Sharesight Blog

Report Improvements

Posted by Scott Ryburn on July 21, 2010

The latest Sharesight update includes some improvements to both the Performance Report and the Sold Shares Report.

The Performance Report now has an option to specify whether you would like to include or exclude the imapct of sold shares in the return calculations. With the ‘include sold shares’ option unchecked, the report will display the performance of currently held shares only. With the include sold shares option selected the realised gains / losses on sold shares will also be included in the performance calculations.

The Performance Report can be run over any date range of your choice. The ‘price’ ‘quantity’ and ‘value’ columns display this information as at the end date of the report.

We have also added a date range selector to the Sold Shares Report. The Sold Shares Report shows the total retun on any sales that have occured within the specfied date range.

Dividend Reinvestments

Posted by Scott Ryburn on February 17, 2010

We have added a dividend reinvestment function to simplify the process of recording dividend reinvestments. The dividend reinvestment function can be enabled by clicking on the on/off toggle link under options in the share detail page sidebar.

The dividend reinvestment is enabled individually for each share holding. To record a dividend reinvestment, simply click on the dividend that is to be reinvested and then click the ‘Dividend Reinvested’ tick box. Record the date, quantity, and price of the new shares obtained.

Please see the help documentation for more detail on the new dividend reinvestment function.

Should you invest in bank shares or bank deposits?

Posted by Tony Ryburn on July 31, 2009

On 11th February 2008 I wrote blog pointing out that rather than placing funds on deposit with a major bank, investors might like to consider buying shares in the bank instead. I pointed out that over the past 10 years this would have resulted in vastly superior returns.

I did not recommend that people switch to shares because I believe that investing in shares should be a long term proposition and funds on deposit are often required it the short-term . Obviously you should be very cautious about investing funds in shares that you are likely to need on a specific future date because if that date falls in a period of depressed share prices, you are likely to crystallise a loss. And individual investor circumstances need to be taken into account as well.

Having said that, I thought it might be interesting to compare the performance of bank shares with interest rates now that we have had had such a dramatic collapse in share prices. Does my suggestion that you would get better returns on bank shares rather than bank deposits still hold water?

Set out below is a Sharesight screenshot of a portfolio of shares in the four major banks. Initially $1,000 was invested in each bank on 28 July 1999. You will see that the compound return across the four major banks over the last 10 years has been 10.31%. This sure beats deposit rates.

What may surprise a little, is that over the last 5 years combined bank returns have been 9.61%. Maybe even more surprising, is that over the last year they have been 11.26% – see the second screen shot.

So are bank shares always going to give superior returns to bank deposits? History says usually but not always. No comparison is complete without noting the following:

1. You will see from the second screen shot that individual bank returns over the last year have been volatile.
2. Shareholders are last cab off the rank in the extremely unlikely even that disaster strikes and a bank falls over. So in theory they carry greater risk.
3. And finally, if you look at bank returns over the past 2 years – see the screen shot below – you will see that deposits win out handsomely. The banks’ overall return was -8.01% with ANZ and NAB taking a beating.

Disclosure: I have no shares or investment deposits in any bank.

The 2025 Taskforce

Posted by Tony Ryburn on July 28, 2009

As investors in the NZ share market we should all applaud the appointment of Don Brash to head a task force to improve NZ’s productivity. If we do see an improvement, that should lead to improved share market returns and a better standard of living for all New Zealanders. Few would complain about that.

But I do have a few complaints. For a start, the stated aim of the task force is not clear. It has been variously stated as:

• Matching Australia’s productivity by 2025
• Bridging the gap between Australia’s living standards and ours
• Matching average Australian incomes.

Whatever goal we choose, it needs to be precise. How exactly do we plan to measure productivity/living standards/incomes? For example, are we talking pre or post tax incomes? Are different living costs going to be factored in?

And when we talk blithely about closing the gap, let’s not fondly imagine that Australia is going to hang about marking time and waiting for us to catch up! Our target will be a moving feast. Cynics might say that is exactly what the Government wants because if they fail, which I fear they will, no one will be able to actually figure that out.

Why the heck would we want to compare ourselves to Australia anyway? Rodney Hide says it’s because we love beating Australia. How pathetic is that? This is not about envy or beating anyone. NZ is far more likely to prosper if we cooperate with Australia rather than trying to beat them. As our major trading partner, the better Australia does, the better we are likely to do.

Performance measurement experts often warn that a focus on inappropriate targets can lead to perverse outcomes and a focus on beating Australia is a good example of exactly that. If the taskforce focuses on beating Australia rather than on the improved products, services and benefits the Government wants to see delivered to all New Zealanders, my prediction is that it will do more harm than good.

So, we have a new taskforce with an unclear, imprecise, inappropriate target that is focussed on the wrong thing. It couldn’t get worse than that could it? Well unfortunately it can and it does – the target is not relevant either. What is the point of trying to compare our economy based primarily on dairying and forestry with an Australian economy based primarily on mineral wealth?

