Wednesday, 1 July 2020

Net Worth: JUN 2020

My NW rose about 0.5% during June, reaching a new 'all time high', which is quite pleasing during the middle of a pandemic (although anyone highly invested in tech stocks or a tech index fund during the past 6 months will have made about 35% gain!). Our reallocation of SMSF investments from bond index fund into growth index fund helped boost the performance of my estimated SMSF account balance during June. And my stock portfolio* also showed a small gain for the month. Our estimated house valuation hasn't changed even though new average monthly sales price data was available - apparently the average sale price for houses in our postcode has been constant for the past four months. My share of our home mortgage continued to slowly reduce, as we move past the 2/3 mark of our 25-year mortgage.

The 'other real estate' value remains constant (i.e. left at the cost price) for the off-the-plan $1m investment unit I bought last year and the lake house I 'inherited' a few years ago. And the 'other mortgage' value is being left as the notional cost price of the investment unit (I borrowed the money for the 10% deposit and stamp duty using part of my portfolio loan line of credit, and the remaining $900K is the amount I'll need to borrow to settle when the unit is completed in 2023). For fun I've been tracking one-bedroom unit sales data for the postcode area of my investment unit, and the calculated approximate monthly valuation has been in a modest up trend since I paid the deposit last year. But I won't start tracking the estimated value of the investment unit for my NW calculation until after it is completed and I get a proper valuation done.

But if the current trend in unit prices is accurate and continues until construction is completed in 2023, the unit *may* be worth around $1.5m by that time. Which should make it easy to get a $900K mortgage, and would also mean that my $140K investment (deposit and stamp duty) will have grown to around $600K equity in the property. After deducting the loan for the deposit and stamp duty, and the capitalised interest on the loan, that would result in a net profit of around $412K (subject to CGT). Can't really calculate a ROI for that as the investment was 100% funded using borrowed funds. Of course there is no guarantee that the unit will be worth more than I paid for it, so I could end up losing money.

* the 'Stocks' amount is net value of my geared stock/fund investments outside of super, minus the various margin loan balances and also the balance of my 'portfolio loan' that wasn't used for the unit deposit and stamp duty payment. As the 'portfolio loan' balance is increasing each month by both the capitalised interest, and the transfer of $1,500/mo to fund my financial planning business fixed costs, the 'Stocks' figure isn't really an accurate guide to how my stock/fund investments are performing.

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Tuesday, 30 June 2020

Last chance (for most people) to maximise concessional superannuation contributions for this FY

As today is the last day of the FY, I checked my CFS (employer selected) superannuation funds online transactions for 1 June 2019- today to see what the total of 'employer' (SGL and Salary Sacrifice) contributions added up to for the current FY. I had intended to 'top up' any remaining gap to reach the $25K annual cap on concessionally taxed contributions. It turned out that because of a late payment for June 2019 (hit the account on 1 July), and an unusually large employer contribution for March 2020 (still not sure why that was - I suspect it relates to SGL being higher that month as the annual 'bonus' was paid out, but the increase doesn't correlate with the size of the bonus compared to normally monthly wage, so perhaps the monthly pay/SGL gets annualised and capped as if I was earning that monthly rate all year?) I had already exceeded the $25K annual cap on concessional contributions. So, I didn't make any extra contribution (which I would have been able to claim a tax deduction for if I lodged the relevant form with the super fund by the end  of next FY).

So, anyone that hasn't hit the annual $25K cap on concessionally taxed contributions (for example, if you don't have salary sacrifice arrangements in place), has today to make the payment (although you'd have to check that the funds transfer hits the super account with today's date or it might end up in next FY as far as the ATO is concerned).

There is also a small 'loop-hole' that allows people with super balances below $500K to 'carry forward' unused concessional cap amounts for five years (from 1 July 2018), so if you didn't make the maximum $25K concessional contributions last FY you may be able to make a larger contribution this year (or else if you don't max out your concessionally taxed contributions this FY and have a low enough super balance next FY, you can 'carry forward' the unused cap and make a larger 'catch up' contribution next year.

Of course this all requires you to a) have enough spare cash flow to make additional superannuation contributions, and b) want to put more money into super (its tax effective, but on the down-side it means the funds are inaccessible until 'preservation age' in most cases).

DW and DS haven't maxed out their concessional contributions this FY, so if they are working next year they may be able to take advantage of the 'carry forward' rule to make additional contributions next year.

There is a good source of information summarizing the various contribution rules here.

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Friday, 26 June 2020

Past the half-way mark in my Master of Financial Planning studies

The uni results for the course I studied in Q2 (Planning for Retirement) came out this morning. I got a Distinction (77%) for the subject, which was quite surprising given that a) the weekly course modules online were very brief (30 minute read each) and simply provided guidance as to which chapters of the prescribed textbook were supposed to be read (I never got around to reading the textbook at all), and b) although I got 80% for the first assignment and around 85% in the exam, I only got 11/20 for the second assignment (a two page essay that I thought was quite good - but although I got high marks for style, grammar, structure and referencing, I got practically no marks for 'content' (worth half the marks) simply because the lecturer decided I didn't answer the question in the rigid essay structure she wanted). Having written lots of uni essays during the past 40 years of doing undergraduate and post grad courses (and always getting pretty decent marks) I felt this was a total rip-off. Fortunately it turned out that because the essay was only worth 20% of the overall course mark, I would have needed to get 19/20 or full marks to get 85%+ and a High Distinction for the subject. So essentially it didn't matter that I only got 55% for the essay.

Due to courses being completely online (including the online final exams, invigilated using ProctorU) the uni has offered students the choice of replacing their graded result this semester with a simple Pass/Fail result that won't be included in their overall GPA calculation. Since I managed to get a Distinction (6.0) for this subject I don't need to exclude the result from my GPA calculation (I need to get a GPA of 6.0 or more to graduate 'with distinction'), but I would have liked to be able to replace the Credit (5.0) I got last semester (Q1). I'm not sure why they haven't offered the Pass/Fail option for Q1 results as the final exam for Q1 was in March, just when the Covid-19 changes were being introduced and causing maximum disruption. I've emailed student services to double check if Q1 result can be replaced with the simple Pass/Fail outcome, but I don't hold out much hope.

If my Q1 result stands, my current GPA is just under 6.0, so I'll need to average Distinction for the remaining five subjects and get at least one High Distinction to bring my GPA back up to 6.0. This coming semester I'm doing 'Funds Management and Portfolio Selection' which should be interesting and quite easy to get an HD. And the final two subjects are 'research' projects, so should be able to get HDs if I put in enough work. We'll see how it goes.

I also have to finish off a couple of 'specialist' courses (in Margin Lending and Self-Managed Superannuation Funds) I'm enrolled in at an RTO and have nearly completed, plus do the four courses for the Advanced Diploma of Financial Planning I'm also enrolled in at that RTO. So it will be quite busy for the rest of 2020.

Once I finish off the MFP degree in mid-2021 I want to enroll in a PhD in Financial Planning (should be a lot easier than the astrophysics PhD I was enrolled in a few years ago). I'm slowly browsing through PhD theses in Financial Planning to try to get an idea of what research topic I might want to pursue. I'll have to start sounding out prospective supervisors at the uni early next year, and be ready to put in my application by the start of my final semester. 

