The Lemon Fool

I found the financial crisis quite interesting (in a scary way) - and looked forward to Robert Peston's commentaries!

Three days before markets hit bottom here in Australia. ( 06/03/09 ) I began to think I had seriously got it wrong,I had got it seriously wrong!!!!.

Got too close to a margin call for me,around 65% of value disappeared,lines of credit exhausted.Hoping I could hang on until the end of March and first week of April when dividends would pour in,more shares and cash would go into the margin account.

Pressure got really bad,I got on a plane,escaped to the bush in SE Asia,no internet,news papers ,nothing.

Two weeks later checked the margin account,a good rise occurred over those two weeks,I was so happy.I had got through it.

Six months later the large amount of equity that had disappeared was back,I think it was close to 7 figures,I couldn' t really think straight at the time.The crash seemed far worse than the 1987 crash ,mainly because in 1987 I knew I had 30 years of compounding ahead of me,in 2009 I didn't.

Finished up I think dividend income reduced by about 10-- 15% for that year and bounced back the next year,a storm in a teacup.Certainly didn't feel like a storm in a teacup at the time.

I consider myself very lucky to have started investing (without the security blanket of a stockbroker at least) just before in 2005.

By 2008 I only had a few small (by today's standards at least) positions and so it wasn't that nerve wracking an experience to live through GFC. It meant I was still putting money into the markets for the next few years and I did very well as the recovery and subsequent bull headed for the top right. All this while having the knowledge and experience of what could happen.

Had I just started investing in 08 or 09 I may have thought it was easy, which would probably have made me a worse investor.

Checking annual reports through that period the storm in a teacup looks exactly that.

CBA makes up around one third of the portfolio and produces around that in income.Memory is a top of $62 in November 2007 and a bottom of $26 or$27 in march 2009.

The annual report from 2012 gives a 5 year summary on page 93.Highs and lows are

2008. ( H ). $62.16. ( L $37.02 ) end price ( 30/6 ) $ 40.17.Dividend $2.66 per share.


2009 ( H ) $46.69 ( L ) $24.03. end $39,dividend $2.28.

2010. ( H ). $60. ( L ) $36.20 ,end $48.64,dividend $2.90.

2011. ( H ) $55.70. ( L ) $47.05 ,end $52.30,dividend $3.20 .

2012 ( H ) $53.80. ( L ) $42.30 ,end $53.10,dividend $3.34.

Frightening for a day o4 two when I took off to SE Asia to escape the pressure.Storm in a teacup looking back.I was stunned at how quickly everything came back. China and a mining boom.Cricketers thank Kerry Packer every day,I thank China,and my inbuilt genes of never worry and don't follow the crowd.

They wallowed for what seemed like forever and took off to hit a high of $96 in April may 2015 .Then crashed again to be around $72 ish now.However the income is very high dividend increasing every year to be $4.31 now and the increasing shareholding by buying more at low prices,and excess income going into the DRP.

I will never understand how the chicken little suits ruled for a while and then disappeared seemingly overnight.

I forgot to add,I always give people advice that never follow daily or monthly noise.In the long term good companies are remarkably stable and should produce an ever rising income to live off

I've got the DVD, but haven't watched it yet (like many of them)
The book is very good, if you like that sort of thing
'Fool's Gold' by Gillian Tett is worth a read too

Boomerang is well worth a read as well, but then I've yet to meet a Michael Lewis book which wasn't.

On the subject of Lehman, they may have messed up the financial side of things but I thoroughly recommend their letter openers. Outstanding bit of kit.

Yes, Boomerang is good too - particularly the Iceland/Greece/Ireland bits.
Read those originally on the Vanity Fair site (for free!)

Very interesting article on the BBC website here, discussing the huge impact that the 2008 financial crash had on the US generation just entering the workforce around that time -

The millions of 'missing' babies after 2008 crash -

In 2008, I was one of the 1.5 million students who graduated from university in the US.

And, like everyone else, I was caught off guard.

Whatever we expected then, the reality today is that as a generation, we have more debt, fewer children and quite a few scars.

A decade on, there has been quite a bit of handwringing about what's changed since the financial crisis.

And I'm convinced that the biggest fallout isn't the increased regulation, or the jailed bankers (or lack thereof), but the impact it had on those of us who were just entering the workforce in 2008....

https://www.bbc.co.uk/news/business-45478670

Cheers,

Itsallaguess

This is also a good article;
https://www.bbc.co.uk/news/resources/id ... ost_decade

Another good read is Alistair Darling’s book Back from the Brink, covering his time as Chancellor during the financial crisis.

It really is an insight into what the Treasury and BoE had to do to protect the banking system from collapse.

You may not agree with all the measures taken, but I am pretty sure the outcome, although bad enough, could have been a whole lot worse.

As stock market investors, we should be grateful for such measures taken as QE which have benefitted us over the last 10 years.

FD