Maybe we can rely on Labour leader Phil Goff to bring some sanity to proceedings? Don’t hold your breath folks. Phil reckons the whole thing is about privatisation and right wing ideology!

A copy of a disclosure statement for Tony Ryburn and Sharesight is available here. This is provided in order to comply with our obligations (if any) under the relevant legislation and is not a representation that either Tony or Sharesight is an investment adviser.
Nothing contained in this blog is intended to be investment advice and neither the writers nor Sharesight accept any liability for reliance on information or opinions contained in this blog.

Back to the Future (Have we got too smart for our own good?)

Posted by Tony Ryburn on April 17, 2009

I was brought up in an era when life in general, and in the world of finance in particular, was a lot simpler than it is now. Borrowing money was frowned upon. You worked and if you were frugal, you might save enough to buy a few non-essentials if not luxuries.

If we wanted something we saved for it. The idea that you could borrow and have things now, rather than having to wait, did not feature in our thinking. We didn’t know much about interest and we had no idea about compounding. But we did have this vague, uneasy feeling that if you paid interest you were heading down the wrong path and would be worse off in the long run.

But we didn’t have the benefit of the advice that Yuwa Hedrick-Wong gave us all a couple of days ago. He said:

“The benefit offered to the consumer to acquire a short-term loan anytime and anywhere without any security coverage is not available on any other payment option except the credit card. The importance of the option for a consumer to borrow for short-term needs is more significant today as the global economy is heading into a period of constrained credit.”

(Maybe I should mention that Yuwa Hedrick-Wong is MasterCard’s economic adviser).

I’m getting that vague, uneasy feeling again. It is telling me that we need advice like this like a fish needs roller skates.

What we knew clearly in the good old days was that if you did need to borrow, the bank might not have funds available when you needed them. So relying on borrowed funds was a bad idea. Today we have MasterCard and all those collateralised debt obligations and credit default swaps designed to ensure that banks always have the capacity to lend. But I for one am not convinced this is a step in the right direction.

We used to have this outdated belief that if you did borrow money you had to pay it back – no ifs, no buts, no maybes. Today we have revolving credit facilities and interest-only loans so that repayment is no longer necessary. I’m not sure this is a step in the right direction either.

Of course it wasn’t all bad in the good old days. Some of us did save a bit and stock exchanges were set up to allow us to participate fully in the capitalist society. These exchanges were pretty simple – they allowed you to buy and sell shares in companies. Despite this clear, simple mandate we had this irrational fear that somehow these exchanges would morph into giant casinos. Some would say this fear has now been realised which suggests that stock exchanges may not be heading entirely in the right direction either.

I hasten to add however that you can invest in the share market in a way that avoids the casino element, gives you good returns and enables you to ride out the volatility. See Why you should invest in the sharemarket

As well as the stock markets, what if the wonderful new financial instruments that are now available for us to make money were available in the old days? We wouldn’t have understood them, that’s for sure. But we probably would have had this vague, uneasy feeling that they had been developed with little regard for the risks. Risks that are inherent not only the instruments themselves, but also in the mechanisms for trading them.

However if the actions of the current generation are any guide, we would have headed off in the wrong direction. We would have ignored the risks, brushed aside our lack of understanding and gone for these  new financial instruments like rats up a drain pipe.

A copy of a disclosure statement for Tony Ryburn and Sharesight is available here. This is provided in order to comply with our obligations (if any) under the relevant legislation and is not a representation that either Tony or Sharesight is an investment adviser.
Nothing contained in this blog is intended to be investment advice and neither the writers nor Sharesight accept any liability for reliance on information or opinions contained in this blog.

Who needs economists?

Posted by Tony Ryburn on December 15, 2008

I agree with Chris Worthington’s contention (Dom Post 13/12/08. Super fund has no room for nationalism) that a Government directive to the NZ Super Fund would set a dangerous precedent.

But I question almost everything else in this article. Economics was never my strong point however, so maybe that’s why I have a few questions.

1. Is diversification the great free lunch of finance?
   
   See my thoughts on this.
2. Is it really true that over the long term, investment in NZ assets would have underperformed diversified international investment?
   
   As Chris himself admits, this has certainly not been true over the last 5 years and I doubt that it has been over the last 50 years either.
3. Are small countries unusually vulnerable to country-specific shock?
   
   The country specific shocks of the last year or so have generally hit larger countries the hardest. (I admit that Iceland is an unhelpful exception to my contention!) But if you look back over history I think you would be hard-pressed to come up with persuasive evidence that small countries are particularly vulnerable.
4. Is there really a rule-of-thumb that the correct allocation towards NZ assets should be less than 1% because our share of global assets is less than 1%?
   
   Since when has there been any evidence that asset allocation based on share of global assets has any relevance at all to investment performance? Quite apart from this, an investment strategy based on such a ‘rule-of-thumb’ would be totally impractical.
5. Is it really true that if NZSF invested more in NZ this would crowd existing investment into foreign markets?
   
