ASX Investor Hour DISCLAIMER: The following material was presented at ASX Investor Hour. The views, opinions or recommendations of the presenter are solely those of the presenter 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”). ASX makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions. To the extent permitted by law, ASX and its employees, officers and contractors shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided or omitted or from any one acting or refraining to act in reliance on this information. Presenter: Dale Gillham, Executive Director, Wealth Within Topic: Realities of the Sharemarket Date: 6 July 2011 Location: Melbourne Investor Hour
Realities of the Share Market
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Bear markets in Australian shares since 1960 M on th s after % gain in first M on ths to % fall low to m ake 1 2 m o nth s after reach lo w n ew h ig h lo w Sept em ber 60 - Novem ber 60 2 -23.2% 33 1 2.0 % February 64 -June 65 16 -20.4% 25 9.0 % January 70 - Novem ber 71 22 -39.0% 94 5 2.0 % January 73 - Septem ber 74 20 -59.3% 59 5 1.0 % Novem ber 80 - July 82 32 -40.6% 17 3 9.0 % Sept em ber 87 -Novem ber 87 2 -50.1% 75 3 5.0 % August 89- January 91 15 -32.4% 30 3 9.0 % February 94- February 95 12 -21.7% 20 2 5.0 % March 02 - March 03 12 -22.3% 15 2 7.0 % Average 1 5 - 34 .0% 4 1 3 2.0 0 % No vem ber 0 7 - 10 -29.5% November 07 - March 09 16 -55.58% Sou rce: Bloo m berg, AM P Cap ital I nvesto rs
The Reality of the Market
The 20 Top Shares 1/1/1997 to 31/12/2009 St George was bought by Westpac
The 20 Top Shares 1/1/1997 to 31/12/2010 Ranking of the Top 20 Total Return Average Growth Per Year 1 NCM 1807.55% 164.32% 2 BHP 731.80% 66.53% 3 CSL 678.76% 61.71% 4 ORG 653.02% 59.37% 5 WPL 483.01% 43.91% 6 WOW 385.95% 35.09% 7 RIO 341.71% 31.06% 8 WES 170.50% 15.50% 9 QBE 168.89% 15.35% 10 MQG 131.31% 11.94% 11 ANZ 128.70% 11.70% 12 CBA 119.21% 10.84% 13 WBC 103.39% 9.40% 14 FGL 28.51% 2.59% 15 WDC 15.98% 1.45% 16 SUN 7.49% 0.68% 17 NAB -3.66% -0.33% 18 BXB -28.01% -2.55% 19 AMP -59.98% -5.45% 20 TLS -63.43% -5.77%
Positive v negative years
Where the money went in 2010 Indice and Sector Performance 2010 First Half 2010 Second Half 2010 Full Year Growth full Indices 1/01/2010 30/06/2010 Growth % 31/12/2010 Growth % year % XTL Top 20 2949.6 2588.2 -361.4 -12.25% 2832.1 243.9 9.42% -117.5 -3.98% XFL Top 50 4878.9 4328.9 -550 -11.27% 4693.3 364.4 8.42% -185.6 -3.80% XTO Top 100 3987.8 3524.8 -463 -11.61% 3853.3 328.5 9.32% -134.5 -3.37% XJO Top 200 4870.6 4301.5 -569.1 -11.68% 4745.2 443.7 10.32% -125.4 -2.57% XKO Top 300 4868.2 4292.9 -575.3 -11.82% 4760.8 467.9 10.90% -107.4 -2.21% XAO Top 500 4882.7 4324.8 -557.9 -11.43% 4846.9 522.1 12.07% -35.8 -0.73% Sectors XDJ 200 