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The Tide Turns

FOR decades looking after other people’s money has been a lucrative business. Profit margins in the asset-management industry were 39% in 2014, according to BCG, a consultancy, compared with 8% in consumer goods and 20% in pharmaceuticals. The industry’s global profits in 2014 were an estimated $102 billion, allowing firms to pay those picking stocks in the American equity market an average salary of around $690,000 a year. Better yet, asset-management is growing fast: the industry looks after $78 trillion worldwide, and could shepherd over $100 trillion by 2020.

Yet the outlook for many asset managers is grim. The industry is being reshaped by low-cost competition. At the same time falling markets are shrinking assets under management, and thus fees levied as a percentage of those assets. Regulators, meanwhile, are trying to prevent consumers from being sold inappropriate products, which are often the most lucrative.

The biggest challenge confronts so-called active managers, who promise to earn returns that are higher than the market benchmark (the S&P 500, for example) by picking investments judiciously. Very few manage to do so: a study by Standard & Poor’s, which compiles the S&P 500 index, among other things, found that 91% of active managers in emerging-market equities failed to beat the relevant index over ten years, and that 95% of active bond managers underperformed.

More here – The Economist

Hedge Fund Returns

I thought I would update this. It combines data from the Barclays Hedge Fund Index and available total yearly returns for the S&P500

Hedge Fund Returns

 

Valeant Pharmaceuticals

The ongoing saga of Valeant and its capacity to make dickheads out of apparently the hedge fund industries best and brightest intrigues me because it displays the power of the narrative over rational decision making. Consider that hedge fund managers are the highest paid individuals in the world and for their multi billion dollar salaries they deliver a return that is less than simply buying an ETF. The chart below is of Valeant – this chart shows nothing other than price, volume and a long term moving average. Ask yourself this simple question – is this a stock you would be long?

Valeant

Your answer should be no, in fact it is most likely as a sane individual you would have begun dumping the stock as it collapsed under heavy volume. Such a decision makes you smarter than individuals who manage billions of dollars because apparently total hedge fund losses from the rout in Valeant are now somewhere north of $5.3 billion. Pershing Square run by Bill Ackman and Ubens ValeAct Holdings are each said to be down around $700 million each.  Both of these funds are majority shareholders in Valeant. Apparently, the situation is worse for some smaller hedge funds who in a profound display of recklessness have over 20% of their total capital invested in Valeant.

What is so fascinating to me is that these geniuses are so wedded to their own narrative fallacy and the protection of their own ego that they seem to operate without any for of self awareness and without any form of plan. To my untrained eye it seems the only requirement to run a hedge fund is to have a good sales team and no plan for when your luck runs out.

A 99-Year-Old Wall Street Veteran Reveals the Secrets of Her Success

Not my philosophy but remarkable longevity in an industry where most are transient and leave after a few years if they have not made it big.

As she nears 100, Irene Bergman has some advice for enjoying a long career on Wall Street: Don’t do anything stupid.

Consider investment returns, the financial adviser at Stralem & Co. said in an interview at her New York apartment, where, surrounded by paintings from Dutch masters, she telephones her clients. While many investors nowadays obsess over quick profits, it’s best to wait at least three years, or better yet, many more, before evaluating holdings. But don’t be afraid of revising your thesis, she said. If thorough research favors a portfolio shift, have courage and make changes.

“The longer you’re in the business, the more pessimistic you get,” Bergman said in her soft voice, noting she currently thinks shares are too expensive. Still, “I’m able to get bullish, because when I look at a stock, I can imagine where it was 40 years ago.” 

As one of the oldest working professionals in an industry run by men half her age, Bergman offers a rare perspective. She recalls the small private firms founded by German Jews of the 19th century that came to define Wall Street before their partnership model gave way to public listings, and honor succumbed to an ever-fiercer push for profit.

“The way of doing business has changed,” she said. “It’s much more competitive, much more knives-in-the-back.”

More here – Bloomberg

MY TOP INSIGHTS INTO ACCELERATED WEALTH CREATION – Michael Yardney

Today I wanted to share my top wealth creating insights from our premier property training event – our 5 day Wealth Retreat.

You see…property money

As I start preparing the curriculum for this year’s event that will be held on the Gold Coast at the end of May, I’ve been reviewing my notes from last year and spending a lot of time chatting with past attendees of Wealth Retreat

As I spoke to many of them I was blown away and humbled by the feedback as they explained how Wealth Retreat had changed the way they handle their investments, business and in fact many aspects of their life and how it was the best event they had ever attended.

