Managed Funds Going 100% cash

Discussion in 'Shares & Funds' started by TwoDogs, 22nd Oct, 2008.

Join Australia's most dynamic and respected property investment community
  1. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    if that does happen, and it breaks through the 3900, then expect to see 3400 as the next stop!
     
  2. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    yep, we are right on the lows!

    looks like the all ords dropped 1% at match up! cause it was down 3.4% at 4pm
     

    Attached Files:

    • xao.jpg
      xao.jpg
      File size:
      77.8 KB
      Views:
      9
  3. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    looks like the property index has broken support.
     

    Attached Files:

    • xpj.jpg
      xpj.jpg
      File size:
      76.6 KB
      Views:
      8
  4. Alan__

    Alan__ Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    508
    Location:
    Sydney
    Since my MF is 100% in cash, I'm starting to use some of my own cash reserves to DCA into direct shares(without any loans!).

    I'm limiting this to the Top 50 with high dividend yield and fully franked dividends.

    I'm not overly concerned if the price drops a bit in the short to medium term as my call is I'm buying at a good price with reasonable tax effective returns and a good chance of price growth in the future. I'm doing this a bit at a time as opportunities present themselves.

    I'm not of the opinion that the world is about to end. :)
     
  5. try anything once

    try anything once Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    104
    Location:
    melb
    ..Cause the $50 of booze can help you forget the $5,000 you lost yesterday?? Works for me.
     
  6. try anything once

    try anything once Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    104
    Location:
    melb
    Funds vs ETF

    personnaly I'm a bit dubious about buying units in any fund soon after a big asset price drop. Perhaps I'm wrong but how do you know the losses are fully reflected in the fund price?

    At least with ETF you can rely on arbitragers to keep the prices in line with the held assets.
     
  7. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    arent ETF pricing also affected by demand for the stock? ie if there are to many sellers, it will be cheaper than its NTA? or does the fund provide a market for the shares?
     
  8. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    good to see the DOW was up 172pts over night. Looks like the current 3900 will not be broken today.
     
  9. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,374
    Location:
    Buderim
    The Market Maker pretty much keeps the ETF price in line with the underlying index. But generally there are some opportunities to take advantage of a wider spread on occasion. I have often picked up STW a bit below its NTA. But it's certainly nothing like LICs which can trade at a large premium/discount to the underlying NTA.

    Cheers - Gordon
     
  10. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,393
    Location:
    Sydney
    Most unit trusts which invest in shares will calculate their unit price daily and they MUST take the current share prices into account.

    Some alternative structured investment products and hedge funds don't calculate unit price daily (some are monthly or even quarterly :eek: ) ... so there is much more potential for discrepancy there.

    Anything which invests in assets where there is no liquid market (eg owning direct property or unlisted companies) is where you potentially run into the big discrepancies ... especially where there is the possibility of them doing their own valuations :rolleyes:
     
  11. Redwing

    Redwing Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    7,426
    Location:
    WA
    Something we thought about also, however we'd planned on using our share and Managed Fund dividends to assist cover the shortfall on our property portfolio

    Maybe MW bailed out of the market at the right time as well, its been an interesting ride

    Luckily with property, interest rates are coming down to meet increasing yields in our situation; hopefully they meet in a happy place ! Prior to reading this thread we'd looked at adding CFS W/S Geared share fund and an Index Fund for our SMSF due to discounting of late though we are still watching with interest
     
  12. MichaelW

    MichaelW Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    839
    Location:
    Brisbane
    Hi Redwing,

    Funny you should mention that... But I was thinking the same thing myself the other day. I bailed on Black Tuesday in January when the market tanked to 5200. But, since then I've preserved my capital and been sleeping like a baby while the market tested and broke through 4000. Not to mention the 10 months of interest on 100% borrowed funds as a mix of LOC/ML.

    I ran the numbers, and to have stayed the course would have cost me an additional $200K odd split pretty evenly between capital losses and interest holding costs.