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Sunday, 21 June 2020

Bought some Betashares Asia Technology Tigers ETF (ASIA)

I noticed that I had set up an IG trading account with $500 to get some bonus Qantas Frequent Flyer points last year, and it still had a cash balance of $436.55 sitting in the account (yes, I managed to lose some money while doing the required number of trades to qualify for the Frequent Flyer points, but the value of the QFF points I got was still significantly greater than the amount of money I lost). I probably should have just closed the account and transferred the balance back out, but I decided instead to purchase some ETF shares with the available balance. I've placed an order for 50 of the Betashares Asia Technology Tigers ETF (ASX code ASIA). At a limit price of $8.57 and $8 in brokerage that order will just about use up all the cash balance on the account. Assuming that the order gets filled when the markets reopen on Monday, I'll just let the investment sit for a decade or so and see what happens. No matter how this investment performs it will be hardly worth the trouble of including any distributions in my annual tax return, and to calculate capital gain/loss when I eventually sell the investment, so I might set up a monthly automatic contribution from my savings account into the IG account, and then add to this holding every six months or so to 'dollar cost average' into a larger position over time.

The top 10 holdings of this fund are:

NameWeight (%)
By country the ETF allocation is about 55% China, 20% Taiwan, 20% South Korea and 5% India.
And by sector it is about 30% internet and direct marketing, 20% interactive media and services, 20% semiconductors, and the balance other 'tech' sectors. The relevant index has a five year average return of 14.25% pa and the ETFs management costs are around 0.67% pa.

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Diet (bad) and Exercise (none) week whatever

After progressing well with my weight loss and exercise program until the gyms closed down and I started working from home (and eating too much junk food), I've now put back on about ten kilos since Feb. Time to stop snacking and start ramping up my daily step count again! While I was taking the bus and train to work (and walking around the office) I used to regularly do about 10,000 steps/day, which helped burn off the calories. But since being stuck at home all day I've averaged only 1,500 - 2,500 steps/day.

I noticed today in my Qantas Wellbeing phone app that until the end of June I can earn a 'bonus' 10 Qantas Frequent Flyer points every day that I walk at least 7,500 steps. Time to put the gym shoes on and start going for evening walks again...

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Fun investing app - Spaceship

I opened an account with 'Spaceship' in August 2018 and invest $100/mo in their 'Universe' fund. So far the performance has been quite 'stellar', with gains of 35.54% in the past year. I've no idea how this fund will perform in future, so don't take this as a recommendation to invest! But I'll keep adding $100/mo automatically and see how this account performs over the next 10 or 20 years (assuming it stays around that long).

The 'universe' fund invests in a range of companies, including global tech companies such as Adobe, Alibaba, Alphabet, Amazon and Apple (funny how a lot of 'tech' companies all start with "A"). With No brokerage fees, no buy-sell spreads, no entry or exit fees, and no admin fee for balances below $5,000 (and only 0.10% in total fees for balances over $5,000) it seems a pretty easy, cheap and fun way to get into 'investing'. I also like the colour scheme, which happens to be my favourite colour ;)

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Saturday, 20 June 2020

DS1 has his first job already lined up for when he finishes uni

DS1 is currently in his third and final year at UNSW studying computer science, and recently finished doing 'final round' interviews with two local IT companies. It turned out he was offered a position by both companies! He initially accepted the offer made by the first company (a stock trading investment company), as he didn't get an answer/offer from the second company (that he was more interested in) until after the acceptance deadline. A week later the second company also sent him an offer, so he then had to let the first company know that he'd changed his mind. His starting salary will be about the same as mine (!) and he'll also get about $20K pa worth* of stock 'options' each year for the first four years. The value of the stock options is a bit of an unknown as the company isn't yet publicly listed, but the company has been growing very rapidly (it started up in 2012 and has apparently been profitable since 2017 - although its hard to know for sure with private companies).

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My financial planning 'start up' is 18 months old and still no clients

As readers may recall, I completed my Diploma of Financial Planning in late 2018 in order to get 'registered' as an 'existing' Financial Planner (aka Financial Adviser) in Australia before the rules changed on 1 Jan 2019 (which required all 'new' Financial Advisers do a year of supervised training/experience). I'd been studying for my DFP qualification on and off for several years (just out of interest), and the rule change prompted me to get my butt into gear and get 'registered'. As I still have a full time 'day job' that has nothing to do with financial planning, having to quit a relatively well-paid job in order to get an entry-level Financial Planner position just to meet the 'training' requirement would not have been feasible. Since getting 'registered' in late 2018 I've been doing a bit of local advertising (dropping free booklets into local letter boxes) and set up my 'business' website with an online appointment booking tool.

The result? So far, only two 'serious' enquiries (made a booking for a complimentary introductory meeting) that resulted in one meeting (that didn't work out as they had minimal income, no significant savings, and the person I met with wasn't really interested - their partner had booked the meeting but didn't attend) and a last minute cancellation.

I'm currently paying around $1,500 per month fee to my 'dealer group' (I have to be an authorised representative of an AFSL holder to be a Financial Planner here in Australia, or have my own AFSL which would cost a lot more) just to stay 'in business'. I had hoped to get a couple of clients in my first year (2019) and to get enough clients by the end of this year to at least cover the fixed costs of remaining registered (and a member of the FPA and AFA, which each charge around $500pa). Now I'm just hanging out to get my first client...

Oh well, I plan on staying in my full-time paid work for several more years (unless I get laid off), and in the meantime will complete my Master of Financial Planning degree next year and (hopefully) then enrol in a PhD. The Masters degree is costing me $3,500 per subject (there are 12 subjects in total for the degree), but fortunately if/when I enrol in the PhD course next year I shouldn't need to pay any more uni fees as this is generally covered by the Commonwealth-funded RTS (Research Training Scheme).

Once the Covid-19 restrictions are lifted I might start offering free lunchtime seminars for the staff of local business. And I'll start doing some 'cold calling' of locals.

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Thursday, 18 June 2020

Revisiting "the chart I wish I'd seen a year ago"

Way back in 2008 I posted about a chart I made of the All Ords Index vs the Australian GDP price index series, which appeared to be a good warning sign of when the market was 'irrationally exuberant' and when it was 'oversold'. ie. When you might think about 'taking profits' and getting out of the stock market, and when the market was 'on sale' and a good buying opportunity. Of course, as Moom pointed out at the time, there are reasons why the stock market may increase relative to GDP, such as the decades long decline in interest rates (which made higher stock p/e multiples sensible - from 8-12x in the 80s and 90s to 15x-20x today). However, in the 'long term' it seems rational for the stock market as a whole to increase in line with GDP. So when the 'irrationality of crowds' makes the market oversold or overbought, one has better than normal chance of actually benefiting from trying to 'time the market' (I generally buy and hold, as timing attempts generally increase transaction costs more than performance, and I tend to buy index funds or ETFs rather than trying to 'pick' individual stocks or sector funds).

