December 2020 'The three most harmful addictions are heroin, carbohydrates, and a monthly salary' - Nassim Taleb

unnamed-7

Wednesday 2nd December 2020

The short story is the RBA met yesterday saying we’ve ‘turned a corner’ economically and they’ll ‘look to do more if necessary’ depending on jobs and inflation data.

Feels like we maybe in for another bull run in property and shares and to be more specific, the gap between those who own assets and those who don’t will widen even more.

 

Wednesday 9th December 2020

Today SOL held the 118th annual meeting online thanks to COVID. The stand out, other than they being the only company on the ASX to have 20 years of increasing dividends (2000-2020) for shareholders and have never missing paying a dividend even during the Great Depression, now is the first time in the company’s history they’re using debt to make investments.

While cash holding and extremely low gearing offsets this debt, it’s a significant change in 118 years of behaviour and a sign of the times.

 

Thursday 10th December 2020

Yesterday I recorded this video https://youtu.be/w2eRhjEd4jw on benefits of exercise for USANA Australia and the current Reset Challenge they are running.

xxx called to share he got rid of NAB and is close to divesting ANZ and a few others, trimming down is portfolio by around 50% in terms of number of companies held.

 

Saturday 12th December 2020

CSL (in partnership with the University of Queensland) are in the poo with their COVID vaccine’s false positives for HIV. Apparently the researches knew of this for months thinking this was a ‘manageable risk’.

In not sure what part of a false positive for HIV is manageable at all. But perhaps that’s just me.

 

Tuesday 15th December 2020

A few local business partners went to Bounce tonight for our annual USANA Christmas party and secret Santa. So. Much. Fun! 

APRA has dumped the restrictions on banks paying out more than 50% of their profits to shareholders. This will be welcome news for investors overweight in bank shares.

Turns out the banks to handle a situation far worst than the COVID Crash according to recent ‘stress testing’.

This next section is from Noel Whittaker’s latest newsletter on bonds. It a great write up on where things are at economically at the moment. Recommend subscribing to it if you don’t already at www.noelwhittaker.com.au

You may have read this week that the Australian government has offered $1.5 billion worth of March 2016 Treasury notes. The demand was so strong that the offer was 5.47 times oversubscribed. One investor, thought to be offshore, purchased at least $1 million worth three months Treasury notes at a negative rate of -0.01%.

This of course begs the question as to why anybody would “invest” in a security paying a negative interest-rate. To understand the reasoning, let’s have a quick course on bonds. Most government bonds pay a fixed rate of interest with the capital sum payable on maturity. Now, if I have a bond with a fixed rate of 3%, and interest rates fall generally so that the going rate becomes 2%, then my bond will rise in value. This is why bond markets around the world have been booming over the last few years as interest rates have tumbled. Therefore, if I buy a bond with a negative rate of 001%, I will make a capital gain if interest rates fall further. Obviously, any purchaser of a fixed negative rate security is expecting interest rates to fall further.

The other reason is a currency hedge. For example, if I thought the euro was undervalued, I could buy euro bonds with a zero or even negative rate with the expectation that they would rise in value in Australian dollars if the euro appreciated against the Aussie dollar.

In Denmark now negative rates are the norm. This means if you buy a property in Denmark the lender pays you the mortgage payments – that’s attractive to homebuyers, which is why there is property boom in Denmark. But it’s no good for savers. If your mother placed  $100,000 in the bank at a negative rate of 1% she would receive only $99,000 when that deposit matured in 12 months. It’s a crazy world.

 

Tuesday 22nd December 2020

Fortescue Metal is now the 6th largest listed company over taking Westpac bank, thanks to surging Iron Ore prices.

STW released their estimated distributions for the last quarter, down 36% from last years same quarter.

On average yield’s were around 4% on Australian indexes last year are now a little over 2% (plus franking). Income has become a lot more expensive.

 

Thursday 24th December 2020

CCP jumped 20% today on an acquisition. It’s now around $30ish.

xxxx called telling me he hit his investing goal today with his purchase today in terms of capital he’s put into the market. We keep each other accountable on our investing behaviours.

The other take away from this conversation was if talking about vanilla investing (indexes for example) you could have bought any day between March and October 2020 and done well, using this calendar year as a time frame.

Which brings us to the next point. Time frames matter, a lot!

Outcomes can be heavily manipulated based on time frames used. A change of starting date, for example and the outcome can be chalk and cheese.

Put $10k in the market in January 2020 vs putting the same $10k in during mid March and the results in December are way different. This only matters if your investment horizon ends in December 2020. If it doesn’t, then don’t sweat it. Keep on investing and control the controllable and ignore everything out of your control.

 

Friday 25th December 2020

Merry Christmas!

 

Tuesday 29th December 2020

Vanguard distribution estimates released today.

With distributions paid for the March, June, September quarters and soon the December quarter it’s clear most businesses have struggled according their the profits and distributions for the 2020 calendar year.

I’m guessing 2021 will be an improvement on last year’s distributions. But by how much is the question?

Bitcoin continues to fly. My friend tells me it’ll be the alt coins next at BTC dominance drops slightly and some money goes into the alt coins.

 

Thursday 31st December 2020

Wall Street ends 2020 the new records.

The S&P500 up 16%.

The NASDAQ up 43%.

VAS (Australian market) did 1.87%.

Bitcoin did 307%.

Who’d have thought?

Depending when you bought (or sold), how often and what you bought, your returns are anywhere between incredibly negative and insanely positive. How's that for a prediction. Haha.

All the best to you in 2021!

Leave a Comment