Firstly, it’s just another typical week of riding a rollercoaster – one day we are up and next day we’re down again! So as we were up yesterday by almost 2%, it’s no surprise that today we are back down to almost break-even again. Just shows how quickly things can change as the “BIG” players moved the market to profit from what is almost a sideways move when you look at the overall markets. What we can do is just know that’s how they work and patiently give the shares the time needed for all this volatility to run its course and eventually realise their true potential. Sadly we can never tell if it’s tomorrow or next year and it’s interesting to already see some large variations in the short time we have held the shares currently in our portfolio.

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IB Market Values + Orders 4/ 6/ 21

So it’s a good time to try making the following points:

  1. This illustrates why diversification is also a very important factor (i.e. “don’t have all your eggs in the same basket”).
  2. It’s important to understand that we also need to think about holding shares for more than a year if we want to take advantage of the Capital gains discount (i.e. CGT). So even if we have a good gain, I like to consider if there’s more potential of holding them longer and then reduce any tax liability as a bonus?
  3. Another factor is the costs of selling the shares and then buying them back (along with the difficulties of timing) which sometimes can work against us.
  4. However, it’s worth considering taking gains if we also have some losses to offset them that neutralise the tax effect. That’s something we will look at as we approach the EOFY date of 30 June 2021.

The good news is that we have finally managed to open two more broker accounts – ANZ Share and Bell Direct. The reasons for these are they give us access to ASX MFunds. These are different from Interactive Brokers (or Capital 19 and others that use this system) that does not offer this service / product range. This is what Bell Direct screen looks like with our portfolio – although we notice there’s an error with a $10,000 investment not currently showing up in the total value yet? This may be because there are transactions in process and they should eventually show up when everything is settled.

Bell Portfolio With Error 4 6 21
Bell Portfolio With Error 4/ 6/ 21

The following shows all the Bell Direct transactions so far and that we have deposited $50,000 there:

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Bell Account Trans 4/ 6/ 21

We have now invested in funds to help with what we call the Core investments. They include some Global investments in specific assets like Property, ASIA, and emerging markets but also create a currency risk that we need to understand. This is a screenshot of one of them and I will post more about these next week as this post is getting to it’s limit (we know you only have a limited amount of time each week to digest these).

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Bell Orders + Details 4 6 21

For more details, we can use the ASX MFunds website to search and review various fund managers (see the ASX code ACA01 is one fund we invested in above and below) and their performances if you click here.

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Amp Fund Performances 31/ 5/ 21

What’s important to consider are the following, though not necessarily in this order, when selecting a fund:

  1. Is the manager reputable and relatively stable? This element comes easier with experience but you can obviously try to “google it” and check if they have a good reputation or not.
  2. How long has the specific fund been going – the longer is usually the better unless there’s a good reason for the fund being “new”.
  3. The performance relative to their stated benchmarks. Sometimes they may be very close or under the benchmarks but if that’s what they are supposed to do then it’s fine because fees will naturally reduce their results when compared to the index that excludes any fees. Again, care isĀ  always needed when looking at past results because it’s often impossible to tell what will happen in the future but consistency is certainly important and why greater reliance should be on more than just the last years numbers.
  4. The size of the funds is also important. The smaller the funds, the higher the “liquidity risk” – which means if too many investors decide to withdraw funds at the same time, there could be delays, and potentially more losses.

Finally, cryptocurrencies are still going through a period of consolidation and more rhetoric from governments against them – recently China. They are banning Bitcoin miners and that’s clearly having an impact in the short term. Longer term, we know that things are changing to reduce the high costs that got out of control and made Elon Musk reverse his position to accepting Bitcoin as a payment alternative. In time, we know there will be better and cheaper solutions that use this technology and make this workable. Our portfolio remains cautious and we are a bit behind again for now.

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Bitcoin Holdings 3/ 6/ 21
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