what do you think of peter spanns new course

[WinstonWolfe]

I recently saw that they reported the MOO Fund paid a 5.6% yield to investors in the last three months

I presume what you refer to as yield is the distribution figure mentioned in crc's Feb snapshot.

That's 5.552 cents per unit.
But note "fund performance" for the 3 mths is -2.38% and the price of a unit is 95.7cents, presumably down from $1.

As I raised above, be careful how you interpret 'distribution' or yield. It could be part of your original money being given back, or your investment is being eroded by negative performance.

As an exercise, work out whether you are ahead if you put $1000 in at inception and closed your account today.

Then compare that to an index fund like STW, which has returned 8.5% since inception of Magic Moo Cow.

 

[crc_error]

thats the point I was trying to make Winston. Yes Peter can advertise a nice big yeild, but whats the point of the capital goes down by more than the yeild to give a overall negative return.

As I pointed out earlier, Macquarie also had a buy write fund, which freeman fox recommended, and it also didn't do to well, especially when the market was booming.

I like Keith's stratergy more. buying good yielding blue-chip stocks. And currently many of them have increased dividend forcasts over the coming years.

 

[Ol School Skata]

As an exercise, work out whether you are ahead if you put $1000 in at inception and closed your account today.

Then compare that to an index fund like STW, which has returned 8.5% since inception of Magic Moo Cow.

I agree with the exercise of comparing the returns of any fund with another benchmark but comparing to STW it is important to note the differences in trading strategy here. Moo fund is a cashflow generating investment, while the STW is set up to track the ASX200 Accumulation Index (buy and hold).

STW's return for the same period is not 8.5%.. its

STW as at close of trade on 27 Oct 2009 = $44.92
STW as at close of trade on 9 Apr 2010 = $46.90
Distributions paid during this timeframe: $0.657

Total Return is ($46.90 - $44.92) = $1.98 + $0.657 = $2.637; $2.637/$44.92 = 5.87% return

OSS

 

[crc_error]

I dont think you can compare the moo fund to a index fund, as they are two seperate type of investments. Its like saying compare ASX200 index to a property purchased in the city.

But you would expect to make more with a stratergy than fixed interest, and unfortunately buy write hasnt achieved this.

Whats also dissapointing is the market has gorn gang busters over the last 6 - 12 months, yet the moo fund has not shared in any of this success.

 

[WinstonWolfe]

I agree with the exercise of comparing the returns of any fund with another benchmark but comparing to STW it is important to note the differences in trading strategy here. Moo fund is a cashflow generating investment, while the STW is set up to track the ASX200 Accumulation Index (buy and hold).

STW's return for the same period is not 8.5%.. its

STW as at close of trade on 27 Oct 2009 = $44.92
STW as at close of trade on 9 Apr 2010 = $46.90
Distributions paid during this timeframe: $0.657

Total Return is ($46.90 - $44.92) = $1.98 + $0.657 = $2.637; $2.637/$44.92 = 5.87% return

OSS

I agree there are serious strategy and risk differences between MOO and STW. However, MOO uses the S&P50 Accumulation Index as a benchmark.

And sorry. I erroneously used 29/10/09 as the inception date.
which raises a sobering point. During the MOO presentation I attended in Brisbane, I was dumbstruck at how the audience lapped up how apparently 'simple' it was to pick the market either goes down, sideways, or up, and presumably adjust options premiums accordingly.

If it was that easy, MOO might have delayed its entry into the market from 27/10/09 for 7 trading days, to 5/11/09.

On this date, STW closed at $42.58...... -> ($46.90 - $42.58) = $4.32 + $0.657= 11.7% performance.

Several key indicators showed weakness in STW for a week prior to 27/10/09 OBV, ADX; and RSI was on a downwards trajectory closing on 50 on the day.

 

[crc_error]

Winstone, the average Joe Public will not know how hard its to trade the market. They see nice colorful charts with nice candle sticks and think 'pros' will just read this and trade accordingly. However in reality its much harder to pick.

