Mark Draper

Mark Draper

Tuesday, 04 March 2014 15:02

Chinese Manufacturing - Declining

We have been writing about the great stress that of the Chinese Financial System.  One of the outputs of this is likely to show up in manufacturing data. Every month HSBC produces a Chinese Manufacturing Purchasing Managers Index ahead of the actual PMI data that is released.  In short, a reading of higher than 50 means that the Chinese manufacturing sector is expanding, and a reading below 50 means that Chinese manufacturing is contracting.

 

Key Points:

 

Flash China Manufacturing PMI at 48.3 in February (49.5 in January).  Seven month low.

Flash China Manufacturing Output Index at 49.2 in February (50.8 in January).  Seven month low.

 

Data collected 12–18 February 2014.

These charts show a downward trajectory in Chinese manufacturing, which is consistent with a Chinese financial system that is under stress.

 

Tuesday, 04 March 2014 14:20

Warren Buffet's - 5 Investing Don'ts

 

Warren Buffet, attributed as one of the best investors of the 20th century and one of the world's wealthiest people recently gave an interview to CBNC.  During this interview, 5 specific things NOT TO DO came from the discussion.  Warren Buffet's net worth is estimated to be around US$60bn at the time of writing this blog.

 

1. Don’t let world events affect your investing decisions.

Even if the Oracle of Omaha said he knew a big war was unavoidable, “I will still be buying stock ... The one thing you can be sure of is if we went into some very major war, the value of money would go down,” CNBC reported him as saying on its web site.

“The last thing you want to do is hold money during a war. You might want to own a farm, you might want to own an apartment house, you might want to own securities. During World War II the stock market advanced. The stock market is going to advance over time.”

 

2. Don’t feel bad when stocks go down

Even as global markets began to gyrate because of the Russian military build-up in the CRimean region of neighbouring Ukraine, the 83-year-old head of Berkshire Hathaway said: “When I got up this morning I actually looked at a stock on the computer, on the trades in London, that we’re buying and it’s down and I felt good ... We were buying it on Friday and it’s cheaper this morning and that’s good news.” Asked if he would buy more, he replied: “Absolutely.”

 

3. Don’t think you have to be an expert to profit from stocks

“The stock market just offers you so many opportunities, thousands and thousands of different businesses. You don’t have to be an expert on every one of them. You don’t need to be an expert on 10 percent of them even. You just have to have some conviction that either a given company, or a group of companies ... are likely to make more money five or 10 or 20 years from now than they’re earning now. And that is not a difficult decision to come to,” CNBC reported Buffett as saying.

 

4. Don’t go for the quick profit

When Buffett, whose fortune was estimated in December to be worth about $US59.1 billion ($66.2 billion), was asked if activist investors were acting in the best interest of targeted companies and their shareholders, he replied: “Generally speaking, they are interested in making a quick profit and there’s no law against making quick profits. But our whole attitude in our own business and what we like to see with the businesses we own stock in is we want to run them for the people who are going to stay in rather than the people who are going to get out. At any given time, you can make more money, usually, selling the company. ... The answer isn’t to sell the company. The answer is to keep running the company well. ... I could do certain things to jiggle up the price of Berkshire in the short run. It would not be good for the company over five or 10 years.”

 

5. Don’t put your money into bitcoins for the long run.

When Buffett was asked about the latest craze of investing in the virtual currency Bitcoin, he was quick to reply: “It’s not a currency. It does not meet the test of a currency. I wouldn’t be surprised if it’s not around in 10 or 20 years. ... It’s been a speculative – a very speculative – kind of Buck Rogers-type thing, and people buy and sell them because they hope they go up or down just like they did with tulip bulbs a long time ago.”

 

Tuesday, 04 March 2014 08:18

Master Class

 

We have dedicated this section of our website to helping investors, become better investors.  We have created a series (and are continuing to do so) of short videos with some of Australia's best investors talking about ways to improve investors skills.  We hope you become a better investor as a result.

 

Common Mistake - Inability to maintain investment position

Roger Montgomery (Montgomery Fund) and regularly presenter on Sky Business News and on Radio 2GB talks about the most common mistake he sees investors make - and that is surrendering a perfectly good investment position by listening to market noise.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Price is Everything

Andrew Clifford talks about how investors relate price to the investment opportunity in front of them.  

