted throughout Domino’s 10-K such as the Mayo Jaga in Japan (bacon, potatoes, and sweet mayonnaise), the Saumoneta in France (light cream, potatoes, onions, smoked salmon, and dill), and some others. I thought these were funny and it’s always interesting to learn more about different customs in foreign markets. If you want more updates visit Weekly10K.substack.com. If you made it this far, I appreciate you!
SHH (Shree Minerals) - huge upside potential with very low downside risk - Part II
Second crack at a DD post after my previous VMS DD mooned (well kinda - although 100% in less than 2 months is aok with me). Don't mind this as risk/reward play. Reason i'm bullish below. Current state of play
Low MC of $18M (currently 2.3c) with 800M SOI
$1.8M in the bank and have stated that will be sufficient for 2021 (so CR anytime soon very unlikely)
Main plays are iron ore, gold, zinc, copper
Currently awaiting EPA permits for their iron ore mines, expected Q1 which should see us double
Their iron ore mine has previously produced 5 shipments from about 5 years ago and were of acceptable grade but they shut the operation down due to the iron ore price, which is now about twice the price and expected to hold.
Exploration License recently received and priority gold targets have very good surrounding grades (1535g/t, 135g/t, 26g/t, 14,5g/t)
Why I'm bullish Ex DEG (1.3B MC) director Davide Bosio is a non executive director at SHH. He's a director at a corporate firm that specialises in Cmergers/acquisitions and only gets paid $30k a year by SHH but recently bought $350k worth of shares and is now their 2nd largest holder. Soon after that purchase, SHH stated they'll be actively starting the iron ore process. As we have seen time and time again, when a director buys up and buys up big, good things are coming. Now it's just a waiting game but don't think 4-5 bags is out of the question. Up 9.5% today so not sure if something is brewing. Barchart has it as a 100% strong buy with all indicators pointing to buy. Support at 2.1c and 1.8c but from observing today's action, there wasn't a great deal of selling so think we're getting in at a good time before its next leg up. Good luck if you get on board and gamble responsibly. Full disclosure: I hold 1M+ shares, purchased over the last couple of days. EDIT: Davide’s investment may have been 200k in December. Double checking... EDITX2: 19/1 - Have jumped out on the news but will jump back in on any volume/momentum.
DRX is looking to expand their already large Silica resource and it is looking very hopeful. They are expanding towards a Mitsubishi owned site which is the largest Silica mine in the world. Lot of data points to an expansion being very likely and on top of the massive fundamentals (Link to previous DD: https://www.reddit.com/ASX_Bets/comments/jyq9aq/asx_drx_diatreme_dd_silica_project_possible_1015x/?utm_medium=android_app&utm_source=share ) they have this share price will follow as things keep on getting confirmed. Who had joined me on the DRX journey from my last post? (0.015 to 0.021 sp and just the beginning)
HITMAN GETS WHACKED, BRN IS BACK ON THE MENU AND OTHERS - BANS AND UPDATES
So you degenerates have been busy again. Mods are unsure exactly how much psychological damage was inflicted on our users due to Mondays ASX debacle, but the odds are good it was one of you lurkers that did the deed.... Before you all ask, yes we have some bans resulting from the Election Mega threads. Honestly though, deciphering some of the garbled rhetoric in those threads was a fucking challenge. Y'all some opinioned MOFO's, but we love your demented ramblings and crazy diversity. Those bans will come due, but we ain't touching that until it's all over, whenever the fuck ever that may be. FAIR WARNING - Post ANY more election comments on this thread at your peril. We have a few noteworthy mentions here and then lets get into the juicy that is coming up. Before we hit the Bans though, a moment to congratulate u/minskins & u/Arandomfitguy. Both made moderately big dick claims on ADN last week and both provided proof when asked. Enjoy those gains and your shiny new Flairs you Mad-Lads.... u/meragy dropped 40K into a NSB YOLO. This post generated some decent discussion and counter points, showing just how diverse opinion can be on speculative Bio-Tech Micro's. The winners are out there, but you have to know what to look for. Will this YOLO be a winner? We wait with bated breath................... Also a shout out to u/pricklyapple12 , a little bit of Loss Porn goes a long way. BANS: u/brettthehitmanhart got in the ring and started sprouting they made 100k profit this year. Proof was requested multiple times and in what has become a tired sequence, no proof was delivered. They didn't respond for a while, then shit escalated when they sent a private message essentially saying ''I don't need to prove shit'' and a spicy little personal insult. Now, Mods do understand that it can get a little awkward when we call people out on their fantasy stonk gains, but insulting messages on a weekend really is a bit much. So it's time to depart u/brettthehitmanhart, spandex is generally on sale at Christmas ( so I've heard? ) if you are looking to re-purpose those alleged gains. You've potentially tried to Con the simple folks at ASX_Bets and besmirched the good name of a wrestling icon. The Hart foundation would be ashamed. https://preview.redd.it/v8mixhjk3bz51.png?width=708&format=png&auto=webp&s=99000e62402981b60e6d9c179ea3f202541ce265 RMX dealt u/chanticleer85 a cruel blow, finishing 0.001 above open to deliver a weeks ban for betting it would close in the red. In fairness though, this was almost a self-sacrificial Ban, they desperately wanted their fellow Autists to make sweet tendies and figured a little reverse psychology Voodo might do the trick. Drill result gang salute you. u/l8sz said they would YOLO 20K into the highest upvoted Stonk on their post. Enter ZIP. User messaged and admitted they simply couldn't do it, and bought 4DS instead. So, on the one hand we will congratulate you on a wise purchase, but on the other hand a deal is a deal. See you in 3 months, yet another ZIP statistic. COMING DUE: Come the end of November we have an event to remember. In the murkiness of ASX_Bets past, BRN arose on the sub to a plague like proportion, led by the failed puppet Messiah Melvin. The other BRN prophets escaped Melvin's fate, but the legacy lives on in the form of u/Whichers. This user is the proud owner of possibly our most worrying Flair and the infamous brain bet. Now, it is theoretically possible that BRN will reach the bet breaking price of 0.65 before the end of the month. Theoretically. In the event that it doesn't, Mods will be in contact with u/Whichers to organize you degenerates a truly grotesque spectacle. There have been some seemingly legitimate health concerns raised over this bet, rest assured these will be kept in consideration whilst not undermining the perverted disgusting-ness of this task. COMING UP IN DECEMBER: It's going to be a busy month, that's no lie. A whole pack of you Autists must be in the festive mood, because we have the following to look forward too as stonking stuffers for the holiday season. - We have a new Perma-Ban bet running from u/Vulpes-corsac. Why is it people seek a lifetime ban after a conversation with a hairy bear? Anyhow, this user states that if EM1 hits 0.14 by New Years they will depart on a Perma-Ban. - The spicy chicken wing crew will be sending tendies across the nation, betting that: On Thursday the 24th of December (last trading day before Xmas), based on the price of APT at close: If above $100 - u/archbishopofoz buys u/itsdankreddit 10 Wicked Wings If below $100 - u/itsdankreddit buys u/archbishopofoz 10 Wicked Wings Don't forget, the loser also has a week on the sidelines. It's also traditional for the winner to make a ''Tendies Received'' Shitpost. - We still have HAIR OF THE DOG running with u/T3MUR and u/nottherealmalhotra , coming due 31/12/2020 Strange that potentially consuming pubes and wine seems perfectly reasonable to everyone, but brain eating has caused a big old kerfuffle. - Our Nude run is looking more and more ominous, u/alimessimourad , SZL to $13 by Christmas has about the same % chance as you not being unseemly violated during your nude run around the Opera House on New Years... - u/theautistikinvestor is still tracking with ZIPPY, running the theory that it will be outperformed by ANZ over the next 3 months. Or a 3 month Ban. Give us an update of your progress in the comments section please u/theautistikinvestor. - Perpetually confused u/ItIsYeGiraffe cums due on Christmas, with the other ZIPPY claim when they said ZIP will hit $10 by Christmas or they will fuck their own Dad. or a 3 month Ban. All Daddy wants for Christmas is a ZIP rocket. All other rockets to remain sheathed. - u/plucky26 & u/fahrenheitc are still locked in a battle over the ICI market cap. The Due date for this is December 20th, can one of you Autist's give us an update in the comments, although from my limited googling this one looks to be done and dusted. Also, while I remember, a bunch of you autists owe u/atayls beers. Own up below and save being hunted down by said Hairy Bear, it's coming into summer and those fuckers get nasty when denied their Peroni... ( u/atayls, turns out I did mention it.... Damn I should have taken your bet...) That about wraps it up for now folks, how do you say that in Greek?
