24/05/2019

Investing News

The Widow-maker trade...
 

What a week for investors. The Liberal party win meant banking, healthcare, housing and retail stocks all saw much uncertainty removed from their price, resulting in an 11.5 year high in the ASX index. 

Banking stocks in particular saw a huge rise, with the 4 big banks rising up to 5% on Monday. This was very good news for the NBS Fund, as CBA is the biggest holding. The banking sector in Australia is the staple of our share-market, and time and time again doubters are proven wrong, as banks remain resilient and strong despite adversity. 

Aussie bank deniers/haters often fall victim to the Australian widow-maker trade; shorting the banking sector. 

It's called the widow-maker because anyone daring to do it, is always destroyed as these 4 banks are money making machines. 

Some of the big 4 banks greatest 'moat-like' attributes include: 

(a moat is an impenetrable castle surrounded by water)

Impeccable credit ratings: These ensure a low cost of funding, which means they can offer the best interest rates to consumers. Smaller competitors can't offer the same rates, therefore can't compete because all people really care about at the end of the day is getting the best rate.  

High switching costs: Once you join a bank, it's expensive and time consuming to change banks. This is why customer loyalty is high at the big 4 banks, no one is bothered to change banks as the process isn't worth it. 

Australia's housing market: Australian is a highly desirable place to live, with a high GDP per capita and a high standard of living. We have several highly concentrated coastal cities that contain incredible houses. The big 4 banks dominate the lending market, and the Australian housing market is always going to be fine as Sydney and Melbourne are considered top 5 best cities on earth to live in, and are the pillars of banking revenue. 

  • Note: The current housing crash is happening for a few reasons: The market became europhic in late 2017, outer suburbs houses in cities were selling as if they were waterfronts, buyers were scrambling over one another to get a piece of the phenomenal capital gains. The 2018/19 slowdown is a necessary drawback, and now with the status quo reinstated, it's probable (can't be sure though) that house prices will flatten, and continue to slowly grow in the long run.



The big 4 banks have recently been hammered by the worst possible circumstances, and they have come through relatively unscathed, barring remediation expenses. 

The royal commission was an absolute farce, the stories uncovered in that were overblown and frankly all related to deadbeats who lied to get loans and couldn't pay them back

(I went through about 20 of the testimonies, one women was on the stand because she defaulted on a loan which they judged that the bank shouldn't have given her; they gave her the loan after her 10th application)

The whole thing was a media circus, driven by angry journalists making an imaginary enemy out of the banks, for political gain. Look what happened in the end; the banks came out better off as independent mortgage brokers were hammered. 

The election and Bill Shorten threatened to derail the housing market through their ridiculous taxation attacks on hard working, wealthy Australians. Thankfully Bill is not our man, and our housing market should recover. 

The big 4 banks should be the staple of a young person's portfolio; one should buy some shares and sign up to the dividend reinvestment platform; when your 65 you will thank yourself. 

Bullsh*t of the week

This is going to be political, but that's expected in election week.....

Vocal minority versus the silent majority..... 

The polls 

Everyone has probably read something this week about how wrong the pre-election polls were, and how the Liberal party win was an utter miracle.  

The fact that these polls are used and referenced in the first place defies logic. The polls are run by different media outlets, who poll people of their choice. They ask demographics with predictable alliances to get the results they need, to spin the next day's headline. 

My Dad has always said, in his 59 years not once has he ever been asked to participate in a pre-election poll, nor does he know anyone that has been. 


The decline of the Labour party 

Labour were absolutely creamed across the whole of Australia, and for good reason. I'm very proud of Australia this week, as we voted for the sensible party, and didn't engage in identity politics and class warfare. 

The Labour parties tactics and policies were grubby, and essentially pitted the middle and upper class working population, against {insert name here}. 

Who were their policies aimed at, who were they going to benefit? The only group of society I can think of is hipster uni students that bitched about not being able to buy a house in Sydney and Melbourne. 

The franking credits issue was a direct assault on those who had worked hard their whole life, smartly invested their money so they could be self sufficient in retirement and not rely on the pension. Good one Bill

The reduction of the capital gains discount removes a massive incentive for people to invest their savings, and punishes those looking to take profits on their smart investments.  Good one Bill. 

The abolishment of negative gearing would have seen rents increase (affecting poor/middle class), and housing become even more unaffordable for younger people. Without negative gearing, people can't buy their first investment property as they won't be able to afford the losses. Negative gearing doesn't discriminate, it is available for us all to use. It's a fantastic tool for people our age, looking to get into the property market. 

Good one Bill. 

So thanks Australia, for not voting for a slimy weasel that is appeasing to the victim culture being adopted by the younger generation, in trying to take away the wealth of the working and successful. 


Quick fact 

Did you know Bob Hawke, the famous Labour leader floated the Aussie Dollar, conducted massive financial deregulation, dismantled all tariffs, privatised state sector industries, ended subsidisation of loss making industries, and sold off government owned assets? 

He was responsible for the floats of Commonwealth Bank, Optus, Qantas and CSL. He also introduced the full dividend imputation program....

This is what Labour used to be about. It used to be about the working class, and the working man. Somewhere along the line it's disintegrated into being led by the hard left, who's mission statement is as follows:

'We are victims to the patriarchy and the white men oppression, therefore we need equality of outcome'. 


Vocal minority vs silent majority 

The vocal minority are the ones making all the pre-election noise, printing the outrageous headlines and being referenced in polls. 

The silent majority (the Australians with jobs......) don't engage in this rubbish, don't read into these polls and don't try to push their political views onto other people. 

The vocal minority should be humbled, yet they have gone on the warpath. No doubt you've seen memes or angry rants this week about how Queensland is filled with climate hating rednecks intent on ruining Australia. 

Go and f*ck yourself you privileged hippies (friendlyjordies...). Those Queenslanders voted for their jobs, they voted for the economy, they voted to keep food on the table.  They still believe in looking out for themselves, and don't need the government to step in and control their life. 

Here's a tip for the Labour party, as well as the left. Accept your defeat, listen to what Australia had to say, and change your policies. 

Of course the above is rational advice, rational isn't in the leftist dictionary. They are already doubling down, as members of the press and the Labour party are insulting everyday Australians for not voting for them, labelling opposers as extremists (look in the mirror), and labelling everyone as planet haters (Waleed in SMH). 

The vocal minority are almost entirely localised in inner-city Sydney and Melbourne. You can picture them now, drinking their extra soy lattes. See you in 3 years you butt-hurt whingers. 

Weekly reflection

Australia is the greatest country on Earth, don't let sore losers tell you otherwise. We are a nation that works hard, believes in ourselves and doesn't let the lunatic elitists dictate what we do.

 

Now the election is over, we can back to business. Any of you looking to invest a bit of money can now do so, as the Australian market looks to have a couple of tailwinds behind it.

NBSInvesting