The Rules of Investing

How an everyday investor competes with the pros

Angie Ellis might not be a 'household name' among investors, but she's racked up quite a track record since she started 8020 Investments about five years ago. See, Angie is a regular entrant to the Fairfax share tipping competition, published in The Age and the Sydney Morning Herald each week. And of the seven times she's entered the competition this year, she's won it five times, and came second twice. This is no fluke either, she's consistently been the top performer over several years. 
 
So for my last podcast for 2019 (this was recorded in December), I decided to change up the pace, skip the fund managers, and talk to one of Australia's most successful private investors. 
 
We discuss how she transitioned from a part-time to a full-time investor, and how it's affected her portfolio; her strategy for the tipping competition, and how to compares to her personal portfolio; and she discusses some of the companies that have been key to her success. 

Two consumer stocks making it big overseas

The Australian team at Fidelity International often draw on influence of legendary Fidelity fund manager, Peter Lynch. But one area that the approach hasn't always worked has been store rollouts. Lynch famously loved a good store rollout as it was predictable growth with limited risk. As Kate Howitt, Portfolio Manager at Fidelity International explains in this week's podcast, this approach runs into a problem in Australia:
"If you try to put that into the Australian market there's a bit of a problem. That is that by the time you're large enough to list, you're probably about halfway through rolling out stores, because our market is so small."
Her approach instead, has been to look for great Australia consumer brands and retailers that can roll their product or store out overseas. In this episode of The Rules of Investing, she shares her thesis on two of these companies. She also discusses her quest to understand what makes a great company, and explains a strange anomaly being created by the combination low rates, easy money, and passive investing.
 

50th episode special with Hamish Douglass

After two years on the air, The Rules of Investing marks its 50th episode with a very special guest; Hamish Douglass, co-founder, Chairman, Chief Investment Officer, and Lead Portfolio Manager of Magellan Asset Management.
In this exclusive, in-depth interview, Hamish opens up about several topics that he rarely discusses. We hear about the first investment he ever made, how he invested his entire personal wealth in a single asset (and why it was so successful), and some of the challenges he faced in the early years of Magellan. He also discusses what it would take to see a pick-up in inflation and how likely he thinks that scenario is, why he’s confident owning US-listed Chinese mainland companies, and the big investment trends he expects to succeed and fizzle out over the coming decade.
Tune in below for this special episode.

Nailing your asset allocation

 
While most investors focus on picking stocks to drive performance, in reality, this is just a part of it. Research has proven that over the long-term, 85% of your return is determined by nailing your asset allocation, i.e.: the right mix equities, bonds, alternatives, property and cash for your goals. 
In the final part of this three-part mini-series aimed at new investors, I sit down with Andrew McAuley the Chief Investment Officer for Credit Suisse Private Bank in Australia. 
Bringing it all together to complete this series, Andrew succinctly explains what asset allocation is and why it is important to get right. This was an enjoyable interview with an industry luminary, and I hope you find it as useful as I did interesting. 

How to pick stocks like a pro

Equities form a core part of most long-term investment strategies; they offer strong long-term returns, but at the cost of higher volatility than many other assets. But how should investors think about their strategy in this important asset class? That’s the topic of this week’s podcast.
In part two of this three-part mini-series, I sit down with Hamish Carlisle from Merlon Capital. Hamish is an excellent communicator, and has written some of my favourite pieces of stock analysis on Livewire this year. The goal is to provide the tools and the background needed to get started investing in equities.
We discuss what makes a great equity investment, some important skills and concepts for new investors to learn, and he talks us through a current practical example of an investment that he thinks is materially undervalued.

Investing: A how to guide (Part 1)

Getting started as an investor is a daunting task. Even for experienced investors, information overload can be a problem, but for the new investor, it’s hard to even know where to look for a starting point. That’s the goal of this special mini-series; to provide a starting point for novice investors to begin their journey.
In this first part of the series, we’ll be discussing issues around personal finance, goal setting, risk and reward, and setting yourself up to get started as an investor. In two weeks’ time, we’ll do a special episode on equity analysis, that I hope will provide the tools required to begin analysing stocks. Finally, we’ll do an episode about portfolio construction and asset allocation – one of the most underappreciated aspects of investing.
If you’ve got any family members or friends that have been asking you about investing, then this is for them. Please consider whether you know anyone who might benefit from this content, and send it their way.
This week’s guest is Phil Richards, Director and Wealth Advisor at Endorphin Wealth, and Founder of Smart Home Deposit, an online tool to help first home buyers save for a deposit.

Tagliaferro: How the '87 crash shaped my philosophy

Guest: Anton Tagliaferro, founder and Investment Director at Investors Mutual.
Just like in life, an investor’s early experiences can’t help but shape the way they see the world. For Anton Tagliaferro, founder and Investment Director of Investors Mutual, one of those early formative experiences was the infamous ’87 stock market crash. After witnessing the events in New York the night before, Anton and his team tried to guess how far the ASX would fall that day, but even the most bearish analyst in the group was not prepared for the 25% crash that came when the market opened.
“It taught me a very important lesson; on the day of a crash such as that, everything falls. In a crash, everything falls. The good, the bad, and the ugly. But when sanity prevails and the panic subsides, which it does eventually, people do go back to the stock market, but it’s the good stocks that recover. A lot of the crap, all the froth and bubble, which in the boom was in the headlines all the time, a lot of that stuff goes to nothing.”
In the latest episode of The Rules of Investing, we discuss his current views on Australian banks and retailers, how he first developed IML's investment philosophy, and why he doesn't like the ‘value versus growth’ argument.

Catherine Allfrey: Look over the horizon

In Australia we’re fortunate to have some very talented women in funds management. Catherine Allfrey is one of them. After a chance encounter at a Wesfarmers event in the late 90s, Catherine was recruited to Colonial First State by Greg Perry – a true ‘Master of the Market’.
This time working with Perry helped to shape her investment philosophy, which seeks to identify those companies that can grow their earnings at a rate higher than GDP. Catherine formed Wavestone Capital in 2006 with her business partners Ian Harding and Graeme Burke with Raaz Bhuyan joining 2014. Today Wavestone manages ~$4.8 billion for institutions and retail clients.
In this video, Catherine discusses the attributes of companies with superior DNA, shares her view on sectors experiencing tailwinds and explains how she is working to bring more women to investing in Australia.