Trust – What happened?

Why should we trust others with money we invest in stocks? I have had a nasty experience, have you? The productivity commission reports that underperformance and fee gouging is rife in the retail superfund industry and that eats into your returns. What a mess. Let’s see how the Royal Commission handles this one.

Activist short sellers

Thankfully the markets have now become the birthplace and playground for the activist short sellers calling to task rogue companies talking up their books or burying the truth in ‘accounting’ numbers while playing on the dreams of gullible investors. When it comes to dealing with ‘dollars’ we aren’t being very aware but often taking a more hopeful approach which is dangerous and somewhat lazy. Sometimes it is hard for us to establish the ‘real’ truth so bring on the rigorous short sellers that will keep ‘the buggers honest’. I’ll bet there are many highly paid company directors, managers and CEO’s all looking nervously over their shoulders right now. Who will be next? Let’s hope it will go some way to making the stock market a safer place to invest.

‘Bare bottoms’

The comfortable ‘bedroom’ of ‘insular boards, complacent management, and index hugging institutional fund managers’ – (Rob Luciano short seller of recently targeted Corporate Travel Management) is also now being opened to the public and their ‘bare bottoms’ are being exposed.

Superfunds are tainted with the same brush as the banks

This is of utmost important to you as investors because it’s your money and your retirement and you are more than likely being ripped off if your money is in one of these institutions or superfunds. Or at the very least you could do better elsewhere. Yes, it probably isn’t fair and you are probably unaware of the double dipping, skimming and rorting. But these things come home to roost and these rivers of gold are drying up for the cosy superfunds managing billions and siphoning off just a little but here and a little bit there.

Will things change?

When money is concerned probably only slowly as greed remains one of the key three drivers of illegal activities with power and sex being the other two. However, there is hope, as it seems things are beginning to change as awareness is slowly being enlightened and processes such as the Haynes report brings to light these activities. We are disgusted. Really when you think about it a vertically integrated setup such as AMP’s can only encourage greedy and ‘untoward’ behaviour. In reality if companies behaved appropriately and honestly, as they should, we wouldn’t even need ASIC.

Who can you trust?

That’s a singularly easy answer, yourself plain and simple. The confusing money-go-round of explanations by money managers when you ask them for a simple explanation of costs and performance is an extraordinary thing to behold. It’s how you hide reality. The rorts as Mr. Haynes has found are rife and at the highest level. This is a huge problem for the industry because trust is vital to its survival.

‘Too often, the answer seems to be greed – the pursuit of short-term profit at the expense of basic standards of honesty.’ – Commissioner Kenneth Haynes

Cost effective alternative

The best and most cost effective alternative when investing your hard-earned dollars in the stock market is to do it yourself. Stock market investing is actually about common sense. Protecting and making your capital safe is the first and foremost objective and then investing sensibly and systematically with discipline and the right expectations would seem the common-sense approach.

You can have full control.

Having control of your money and your destiny is important and, in the end, very satisfying. With a healthy dose of common sense in our back pocket sometimes we just need a little help in selecting stocks. A simple strategyof selecting stocks based on historically sound principles of investing can help. Nothing more. I look at stocks in a systematically and controlled environment and it works for me. You ultimately retain full control of your actions but in the end the proof is in the pudding – the outcomes. That means getting what you need – solid, consistent and predictable growth in your equity.

The charts on our home pageshow steady growth and how methodical stock selection enables a degree of predictability and this gives us a lot of confidence. It’s about having a strategy and a discipline to invest in stocks safely. Knowing full well we can’t predict or forecast the path of the stock market, but you can very effectively manage a process of investing for your own benefit.

Our members stayed safe during recent rout, as they did in the GFC, using a simple but effective money management tool – The Stop. Exposure during down swings is cut when required and lifted when markets rally – it’s that simple.

Who will you trust with your retirement capital?

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Catching trends is like surfing. Catch the wave, enjoy the ride and jump off when it subsides. That’s the simple message.

What is it retail and SMSF investors really want from their equity portfolio?
Growth in equity, plain and simple and that makes complete sense.

The great thing about trading is that it gives you power and freedom. That attracts us all. In turn to be successful it requires oodles of self-discipline.