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In the know; Trading with an ace
Topic Started: 25 Aug 2015, 10:33 PM (2,312 Views)
Loki
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Terry
26 Aug 2015, 09:00 PM
As a Nomura colleague pointed out to me, investing in the ASX, particularly with reference to the banks, is much like investing in a planned economy where the govt, private sector and the private citizen are all stakeholders. In all his discussions within the industry, the risk factor is explained away by the unique framework that Australia has.

I've asked him of what he thinks about that. His response is that it is similar to Japan back in the 80s when the widespread belief is that the system has no flaws and is kind of invincible. I get it. However, he says that the biggest difference is that the financial system in Australia is propped up by superannuation, which the Japanese never had to deal with (superannuation was never directed towards equities on the whole). That is why he thinks the system has the potential to cause real hurt and devastation.

The suburbanites don't really get it. They typically buy into what the govt and finance industry tells them, much like anywhere in the world.
That is a very astute observation, but one that can only be made from outside looking in. The fish are only aware of the ocean when they are no longer in it.

The market risk factor is now a systemic risk factor. If you treat hard assets (like houses) as financial assets, their price becomes co-correlated with other financial assets, so when the financial system corrects, it spreads through the entire economy.

Sydneyite
26 Aug 2015, 09:36 PM
In fact I actually make money out of this arrangement, as loans with tax deductible interest are held in my name while the offsetting cash is held in high interest bearing accounts in my wife's name, who is in a much lower marginal tax bracket than me.
Isn't tax evasion illegal? Did you 'gift' this cash to your wife?
Edited by Loki, 26 Aug 2015, 09:39 PM.


“Talk sense to a fool and he calls you foolish.” - Euripides
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Terry
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Loki
26 Aug 2015, 09:37 PM
That is a very astute observation, but one that can only be made from outside looking in. The fish are only aware of the ocean when they are no longer in it.

The market risk factor is now a systemic risk factor. If you treat hard assets (like houses) as financial assets, their price becomes co-correlated with other financial assets, so when the financial system corrects, it spreads through the entire economy.


Isn't tax evasion illegal? Did you 'gift' this cash to your wife?
Yes, what you point out about risk being allocated throughout the economy and society is a common area of interest in investment banking. Across Asia, there is much interest in Australia right now, but not for what most people expect (luck, robustness, well managed). The idea of manufactured wealth backed by policy and institutional integration is fine when the environment suits....as long as it can adapt to change.
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Sydneyite
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Loki
26 Aug 2015, 09:37 PM
Isn't tax evasion illegal? Did you 'gift' this cash to your wife?
I "gift" all my cash to my wife..... except its compulsory! :lol are you married? :lol :lol I'm suspecting not.....
Edited by Sydneyite, 26 Aug 2015, 10:20 PM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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Loki
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Sydneyite
26 Aug 2015, 10:18 PM
I "gift" all my cash to my wife..... except its compulsory!
That makes sense.
Sydneyite
 
are you married?
Yes.
Sydneyite
 
I'm suspecting not.....
Well, it has been said that the true measure of a conservative is a lack of imagination.

So, I am guessing your investments are not diversified then. If one collapses, they all collapse.

Edited by Loki, 26 Aug 2015, 10:28 PM.


“Talk sense to a fool and he calls you foolish.” - Euripides
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Sydneyite
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Loki
26 Aug 2015, 10:28 PM
That makes sense.

Yes.
Given the second answer, the first one also adds up. :to:

Quote:
 

Well, it has been said that the true measure of a conservative is a lack of imagination.

So, I am guessing your investments are not diversified then. If one collapses, they all collapse.
Whatever helps you sleep better at night! :oo:
Edited by Sydneyite, 26 Aug 2015, 10:53 PM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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Terry
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Sydneyite
26 Aug 2015, 10:53 PM
Given the second answer, the first one also adds up. :to:


Whatever helps you sleep better at night! :oo:
Another happy camper for the finance industry. Testimonials from customers like yourself are a good promotional tool. It cuts through in the suburbs.
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