Note: I do not have a position in Domino's. Industry Overview Domino’s competes in the quick-service restaurant (QSR) pizza industry with various competitors. The U.S. market is estimated to be ~$37.8bn and steadily growing. This is the second-largest category in the broader $279bn QSR market. The QSR pizza industry is primarily comprised of delivery, dine-in, and carryout. Unsurprisingly carryout and delivery are the two largest segments. Domino’s is the leading market share leader for U.S. pizza delivery and the second-largest market share for carryout. The four industry leaders, Pizza Hut, Papa John’s Pizza, Domino’s, and Little Caesars Pizza account for 61% of the U.S. pizza delivery market and 51% of the carryout market. The international pizza market is more underdeveloped than the United States. Domino’s is one of three companies with a global presence. Business Overview Domino’s was founded in 1960 by two brothers. The two brothers initially focused on opening stores near college campuses and military bases. Fast forward almost three decades and Bain Capital buys 93% of the business in 1998. A few years later, Bain proceeds to IPO Domino’s in 2004, and it’s been a public company ever since. Domino’s has three different revenue segments:
U.S. Stores
International Franchises
Supply Chain
We’ll dig into these different business lines and how they all work. U.S. Stores U.S. stores consist of both company-owned stores and franchised stores. Roughly 6% of all U.S. stores are company-owned. These stores are typically used for testing sites for new innovation as well as training and developing future talent. There are more than 6,100 U.S. stores, with ~340 stores being company-owned and ~5,800 being franchisees. The ~5,800 franchised stores are operated by 777 U.S. franchisees. These franchisees are able to benefit from Domino’s brand image with a low capital investment. The largest U.S franchisee operates more than 176 locations. Domino’s has a rigorous process for U.S. franchisees. Those interested in being a franchisee must manage a store for at least a year and graduate from its franchise management school program. This is successful as there is a 99% franchise agreement renewal rate. Franchisees must pay a 5.5% royalty fee on sales and certain technology fees. Stores must also contribute 6% of sales to fund national marketing and advertising campaigns. These contributions go into Domino’s National Advertising Fund, which is a not-for-profit advertising subsidiary of Domino’s. International Franchises Domino’s has more than 10,894 international franchises in more than 90 markets. The main source of revenue from these stores is royalty payments. Domino’s top ten international markets account for 63% of international stores. Domino’s grants franchisees exclusive rights to develop and sub-franchise stores and the right to operate supply chain centers in particular geographic regions. This means they can create their own Domino’s in international markets. They control the franchisee options, the supply chain centers, and other decisions. These franchisees pay an initial one-time franchise fee and a fee upon the opening of each additional store. The master franchisee pays a continuous 3.0% royalty fee on sales, Supply Chain Domino’s operates 19 dough manufacturing and food supply chain centers, 1 thin crust manufacturing center, 1 vegetable processing center, and 1 center providing equipment and supplies to U.S. and some international stores. The management team is continuously looking to expand and build more centers. Domino’s sells food and supplies to more than 6,600 stores. Domino’s believes that franchisees buy directly from them due to cost savings, efficiencies, quality offerings, and consistency. Franchisees also benefit from profit-sharing arrangements with supply chain centers. This program offers participating franchisees 50% of its regional supply chain center’s pre-tax profits. Total Addressable Market The global QSR pizza market is already well established with the biggest opportunity being in expanding in international markets and same-store sales growth in more established markets such as the U.S. One of my main concerns is just how big the pizza market can be. I feel as though the pizza market is already well-established, but Domino’s talks about their fortressing strategy which is adding more Domino’s stores within one area to improve on delivery times, customer service, and cost efficiencies (cheaper to deliver pizza the closer the customer), and other important areas. Competitive Advantages
Brand. Domino’s is one of the strongest brands in the world. They benefit from brand recognition almost anywhere you go in the United States and I’d bet it’d be similar in some foreign countries. There are definitely some die-hard Domino’s fans and then there’s also your local pizza restaurants that arguably have better pizza than Domino’s but these companies can’t compete on price. Basically, when ordering from Domino’s you know what you’re getting.
Scale. Since Domino’s is the largest pizza company, it’s able to benefit from economies of scale through purchasing power over suppliers, can test changes on a small scale, and then roll these features out globally. Scale also gives Domino’s the benefit of operating leverage. As the international franchise store count grows, Domino’s will collect royalty fees that do not require extensive operating margins so operating margins grow slower than international royalty fees giving Domino’s operating leverage for this segment of the business. The same can be said for US stores that are not company-owned.
Financials Domino’s breaks down revenue into U.S. stores which include company-owned stores, franchise stores, U.S. franchise advertising, then supply chain, and international franchise royalties and fees. Other important financial numbers are global retail sales growth, same-store sales growth, and total store count. These numbers are all listed below. 2019:
Total revenue = ~$3.6bn
U.S. Store revenue = ~$1.3bn
Supply chain = ~$2.1bn
International franchise royalties and fees = $0.2bn
EBIT (Operating income) = ~$0.6bn
EBIT margin = 16.6%
Global retail sales growth = 8.0%
Total store count = 17,020
U.S. stores = 6,126
International stores = 10,894
2018:
Total revenue = ~$3.4bn
U.S. Store revenue = ~$1.3bn
Supply chain = ~$2.0bn
International franchise royalties and fees = $0.2bn
EBIT (Operating income) = ~$0.6bn
EBIT margin = 16.6%
Global retail sales growth = 10.8%
Total store count = 15,914
U.S. stores = 5,876
International stores = 10,038
2017:
Total revenue = ~$2.7bn
U.S. Store revenue = ~$0.8bn (but did not include advertising revenue)
Supply chain = ~$1.7bn
International franchise royalties and fees = $0.2bn
EBIT (Operating income) = ~$0.5bn
EBIT margin = 16.6%
Global retail sales growth = 13.0%
Total store count = 14,856
U.S. stores = 5,587
International stores = 9,269
What’s Interesting Domino’s has outperformed Facebook, Google, Microsoft, and many other companies since it’s IPO in 2004. This isn’t random. Domino’s has been able to build a brand and continue to expand in the U.S. and internationally while rewarding shareholders. Domino’s has a share repurchase program and also dolls out dividends each year. This combined with revenue and net income growth is a good recipe for any successful company. Domino’s also seems to be the original cloud kitchen model. Many of its stores do not include seating which would increase capital expenditures. The majority of Domino’s business is carryout or delivery. Future Questions
How long is Domino’s runway? Domino’s is already a mature company with more than 17,000 stores worldwide. Future growth will come from cost efficiencies and some store openings, but I feel like it’d be hard for Domino’s to make a case that store count can double worldwide because of how many stores are already in existence. International store count can probably double at some point in time, but going from even ~11,000 international stores to ~22,000 will be a big challenge. The good part is that royalties and other fees associated with international franchises are basically pure profit since international franchises are operated by a master franchisee that takes care of all the headaches in foreign countries. Through operating leverage, if the international franchise store count doubles, then the profit will more than double. Domino’s only has a market cap of ~$15bn meanwhile companies like McDonald’s have a market cap of ~$150bn. Domino’s definitely has room to expand, so if I were to do a deep dive on Domino’s I’d have to answer the question of how many stores can Domino’s operate throughout the world.
What effect does Uber, Grubhub, DoorDash, and the food delivery market have on pizza delivery and carryout? In the past, carryout and delivery were typically done by pizza companies. These companies often don’t have any seating in their stores and therefore benefit by having less capital tied up in stores rather than inventory, buying back shares, or paying dividends. Families, college students, and professionals would order a pizza rather than ordering a bunch of different food from a Chinese restaurant or whatever other food option there is available. How does the new wave of food delivery companies impact pizza’s delivery and carryout appeal? Do families increasingly order from somewhere else instead of the pastime of fresh pizza delivery? Are the costs of ordering from Grubhub, Uber Eats, DoorDash too expensive for a typical family of 4? Does the cheap cost of pizza relative to other options give Domino’s and its pizza staying power in this new age of food delivery?
Conclusion Domino’s is an interesting company that I’d have to put in the more mature bucket. It’d be interesting to figure out if food delivery is a net positive or net negative for Domino’s and other pizza companies. Domino’s has historically been a great investment for hopefully many people, but it might be too late for me. Domino’s is already at the stage of giving out dividends to its shareholder base and that’s not what I’m personally looking for. I’m a young investor so I’m looking for growth and I’m not worried about short-term volatility in the pursuit of long-term gains. Fun Facts There are international Domino’s franchises that are public companies. Not all of these companies are specific to Domino’s and these firms often combine various franchises into one holding company. But here’s a shortlist:
ASX: DMP - Domino’s Pizza Enterprises
BMV: ALSEA - Alsea
L: DOM - Domino’s Pizza Group
L: DPEU - DP Eurasia
NS: JUBLFOOD - Jubilant Foodworks
Domino’s has very different food options depending on local customs. Some of these were highlighted throughout Domino’s 10-K such as the Mayo Jaga in Japan (bacon, potatoes, and sweet mayonnaise), the Saumoneta in France (light cream, potatoes, onions, smoked salmon, and dill), and some others. I thought these were funny and it’s always interesting to learn more about different customs in foreign markets. If you want more updates, feel free to message me! If you made it this far, I appreciate you!
Hi guys, over the weekend I posted a hastily written but researched piece on EM1's affiliate marketing partnership, here. I conducted further research over the weekend (it was raining, okay) and things got a bit clearer, and a bit worse. I am reasonably confident that:
EM1 have partnered with Crowd1 subsidiary TIM to market the EM1 platform under the MIGGSTER brand name,
TIM is a Spain-based shell company of the UAE-based Crowd1 headquarters,
Crowd1 is a multi-level marketing scheme, and TIM is a financial holding vehicle; this is borne out in the terms and conditions when you sign up for MIGGSTER,
The millions of pre-registered users are coming from within the Crowd1 MLM participant user base, not the mobile gaming community,
It is exceedingly doubtful how many of these millions of users will convert to paying customers and stay for any meaningful amount of time,
EM1 has almost no legal capacity to collect payment from TIM,
It is impossible that management do not understand what is going on here, so the important question cui bono? remains unanswered, but the answer is almost certainly "not longterm shareholders".
However, I believe EM1 will continue to fool the market until at least January or February 2021. The MIGGSTER launch is November 14, so we can reasonably expect more price sensitive announcements based on this affiliate program. Once it goes live, one can probably even expect some users to sign on and stay for a few months which means the Q2 4C will look like it's pointing to the moon. It wouldn't be until the Q3 4C when the user base dissipates (if I'm correct) that the whole show collapses on itself and even by then we can reasonably expect management will have constructed a supporting narrative or the next best thing. Anyone able to share broker data for this ticker over the last few weeks would be doing the public a favour. Whether or not you think you can outpace the rest of the herd on this pyramid fiasco, please be aware that at least one of my readers has referred this on to ASIC.
Alternate title (with thanks to 'The Good Place'):
How much do you spend on energy drinks and body spray per week? Three hundred dollars? Ten hundred dollars?