So, with the recent market drop and recovery during the first half of 2020, I thought I'd get some updated data on the AllOrds Index (the ASX200 Index follows the same basic pattern) and the Australian GDP Price index series, and see how the plot looks today. As you can see below, this plot is still pretty good at showing when the market is relatively 'expensive' (too high) and when it is probably 'cheap' (too low). But, as DS1 pointed out, if you sold out of the market when it goes 5% or 10% above the 'expected' level, and bough back in once it dropped 5% or 10% below the expected level, you would have missed the large market gains of 1986-87 and 2005-2007.  So, you'd probably want to take these levels as warning bells, rather than simplistic buy/sell signals. Possible it would be useful to combine tracking 30 vs 90 day moving averages with this simple 'too high'/'too low' market indicator to decide when a long-term investor should consider reducing and increasing their exposure to the stock market. That would help with making the decision to buy into the market when it is oversold, as it is usually quite hard to 'pull the trigger' and invest/reinvest when the market has dropped a lot - like in Mar 2008 or March 2020. Seeing that the market may have 'turned around' (rather than just a 'relief rally' during a bear market run), helps identify if the 'bottom' has passed.

If anyone is interested in tracking this relationship for themselves, quarterly GDP Price Index data and Monthly adjusted close All Ords Index data was obtained from the following free resources:

ABS website

Yahoo Finance

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Wednesday, 17 June 2020

Time for the Aussie government to borrow and invest big

Ross Gittins has a good article in today's SMH outlining the reasons why the right wing Morrison government should be not looking to 'cut the deficit' (usual Liberal mantra) as the post Covid-19 economic recovery starts to tentatively materialize later this year. With the government able to effectively borrow at 0% real interest rate, they should restart the old 'government bonds' program (that issued 10 or 20 year bonds) with an interest rate of, say, 1.0%. A lot of super funds and pensioners would probably take these up, given the bank interest rates on savings being around 0%. That wouldn't raise a lot of money, but the government could also set up a few government-back statutory infrastructure bodies that could borrow globally at close to 1% for the long term, and then invest all this borrowed money in major projects that are a) sensible and add to long-term national productivity and/or development, b) relatively labor intensive, and c) have a decent 'multiplier effect'. There a experts that could (and probably already have) provide the government with a list of projects, but a few that spring to mind and such as - constructing defense assets such as destroyers, submarines, and possibly even an aircraft carrier (we used to have one) - building a large-scale solar electricity 'farm' (or farms) in outback regional Australia, with associated storage battery farms and connection to existing transmission lines - building adequate amounts of social housing, preferably with a bias towards regional towns to aid with decentralization - upgrading Woomera to support satellite launches using the commercial launch vehicles becoming available, and to add some 'bricks and mortar' to the recently created Australian Space Agency (with a budget allocation last year of just $9.8 million it could probably fund one episode of 'The Orville' - hardly a serious initiate for the 'clever country'). Anyhow, there are probably a lot of better ideas on how the government could spend a few billion dollars of cheaply borrowed money to help grow the Australian economy, address our contribution to global warming, develop local technology business, and provide skilled jobs. Hopefully the delayed budget later this year might actually include some large public spending initiatives. We'll see.

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Tuesday, 2 June 2020

Net Worth: May 2020

The markets recovered somewhat during April/May, so my NW is close to the previous all-time high already. The house price and estimate off-the-plan unit valuation are less accurate than usual, as some of the sales price data I use for my estimates had not been updated in May. In any case, it appears that real estate is only down slightly so far, and may not fall as much as some pundits were predicting. We'll see.

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Sunday, 31 May 2020

DW decided to 'retire'

Well, DW's employer decided against letting her work from home as they want to apply one rule for everyone (the decision doesn't make much sense, as while warehouse staff and those serving customers in the sales room had to work on site while the accounts payable work could be done just as efficiently from home, as it mostly involves accounts departments of other companies, and logging into the accounting server running at head office. But I think a few of the staff were already resentful that DW had been working from home four days a week during the 'lock down' period).

So DW has given in her resignation and will stop work in a couple of weeks. She will notify our SMSF admin that she has 'retired' at the start of the new FY in July, so her account will be transferred into 'pension mode' where the tax rate will be 0% rather than the normal 15% tax rate for superannuation in accumulation mode. She will withdraw $50K to pay off some debts she had accumulated, and we'll setup a regular $1,200/mo 'pension' payment from the SMSF to her bank account.

DW might start working again (part-time or casual) later in the year (if she can find a local job that she wants to do), in which case she will continue to draw her 'pension' payment but will also resume accumulating some superannuation via SGL - which would go into a new 'accumulation' account in the SMSF in her name. We'll see how things pan out.

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Sunday, 24 May 2020

Things slowly moving towards a 'new normal'

The NSW version of  'lock down' is starting to be wound back. At its most restrictive, our family was spending most of our time at home, with DS1 doing his uni course 'virtually', DS2 doing the same for high school, and then attending school one day each week. I've been working from home since March, and will continue to do so until I *have* to go back to the office - commuting is a great time-waster, and I prefer working from home as long as possible. DW was having to go into the office one day and was hoping to be able to continue working from home, but now is considering whether she might quite her job (and 'retire') as her employer may insist on everyone going back into the office full time. DS2 will be going back to attending physical high school full-time from next week - but rather than catch the school bus I'll drop him off close to school each morning and collect him in the afternoon. Fortunately I can make the 'round trip' from home office to his selective high school in around 30 mins.

Beaches and parks are available again for outdoor activities, although social distancing is still supposed to be applied. Yesterday DS2 had his first Kendo session since the club shut down - but it was in small groups of 6 in an outdoor park, rather than being held indoors. Restaurants are being re-opened for dining in, but with limitations on numbers that comply with social distancing requirements. Hopefully infection rates will remain low and the inevitable 'clusters' of infection that spring up can be quickly brought under control, so businesses don't need to be totally shut-down again.

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Decided to rebalance our SMSF after all

Despite expecting the economic impacts of the Global Covid-19 crises to be severe, we've decided that since we'll have to head back towards our long-term asset allocation (the Vanguard High Growth Index Fund) eventually, we may as well start shifting a portion of our SMSF investments out of the Bond and Conservative Funds and back into the High Growth Fund.
I had initially been considering shifting to 50% High Growth Fund, 35% Conservative Fund and 15% Bond Fund, but as the management fees are higher for the first $100K in each fund, we'll pay slightly lower fees having only two fund investments rather than three. So after a quick 'trustee meeting' of myself, DW and DS1 (the three SMSF members), we decided to just switch to 50% High Growth Fund and 50% Conservative Fund.
This means that overall our asset allocation has changed from:
up to 20 Feb:    100% High Growth Fund    = 90% Growth/10% Income
Feb-May:          70% Conservative Fund/30% Bond Fund = 21% Growth/79% Income
25 May:            50% High Growth Fund/50% Conservative Fund = 60% Growth/40% Income
By being only 20% invested in growth assets from Feb-May we avoided much of the investor angst experienced in late March, but don't want to sit 'on the sidelines' until the stock markets have fully recovered. Putting some of our SMSF investments back into growth assets while the markets are still down ~15%-20% looks reasonable from a long term perspective (the market may well suffer futher declines, but as we'll be invested for many decades such 'blips' have to be tolerated).
The US S&P and Australian AllOrds Indices dropped about 35% from 20 Feb to the lows around 23 Mar, and since then the US S&P has recovered to be 'only' 13% below the 20 Feb level, while the Australian market is still roughly 23% below the Feb level. Looking at past recessions the stock markets often continue to produce reasonable returns even when the 'real' economy is doing poorly, so waiting until the recession is over would probably not provide the best outcome overall.
Recent Australian and US stock market performance shows the deep Covid-19 dip and the rapid partial recovery:
While stock market performance over the past century shows that such sudden dips are generally a 'buying opportunity' in the long term:
Should we have moved back into growth assets earlier? Or sat for another 6-12 months in income assets? Only time will tell, but you can only take your best guess and live with the result. Deciding to do nothing at all is still a decision...

