About

I have over 20 years experience in the investment management industry, 16 of those spent in a “front office” role. The typical frustrations of the industry such as being aware of performance risk, career risk, client and consultant’s short term views etc has in part led to me embarking on going out on my own as an investor managing my own money, including that of a Self Managed Super Fund recently. For quite a few months of the year I travel through South East Asia (cheap cost of living there was another reason for the decision), and focus mainly on the Australian Stock Exchange, however at times invest on other global exchanges.

My style could best be described as an “activist investor”, however my funds available don’t allow me to be the activist myself, but rather I look for companies that will become targets for other activists to unlock value. Deep value and event-driven investing may also be used to describe my approach. In addition to this I believe in a broad top down sector allocation covering stocks, property, commodities and cash equivalents in which I will not try and outsmart too much. It is more a rebalancing discipline to help limit drawdowns and broadly to have a contrarian tilt at major turning points. I use this approach to manage currency exposures also, which has become more important as I am now spending more time than previously outside Australia.

The blog is for a hobby, diary and a bit of self reflection, analysis and above all fun. Hopefully I will remain active. However first and foremost my investing is my main source of income so that is my priority rather than documenting everything on the blog. Yet time wise I couldn’t yet describe it has a full time approach for me as I have a few other things I spend much of the week also focusing on. So I apologize in advance if I go missing for a few weeks here and there. Feel free to enter your email in the follow section on the right hand side of the blog to be notified of my posts. Thank you for reading and please read below!

DISCLAIMER

This information should by NO means be taken as financial advice. It does not represent general advice or specific advice, particularly as I am unaware of the personal financial circumstances of readers. It is written purely for the purpose of an investment diary, to look back on, self-reflect and try and improve my own accountability for the investment decisions I make. It is for fun, and I am not a financial advisor. I try to be as accurate as possible but cannot guarantee I avoid mistakes. If making decisions with your own money, do your own research and seek personal/professional financial advice. Please read the ASIC guidelines around Internet Discussion Sites before reading this blog. By linking or mentioning other sites and products I am not endorsing them. Also be aware others commenting on this blog are not permitted to do so by giving licensed investment advice. Others who comment are personally responsible for their own postings.

 

4 thoughts on “About”

  1. Hi, I am busy setting myself up to do a similar thing (manage my own money as opposed to working for a manager) and would love to get your thoughts as to how much capital you need as a starting point to be able to draw down a salary and still grow the pot. Have you learnt any key lessons along the way?

    1. Hi Carly,

      Fascinating question and it quite depends on each individual with varying risk tolerances and their life situation etc etc!

      Guess you know that so I get you are interested in my experiences thus far.

      To answer that I think the lessons are still awaiting me to a large extent. That is, I still don’t think we have had any major scares in the market since I stopped working in the industry late 2015. The more stressful times for me are probably like this calendar year. I say that because my investment style doesn’t seem that clever this year versus simply owing the major passive equity ETFs.

      As to what you could draw down on your capital, I’m probably a bit more negative than many citing the common 4% rule. But as I said it’s personal and I don’t see myself as much of a risk taker in life. It’s a topic for a whole blog post. Some of my thinking stems from the yearly Credit Suisse book.

      https://www.credit-suisse.com/corporate/en/articles/news-and-expertise/global-investment-returns-yearbook-201902.html

      And that too many get too much comfort on historically looking back and only thinking about returns from the US or Australia markets. We then maybe forget about taxes or other costs. And perhaps the 20th century just had some tail winds that won’t be repeated? It’s a very long time period in one sense, but then again not in the bigger picture of world history.

      So it might sound discouraging but perhaps even drawing down 3% real returns is optimistic! I’m more thinking about passive style investors.

      My optimistic streak thinks perhaps foolishly that I can maybe do a fraction better than the indexes or at least match them with less risk. A small portfolio size and no one on your back should give you some advantages. I am happy living a lot of the year in very low cost of living countries so that helps in the equation for me also.

      The main thing I’ve learnt though is to think a lot about the lifestyle change. I worry about some who have an extreme savings plan for more than a decade ahead when they can’t be sure giving up a normal full time job will make them happy anyway! For example I took about 3.5 months long service leave before I quit. I guess it helped me get a very small insight what it might be like having heaps of time by myself for an extended period. I’m also trying to do some small amount of work that pays me a little bit that isn’t dependent on how my investments are going.

      It’s such an open ended question so this long response might have seemed like a blog post itself!

      Perhaps some other readers might also have different opinions to share as I’m sure it differs from person to person.

      Steve.

  2. Interesting question and thoughtful reply. I’m coming around to the idea of LICS dividend return as the expectation for ‘whatever’ the retirement income requirement might be. The ability to retain profits in good times to buffer out bad times mitigates a bit of risk of dividend cut – then any capital appreciation is a bonus.
    It does increase the pot of capital required but means much of the income comes out tax-paid, the net effect being the actual return is higher than the headline rate.
    Chuck in a LIC with bonus-share capacity whilst I’m earning and bob is your favourite aunty.

    1. Hi Scott, yes I can see the attraction of that line of thinking.

      I’d be a bit cautious about making LICs the whole portfolio though. They have had a relatively weak last year or so and one wonders if it would have been a fair bit worse if Labor won the election.

      It wouldn’t have been the end of the world if Labor won but I just prefer diversification in many formats. I suppose I touched on this a bit in this post a while back..

      https://valueinvestingforaliving.com/2018/03/13/is-your-portfolio-diversified-from-our-politicians/#more-1129

      One other thing I would say with this strategy is I would also want some diversification outside of the older LICs. That is I would probably want my major bank exposure not any more than 10%. So if you pick a few of the older LICs only maybe you could end up with a quarter of your portfolio in highly correlated major bank exposure. I’m not predicting doom for the sector. Just simply saying I personally think you may as well be more diversified.

      Your way of thinking though generally sounds good for a way to invest fairly efficiently tax wise. Probably helps from a behavioural point of view just focusing on the dividends also.

      Just depends on how far your take some of these attractions. For example paying more than 5% premiums on the likes of AFIC & ARG a year or so ago, or 25% premiums to get the WAM divvies was probably falling in love too much with the strategy. That’s not getting wrapt up too much about predicting where such premiums / discounts fluctuate. It’s rather just simple maths that outlaying say $125 to have only an underlying $100 to be working for your to bring in the dividends will be a headwind. (In the WAM example).

      In summing up though for a decent chunk of my portfolio, I do think of things exactly the way you described. It’s just not my strategy for the entire portfolio right now.

      Cheers
      Steve.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s