TLDR: I'm prolly gonna try to monetise my code rather than give it away. Y'all get free license keys, but is it worth the price of a cheese pizza and a large soda at Panucci's Pizza?
A little while back I wrote about making an attempt to parse PDF broker documents to extract details to help fill in ATO CGT details: Link. Aaaaand now I've pretty much done it. Some of you pointed out that brokers also provide CSV documents of all trades within date-ranges of your choice, and what I've written also parses them rather than multiple PDFs (and much faster I might add) to spit out all your CGT details - but here's the thing…
…I don't have a job, which means I don't have any form of guaranteed income asides from whatever I can grind out day-trading, which is not all that much recently as in all honesty I'm not a very good day trader, but I am a competent software engineer. While I could go on Centrelink jobseeker-type-shit or find some contracting work and commute to Melbourne (I live in regional Vic about 90 mins out), I'm not particularly keen on doing either of the above... and this is what I'm really getting at - I could attempt to, and a mate of mine is encouraging me to, monetise the software I've written.
Before anyone moans that I'd previously said I'd put the source up on GitHub for free, even should I decide to try and publish / monetise my work I can still provide free license keys to all ASX_Bets members who joined by today (1st Nov 2020) which is about 22.1K keys, so you'll all get it for free anyway as thanks for being a fucking stellar community. Hope that smooths your feathers =D
Considering the code's alpha AF at the moment and works for me (but we're not shipping me and my own suite of broker documents) there's no way I can get a proper release done by Monday Nov 2 (ATO extended tax lodgement deadline since Oct 31 fell on a Saturday) - but I can tell you what the software currently does:
Works for CommSec and SelfWealth brokers ATM (that's all I use and hence all I have test documents for),
Can parse a broker-exported CSV containing all trades OR a directory containing multiple PDF documents from either broker to generate grouped transaction histories and gains/losses for each company,
Can use 3 (or technically, 2) different policies to attempt to minimise your CGT: LATEST_SALE_AGAINST_EARLIEST_PURCHASE, LATEST_SALE_AGAINST_LATEST_PURCHASE, AUTO (tries both of the above over your entire portfolio and lets you know the best strategy and why. The ATO's happy if you pick one either way and stick to it - source: Link with thanks to phantom_hax0r)
Constructs tax-year CGT details from all sales using a single policy from the above.
So that's the bare minimum to get the job done for me. Here's what it could do given further work:
Handle documents from more brokers (NAB, WestPac, etc.),
Generate output from PDFs pulled from an email address rather than requiring the files to be downloaded and copied into a 'broker_pdfs' directory,
Work internationally with even more brokers and some more tax rules,
Spit all your details into a LibreOffice spreadsheet (opens in LO & Excel) rather than just a text file,
Having a GUI rather than just a set of command-line switches would prolly be nice (would also make the mobile app version a bit more palatable, lol).
Finally, even assuming I can cover all the major AU brokers - how much would you pay for such an app (PC and Android clients)? ShareSight and shit like are expensive and yearly, and I couldn't even get SS to parse a CommSec CSV the other day ("What field does this map to?" / Gateway Timeout 504)… ComputerShare will give you a PDF pack for $50 - but it doesn't calc. your GST so WTF's the point in that? So, like, is it worth:
$10 for a one-off purchase with no updates (but works for all supported brokers for the current tax-reporting year),
$20 for a licence that guarantees updates for 3 years?,
$30 for a perpetual license that lasts as long as the project is actively maintained? (Min: 3 years+… Risky play, or is it?),
Much, much more! (remember - you all get free keys & piracy exists),
Much, much less! (would it even be worth my time?).
Honestly, I hate this part of it. Either work for free or full price - well, I'm working for full price on this one (and I really hate 'pricing' my work) - but there's no point selling it for $1, getting a few thousand sales and then having to continue updating it for years. I need to make about $20K a year just to pay my bills and survive… I'm not saying I could make that off this app, but if it fills a niche at a good price-point then perhaps it might, or at least cancel out some losses lol.
Anyways, just putting this out there and asking for your thoughts. Cheers, y'all.
With Donald Pump now in Walter Reed Memorial Hospital, 🌈 🐻‘s can come out to play. If you are going to make 🐻 plays though, please make sure you at least understand the instruments you’re using. General advice for new 🐻s from a 🐂 * unless you are a true 🐻 and believe this is the beginning of the recession, these aren’t buy and hold inverse products. * management fees don’t really matter as you’re only going to hold these for a day or two * these are forward looking inverse ETFs that price themselves off US futures. So no you can’t be the next big thing by watching US markers overnight and then think you’ll be ahead of BBUS/SNAS pricing. US markets overnight will affect the opening price here on ASX, and price throughout the day here is based off US futures. * In Australia we have a bit of a disadvantage as the US pumps it’s market out of hours every night, which is when our markets are open. So when you can be trading BBUS/SNAS it’s when US market being nightly pumped https://www.businessinsider.com.au/stocks-fall-during-regular-trading-hours-rise-overnight-2016-3 BBUS: * Provided by Betashares * MER 1.38% - who cares, don’t hold it this long unless you are 🌈 🐻 * Inverse of whole S&P500 * Dividends: annual... but really who is buying S&P500 for its dividends, let alone an inverse S&P500 etf for its dividends. Even Melvin isn’t that retarded. * Daily rebalancing * Leveraged within a -2x to -2.75x range on any given day. The Fund’s returns will not necessarily be in the range -2x to -2.75x over periods longer than a day, due to the effects of rebalancing and compounding of investment returns over time. Investors should monitor their investment to ensure it continues to meet their investment objectives. * The Fund uses futures to obtain its exposure rather than the underlying shares. As the futures market closes at a later time to the share market, at times the Fund’s performance for a given day may differ from that indicated by the share market. As the U.S. futures market is open during ASX trading hours, the Fund’s performance during the day will reflect movements in the futures market. SNAS * provided by ETF Securities * MER 1% * Inverse of NASDAQ 100 * Dividends: annual... but really who is buying this as part of their income portfolio?! * Leverage target range of between 200%-275%. The performance will depend primarily upon the general direction of the Index (up or down) and the amount of exposure to the Index (leverage) within the target range at any point in time, and will also depend on the path the Fund portfolio takes to achieve its returns. * SNAS achieves its exposure to the Nasdaq-100 Index using primarily derivatives. It invests primarily in a portfolio of short E-mini Nasdaq-100 Futures contracts listed on the Chicago Mercantile Exchange. Derivatives such as futures provide gearing or leverage because they offer market exposure in excess of the amount that is required to be invested upfront when entering into the contracts. When opening a short futures position, the upfront cost is zero, although there are transaction costs to be paid and an initial margin amount to be posted by SNAS. This margin amount is adjusted up or down daily depending on whether the contracts have generated a gain or loss. * As the Nasdaq-100 moves up and down the amount of gearing in the fund changes and the fund manager needs to rebalance the exposure to ensure it remains within the target range. Currency hedging is achieved by entering into foreign exchange forward contracts whereby the fund contracts to sell U.S. dollars and buy Australian dollars at an agreed rate on a fixed future date. * Is a bet against Tim Apple, Satya Nutella and Papa Elon. Are you really going to do that? NDQ 🐂 gang rise up! So if you do think Donald Dump will continue to cause widespread market collapse next week, then BBUS is the safer play as it covers whole S&P500, including financials which have more to lose under future President Biden. However if you’re a real 🌈 🐻 and think tech and the Nasdaq are overvalued and that Donald Dump has just triggered the DotCom 2.0 collapse we’re overdue for... then buy SNAS and let Papa Elon donate his wealth to you so you can eventually afford to move out of your step dad’s granny flat. TLDR: just join the 🐂 gang and load up on GGUS and GEAR while they’re cheap!
