Copper is the only extreme I can find
July 10, 2020 Leave a comment
ASX 200 not breaking highs
July 10, 2020 Leave a comment
One month ago (on June 9th, 2020) I wrote the post below.
The ASX 200 has not traded higher than that June 9th high of 6,198. Today it’s 4% lower, however many market watchers seem to think we have been barrelling into new highs each day.
The ASX 200 has not traded higher than that June 9th high of 6,198. Today it’s 4% lower, however many market watchers seem to think we have been barrelling into new highs each day.
Although I’d like to note that the stocks I was selling as listed in the original post have all declined between 10% and 20%.
I am not advocating a trading mentality but rather, when you have conviction in your opinion, there are times when you need to protect your capital.
July 10, 20202
by Rob Zdravevski
rob@karriasset.com.au
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Assets revert to the Natural Owner
July 9, 2020 2 Comments
Throughout the business cycle it seems inevitable that assets change hands between a “natural” to the “unnatural” owner and revert again to the “natural” owner.
What do I mean by this?
When doctors and lawyers buy vineyards, sure and soon enough they end up selling them back to the seasoned wine operator.
Sometimes people are romanced by starting, owning or buying a business which they have no business being involved in.
This can also include people who shouldn’t be in the stockmarket or own multiple residential dwellings in order to become high-flying landlords or starting a restaurant.
I’d love to hear some of your examples.
A recent conversation which started up while drinking beer with friends was relating to the housing grant stimulus being offered and a coming “boom” in new home starts.
One of the pre-requisites to receiving or qualifying for the grant, was that a slab (concrete foundations) needed to be laid by the end of December 2020.
So, my buddies start talking about getting into the concreting business.
I interrupted and asked “what the hell do you blokes know about concreting?”
Their reply was along the lines of, “what’s to know?” and “its easy”.
I needed to chime in and remind them that the guys which you see in the business today, actually belong there.
They are the “natural” owners of those businesses.
They’ve been talking concreting with their “old man” over the dinner table for years.
They know the costings, pricing and margins better than any of us.
I’m not raining on anyone’s entrepreneurial parade but it seems obvious that certain businesses should be run and owned by those with a pedigree in that industry.
Pedigree trumps competence, finances and passion.
If your friend ever decides to invest in Alpaca Farming or a Forestry Schemes, start a Nail Salon or an online bikini company…….and they have no business being there, perhaps you should say something.
7 July 2020
by Rob Zdravevski
rob@karriasset.com.au
ASX 200 posts a financial year decline of 11%
July 6, 2020 Leave a comment
In another edition of market illusions…..
It’s the time of year when Australians measure investment performance as our financial tax year (ending June 30th) has come and gone.
Some market watchers may think V-shaped rallies, overwhelming tech bullishness coupled with tsunami’s of fiscal stimulus should’ve equated to above average returns on equity markets.
Not necessarily the case…..
Between July 1, 2019 and June 30, 2020,
the S&P 500 recorded a 5.4% return,
while in AUD, it was 3.7%.
and deceptively, the ASX 200 posted a decline of 10.9%
Another topic for another day is why we draw the line on each quarter, calendar or fiscal year. Though I guess, we need to start somewhere in order to measure things.
July 6, 2020
by Rob Zdravevski
rob@karriasset.com.au
How Tesla paid for his Tesla
July 3, 2020 Leave a comment
One of my clients (“John”) has always been interested in buying the new Tesla 3. In Australia, that car was being priced around A$73,000 or ~ US$47,000 depending on the FX rate used.
While the markets were plunging in March 2020, I told him about a story from over 20 years ago where a client (“Brian”) wanted to buy a Harley Davidson (HOG).
Instead of buying a Harley Davidson for $35,000, Brian decided to invest that same amount in HOG shares.
His strategy was that Harley Davidson shares could pay for his Harley.
Back in 1997, HOG shares were wallowing around the $10 mark. By Christmas 1998, the stock was trading at $20. At a price of $22, Brian had sold his shares.
Job done. A free Harley Davidson.
He recouped his original outlay. The profits were used to buy a new motorcycle and with a bit of money leftover to contribute towards his capital gain tax bill.
However, the story continues…..
15 months later (May 2000), HOG shares doubled again and are now trading at $40 per share and by 2004 they are trading a further 50% higher, at $60 per share.
Brian suffered from “Hindsight Bias”. He was annoyed about his decision to sell and thinks his $35,000 Harley is actually worth at least $180,000. He even pondered installing elaborate security in his garage to protect it.
Today (16 years later), HOG shares are trading at $23.
And so this brings me to “Tesla John”.
Instead buying a car, in early April 2020 he bought Tesla shares at $504 per share (not quite the $350 low seen 2 weeks earlier).
