Why Shares Suck

It's a nonsense argument isn't it?. Ask people in Perth who bought real estate in 2007 how that's working out for them. Some Perth investors are in negative equity 10 years after buying. So much for real estate doubling every 10 years. Some other investors made good money buying shares after GFC. Others bought Dick Smith shares. Across shares and real estate over the past 10 years, some have made money, some have lost money. Neither asset class is better than they other. They are just different. It's possible to win big or lose big in either.

 

I'm getting too old to waste time debating such things. I just quickly knocked up this chart. It's a little rough but I'll leave it to readers to draw their own conclusions. The top diagonal red line is what the typical long term investor who consistently invests regularly (and reinvests the dividends) will experience. The media and the anti-shares brigade like to assume all long term investors invest their their life savings at the market top prior to a crash. Makes for a sensationalist story albeit garbage.

 

I expect this will make it into the next edition of the Macquarie dictionary. Classic..!!

 

The top red lime is what the govt hopes superannuation to achieve - regular investment starting as soon as you hit the workforce. Over time (even if it's 100% shares), the returns are strong. It depends on regular investment into it holding for the long term.
A lot if investments are probably like that, including property. The dollar gain may be more than shares but that's most likely because it was leveraged where's shares probably wouldn't be..not for the average Joe schmo at least...

 

Not sure who this bloke is but he sounds like an idiot.

 

Did you read the post? The "upward bias" was in relation to successful stocks remaining in the index, not the direction of the overall market.

Of course there is volatility and changes in that direction, but the "upward bias" refers to long term averages which keep the successful stocks in the index, and the unsuccessful ones out

The author of the article claims that this is a "bias" that skews the results of share investment positively over the long term. My response to that is - this bias is available to us as investors, at tokenly small cost, so how is this a bad thing?

 

Have you ready my new year's resolutions?

Oh look! A butterfly...

 

Regular investing has its advantages but better returns are provided by effective timing.

Jan 2009 cba for $27 - currently up 192%
Jan 2012 csl for $31 - currently up 342%
Jan 2012 mqg for $16 - currently up 449%
Jan 2016 rio for $40 - currently up 50%

 

In the interests of sharing and caring what was your opinion, has it changed and what have you learnt?

 

Exactly

Negative Gearing, Home Mortgages, Margin Lending, Maintenance, Franking, Rates, Insurance, Renovations/Improvements, Subdividing, Commercial, Industrial, Foreign Investment,Taxes, International etc etc

There's no FHOG for shares

Annual change of capital city property prices.



From Corelogic May 2017

Four of the eight capital cities have recorded annual value growth of more than 10% over the past year with values in Sydney (+18.9%) rising at their fastest annual pace since November 2002, Melbourne values (+15.9%) have increased at their fastest pace since August 2010 and Canberra values (+12.8%) are rising at their fastest pace since July 2010. Values have also increased over the year in Brisbane (+3.7%), Adelaide (+3.4%) and Hobart (+10.2%) while they have fallen in Perth (-4.7%) and Darwin (-4.4%).

Following dwelling value falls of around 6% during the financial crisis, combined capital city dwelling values have now increased by 68.5% since the end of 2008. While this suggests a strong market, it has been significantly influenced by growth in Sydney (+109.2%) and Melbourne (+92.4%) with Canberra recording the third highest rate of growth over the period at 39.6%. All other capital cities have seen dwelling values rise by less than 20.0% since the end of 2008

 

Of even if Rip consistently purchased over the entire period the downs would have been smoothed, effectively providing the red line in return.

 

Ok, so you either didn't read the post or don't understand how a stock index works. Got it.

 

I think the blog is one eyed of course because he is a property guru? or something like this.

My opinion has not changed, property and shares have their place, ideally be great to have a mix

Which outperforms comes down to the skill of the investor and some luck.

The advantage I see with property is LVR and you can add value ie develop, renovate etc, not sure you can do this with shares?

If you look at any charts pertaining to property or shares over 10-20 years dependent on where you buy, if you get the timing wrong you will lose money regardless.

All is forgiven if you are a buy and hold for long term, however, I would want to be seeing cash flow if this were the case.

MTR

 

Option 3. I wasted 2 years of my life doing a M Comm.

 

@Redwing - serious is winning atm, 437:406

 

The company is a snake oil promoter. promise the world and deliver a pile of smelly crap. Told me I was paying to much interest and they could get a cheaper loan. They thought ANZ where best they are the worst they couldn't get a loan. They didn't even understand the effect of the APRA regulations But I got a loan by getting a broker to put a tender out to banks. They presented supposedly discounted crappy overpriced property at agents list price and wanted a 2.5% commission anfd tried to flog OFP apartments. I negotiated a price with the agent for much cheaper but still didn't buy because it was a poor investment. The fact you need a LVR for property and that it is often low is a disadvantage for property. You can get a margin for shares at 80% with out jumping through hoops. With a deferred purchase plan you can get a 100% loan, no hoops just pay 3 years interest in advance. If you borrow the 3 years interest and put options (insurance against price falls which you cant get with property) you can effectively get about a 2000% loan.

 

I interesting


Pretty sure this group was selling US properties in Detroit to investors, not good product

 

The poor author – runs a business about cash flow property and then forgets that shares pay dividends! If that wasn’t enough to invalidate his entire article…


“But the thing to remember is that the All Ordinaries isn’t a measure of all stocks in the Australian market. The All Ordinaries only tracks the biggest 500 companies.

Now the biggest 500 companies in Australia is fairly stable, but it can change over time.

So let’s say one company does particular poorly one year. And it goes from being the 400th biggest to the 505th biggest.

That company drops out of the All Ords.”



This is unfortunately just flat out wrong. In the space of 4 sentences he makes 2 flat out wrong statements about equity indices that he could easily rectify by simply googling the subject.


Fair play to him though – he makes his money selling property so I’m not sure why I would expect anything else.

 

Its of the same quality of posts a while back in the IP vs Shares thread. Pointless to even bother arguing about. Those that want to gain an understanding will DYOR, I'm not interested in convincing anybody any more, particularly those that cant run a basic mental filter over this type of nonsense from a clearly vested interest