Fair warning, this will be a long post and I won’t be throwing down any rocket emojis. If you’re looking for that turn back. This post is me seeking some legit discussion about whether or not Next DC (NXT) is a buy at the current price. For those not in the know, NXT (Next DC) builds and operates data centers Australia wide. I’m looking at it as a potential multi-year buy and hold. It's currently sitting at $12.77 a share or about 5.88B on market cap, and made minor losses in FY19 and FY20 (more on why later). I’m going to talk about it at ~around $12 because $12.77 is a short term high and it could probably be picked up for less if you were patient. Another thing to keep in mind is that it has come up off $6 a year ago, with a capital raise in 2020, so it has more than doubled in market cap. Since I’m considering this as a long term hold my decision to go in has to be based on fundamentals, not price sentiment. I’m aware that this is a foreign concept to most denizens of ASX_Bets, but you retards are the closest thing to ASX stock analysts (*) I have on reddit. I consider myself to be a beginner at this kind of thing, so I welcome all kinds of feedback (good and bad) on my analysis. One of the first things I do when I’m trying to put a valuation on a company is a dive into the consolidated financials of the last few annual reports. This approach isn’t the be all and all of DD, but I like it as a starting point because it provides quick insight into how the company does or does not generate earnings, and trends in that behaviour. So, I tabulated the consolidated profit and loss statements of NXT’s 2017-2020 annual reports, and it only raised more questions for me. You can find my table at this imgur link. The numbers are rounded figures in millions, and the ‘scaling’ rows at the bottom are my own addition (sum of the ‘blue’ rows in the actual statements). https://imgur.com/nSYNdeI This table tells an interesting story, but before I get to that the number one thing to know about these figures is that the D&A Cost is Depreciation and Amortisation and it represents the continual loss in useful life of the company’s buildings, plant and equipment. So, when the company invests truckloads of cash into building a new data center the cost does not all appear on these statements in one lump, it gets spread out over the entire ‘useful life’ of the assets. This means it would be wrong to assume that the P&L statement looks bad just because the company is growing. Those growth costs simply don’t hit the P&L that way. You will observe that I’ve highlighted figures in blue that I consider to scale with the size of the company’s core business of building and running data centres, including lifetime D&A of those assets. These figures show a very nice underlying profitability to that business. Secondly, you will observe that the company made a profit in 2017 and 2018, and only made a loss in 2019 and 2020 because of the arrival of large financing expenses. If you dig through the 2020 annual report, you will find that this financing is mostly in the form of short term corporate bonds, about $800M worth. Some of the bonds mature in 2021 and some further out, at rates of 4% to over 7% per annum. Now, with the cash from the recent capital raising NXT could technically just pay out the bonds when they mature and be debt free, but they don’t really want to do that. The company has been growing at about 20% YOY by investing capital into new data center capacity, it needs cash on hand to continue this strategy. If the management of a company thinks that they can get a return on investment greater than the cost of capital then it makes perfect sense to take on some form of debt. NXT used that bond financing to fuel growth in the last couple of years. Read the section titled ‘Funding’ on page 23 of the 2020 report for confirmation that the company will seek continued financing. On page 73 of the annual report you will find a summary which shows a debt gearing ratio of 35% in 2019 and no gearing in 2020. However, they have used a Debt-to-Capital ratio there, which makes the debt cancel with the cash for technical reasons. To get a different view of gearing I worked out the Debt-to-Assets ratio (still factors in cash) and got 47% in 2019 and 32% in 2020. I don’t think the company will go back to shareholders for more cash again soon, so they will either need to draw down on their $300M debt facility or issue new bonds to roll over the old ones (hopefully at lower rates). The important take-away from this is that in order to keep growing (as shareholders will expect) the company will have to carry debt, and should carry debt if they can get a return on investment. They only need to hold cash temporarily while they set up the next expansion project. What this means for earning figures is that ‘financing expense’ scales with size of the annual growth for now, and will only later morph into an annual asset replacement cost proportional to the size of the business. This will never go away and it will eat into that ‘underlying profitability’ I mentioned earlier. It will also be a bit patchy and unpredictable from year to year as the company gets funding from different sources. Note that (the way I think it works is that) the financing impact on the profit and loss statement is the interest coupon on the bonds. I.e the -$57.7M in 2020 is about 6.5% of the total outstanding bond amount, equal to the average coupon which gets vaporised and forever disappears from shareholder value. The repayment of the principal on bond expiry will not appear on P&L, just like the initial funding injection did not appear as revenue. I know that was a lot to take on, but understanding the capital structure is a necessary foundation to valuation in this instance because the business model is so capital intensive. Company management is happy to blow past year’s ‘profit’ on next year’s financing if it will allow continuation of growth. You can expect the company to keep doing this until it hits some kind of growth ceiling or slowdown, at which point financing would drop to an asset turnover rate and the company would start paying dividends. The share price of the company, or I prefer to use total market value of the company (5.88B), should reflect earnings potential once the company stops growing, discounted depending on how many years in the future that point is, and should also count book value of assets at that time. The problem for me attempting a valuation is that the assumptions going into that method are all guesswork. Can the company continue to grow at +20% revenues for the next however many years? What about the growth rate in asset value? What if there is a significant shift in finance cost? Basically it is one of those situations where you can make present value come out at whatever number you choose, just by tweaking the assumptions. What’s worse, it looks to me like almost all of the present value is counted in the future value of assets. I won’t bother showing you the discounted cash flow because the numbers are meaningless, but in summary the annual profits generated are small in comparison to the value of assets, and once growth slows down the growth in profit is eaten by inflation and risk anyway. Even now (in 2020) the ‘scaling profit’ in my my original imgur link is less than 10% of net current asset value in each year (50M vs 1700M in 2020), which supports the view that a large portion of any debt fuelled infrastructure valuation is just book value of the assets. NXT will grow until management does the maths one day on return on capital and decides it is not worth it to keep growing at that cost or at that rate of return. In this way NXT is very much like an airport, a port or or a toll road company, just with data instead of physical goods. Valuation will trend towards nominal replacement cost or purchase price plus a return rate only slightly better than cost of capital (very low right now). Conclusions and Questions On the one hand, the rapid growth in net asset value looks likely to eclipse current market cap in a few years. Net assets (inclusive of debt) have grown at an average x1.6 for the last three years. 2017 506M > 2018 893M > 2019 875M > 2020 1683M (includes 862M cap raise). Now while that includes a capital raise, i.e. shareholder money, Net Current Assets (mostly just property, plant and equipment) have been growing at a similar rate. So, just project that rate out a few years, throw in reasonable revenue (beating cost of capital as a ROI) on top of that and you might consider it a buy at $5.88B today. It certainly would have been at $6. As far as risks go, I think the data center business is probably resistant if not immune to most foreseeable economic disruptions. The black swan stuff is not a reason not to invest, if you are diversifying properly. Direct threats would be mismanagement or competition. A near term (<3y) increase in cost of capital would also be problematic because it would put the brakes on growth. However, that would also affect competitors and would allow NXT to set prices. For upside risks, if the company can access cheaper debt it would be a great boost to shareholder value because it would slash the annual financing costs. On the other hand, I have difficulty making my preferred discounted cash flow model arrive at a $5.88B valuation. I figure that the company will return in the order of 10-15% of revenue as profit after the rapid growth phase is over (e.g. Replacing 5% of current assets value each year at a cost of 5-7% debt finance.), or a smaller percentage as return on assets. So, if it grows revenue at +20% for another 5 years it might make 75M in profit in 5 years time. If you run that into a cash flow model you get nothing like $5.88B present value (more like 2-2.5B). However in that model the present value is clearly dominated by underlying asset value (which I always count in total valuation) and that has been growing much faster as noted above. It would be silly of me to say that NAV will still be $1700M odd in 5 years time, which is what is happening in that 2-2.5B calculation. Some of you might be saying ‘but ASisko, you can’t use a DCF to value a growing, capital intensive business!’. Well, I think you can still make some ballpark guestimates, especially if you take the company’s depreciation and amortisation of capex at face value. However, this still leaves me wondering how to reconcile the rapid expansion in net asset value with the relatively paltry free cash flow. I can just project NAV at x1.6 (or a lower multiple for risk) and it comes out much higher than accumulated free cash. I guess my first open question to you guys is what the f**k to do with this weird NAV growth in a discounted cash flow? Or alternatively, is the DCF right and the NAV figures are wrong? Secondly, does anyone know of a superior fundamental analysis model for this type of business? Thirdly, would you invest or are you already invested in NXT, and why? Lastly, any other comments on my analysis or on NXT itself? Cheers guys and if you read all the way here instead of looking for the TLDR; I appreciate it.
PLEASE NOTE: I AM STILL NEW TO TRADING. This post exists to garner feedback on the research, if you wish to call it that, that I'm providing or on the stocks I believe I see possible opportunity in. If you don't like something I've posted, please, help me out. For reference, whenever I say something in the context of or in reference to "today's predictions", I'm talking about my comment on this post. Another day, another DD. I'm going to post this in the main more so than in the daily because I'm hoping to get more opinions from everyone else as to the quality of my research, assumptions and what not. Regarding my predictions:-ESR absolutely rocketed. A day earlier than I anticipated (but increased nonetheless).-BRN plummeted, good thing I was a little bitch. F to the bagholders. Bail out as soon as you're willing to take the losses.-CT1 remained stable today rather than the price drop I was expecting. More on this later.-DOU hasn't moved outside of the $0.2-0.4 range I am estimating it to sit in more permanently. Long term is still stupid, if you're holding this try and cut your losses, it won't be making money soon.-EM1 also shit itself, much to what I was thinking.-HCT fell from grace. A stable price is yet to be determined.-TSO has begun a slight increase today. Anticipating this to continue. My watchlist for tomorrow consists of the following: BKY CT1 EM1 RSH BKY already has some long term prospect, being a "clean energy company" (varies on how much you wish to call uranium clean), fitting perfectly in line with various goals in the reduction of CO2 output. Today, they floated on the IBEX SMALL CAP (Spanish), which will provide much needed capital for their Salamanca Project. The project itself is slated to extract 4.4M lb of uranium yearly at a full expense of $15.06 USD per lb, selling on spot price for $20 USD per lb and on contract for $41 USD per lb. This is expected to last for 10 years. I'll let you run the math on that one (just kidding, at spot price it's $217.36M USD profit). This is a fairly small scale however, and you would be taking bets on the price of uranium and acceptance of nuclear power if this were to be a bag holding. There is currently a 7:1 depth, though a noticeable gap between bid and sell can be seen at the time of writing this. It will remain relatively stable until further announcements regarding the Salamanca Project can be made, which will be heavily tied to its success on the IBEX.(Yes, I copied this from my last post, sue me) CT1 saw an 18% drop yesterday, and is almost at post-COVID March levels (I have serious doubts it has the capacity to drop below that). When it hits rock bottom, the only way is up. Today presented it as very stable. Should there be no drop in price tomorrow, I would heavily advise jumping on board. The MQ report also values this at $0.04, given it is currently at $0.018, there is significant ground to be made back up. It does have a fairly small Market Cap at $24M. You're not going to see a rocket out of this, but profits are almost a given. EM1 took a turn I did not account for, but should have anticipated, especially given the hyperinflation that occurred yesterday. I believe this will be a continual occurrence so long as it's project, MIGGSTER, continues to acquire pre-registrations. As of yestoday, MIGGSTER reached 3 million pre-registered users (for those unaware, it had also been active for a total of 6 days, AKA 500k new registrations per day). As pointed out in #pennystocks in Discord, that is an extraordinarily small number of people in the mobile gaming community. The service itself is very low cost, $8.50 USD per month, and effectively acts as a lottery for gamers. See where this is headed? Even if only 25% of the current subscribers did stay there, and no further were added, that's still a fairly solid gross $76.5M USD per year. Further announcements will likely bring back in those who FOMO'd the first two increases, which will then be promptly corrected. Keep watching this for aforementioned announcements, easy gains to be made in them. RSH today announced a prospectus, closing on the 20/11. 1000 shares @ $0.20. These are being offered to "sophisticated" or "professional investors", so whether or not you'll be eligible for this offer varies. The prospectus aims to generate $12.5M, in addition to the capital that can be generated from the 64.501M shares, that if approved, will be available for purchase on the 28/10. Unlike the BRN presentation from today (HOW IS THAT EVEN A PRESENTATION?!), something actually worth a read in regards to the profitability of RSH was released. This predominantly detailed an asthmatic aid, capable of 'competing with a trained physician', wheezo, which has recently undergone a software upgrade to further improve its capacities. A significant plan for distribution was released for the rollout of the product within Australia and New Zealand, with international prospects on the horizon. Pharmacists provided a very strong positive response to the product, with an almost as strong response from carers of patients with asthma. I could continue on and on about it, but honestly, after BRN, you might be interested in looking at an actual presentation. This is a stock with great promise for long term holding, so don't expect to make money off it in the short term.
