Storm

This article was originally published as 'Storm' in http://www.themorningbulletin.com.au/ on 10th August 2013. Image borrowed from www.couriermail.com.au

The dumbing down of education and the reliance on one's own feelings as a reasonable basis for decision making are topics previously addressed in the column.

It seems to me that we have moved from a situation where few were relatively tertiary educated, but educated to a high standard, to one where a shallower style of tertiary education is available to most everyone. And we have moved from a system of highly organised (definitely flawed and perhaps over-bearing) religion as a source of self-reflection to one where daring to question the crowd is deemed heretical. The popular default now is a reliance on feelings and bureaucracy.

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The Grand

This article was originally published as 'The Grand' in http://www.themorningbulletin.com.au/ on 16 June 2012.

Passers-by will notice that the Grand Hotel and the house next to it has been demolished, with only Legacy house still standing. The combined land parcel comprises more than 1,700 square metres of prime commercial land, snugly situated between City Centre Plaza, The Edge and the new Empire apartment hotel (to be started in January).

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Rundown on CIPL

This article was originally published as 'Rundown on CIPL' in http://www.themorningbulletin.com.au/ on 21 July 2012.

Of the $150 million or so our business looks after, about $90 million originates from Central Queensland. That’s a lot of money, but think about it this way – that’s only money entrusted to our firm - one of probably 30 financial services firms in the area.

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Wacademia

This article was originally published as 'Wacademia' in The Morning Bulletin in July 2012

Flinders prided itself on was an interdisciplinary approach to learning streams. As part of my economics degree I studied statistics, demographics, politics, history and even had the opportunity to enrol in “death dying and bereavement” and other subjects in the medical school. More experienced, it’s almost uncomfortable to realise that I only now understand what they gave me back then.

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Just Google It

This article was first published inThe Northern Daily Leader under the heading, 'Just Google It' on the 17th of March 2012.

How great is the internet? Want to know how many ping pong balls fit in a jumbo? Just google it (around 28 million). Want to know Tony Abbott’s date of birth? Just google it (4 November 1957). Want to know how much the world’s most expensive watch costs? Just google it ($4.7 million). Want to know where the….ok you probably get it by now. It’s almost hard to imagine life without access to all of this amazing information. Though of course much of what you find on the internet is of dubious quality – have a look for when the world will end and you’ll see what I mean (21st of December apparently, so go easy on the Christmas presents this year).

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The Music Did It

This article was first published inThe Northern Daily Leader under the heading, 'The Music Did It' on the 03rd of March 2012.

It’s remarkable how sights, sounds and smells can jog our memories, instantly reminding us of places or events long past. Music in particular is very effective at transporting you back to a certain time or place. When I hear Ennio Morricone’s classic theme song from The Good, the Bad and the Ugly, it immediately takes me back to the late 70’s, sitting on the shagpile rug on the lounge floor while my parents listened to the soundtrack on their vinyl record player, eating Swedish meatballs and a cheese fondue. On the other hand, a power love ballad from Whitney Houston reminds me of teenage parties where we hung out with our acid wash jeans, leather jackets and big hair, furtively sneaking sips from a can of beer we’d stolen from Dad’s fridge.

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Productivity

This article was originally published as 'Productivity' in The Morning Bulletinon 03 March 2012.

Economists have not been good at explaining productivity, and consequently most people think it involves closing factories and cutting heads. That can happen, but more powerful sources of productivity improvements do exist. While employing better machinery and other equipment is obvious, it is the legion of small things that interests me most.

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Shopping is not a movie

This article was first published in The Northern Daily Leader under the title 'Shopping is not a movie' on 04 February 2012.

It struck me then that choosing a movie was not unlike investing in the stock market – I had a choice between very different alternatives, just as you do when you select any investment. One of the choices, The Hangover, was clearly high-risk (my wife was not going to be happy when I showed her my selection) but also high-reward (I was going to be much happier watching it than the movie about shopping). Sex in the City however, was the complete opposite – low-risk (my wife was going to be thrilled with my choice) but also low-reward (I would have to try and keep awake for two hours watching Carrie and her friends go shopping and talk about their feelings).

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The 'toilet tip'

This article was first published inThe Northern Daily Leader under the heading, 'The Toilet Tip' on the 18th of February 2012.

People often lump gambling and the stock market together, believing that the risks or chances of success in both are of equal magnitude. In fact researchers have found that there is a difference: gambling in casinos or on pokies means you will only ever lose in the long run, due to the nature of the odds against you. The stock market however, is more like the racetrack, where the more informed investor (or punter) can succeed at the expense of less well informed players. The message is that successful investing, like picking winners at the track, means talking to somebody who knows what they’re doing. It’s just that good investment advisers are hopefully easier to find than hanging around the toilets at the racetrack.