Consumer Discretionary 1636.8 1446.4 -190.4 -11.63% 1500.8 54.4 3.76% -136 -8.31% XSJ 200 Consumer Staples 7809.3 7391.3 -418 -5.35% 7714.5 323.2 4.37% -94.8 -1.21% XEJ 200 Energy 16119.2 14092.8 -2026.4 -12.57% 16114.4 2021.6 14.34% -4.8 -0.03% XXJ 200 Financial Property Trusts 5607.4 4791.8 -815.6 -14.55% 5063.8 272 5.68% -543.6 -9.69% XFJ 200 Financials 4803.6 4166.3 -637.3 -13.27% 4361.8 195.5 4.69% -441.8 -9.20% XHJ 200 Health Care 8752.5 8113.2 -639.3 -7.30% 8933.2 820 10.11% 180.7 2.06% XNJ 200 Industrials 4005.1 3180.4 -824.7 -20.59% 3736.5 556.1 17.49% -268.6 -6.71% XIJ 200 Information Technology 672.7 633 -39.7 -5.90% 644.7 11.7 1.85% -28 -4.16% XMJ 200 Materials 12777.2 11435.8 -1341.4 -10.50% 14080.6 2644.8 23.13% 1303.4 10.20% XPJ 200 Property Trusts 897.3 843.5 -53.8 -6.00% 839.8 -3.7 -0.44% -57.5 -6.41% XTJ 200 Telecommunication Services 1175.3 1096.6 -78.7 -6.70% 959.6 -137 -12.49% -215.7 -18.35% XUJ 200 Utilities 4328 4058.9 -269.1 -6.22% 4413.4 354.5 8.73% 85.4 1.97% XGD Gold Index 5856.8 6437.7 580.9 9.92% 8099.1 1661.4 25.81% 2242.3 38.29%
Bulls V Bears since 2009 Dates of Bull market Bear market bull market rises time and % rise time and % fall 13/03/2009 12/06/2009 13 weeks 33.05% 4 weeks 8.65% 10/07/2009 16/10/2009 14 weeks 32.00% 3 weeks 7.80% 6/11/2009 15/01/2010 10 weeks 10.38% 4 weeks 10.05% 12/02/2010 16/04/2010 9 weeks 12.61% 5 weeks 16.92% 21/05/2010 25/06/2010 5 weeks 10.65% 2 weeks 9.23% 9/07/2010 17/08/2010 5 weeks 8.79% 2 weeks 5.80% 27/08/2010 5/11/2010 10 weeks 10.95% 3 weeks 5.06% 26/11/2010 18/02/2011 12 weeks 7.83% 5 weeks 9.40% 18/03/2011 15/04/2011 4 weeks 10.07% 11 weeks 11.06%
All Ordinaries Cycles Date of low Price Weeks Date of low Price Weeks 14/03/2003 2666.30 23/11/2007 6373.00 14 4/07/2003 2977.50 16 21/03/2008 5130.10 17 3/10/2003 3159.80 13 8/08/2008 4829.20 20 30/01/2004 3271.20 17 21/11/2008 3201.50 15 14/05/2004 3348.40 15 13/03/2009 3052.50 16 20/08/2004 3479.30 14 26/11/2004 3841.60 14 10/07/2009 3710.10 17 6/05/2005 3886.00 23 6/11/2009 4515.30 17 21/10/2005 4277.00 24 10/12/2010 4483.30 14 17/02/2006 4739.90 17 21/05/2010 4194.40 14 16/06/2006 4726.00 17 27/08/2010 4350.80 14 24/11/2006 5303.40 23 26/11/2010 4638.30 13 9/03/2007 5626.90 15 18/03/2011 4559.20 15 17/08/2007 5490.80 23 Total 231 Total 120 Average 19.25 Average 15
Outlook 2011
Remember average time to make a new high is 41 months. August 2012 is 41 months from March 2009