There have been numerous posts and comments lately with people discussing options and not understanding how to use them or what to do, so this post is for that and will be explained in basics. So if you understand options skip this, otherwise feel free to learn something new today. If i skip what youre looking for comment it and ill explain it or message me (examples are dot points incase you wanna skip all the text) There are two main types of options which people use calls(buy) puts(sell).Options come in contracts, each contract for a company is typically worth 100 shares. For indexes its $10 per 1 point I.e. $6000 strike 100 points itm would be $1000 intrinsic value ($10 per point times 100 points = $1000 intrinsic value) For example a $2 premium on 10 contracts is $20k for the xjo. You use calls when you think stonk up, puts when you think stonk down.Lets say you think afterpay will have good results and you want to buy calls. First thing you need to do is choose a date, afterpay do monthly which means you cant buy options only lasting 2 days unless you buy them just before the set monthly date. now you pick a price, the higher away from the current stock price ($80 for arguments sake) the cheaper the call costs to buy, vice versa the further away down from the stock price the more expensive it becomes. This is because the stock must go up by that amount for you to make a profit. The amount you pay is a premium, the further the expiry is away the higher the premium. But what if theres no volume or prices for the price i want? then too bad its the asx theres not much liquidty just pick a new one thats not so far away. You will see bot volumes during market hours, its the same in the sense that they can only be traded during stock hours.
Back to afterpay so you buy calls for 17th september @ $83 and the premium is $5.15 (premium is times 100, because its 100 shares per contract, so you're actually paying $515 per contract)your profit is when the stock goes above $83+$5.15 $88.15your loss is when the stock is below $88.15and your break even is $88.15
You can exercise this option before the 17th of september and take your profit if you like or you can wait until the 17th
Puts are the opposite, lets say you want to bet against afterpay as you think they will have bad results.Stock is $80 Put @ $81 and premium is $6.34Your profit is whenever the stock is below $74.66Your loss is whenever the stock is above $74.66and breakeven ill let you solve ;)
You can buy as many contracts you like as long as you can afford them, lets say in the above example you want 5 contracts, you would pay $6.34*100*5=$3170. This obviously increases your potential profit but also your potential loss. stock settlement is t+2, options are t+1 so dont mess that up, tom already takes enough money. these are the 2 most basic options, they get more complicated once you start to combine them and so on but focus on understanding these 2 and if youre unsure choose a company and graph the profit and loss yourself, then compare it to an online options solver.
Share your financial horror stories to make me feel better...
I was doing some tax documents this afternoon and started to reflect on my investing performance over the past few years. I'm 25 now, when I started my first job right of out university at 22 I had no idea what to do with the money I was earning. I ended up investing (gambling) on ASX penny stocks, and actually got really lucky... at first. My first "win" was AVZ, a lithium mining company based in the Congo. I put my first $10,000 from my job into it with no research other than believing the hype on HotCopper. I rode it all the way to $50,000! At 22 this made me feel like the king of the world, and I got addicted to that thrill of finding the next winner. If I could pull the same trick a few times in a row, I would be a millionaire within a year! Over the next two years, I would steadily erode that $40,000 total gain into a $15,000 total loss. I speculated on everything from a gold mining company in Brazil, to a cobalt explorer in Namibia, to exchange rate futures in the United States, to biotechs, and on and on... In February 2020, three years after the beginning of my investment journey, I reached a point where I accepted I had a problem. I wasn't an "investor", I was a gambler. I looked at people who put their life savings into slot machines at the casino with disdain, and then realised I was exactly like them. I sold everything I still had in the share market and did some research into the financial independence retire early (FIRE) movement. I accepted there was no shortcut to riches, I would have to earn and save just like everyone else. Now I'm here looking at this $15,000 loss and wondering, how badly did I screw up? Is this something that has happened to other people as well? I'd like to hear your experiences so I don't feel like such a moron :( Today, I have a portfolio of VEU, IVV, and A200. Funnily enough, I had my own personal financial crisis just before COVID-19 hit, enabling me to buy these three ETFs right after their prices collapsed. That softened the blow somewhat. TLDR: I was a moron during my first three years of earning and "investing", and turned a $40,000 gain into a $15,000 loss by betting on penny stocks. How bad did I screw up? Has something similar happened to you?
https://www.afr.com/markets/equity-markets/retail-investors-shrug-off-tech-rout-20200904-p55sgx Justin Gerretzen is not too worried about the sharp sharemarket sell-off on Friday. The 35-year-old diesel mechanic is a FIFO worker in Queensland's coal mining industry and owns shares in two technology companies. Justin Gerretzen says his sharemarket gains this year have funded the purchase of an investment property. His high-conviction positions in PointsBet Holdings—the online wagering company that is in a trading halt ahead of a capital raise—and the research-phase brain-computer-interface company BrainChip were steady as other investors bailed out of their technology shares, pushing the S&P/ASX All Technology Index down 5.2 per cent over the session. The two companies epitomise the massive interest in technology companies that has seen share prices in the sector soar since the market trough in March, with PointsBet shares rocketing up 1050.4 per cent since their low five and half months ago and BrainChip shares up 1314 per cent after slipping 1 per cent on Friday.
Share your financial horror stories to make me feel better...
I was doing some tax documents this afternoon and started to reflect on my investing performance over the past few years. I'm 25 now, when I started my first job right of out university at 22 I had no idea what to do with the money I was earning. I ended up investing (gambling) on ASX penny stocks, and actually got really lucky... at first. My first "win" was AVZ, a lithium mining company based in the Congo. I put my first $10,000 from my job into it with no research other than believing the hype on HotCopper. I rode it all the way to $50,000! At 22 this made me feel like the king of the world, and I got addicted to that thrill of finding the next winner. If I could pull the same trick a few times in a row, I would be a millionaire within a year! Over the next two years, I would steadily erode that $40,000 total gain into a $15,000 total loss. I speculated on everything from a gold mining company in Brazil, to a cobalt explorer in Namibia, to exchange rate futures in the United States, to biotechs, and on and on... In February 2020, three years after the beginning of my investment journey, I reached a point where I accepted I had a problem. I wasn't an "investor", I was a gambler. I looked at people who put their life savings into slot machines at the casino with disdain, and then realised I was exactly like them. I sold everything I still had in the share market and did some research into the financial independence retire early (FIRE) movement. I accepted there was no shortcut to riches, I would have to earn and save just like everyone else. Now I'm here looking at this $15,000 loss and wondering, how badly did I screw up? Is this something that has happened to other people as well? I'd like to hear your experiences so I don't feel like such a moron :( Today, I have a portfolio of VEU, IVV, and A200. Funnily enough, I had my own personal financial crisis just before COVID-19 hit, enabling me to buy these three ETFs right after their prices collapsed. That softened the blow somewhat. TLDR: I was a moron during my first three years of earning and "investing", and turned a $40,000 gain into a $15,000 loss by betting on penny stocks. How bad did I screw up? Has something similar happened to you?
https://www.afr.com/wealth/personal-finance/meet-the-sharemarket-s-corona-generation-20200610-p551dz On Wednesday morning, moments before the market opened for trading, Will Bennett, a moderator of a popular Facebook stock trading group, made a "public service announcement". The vast majority of the group's 23,700 members were just a few weeks into their trading careers and with SPI Futures pointing towards a 1.4 per cent fall, Bennett tried to prepare them for what he anticipated would be their first bloodbath session. "Remember markets go up AND down," he said. "Don't make emotional decisions and DON'T PANIC SELL if selling is not part of your plan." Not all the members of the group were worried. One trader's down day is another's top-up day and most were itching to buy more of their favourite stocks. But as the session came to a close, the market had turned and rallied to end in the green. "Today was meant to be the day that it came crashing down and it turned out to be just fine," the 25-year-old from South Melbourne told AFR Weekend with a mixture of surprise and guilt. "I have no sensible stocks," admits Bennett, who had held blue-chip stocks for years until he sold out last September, only to re-enter the market with a bet on a penny stock which has crashed and burned. Another trade in buy now, pay later (BNPL) player Zip Ltd has soared to cover his $4000 loss. Zip was more actively traded on Commsec this week. "I should be getting punished. It should not be this easy," says Bennett. Bennett has time on his hands and has been stuck at home. He doesn't drink or smoke – and the gyms are closed. So he watches the market all day. He's also agreed to help as a moderator of the ASX Stock Tips Group that has grown from 15,000 to 23,700 members in 12 weeks to become Facebook's largest Australian share trading forum. There they share ideas, memes and seek validation for the bets they're placing into a market that has gone up like a rocket, but which the experts have repeatedly warned is becoming detached from reality. Market watchers say there's nothing particularly new or interesting about an influx of individuals being lured to the stock market in search of quick profits. But the nature of the coronavirus outbreak – in crashing the market and confining entire populations to their homes – has unleashed forces of speculation the likes of which we have never seen before. In the United States, millions of Americans have opened trading accounts with popular trading app Robinhood. But from the time the S&P500 bottomed on March 23, the number of active accounts has surged by 70 per cent to 37.1 million.