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A perfect 10

This article was first published inThe Northern Daily Leader under the heading, 'A perfect 10' published on 24 December 2011.

It’s a shame there isn’t a World Championship of Fainting, as I’m confident I could win gold for Australia. My most recent example, prompted by a stomach complaint, would certainly have come as close to perfection as Nadia Comaneci’s 10 out of 10 on the uneven bars at the 1976 Summer Olympics. It was a fairly spectacular effort, with all the hallmarks of a great faint – sweating, shivering, mumbling and kryptonite-like weakness.

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In a 'roundabout' way

This article was first published inThe Northern Daily Leader under the heading, 'The Robot Says Stop' published on 10 December 2011.

I was thinking about the different names for traffic lights as I was stuck on red at Tamworth’s newest set of traffic lights (at the intersection of Bridge Street and Belmore Street). As I waited for green, I wondered why we had swapped a perfectly good roundabout for a set of traffic lights.

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Fleeting 1st lesson in finance

This article was first published inThe Northern Daily Leader under the heading, 'A kiss from Julia Roberts' on the 26th of November 2011.

Starting early is important not only in education, but also in saving and investing. The earlier you start saving up for something, be it a new car, a nice pair of shoes or your retirement, the more chance you have of reaching your goal. Now we all already know this, so why is it so hard to do? It’s simply a trade-off between immediate and delayed consumption. We all want it now! Having to wait a week, six months or forty years before we get to spend our savings is no good, we want it all now.

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A boy and his toys

This article was first published inThe Northern Daily Leader under the heading, 'Ken and Barbie won't make you rich'?

It wasn’t until many years later that I finally figured out what I really should have been buying with my fifty pounds – shares in BHP Billiton. If I had the foresight to spend my fifty pounds on BHP shares each year, I would now be sitting on a tidy investment worth just over $23,000. A little deposit perhaps towards the fast red sports car that somebody wants for their fortieth birthday. I guess the toys never change, they just get bigger and more expensive.

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Who's This Jason Guy?

This article was first published inThe Northern Daily Leader under the heading, 'Who's this Jason guy'?

Given my regular message that most investing behaviour is driven by our cognitive and emotional states, it probably wouldn’t surprise you to learn that the same failure to act sooner rather than later is also prevalent in how we manage our investments. Researchers have given it the fancy name of the ‘disposition effect’, but really all it means is that when it comes to share investing we tend to hold on to our losers and sell our winners. It’s not so much the selling of the winners which is a problem (as they say, nobody ever went broke taking a profit), it’s holding on to dud investments for far too long, when they should have been sold immediately when things started to go downhill.

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Jackpot

This article was first published inThe Northern Daily Leader under the heading, 'Hi Mum I've won the lottery' on the 15th of October 2011.

Unfortunately, your real chances of winning the lottery are slim – winning Powerball is a 1 in 55 million long shot. However your odds of having to deal with a windfall of a different sort are quite high – every one of us has money in superannuation and many of us will need to decide what to do with our lifetime savings when we retire. While not quite on the same scale as a lottery win, you may still be required to decide what to do with hundreds of thousands of dollars.

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What sort of car are you?

This article was first published inThe Northern Daily Leader under the heading, 'What sort of car are you'?

Early last year my wife and I experienced two momentous occasions: we found out we were having a baby and we had to buy a new car. Clearly the latter was brought about by the former, for as much as I argued otherwise, it was apparent that fitting a baby capsule to the ute’s passenger seat was not an option.

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Theories

This article was originally published as ‘Theories’ in The Morning Bulletin in September 2011.

The Chinese do know what they are doing. Once fragmented, four or five companies now control much of the commodity market, making prices much less volatile. High prices are not evoking the supply response of times past, and therefore prices are remaining “stronger for longer”. Such an outcome is consistent with microeconomic theory - big consumers will want to bypass the problem by owning the resources directly. Not keen on economics? Watch the movie “Dune”.

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Don't just do something, sit there

This article was first published inThe Northern Daily Leaderunder the heading, don't just do something, sit there.

Unsurprisingly, these are the sort of questions that scientists love to answer, and a 2007 study by a group of Israeli researchers found that when facing a penalty kick, goalkeepers have an ‘action bias’ – which means that they tend to dive left or right more frequently than was useful. The study showed that goalkeepers went left or the right 94% of the time – meaning they stay in the middle for only 6% of the kicks they faced. However, the penalty shot went straight at the middle of the goal 29% of the time, so it turns out that goalkeepers could increase their chances of saving the penalty kick simply by doing nothing.

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Shock Loss or Shocking Winners

This article was first published in The Northern Daily Leader under the title 'Take That' on 06 August 2011.