Now that’s high praise indeed from people who are already successful property investors, business people and entrepreneurs, and I don’t take it for granted.

You can find out more about Wealth Retreat by clicking here.

O.K., here is the first insight …

 

  1. TO BECOME FINANCIALLY INDEPENDENT YOU NEED TO TREAT YOUR PROPERTY INVESTMENTS LIKE A BUSINESS

Over the last few years it became very obvious to me was that those investors who treated their property investments like a business were the ones that managed to develop financial independence from their properties.

And those that didn’t, seemed to be working for their properties rather than the other way around.

I’m sure you’ve read that most property investors don’t get past their first or second property and that almost half of all property investors sell up in the first 5 years.

When you speak to them they’ll tell you “property doesn’t work.”

Some investors have a portfolio of negatively geared properties but have to keep supporting their cash flow shortfall.

Others can’t seem to get the funding to get past their second or third property.

And others bought positive cash flow properties but the little cash they get (if any) doesn’t alter their lifestyle.

On the other hand, a small group of Australian investors treat their properties like a business.

They are the CEO of their business and realize that it’s not how much money you make that matters, but how hard that money works for you and how much you keep that matters.

They have a plan including a property plan, a finance plan, a tax plan and an asset protection plan and are surrounded by a good team of specialists.

If you want to grow your own significant property investment business, one that could one day replace your personal exertion income, then you should really consider joining us at Wealth Retreat 2016.

Because that’s exactly what Wealth Retreat is about.

We give you a blue print to build your own property investment and then give you a tool box full of Power Tools to help you build it.

Find out more about Wealth Retreat by clicking here and register your interest online to find out more or email my assistant Jo Fitt jfitt@metropole.com.au  mention the Trading Game and she’ll explain everything.

 

  1. ALONE YOU ARE VULNERABLE; CONNECTED WE ARE STRONG

It really struck me how easy it is to fall back into old habits and let negative outside influences dramatically impact our mindset and financial results when we are on our own.

Several people I spoke with candidly shared how they had pulled back and isolated themselves after suffering some investment problems and financing issues over the last few years, and how that isolation cost them so much more.

I can relate to this.

Many investors think they have to do it all themselves or learn it all themselves.

Partly because they think they know better than others or maybe it’s because they are not hanging around the right people – supportive, encouraging people.

And these get harder to find, the more successful you are.

But we cannot be our best selves in isolation from the world.

We need other people.

The key is making sure we’re spending time with people who inspire, empower, and encourage us.

The next two lessons really emphasize this point.

 

  1. YOUR PEER GROUP IS CONTAGIOUS

One of the things that struck me on the first night at Wealth Retreat, when we all got together for a special surprise event (the details of which I can’t reveal here, otherwise it would spoil the surprise for the attendees) was how quickly people connected with each other.

Have you ever had that experience?

Where you meet a group of people and feel like you’ve known each other for years?

May I ask you a direct question?

It’s going to be a bit blunt, but I’m not sure how to “finesse” it so here goes:

  • Will your current peer group empower you to reach your deepest dreams goals and your life’s purpose?
  • Will they hold you accountable to a high enough standard or will they let you slip back into your old comfort zone?
  • Will they feed your ideas and give you input to help you overcome challenges you face along the way?
  • Will they support you when you’re having a tough moment?
  • Do they inspire you to keep performing at your highest and best capabilities?

If not, what are you doing about changing that?

It’s ultimately up to you to find and create the peer group that will help you live the life you want to live.

 

  1. AFTER A “LOSS” WE TEND TO GO BACK TO WHAT WE KNEW

Many of the investors and business people I have spoken with recently have suffered a set back over the last few years.

Some in real estate, others in the share market and some in their businesses.

And we’ve had some interesting discussions putting this into perspective and clarifying the useful lessons to take from our experiences to help us move forward.

One of the most important insights that I want to share is that when most people suffer a “loss” financially, their natural tendency is to pull back and isolate.

Some are fearful… others embarrassed…

But isolation only makes things worse. You need to accurately assess the situation, learn your lessons and move forward.

Beating yourself up is of no benefit.

This is why your peer group and mastermind team is so essential.

We are moving into a new financial era – a time of amazing opportunities and some real risks.

To succeed in this environment, we need the support, insights and perspective of a trusted group of advisers and peers.