I dont think though MOO trys to pick bottoms does it? I would say they write calls each month at the beginning of the month and collect premium.

 

[WinstonWolfe]

I dont think though MOO trys to pick bottoms does it? I would say they write calls each month at the beginning of the month and collect premium.

Option income is one thing crc, but can a fund manager ignore portfolio value? Is an investor better off making 15% in options income if portfolio value goes down 30%?

I don't buy that a fund manager can be so good at derivative arbitrage, that they can offset the risk associated with a strong correction or downturn, and margin call. And I haven't seen any performance figures validating that.

Preservation of capital is always paramount in my mind.

 

[crc_error]

totally agree. This is why I didnt think the fund did very well at all, since it fell by more than the permium amount. essentially it returned your own capital in a fancy way, while freeman fox collected brokerage and fees.

As I said before, I subscribe to holding quality companies with regular dividends. you cant outsmart the market with options on a regular basis

 

[willair]

Preservation of capital is always paramount in my mind.

That's the number one item,longterm you are best going it alone because
the story is always the same,they always tell you we will reach profitability by the combination of our improved product portfilo,cost saving and new slick services,but at the end of the day who is left holding the can when everything goes pearshape again or as they say in China,"Shangwu-Chouti" when they revalue their worldwide money..
willair..

 

[WinstonWolfe]

That's the number one item,longterm you are best going it alone because
the story is always the same,they always tell you we will reach profitability by the combination of our improved product portfilo,cost saving and new slick services,but at the end of the day who is left holding the can when everything goes pearshape again or as they say in China,"Shangwu-Chouti" when they revalue their worldwide money..
willair..

hehehe.....reminds me of when I was a young lad, and every May holidays, we had to wash the house and clean the gutters on the family home. and younger bro thought it was funny to remove the ladder when I was on the roof....until I eventually got down and chained him to the Hills hoist for an hour or so.

amazes me that so soon after GFC, so many think open positions in shares is like money in a (govt guaranteed) bank account

personally, i think risk management is so extremely important, there should be a course in high schools relating to recognising its many forms, and measuring it. maybe in a financial maths unit.

 

[crc_error]

I have noticed wealth magic is back. How many times was it 'the last one'? Peter is retiring from Seminars? hmmm

 

[Piston Broke]

there should be a course in high schools relating to recognising its many forms, and measuring it. maybe in a financial maths unit.

It's all there, there is a world of info, and who does'nt have "google" these days?
But the schools numbers are the same as everywhere else I reckon, 90% keep the seat warm, 5% learn a few things and 5% learn lots.
Isnt the % retire wealthy about the same, 5%?

 

[Peter Spann]

Entertaining but inaccurate

Now if there is one thing I’ve learned over my years of membership of this forum, the easiest way for a thread to die a natural death is for me not to respond or get involved – but there are so many inaccuracies in this one I can’t let it stand.

Winston – congratulations, at least you are trying to make an intelligent argument (even if it is dripping with cynicism) but your points are off base.
Here’s why...

The investment objective of the Managed Options Opportunities Fund (MOO) is “to produce a regular flow of income from shares and options so that investors might benefit from increased yield through distributions or add to potential capital growth through reinvesting those distributions”.

You can only judge the fund against this criteria and against its benchmark which as you have rightly pointed out is the ASX 50 accumulation index.

Against both these criteria the fund has performed well.

Debate about the relative merit of these things is irrelevant. It is only relevant to an investor considering putting money into the fund. They can decide for themselves whether that is appropriate to their needs as an investor and whether the objective of the fund is being met and suits them.

The maths here shows a fundamental misunderstanding of fund unit pricing and reporting.

Unusually, MOO seeks to distribute all income on a monthly basis. And these distributions have averaged 1.85 cents per unit per month which is well within the parameters of the 1% to 2% we claim the fund is capable of.

