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LP
Below is an article I read that puts the age old debate of ‘The Stock Market is so risky’ into perspective. I think most reasonable people get this article, once they’ve had a chance to weigh up the facts. The problem for most is working out just what shares they should buy. This is when you pick up the phone and we have a chat. Read on.
Credit to Motley Fool.
Now, I’m not about to put the boot into property investing — done sensibly, it is without doubt one of the best investments you can make. And I’m not going to preach on about how shares are so much better — each to their own I say.
But the difference in attitudes towards shares and property couldn’t be more stark, and is worth teasing apart. Especially when much of the perception is based on complete misconception.
Take the idea of risk.
Now a loss making mining exploration company with mountains of debt and an ever shrinking balance sheet is risky — super risky — but that says nothing about the long term risk associated with an established, profitable ‘blue-chip’ company.
Sure, all shares have a tendency to be volatile over the short term, but that speaks only to the risk associated with short-term price speculation. I’d wager that buying and selling properties in quick succession was equally risky — perhaps more so given the costs and difficulties of selling houses.
People also like to tell me that shares aren’t ‘real’; they are intangible assets. Bricks and mortar, on the other hand, is a solid asset that you can touch. And as such, its value is more real.
Obviously, these people have never been to a Bunnings warehouse, a Woolworths supermarket or a Commonwealth Bank. They all seem pretty real to me.
For some reason, people also like to tell me that property never loses value. Shares, on the other hand, can ‘crash’ and do so regularly.
I’d suggest these people open up a history book. Property — like all assets — does of course ‘crash’ from time to time. Ask an American or Spaniard if they think property doesn’t crash! Sure, we haven’t seen a significant pullback in price in an Australian capital city for quite some time, but right now there is a property crash underway in many mining communities. A few years back, many Gold Coast properties lost close to half of their value and have still yet to recover.
Here’s the irony.
That mate of mine, who feels I am being risky with my investments, has 2 properties; one is his residence the other an investment. Both are in the same geographic area (and hence face similar risks), and both are highly leveraged — about 90% of their value is in debt.
The investment property actually costs more in interest, fees and maintenance that what it generates in rent. He gets a tax benefit from this ‘negative gearing’, but even with that he is still losing money each year.
Every spare cent he manages to save goes towards servicing his loans. He loses sleep anytime he hears that interest rates might rise — and I don’t blame him.
Seems pretty risky to me!
Of course, if the value of his properties can grow enough over the coming years, it will all be worthwhile — he’ll likely make a great return. That’s what happens when a highly leveraged bet pays off.
But if his properties don’t appreciate in value fast enough, or if he can no longer service his obligations while he waits, he is going to get taken to the cleaners. In a BIG way.
And I’m the one taking a huge risk?
Now, what he is doing doesn’t mean that property investing in general is risky — it’s just the way he is going about it.
And it’s the same with shares. Invest in poor companies, with borrowed money and a short time horizon — well, you deserve what you get.
But if you buy a diversified range of wonderful businesses, with established and growing operations, strong balance sheets and the capacity to deliver regular and attractive tax effective dividends — and with the intention of holding tight for many years — you’ll likely do very well. Sure, you’ll face the inevitable bumps along the way, but I wager you’ll do better than most.
If you have ever thought about investing in the markets or when to add to a portfolio, now is the greatest opportunity we will see for years to come. Read on and access the link below to see where I’m coming from…
I thought I would share with you Morgan Stanley’s latest take on international equity markets.
‘Morgan Stanley has issued a “full house” buy alert on international stock markets for the first time since early 2009, effectively calling the bottom of this summer’s equity slump.’
We have been beaten and abused by the markets throughout August and we have really felt the effects. The local market was down 17.8% at one stage from it’s highs made only 3 months prior in April this year. US and European equities are hurting but as the saying goes, ‘Buy when those are fearful’. It takes courage and your remaining capital to take advantage of these excellent opportunities when they arise. We need to take advantage of these opportunities.
Lets not forget, this is not a GFC! We have strengthening economies both in Europe and the US. We have stimulus up to our ears, encouraging investors to seek returns in the equity and housing markets. Holding cash in these environments is criminal. The market is falling on fear and bouncing on optimism of a bottom being formed. The Devaluation of the Chinese Yuan has been the catalyst across global markets for the sell off. There are concerns of the Chinese economy starting to contract but this has been in the news for the past 18 months, so why the fear now?
As I have mentioned in previous notes, I believe we will see local and offshore markets pushing back towards their highs by the end of January as this crash is all forgotten about and everyone takes advantage of the great yields and buying opportunities on display now.
Read Morgan Stanley’s take on it all:
If you have the capital preserved, now is a better time than ever to begin or add to your portfolio.
Let’s chat.
LP
Hi All,
A quick note publishing the establishment of the Performance page on the website.
The page will be kept up to date on a constant basis with the strategies and trades entered and the performance related to them.
The spreadsheet that is downloadable from the page will cover the details and performance of:
Let me know if you have any questions pertaining to this publication or if you would like to find out more about myself, my investment services, Gleneagle Securities or anything else.