The money flow in 2011 Indice and Sector Performance 2010 Full Year 2010 First Half 2011 Growth full Indices year % 1/01/2011 31/05/2011 Growth % XTL Top 20 ‐ 117.5 ‐ 3.98% 2832.1 2831.6 ‐ 0.5 ‐ 0.02% XFL Top 50 ‐ 185.6 ‐ 3.80% 4693.3 4690.7 ‐ 2.6 ‐ 0.06% XTO Top 100 ‐ 134.5 ‐ 3.37% 3853.3 3840.3 ‐ 13 ‐ 0.34% XJO Top 200 ‐ 125.4 ‐ 2.57% 4745.2 4708.3 ‐ 36.9 ‐ 0.78% XKO Top 300 ‐ 107.4 ‐ 2.21% 4760.8 4716.6 ‐ 44.2 ‐ 0.93% XAO Top 500 ‐ 35.8 ‐ 0.73% 4846.9 4788.9 ‐ 58 ‐ 1.20% Sectors XDJ 200 Consumer Discretionary ‐ 136 ‐ 8.31% 1500.8 1419.9 ‐ 80.9 ‐ 5.39% XSJ 200 Consumer Staples ‐ 94.8 ‐ 1.21% 7714.5 7854 139.5 1.81% XEJ 200 Energy ‐ 4.8 ‐ 0.03% 16114.4 16475.4 361 2.24% XXJ 200 Financial Property Trusts ‐ 543.6 ‐ 9.69% 5063.8 5028.9 ‐ 34.9 ‐ 0.69% XFJ 200 Financials ‐ 441.8 ‐ 9.20% 4361.8 4354.6 ‐ 7.2 ‐ 0.17% XHJ 200 Health Care 180.7 2.06% 8933.2 8684.8 ‐ 248.4 ‐ 2.78% XNJ 200 Industrials ‐ 268.6 ‐ 6.71% 3736.5 3657.8 ‐ 78.7 ‐ 2.11% XIJ 200 Information Technology ‐ 28 ‐ 4.16% 644.7 590.7 ‐ 54 ‐ 8.38% XMJ 200 Materials 1303.4 10.20% 14080.6 13709 ‐ 371.6 ‐ 2.64% XPJ 200 Property Trusts ‐ 57.5 ‐ 6.41% 839.8 861.7 21.9 2.61% XTJ 200 Telecomunication Services ‐ 215.7 ‐ 18.35% 959.6 1035.3 75.7 7.89% XUJ 200 Utilities 85.4 1.97% 4413.4 4343.4 ‐ 70 ‐ 1.59% XGD Gold Index 2242.3 38.29% 8099.1 7697.7 ‐ 401.4 ‐ 4.96%
Creating success Successful trading or investing is achieved through the mastery of three distinct areas. 1.Skills/Knowledge (what you do) 2.Experience (how good you are) 3.Psychology (how you do it)
Questions: • What style of Trader or Investor are you? • How well do you rate your level of mastery?
Trader styles The Cowboy
Trader styles The Cowboy •Likes to live on the open range, trades anything and everything •Has very little genuine market experience and a low level of knowledge and skill •Unconventional in their techniques using very little planning •They tend to be erratic •Catch phrases: “I don’t care if I lose”
Trader styles The Rollercoaster or Thrill Seeker
Trader styles The Rollercoaster or Thrill Seeker •Can make money quickly, some do so over a reasonable period of time •They give all the money back to the market and sometimes more •They trade from gut feel not good trading techniques Example: Tech boom and bust
Trader styles The Possum
Trader styles The Possum •Wants to trade but is often too scared to venture into the market •Scared of losing, they justify their non action by saying they are still learning or developing their skill, sometimes for years •They can have skill and sometimes are very skilled, however, self doubt can consume them once in a trade, so they can become inconsistent which then validates their fear
Trader styles The Chicken
Trader styles The Chicken •Tends to pick lots of trades •They think trading more means making more •Exit early in profit as they are scared of losing •There is no real purpose in their trading •Generally have limited knowledge and skill •Often costs and other factors eat up their trading account
Trader styles The Astronaut
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