Zero-cost brokerage
Robinhood's model of zero-cost brokerage has made it cheap and easy for anyone to trade the market. Controversially, it makes its money by directing the orders to high-frequency trading firms that are in turn able to profit from the activity. Meanwhile, Japanese investors are shedding their decades-long aversion to stocks while South Korean retail investors have also stormed back into the market. Australia's market structure, in which one exchange dominates, makes it less conducive to the zero-cost brokerage model. But that's done little to deter a new generation of young traders, nor has March's harrowing correction. Since late March, Commsec, the largest retail broker, has grown its share of trading by an enormous 1.2 per cent to 4.8 per cent, according to the popular market newsletter, the Coppo Report. The last time the market crashed badly, in 2008, middle men with margin loans swore off stocks for good after their Babcock & Brown shares blew up. This time it has had the opposite effect. The coronavirus crash put the stock market on a once in a life-time introductory sale while the volatility added the potential to get rich quick. So they may be holed up at home in their bedrooms, but newbie traders are having the time of their lives. "Z1p your f**cking spacesuits up and give your wife's boyfriend one more kiss on the lips because we're going to the MOON today boys," wrote a poster on Reddit stock forum on Wednesday. The newbies are enthusiastically gravitating to the BNPL darlings, like Zip and Afterpay that are up six times from their late March lows. But they have also embraced the bargain-hunting tactics of value investors and have rushed to bet on a recovery in the beaten-up travel sector. Broker activity shows a surge of trading from retail broker firms in stocks such as Flight Centre and Webjet. Those businesses were forced to raise hundreds of millions of dollars of expensive emergency capital in the depths of the crisis. But their share prices have since recovered to levels that seem to defy the reality of the situation.
Bloodbath arrives
That was until Thursday, when broker downgrades from the big end of town triggered a sell-off in the travel stocks, And on Friday, the bloodbath arrived after Wall Street's worst session since March. Flight Centre and Webjet were pulverised – falling by 12 per cent, while the big BNPL names were down 8 per cent before rallying to pare back half the losses. "Suing whoever said stocks only go up," said one poster. "Good time to buy. but got no money. Deleting commsec for one month" Bennett says the activity was chaotic, with many traders posting comments of denial and despair. Their anxiety wasn't helped by glitches on overloaded trading platforms. "Many traders have only experienced the market rising, but they haven't followed the golden rule to diversify and now they're in for a nasty surprise." Until this week, the little guy was well and truly sticking it to the big end of town. An analysis by the Coppo Report showed retail stockbroking firms have been net buyers of $7.4 billion of stock since February 20, while institutional brokers were net sellers of $11.2 billion. "To call them the 'dumb money' ... is just insulting" the report's author Richard Coppleson wrote. The similarities to the US are uncanny. While the world's greatest investor, Warren Buffett, dumped his airline stocks in March, retail investors have rushed in the sector, which has tripled from its lows. The Oracle of Omaha, an inspiration for so many generations of investors, has degenerated into a meme, as day traders high on profits and low on humility openly mock him. "The big sharks are dumb. The economy is in great shape, best it’s ever been," said one poster on the Facebook forum. Robinhood traders also bid up shares of broke car rental company Hertz, which has gained an incredible 800 per cent since declaring bankruptcy in May and rendering the common stock all but worthless. They also shifted their bets away from previously hot stocks like Elon Musk's Tesla in favour of the Ford Motor Company. Australian novice traders are also finding their feet and learning that stocks can be bought and sold on the same day, but not in the evening. These newbie traders want and need help but not from the experts, who haven't excelled themselves in calling the market. The commentary that the stock market is overheated, they believe, is motivated by institutions that want to get back into the market at a lower price. And Bennett agrees there are many on the sidelines that are "salty" they've missed the rally. Some traders are not taking kindly to insinuations that they don't know what they're doing, or they need looking after. An ABC segment carrying a warning from regulators about the risks facing inexperienced day traders was mostly met with ridicule on a Reddit site where it was posted.
'We know we're idiots'
"Tells people not to invest, then shows people making money," said one poster. "I'm surprised they picked someone who is only up 35 per cent. There are a lot of people making way more than that. Hell, my zip is up 380 per cent and I didn't time it that well." Another said the regulator and the government might be worried that ordinary Australians were going to work out how poorly their superannuation had been managed after discovering how easy it was to make money trading stocks. "I know how much money I pay in each quarter and the shitty returns they’re making on my behalf." As the market soared and more winners than losers have been created, a counter-culture of self-assured young day traders is forming. One female who preferred to remain anonymous says she is concerned about the level of sexism among traders. There may be no physical trading room floor but she says she's put off by comments in the virtual trading community. Another major concern, she says, is "young investors gambling $10,000 of their just released COVID support relief package out of their super". "I’m not kidding, it is happening a lot at the moment," she says. "There are people 'working from home' who are bored, have downtime, want to learn a new skill, are aware that the market is technically down, and I feel worried about the level they are gambling." Lord of Ruin, who moderates the increasingly popular ASX_bets Reddit site, says he doesn't believe there's much difference between the traders of today and those that have made and lost their fortunes in the past. With one exception, social media has brought more "introspection". "Yes we're idiots, but we know we're idiots, now look at my meme about stodgy central bankers firing bank notes into a crowd of already rich people." Lord of Ruin, who is in his mid-30s and still working in a technical field, says retail investors "are getting all the thanks" for the rising market. He says the market remains a dangerous place for individual investors who are preyed on by pump and dumpers. "Only they don't cold-call you from a boiler room anymore, they leave comments in your forums and subreddits while moderators play Whack-a-mole." There are valid reasons why individuals have rushed into the market and why online forums like ASX Stock Tips, exuberance and all, have proved useful in guiding individuals into the stock market. The last time the stock market crashed, Westpac was prepared to pay anxious savers 8 per cent to keep their money safe. This time the bank is paying you close to nothing. The opportunity cost of risking money in the market is lower than it has ever been. "People have a heap of money. They have saved a heap in this lockdown and they don’t want to earn $2 a month at the bank," says Bennett. "They are seeing other people making a lot of money and they feel they are missing out." While he says he's not accessed his superannuation early, he admits it's been "tempting" and more bullish investors are tapping the banks for investment loans. For many investors, the COVID crash gave them the confidence to put their savings to work as other investments such as a property remain out of reach for now. Sian Gard from Bendigo, who is in her early 40s, has also embraced the share market and the exchange of ideas on the forum. Gard works in media and after doing her finances late last year she was determined to find an alternative source of wealth creation so she would have enough funds to retire. "I need to diversify my income stream and looked at the banking sector and what I was getting. It was quite depressing. This was not going to get me anywhere." She admits being "petrified" making her first stock purchase, but a small position on Point Bet Holdings has worked spectacularly well – rising from $1.91 to $7. "I didn't invest a huge amount but that's $3000 I haven't had to work for," she says. Gard says she is "a risk-taker but it has to be calculated". "I feel the same about the market and I try to make sensible decisions. I am trying to look after myself." She says she's enjoying the intellectual challenge of working out which stocks to buy but in particular she's revelling in the "the financial empowerment". "I am going to do this with my money, and if it bombs it's my fault."
Quarter 4 2019 – Net worth update: Up $534,000 for 2019
Wow, I cannot believe the year went by that fast. I hope you’ve all had a safe and happy Christmas and New Year period. As we said in our New Year birthday post, we had a busy quarter on the work front. It’s been getting really bad. Work stress is a very real concern for both my wife Ellie and I, and it seems only fitting that we want to FIRE. It’s still very far away, but we started 2018 with a goal of retiring in 10 years, and a year has passed. Given the rapid passage of time, 10% time progress is nothing to be sneezed at. However, in October I wrote a post on how our progress seems to be accelerating, following the rapid progress we made to a $1 million share portfolio. But the numbers in that post were quickly superseded with some big news. Financially speaking, the quarter started out with a bang when Ellie received a $100,000 inheritance and the mixed emotions that came with it. It was a huge win for our finances, but it came at the expense of a familial loss. While that was the headline event this quarter, let’s take a look at the full picture and see how we ended the year.
Our financial goals
Here are our early retirement goals. Essentially we want to retire early before the age of 45, with the following in assets:
$2,000,000 in shares
$600,000 in two investment properties
$700,000 in superannuation
$1 million house as our primarily place of residence
Total asset goal = $4,300,000.
