Managed Accounts Marketing Email – It's all Greek to me – May 2010
Managed Accounts Marketing Email It's all Greek to me May 2010
The volatility we have seen in the last few weeks has opened up some great opportunities in the Australian market; it also enabled us to significantly increase our outperformance against our benchmark index to 23.32%. We have included below detailed commentary on how we see the market at the moment and what opportunities the current volatility has presented us.
It's all Greek to me
A few weeks back Shawn and I were sitting in our Melbourne office discussing the situation in Greece and the wider Eurozone and what we considered to be the likely impact of the debt crisis on our markets here at home. After 4-5 hours of robust discussions we decided to liquidate our entire portfolio, we agreed that the risks were weighted more heavily to the downside. Within just a week global markets proceeded to fall significantly while our money accumulated interest in the bank and we waited for an opportunity to enter stocks at cheaper levels.
I'm not writing to you today simply to point out that we were right (although it is certainly nice when being right saves your clients 6.56% in two weeks!), I'm writing today to highlight what we feel is the key benefit of the investment methodology for the William Shaw Managed Accounts. Cash.
Cash is a trade
By always starting from a position of cash we are able to evaluate where the balance of risks lies in the market and whether our money will yield a better return invested in shares or waiting for the right opportunity earning interest in the bank. This approach is key to our outperformance of the market over the past three years, market conditions which are widely considered to be some of the toughest and most unpredictable in living memory.
Below is our updated performance chart which shows how our Managed Accounts have performed against the ASX 200 Accumulation index over the past 3 years. We are very excited to announce that we have surpassed 20% outperformance for the first time since inception of the Managed Account Service. As it stands an investment with us over 3 years has performed +23.32% better than our benchmark index, the ASX-200 accumulation index.
Falling Markets Reduce risk
You might think I've lost my marbles given the above heading but think about it. As the market falls the total risk' has been reduced. Would you rather buy the market at 4467 points today or at 5000 points just a few weeks ago? Even if the market continues to fall from here you are far better off buying it here than having bought it at 5000 points.
We all know markets go up and down; no market will ever go up or go down forever. Using our strategy, or job is to assess when the market has become overstretched in one direction or another. Where it gets tricky is generally where there are large changes in volatility, such as very recently.
Amazingly, people tend to be more concerned about the likelihood of the market falling immediately after a fall has just happened, whereas in fact the real risk has been significantly reduced. Similarly people are often more comfortable with making investments in the market after a prolonged uptrend, when the real risk of doing so is much, much higher.
Be brave when others aren't
You won't get any clich quotes of Warren Buffett from me; they tend to be grossly overused and are often out of context. The point is, very often when presented with the very opportunity they wished for, people will justify a whole new list of reasons why not to go ahead with an investment. To make money in any investment you have to decide what you think something is worth and when you have a chance to buy it, have the courage to pull the trigger.
We want you for our Managed Accounts!
Many of you receive our trading recommendations via email, we hope that over the past weeks these have saved or made you some money (hopefully both).
Our business is managing money for people and delivering them the best risk adjusted return we possibly can. If you're looking at making an investment in the market we would welcome the opportunity to discuss if an investment in a William Shaw Managed Account would suits your needs.
We take great pride in what we do and if you look at our returns above (which are net of all fees) you will see that while we aren't always right our investment methodology has stood up to some pretty extreme tests and come out well ahead.
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