ps. I got a call from Vanguard a few days after I mailed in the switch form, asking for clarification as I'd only filled in the % I wanted after the switch (I had assumed they would work out the most efficient way to shift my current asset allocation to the new ratios, but no, they need explicit details of what to sell and what to buy.) I explained that to minimize transaction costs (the buy/sell unit price differential) I didn't want to sell all the Conservative Fund units and then rebuy half of them! So we worked out that I could sell all the Bond Fund units and 25% of the Conservative Fund units and invest the proceeds 100% into the High Growth Fund. After checking with the processing department, the rep said they I would have to fill in a new switch request form, with those details filled in, so I had to quickly complete a new form, get DW to sign it, and scan and email it back via the 'secure email' service I had to register to use. Unfortunately I filled the form in too quickly and accidentally ticked 100% into the Growth Fund rather than the High Growth Fund! D'Oh!

Ah well, we'll be switching back to our long term allocation of 100% High Growth once the current volatility has settled down, so for the time being I'll just leave us allocated 50:50 in the Conservative:Growth Funds as it won't have too much impact on this year's performance (and it might turn out to be good to remain a bit conservative).
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Friday, 22 May 2020

$50 bonus available to RateSetter Investors until 30 June

I've been investing a small amount each month via the peer-to-peer lender RateSetter, and so far haven't had any issues. I've invested in the five-year term lending (as it offers the higher interest rates), which has been offering an interest rate of around 7%pa. I get monthly interest payments from each micro loan, which I get automatically re-invested into new five-year loans. Sometimes various loan amounts will be repaid early, in which case the money just gets reinvested in the new loans at the prevailing rate. Of course the interest rate varies (supply and demand) and the principal and interest isn't guaranteed, although a small proportion of the funds invested gets taken and held in a pooled trust fund which may be used to make principal and interest payments in the case of bad debts. I haven't made any withdrawals as yet, but I'm assuming RateSetter will remain solvent and process any withdrawal requests (I've only got $2,953 invested, so I don't have a significant portion of my net wealth invested in peer-to-peer lending as it's quite high risk).

If anyone is interested in investing in peer-to-peer lending via RateSetter, you can use this link to register for an account and you'll be eligible for a $50 bonus payment if you invest $1000 before 30 June 2020 in either the five-year market or one month rolling deposit.

Full disclosure: I'll get a matching $50 bonus payment if any reader uses this link and qualifies for their $50 bonus, hence this post ;)

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Thursday, 21 May 2020

Fighting investment FOMA as the market continues to climb the 'wall of worry'

Life as a personal investor is a constant battle of the internal demons of fear and greed. We'd all like to make buckets of money during a bull market, at which time strategies such a gearing (or even double or triple gearing) are attractive and making use of OPM ('other people's money') to invest with makes perfect sense. Would wouldn't like to borrow at x% and get a total return of x+y% (with the added benefit of the interest being tax deductible, effectively 'converting' some of your current income (taxed at your marginal income tax rate) into long term capital gains (taxed at half your marginal tax rate))?

Then, of course, the market inevitable goes from 'bull' to 'bear' market, often with a few minor corrections' thrown in during the 'bull run'  just to tempt investors to move into cash too soon, often with the net effect of paying transaction costs, unnecessary capital gains tax, and missing out on some of the bull market gains while they sat overweight in cash until, eventually, getting tempted back into the market as the bull run continues.

When the market turns 'bear', the investor is either regretting staying 'fully invested' and wondering whether it is now too late to move into cash (or other asset allocations), or whether this is just the start of a down-trend and it should be 'everyone into the life boats' asap?

The current situation is that the US and Australian markets ignored the start of the Covid-19 pandemic during January and February, hoping that the spread could be restricted to China and any economic impacts would be mitigated via central bank action. Then, when the severity of the health crises became all too apparent in March the stock markets tumbled, hitting a deep low around 23 March.

Since then US and Australian markets have made surprising (to me at least) gains - recovering a large proportion of the value loss during Jan-Mar. Small amounts of potentially good news (such as early positive signs for a potential vaccine development) boost the stock markets, and even if such speculation proves to be premature (a vaccine will take many, many months to develop, test, manufacture and distribute to a significant proportion of the population, assuming a vaccine that provides enduring immunity to Covid-19 is ever developed), the markets remain in a generally positive trend since the March low-point.

So I'm sitting at home (where else during a pandemic?) wondering whether we should have (or should) shift some of our SMSF investments back into 'High Growth' rather than sitting 70% in 'Conservative' and 30% in 'Bonds' (and just having a trickle of $2k/mo of our Cash (bank account) funds being invested in 'High Growth' each month). I raised this question with DW and DS1 (the other two member/trustees in our SMSF) about a month ago, and we decided the risk of a further market decline was much higher than the (negligible) chance of a rampant bull market returning, given the rate of Covid-19 spread (new cases) and deaths (heading towards 5% of the number of civilians killed during WWI already, and still rising!). Since then, the US and Australian stock markets have continued to rise, so it is increasingly looking like switching to 20% Bonds, 40% Conservative, 40% High Growth last month might have been prudent after all.

However, the worse economic impacts of Covid-19 are yet to show up in employment and GDP statistics, company results, dividend payments, and enduring changes to company prospects. But there are enough signs that suggest that those economic impacts will most likely be a lot worse than the current market sentiment suggests.

For example, the reality that many jobs have simply evaporated due to 'lock-downs' has meant that the official unemployment rate (in Australia) is understated (as many people have left the 'work force' as they know that there is Buckley's chance of getting a job in the current market), and the figures will continue to get worse as many companies that were placed into 'hibernation' realize that they are no longer profitiable in the 'new normal' that takes hold as social distancing rules are relaxed, but not removed entirely.

In the longer term (6-24 months) a lot of other negative economic impacts will start to become apparent, which should be reflected in current stock market pricing, but apparently isn't. For example, immigration into Australia has practically stopped, and won't get back to pre-Covid levels for several years (if nothing else, boosting immigration when there is high domestic unemployment is hard to sell politically, even if, in the longer term, immigration boosts economic activity and generates new jobs). The lower immigration levels, coupled with higher unemployment and no wage growth, will reduce housing demand and construction for the next several years, which in turn will impact demand for white goods etc. So the Covid-recession of 2020/21 is likely to be quite severe.

Based on the likely impact on the housing industry I would expect the 20/21 recession to be at least as bad as the 1991 recession in Australia. But that doesn't automatically mean the stock market will perform badly. At some time we're going to have to reallocate back towards our long-term asset allocation target ('High Growth' Index Fund), given the historic long term performance of equity investments. But for the moment, our FOMA is still being outweighed by uncertainty regarding the magnitude of the recession that will result from Covid-19.

