SPEAKER: Julia Lee, Equities analyst, Bell Direct LOCATION: Sydney DATE: March 2013

ASX INVESTMENT TALKS Investing through different cycles

DISCLAIMER: The views, opinions or recommendations of the presenters are solely their own and do not in any way reflect the views, opinions, recommendations, of ASX Limited ABN 98 008 624 691 and its related bodies corporate (“ASX”). Information and material presented at the seminar is for educational purposes only and does not constitute financial product advice. Investors should obtain independent advice from an Australian financial services licensee before making investment decisions. No responsibility is accepted by ASX for any loss or damage arising in any way (including due to negligence) from anyone acting or refraining from acting as a result of this information or material. © Copyright 2013 ASX Operations Pty Limited ABN 42 004 523 782. All rights reserved 2013.

Investing through different cycles Julia Lee Equities Analyst

Where are we now?

* Change from general optimism to pessimism

Optimism Optimism

Relief

Hope

Depression

Excitement

Thrill

Euphoria

Anxiety

Denial

Fear

Desperation

Panic

Despondency

Strategy cycle

GARP & momentum

GARP & high beta

Defensives

Quality & defensives

Defensives

Value

Strategy

Momentum

Defensive Value

Growth

Growth at reasonable prices (GARP)

•Dividend paying universe

•5 year average 15%+

•P/E less than 16

•ROE greater than 15

•Mkt cap greater 100M

Stock Yield P/E ROE LYL 5.1% 10 20% DTL 5.6% 14 20% ILU 2% 8 22% MYE 4% 8 15% MLD 3.2% 9 18% FGE 3% 9 17% JIN 1.2% 16 18%

Momentum

- Stock that reach new highs are likely to continue to make new highs

- Stocks that make new lows are likely to continue to make new lows

- A stock in motion will stay in motion

Studies on momentum

• Debont and Thaler (1985) • Rouwehorst (1998) • Griffin and Martin (2004) “Globally, momentum profits are large & statistically reliable in periods of both positive & negative economic growth”

8

Timing – Technical analysis

Looking for value

P/E = ------------------------------- Share price

Earnings per share

Top defensive sectors

Industry Dividend yield

Telecom 5.9%

Banks 5.5%

Utilities 5.4%

Staples 4.2%

Healthcare 2.2%

Putting it into practice

13

Disclaimer

The information in this presentation is of a general education nature only. It does not take into account the investment objectives, financial situation or needs of any individual investor. Before making an investment decision we recommend that you consult a professional advisor.

The Bell Direct service is provided by Third Party Platform Pty Limited trading as

“Bell Direct” (ABN 74 121 227 905) an Australian Financial Services licensee (AFSL314341) and a Participant of the ASX Limited Group.

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