Posts by Stephen Judd
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But if you buy existing shares in an existing business, you're doing nothing but gambling.
A contemptuous half-truth, I think. My shares are small ownership stakes in a productive enterprise, whose earnings I likewise own and enjoy in the form of dividends, and retained earnings that increase the value of the share. Through diligent analysis, I try to identify companies whose shares are trading below fair value, so as to get the best bang for my buck. Most long-lived fortunes in the market are made with that philosophy. There is an element of chance in it, but it's only gambling if every operation with an element of chance is gambling.
If I didn't buy shares in existing businesses, people who did start businesses would have no way to cash out. By Idiot Savant's logic those who start businesses could never realise their investment, while those without the opportunity to get in at the ground floor would never have a better investment than a savings account. Unless they "gambled", of course.
Many people DO buy shares in the hope of trading successfully or without regard to underlying value. Brokers encourage them to do so, in the same way and for the same reasons that real estate agents encourage business: because they make their money when clients trade, whether or not clients make a profit. Those people should be buying indexed funds or just stashing their money in a high interest savings account. They should not be encouraged to trade.
(One of my big complaints about the current government's policy in this area is that although study after study has shown that actively managed funds underperform the market and lose investors' money in management fees, the government is effectively trying to steer people into managed funds, rather than direct investment or index funds. But we digress).
Most people don't know enough about shares, or houses, or any other form of investment, to make their purchases much more than a gamble. But that doesn't mean that shares, or houses, or any other form of investment are inherently gambling.
Our local sharemarket is dwindling for a number of reasons but one of the big ones is that there are few IPOs for people like me to invest in. Another is that since we locals prefer houses, foreigners who take the longer view are simply buying out and delisting our companies. Most of my share investments are in Australia because there simply isn't enough depth in our local market for me. Since I'm reversing the flow of dividends and interest across the Tasman, I feel positively virtuous...
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Here's a few things to consider, Yamis.
1. Your profit is unrealised. You can only see that return on your investment if you sell the house, or borrow against it. When you say "at worst it will stall for a bit", that's glossing over the reality of being unable to realise your profit when you want to, or having to sell at far less than you want to.
2. Your investment is in one house. There is no diversification there.
3. Your return is high because you are highly geared (ie you have a mortage and not that much equity). If you were not geared, you could have got the same return or better in the New Zealand or Australian sharemarkets over that period.
4. Because you are geared, you are vulnerable to rises in interest rates or changes in your ability to service the debt. And if these things happen in a period of market decline, you will be forced to sell at the worst time.
5. "I'm not quite sure where I could have invested a few thousand dollars a year of disposable income to earn a few thousand percent on it a year." But it's not just a few thousand dollars a year that you have invested. A correct accounting of your investment includes your deposit.
I happily accept that your choice has worked out for you, but in fact you are exposed to a number of risks that we non-owners don't worry about.
(PS: I'm moving to Hataitai in a week. Hi, nearly neighbour Joanna!)
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I earn more than 70K, it's not important how much. And I rent. Buying an overinflated asset that will yield less than a bank deposit in income, while relying on a greater fool for my profit does not seem like an investment operation to me. It's speculation.
My rent is far from crippling when you look at the value of the house I live in. It's not me who's suffering - it's my poor old landlords, who are getting a poor return on their capital, unless they're substantially geared.
The VP of the Property Investors Federation has a vested interest in the younger folk buying houses. His business is based on a continual supply of greater fools. Perhaps a more financially aware youth have realised that houses are a lousy investment unless you have sufficient capital and chutzpah to trade for income while not paying tax on it.
Personally, my money is in a mixture of cash and shares, mostly in Australia. Every single dollar I have returns to me more than in would from a house, and my money is spread over a large number of assets, not a couple. I'm ungeared and proud.
I expect terrible things to happen in the next year or two as the bubble implodes, and then, only then, will I buy a house. I would view public statements from the Property Investors Federation as signs of the impending doom. Immigration is falling, inflation is rising, and the the bottom of this pyramid scheme we call "property investment" is running out of new recruits.
On the tongue in cheek suggestion: if we're going to become Australia's farm, we'd better stop building houses on the best agricultural land...
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One minister's migration took a couple of hundredths of a second though. We tjhought there was a problem & reran it several times... Then we checked the server & found that all there was stored on this hugely powerful computer, was 19 documents. All of them personal missives from the minister's PA.
My dad recently retired as a head of department at a large polytechnic. He avoided email wherever possible, leaving his secretary to deal with it all, on the grounds that there were far too many people trying to communicate with him as it was, and the last thing he needed was yet another channel through which yet more messages could pile up. As far as he was concerned, part of a secretary's role is to filter the boss's incoming messages. And you know, I can't help thinking there's a certain soundness to that view.
(Have you ever stood by as a senior manager painfully hunted and pecked their way through an email, and thought that the demise of the secretary, dictation, and the typing pool is a damned shame?)
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I generally like the style of Steyn's writing.
I loathe and detest Steyn, but I agree - he's the master of the mot unjuste.
The thing that irritates the hell out of me is that literally I am as well qualified to pontificate as Steyn. In fact, since I actually did study some history and pol sci, arguably I'm better qualified. The man is a jumped-up music critic with nothing better behind him than any other interested amateur's background reading. Apart from the amusing language in which they're couched, I can't think of any reason why his opinions deserve notice. (And given their racist, actually genocidal nature, the sooner he fades into obscurity, the better).
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I really don't know how anyone can be confident stricter firearm control wouldn't work in the US. It hasn't been tried.
Places where it has been tried it has worked. They could even do it in a few trial states to see the effect. All the arguments in the world are no substitute for an experiment.
My thinking is that
a) you can't try it, because of the very deep political and cultural attachment to the "right to bear arms"
b) trial areas are doomed because there are no secure borders between any such areas and areas where guns are allowed. Also there is a huge pool of guns out there that might be hard to bring into the gun control regime.
So I suppose yes, I agree we could indeed hav e lot of fun, if we had a pony.
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Just to be clear James, I think given the prevalence of firearms in the US, imposing gun control there at this stage is likely futile. I'm kind of reminded of the Simpsons gag "Alcohol: the solution to, and cause of, all our problems!" I can see that going for handguns too.
But maybe we can draw conclusions for here on what happens when you have a lot of concealed weapons around.
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Oh yeah, Mike, see this list. Notice a pattern?
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"But worldwide, there has not been a single school shooting prevent by police or law enforcement."
I would discount Beslan as a terrorist attack in a country with weak law enforcement. The only other cases I can think of outside the US are Dunblane (over in three minutes) and Erfurt (shooter killed himself as commandos stormed the building).
The USA is an anomaly where concealed weapons are commonplace and legal in an otherwise civilised society. I don't know how you can get the ink out of that particular swimming pool.
But back to preventing school shootings: in this country we prevent them by having a gun licensing system and forbidding handguns to all but collectors with stringent lockdown conditions, and having a historical tradition that routinely carrying a firearm for non-work purposes is the mark of a nutjob. By the time someone has brought a firearm to school it is way, way too late to talk about prevention.
Can you imagine what would happen in a school full of teenagers where firearms were accessible? Because if they were accessible to teachers or whomever, they would be accesible to pupils, greatly enhancing the risk of a misdeed. Conversely , if they were not accessible, they would not be useful for disabling a rogue shooter.
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any pogroms against the Koreans would be directly caused by sensationalist reporting.
I dunno. Remember that after Steve Irwin died, people in QLD were hacking up stingrays in revenge. There are some really, really stupid, tribal-minded people out there.