1 / 54

Investors’ Seminar October 2012

Investors’ Seminar October 2012. Investors’ Seminar October 2012. Historical Data; Recent Events Forecasts Recommended Investments The 4 steps needed. Hayden Asset Allocation Model. The 4 Step Process….1. FP Framework. Goals – realistic cashflow needs Structure & Strategy

cachez
Download Presentation

Investors’ Seminar October 2012

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Investors’ Seminar October 2012

  2. Investors’ Seminar October 2012 Historical Data; Recent Events Forecasts Recommended Investments The 4 steps needed

  3. Hayden Asset Allocation Model

  4. The 4 Step Process….1

  5. FP Framework Goals – realistic cashflow needs Structure & Strategy Super & Pensions Tax & Centrelink Matters Drawdowns and/or Contributions Super Fund Admin SMSFs vs Wholesale/Retail/Industry etc

  6. The 4 Step Process….2

  7. The Segmentation Bar Cashflow Needs Peace of Mind Confidence to let LHS focus on the long-term Trade-off for security and for long-term returns Ability to “stay the journey”

  8. The 4 Step Process….3

  9. Cash/Term Deposits Government Guarantee Security – Ratings Agencies Security – Short-term Access Return of the $, not return on the $

  10. Term deposit rates Term Deposit “Rate Specials” Forecast RBA Cash Rate SFE Cash Futures Source: RBA, Perennial. SFE as at 22 August 2012

  11. The 4 Step Process….4

  12. Investors’ Seminar October 2012 The LHS = Long-term Investing Recent Events Long-term Data and Charts Forecasts

  13. How are we “starting” from here? GFC – Global Financial Crisis Sovereign Debt Crisis De-leveraging

  14. The GFC • Debt – Western Consumers • Sub-Prime in US; CDOs–and inter-bank transfers • Fear replaced Greed in Markets • Banking Crisis – near collapse • Lower Consumer and Business Confidence • Negative Cycle –Profits Drop; Unemployment increases; Consumer Confidence drops etc ….then Sovereign Debt issues……………

  15. The “Euro” family Euro (mil) GDP Sovereign Debt Source: Eurostats 2010 data

  16. The debt inheritance 60% of GDP = “healthy government debt levels” Source: OECD Economic Outlook May 2011

  17. Long term bond yields Greece Portugal Spain Italy Germany Source: Bloomberg

  18. Historical Data

  19. Crisis – What’s Biggest? Source: AMP Capital Investors

  20. Forecasts

  21. LHS – Long-Term Investing 10 Year Investing vs 1 Year Investing “Rolling Smoothed” 10 Year Returns Hayden Investment Paradox Inflation is Crucial. Purchasing Power

  22. Selecting Asset Sectors & Specific Investments The 3 Characteristics of Investments: Regular Return Capital Gain Access to Capital

  23. Selecting Asset Sectors & Specific Investments How important are these characteristics for the 2 distinct investment sections: Regular Capital Access to Return Gain Capital RHS 5/10 n/a 10/10 LHS 10*/10 10*/10 N/A *Best Total Return is the Goal

  24. Selecting Asset Sectors & Specific Investments Investment Alternatives to Eliminate: • Blended portfolios (eg Balanced etc) – will smooth volatility (over short periods) but not maximise returns • Any investment that focuses on Regular Return or on Capital Gain • Structured Products • Cash will not win based on “rolling smoothed” returns • Investments favoured by Speculators & Traders • Non-productive Investments

  25. Shares vs Property vs Infrastructure Shares – Best Businesses - Industry – Barriers to Entry - Products & Services - Consumers - Management – Board and Execs Property - Land - Improvements Infrastructure – Government Intervention

  26. Investors’ Seminar October 2012 Drilling Down – Shares vs Co. vs Businesses

  27. Shares/Co./Businesses Dividends + Corporate Products & Services; Capital Gains Structure Trade; Supply & Demand

  28. Shares/Co./Businesses Shares – a right to future Earnings (Profits) - some people see them as a collectable like antiques, art etc….a tradable piece of paper?? Company - Shareholders appoint the Board - The Board contracts Senior Management - Big picture and Day-to-Day decisions Businesses - the ability to trade - supply and demand

  29. Australian employment Source: Bloomberg, ABS

  30. Australian employment Impacted by A$ Source: Bloomberg, ABS

  31. Australian employment Impacted by Fiscal Policy Source: Bloomberg, ABS

  32. Australian employment Impacted by Monetary Policy Source: Bloomberg, ABS

  33. A closer look at Step 3 – ICVR stock filters COMPANY QUALITY Industry positioning Barriers to entry Recurring- revenue Growth rates Margins Return on Equity CCompanyQuality Free Cash Flow Dividend history Management- experience and track record Management- incentives and stake in equity Corporate Strategy Corporate- Governance Balance sheet- strength VALUATION Enterprise Value / EBITDA Market Cap. / Free Cash Flow VCompanyValuation Stock Price / Cash EPS Stock Price / Dividend PS Market Cap. / Book Value RISK RATING Key macro-economic & weather- sensitivities Key customers and suppliers Government influence Level of recurring- revenue Barriers to entry RCompanyRisk Rating Balance sheet- strength Free Cash Flow Corporate Strategy Corporate -Governance Market –Capitalisation Share liquidity Major shareholders INDUSTRY Products Supply & Demand Key Macro-economic variables Growth Rate Structure Barriers to entry Return on Capital Government intervention Sustainability I Industry Rating

  34. The gulf between best and worst stocks

  35. Sub-sets of Shares Smaller (and Micro) Companies: Ability to Sell; Volatility International Shares: The $A; need extra knowledge of the business environment; need specific knowledge about the corporate structure

  36. Do Small Caps Outperform? Fama and French (US) 1964 Source: CRSP. Small Caps = bottom 4 deciles of stocks.

  37. Deconstructing International Equities Performance International underperformance comprised two elements, market valuation + currency. The following charts deconstruct this underperformance:

  38. AS TD Cash IS P Specialist Stock-picker XYZ Manager

  39. Specialist Stock-picker What are we buying? A designated portfolio of shares A contract to manage the portfolio and instigate changes to ensure best forecast (prognostic) returns How do we ensure a high quality result Analyse the portfolio of shares Analyse the skill-set and the expectations of both parties

  40. Specialist Stock-picker The Top 10 Holdings: Are the portfolios of shares consistent with our stated goals Industry – is it an Industry conducive to good long-term returns Management – is the Board and Senior Management able to act promptly and professionally? Can Expenditure be varied when Revenue changes?

  41. What Could go Wrong?The Risks? Volatility? The Flight Path – it’s the Flight Path that kills you.. J M Keynes: “The markets can be irrational for longer than an Investor can be solvent” However – we are not forced to sell. The LHS maintains a 10 year focus. True long-term investing. We have clearly defined goals – the LHS expects and accepts volatility

  42. What Could go Wrong?The Risks? Volatility – it’s not a risk; it’s a certainty Risk Capacity Risk Attitude Longevity Risk Inflation Risk Liquidity Risk Credit Risk; Diversification Risk; Market Risk Market Timing Risk

  43. Developments at HaydenFS The Book - The Rational Investor The Fund – Patient Capital Fund The Websites – RI & FPF A positive for HaydenFS Investors – the long-term commitment; mutual agreement

  44. The 4 Step Process….1

  45. The 4 Step Process….2

More Related