ASX INVESTOR HOUR€¦ · SPEAKERS: Scott Pape, The Barefoot Investor & Michael Kemp, IQ Investing...
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SPEAKERS: Scott Pape, The Barefoot Investor & Michael Kemp, IQ Investing LOCATION: Melbourne Investor Hour DATE: 7 March 2012 ASX INVESTOR HOUR How to compound your wealth DISCLAIMER: The following material was presented at ASX Investor Hour. 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 2012 ASX Operations Pty Limited ABN 42 004 523 782. All rights reserved 2012 .
Transcript of ASX INVESTOR HOUR€¦ · SPEAKERS: Scott Pape, The Barefoot Investor & Michael Kemp, IQ Investing...
SPEAKERS: Scott Pape, The Barefoot Investor & Michael Kemp, IQ Investing
LOCATION: Melbourne Investor Hour
DATE: 7 March 2012
ASX INVESTOR HOUR
How to compound your wealth
DISCLAIMER: The following material was presented at ASX Investor Hour. 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 2012 ASX Operations Pty Limited ABN 42 004 523 782. All rights reserved 2012.
How to Compound Your Wealth
Scott Pape & Michael Kemp
The 3 stories of Compounding
Frank’s story
6 years ago, Frank retired
$1 million
S&P/ASX 200 Accumulation Index
January 1980 – October 2006
Post GFC
Growth of $1k invested from 1980 to 2012
Compounding - reverse
The story of the 50 year disease
S&P/ASX 200 Accumulation Index
January 1980 – October 2006
The 50 Year Disease
PHIL
What could Phil have done to prevent it?
IT’S A NO BRAINER
Historical Perspective on the value and cost of housing
Terry Toner
(Oregon, USA)
Property
Established house price index and CPI (Base year: 1986 = 100), source ABS
Professor Piet Eichholtz
(Herengracht, Amsterdam)
- Long term - 345 years NOT 20 years
- Same houses
- 345 years of meticulous records
Herengracht Study
Annual Geometric Capital Gain 0.2% real
Growth Irregular Periods of 2X or 1/2X 1855 – 1955 ↓30% (real)
Inflation
Recent Returns atypical
Geometric Return – Real Capital Growth 0.2%
Property Prices have doubled in 345 years (in real terms) 3.6% ? 199,120 times Purchase price REAL !
The property Downturn has already begin
Index – Broad based portfolio
Dividends 5.4% “Capital Gain” 1.6% 7.0%
10,000 Shares in Woolworths in 1993
$2.60 a share = $26,000
Dividends: 12c per share = $1,200
10,000 Shares in Woolworths in 1993
$26.00 a share = $260,000
Dividends: $1.22 per share = $12,200
Walter Schloss
15.5% compound return
“I just try and buy cheap stocks”
“I just try and buy cheap stocks”
CKF = $1.19
$???
Australia’s largest KFC operator
- Junk food: A defensive business
- Long-serving, strong management
- An incredibly strong brand
- Pirate equity
Headless Chickens
- Floated at $2.50
- Nov 2011: Profit downgrade
- Price went from $2.00 to $1.20
Sept 2011 Feb 2012
Our recommendations
- Smart investors make big mistakes
- You rarely hear about the losers
- Over-time, good-quality businesses fall out of bed
My 5-year plan
• Take a short online course
• Subscribe to the Investor Update e-newsletter
• Play the ASX Sharemarket Game
• Watch another Investor Hour presentation
KEEP LEARNING
VISIT www.asx.com.au/education