    It was interesting to note that, at the time of exiting, I spoke to a close friend who is a financial planner, but he recommended I stay the course and the ASX would see 6800 again by Christmas. To me its clear, with perfect 20/20 hindsight, I was correct to make my flight to cash at the time. Seems some pretty big MF organisations are now belatedly making that same call themselves.

    As my wife put it succinctly: "If we'd tried to stay the course in the stock market we would have lost Mona Vale by now." And staying the course was contrary to my strategy. I always buy the trend, and a long only strategy just doesn't work in a bear market. Period. Entry/exit costs are so low for equities that they don't factor into my strategy. It made perfect sense to exit as soon as I was convinced equities had turned bearish. My only regret is that I missed some of the earlier bear technical signals not being a tech trader, and that I was only using fundamental signals which were still largely bullish. This delayed my exit some two months and quite a bit of equity later.

    But as it stands, we're still in great shape having held my Mona Vale development site and being able to meet all my cash flow obligations comfortably. We're now watching interest rates fall and the government prop up the property market with handouts. Commodities are crashing so my tender costs are getting cheaper daily. Pretty soon, the rental yield on my costs fully let on completion will be more than the prevailing bank interest rates. i.e. CF+ from completion at day 1 fully let. Thinking of tendering my build early to mid 2009... From sleepless nights to happy days. Life's a joyride!

    Cheers all,
    Michael
     
  13. Chris C

    Chris C Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    904
    Location:
    Brisbane, QLD
    I was just reading you signature and was wondering how you feel about you game plan given the current climate? Are you still confident that property will see reasonable growth over the next 3 - 5 years?

    Also do you have an general plans and time frames for re-entering the share market? Also when do you expect to leverage back into the market?
     
  14. MichaelW

    MichaelW Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    839
    Location:
    Brisbane
    Hi Chris,

    To be honest, I can't see me reaching true financial independence in that timeframe any more. I'll have to re-calibrate allowing for the massive crunch that fell right in the middle of my timeline. I still expect to be in a very strong financial position by 2015, but not financially independent. I had hoped to have over $100K pa in net passive income by 2015 after all other investment costs accounted for. At this rate, I could get to over $50K but not the full $100K. i.e. Develop Mona Vale, sell down two and hold one. That would clear all my debt and leave me generating around $50K pa passive income. I own my PPOR outright. If we get some capital price appreciation beforehand, then obviously that number improves.

    As for the stock markets, I think they're already over-sold but we might see more selling down through the beginning of 2009. I feel 3500 will need to be tested before this is all done and dusted. Commodities IMHO have a lot further to fall.

    But its crazy times and too many government interventions that haven't been factored can influence the potential outcomes. I still think property will be propped up by interventions to avoid a negative wealth effect vicious cycle in Australia, so its a smart place to invest. Inflation will eventually come back in earnest, but for now easing rates and government interventions mean property prospects over a 5 year horizon are positive IMHO. I've got 7 years to realise my strategy yet, and might still be able to pull it off with a lot of hard work. The current credit crunch is not the end of the world as we know it, but it is a big temporary dislocation.

    Cheers,
    Michael
     
  15. benbegg

    benbegg Active Member

    Joined:
    1st Jul, 2015
    Posts:
    31
    Location:
    Brisbane, QLD
    I for one think this rally we are having will be short lived as it is only due to the interest rate decreases. Imagine what a tanking the financials would take tomorrow if the RBA does NOT decrease the rates by 1/2 per cent. I also agree that we have further to fall, even though there might be a short term rally. Sure it is nice to buy into the market and think you are going to make some quick dollars but we seem to be very much at the mercy of the US market at the moment so when you wake in the morning you either read good news or not so good. I prefer at the moment and after such a big fall in the markets in Oct to just read the jokes and leave the business to later till I have eaten my breakfast.