Peter Spann Investor Update - Details

For those who asked for the details of the Investor Update...

There were four products offered:
1. Colonial First State Geared Fund
2. Macquarie Property Income Trust
3. HFA Octane Asia Fund
4. Timbercorp Tax Advantage Investment

My thoughts:
1. CFS Geared: already knew this was a great fund, 28% since inception which was more than 10 years ago, internal gearing up to 50%, some margin lenders will go to 70% for it. Personally, if I was going to get into it, it would be through a 100% rebate facility and at the best rates I could find. Nonetheless, you can't complain with that performance which seems to be relatively stable; only volatility resulted in one -'ve return in early 2000s.
2. Macq Property: it has been around for 3 years, apparently the top performing LPT over the past two years (I won't believe this until I research it), has internal gearing, up to 60% LVR on margin. About 15% since inception, about 60% tax deferred, distributions paid quarterly but 50% of income in June quarter. Personally, for income (which I'll need for funding growth investments) I am not quite sure what I'm going to do yet. I'll either go for an LPT with good tax benefits (and returns) or start trading. I'd only trade if the results would be much better.
3. Octane Asia: 100% finance, 8.?% rate, loan available for interest loan, internal gearing, it's an absolute return (hedge) fund that buys into other hedge funds, capital protected at 0.25%, finance and protection supplied by UBS, access to most Asian markets (incl. Japan I believe). The managers, HFA, apparently short-listed 700 Asian fund managers and personally interviewed 200 in Asia. Oscar Martinez is the manager, seemed like a pretty serious guy. Personally, I like the idea of this fund considering the volatility in the Asian markets (this is known but was also discussed by Peter). Apparently the fund is look for volatility (std dev) of 6-10%.
4. Timbercorp: this is another tax advantage tree investment. I didn't take many notes on this because my assessable income is going to be very low this year considering new investments, depreciation and existing -'ve gearing.

Peter did talk about his outlook for the next 10 years. I'll just regurgitate it in straight prose for brevity. He says the next three years will be good for equities and that we are 50-60% the way through the equities peak (saying there may be 40% more of it to go). He doesn't see much growth in residential real estate for a long time (I'm sure they make more $ from clients investing in equities and it's much easier). He says the US will get very strong over next 12-18 months but is in for a big fall (NB: PS seems anti-US whichever way you look at it, anti-Liberal too - is this part of his campaign to capture the moms and dads?). 2009-20010 are the danger times for him, a cash cycle will follow US market correction. He says at the end of the decade he expects at least 11-12% rates (but really he says we'll see higher rates than ever 20%+, I think this was more an alarmist outburst though), high inflation, high unemployment, etc. He keeps saying a geopolitical event will cause instability, driving gold further up, driving economies far down. 2010-2013 will be recession times; he thinks it will be a depression though. 2013-2015 will be a new economic cycle and everything will start to recover and grow.

Overall, the event was worth it. Oscar from HFA provided a very simple example to the moms and dads regarding volatility and why it can be bad for buy and hold. It was the good old, make 50% lose 50% vs lose 50% make 50% scenarios. As you know, both lose out below the initial amount. He gave me a great way to explain it to my parents though. Peter was his usual self (whether that's good or bad is up to you ).

 

Great summary!

Thanks T!

 

I am going tonight, as are some others from the Somersoft forum such as Les, Karina and Beachside (Wayne). So if any of you come, be sure to look us up.
BTW Les is prob the easiest to spot, with his beard

 

when and where?

 

Investor update.
220 Pitt St, City. Wesley conference centre.
Registration at 5pm, for a 6pm start. Goes until 10pm.

If you want to go Nigel, tell me. I will give you the contact details, and you can prob come as a guest of mine for free.
David

 

Hope I didn't spoil it like the end of a movie.

I just got back from Melbourne, what an odd place!

 

How about that coming world depression in 2011 to 2013.
Interesting times...Peter says have lots of gold and be cashed up.
What are other thoughts on this?

 

If by odd you mean the greatest place in the history of the universe, then yes, it is rather odd!

Mark (Melbourne local, currently residing in Brisbane)

 

Perky,

I would like to have his crystal ball. Is it for sale?
PS - Did you get BHP around $ 27?

