“We search for operations that we believe are virtually certain to possess enormous competitive strength ten or twenty years from now.” Warren Buffett Economic recovery is well under way led by retail sales, housing commencements and booming commodity exports. Australia could return to pre-pandemic levels of economic activity by mid-year. These outcomes have been underpinned by Australia’s success on the health front, and the very significant fiscal and monetary support. The positive news on vaccines is boosting consumer and business confidence daily. The Reserve Bank says it will not increase interest rates until inflation is sustainably within the
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A portfolio of Australian stocks with us yields a dividend income return of 6.5%. Capital growth is on top of that. A stock exchange listed Real Estate Investment Trust (REITs) portfolio yields 6.0%, plus capital growth. REITs invest in major shopping centres, office buildings and industrial parks. Direct property investment in homes and apartments provide a net rental income yield of around 2.0%, plus capital growth. Interest only investments rates range from 0.1% for “at call” bank deposits, to 0.35% for 1-3 year bank term deposits, and 1.65% for 10 year Australian government bonds. However there is no capital growth. Stocks and property provide income and
What are the advantages and disadvantages of direct stocks versus managed funds? Performance Direct stock ownership allows you to focus on the stocks which you believe offer the best potential returns. If you are right you will outperform the market. Studies show that 92% of managed funds underperform the market, due to their size and high fees. " Size is the enemy of performance." Warren Buffett Transparency With a directly owned stock portfolio you know exactly what you own and your dividend income. Managed funds lack transparency. You don't know what underlying stocks you own, or the income you can
There are three "high conviction" questions you need to ask before buying a stock: 1. Is this stock a better buy than adding to my existing holdings? 2. Would I sell some of my portfolio to invest in this stock? 3. Would I be prepared to invest a sizeable part of my wealth in this stock for the next 10 years? If you can answer in the affirmative then the stock is a worthwhile addition to your portfolio. Opportunities to buy stocks can present themselves in various ways. The whole market can collapse as happened with the onset of the
Value-Focused means we will only buy stocks we consider are reasonably priced relative to our assessment of their intrinsic, true or real value. Risk-Adverse means we will not buy stocks that we assess as overpriced, even if market sentiment favours them going higher (as happens in bull markets). We do not speculate or take foolish risks.
We are experts, with decades of experience working with our high net worth clients in real estate investment. Real estate is one of the safest places to put your money. It never goes completely bust like a business can. Its growth of rental income and property value is driven by population growth, inflation and increasing affluence. There are two ways to invest in property in Australia. 1. Real Estate Investment Trusts (REITs) A Real Estate Investment Trust is a portfolio of property assets listed on the Australian Stock Exchange. You own units in the REIT, in the same way as shareholders
There is an objective, determinable value for any investment, which is independent of the stock market. This is known as its intrinsic, real or true value, and is defined as “the discounted present value of all the cash that can be taken out of a business during its remaining life”. This universal value formula is applied to valuing bonds (government or corporate debt issues), when sold in the market before their maturity date. The formula actually applies to all investments be they bonds, stocks, real estate, commodities, works of art, or government bonds. With bonds the interest rate and maturity
The real question when you buy a stock is – “Am I getting my money’s worth?” This is one of Warren Buffett's key principles. It focuses the decision making on the real issue of the value of the business being bought, and away from trying to guess what might happen in the market. It is unwise to pass up something that’s attractively priced today on the chance it may be more attractive tomorrow. That might happen, however the future is never certain. Wait on the side line and you risk missing out. What matters is that you are getting value
Australia has vast mineral wealth, high living standards, rapid population growth, a stable Western democracy, the rule of law, a AAA credit rating, and is one of the world's preeminent investment destinations. Australia is the world’s 14th largest economy one of the world's largest stock markets, with the sixth largest pool of funds under management in the world rated AAA with a stable outlook by all three global rating agencies, characterised by a government budget surplus and low debt forecast to realise average annual real GDP growth of 2.7% over the next five years – the highest among major advanced economies
All investments carry risk, be they stocks (business failure), property (buildings depreciate, land can become degraded), or government bonds (inflation, low interest rates). In addition stocks and property are subject to market fluctuations which can be sharp, large and unpredictable. This is a fact of life, to be accepted as such if you are to invest in stocks and property. Market fluctuations can also be an opportunity if you have money available. "We simply attempt to be fearful when others are greedy and to be greedy when others are fearful." Warren Buffett Risk isn't the same as volatility. Rather risk is the chance of
Warren Buffett gives the best advice on investment advisors, fees and bias: “The question of finding investment advisers is a hard one. Most advisers are far better at generating high fees than they are at generating high returns. In truth, their core competence is salesmanship.” Warren Buffett “Money managers purposely work at manipulating numbers and deceiving investors. They’re selling the fund of fund stuff – it’s really unbelievable, piling on the layers of costs. But if they are good at marketing they don’t need to be good at anything else. The poor guy in the general public is getting a terrible product.” Warren Buffett “Many