dtcwee: The Value of Nothing

What is Private Equity? Private equity refers to investments made in companies that are not publicly traded . The goal is to achieve high returns by improving the company’s operations and then selling it for a profit. Think of diamond-in-the-rough companies in which value is difficult to see, (but which you are assured is there).  What is the Efficient Markets Hypothesis (EMH)? The EMH states that share prices reflect all available information. It posits that stocks always trade at their fair market value , making it impossible to consistently outpe

TLDR: Call the Tax Office ☎

How do you fund a nation? British PM Clement Attlee said, If a rich man wants to help the poor, he should pay his taxes gladly.

The cost of kids vs residential care. It used to be that children were a retirement strategy. You'd gently pass away in your mortgage-free bed surrounded by loved ones. Old folks' homes were for lonely deviants who failed at family formation. Let's compare ...

I used to agree with the mainstream view that an aging population was deflationary. The logic: old people don't buy new stuff. Real world examples: Japan, Singapore, Germany, etc. If inflation did pop its head up, governments would reflexively smash it with higher interest rates, never mind the resultant unemployment. Why? Well, the US did it in the 1970s. Since then, much of the neo-liberal project has been to transfer power from workers to consumers. Voters were happy with that trade-off then, so they probably would be again. The numbers stack up politically. Inflation affects everyone. Unemployment only affects workers. I don't work. I'm team higher unemployment. Anticipating a future of stable or falling prices, I relaxed going into the COVID pandemic.

Why not? Calculators sure changed mine. A lifetime ago, in a safe but stifling job, I found an online mortgage calculator that visualised the power of extra repayments. Having just borrowed to buy a home, it opened my eyes. I was hooked. Learning that early escape from debt was possible made it my obsession. I checked that calculator after every stymied project and pointless restructuring. So, like, twice a day. With few opportunities to flex my skills in my IT role, I wrote other calculators to rationalise and strategise my approach to life.

Borrowing to invest in an asset will not simply multiply your returns. It is more accurate to say that leverage multiplies the difference between the returns on the asset and the cost of borrowing. This post was originally published on 18-Dec-2016. I have since made an interactive leveraged returns calculator . Short Form Calculation Return on Equity = Interest Rate Differential x Debt to Equity Multiple + Asset's Return For example: 8:1 Debt to Equity at 4% debt interest with an asset return of 5%: 1 x 8/1 + 5 = 13% Visualisation looks a little something like this: ROE Alpha (Y-axis) by Return-Borrowing Differential (Z-axis) by Borrowing (X-axis)

Australia's Productivity Commission estimates that the baby boomer generation (born between 1946 and 1964, aged 56 - 74 in 2020) will pass $3.5 trillion dollars in wealth to their heirs by 2050. The distribution will not be even.

Household formation was dullishly ordinary before it became the Australian 'dream'.

Same again tomorrow. One thing I like to tell myself during bear markets: On any given trading day, three quarters of a percent of the U.S. market turns over .

To aid division of assets under Australian Family Law. There are many resources to aid understanding of the property division/settlement process, the SA Law Handbook comes to mind, but few help with the calculations or how they map onto various elements in the court forms. As a result, parties risk negotiating without a clear idea of the assets in play, or how the division can be achieved. Closer to finalisation, the draft orders may be difficult to understand. After finalisation a poorly communicated division may lead parties to convince themselves that it was unfair.  So here's a Google Sheet: Family Law - Property Division Calculator (AU)   ... to help people reconceptualize the negotiations. It is, of course, free and you don't need to create a login (unlike some other online aids.)

The STI benchmark for Singapore's stock exchange is easy to visualise as it has just 30 well publicised constituents. Go on, click the sector headings to drill down. It's easy to see how diverse it is. Is it too concentrated?

The same people whinging about low interest rates debasing the U.S. dollar ... After snoozing through the period of zero interest rates, we are bound to awaken with some suddenness to the consequences of monetary debasement, which we have been collectively ignoring for too long. ... now complain that raising interest rates will wreck the economy .

Australian houses have gotten larger while Australian families have gotten smaller.

Q: How can you tell if someone has an investment property? A: Don't worry, they'll tell you.

Why you should want to work. People who don't want to work are often presented with 'The Ant and the Grasshopper' to prime them for shame and deprivation.

The future of Japan's national pension (国民年金/Kokumin Nenkin), and that of Japan. Japan is at the vanguard of indebted aging societies, so there's a lot of debate about whether it's going to be OK, seeing as more than a few developed nations will also Japan-ify. Team "Prep for Armageddon" points to the huge national debt. Team "Shrug" points to that debt being overwhelmingly yen-denominated and domestically held. If indeed  each Japanese citizen is owed 9 million yen  (about USD90,000) what realistic claim do they have to it? Because how they might access it has ramifications not just for citizens, but the future of the country. That's what we're here to tease out.

Education plus work equals money. Spend time (and cash) studying at a good school, spend skills on a good job, spend workdays boosting your reputation, and you will be rewarded with a nice middle-class life and retirement account. Well okay, that makes sense, but it may be the least efficient way to get rich.

Superannuation and housing are Australians' biggest assets. How do they compare in scale?

Beware of buying houses based on loan rate movements. 🏡🌏 Australian policymakers use lending rates to stabilise house prices. House prices are expected to move opposite to the interest rates charged by banks, which are set in line with the RBA's rates. When rates fall, borrowers can afford higher repayments, higher principal amounts, more expensive properties, and vice versa. However, this has not historically been uniform.