Saturday, August 27, 2011

Are Tech Stocks Cheap?

Most large cap tech stocks now have fairly low price earnings ratios and some are even paying big dividends:

Historically, tech stocks paid very low or no dividends and utilities great big fat ones. From Tickersense.

Thursday, August 25, 2011

Buying Shares

I've actually been buying shares recently. Adding $A5,000 to the CFS Geared Share Fund (large cap Australian shares with in built borrowing and today I bought 5000 shares of Qantas (QAN.AX). That was a departure from my recent investment plan. The only other stocks of individual companies I hold are Legend International (LGDI.OB) and Bekaert (BEKB.BR) and neither has been doing well lately. Still, if analyst forecasts are even slightly right, Qantas is very cheap and it is trading a lot below book value. The two moves are about a 2.5% investment of net worth. Of course, we have automatic investments of more than $A5,000 happening every month anyway. $A1,000 in each of mine and Snork Maiden's CFS managed fund (mutual fund) accounts and retirement contributions - about $A2,000 for me and $A1,400 for her. These are in diversified but equity biased funds.

I also just bought a ticket to the US today. On Qantas.

Thursday, August 18, 2011

Superannuation and Life and Disablement Insurance

I finally got my job contract and have signed and returned it, so now I have a permanent job. As I discussed, I decided to make no additional contributions to superannuation (retirement) beyond the 17% my employer is contributing. Additional contributions have to come from after tax income as the employer contribution already almost hits the annual $A25k ($US26k) ceiling on pre-tax contributions. As I won't be paying any capital gains tax for a while and franking credits help reduce my tax bill it seems to make sense to invest outside super for the moment. There will be plenty of opportunity to invest extra in super nearer retirement (assuming the laws don't change). The cap on after-tax contributions is $A150k per year and at the moment for over 50s there is a $A50k cap on pre-tax contributions. I'm 46. So from age 50 to 65 I could in theory put $A3 million into super! I don't think I need to make extra contributions now.

I think we will instead increase Snork Maiden's superannuation contributions to the maximum pre-tax level. Currently her employer pays 15.4% on top of her salary. We contribute $A225 every two weeks from pre-tax salary. We could double that to $A450 and stay within the $A25k cap.

I did opt for the maximum life and disability insurance that is allowed by my superannuation provider without providing health information. This would be a lump sum payout of $A255k currently. That declines to $A231k next year and so forth. It makes sense that the number goes down as there are less years of salary to replace and savings will increase at the same time. The premium is $A218 a year for that amount. I'm not a big fan of paying premiums to insurance companies given the insurance company failures I've seen. But this amount made Snork Maiden feel more comfortable.

Tuesday, August 16, 2011

Hedge Fund Performance in the Recent Market Correction

The Dow Jones Credit Suisse Core Hedge Fund Index is a hedge fund index that is updated daily. This allows real time tracking of hedge fund performance vs. other asset classes:

Hedge funds declined much less than stocks in the recent correction. Particularly noteworthy have been the gains in managed futures.

Tuesday, August 02, 2011

Moominvalley July 2011 Report

Another month has flown by... I'm getting tired of losing money. In Australian Dollar terms the last 5 months have all had negative returns on investment. That's a long-run of negative returns. The accounts for the month look like this in USD terms:

Our trip to Asia didn't end up costing us very much at all. My flight and first week hotel was paid as I was on business. I also got an $A1,100 expenses payment up front with no need to prove any expenses and then I got another $US500 for a presentation I gave the next week. So this more than paid for our expenses in Seoul ($A800 hotel bill etc.). Snork Maiden's parents gave her a RMB15k gift, though she was expected to pay for some family meals etc. But that is about what her flight cost. As a result, income was high and so was expenditure. Total expenditure also included a ticket to India. Core expenditure, which excludes this amount which I expect to get refunded was still high but not above the normal range.

In USD terms we lost 2.86% this month against an MSCI World Index loss of 1.60%. We're now down 1.92% for the year in USD terms while the MSCI though has gained 3.32% for the year so far. Due to the continuing rise in the Australian Dollar (hitting a post-float high above USD1.10), AUD performance looks much worse - a 5.23% loss this month and a 9.10% loss YTD.

As a result net worth fell USD 6k to USD 547k and fell AUD 18k to AUD 498k, down below half a million dollars again.

Monday, August 01, 2011

HSBC Sells Upstate NY Branches to First Niagara

HSBC lost a lot of money from it's venture into North America. Now they are withdrawing and have sold their upstate New York branches to First Niagara Bank. I have a checking account with HSBC at an upstate NY branch as well as a credit card account and an online savings account. Apparently, all these accounts, including the online only account, will transfer to First Niagara:

"9. I have an Online Savings/Advance Account, and also accounts at a branch which is included in this transaction. Will my Online Savings/Advance Account transfer with my other accounts?

Upon completion of the sale, if you have a branch relationship, all accounts associated with your branch relationship (including Online Savings/Advance) will be automatically transferred."

Snork Maiden has an online only account with HSBC and so apparently her account will stay with HSBC. The full FAQ is here.