Just buying quality is not enough, in fact ...... Price is Everything.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

How to BUY low and SELL high

Here Roger Montgomery provides some tips to help investors achieve the goal of buying low and selling high

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 Tips for Success in the Sharemarket

Anton Tagliaferro (CEO Investors Mutual) and one of Australia's most respected investment managers gives us his best 3 tips for success in the sharemarket.

Monday, 03 March 2014 20:08

SMSF - Checklist to consider

 

With Self Managed Superannuation Funds (SMSF) being the fastest growing sector in the Superannuation system, here we explore a series of questions that we believe people should ask themselves before proceeding to establish a SMSF.

 

  1. Ask yourself one more time if this is the right decision for you. It might be time to take a deep breath and just check that you are sure. Don't do it just because SMSF is a buzzword and everyone else you know is doing it. It has to work for you and your family. So maybe sit down and do the age old thing, draw up two columns, one pro and one con, and go through it all again
  2. Part of the shift is being confident, not only that the SMSF structure will work for you, but that it will perform better than what you have already. So go through your existing statements on your retail or industry fund or whatever it is you have, and check its performance over time. Do you have a consistent and coherent investment strategy to fulfil your goals for retirement savings
  3. Make sure you have a good idea of how you will deploy your money when you set up your fund, either acting by yourself or with the help of an investment adviser you trust. Part of this is to understand how you can roll over existing super accounts, but also how you might put other assets currently outside your super into your new fund. Think about what assets you want to put into your fund and understand how much tax you might have to pay on getting them into your SMSF.
  4. You're going to become a trustee of your fund, so you need to make sure you understand your responsibilities and legal obligations. Work out if you want to get some professional help, or if you want to be completely DIY. You should understand how much work is required to administer the fund and work out if you have the time and expertise to do it yourself. If not, you should know what sort of skills you need to access, have some particular advisers in mind and have an understanding of their fees.
  5. Decide on your structure - individual trustees or a corporate trustee. The corporate route has gained in popularity in recent times but there are advantages and disadvantages for each. Professional advice will be useful here.
  6. Make sure all your tax affairs are in order. The ATO is the regulator of the SMSF sector and will approve the creation of your fund. It will definitely have issues with your application if you've been convicted of dishonesty offences, but they will also be cautious if you have a large outstanding tax bill, a history of not lodging your returns, if you have a private company with a poor reporting record or taxes outstanding.  If there are other trustees in your fund, they also need to be eligible, so check that they are.
  7. Apply the residency test. If you live outside of Australia for long periods, an SMSF might not work for you because that will impact on the tax situation. The fund needs to meet the ATO's definition of an "Australian superannuation fund” to be eligible for tax concessions.
  8. Get your trust deed together with the help of a legal practitioner. Sign and date it and make sure that is properly executed. Make sure all trustees sign it. At the same time, or within 21 days of becoming a trustee or director, all trustees need to sign a declaration saying they understand their duties and responsibilities. Keep this safe because you could be asked to produce it later.
  9. Access the tax file numbers of everyone in the fund, because these will be quoted when the fund is registered with the AT0.
  10. Set up your fund's bank account. You'll quote this account if and when you close down your existing super funds to kick off your SMSF.
  11. You need your trust deeds and bank account number when you register your fund with the AT0. If you've gone with a company structure, you'll also need an Australian Business Number (ABN).
  12. Write out your fund's investment strategy. This is not only a good exercise to go through, but you'll need it to show that your investment decisions comply with the strategy you have already outlined, and even more importantly, comply with super laws.
  13. Finally, refer to the ATO’s website for its SMSF series of booklets and information at http://www.ato.gov.au/Super/Self-managed-super-funds/.   And don't be shy about reaching out to the professionals for advice - that's what we're here for.

 

Note: Advice contained in this flyer is general in nature and does not consider your particular situation or needs. If information contained is not appropriate to you at this stage please pass on to family and friends who may benefit. Please do not act on this advice until its appropriateness has been determined by a qualified adviser.

For more information on SMSF’s or to arrange a no-cost, no-obligation first consultation, please contact us at GEM Capital on Ph (08) 8273 3222

 

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