View Poll Results: What is your YEARLY profit from shares, over the last 5 to 10 years, or more?

Voters
7. You may not vote on this poll
  • I lost more than 5% a year on average

    1 14.29%
  • I lost, but less than 5% a year on average

    0 0%
  • About 0 (didn't lose and didn't win anything)

    0 0%
  • I won, but less than 5% a year on average

    2 28.57%
  • I won between 5 and 10% a year on average

    1 14.29%
  • I won between 10 and 15% a year on average

    0 0%
  • I won between 15 and 20% a year on average

    0 0%
  • I won more than 20% a year on average

    3 42.86%
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What is your long term (5-10 years) profit in the share market?

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  1. #11
    Quote Originally Posted by MovingIn07:
    You think Iceland has a low risk of defaulting? You guys following what is happening in Iceland right now?
    Everything seems to have been sorted out in Iceland and Greece. I don't think that any European country will default, because I am European and I have faith

    Besides, did you see how hot the Icelandic girls are?!?!?!

    Of course the higher the revenue, the higher the risk, and the Icelandic bonds give the higher revenue. Similar to the Brazilians. So I didn't buy much of that.

  2. #12

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    To the original poster,
    5% return for fixed income investment is not bad, if the risk is very low. But do factor in inflation, interest rate, taxes and etc. I think like one of the posters said, 7% is good, and 10% is very good.
    Could I ask why you wouldn’t invest in US treasuries? To play devil’s advocate, US treasuries are considered one of the safest assets one could invest in due to the fact that they have never defaulted in history, not even during the great depression. Also, they are proxied as “risk free assets” in financial modelling and benchmarking. Some of the countries that you mentioned have quite high country specific risk and should maintain caution because of the elevated level risk of default-measured by both public sector deficit and public sector debt.
    On to more salient points, the investor landscape has changed significantly. From an academic study of creditor/sovereign debt cycles, Reinhart/Rogoff outlined 3 critical points: 1. The true legacy of banking crisis is far beyond the direct cost of bailout packages, on average the outstanding debt nearly doubles within 3 years, following the crisis. 2. Aftermath of banking crisis is associated with an average increase of 5-7% in unemployment rate, which remains elevated for 5 years. 3. Once a country’s public debt exceeds 90% of GDP, its economic growth rate slows by 1%.
    This is all followed by deleveraging of of the private sector accompanied by a substitution and escalation of government debt. This in turn slows economic growth and lowers return on investment and financial assets. Some of the countries you mentioned have rather high public debt, and deficit. The insolvency risk, is considered high. Also, looking into the longer run, deleveraging usually begins 2 years after the beginning of the crisis (2008), and lasts 6-7 years. Second, in about 50% of the cases, deleveraging results in a prolonged period of belt-tightening exerting a significant drag on GDP growth. In the remainder, deleveraging results in a case of outright corporate and sovereign default or accelerating inflation.
    An important factor to consider prior to making sovereign fixed income investment is to examine initial conditions, bc it measures a county’s ability to respond to a financial crisis, since it is related to the size of its existing debt burden and points to future financing potentials. Developing countries like India, China and Brazil have total debt level in % of GDP in the 150 level compare to Germany around 300 and UK right below 500 and escalating.
    To select low risk investments with potential growth, one should look into where growth is, where the consumer sector is still in its infancy, where national debt levels are low, reserves are high and where trade surpluses promises to generate additional reserves to come. Look to countries that deliver results in driving growth in the global economy, rather than countries that are losing their position.
    Finally, required rate of return is almost always relative to the intrinsic risk of the asset.

    MovingIn07 likes this.

  3. #13

    Join Date
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    Quote Originally Posted by DforDavid:
    To the original poster,
    5% return for fixed income investment is not bad, if the risk is very low. But do factor in inflation, interest rate, taxes and etc. I think like one of the posters said, 7% is good, and 10% is very good.
    Could I ask why you wouldn’t invest in US treasuries? To play devil’s advocate, US treasuries are considered one of the safest assets one could invest in due to the fact that they have never defaulted in history, not even during the great depression. Also, they are proxied as “risk free assets” in financial modelling and benchmarking. Some of the countries that you mentioned have quite high country specific risk and should maintain caution because of the elevated level risk of default-measured by both public sector deficit and public sector debt.
    On to more salient points, the investor landscape has changed significantly. From an academic study of creditor/sovereign debt cycles, Reinhart/Rogoff outlined 3 critical points: 1. The true legacy of banking crisis is far beyond the direct cost of bailout packages, on average the outstanding debt nearly doubles within 3 years, following the crisis. 2. Aftermath of banking crisis is associated with an average increase of 5-7% in unemployment rate, which remains elevated for 5 years. 3. Once a country’s public debt exceeds 90% of GDP, its economic growth rate slows by 1%.
    This is all followed by deleveraging of of the private sector accompanied by a substitution and escalation of government debt. This in turn slows economic growth and lowers return on investment and financial assets. Some of the countries you mentioned have rather high public debt, and deficit. The insolvency risk, is considered high. Also, looking into the longer run, deleveraging usually begins 2 years after the beginning of the crisis (2008), and lasts 6-7 years. Second, in about 50% of the cases, deleveraging results in a prolonged period of belt-tightening exerting a significant drag on GDP growth. In the remainder, deleveraging results in a case of outright corporate and sovereign default or accelerating inflation.
    An important factor to consider prior to making sovereign fixed income investment is to examine initial conditions, bc it measures a county’s ability to respond to a financial crisis, since it is related to the size of its existing debt burden and points to future financing potentials. Developing countries like India, China and Brazil have total debt level in % of GDP in the 150 level compare to Germany around 300 and UK right below 500 and escalating.
    To select low risk investments with potential growth, one should look into where growth is, where the consumer sector is still in its infancy, where national debt levels are low, reserves are high and where trade surpluses promises to generate additional reserves to come. Look to countries that deliver results in driving growth in the global economy, rather than countries that are losing their position.
    Finally, required rate of return is almost always relative to the intrinsic risk of the asset.
    Hey, you rambled on so much you didn't even bother to say what the current return is on these.
    That is kind of important information that you left out.