 

I think if nothing else, Peter's talk last night probably reminded a few to keep an eye on the downside as well.

It's probably human nature that in the 'good times' we start to occasionally believe the good times can go on for much longer than they actually will. Margin loans get extended, cash buffers get reduced etc.

What did he say? Expect the best and prepare for the worst........ Probably good advice no matter what happens.

It's been interesting to hear how the market 'pullback' we've had over the last few weeks was really starting to hurt some. What would have happened if the market had dropped 25-30%?

Alarmist presentation? If it prompted us to bump risk management up again then I think it was a good outcome.

 

All

when Peter was in Canberra giving his talk about the Macquarie Equity Enhanced Fund, he made a comment about advising people not to buy residential real estate for the forseable future. he said he would elaborate on that at his update event. did he and if so what were his points?

cheers
Gazza

 

Pretty much "What did he say? Expect the best and prepare for the worst........ Probably good advice no matter what happens."....however the next 3 years on the sharemarket will be very much on the upside - the dow will hit 30,000 before crashing (nice for the US fund at least) - in Peter's opinion.
Tropo, I buckled and got in 2 days ago at $27.77 , should have put in at $27.50 (it went down to below $27.40 at one point) but my lovely wife said get it now its done a 10% drop and I tend to agree with her ....nice to see it up today. Though I still think the next week or so will have ups and downs before the next upward phase starts in earnest in June.

 

Gazza,
He thinks the Macq Property Income fund is a winner - it is returning 15%+ in distributions over the last few years (its diversifies across, industrial, retail,commercial etc) , and is a geared fund. I checked BT online, they margin lend 60% against it which is reasonable (though not as good as Navra 70%).
Basically Peter says when the world recession (possibly depression) hits in 2011 - 2013 we should have our cash and bullion ready to pounce on the resdidential property market , at that point in time. Now to end of 2009 is the share markets golden run.

 

Always follow your wife's advice !. Well ..... almost always
Well done !!!!!
Keep $miling !

 

Peter did concede when he was in Perth that the local market was bucking the trend across the rest of the country.
But he said it would not last, maybe 18 months, maybe 2 yrs.
So in effect we get the best of both worlds.....strong share market and strong local property market.

BTW this must have been a different presentation to the one in Perth, as he was just talking about cashflow strategies in Perth.

All good stuff anyway...

Kevin..

PS...How many are Wealth Club Members on here ??
I am undecided as to whether to join or not..

 

If I wasnt a Navra client, I would become a Spann client - prob in the middle level (saphire - 2k joining and 1k per year). I am not sure if they include share trading help with that?
But being a Navra client is also cheaper - it costs nothing!! For those wanting to become one, I think it now costs 1k ? - or $275 if you do their two day course (and you get to learn more about real estate, Navra's DCT method etc) - excellent value.

 

navra/freeman fox

why wouldnt you use both freeman fox and navra?

 

I might be misunderstanding Perky, but you mean it costs $1K to sign up to NFS or NI ?

I know you can invest in NavraInvest for free (ie. no fees) if you invest direct. You can do the Navra course, which is a bargain anyway you look at it at the going rate.

But to become a client of Navra Financial Services (which is probably more equivalent with the type of services offered by Freeman Fox), my understanding is your NFS planner will discuss the fee structure.

When I met with Steve and Roger in Brisbane, they said there is a kind of sliding fee structure - around $2,000, $3,000 and $5,000 - each level entitling you to slightly different benefits and fee exemptions when investing in the Navra Invest fund. (the top level gets you fee-free NI entry, which didn't totally make sense to me as you can get that by simply downloading the application form from the web).

NFS will then also earn their commissions as disclosed on property purchases etc. The only reason I've not yet progressed, and hence am unclear on the fees, is we are, on Steve's advice, waiting for our latest development to be completed so we can get creative ;-)

Just thought I'd ask and/or clarify, as its not apples with apples when talking Freeman Fox and Navra, etc.


Carl

 

In my case I did my due diligence on both companies, their management, and their reputations / results, and was comfortable proceeding with the Navra Group from what I saw.

Cheers
Carl