   Evidence please Chris. And if it is true, why would that matter?
6. Are NZ assets really less desirable to the NZ Government than foreign assets, all else equal?
   
   Really? What precisely are all the things that have to remain equal? Will they? And if they don’t does that mean NZ assets aren’t less desirable for the NZ Government after all?

We all agree that we are in difficult times at present and if we are going to get things sorted, we need more than platitudes and perceived wisdom from those who, unlike me, do understand economics – if anyone does!

And what we don’t need are experts who have a bob each way. In October I questioned Rod Oram’s contention that the doomsayers have got it wrong. In this article Rod claimed that ‘other countries are rejoicing at the stability similar schemes (to NZ Government’s bank deposit scheme) are bringing to their banking systems’. Now he is now telling us ‘we don’t yet get the gravity of this crisis’.

Are you any the wiser?

A copy of a disclosure statement for Tony Ryburn and Sharesight is available here. This is provided in order to comply with our obligations (if any) under the relevant legislation and is not a representation that either Tony or Sharesight is an investment adviser.
Nothing contained in this blog is intended to be investment advice and neither the writers nor Sharesight accept any liability for reliance on information or opinions contained in this blog.

God Bless America

Posted by Tony Ryburn on November 14, 2008

Have you noticed how America always has to be centre front on the world stage?  The Iraq war did the job nicely for quite a while and just when even diehard Americans started tiring of that, they conjured up a financial crisis that started in their banking system and then reverberated throughout their entire economy before engulfing the rest of the world.

Things got seriously out of hand as we are all now painfully aware and America turned to its economic policy advisers to come up with a solution. Unfortunately what they came up with left a lot to be desired.

Their solution was to grab $US700 billion of tax payers’ money and buy bad bank loans.  This would have been grossly unfair to taxpayers who were basically being asked to pay megabucks for a load of worthless junk with no compensating upside.

Fortunately the European Union and Britain were alert to this inequity and came up with a much more reasonable, if blindingly obvious solution.  If tax payers’ money had to be used to bail banks out it should be used to purchase equity in the bank.  That way, long-suffering taxpayers would get a commensurate share of the good stuff as well.

Eventually, the wisdom of this proposal dawned on the Americans and they announced that they would follow the European and British lead.  And what happened when they finally got it right? A few billion (or was it trillion?) was promptly wiped off the American share markets! So it’s not just the banks and economic policy advisors in America who seem to have lost the plot.

And the point is? Well, the Americans led us into this mess but, based on their performance to date, we would be foolish to expect them to lead us out.

A copy of a disclosure statement for Tony Ryburn and Sharesight is available here. This is provided in order to comply with our obligations (if any) under the relevant legislation and is not a representation that either Tony or Sharesight is an investment adviser.
Nothing contained in this blog is intended to be investment advice and neither the writers nor Sharesight accept any liability for reliance on information or opinions contained in this blog.

Performance Report

Posted by Scott Ryburn on July 8, 2008

The Sharesight Performance report is now available to users on the Investor and Expert plans. The performance report shows similar information to the portfolio overview page, however it allows you to select both a start and end date so that you can view the performance of your portfolio over any date range.

As with other Sharesight pages you can switch between displaying dollar returns and annualised percentages. The new performance report can be found under the reports menu when logged into Sharesight.

How much will you get from the 2008 Budget tax cuts?

Posted by Scott Ryburn on May 23, 2008

One of Sharesight’s key objectives is to show you the true return on your shares. But on Budget day we thought we should show you exactly what you are going to get from the budget.

Labour says the 3 year rolling tax cuts will cost $10.6 billion. That sounds a huge amount but National says it is too little too late.

Exactly how much are you going to get and when?

Click here and Sharesight will tell you.

Sharesight: The custodial system you have when you don’t have a custodial system

Posted by Tony Ryburn on March 25, 2008

In NZ we pride ourselves on being a DIY nation and this is increasingly the case with share investment.

Many DIY investors do not have access to a decent custodial system. And investors using the custodial system provided by the National Bank have recently been told that their custodial system is about to get the chop. If you don’t make alternative arrangements you will cop “a custody fee of 1% per annum of the value of the securities, with a minimum charge of $100 per annum”.

Enter Sharesight: the custodial system you have when you don’t have a custodial system. Sharesight is a simple, DIY custodial alternative with a lot of other features as well.

Not only that, Sharesight eliminates the disadvantages of a custodial system because it:

• Puts you in control.

• Allows you to be the legal as well as beneficial owner of your shares so you get all the shareholder
  communications from the company.

• Ensures you do not miss opportunities to participate in offers to existing shareholders which can happen if you
  are in a custodial system.

• Keeps you constantly in touch with how your shares are performing rather than being captive to infrequent
  and often inadequate reports from the custodian.

• Gives you the satisfaction and enjoyment that many investors get from managing their own share portfolios.

So if you know anyone suffering from the loss of a custodial system (or perhaps you are looking for an alternative yourself), we think Sharesight is the ideal solution.

Signup for a free trial!