A buy-write strategy will most likely ALWAYS underperform a fast rising market but you’d know that if you were a potential investor because that’s in the PDS too!

Insulating my clients also does not show much intelligence on your part. I was not attempting by any stretch of the imagination to give a detailed explanation of technical analysis in the seminar.

MOO is a mechanical strategy. It is technical and fundamental neutral. It only seeks to invest in shares that are showing relative strength compared to their peers. Hence the very brief explanation of technical analysis.

It does not intend to nor does it seek to have a view about the future direction of a share.

It is required to be, by mandate, more than 95% invested at all times. So staying in cash is simply not allowed by the funds investment guidelines so as fund manager even if I wanted to go to cash I can not.

So again, with respect your arguments about timing and technical analysis and your insults to my clients are all irrelevant.
And moreover it’s easy to be a great technical analyst in hindsight – did you see that trend before it occurred? Did you trade it? If so how much? Did you profit from it? No don’t bother because your answers are irrelevant. They would only be relevant if I was claiming that MOO would outperform any and all strategies that exist. It, like all funds, is only designed to achieve its mandated goals, and to outperform its benchmark, which it has.

More important it is deliberately simple. And that has upsides and downsides. We even comment that it may very well be possible for an independent investor following the same strategy to outperform. You are clearly claiming you are capable of this – good on you, but again that’s not the point.

The ONLY relevance is whether the construction of the fund suits you as an investor. Clearly it doesn’t but I reiterate my absolute comfort with that.

There are over 4,000 funds in Australian. Based on your comments in multiple threads I’m guessing none of them would suit you. Again that’s OK, but there are millions of investors in those funds and billions of dollars committed. To deride the entire industry is just silly.

CRC – I know you’re upset that your investment hasn’t performed the way you anticipated. I’m sorry. But whilst it may be my fault that the fund exists, and it may be my fault how it was promoted and it may be partially my fault (because I don’t manage it, Macquarie does) that it has underperformed your expectations, it is NOT my fault you invested in it. You have to take personal responsibility for that decision.

And as for Wealth Magic, I haven’t done it for 6 years. If Jonny Farnham can come back multiple times, why can’t I?

 

[crc_error]

Hi Peter, thank-you for your time to reply and clear things up.

Yes I do take responsibility for my choice, so in the end, the buck stops with me. But where I have a problem is the fact you promoted it as 'the investment of the decade'. I clearly recall you standing on the stage and said how property was it back in say 2000, but then it was these funds. I think you also indicated you put $2mil in yourself. So by the fact you promote yourself as 'knowledgable' and a 'expert', I followed your lead and paid for the advise as a club member.

From where I stand, I think your orginal investment plan with property and shares was a good one, but I think you have got too caught up with these complex funds which really seem to me as a investor to be a fee factory for freeman fox, as their performance has really been limited.

But I'm sure you have learnd allot yourself from these investments, as we all have. This is why your probably bringing back Wealth Magic! This was a good seminar, and you did something unique. Although I'm not sure if today there is much of a market for people paying $5k a pop for seminars.. but maybe there is!

But yes, your welcome to come back multipal times! But this time I will take less note of 'last time offer, wont be back etc' and 'investment of a lifetime' comments with all due respect

 

[cu@thetop]

And as for Wealth Magic, I haven’t done it for 6 years. If Jonny Farnham can come back multiple times, why can’t I?

Regrettably I did not attend Farnham's "final" tour otherwise when he came back out of mothballs I would I have tried to injunct him under the Trade Practices Act for misleading and deceptive conduct

Peter I see what you are saying but I think you miss the point- people put money in funds so they can forget about it. Many are not informed investors- but even intelligent people may have trouble determining exactly what the PDS means. A mandatory 95% holding tells me in times of volatility there was a shift of funds between different shareholding perhaps leading to "churn" on the fees (a gripe raised above). (I may be wrong as my share trade knowledge is below novice level). However when I see the tentacles of Macquarie involved I will run for cover due to their strategy which I see as follows: "We don't care if it makes money or not, we still get paid our fees in any event".

