909 replies to this topic

[orca]

Someone asked me last week why I buy stocks that have a good uptrend. Here is the answer.

http://knowledgebase...EA577463A43B8ED

[delta66]

i'm buying more post div..might visit orca in portugal if i can get 70%+ from current levels...lol

[orca]

RISK

Market

The share price and earnings will clearly take a hit, albeit mitigated to some extent by the variable cost model, in any major downturn.

Underperformance

Underperformance by peers occurs frequently and it is still a given that an asset manager, who comes from nowhere to top of the log, is likely to head for the bottom soon afterwards. Coronation has however managed to maintain above-average performance consistently over time and, while this by no means eliminates the risk, it is thereby mitigated.

 

From the same website.

[BBW]

I don't think CML will easily, if ever, go below 62 again.

[orca]

"The market cap to FUM ratio, at 4.1%, is at the upper range for asset managers but then, with Coronation’s track record, it should be! Sceptics who held their breath over the past 10 years for the “statistically inevitable” period of marked underperformance would no longer be with us. Nevertheless the risk remains but it is fair to point out that, just as the market value of funds under management grew less than the general movement in equities on the JSE, so would the decline be less. It would therefore take a market movement along the lines of 2008 for FUM to be severely impacted. Investors who believe, as we do that global equity markets are undergoing a seasonal correction after a rapid surge, with the prospects of subsequent recovery by year-end, could therefore HOLD".

 

Posted today on broker website.

 

The reason why the funds under management performed lower than the equities on the JSE is due to the many non equity portfolios such as money market and interest bearing instruments they hold.

I therefore must dismiss Farouk's post below.

Edited by Orca, 29 May 2013 - 11:00 AM.

[farouk]

Orca

If market go into a minor correction then her target is minimum R40.(200dma).

She reached that target (200dma) in her last correction(last year June).

If she breaks her 200dma then its free fall (anybodys guess where the bottom will be).

Decision time...........

Pay the tax man or pay the market maker.

 

 

[orca]

I just received a PM via the mobile app but my answer won't go through so I will answer here.

 

No. I will not sell if it tanks to the 50's as I have learned my lesson over the years. Selling when it drops like in June last year and buying back in at a higher price. And then paying tax on the "trade".

Even if it drops back to the 50's, it is still a great stock and will still have given me roughly 100% for the year. I'm cool with that.

Bull's calculation of Fair Value at 9237 gives hope that it will not tank.

[bphartell]

I would close the trade this week. She might correct on Friday. If she falls, she will fall rather far.

Thanks Orca

[dominant]

Thanks dominant.

Appreciate the clarity

 

no prob

[Cold Night]

Sure am delta but I have come to terms with the possibility that we might see the 50's again.

 

CML Tards! We ride!

[orca]

orca, hope you sticking around for the run up to <R90.00 ; > 

 

Sure am delta but I have come to terms with the possibility that we might see the 50's again.

[gamma]

Thanks dominant.

Appreciate the clarity

 

 

Gamma,

 

A dividend remains a dividend irrespective of whether the security is held as an investment or trading stock. Dividends tax is a final tax at 15% (differs when you start paying overseas where there are Double Tax Agreements and treaties in place, but I suspect this is not the case here).

 

If you think about it, company profits have already been taxed at 28%, then there's a Dividends Tax on that post-tax profit once that's distributed to shareholders. Here's a simple example of the effective tax rate: Company earns R100 taxable income. Taxed at 28%, NPAT is R72. This is distributed to shareholder on which 15% DWT is levied. Shareholder receives R61.20 (R72 x (100 - 15)/100. The effective tax rate is therefore 38.80% (R100 - R61.20)/R100. SARS is therefore more than happy with their cut of the pie.

 

Only the gain from the sale of the CFD will be included in your normal taxable income, which is taxed at your marginal rate.

 

In summary, a dividend is not a capital gain. It is normal income in all cases, which is excempt from income tax i.t.o. s.10(1)(k)(i). Certain dividends are however taxable such as property company dividends, foreign dividends and some other very technical ones. In most cases however, the former is applicable.

[dominant]

I wonder about this.

As you probably know all CFD activity are considered trading. Never can one claim CGT even if you were to hold a contract for 5 years.

So then is the profit that acrues from the divi really taxed at a divi rate or marginal?

 

Gamma,

 

A dividend remains a dividend irrespective of whether the security is held as an investment or trading stock. Dividends tax is a final tax at 15% (differs when you start paying overseas where there are Double Tax Agreements and treaties in place, but I suspect this is not the case here).

 

If you think about it, company profits have already been taxed at 28%, then there's a Dividends Tax on that post-tax profit once that's distributed to shareholders. Here's a simple example of the effective tax rate: Company earns R100 taxable income. Taxed at 28%, NPAT is R72. This is distributed to shareholder on which 15% DWT is levied. Shareholder receives R61.20 (R72 x (100 - 15)/100. The effective tax rate is therefore 38.80% (R100 - R61.20)/R100. SARS is therefore more than happy with their cut of the pie.

 

Only the gain from the sale of the CFD will be included in your normal taxable income, which is taxed at your marginal rate.

 

In summary, a dividend is not a capital gain. It is normal income in all cases, which is excempt from income tax i.t.o. s.10(1)(k)(i). Certain dividends are however taxable such as property company dividends, foreign dividends and some other very technical ones. In most cases however, the former is applicable.

Edited by dominant, 28 May 2013 - 01:24 PM.

[gamma]

I wonder about this.

As you probably know all CFD activity are considered trading. Never can one claim CGT even if you were to hold a contract for 5 years.

So then is the profit that acrues from the divi really taxed at a divi rate or marginal?

 

 

Hi BBW,

 

Yes, Dividends Tax is a withholding tax, meaning the onus is on the Company declaring the dividend to pay it over to SARS on your behalf. The amount you receive in your account has therefore already been taxed, and there is no further tax implications for the dividend you've received.

[orca]

Currently long @ 6073 (CFD).

 

Not sure if I should close position before LDT or wait to see what happens come ex div.

 

Any advice?

I would close the trade this week. She might correct on Friday. If she falls, she will fall rather far.

[dominant]

Thanks, so tax will have already been paid on that amount?

 

Hi BBW,

 

Yes, Dividends Tax is a withholding tax, meaning the onus is on the Company declaring the dividend to pay it over to SARS on your behalf. The amount you receive in your account has therefore already been taxed, and there is no further tax implications for the dividend you've received.

Edited by dominant, 28 May 2013 - 12:48 PM.

[BBW]

Hi BBW,

 

DWT will work the same way it does with normal stocks. If you hold 1000 contracts and a dividend of R1 per share is declared, you will receive R850 in your account, and the dividend declaring company will withhold the 15% DWT payable by the dividend declaring company directly to SARS.

Thanks, so tax will have already been paid on that amount?

[Cold Night]

Currently long @ 6073 (CFD).

 

Not sure if I should close position before LDT or wait to see what happens come ex div.

 

Any advice?

 

 She aint slowing down today!

[bphartell]

Currently long @ 6073 (CFD).

 

Not sure if I should close position before LDT or wait to see what happens come ex div.

 

Any advice?

[Sheldyn]

all the movement we're seeing must be exchange rate related? at this rate we'll see 10/USD in a couple days