As the year comDavid EoYes to an end, you will see in the media the so-called financial experts trying to predict what the share market will return in 2016.

Personally, I never make short term predictions about the share market; but if I did it would similar to Nick Murray’s prediction for the US market for 2016. Many people say if the US sneezes we get a cold, however I hope we get what Murray predicts the US will receive in 2016:

“We’re simply observing that five hundred large profit-seeking companies, managed by experienced professionals, are currently planning to commit very large cash sums to strategies which might, if successful, result in both direct and indirect benefits to the patient, diversified, long-term investor”. Nick Murray, Client’s Corner, Dec 2015.

To find out more, I urge you to visit Nick Murray’s website and subscribe to his Newsletter Client’s Corner. The article is entitled How Companies Are Planning To Reward Shareholders In 2016. I also recommend, if you have not already done so – that you attend our free information evening Common Sense Investing. We have dates scheduled for January, however if you are still enjoying your holidays, our 2016 dates and can be viewed here.

Merry Christmas and Happy New Year to all.

David Ramsay, CEO and Founder


Copy of Copy of Copy of Copy of JulyAs part of my current study I was required to research and analyse the Charter Hall Group. I am inclined to share some of my findings with you.

Charter Hall Group (CHG), is a property funds manager which, was founded in 1991. The group employs specialist intellectual property and advanced intellectual knowledge to manage property assets across retail, office, residential and industrial properties. These assets can be held in either unlisted, or listed property trust.

The Charter Hall Group’s intellectual property includes investment management, asset management, property management, transaction services, development services, and treasury, finance, and legal and custodian services as outlined in the Charter Hall Group Annual Report 2015. Consequently, Charter Hall consider themselves to be the upmost experts in property.

On the 16th of June 2006, the Charter Hall Group floated on the ASX, closing at $4.97.

On the 14th of December 2015, the Charter Hall Group closing price was $4.33. This demonstrates a loss of over 12%, in 9.5 years.

I ask you, taking into consideration the information I have just shared with you.

If the experts at Charter Hall are unable to make a profit in the property market, why do so many Australians invest their time, and expend their energy trying to turn property into profit?

David Ramsay, Founder and CEO

Let your head rule your investment decisions

SPECIAL FEATUREI’ve been watching the news with a heavy heart lately, as I’m sure the majority of people have.  The terrorist attacks in Paris have been shocking and the imagery of people being killed or injured going about their everyday lives, lives not so dissimilar to our own, really strikes fear in your heart.  We start asking ourselves whether we should start changing the way we live.  Questioning ourselves about attending large events.  Asking ourselves how normal life can go on.

The reality is we really don’t know what tomorrow will bring.  But one thing that I firmly believe is that life does go on.  History has shown us that no matter what terrible event happens in the world, normal life continues, the world keeps on turning.  Being part of a financial planning firm, we see people take hold of this fear and uncertainty in world events and they extend this fear to investment markets.  Sentiments like “markets are going to drop” and “the world’s in crisis, so investments will collapse” come to the surface at times like these.  As I said, nobody knows what tomorrow will bring.

The only thing we can do is look at the past and see how financial markets have previously behaved in times of trouble.  When we look at past investment market performance, we can see bumps in the road connected to various world events but in the long term we really don’t see any lasting impact.  If you are investing in the share market you are investing in the companies that we use on a daily basis.  What happened this week in Paris is horrific, just as the attack on the Twin Towers in New York was horrific and the London Bombings were horrific.  Even so, we are still using electricity each day, buying groceries, filling our cars up with petrol – life’s normal consumption of goods goes on.   The normal life that sustains the investment markets.

It’s my birthday today and being a child of the 70’s I grew up loving reggae music.  Bob Marley has a song called “So Much Trouble In the World”.  He wrote the song in 1979.  Clearly the song was written because, in Bob Marley’s opinion, there was a lot of trouble in the world in 1979.  In some respect I guess not much has changed.  One thing I know for sure though – I wouldn’t want to have let world troubles stop me from investing in the share market in 1979.   $100,000 invested in the industrial index in 1979 would be worth approximately $1.7m today and the dividends would be providing me with an income in excess of $70,000 pa.  World trouble can see you experience a whole range of negative emotions but let your head, not your heart, rule your investment decisions…and long live world peace!

Alison Adams, Business Development Manager

Cutting through the noise: dispelling the myths at an early age

Copy of July (1)Just a week after the return of the grizzly bear to our newspaper front pages the important distinction between capital and income could not have been more starkly displayed.

As this headline from The Age says, Australian companies will pay out an $81.8bn dividend windfall this year, much of which will attract franking credits making it the some of the most tax effective passive income that you can earn.

In the midst of the tumbling capital values last week I had the pleasure of again spending time with a year eleven economics class at a Victorian high school.

I have a huge passion for working with teachers and their students. It is exciting reaching a group at grass roots level to help them gain their own understanding that goes beyond the myths and the ‘noise’ that is generated to sell newspapers.

Getting distracted by incomplete or even miss-leading information doesn’t end when you leave high school.  Like many professions, the stresses, strains and time pressures of the job mean teachers often have little time to stop and think about their specific planning needs.  The personal experience of watching my own parents hurtle towards retirement with no more information than what was thrown at them in the media instilled in me the belief that it is hugely important to search deeper than the headlines and gain a more accurate picture of what is going on.

Students don’t hang back from asking the direct questions.  The timing was great as we were able to have a fantastic discussion about the difference between the capital fluctuations of the ASX 200 in comparison to the march of corporate profits and dividends as it unfolded in front of us.  I didn’t only have to rely on more than 100 years of data to illustrate my point but could call on the CBA’s announcement of a 5% increase in profits matching a 91 point drop in the market on the same day just two weeks prior.

One student wanted to know why the markets fluctuated so wildly when investors should be in search of tax effective passive income to support their lifestyles.  He understood the ASX 200 is made up largely of companies that we touch and use every single day including banks, supermarkets, telecoms companies, energy providers and so on.  He seemed to appear confused as though he was missing some obvious point or “trick” to the share market; why did people need to panic when history showed corrections were normal, values would increase again and when dividends grew consistently and steadily over time?

I’ll let you answer that question.

By Gareth Daniels, Financial Planner

The Ordinariness of Equity Market Corrections

We have been reminded of late, that sudden, sharp pull-backs in equity prices have not gone away. In fact, they have always been with us—not just lately.

Please refer to table below documenting downturns (drawdowns) since 1928-2014.  Note, this is the US market.

David Blog

Downturns are normal.  I find it fascinating to watch the way our media report these events.  Please refer to the Herald Sun articles below, dated seven and a half years apart—rolling out the same bear image and downward trending line in both articles.

Herald Sun, Wednesday, January 23, 2008

Unfortunately many people will panic; it is easy to see why with this sort of reporting.  People will respond counter to how they should in order to build wealth.  Just as it was in 2008, and every other downturn in history, the correct strategy is simple—hold onto your equity holdings, purchase more of them and wait for your dividends.  These times bring golden opportunities to build your portfolios and increase your dividend (income) stream.

I really recommend coming along to one of our Common Sense Investing information evenings – we talk about this kind of media hype and you’ll also learn about:

  • What causes volatility and what impact it has on your long term investment strategy
  • What asset class (property, shares, cash) will look after you for the long term

Register now for either Geelong or Melbourne!

By David Ramsay, CEO and Founder


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