NSW Sydney Thornhill Event - 17th June

I've quickly done a 5-year backtest in Sharesight for the 4 "Thornhill" LICs assuming $10,000 invested in each of ARG, BKI, MLT and WHF with all dividends reinvested.

• Initial Investment - $40,000 at 19 June 2012
• Total return - $41,147
• 18.08% pa total return ( that's per-annum )
• You would have also outperformed the ASX 200 by 3.16% per annum.

Note that the total dividend income is $18,970 or 47.4% of your original investment.

 

Same as 80% LVR on an investment in Port Hedland 5 years ago. No SANF now anyway. Your income would have fallen off a cliff. The difference with the LICs is that you probably won't have such a dramatic fall in the dividend income. If you hold it long term the LICs asset value is likely to recover more quickly than the investment in Port Hedland.

In the scenario of a share correction, the kicker is that if you are reinvesting dividends automatically then you a dollar-cost avergaing at a lower buy price as the LIC value tapers off. That leads you to substantially increasing your asset base for recovery. That's the theory anyway.

Edit - clarification / more info.

 

But I think most residential markets in Australia are not really comparable to the Port Headland market in terms of risk.

 

Volatility could be the reason? I don't want to receive a margin call.

 

I'd be very keen @Gockie

 

I think tenant rights have improved quite considerably over the years, but can understand where he's coming from.

 

@wombat777 could you please elaborate further if you don't mind?

 

If I run the backtest 12 years to start from June 2005. This includes the GFC. The total return is 10.58% per annum.

 

Which trading platform are you using? Nice chart.

 

Take a simple example of a hypothetical quality income-paying stock XYZ that trades at $10 per share.

• Initially stock trades at $10 and pays a $0.50c dividend. A 5% yield. You own 500 shares with a value of $5000. The company pays your dividend and you get $250 ( 5000 x $0.50 ). You reinvest the dividend and buy 25 shares ( 25 x $10 = $250 ).
• Market corrects and because of general sentiment that stock drops to $6 yet still pays a respectable dividend at $0.40c ( assume the company has decided to pay a lower dividend but is still generally doing well ). Yield on the shares has improved to 6.67%. The next year your dividend on the 525 shares that you own will be $0.40 x 525 = $210. You reinvest the dividend and buy 35 shares ( 35 x $6 = $210 ).

Because the shares are "cheaper", the buying power for your dividends to buy shares has improved, increasing the rate at which shares have been accumulated through reinvesting your dividends.

I haven't accounted for tax on the dividend income in this example.

 

This is sharesight.com. It is a platform independent of broker that I use for tracking my share investments.

You can start with a free account which allows you to track a single portfolio. I have a paid account at $25 / month which I use for tracking 3 portfolios ( in my case direct shares, my super and also a what-if portfolio I use for backtesting etc ).

 

As promised, I have created the Excel working. I have posted it at LIC vs IP
Didn't want to derail this thread so much and also take away the focus from the person (PT) to the actual concept.

 

1991 had an issue price of $5.40 so PT likely got in 26 years ago.

I knew a few people who got in at initial listing and oft wonder if they still hold them or continually reinvested

How far back was CSL at $7.00, its been a stellar performer

In your chart what property figures are you basing it on @devank ?

 

According to charts, 2004. Only 13 years!

 

Partner says he is looking at buying shares instead of having his money sitting in term deposits. Win!
Thanks Virgo for the event.
My partner may have come down to Melbourne with me this weekend to see Peter there, but now he didn't need to.

 

Very funny indeed.

Best not let him know we have made a fortune from leveraging with property in Syd and Melb over the last 4 years,

Lets not forget he is a business man first, he is selling his theory, his business model first, why do you think he is so rich.

Do you really think the average person would achieve what he has achieved if you are not even timing the market with this stuff. You need a sh$t load of cash, cos you cant even leverage like property.

When someone can come back with some real numbers on their income from shares I may sit down and listen until then I am waiting for the crash...
Call me cynical but many people are getting excited because PH is telling them what they want to hear, you will get rich, painless, no timing of market, forget crashes, let me show you my charts it all works out at the end.

I wonder if he has any clients that have come along with their huge portfolio of shares, with their income and what they have done. My guess is those clients have started their own business and are his competition.

All to their own, be interested to see what happens when share market does crash. I remember what happened last time, people lost money and they realised it was not just a paper loss it was real.

 

Stay sceptical... that's ok! But it's much better than just having money lying around in a bank account!

 

That in itself tells me something, but me thinks people are only interested in the good stuff, because they get caught up in the message..... I will get rich

 

How can you actually be sure about this?

My gut tells many jumping into this is in the main because they no longer can service debt and they have some equity they made from recent property boom markets and this is another option to try to make their money work while trying to increase cash flow. Nothing wrong with this of course unless you sacrifice this for capital.

Many are impressed with PH net worth, I am impressed with Trump's net worth, does not mean I can repeat what he has achieved. I just wonder if anyone has thought about this one.

Just being the cynic for the evening.

Devan was the only one who pointed out some questionable elements to the seminar, notice what happens, most want to ignore this because they are only interested in becoming rich.

MTR

 

Sorry... I don't understand what you wrote here? Nothing wrong with this of course unless you sacrifice this for capital.
You are not sacrificing capital... how did you arrive at that conclusion?