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Saturday, 2 May 2020

Net Worth: April 2020

The rebound in stock markets during April pushed up the value of both my geared share portfolio and SMSF investments, gaining 3.27% and 2.71% respectively during April. We're still invested 70% in the Conservative Index Fund and 30% in the Bond Index Fund in our SMSF, with only a small ($2K/mo) ongoing investment of cash into the High Growth Index Fund. We thought about shifting part of our SMSF investment back into the High Growth Fund in mid April, but decided the market is likely to remain volatile until the scope of the economic impacts of Covid-19 become more predictable, so stayed invested relatively conservatively for the time being. By the end of April this strategy was looking costly as the markets continued to rise, but the large single-day drop on 1 May suggests that we may be right after all. In the current situation I'd rather suffer from modest returns by being invested conservatively, than suffer from large capital losses by being too aggressive too soon.

Our estimated house price remained unchanged in April, with real estate sales subdued due to social distancing rules, and prices likely to be weak as unemployment (and underemployment/wage cuts) impacts both consumer confidence and enthusiasm to take on large mortgages. If the unemployment and economic impacts of Covid-19 aren't too severe in Australia, and the economy starts to pick up again later this year, then property prices may be supported by a move of investments out of equities and into real estate (it happened after the '87 crash made a lot of 'mum and dad' investers wary of the stock market).

I haven't revalued my 'off-the-plan' $1m unit investment or my holiday home/hobby farm (as usual). Valuation of the off-the-plan unit based on recent unit sales data in the suburb is likely to be imprecise, as the new unit development will put a lot more stock into the market when constuction ends in 2023, and the new units are relatively 'high end' compared to existing, older units in the area. I'll only start tracking the valuation of my apartment after get a valuation done for a mortgage when settlement is due upon completion of construction. Best guess is that it *might* be worth about 10% more now than when I entered the contract last year, which would cover the stamp duty I've paid and selling costs. So I don't appear to have lost money on that investment at the moment.

The rural property is just being left at the valuation used when it was transferred into my name. I intend to leave it to the boys and never sell it, so it seems rather pointless to include any notional gains in my personal net worth tracking. In theory it's probably worth about $600K now, compared to $325K when I took title.

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Monday, 27 April 2020

Installed COVIDsafe

The Australian government has finally released it's contract tracing app for iPhones and Android phones, called COVIDsafe. After all the usual knee-jerk privacy paranoia it turns out that the App doesn't track your location or store data on some government database, it simply records when you get within blue-tooth range of another smart phone that has the App installed, and the data stays on your phone until you choose to give it to the health department's contact tracers (IF you catch Covid-19 and have a positive test result). If you never get Covid-19 before the pandemic ends you won't ever be asked to share the data, and it can be deleted at any time you choose (eg. when the pandemic is over).

The installation was quick and easy. The only trouble I had was that I had to use google to find the government health department page to get the link to the app in Google Play - searching for 'CovidSafe' within the App store failed to bring it up!). I did initially think that the registration/PIN wasn't working when I didn't get sent the PIN via SMS -- but it turned out that I'd just entered my phone number incorrectly. Hopefully enough Australians install COVIDsafe you the country to be able to quickly contract trace any future instances of community transmission. That way we'll be able to ease restrictions and minimise social and economic disruption. It might turn out that we are the 'lucky country' yet again.

ps. If Australia and NZ manage to get on top of Covid-19 and open up trans-tasman travel, we might go skiing in NZ for our next overseas vacation. It will probably be the only place Aussies can go overseas for quite a while...

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Saturday, 25 April 2020

The World is a giant laboratory at the moment

One positive aspect of the many varied approaches being taken around the world to social isolation, lockdowns, business closures and re-openings, testing rates etc. is that the will be an abundance of data available for researchers to analyse regarding what are the best approaches to limit the spread of a pandemic such as Covid-19, where the best trade-off of restrictions lies in terms of health benefits vs. economic costs. And which methods and timing for easing restrictions and getting back to a 'new normal' are the "best" way in different circumstances. PhD students in economics and health sciences (and sociology) will be using the data for their theses for decades to come.

Of course this isn't an experiment you'd choose to do, but it will put the world in a better position to be able to handle the next pandemic in a more informed and effective manner (hopefully).

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Tuesday, 21 April 2020

Flattening the curve isn't the end of Covid-19, just the beginning

After initially being too blase about Covid-19 (thinking it was safely restricted to just China), countries swiftly ramped up a series of restrictions to try to prevent the spread of Covid-19 as it spread across the globe. At a huge economic and social cost. But now that several countries have succeeded in 'flattening the curve', many countries are already looking at easing restrictions (some prematurely - such as the US). That may be sensible in countries that are islands (or island continents) and have closed their borders (such as Australia and New Zealand) and have reduced the spread of Covid-19 to a handful of new cases per day (so 100% contact tracing may be feasible), but it seems a recipe for disaster in countries that are still detecting thousands of new cases each day, even it that rate of spread is constant and no longer increasing exponentially. After all, although the 2,314,621 confirmed Covid-19 cases reported in the WHO Sitrep 91 seems to be a large number, it is only 0.03% (!) of the world's population. Which means that the other 99.97% of people worldwide (essentially everyone) still has no immunity from Covid-19, and we are still months (or years) away from more effective treatments for those seriously ill from Covid-19, or a mass-produced (and effective and long-lasting) vaccine.

So, unless easing restrictions is done *very* carefully, and with massive amounts of continual testing and monitoring, and with governments ready and prepared to bring back restrictions as needed (which might be more difficult after the populace has been through one round of restrictions and was told things are getting better), things could go very bad (again) very quickly.

And don't forget that being tested and found negative simply means they were (probably) virus-free at the time of testing. They are still at risk of catching (and spreading) the virus after the test was done. Having tested negative last week doesn't mean you might not have been exposed since, and be currently asymptomatically spreading the virus...

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Is Donald Trump killing the people who voted for him?

The SMH reported today that some US States with Republican Governors are planning to reopen gyms, churches, bowling alleys, tattoo parlours, hairdressers and nail salons. Given that new Covid-19 cases are being detected at a great rate in the US, despite limited testing, and that Covid-19 is quite lethal to those that are older and male (ie. key Republican voter demographics) this would seem likely to kill off quite a few Trump supporters. Then again, as poor, black voters are also more at risk of dying from Covid-19 due to comorbidities than WASPs, it may kill off more Democrat voters than Republicans?

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Wednesday, 15 April 2020

The joy of being an anti-social introvert during a pandemic

I've been somewhat bemused watching TV interviews of people complaining about the 'sacrifice' of staying at home, avoiding crowds and not having dinner parties. Personally I've always found socialising a bit of a chore and prefer watching a movie on TV or reading a book to eating out of going to a party. So being an an introvert and somewhat anti-social (in the sense of not feeling any great need to socialise) makes one perfectly suited to the current 'work from home' and 'social isolation' requirements. DW is a bit more social than me, so although she is enjoying working from home (enjoying working reduced hours - but not enjoying the reduced pay so much) four days a week, she's glad that she is still required to go in to the office one day per week (although I'm now driving her to and from work, so she doesn't need to catch public transport). I'm working from home five days a week (they've closed my office to all but a few essential staff that have to work on-site), and I'm quite content to sit at home with the boys (who spend most of the day in their rooms - DS1 doing uni assignments, and DS2 playing computer games and chatting with his school friends on discord).