If I am a passive investor I only want investments that will reduce my capital if it is explained to me with big red letters- not hidden in the fine print in a PDS.

I accept people need to take responsibility for their decisions, but only where they have been fully informed of the risks by those who know more than they do.

 

[WinstonWolfe]

Now if there is one thing I’ve learned over my years of membership of this forum, the easiest way for a thread to die a natural death is for me not to respond or get involved

yeah a part of forum psych 101.

– but there are so many inaccuracies in this one I can’t let it stand.

Winston – congratulations, at least you are trying to make an intelligent argument (even if it is dripping with cynicism) but your points are off base.
Here’s why...
The investment objective of the Managed Options Opportunities Fund (MOO) is “to produce a regular flow of income from shares and options so that investors might benefit from increased yield through distributions or add to potential capital growth through reinvesting those distributions”.

which in plain language is, I want my capital to grow in value, whether by growth and/or income....and I don't want my capital to go backwards, because who wants to get stuck on the roof without a ladder in a storm.

You can only judge the fund against this criteria and against its benchmark which as you have rightly pointed out is the ASX 50 accumulation index.

Against both these criteria the fund has performed well.
Debate about the relative merit of these things is irrelevant.

not to the fund management industry, which accepts it is poor practice to benchmark strategies with different styles and risk profiles. but I suppose there's enough investors not interested in objective measure of risk adjusted performance.

It is only relevant to an investor considering putting money into the fund. They can decide for themselves whether that is appropriate to their needs as an investor and whether the objective of the fund is being met and suits them.

sure they can, with adequate understanding of risk adjusted reward.

The maths here shows a fundamental misunderstanding of fund unit pricing and reporting.
Unusually, MOO seeks to distribute all income on a monthly basis. And these distributions have averaged 1.85 cents per unit per month which is well within the parameters of the 1% to 2% we claim the fund is capable of.
A buy-write strategy will most likely ALWAYS underperform a fast rising market but you’d know that if you were a potential investor because that’s in the PDS too!

You mean I have to read the PDS, as well as listen to your presentation for 3.5 hours? Do you value all of your audience's time so?

Insulating my clients also does not show much intelligence on your part.

You mean the ones who independently and knowledgeably make their minds up about the contents of a PDS, without need of a 2 hour moo cow analogy? or the Macquarie Newton clients?

I was not attempting by any stretch of the imagination to give a detailed explanation of technical analysis in the seminar.

MOO is a mechanical strategy. It is technical and fundamental neutral. It only seeks to invest in shares that are showing relative strength compared to their peers.

by what criteria is 'relative strength' measured?

Hence the very brief explanation of technical analysis.
It does not intend to nor does it seek to have a view about the future direction of a share.

It is required to be, by mandate, more than 95% invested at all times. So staying in cash is simply not allowed by the funds investment guidelines so as fund manager even if I wanted to go to cash I can not.
So again, with respect your arguments about timing and technical analysis and your insults to my clients are all irrelevant.

Excuse me, I don't recall the 95% investment requirement during the Brisbane 3.5 hours. Can I suggest that gets included in the analogy next time.....maybe something like....even if all the cows get mad cow disease, and many die and the rest only produce half the milk, the farmer can't sell em. And if the cost of new cows has gone up when you have to replace your dead cows, you need to find cash from another income source apart from milking cows.

Do you recommend a margin loan for this fund Peter?

And moreover it’s easy to be a great technical analyst in hindsight – did you see that trend before it occurred? Did you trade it? If so how much? Did you profit from it? No don’t bother because your answers are irrelevant.

Why do you say your fund can do 1-2% income per month Peter? What part of the next 5 years does that refer to?