Psychologists found that most of us suffer from ‘confirmation bias’, which means that we tend to favour information that confirms our views, regardless of whether the information is true or not. Another discovery is the ‘house-money’ effect, which found that people tend to gamble more recklessly with money from a windfall (such as a profitable investment or a winning scratchie). It’s no surprise why casinos are happy to give you free chips when you join their loyalty club.

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Bubbles in Paris

This article was first published in The Northern Daily Leader under the title 'Bubbles in Paris' on 09 July 2011.

Too often we see ordinary Australians being duped by the modern-day equivalent of John Law and his exciting yet ultimately worthless investment opportunity. So whenever a ‘John Law’ comes your way, be a sceptic first and a believer second. The Mississippi Company wasn’t the first speculative bubble to collapse, and it certainly won’t be the last.

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Don't feel compelled to do things that make you uncomfortable

This article was first published in The Northern Daily Leader under the title 'Hello Brian' on 23 July 2011.

The ‘Do Not Call Register’ is a great idea – apparently signing up to the register means you won’t be troubled by pesky telemarketers, who have a knack for knowing when you have just sat down for dinner. Last week, while my wife and I were preoccupied with convincing our six month old son Jack, that liquidised pumpkin is a tasty food source, we were interrupted by a telephone call from ‘Brian’. In hindsight we should have just ignored the call, but we had been expecting a call from a family member.

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Rockhampton It's The Vibe

This article was first published in The Morning Bulletin Titled (The Show) dated 11 June 2011.

The show has moved with the times, but not so our region. These initiatives were all driven by individuals who want to achieve something. None relied on Government, and consequently avoided the squabbling and do-nothing mentality that we are saddled with. After more than 10 years back here, the problem is clear. There is simply too much politics – bring back Brophy.

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A cut above

This article was originally published in The Morning Bulletin in March 2011. Titled What can a financial planner do?

The ongoing nature of financial advising provides the opportunity for continuous financial improvement, whether through investment or through structural means. Like a GP, personal financial professionals will call in expert help when needed, but the primary relationship will be with the generalist.

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Super is not an asset

This article was first published in The Morning Bulletin under the heading Income Returns dated 18 September 2010.

Many think that superannuation is an asset. It is not - superannuation is a special trust formed with the express goal of providing for an individual’s income needs during retirement. From cash to property to shares to art, the assets which can be held in the superannuation trust are broad. Comparing income yield across asset classes is not easy.

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What Happens Next

This article was first published in The Morning Bulletin under the heading Whats Next dated 21 August 2010.

Australia performed better than the rest of the world through the GFC. The European crisis never got to crisis point. Our local economy seems soft, although car dealers tell me that business is actually quite good. CQ’s economy appears to be very interest rate sensitive, and the rural sector is finding life difficult as banks run tighter lending criteria and restrict access to working capital for seed and restocking. Looking forward, interest rates are unlikely to increase at a rapid rate.

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Ripoll on the water

This article was first publihed in The Morning Bulletin dated 13th March 2010. Titled 'All The Rivers Run'

Despite frequent bad press, financial advisors are going to become more, not less, important to people. The advisors will cover all types of personal finance and act as a hub between accountants, solicitors, Centrelink, superannuation and small business. They will provide broad, tailored advice on all these matters, drawing on particular expertise as required. They will charge a fee for service, based on the workload, for managing these things.

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A degree of economics

This article was first published in [The Morning Bulletin] dated 7 November 2009.

Over the last 30 years, policy changes including superannuation, the deregulation of banking, labour force changes and the floating of the $A, have exposed all of us to markets. Government policy needs to be adjusted so that everyone picks up some proper economics, finance and accounting at school. School leavers who want to make a difference should get into it boots and all.

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There is nothing fishy here

This Article was first published in The Morning Bulletin as 'Fees and Fish' dated 29 August 2009.

Paying people to help me sucks. I say every service business should install a fish tank with barra in it – like the one at the show. Paint prices on the fish, and clients can cast a lure. They pay whatever is on their catch. It’s unbiased and fair. Gives those damn professionals something to do with their time too.

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Identify your goals

Before visiting your preferred Financial Advisor, it is important to have thought about what you want - your goals. Once you have clearly described what you want, your Financial Advisor is can then work with you to devise a strategy to help you achieve your goals.

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Select your investment types

You don’t need the knowledge of an expert to invest successfully. However it is important to be able to access reputable professional advice. You also need to understand the nature of your investments and whether or not the qualities of the investment suit you at your current life stage.

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Preparing for retirement

Please note that this article was originally published in The Morning Bulletin in September 2005

Coincident with the introduction of Superannuation Choice, financial services regulator ASIC released guidelines for financial planners who recommend self managed superannuation funds (SMSF). Generally the paper is quite sensible, but we disagree with one aspect of it – the view that $200,000 is the minimum recommended investment required to run a SMSF.

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Salary sacrifice

This article was originally published in The Morning Bulletin in February 2004.

