Australian housing bubble thread

[PistolPete]

You said the same thing in May 2010 on post one of this thread. Even if you failed to enter into any shorts ( many of which would have lost serious money on this idea ), it would have been a distraction to taking much better investments at that time. Like going long US equities or ironically buying Australian property in the cities you claimed were in a bubble.

Like ironically buying Australian banks

 

[m22au]

And how does one deal with the carry on that given the huge dividend banks pay ? Risk free you can get 3% and the net dividend on banks is close to 6% annually . So you are minimum 9% behind annually . They dont call shorting Aust banks the widow maker for nothing

It's a bit of a stretch to claim that the risk-free rate is 3%, when the RBA cash rate is only 1.50%. Yes, you can get higher than 1.50% at call with many banks, but often these accounts have limits on the amount that can earn those high interest rates.

Regardless, the dividend is a corporate finance decision, and results in a bank reducing its assets in order to make the payment to shareholders. On the ex-dividend date, the share price of the dividend payer will usually underperform their peers by about the amount of the dividend payment. If and when they run into financial trouble, they have a greater need to raise capital than if they had reduced or eliminated the dividend. As such, it is of little consideration when deciding if/when/how to short Australian banks.

If the dividend yield is of concern, then a short position in Australian banks could be paired with a long position in other Australian shares, and/or an ETF containing Aussie shares.

Finally, I don't think shorting Australian banks has been a 'widow maker' in the last couple of years. A back of envelope calculation shows that most banks are about 15% their 52-week highs, compared to the ASX 200 which is only 3% below its 52-week high.

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[PistolPete]

It's a bit of a stretch to claim that the risk-free rate is 3%, when the RBA cash rate is only 1.50%. Yes, you can get higher than 1.50% at call with many banks, but often these accounts have limits on the amount that can earn those high interest rates.

Regardless, the dividend is a corporate finance decision, and results in a bank reducing its assets in order to make the payment to shareholders. If and when they run into financial trouble, they have a greater need to raise capital than if they had reduced or eliminated the dividend. As such, it is of little consideration when deciding if/when/how to short Australian banks.

If the dividend yield is of concern, then a short position in Australian banks could be paired with a long position in other Australian shares, and/or an ETF containing Aussie shares.

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Clearly you are a clueless moron so i wont waste further time on you outside mentioning if you are short a bank you HAVE TO PAY THE DIVIDEND amount the day a bank goes ex div and that since you advocated shorting banks in 2010 the RISK FREE aust govt 10y bond yield has averaged > 3% since . Good luck you are going to need it

 

[m22au]

You said the same thing in May 2010 on post one of this thread. Even if you failed to enter into any shorts ( many of which would have lost serious money on this idea ), it would have been a distraction to taking much better investments at that time. Like going long US equities or ironically buying Australian property in the cities you claimed were in a bubble.

Like ironically buying Australian banks

https://www.elitetrader.com/et/threads/australian-housing-bubble-thread.199582/page-18#post-4471293

You may be pleased to know that I didn't short any Australian banks in 2010 and I did indeed by US equities instead.

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[m22au]

Clearly you are a clueless moron so i wont waste further time on you outside mentioning if you are short a bank you HAVE TO PAY THE DIVIDEND amount the day a bank goes ex div and that since you advocated shorting banks it 2010 the RISK FREE aust govt 10y bond yield has averaged > 3% since . Good luck you are going to need it

View attachment 192226

Yes - you caught me! I am a clueless moron! Guilty as charged! I was trying to keep it a secret but you caught me out!

Yes, I am well aware that if you are short a bank then you have to pay the dividend (caps lock not required), but this is not a concern given that, as I mentioned in the previous post, this

results in a bank reducing its assets in order to make the payment to shareholders. On the ex-dividend date, the share price of the dividend payer will usually underperform their peers by about the amount of the dividend payment. If and when they run into financial trouble, they have a greater need to raise capital than if they had reduced or eliminated the dividend.
.

I don't think it's accurate to say that I "advocated shorting banks in 2010". My exact words were:

* House prices in bubble, but waiting for confirmation of bubble popping before considering trades to capitalise on the bubble deflating. Such trades include buying Aussie govt bonds, shorting AUD/USD, shorting Aussie banks (CBA, WBC, NAB, ANZ, BEN, BOQ)

Finally, I don't think the 10-year bond yield is an appropriate choice for the risk-free rate. Its yield is much higher than shorter-dated maturities, due to term risk. A more appropriate choice would be the RBA cash rate.

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[themickey]

Clearly you are a clueless moron so i wont waste further time on you outside mentioning if you are short a bank you HAVE TO PAY THE DIVIDEND amount the day a bank goes ex div and that since you advocated shorting banks in 2010 the RISK FREE aust govt 10y bond yield has averaged > 3% since . Good luck you are going to need it

I don't believe m22au is a clueless moron, far from it and not everyone is a 100% correct genius.
But it has me wondering about you...?

 

[themickey]

https://www.smh.com.au/business/ban...arnings-of-credit-crunch-20181001-p50729.html

 

[Nine_Ender]

Yes - you caught me! I am a clueless moron! Guilty as charged! I was trying to keep it a secret but you caught me out!

Good to see you are finally catching on that you are clueless on this topic. For example, this is what you said in post one in the year 2010 :

" Australian housing prices are high and in bubble territory. However we know from previous bubbles (eg. Nasdaq late 1990s) that the mere existence of a bubble is not sufficient for prices to (1) stop rising and (2) start falling. "

This statement was false and extremely misleading. It is intellectually dishonest of you to continue to push this theme. That puts you in the company of many others on here who have grossly misread many markets from 2009 to 2018, but it doesn't excuse you from being called out on it when you continue the charade.

 

[m22au]

" Australian housing prices are high and in bubble territory. However we know from previous bubbles (eg. Nasdaq late 1990s) that the mere existence of a bubble is not sufficient for prices to (1) stop rising and (2) start falling. "

This statement was false and extremely misleading.

The statement was true. In what way was it misleading?

It is intellectually dishonest of you to continue to push this theme.

What theme do you believe am I "pushing" ?

That puts you in the company of many others on here who have grossly misread many markets from 2009 to 2018, but it doesn't excuse you from being called out on it when you continue the charade.

In what "charade" am I participating?

As a general observation - you seem awfully preoccupied with posts I made in 2010. Why is this the case?

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[Nine_Ender]

The statement was true. In what way was it misleading?

Your statement was false and 8 years of data since confirms it. I have no idea what you think a "bubble" is; perhaps the lesson here is you are inexperienced and a slow learner.