Between those shares giving us dividends and rent from the investment properties, we want to have a gross passive income of about AU$150,000 per annum (pre-tax), to fund a nice early retirement where money isn’t a concern. You can also track our net worth growth in our previous posts. So how did we go in October-December to finish up the year? As always, let’s start with shares. https://preview.redd.it/y07lxgmtv0a41.jpg?width=1200&format=pjpg&auto=webp&s=13392f5dd13fc484828da42ab64b33a995657cff
October-December: Shares
After finding out that we were going to receive the inheritance, our thoughts turned to where we could invest it. That ended up being in a pair of long-term, hopefully safe and stable Listed Investment Companies (LICs). They’ll provide us with around a 6% gross dividend return. With $50,000 thrown into each, they should see our gross passive dividend income increase by around $6,000 annually. That’s around 4% of our entire FIRE income right there, and we’re incredibly lucky and grateful to have received this. Otherwise, after that explosive start to the quarter, the remainder was actually very quite on the buying front. We had a big tax bill to pay, as well as another big expense for 2020 – holidays – that we put a down payment on. But you’ll have to wait for our Q4 income and expense report (coming up next) to hear more about that. However, that did mean that we lost the best part of a month of our salaries to those expenses. While we bought big, our portfolios were also hit by the (seemingly endless) banking scandals that have hit the sector. Given that we’re heavy in financials, that side underperformed – all the more reason to add extra diversity to our portfolio! So how did it all go with the value of our shares? Our share portfolio was started the year on $725,000, was $819,000 at the end of Q1 2019, $931,000 in Q2 2019, and broke the $1 million mark at the end of Q3 at $1,023,000. The ASX started October on 6688.30 points and ended the year on 6,684.10 – down 0.1% for the quarter. We ended 2019 with a value of $1,120,000. Given how much many of our stocks were beaten down, we were actually very happy to end up with that – it could have been a lot worse. We’ve noticed that LICs generally show a lot of resilience during downturns, so they could have cushioned the blow for our balances. Regardless, we ended the quarter up $97,000 (9.5%). In total on 31 December 2019 our share portfolio was up $395,000 compared to 31 December 2018 – an increase of 54.5%, which is just mind-blowing to us. Even without the inheritance, our portfolio would have gone up by around 40%. What a crazy year on the share front, in so many ways. https://preview.redd.it/0j3y8cbuv0a41.jpg?width=1200&format=pjpg&auto=webp&s=ee77b2e1c64c7cb09090dd5979aec73b3b815839
October-December: Superannuation
Next up is our superannuation accounts – or compulsory retirement savings. During the quarter there were all sorts of ruminations about the Australian retirement system. Someday a future government is going to have to bite hard on the retirement age bullet and raise it, because it’s just not going to end up well for the economy otherwise if they keep it as it is. But that unpopular can of worms will still get kicked down further the road for a few years longer. Thankfully we plan to avoid a lot of the hoopla around government pensions (or lack thereof) in our old age by being self-funded early retirees. That said, for as long as we continue working, we receive employer-funded contributions into our retirement funds. We don’t make extra superannuation contributions because we can’t access these under current laws until we’re at least 60 years old (wait for that number to eventually rise as well). We’ll do a post about that in the next few weeks. So how did things go for our superannuation balances? As a reminder, we started 2019 with $335,000 in super, $368,000 by 31 March, $393,000 by 30 June, and $409,000 at 30 September. Three months later we’re now on $428,000 – an increase of $19,000 or 4.6%. It’s also an annual rise of $93,000 or 27.7%, which is a staggering amount. https://preview.redd.it/5jlko3xuv0a41.jpg?width=800&format=pjpg&auto=webp&s=7d6b00ee9b3f2e44dec609f6d355b49bc7930edf
October-December: Primary place of residence
Last quarter the dial on the value of our house price moved for first time, and there seems to be some corroborating evidence for that. House prices stagnated here in Brisbane over the last year, while southern Australian house prices took a dive of 10-15%, However, now news comes of a change in sentiment, and house prices are forecast to rebound by as much as 17% in 2020… Unfortunately it’s only meant to be between 3-7% in Brisbane. But we can live with that. However, despite the change in the national property market’s sentiment, has anything changed with the value of our home in the last three months? Last quarter in Q3 onthehouse.com.au said it was $710,000 (up from $705,000 in Q2), and ANZ bank said it was worth $720,000 (up from $655,000). We didn’t trust the actual numbers, but we went with the number ANZ gave back in Q2 – $655,000, a $5,000 increase. We haven’t seen as much real estate action in our neighbourhood this quarter, so this will be interesting. At the end of December onthehouse.com.au gave us a valuation of $735,000 – up $25,000. Once again, onthehouse.com.au seems to be a bit too optimistic (but we’d certainly take it!), while ANZ is a bit closer to the mark. That said, compared to Q3 when ANZ it was $720,000, in Q4 it now said it’s worth $668,000. Huh? ANZ certainly likes to bounce around. So once again, I’m a bit conflicted with how to value things. While one valuation goes up $25,000, the other plummets by $52,000, and they give different figures. The ANZ report is certainly closer to the mark in any case in my opinion – and it’s still higher than the valuation we settled on last quarter ($655,000), so hopefully we’re just conservative. But I’m going to play it slightly safe and hold the valuation at $655,000. If both valuations move in the same direction (either up or down) as they did last quarter, we’ll move things. Our future retirement home will cost around $1 million to buy, so we’ll have a shortfall that we’ll need to make up once our passive income goals are finalised. However, we’ve paid off the property, so all the capital is ours and counts towards our net wealth. But our primary place of residence isn’t the only skin we’ve got in the real estate game. https://preview.redd.it/mcr008ivv0a41.jpg?width=1200&format=pjpg&auto=webp&s=ae97ad34cdeb0a4cc5f646d85abcf690cdff4d38
October-December: Investment properties
Righty-o – Last quarter things moved up by $5,000 to a combined value of $605,000, with an extra $3,000 paid off our two investment properties. This quarter, things only paid themselves off by a barely noticeable $1,000 with a total debt of $374,000. On the valuation side, this was the state of play in Q4 via onthehouse.com.au and ANZ property reports:
Onthehouse.com.au – combined value $680,000 ($695,000 in Q3).
ANZ – combined value $619,000 ($605,000 in Q3).
So just like with our primary place of residence, it’s conflicting data. However, this time it’s reversed, with onthehouse.com.au dropping a little bit (by $15,000), and ANZ increasing (by $14,000). Between the two, things have apparently dropped by $500 per property – which is just splitting hairs. Given they were both pulling in practically opposite directions, we’ll call this flat again at $605,000, and claim the $1,000 mortgage repayment. ANZ seems to once again be the more accurate measure, and we’ll once again play it conservative and retain their $605,000 total value. Deducting our debt of $374,000 gives us total equity of $231,000. That’s a tiny increase of 0.4%. So in total, a very unremarkable quarter on the property front! https://preview.redd.it/qnl4a8swv0a41.jpg?width=1200&format=pjpg&auto=webp&s=b32e426f3d26d2a09518504ebc59867398e9a562
Financial state of the union
Looking back to the start of the year, we began with a net worth of $1,900,000, increasing to $2,057,000 in Q1, sitting on $2,196,000 in Q2, and reaching $2,317,000 in Q3. So here’s how things look at the end of 2019:
Asset
Value
Shares
$1,120,000
Superannuation
$428,000
Investment properties value
$605,000
Investment properties debt
-$374,000
Primary place of residence
$655,000
Total
$2,434,000
That’s another nice increase of $117,000 for the quarter – a 5% lift. For the whole year, it’s a quite extraordinary increase of $534,000, or 28.1%. Taking out the inheritance Ellie received, it’s still a momentous lift of $434,000 – which would have been 10% of our entire net worth goal: a ridiculous number, really. Given the ~18% market rally in 2019, ridiculous really should be the word of the year. It would be crazy to expect the same in 2020. But given that much of 2019 was mired by Brexit and the US-China trade war (which is now partially agreed), 2020 might be another year with rocket under it now that Brexit is also almost sorted (did I just jinx it?). That said, Iran, North Korea, and any number of other surprises will await us as well. Domestically in Australia, talk of further interest rate cuts might drive even more money into shares, and the housing market is apparently rebounding. If it wasn’t for the underlying shaky fundamentals, you’d bet that 2020 will be another solid year… But we’ll see. In the end all I know is that our net worth has increased – and it’s now 56.6% of our total target – progress towards FIRE of 12.4%. What a year! Next up is our income and expenses report for Q4 2019, so stay tuned for that and our quest to save 90% for the year. Will we reach it? Blog link:https://hishermoneyguide.com/quarter-4-2019-net-worth-update/ https://preview.redd.it/g1q7rc8ew0a41.jpg?width=1200&format=pjpg&auto=webp&s=444faca594580d9b556b839b525888d357901ab4
2019 income and expenses: We saved $189,718 – 88.5% savings rate
The big question we’ve been asking ourselves is whether we reached our goal of saving 90% of our income over the course of the entire year. Our running total for the first nine months of 2019 was an income of $151,400, with expenses of just $12,710. That’s a huge running savings rate of 91.6%. But the first nine months don’t tell the full story by any means. We still had our eye watering tax bill to include this quarter. Plus a surprise expense: we’re going on holidays in Q1 2020, and in November we pre-paid a decent chunk of it! So can we keep our heads above the 90% threshold across the whole year as we aim for financial independence and early retirement before age 45? Let’s find out!