  4. #14

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    Quote Originally Posted by Crocodile:
    Hey, you rambled on so much you didn't even bother to say what the current return is on these.
    That is kind of important information that you left out.
    I thought he said very clearly what the return was. He said "it all depends on lots of factors - which I outline in my post - and it's not as simple as one number".

    I thought it was an excellent post actually.

  5. #15

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    Quote Originally Posted by Crocodile:
    Hey, you rambled on so much you didn't even bother to say what the current return is on these.
    That is kind of important information that you left out.
    That's a very good point, that depends on what investors are willing to pay for them, and whether or not the market has the appetite for the risk. The yield has been volatile as you could imagine, fuelled by adverse confidence.

    For Greece, two year bonds climbed 48 basis points to 5.7%. Ten-year yields climbed to 7.15 percent. The benchmark is the German Bund which is only 3.69.

    European Leaders Deploy ‘Bazooka’ to Stamp Out Attack on Greece - Bloomberg.com

  6. #16

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    Quote Originally Posted by DforDavid:
    That's a very good point, that depends on what investors are willing to pay for them, and whether or not the market has the appetite for the risk. The yield has been volatile as you could imagine, fuelled by adverse confidence.

    For Greece, two year bonds climbed 48 basis points to 5.7%. Ten-year yields climbed to 7.15 percent. The benchmark is the German Bund which is only 3.69.

    European Leaders Deploy ‘Bazooka’ to Stamp Out Attack on Greece - Bloomberg.com
    No, you still didn't tell us what the current rate is for these bonds, but you want to give us rates for Greece and Germany. There is a market there, so what is the going rate for US bonds?

    Whilst I understand your post, it started out suggesting US bonds, then had a lot of text-book theory. Then at the end you said:
    To select low risk investments with potential growth, one should look into where growth is, where the consumer sector is still in its infancy, where national debt levels are low, reserves are high and where trade surpluses promises to generate additional reserves to come.
    Any numpty knows that the national debt in the US is anything but low, a quarter of Americans have negative equity in their home, unemployment is high and the whole American economy is being driven by massive government spending and the US hasn't had a trade surplus for many years. So, possibly you should have concluded your post with a better summary as you started to play the devils advocate on US treasuries, but then stopped.
    Last edited by Crocodile; 12-02-2010 at 10:16 AM.

  7. #17

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    Very propitious post. Since any numpty knows the bubbling deficit in the developed economies (including the US), and its correlation with bond yields, I'm surprised you haven't raised the issue earlier.

    The point of my comment was not to advise which specific security offers the most attractive rates, or to compare which economy has the most adverse condition, but to raise awareness into the pervasive valuation and investment process to encourage individuals to take a more hands on approach in making intelligent and more informed decisions. Since you seem to agree that thorough research is necessary, perhaps you too, could shed some light on this topic to make this a constructive forum.

    To make investing more mindless, here are the figures

    U.S. Treasury - Daily Treasury Yield Curve

    Date 2 yr 5 yr 10 yr 30 yr
    02-01-10 0.86 2.38 3.68 4.56
    02-02-10 0.86 2.37 3.67 4.55
    02-03-10 0.88 2.4 3.73 4.62
    02-04-10 0.8 2.29 3.62 4.53
    02-05-10 0.77 2.23 3.59 4.51
    02-08-10 0.79 2.26 3.62 4.52
    02-09-10 0.84 2.32 3.67 4.58
    02-10-10 0.91 2.39 3.72 4.65
    02-11-10 0.91 2.39 3.73 4.69


  8. #18

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    Apr 2009
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    Quote Originally Posted by MovingIn07:
    You think Iceland has a low risk of defaulting? You guys following what is happening in Iceland right now?
    What's the credit default swap on iceland's government bond right now? Can individual investors buy it?

  9. #19

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    where do you buy these bonds ?

    PDLM et al

    where do you guys buy these corporate bonds from ? can you buy using your standard HSBC brokerage accounts ?

    thanks


  10. #20

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    Yes, you can buy through a standard HSBC investment account. But the selection online is a bit limited. They have a broader (but still not huge) selection if you talk to a financial adviser in a branch.

    But now isn't great time to be buying in general - yields are right back down again.