In fact I've been enjoying working from home so much that I'll be disappointed when it's time to start commuting to work again every day.

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Tuesday, 7 April 2020

Industry (Union) Super funds suddenly look a little bit less enticing

Over recent years ASIC has been busy trying to discourage people from putting their superannuation into a self-managed super fund (SMSF), even to the extent of running a dodgy 'education' campaign last year that presumed wildly inflated costs for running an SMSF (I think ASIC quoted a figure of around $10K pa to run an SMSF, while it is perfectly possible to run an SMSF for under $1Kpa - we do). At the same time, Industry (Trade Union based) superannuation funds have been spending copious amounts of their existing members money on TV advertising campaigns spruiking the safety, low cost, and 'not for profit' nature of their funds compared to the retail superannuation funds (mostly run by banks investment arms).

One of the worrying features of industry super funds was that they often invested in unlisted infrastructure assets, such as motorways, airports, etc. As these cannot be 'market priced' (as there is no liquid market for these assets - they get bought and sold in a single massive transaction from one investment fund to another), there was always some doubt about how realistically they were valued.  The fact that valuations were only 'estimates' often done on an annual basis meant that there also tended to be a lot of 'smoothing' of valuations taking place, which in turn meant that they appeared to have low price volatility, which then meant that they could be classified as 'conservative' investments (a bit of 'creative accounting' in some ways similar to the bundling of hoards of junk debt into a CDO with a better risk rating that occurred prior to the GFC debacle. Fund managers are always on the lookout for a way to turn a sow's ear into a silk purse).

The current Covid-19 crises has led to the government changing superannuation rules to allow members to make relatively modest 'early withdrawals' of their superannuation (prior to preservation age, which is normally close to pension age). This has obvious liquidity implications for funds that have made long term investments with limited liquidity on the assumption that most of the member's funds are 'locked in' until preservation age. An example is the recent announcement by Industry Fund Hostplus that they are amending the fund's rules to allow them to essentially suspend or delay member withdrawals. This seems quite similar to what property investment funds did (freeze withdrawals) during the GFC when they were unable to sell their investments (at a reasonable price) to satisfy the rate of withdrawals from the funds.

We'll see if and when Hostplus actually suspends member withdrawals, but it is certainly a potential downside to investing one's super in a low-cost, industry based superannuation fund. On the other hand, even an SMSF might have investments that prove to be illiquid in a crisis. While it is unlikely that a Vanguard Index fund would be unable to service withdrawal requests (as their investments are based on market prices), other investments (like property trusts) might suspend redemptions in a time of financial crisis. So SMSF trustees/members need to take liquidity into account when deciding their investment allocations.

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Monday, 6 April 2020

Australia may be joining the elite club of countries that are significantly limiting Covid-19 spread

An interesting log-log plot of new cases in the past week, vs. accumulated cases seems to be a good indicator of when a country has 'flattened the curve' effectively. While it is impossibly to completely eradicate Covid-19 once it gets into a community/country (given that many infected people are essentially asymptomatic while contagious, so won't be detected as testing the entire population on a continuing basis is impossible), some countries have managed to reduce the number of new cases per day (the 'natural' trend is for infection rates to keep rising until most people are either infected or immune). Other countries still seem to be struggling to get on top of the spread while total cases are still small. Australia seems to be in the 'club' of countries that have managed to put in place measures to reduce infection rates at a fairly early stage (while total cases were still relatively small) - the other countries being Taiwan, Hong Kong, Japan(?) and South Korea.

Other countries seem to have also put effective controls in place (China), or have signs of progress (Spain and Italy) but at a much later stage (when case numbers and deaths had already escalated):

And other countrie have yet to show any sign of getting the situation under control:

However, Japan provides an example of where the infection appeared to be under control for a while, but then took off again. So, until a vaccine is available, efforts to minimise spread will have to be maintained, either continuously (at massive economic cost, but minimising deaths from Covid-19), or intermittently (or less stringently) so that either 'peaks and troughs' or infection (that the hospital capacity can manage) occur, or a steady, relatively low rate of infection is maintained.

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Sunday, 5 April 2020

When experts are idiots

Reading an article in the SMH about the impacts of police having to issue warnings and in some cases fines for people continuing to ignore the social distancing and 'stay at home' instructions, I was struck by one reported quotation of an expert (who should know better):

"Peter Collignon, an infectious diseases physician and microbiologist at Canberra Hospital and a professor at the Australian National University, has made the same point, accusing authorities of overcooking the response for no genuine public health benefit. "You are safer outside than inside. I do not see how anyone's going to get this virus if they keep two metres away from someone and I don't see how anyone's going to get it if they sit on a park bench," Collignon told The Canberra Times."

I'm not an infectious diseases physician, but even I can imagine a highly probable scenario where Covid-19 could easily be passed via people sitting on a park bench. According to WHO:

"How long does COVID-19 last on surfaces?
According to the World Health Organization, it is not certain how long the virus that causes COVID-19 survives on surfaces, but it seems to behave like other coronaviruses. Studies suggest that coronaviruses (including preliminary information on the COVID-19 virus) may persist on surfaces for a few hours or up to several days. This may vary under different conditions (e.g. type of surface, temperature or humidity of the environment).
If you think a surface may be infected, clean it with a common household disinfectant to kill the virus and protect yourself and others. Clean your hands with an alcohol-based hand rub or wash them with soap and water. Avoid touching your eyes, mouth, or nose."
So, here's a scenario for Professor Collignon to get his mind around:
1. Person A (who is not in home isolation as they feel fine and don't know that they have Covid-19 and are infectious) goes our to buy a Kebab and sits on a park bench eating his lunch and enjoying the sun.
2. He has to cough and coughs into his hand - he'd normally cough into his elbow buy he has his hand full with a kebab so uses his free hand to mask his cough.
3. He finishes off his kebab and uses his free hand (that he coughed into) to push off the park bench, walks to the bin and throws his kebab waste away, then goes home.
4. Person B, a perfectly healthy 55 year old is out for a stroll with his partner decides to sit on the bench, carefully sitting 1.5m apart. When sitting there person B happens to put his hand on the bench where person A touched and left Covid-19 on the surface. He happens to touch his face while walking home with his partner.
5. A week later person B falls sick and soon after his partner also falls ill.
Still can't see how anyone can get the disease by going out and sitting on a park bench Prof. Collingnon?

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Thursday, 2 April 2020

Industry Super Funds likely to have their 'creative accounting' exposed

For quite a while there has been some concern/criticism raised by retail super funds about the way Industry super funds have often made large investments in illiquid 'infrastructure' investments that have then been categorised as 'conservative' simply on the basis of infrequent asset revaluations and low price volatility (simply because these monolithic investments are not traded in any 'market' but tend to be bought and sold in single, off-market transactions).