Which brings me to my next point…

 

  1. YOUR MASTERMIND TEAM

Apart from the opportunity for participants at Wealth Retreat 2016 to have one on one sessions with our expert faculty, one of the exciting parts of Wealth Retreat this year will be the “hot seats”.

This is a masterminding technique where you ask a focused power question to your mastermind group and they have 3-4 minutes to brainstorm as many possible answers to your question as possible.

If you are already a property investor, a business person or entrepreneur please click here to find out about Wealth Retreat and register your interest online and join us at Australia’s ultimate learning and networking event for investors and entrepreneurs.

Or ring my assistant Jo Fitt on 03 9591 8888 or email her jfitt@metropole.com.au  to register your interest and find out more.

 

  1. REAL WEALTH IS WHAT YOU GIVE

The people who come to Wealth Retreat are divided into three groups.

Firstly about 15% – 20% of the attendees have been before.

Some are coming for the second, third or fourth time.

You may ask why do they come back if they are successful. I could say they are successful because they come back.

The second group of attendees are very high net worth individuals.

They come to grow and nurture their property portfolios.

Then the bulk of attendees are experienced property investors with between 2 and 10 properties, who are looking to expand their network and super-size their investing and learn skills and techniques that they would not find elsewhere to enable them to build a property investment business.

Others are business people, entrepreneurs and share traders.

But don’t count yourself out from coming…

Every year a group of aspiring investors join us and get the type of information that propels them ahead – the type of information I would have loved to have when I started out.

This year we will be having special sessions at Wealth Retreat to assist investors with their biggest challenges including finance and empowering them with proven techniques for our changing markets.

Many of the attendees want to learn how to step out of the world of being paid by the hour and into the world of building their own property investment business.

In fact many past graduates of Wealth Retreat left their jobs to pursue their passions.

If this interests you register your interest on line by clicking here, or better still email or call my assistant Jo Fitt now on 03 9591 8888, jfitt@metropole.com.au and mention Trading Game to find out more.

Wealth Retreat works so well because each of these groups of people adds something essential to the mix.

But when I observe the most successful participants from Wealth Retreat over time I notice that those people who have “made it” financially all have moved to a place that the money isn’t what motivates them.

Sure they enjoy the money, but it is not their main driver.

Let me explain… money is a sufficiency need.

Once you have enough of it, it ceases to be important.

So what is it beyond the money that pushes and prods and sparks and motivates you to perform at your best and to build and dream and dare?

When I asked people at Wealth Retreat what drove them here are their top two answers:

 

NUMBER ONE: MAKING A DIFFERENCE

To touch the lives of other people.

They want to give back to people and causes that are so much bigger than they themselves are.

They believe that as they receive they need to “pay it forward” to the next generation of business owners or investors.

How are you paying it forward?

 

NUMBER TWO: TO CARE…

To care for their friends and family and provide an amazing lifestyle and quality of life for them, and especially to have the time to be with them.

I hope you’ve found these insights from Wealth Retreat helped give you some ideas about your own wealth creation.

 

HAVE YOU EVER WISHED YOU COULD JOIN US AT WEALTH RETREAT?

While the numbers are limited (on purpose) I urge you to call my assistant Jo Fitt on 03 9591 8888 and find out more and see if you qualify to join us on the Gold Coast on May 28th to June 1st 2016.

Or email her at jfitt@metropole.com.au  to get the process started.

We have a very limited number of spaces for the event and with over 10% of spots already taken (and we’ve just started promoting it) it’s only going to get harder and harder to get in later.

If you would like to find out a little more check out our website by clicking here.

 

If you’re ready to commit to playing at a higher level, to spending 5 days with a select handful of other doers in an environment that will challenge and push you to even higher levels of achievement and success, then please call Jo on 03 9591 8888 or email her at jfitt@metropole.com.au  and ask her to explain a bit more about Wealth Retreat and get on the interview list.

Hedge fund closures return to crisis highs

Here is my idea for running a hedge fund – open the fund- take everyone’s money – buy an index ETF and then bugger off. I will be hailed a genius because I will trounce 99.9% of all other hedge fund managers.

More hedge funds closed their doors in 2015 than at any time since the financial crisis, according to new research, as turbulent markets dragged down the industry’s performance.

Last year was the worst year for liquidations since 2009, with 979 funds closing, up from 864 in 2014, according to data from Hedge Fund Research. The fourth quarter of 2015 also saw the fewest new hedge funds starting up since 2009, with just 183 openings compared with 269 in the third quarter.

More here – CNBC

 

Gold – A Dangerous Obsession


 

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