'Because the yield spread of the individual share (demonstrated...

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Tarvold

22,358 Posts.

1250

05/07/24

13:32

Post #: 74625649
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Originally posted by Alee26: ↑

APA is oversold at the moment with RSI at 23,55.

APA under-performing broad market for the last 5 years:

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I'm just trying to get an answer to a simple question

Originally posted by madamswer: ↑

Starting with this clanger:

"APA is not a fixed income investment nor is it bond or a proxy for one."

You'd be extremely hard pressed to find an ASX listed security whose market value is more closely correlated with bond pricing than APA.

Not just recently but over the long-term:

It:

1. rallied along with bonds during the period of the global recession of the early 2000s,
2. almost halved in value (in tandem with the sharp fall in bond prices) during the economic recovery between 2006 to 2008, then
3. rallied for the next decade (just like the rest of the bond market did), until 2020, and
4. has been crunched (just like the rest of fixed income market) since 2021 and today.

To suggest that APA is not a fixed income proxy reflects either economical illiteracy or someone being intentionally obtuse.

"And yet you still don't explain why you're willing to take on the additional risk inherent in buying a single share when you can just buy bonds instead if you think they are mispriced?"

Because the yield spread of the individual share (demonstrated over extended period of time to behave like a bond) over benchmark bond yields exceeds historical averages by a margin approaching several standard deviations, which provides added prudential valuation buffer in the share.

"If you're saying bonds aren't mispriced but APA is then your whole argument is nonsense,

[Good. god. Like debating a child.]

I'm saying:

1. Bonds ARE mispriced, and
2. APA - a distinct bond look-ee-like-ee - is mispriced even against mispriced bonds.

"you're just trading APA because it's undervalued like anyone else."

Yep. I allocate my capital to investments I consider to be undervalued.
(My assumption is that's not just me that adopts this self-evident approach; rather, that it is a universal investment objective.)

"As I posted before, you come across as a person who's read a few economics text books & thinks they're smarter than they really are."

Not sure why you seek to make me the topic of discussion, but, fine, I'll bite:

If "read a few economic textbooks" is the same as studied economics in a formal setting (for more years than I would have liked), then - yeah - I've ... er .. read some economics textbooks (again, more than I would have liked).

That I retained some of what I learnt is arguably more testimony to the teaching rigours of the tertiary education institution I attended, than it is any innate smartness on my part.

.

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'Because the yield spread of the individual share (demonstrated over extended period of time to behave like a bond) over benchmark bond yields exceeds historical averages by a margin approaching several standard deviations, which provides added prudential valuation buffer in the share.'

Finally he gives the answer I've asking for!

APA Price at posting: $7.90 Sentiment: Buy Disclosure: Held
1 Upvote

0 Great analysis

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