If a large number of Industry super fund members take advantage of the new rules around being able to withdraw some of their superannuation if suffering economic difficulty due to the Covid-19 crisis. then some Industry funds may find they do not have sufficient 'liquid' investments to deal with a 'run' on early withdrawals. We'll see how it turns out.

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Net Worth: March 2020

This month my NW decreased by -$52,659 (-2.06%) which was a great result considering the state of the global markets. Our house price estimate actually increased, which offset most of the losses on my retirement savings and investment portfolio. I managed to time the switch of our SMSF investment from 100% Vanguard High Growth Fund into a 70:30 allocation to the Vanguard Conservative and Bond Funds, so our SMSF investments declined by 5.37% compared to the 20.54% loss we would have suffered if we had remained invested in the High Growth Fund. I had also sold off a large portion of my geared investment portfolio held outside of super, but bought a small tranche of Westpac shares in early March (which had lost considerable value by the end of March), and also bough some additional investments at the end of March which had gone down slightly in value as at 31 March.

Looking forward the property market may well cease to rise, given the likely increase in unemployment and general decrease in consumer confidence. However, this *might* be offset by a flight of investors from equities into property - as happened after the 1987 crash. The property market situation will also be affected by the ban on on-site auctions and 'open house' inspections in Australia, but although that will reduce volumes it may not directly impact prices.

I suspect the equity markets will continue to be highly volatile (obviously) and may well suffer further losses before reaching a 'bottom'. Covid-19 cases worldwide are heading towards $2MM+ and deaths over 100K during April, which is likely to erode any residual economic optimism fostered by the vast stimulus/support packages enacted by Central Banks and governments around the world during March. So for the moment I'm leaving out retirement savings with a conservative bias, and will cautious about increasing my equity investment portfolio too much while markets remain volatile and the economic outlook unclear.

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Wednesday, 1 April 2020

Is Covid-19 spread being contained globally, or is testing providing misleading data?

My daily plots of WHO Sitrep data suggests that the rate of increase in global cases (excluding China) has finally started to drop below the previous exponential rate of increase. On the one hand this may indicate that social distancing and lock downs in Australia, Europe, the US and elsewhere are finally having an impact (by reducing the number of people each contagious, undiagnosed case can infect). Then again, the fact that the raw deaths/cases ratio had been increasing might suggest that the number of positive test results was falling behind the actual number of cases (either because of lack of testing capacity, or simply because you don't know who should be tested).

Hopefully the number of cases globally may be heading towards a plateau around of under 10 million, and deaths may stay below 250,000-500,000. Then again, that may simply be a plateau in the developed country cases (similar to the previous plateau achieved in China), and there may be a global 'third wave' once Covid-19 spreads throughout India and sub-Saharan Africa...

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Putting a foot into the water

Yesterday I decided to invest a bit more in the market, buying about $5K worth of each of the ETFs on my 'list' via my Commsec margin lending account. The total invested was less than the $50K I'd put into the Commsec ML account via a  drawn down on my St George portfolio loan, so there isn't any prospect of getting a margin call, regardless of how badly the market performs in future. So although I'm investing using borrowed funds, it isn't quite as risky as a straight out margin loan.

Anyhow, after the orders were filled yesterday, my current portfolio of securities held on my Commsec and Leveraged Equities ML accounts is:

This snapshot doesn't include the managed fund investments held on my St George ML account or the CFS Geared unlisted fund investment that is also on my Commsec ML account (those were included in an earlier post), as my yahoo portfolio tracker only includes my ETF and share investments.

I'll see how the local and US stock markets performs over the next few weeks/months before deciding whether to increase my investments. I still suspect that the markets have reacted to the various economic stimulus packages and rate cuts in a way that would be rational if this was a financial/economic crisis alone, but may not be applicable to the current situation. The medical aspect of this current crisis may well mean that people don't get back to 'business as normal' even after  governments ease the current 'lock down' style restrictions. After all, most of the 'social distancing' and other regulations that have had an immediate economic impact are intended to 'flatten the curve' and allow ICU capability/staffing in hospitals to be ramped up to cope with an influx of Covid-19 patients over a longer time period. When restrictions are eased there is likely to be a 'second peak' of even more cases and deaths than before, but at a time when hospitals are better prepared to cope with the need for ICU treatments. So, even if 'social distancing' rules have been eased, it may not restore economic and social activity to previous levels if the populace is still concerned about the levels of Covid-19 cases and risk of serious illness. After all, by the time restrictions are eased, while some people may be very keen to get back to 'normal life' and socialise, others may have got used to the 'new normal' and continue to work from home, avoid shopping and eating out, etc. So the economic recovery may be quite slow once the current 'lock down' period has passed. Still, one has to start investing again at some point, so when the market has rebounded about 10% from the recents lows, but is still about 35% below its February highs, it is probably a reasonable time to start making some investments for the 'long term'. After all, even the Great Depression was a 'buying opportunity' when one views market returns over the scale of decades rather than weeks, months or even years...

Then again, as John Maynard Keynes famously quipped "In the long run we are all dead", so this viewpoint is probably more applicable to DS1 and DS2 than myself ;)

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Monday, 30 March 2020

Who will ultimately pay for the Covid-19 pandemic?

Aside from those unfortunates who are paying with their lives, ultimately the economic cost of the Covid-19 pandemic, and the mind-boggling amounts being spent by governments around the world on 'stimulus', 'safety-nets', and myriad expenditures to simply to to keep the modern socio-economic order from falling apart, will be paid by... you and me.

For all the media coverage of 'government expenditure' we have to bear in mind that governments do not have any wealth or income per se. Everything the government owns is, essentially, owned by 'the people'. And, ultimately, all government revenue is sourced from 'the people'. Either via direct income taxes on 'the people', or company taxes (which eventually get paid via 'the people' as costs for goods and services, or via 'the people' as investors when company revenues get squeezed), or via loss of value of existing savings via inflation if the government decides to simply 'print more money' (and hence inflate away the real value of the debts they are accruing). Ultimately every dollar that governments are currently spending to support the economy, provide resources to health care services, guarantee wages or provide stimulus payments or pay unemployment benefits is a dollar that 'the people' eventually have to pay back. It's a bit like a gigantic, unfunded insurance policy where those currently (and in future) fortunate enough to have a job (or savings/investments) will all have to contribute to pay out benefits to individuals or companies that need immediate assistance.

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Sunday, 29 March 2020

Putting a toe into the water

Despite the ever-worsening Covid-19 situation (things in Europe and Australia are bad and getting worse, we have yet to get any real sense of how badly the US is handling its outbreak, and almost no reliable data on most of the developing countries' situations) Wall Street and hence other stock markets such as Australia seemed to stabilise a bit late last week, with several days of market gains. So I decided to start cautiously buying back into my previous ETF positions (QUAL, VAS, VISM, CGAD, VSO and MVW) last Thursday night, starting with a small tranche ($5K) of QUAL. But the 'limit' order I initially placed for QUAL overnight didn't get filled (the price spiked higher on opening), so I had to modify the order to 'market' on Friday morning (only to see the ASX drop back in the afternoon). That used up my available credit on the Commsec ML account, so I then had to transfer some cash into the account.