In early June (only 2 months later….), Tesla shares reached $1,000 and John “was out”.
A new Tesla 3 is due for delivery around September.
Today, the shares have roared a further 20% higher to $1,208 and are now the most valuable automobile manufacturer in the world.
What a wonderful and fun idea but I hope that John isn’t affected by the same cognitive bias.
July 3, 2020
by Rob Zdravevski
rob@karriasset.com.au
Cheaper UK equities coming
June 30, 2020 Leave a comment
I am bullish on UK equities
Today, the UK’s FTSE 100 Index is trading at 6,189 while the
the British Pound (GBP) against the US Dollar is at 1.2260.
At this moment, I am anticipating lower prices in both.
However, I’m not interested in shorting anything but instead preparing to acquire some favoured UK stocks at cheaper prices.
So, I’m taking excess GBP, converting it to USD and waiting while the UK market becomes cheaper in GBP and USD terms.
Odds are increasing for a pullback to 5885 in the index which is 5% below current levels.
Failing that, I’d then look for a test of 5510.
30 June, 2020
by Rob Zdravevski
rob@karriasset.com.au
#GBP #FTSE100
This is not personal advice. Seek your own advice.
Deflation and Weaker Metals Prices
June 25, 2020 Leave a comment
June 25, 2020
by Rob Zdravevski
The set up in the price of Copper ($2.66) suggests that it moves lower.
When ?
Well, I say soonish……
However, patience is important when waiting for a “trade” or thesis to develop, confirm or even mature.
I have the same (albeit early) negative view for others metals such as Silver, Platinum and Gold.
Weaker demand coupled with a stronger US Dollar and deflationary pressures, should result in prices falling.
My original “short” Macro calls were posted on June 8th (back then Platinum was $842 then, now $803 and Silver was $17.72, now $17.58) and these tie into my musings about Debt Deflation (which I hope to expand on in future posts) along with a miffing about not confusing Gold is being the equivalent of money.
Although my “Short” Gold view may seem “long in the tooth”, I want to remind readers that this “call” is only 6 weeks old and for some context, Gold has only moved 2% higher against my original US$1,730 Short price.
For those who don’t directly “short” these commodities, the job at hand is to identify which assets or securities will be affected by my prediction and then to be positioned for the buying opportunities.
At a later stage, I’ll re-visit the notion that commodities are trading at lows not seen for decades when compared to equities. But that is for later….
Subscribe to my blog: www.robzdravevski.com
Drop me an email: rob@karriasset.com.au
Deflation and Weaker Metals Prices
June 25, 2020 Leave a comment
June 25, 2020
by Rob Zdravevski
The set up in the price of Copper ($2.66) suggests that it moves lower.
When ?
Well, I say soonish……
However, patience is important when waiting for a “trade” or thesis to develop, confirm or even mature.
I have the same (albeit early) negative view for others metals such as Silver, Platinum and Gold.
Weaker demand coupled with a stronger US Dollar and deflationary pressures, should result in prices falling.
My original “short” Macro calls were posted on June 8th (back then Platinum was $842 then, now $803 and Silver was $17.72, now $17.58) and these tie into my musings about Debt Deflation (which I hope to expand on in future posts) along with a miffing about not confusing Gold is being the equivalent of money.
Although my “Short” Gold view may seem “long in the tooth”, I want to remind readers that this “call” is only 6 weeks old and for some context, Gold has only moved 2% higher against my original US$1,730 Short price.
For those who don’t directly “short” these commodities, the job at hand is to identify which assets or securities will be affected by my prediction and then to be positioned for the buying opportunities.
At a later stage, I’ll re-visit the notion that commodities are trading at lows not seen for decades when compared to equities. But that is for later….
Subscribe to my blog: www.robzdravevski.com
Drop me an email: rob@karriasset.com.au
rob zdravevski's blog 
Accordingly to my analysis, the price of Copper ($2.86) remains at extended and extreme levels and start to decline.
The traders amongst us may choose to take a “short” position, while others may ponder who will be the beneficiaries of lower Copper prices.
Although not at an extremes, a new trend is developing suggesting lower yields for the U.S. 10 Year Government Bond.
And so, I want to bring to your attention the wonderful correlation the Copper to Gold Ratio has compared to the U.S. 10 Year Treasury Yield.
In the past 2 weeks, the metals ratio is diverging and moving in the opposite direction. I believe this ratio will mimic the bond markets pattern soon and with a new trend suggesting lower yields in the 10 Year, this means either Gold falls at either a proportionate rate or greater than my predicted decline in the Copper price.
10 July 2020
by Rob Zdravevski
rob@karriasset.com.au