LP
I issued a take profit alert on Visa on the 21st July to take profits on this open trade alert with a limit price of $9.30. The stock fell away in the sessions that followed this release and the limit price set was not filled. Overnight, Visa reported an increase in profit for the third quarter and the stock has rallied in the after hours trading session. The stock has traded up $ or xx% in after hours trade.
I am revising the limit order set on the take profit alert. Please see full report below:
Apple released it earnings and sales reports at the close of trading last night and the market wasn’t impressed. Apple sold off approximately 6.91% in after hours trading but it’s not all doom and gloom as you would be led to expect. Credit to Motley Fool on the following article who have summed it up perfectly in my opinion. I am still a buyer or Apple and these price gaps just signal buying opportunities for me. In short, expectations were out of whack, the company is continuing to grow and not by a small amount either. Buy!
Article:
Apple stock was plunging by 7% on Tuesday after official market hours, as investors showed their disappointment with the company’s earnings report for the third quarter of 2015. However, while iPhone sales were below expectations, the overall picture is not nearly as dismal as the initial price reaction would indicate.
iPhone unit sales were below Wall Street forecasts, but the device is still selling like hotcakes, and pricing trends are quite encouraging. Both total revenue and profitability were remarkably strong and better than forecasted, so investors in Apple have no reason to panic when it comes to the overall health of the business. Short-term reactions to earnings announcements are many times misguided and exaggerated, and this seems to be the case with the latest release from Apple.
Financial performance:
Gross margin was 39.7% of sales during the quarter, a small increase from 39.4% in the same period last year. The company’s guidance was for gross margin to be in the range of 38.5% to 39.5%, so the number came in above Apple’s own forecasts. Wall Street analysts polled by FactSet were expecting 39.5% in gross margin, meaning Apple outperformed both its own guidance and Wall Street expectations on the margin front.
Over the nine-month period ended on June 27, Apple produced $67.8 billion in operating cash flow. The company reinvested $7.6 billion in capital expenditures, leaving $60.2 billion in free cash flow. That’s a big 48% increase from $40.8 billion in free cash flow over the same nine-month period in 2014.
Apple distributed $8.6 billion to investors via dividends and $22 billion in the form of buybacks over the first nine months of fiscal 2015. When considering cash and liquid investments, Apple is sitting on a massive cash hoard of nearly $203 billion on its balance sheet.
On products and growth drivers:
The company sold 47.5 million iPhone devices during the quarter, a 35% increase over the same period last year. Wall Street analysts were on average expecting 49 million units, so the number was marginally below expectations. Prices were remarkably strong, though. The average selling price in the iPhone segment was $660, a record for Apple. In terms of revenue, iPhone sales grew 59% to $31.4 billion, and the product represents a dominant 63% of total sales.
Most companies can only envy the kind of growth Apple is enjoying in the iPhone segment, but short-term stock market reactions are usually about data versus expectations, and Wall Street was expecting even more growth from the iPhone. This is probably the biggest negative in the report.
iPad unit sales declined 18% to 10.9 million, while Mac sales increased 9% to 4.8 million computers sold during the quarter. Both products were broadly in line with expectations.
Apple didn’t provide specific sales figures for the much-awaited Apple Watch in the earnings release, but sales in the “other products segment,” which includes sales of Apple Watch, Apple TV, Beats Electronics, iPod, and third-party accessories, grew 49% to $2.6 billion.
CEO Tim Cook said in the press release that Apple Watch was off to “a strong start,” but chances are the company will face more questions regarding specific sales figures for Apple Watch during the earnings conference call.
China was quite strong, especially considering the growing concerns about economic instability in the country. Total revenue in the Greater China region jumped 112% year over year during the last quarter, reaching $13.2 billion and accounting for almost 27% of total company-level revenue.
LP
Hi all,
Please see the information regarding the Initial Public Offering for Adherium below:
Adherium develops, manufactures and supplies digital health technologies that address sub-optimal medicine use in chronic disease. The Company’s first product range is the Smartinhaler™ platform, comprising a range of approved medical devices (Smartinhalers) which attach to prescription inhalers to monitor inhaler actuation and provide audio and visual medication reminders, and the SmartinhalerLive™ software, which integrates the data from the Smartinhalers into a usable form via communications protocols, mobile applications and cloud based software.
Adherium’s objective is to sell the Smartinhaler™ platform directly to pharmaceutical companies, who then provide the device and supporting applications to end users via their own distribution channels and clinical networks. Additional target markets include disease management organisations and organisations conducting clinical trials.
If you are interested in taking up any of the stock on offer, pleas elet me know. This will be very tight and allocations will be small. Worth being involved in this one.
LP
Hi all,
Please see take profit alert on Visa below.
Interested in getting exposure to these trade alerts? Please call or email me through the Contact page.
LP
The Covered Call Strategy is a very conservative, long term, passive income strategy that can help you make money with monthly income streams, protect portfolio’s in market down turns and increases profitability in markets that are trending higher.
Learn more about this strategy through the website here :
http://pilkingtontrading.com.au/covered-calls-dow-jones/
This month’s report is below. Please let me know if you are interested in learning about this strategy and how it can be applied to an existing portfolio or even how to begin you portfolio.
LP
On the back of our 25% + profit taken on the recent Facebook trade, my attentions have turned to Visa.
Please see the Trade Alert on Visa below:
LP
Pilkington Trading 