17 April 2024
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Be careful investing in winning and losing stocks, as Netflix shows

Peter Switzer
20 October 2022

In a bad year for stocks with the All Ords down 11.69% after being as down over 16% in June, Channel 9’s Chris Kohler looked at what you made or lost depending on whether you got lucky or unlucky with winning or losing stocks.

This is what Chris, my former colleague from Sky News, came up with if you’d invested:

• $100 invested in Facebook it’s now worth $38 — a 62% loss.

• $100 invested in Netflix is now worth $40 — a 60% loss.

• $100 invested in Tesla is now worth $58 — 42% loss.

• $100 invested in Google is now worth $67 — a 33% loss.

But they weren’t all losers, as the following shows:

•  $100 invested in Exxon is now worth $167 — a 67% gain.

• $100 invested in Shell is now worth $123 — a 23% gain.

• $100 invested in BHP is now worth $121 — 21% gain.

And here are some odd local winners and losers.

Until Vladimir Putin declared war on Ukraine, coal was unpopular for save the planet reasons, but a $100 invested in Whitehaven Coal is now worth $281. That’s a 181% gain!

Meanwhile if you thought the ‘buy now pay later’ sector was here to stay, you might have invested in Zip, well that $100 is now worth about $15, which is an 85% belting.

Against that, $100 invested in a company pilloried in the Hayne Royal Commission — AMP — is now worth $118 or an 18% gain.

If you believed that electric cars and lithium batteries are our driving and power futures, Pilbara Minerals that mines lithium, has changed your $100 into $144, or a 44% return since January.

If you wanted to play safe with a bank, your $100 invested NAB is now worth $107 but there also dividends that means the real value increase is closer to $12.

Interestingly, when it comes to the stock market, the winners in one year can be dumped next year as big time investors rotate out of one favoured sector into one that has put in a shocker this year. Those US tech stocks could easily have a big year in 2023 and if the Ukraine war ends, coal prices could slump and that would hurt Whitehaven’s share price a lot!

In fact, some of the wins and losses are smaller and bigger because of the move in the Aussie dollar over the year.

Let’s take Netflix, where the $100 shrunk to $40 over the year-to-date, where the loss has been helped by our currency falling. Because a Netflix share price was close to US$600 at the start of January and our dollar was 72 US cents, if you tried to buy a Netflix share then, you had to pay $833 for a share in Aussie dollars. Try it now and it would cost you $428 but it is selling in the US for only US$270.

While the US investor would have lost 60% on a $100, if they sold their share yesterday, the Aussie investor only lost 48% because our currency has fallen. This is an important lesson for anyone wanting to buy overseas stocks — the currency can help or hurt you.

This is an important lesson for local investors who might want to buy US tech stocks expecting they will rise. If they do, the Oz dollar could easily rise too and I expect that to happen.

That’s why when I play the US stock market for next year, I will buy IHVV, which is from iShares and gives you access to a rise in the S&P 500 but is hedged to offset losses from a rising Aussie dollar.

In the early 2000s, I bought an ETF for the Nasdaq after the dotcom crash and it rose brilliantly, but so did the Oz dollar and my gains were reduced by that damn dollar’s appreciation, which I didn’t appreciate!

All this isn’t advice, as I don’t know your personal circumstances, but I hope it’s brilliant financial education!

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