Salary sacrificing involves agreeing with your employer to take some of your salary in non-cash items. Income tax is therefore only paid on the portion of your salary that is cash. The non-tax cash items are received free of income tax. The main idea behind salary sacrificing was to cut the tax-man out of the equation. Unfortunately the introduction of Fringe Benefits Tax (FBT) has made the strategy less attractive.

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Choose your entity

This article was originally published in The Morning Bulletin in November 2004

Investment decisions not only involve choosing assets that perform well, but also housing them in the correct structure. Each structure has different legal and taxation characteristics, and associated costs. Using the correct structure can increase flexibility in management and funding choices, protect assets and assist in making your income more tax efficient.

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Establishing your risk tolerance

When the stockmarket is buoyant it appears that investment success comes easy. Some people are prepared to take more risk when the market is performing better. Risk tolerance is something established independent of market performance.

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Buying and selling shares

This article was originally published in The Morning Bulletin in January 2005

Stockbrokers have provided the traditional entry into the stockmarket. A good broker can provide you with detailed advice, and research about many of the investments traded on the stock exchange. A financial planner’s role is to assess people’s overall financial needs. To that end, actually making the investments is likely to be the end of a process that includes determining whether the money should be invested in super, in a person’s own name or maybe through a trust or a company. Selecting investments is then a matter of choosing investments that match the investor’s risk profile and objectives. The financial planning process generally takes time. It’s more about building a quality portfolio to achieve some future aim, than to make a quick buck.

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Diversifying your investments

This article was originally published in The Morning Bulletin in November 2005.

Many of the portfolios that we set up for our clients at Capricorn Investment Partners have a combination of shares, fixed interest investments, managed funds and property. While many people say diversification is not putting all your eggs in one basket, the real foundation of diversification lies in selecting assets that have varying characteristics. This is the core of modern portfolio theory. Even within asset classes a sensible investor will try to select investments that are not related.

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Bear Market

This article was originally published as ‘There’s a bear in there’ in The Morning Bulletin in July 2002. In 2002, the Dow lost approximately 16% of its value.

I have a book that suggests how you can tell whether or not you are in a bear market or a bull market. The bear market list includes corporate and government scandals coming to light, even good news being taken as bad and the market being down more days than it is up. Bear markets are a normal part of our economic cycle, and they serve to correct some of the excesses that accrue during a boom. They are not pleasant – no-one likes to see the value of their assets falling – and they can go on for a long time. Eventually, however they end and asset values will improve.

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Risky strategies

This article was originally published as ‘Risk is not just a four-letter word’ in The Morning Bulletin on 7th December 2001.

Risk is a four-letter word and many people think it’s dirty. That alone makes it a worthwhile topic. Unlike most four-letter words however, the meaning of risk is often misunderstood.

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Superannuation is not the only money option

This article was originally published as ‘Superannuation is not the only money option’ in The Morning Bulletin in March 2002.

Putting money into superannuation is all the rage. Many financial planners are using superannuation as the first and only stop when recommending what customers should do with their money. The logic is that there are significant tax gains from investing in superannuation.

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It’s different up here

This article was originally published in The Morning Bulletin on 19th July 2001

Your success in investment markets ultimately depends on the quality of the information that you receive and how you act on it. You have to go the extra mile to get quality information when you live away from Sydney or Melbourne – otherwise you might be left behind. Ask plenty of questions to help make sure your advisor is firstly technically equipped to fill this void and, secondly, is competent in applying that knowledge.

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Who’s who in the Zoo?

This article was originally published in The Morning Bulletin on 25th January 2002

General confusion exists as to who does what in personal finance. That’s not surprising, sometimes it seems the industry puts more effort into maintaining obscurity than it does into providing decent product and services.

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Financial planning update

This article was published as “Financial planning must be realistic” in The Morning Bulletin on 8th August, 2003.

Financial planning is a personal thing. The only person who can make a judgement on whether a financial planner is any good, is you. Recent surveys show that industry memberships such as the FPA are no indication of good advice, and neither are brand names. Be clear between yourselves what you are after, do some reading, ask lots of questions and trust your instinct.

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Going to see your Financial Planner

This article was published as “Tips when consulting your financial planner” in The Morning Bulletin in October 2001.

Most new financial planning customers come with some trepidation and doubt. There is a sense of uncertainty driven by a combination of the prospect of trusting someone to help with financial matters, concern for privacy and unfortunately the chequered history of the industry. Mostly the fear is unfounded. Here are some tips to help you get the most out of your first meeting.

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What a good Financial Advisor can do

This article was published as ‘What can we do for you?’ in The Morning Bulletin on 12th July 2002.

There are a million reasons not to see a financial planner. No money, no time. They’re just a bunch of sharks! If financial planners were any good they’d all be rich!

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