They would only be relevant if I was claiming that MOO would outperform any and all strategies that exist. It, like all funds, is only designed to achieve its mandated goals, and to outperform its benchmark, which it has.
More important it is deliberately simple. And that has upsides and downsides. We even comment that it may very well be possible for an independent investor following the same strategy to outperform. You are clearly claiming you are capable of this – good on you, but again that’s not the point.

Hey I am just 'clearly' saying 'I want my money back, at least!!!'.

The ONLY relevance is whether the construction of the fund suits you as an investor. Clearly it doesn’t but I reiterate my absolute comfort with that.
There are over 4,000 funds in Australian. Based on your comments in multiple threads I’m guessing none of them would suit you.

And how many of the 4000 suit you personally, excluding Macquarie Newton?

I thought the idea of outsourcing to a fund manager is that they are supposed to have a superior understanding of downside risk, and not only protect their client's capital against it, but leave a bit of cream in the deal after fees.

Again that’s OK, but there are millions of investors in those funds and billions of dollars committed. To deride the entire industry is just silly.

There's a lot more funds around now than pre compulsory super... go figure.

CRC – I know you’re upset that your investment hasn’t performed the way you anticipated. I’m sorry. But whilst it may be my fault that the fund exists, and it may be my fault how it was promoted and it may be partially my fault (because I don’t manage it, Macquarie does) that it has underperformed your expectations, it is NOT my fault you invested in it. You have to take personal responsibility for that decision.
And as for Wealth Magic, I haven’t done it for 6 years. If Jonny Farnham can come back multiple times, why can’t I?

Listen Peter, you can adopt whatever persona you want in your presentations, reveal as much or as little as you like, spin it this way and that, and take as much of your audience's time. I don't care now...as I won't be back. I understand your method, as I've seen it three times, and I say politely, no thanks. Cos I want to understand the downside risk better than you prioritize to present it. Why? cos I apparently prioritize managing downside risk more than you.....at least when managing my own money, and probably moreso when handling OPM.

Surely you understand when someone feels they've had their time wasted they don't appreciate it.

It's like paying to see a bad movie. and coming out, and thinking well that was a waste of 2 hours.....and then taking another 4 hours to get over the let down.

 

[crc_error]

Winston, what do you mean you had your time wasted? Isn't going to the seminar to get a overview of the product, and then if it interests you, you read the PDS, and then make up your mind if the product interest you? How is this wasted time? You will no doubt need to view many investments, before you find the right ones for you.

Obviously its Peters job to sell his products. So he will put a good spin on what he is selling.

But many novice investors go to Peters seminars, and they rely on his 'expert' advise given on the recommendation. This is what I did but found the funds to be duds. This is why I feel I may as well make my own 'educated' decisions, and not pay the 4% entry and management fees, and I'll automatically be ahead.

To me, the Moo fund performance to date shows that buy write is not a license to print money. It essentially limits the upside due to the calls written, but has all the down side of owning the stock. But Novice investors wont know this.

 

[willair]

It's like paying to see a bad movie. and coming out, and thinking well that was a waste of 2 hours.....and then taking another 4 hours to get over the let down.

Every time i see a bad movie i just go back too the front desk and get my money back never a problem,next time just walk up too the soap box in front of everyone and say you want it in cash now,they don't know how to handle someone like that,because they are used to getting their own way,..willair..http://www.theaustralian.com.au/bus...-forced-on-funds/story-e6frg8zx-1225853393014

 

[Aaron Sice]

if the fund performs as promised i see no problem with it.

imagine being a cashed up BB with $1mil cash to invest and staring down the barrell of 1-2% per month income.....no offence to any of the regulars, but with the comparitively minimal risk a buy-write strategy entails, that's pretty bl**dy enticing - would you knock back $10-$20k month? i sure as sin wouldn't.

 

[crc_error]

yeh but in reality you might get your 1 - 2% per month, but your capital could be eroded in the process. and this is the catch which people need to be aware before investing into this fund.. if they are happy with that risk, then all is cool