October-December: Income and side hustles
Let’s start with our salaried work and effort-related ‘active’ income (aka: side hustles). For starters, this quarter had a profitable seven pay cycles within it for salaries, giving us $43,314.18 after tax. That’s $6,187.74 more than last quarter which only had six pay days. Wouldn’t it be nice if every quarter had seven pay cycles… We haven’t had any big wins on the side-hustle front to finish the year. But here are other small income streams. Our bottle collection numbers were $147.70, compared to $235 last quarter. That brings us up to $1015.20 for the year. Not bad for some tax-free cash. However, this side of things has certainly slowed down for us recently. We just haven’t had the time to go on walks after work like we did earlier in the year, so these numbers are decreasing. And the streets actually seem cleaner as well, which is awesome. This blog made $119.04, compared to $119.26 last quarter. In total the blog earned us $369.76 for the year. In late 2018 the site cost about $521 to set-up with 6 years of hosting, two years domain registration, and a paid theme. So the way things are going, next quarter things will have more or less paid for themselves, which was the core goal of monetising the site. Thanks everyone for your support here! Next up, doing online surveys were another tidy earner. This quarter we earned $190. In Q1 we earned $170 from surveys, $100 in Q2, and $285 in Q3. That brings us to $645 for the year. When you get these in the form of e-gift vouchers, they’re tax free. Cha-ching! We also had $110 in rewards program redemptions for October-December. It’s really not even a blip on the radar, but we’ll take it nevertheless. In total we had $240 of rewards redemptions for the year. Lastly, it’s not really an ‘active’ income source, but Christmas rolled around, and our parents gave us cash in lieu of physical presents. Good thing they gave us money, too, because we have everything else we need – aside from early retirement! This year we received $1,000 in cash, which is greatly appreciated – thanks mums and dads! That brings our side hustles to a total of $566.74, plus $1,000 in presents. Added together with our salaries, that gives us a grand total of $44,880.92, compared to $37,765.44 last quarter. https://preview.redd.it/uqy6w4p1w0a41.jpg?width=1200&format=pjpg&auto=webp&s=c325286aa6e915618bf737bbacb419bb86b1b13f
October-December: Dividends
Let’s turn our sights to our ‘passive’ income: share dividends. We had a nice year of buying and reinvesting shares, so as always – we really want to see our numbers increase. It would be rather disheartening to see a year of progress reveal no progress at all. So how do our numbers compare to last year:
The numbers above are ‘somewhat net‘ – for the purposes of calculating our savings rate. It excludes franking credits, which are pre-paid tax. Looking at the numbers above, our dividend income has increased year-on-year by $2,562.32 or 20.2%, which is quite nice. For reference, this is the full picture for 2019, versus 2018:
Alright, drum-roll time. Let’s look at our expenses for the final quarter of the year: Important to note: the “TOTAL” columns are for the entire year – this table now includes expenses for the last four years: 2016-2019. For October-December we had total expenses of $11,983.96. That dwarfs our 2018 expenses for the same period (which were $7,760.86) – so an increase of $4,223.1 or 54.4%. Gimme a O, U, C, H! That figure is also almost as much as our expenses for quarters 1, 2 and 3 combined. What on earth happened?!? Well, that blowout is entirely down to two items: our tax bill – which doubled on last year – as well as down-payments on a holiday we’re taking to New Zealand in Q1 2020. Our total holiday cost will come in at around $5,000 so we still have around $3,000 coming our way in Q1 next year, so that’ll be an expensive time. However, we hope our tax bill to drop a little bit in 2020 by maybe $1,500 – so that’ll help. It was another largely our bills were mostly around the same – but not all. Firstly, there were some notable savings. The biggest step we took was downgrading one of Ellie’s professional memberships, resulting in a saving of almost $400. Across the whole year this downgrade will save us about $750 each year, which is nothing to be sneezed at. In November 2018 we also had a big expense with setting up the blog, which wasn’t replicated this year. Compared to last year our grocery bill has gone up a little bit, but not as much as we expected given the severe drought. If we take out tax from our “living expenses”, across all of 2019 we only spent $18,256 compared to $17,891 in 2018. That’s an increase of 2%, which is pretty much in line with inflation. All up our goal was to cut spending for the year, which we failed at. But given what some of those increases were, ultimately we’re pretty happy with our expenses. Yeah, some things have gone up, but others have dropped. We could have saved more if the goal was to save money at any cost, but we’re pretty comfortable with life at the moment and what we spend money on. We have a holiday to look forward to, while 2021 will be a staycation most likely ahead of another international trip in 2022. And sure, our tax bill went up, but that’s because we had a higher income – so we don’t have any right to complain there. 2019 was another year of managing to dodge big expenses for items like broken appliances or home maintenance, which will eventually bite us. Until that happens though, we’ll keep saving and investing. But speaking of saving, how did we go for the quarter, as well as the whole year? https://preview.redd.it/bfkev8l4w0a41.jpg?width=1200&format=pjpg&auto=webp&s=577ede8adf901322b29b28b93a4883a1d910930d
How are we tracking? Q4 savings rate
Now let’s throw together some numbers and see what comes out. First up we’ll look at the savings rate for the quarter:
Q4
Value
Income
$44,880.92
Share dividends
$15,256.82
Expenses
-$11,983.96
Total savings
$48,153.78
Savings rate
80.0%
Oooof! 80% is easily our lowest savings rate of any quarter of the year (Q1 was 89.7%, Q2 was 93.2%, and Q3 was 92.1%), but we always knew and said that Q4 with that big fat tax bill was what would hurt us. So that’s not really a surprise, and in the grand scheme 80% is still pretty good. But forget Q4. What did all of 2019 look like? It’s a number I’ve been waiting all year to see… https://preview.redd.it/2dcay1d5w0a41.jpg?width=1200&format=pjpg&auto=webp&s=40773ade74465500540cc0521ee432ba936b2cbf
2019 annual savings rate
So, did we reach our goal of a 90% savings rate for all of 2019?
2019
Value
Income
$166,249
Share dividends
$48,164
Expenses
-$24,695
Total savings
$189,718
Savings rate
88.5%
Darn. 88.5%. So close, and yet so, so far. Feeling an instant level of guilt, I ran a calculation to see what would have happened if we we didn’t pre-pay part of our upcoming holiday, and it was 89.3% – still short. That makes me feel a bit better. The next big savings rate killer was the tax. With the way we do our calculations, having some $4,800 of taxable side-hustle income for 2018-19 meant almost $1,800 in extra tax. The impact of that extra tax and holidays combined would have just about got us over the line to 90%. We tried and ultimately failed! Sorry, folks! In any case, saving almost $190,000 between income and reinvested dividends is something we’re really thrilled about. It’s all going into shares now, and will continue to do so until we hit our share income goals. Combined with the increases to our net worth in 2019, our goal of early retirement has never been closer and feels like it’s accelerating. We’ll be posting our 2020 goals next week, so stay tuned for that. Thanks for reading and good luck with your income and expense goals for the year ahead! Cheers, Alex Blog link:https://hishermoneyguide.com/quarter-4-2019-income-and-expenses/
https://www.afr.com/markets/equity-markets/later-shares-resuscitated-by-global-stimulus-promise-20200302-p5463d Global equity markets snapped a week of losses on Monday as investors bet on a co-ordinated worldwide central bank action plan to inject billions of dollars of fresh stimulus into the global economy and stabilise growth in the face of the coronavirus threat. The Reserve Bank is expected to take the lead by cutting Australia's cash rate one quarter of a percentage point to a record low of 0.5 per cent on Tuesday, according to the futures market. On Monday, the Bank of Japan followed the US Federal Reserve's assurance with a ¥500 billion ($7 billion) liquidity injection, committing to open market operations and asset purchases. The S&P/ASX 200 Index stormed back from a nightmare open to finish 0.77 per cent, or 49.7 points lower, on another day of extraordinary volatility triggered by the virus' spread. Shares were down 3 per cent earlier in the session. The market also fought back on news that Caixin's manufacturing PMI survey data out of China at 40.3 last month was not as bad as the official Chinese PMI of just 35.7 reported on Saturday. The latter was worse than any level recorded during the global financial crisis. David Allingham, a portfolio manager at Eley Griffiths, said the Bank of Japan's unscheduled announcement to "provide ample liquidity and ensure stability in financial markets" gave shares a desperate sugar hit. "There's rising speculation you'll see a large co-ordinated central bank response," he said. "When you put together the Bank of Japan's announcement with the US Fed's unscheduled announcement that's driven risk appetite. "It's like we're obviously moving to some kind of major response here from the policymakers. The market's learned over the last 10 years, you don't fight the Fed." The local sharemarket is now down for seven straight sessions, with $232 billion, or 10.7 per cent, wiped off equities following the fastest correction on record.
Synchronised global easing
"Clearly there's been a bit of bargain hunting and a few people thinking the low's in for the short term. This cycle more than ever has shown the central banks are willing to pre-empt and be proactive," the fund manager said. "Whether it's enough to offset some of the fundamental degradation to supply and demand around the world at the moment is another story for next month. The policy response now means we might rally, rollover, then the low could be retested again." Australian 10-year bond yields also hit a record low of 0.76 per cent as the prime minister, Treasurer, and RBA officials held emergency telephone meetings to discuss the health crisis. Yarra Capital Management's head of macro and strategy, Tim Toohey, thinks central banks are primed for synchronised global easing on the back of the US Fed's press release over the weekend in response to the virus. "It looks like this is one of those events, we've seen before in history, where central banks have co-ordinated and talked, obviously that release by [US Fed chair] Powell is very telling that easing is imminent," he said. "It's very, very, unusual for the Fed to put out an unprompted statement, in the context of that there's going to be global easing. One suspects the RBA has been briefed on that."
RBA tipped to cut
Financial markets are now pricing in a 97 per cent chance of a 25 basis point rate cut from the central bank today, with Goldman Sachs pencilling in back-to-back rate cuts to the RBA's lower bound of 0.25 per cent. The Australian dollar touched a fresh 11-year low of US64.3¢ on Saturday, before rebounding to US65.2¢ on Monday's closing bell. Local gross domestic product data is also due out Wednesday, with Goldman Sachs downgrading its forecasts to just 1.3 per cent growth for 2020. Mr Toohey expects a cut on Tuesday, but thinks two cuts are already priced into asset prices including the dollar, and it's difficult to confidently forecast further material falls for the currency on that basis. He also says the nature of China's slowdown means the Australian dollar is no more vulnerable than the euro to a downturn. "European markets are far more dependent on supply chains and manufactured goods. What we do is all about the raw material uptake. It looks to us that many industries in China are back above 70 to 80 per cent capacity." Mr Toohey said a period of stability for the Australian dollar over the short term should be interpreted as a sign that investors believed the worst of the panic around the coronavirus had passed. "We're not really dealing with considered reason here, we're dealing with emotions and non-linear responses," he said. "At some point some rational thought will come back into markets." The strategist said it was possible the US Fed would lop 50 basis points off benchmark lending rates in one move, but that the RBA would be more conservative due to other factors it must navigate. "A 25 basis point cut together with a fall in the currency more than offsets the impact, in terms of the equity market decline, and credit spreads. They have to worry about house prices going up too rapidly and financial stability concerns as in their last communication."
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