I transferred $50K (borrowed on my SGB portfolio loan) into my Commsec ML account, so I'll be able to purchase several tranches of $5K in the other ETFs that are on my 'list' during the coming weeks. This may well not be the 'bottom' for this bear market, but as a 'long term' investor with (supposedly) a high risk tolerance, I have to start reinvesting at some point.

My current total investment portfolio (excluding our SMSF) is shown below:

The ASX200 is about 33% below its high of 20 Feb, and the S&P500 is about 25% below its high of 19 Feb, so making some further investments at the current levels seems reasonable when you take a long term (10+ years) view of where the market is likely to go once the Covid-19 pandemic is 'history'.

I had tried to sell my CFS GGSF, VIISF and VLHGF holdings back in early Feb (I phoned to relevant funds to redeem the units) but it turned out that because they were collateral on my margin loan accounts a phone redemption could not be processed, and a paper form needed to be printed, signed and lodged (scanned and uploaded for Colonial First State, or faxed/mailed in the case of Vanguard). I did do the paperwork to transfer our SMSF investments in the Vanguard High Growth Fund into more conservative investments, but didn't bother doing it for my SGB ML account. Having already moved our SMSF investments into more conservative options I decided to retain some market exposure (not a great decision in hindsight). In the case of my CFS geared global share fund investment on the Commsec ML account I initially was told that a phone redemption was OK, but a week later found out that a form needed to be signed, scanned and lodged. I didn't bother to proceed with that redemption, which is probably the worst decision I made back in February. My worst decision in March was probably buying some Westpac shares too soon, but that was a relatively small investment amount.

What my worst investment decision in April turns out to be is anyone's guess ;)

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Thursday, 26 March 2020

Diet 2020 Wk 12 - week ending 22.MAR.2020

I haven't got my weekly macro summary figures to report, as I'm working from home and haven't updated my daily figures for the past week or so as I had a uni exam yesterday and didn't have much spare time. I'll probably do some catch-up data entry this weekend and report two week's of data next week.

Regardless of what the exact figures turn out to be, I know that my weight has slowly been increasing and I've been eating too much junk/snack food while stuck at home. I also have only been walking  about 5,000 steps/day while at home (especially as its been raining quite a bit for the past week), compared to over 10,000 steps/day when commuting to work. Combined with not going to the gym (gyms are now officially closed by government edict) or to Kendo training (indoor sports are also banned), I'm eating a lot more calories and burning off a lot less. So the inevitable result of having a calorie surplus is to gain weight.

So I need to set myself a strict meal plan and schedule to avoid browsing or snacking during the day and after dinner, and I also need to do some more walking and do some more weight training at home using my barbell and dumbbells.

I did manage to find my old skinfold calipers yesterday, so took a set of skinfold readings and used an online calculator to calculate body fat using various equations. The calculated body fat results were:
Formula               BF%
J-P 7 pt              15.98%
J-P 3 pt              13.71%
J-P 4 pt              15.10%
Parillo               15.86%
D/W                   24.89%
Navy tape             25.33%

There is significant variation in the results, depending on which formula is used, but the values close to 17% match the values I'd been getting (on average) from my old bathroom scales (which broke last week). My new bathroom scales seem to produce much higher body fat readings (around 25%), which I don't think is accurate.

As long as I get back into 'diet mode' and slowly reduce my weight to my target, and keep doing weight training to preserve lean mass, I don't think I have to worry too much about trying to get accurate body fat readings along the way. Once I get closer to my target weight I'll get my second DEXA scan done, and that should provide a more accurate reading of what my body fat is. In any case my goal is to loose the 'spare tyre' of fat I still have around my waist, not to hit any particular body fat reading.
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Monday, 23 March 2020

Covid-19 actions all seem to be implemented a week too late

A week after I started working from home (indefinitely) and told DS2 to stay home from school (he had a bit of a 'sniffle' anyway, so I decided to keep him at home even though there's no known case of Covid-19 at his school) the NSW Premier has today announced that although the state's schools remain open (for the moment) children should stay at home 'if possible'. And the Australian Prime Minister announced that all 'non-essential' businesses should shut (their physical offices). And two weeks after I stopped going to the gym (at a time the 'experts' were saying it was still OK to go to the gym, as long as you wiped equipment down and washed hands afterwards) the PM has also shut-down all indoor sports activities and gyms (for six months!). So, many actions previously thought to bve 'too cautious' has morphed into mandatory precautions, but a week or two after it should they should have been implemented (to have a significant impact on 'the curve').

Aside from the trivial annoyance of having recently changed my gym membership from month-to-month to an annual paid-in-advance membership (oh well, my contribution to keeping businesses going I suppose), and the relatively small investment I still have in the stock markets (down another 8% on opening this morning, to an 8-year low), my biggest concern is that DW still had to go to work today (I'm expecting they'll decide to either ask employees to WFH (work from home) or take leave (annual, sick or unpaid) from tomorrow. It would have been better if DW could have avoided going to work and catching public transport for the past week, but hopefully the probability of exposure to Covid-19 is still quite low at the moment.

In the longer term the question will be whether or not DW and I keep our jobs - even large, healthy companies are likely to suffer extreme financial stress during 2020, and there will be a massive increase in unemployment during the course of 2020. If we're "lucky" we may receive a redundancy payment and be in a position to take an 'early retirement' if we need to. DS1 will be graduating at the end of this year and still seems to have an optimistic outlook regarding his chances of getting a well-paid IT job -- personally I won't be surprised if he ends up living at home rent-free and doing a post-grad degree for a couple more years...

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Saturday, 21 March 2020

Heading towards 1MM Covid-19 cases and 40,000 deaths globally by the end of March

Unfortunately the Covid-19 situation outside of China is dire, with countries being too slow to introduce detection, then containment, and now social distancing/self-isolation. During January and February the world first learned about the novel coronavirus in Wuhan, and then watched on in amazement at the draconian measures being taken to contain the spread within China. All while taking minimal actions to prepare for a possible pandemic.

The fact that China apparently managed to bring its outbreak under control (and the few cases detected outside of China during February) seems to have actually hindered global preparations - governments around the world were focussed mainly on reassurance and preventing economic dislocations by maintaining 'business as usual' approaches for far too long.

Now, the global rate of increase in Covid-19 cases and deaths has grown sufficient to outweigh the positive results achieved in China and South Korea, as can be seen below.

Global Covid-19 cases outside of China continued to rise exponentially:

While control achieved within China gave a false sense of security to the WHO and other countries:
But cases outside of China have now increased sufficiently to dominate the overall trend in global cases and deaths:

And with no indication that the spread of Covid-19 is yet being adequately controlled outside of China and South Korea, it looks as if the world may hit 1 million cases and close to 40,000 deaths from Covid-19 by the end of this month...

Governments around the world are belatedly trying to boost their ICU capacity by ordering mechanical ventilators - which will rapidly exhaust stock is on hand around the world (the government equivalent to suddenly running down to the local supermarket and trying to buy a month's supply of toilet paper!).

Hopefully everyone takes 'social distancing' and 'self-isolation' seriously enough to slow the rate of increase ('flatten the curve') to an extent that health capacity isn't totally overwhelmed. Otherwise the death rate could climb due to lack of trained staff, facilities and specialist life support equipment even in developed countries. What the situation is going to be like in India and African and South American countries in 2 or 3 months doesn't bear thinking about.

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