what do you think of peter spanns new course

[Aaron Sice]

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

but when you're investing for cashflow, the principle value can't be taken tinto account - unless it's leveraged. now don't just quote that bit and argue with me - read on.

if you are getting 10% on $10,000 per annum, then as long as the 10% on $10,000 holds up, it doesn't matter if the principle goes down to $5000.

in RE - this works great - the value of the asset can go up or down but generally the initial purchase yield will hold and/or get better. the issue with shares is, the call value relates directly to the share price, so income is reduced if the share price reduces.

pick a stable stock and run. hard to do, but then, stable stocks return the least in option premium - generally.

 

[WinstonWolfe]

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.

There's seminars and seminars. If I devote 2 hours in commute and 4 hours in listening, I kind of expect a bit more than a broadbrush overview of a PDS I can download. Why? because I place a reasonably high value on my time.

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

I don't have an issue with balanced time efficient spin that delivers the meat.

But many novice investors go to Peters seminars,

crc!!!...I hope you aren't alluding Peter selectively attracts novice investors.

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.

Yeah, you want to give the education thing a go....which means seeking out people who genuinely educate, well.

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.

Novice investors don't know a lot, especially how to interpret a PDS, and identify the risks taken to chase the reward.....but Peter isn't targeting novice investors, is he?

 

[Peter Spann]

Further

Hi again

This stuff is really hard to respond to because most of it is personal opinion with no thought to balance – the upside and downside of a forum.

We do not deliberately target novice investors however I will accept a large proportion of people who invest with us could be described as “novice”. Increasingly I have found that more and more of our clients are “sophisticated investors”. Hence the move away from seminars.

But in the end most people who invest in managed funds are by nature novice investors in the same way that most people who fly on Jetstar are infrequent and often first time travellers. We provide a service to those clients and I for one am proud of what we do. I’m not proud of everything we have sold but those things are actually in the minority.

I don’t believe the MOO Seminars were a précis of the PDS – they were an overview of the strategy which goes hand in hand with the other resources we have to offer.

And they were exceptionally well received – in fact I would confidently say we got the best response to anything we have done in years. Winston, if you didn’t like it I’ll personally send you a cheque with a refund – no problems. We don’t want to work with people who don’t want to work with us.

Most clients (and remember we have over 3,000 active investors) go on to trade it themselves (we have 7 times as much direct investment as we do into the fund) but I am personally a fund manager so of course my bias is that direction.

And yes you MUST read and understand a PDS before investing in ANY product.

I am not saying for one second that everybody dose that but we can’t sit there with a gun to your head and watch whilst you do so.

This is a fundamental principal of investing – it’s in every “Important Information” statement we make.

Buffett says “Never invest in something you don’t understand” and more than anything I think that rule is playing out in this conversation. The only way to understand a managed fund is to read the PDS.

It is educational and interesting to read PDS’s, and nobody should ever consider investing unless they understand the underlying strategy.

If you look at the MOO PDS (which is just 25 pages and in plain English) there is:
· An opening statement that says it is important that investors understand the fund before investing and seek professional advice if they don’t (page 2)
· Two full pages in simple English on the investment strategy including an example which has the three possible outcomes (a win, a loss and a breakeven – all paragraphs are the same length).
· A table which shows under what circumstances the fund will out and underperform (page 7) – not buried and not fine print
· One page on the benefits of investing (page 9)
· Two pages on the risks (pages 10 and 11)
· Four pages on fees including worked examples, high and low cases and full disclosure

It was based on an award winning PDS produced by another fund manager which won because of its simplicity, disclosure and balance. That was our goal – industry best practice.

Many people will know Warren Buffett is my hero and he’s the one who coined the two rules of investing referred to here – capital preservation.

But Winston what you are asking for is near impossible – capital preservation in all circumstances. The Buy Write has a capital preservation strategy in that the yield helps off-set risk – if that’s not good enough for you fine, but the only strategy that mechanically preserves capital is cash.

In order to actively preserve capital you have to apply a level of skill and that is a variable that has, as much as possible, been dialled out of our MOO Fund – the goal was to make it as simple and mechanical as possible. A skill based requirement adds a whole new level of risk into any managed investment and we wanted to avoid that.

It is ONLY reasonable to expect a fund manager to actively preserve capital when that is mandated in their investment approach. If not then technically it would be illegal!

We are required under our mandate to remain 95% invested at all times. There are actually a lot of benefits to that in terms of consistency, mechanics, and most particularly tax treatment.

So if you don’t want to invest in a fund that has that mandate, don’t! Simple as that.

Yes, a LOT of investors buy into funds without understanding them. That’s NOT my fault. All I can do is to try to make our fund, our PDS, and our marketing as simple, transparent and easy to understand as possible.

Out of the 4,000 odd funds available in Australia 19 suit me to answer your question – that’s how many I have money invested in.

Understandably given what has happened in the past couple of years everybody’s focus is on the negative. It is almost astounding to realise that the fund could actually go up in value! Amazing I know.

 

[crc_error]

Hi peter, I just had a look at your GEM funds, and have noticed returns are 12-15% for the last 12 months.

This result is low if you consider the performance of ASX200, however could we conclude the returns on these funds will be more consistant rather than big ups and downs?

Would you expect a return of 15% even in say negative ASX200 years?

 

[qaz]

Many people will know Warren Buffett is my hero and he’s the one who coined the two rules of investing referred to here – capital preservation.

Off topic I know (you look like you could use a break ), but what did you think of the new Warren Buffet book Snowball? Had a chance to read it yet?

 

[Peter Spann]

Hi peter, I just had a look at your GEM funds, and have noticed returns are 12-15% for the last 12 months.

This result is low if you consider the performance of ASX200, however could we conclude the returns on these funds will be more consistant rather than big ups and downs?

Would you expect a return of 15% even in say negative ASX200 years?

Consistency is the goal of Maximiser and Generator (but not necessarily Emergent) so to some degree your statement is correct.

Unfortunately no, it cannot be assumed they will perform at +15% in a falling market.

Actually this is illustrative from the point of view of being fully invested or otherwise.

These funds are mandated to go to cash and stay in cash against certain triggers. So they actually stayed in cash for the first part of the rise in the equity markets.

This illustrates the “dangers” of not being fully invested. It means the investors were protected from some of the downside but also have missed out on some of the upside.

So the 12% to 15% you have mentioned looks bad but in fact they didn't go down as much as the market, so are coming off a higher base.

This means they have outperformed their benchmarks – not significantly but still. What this means is overall there was virtually no positive or negative impact from going to cash. In fact there was a negative - it did cost the fund a "lot" of money in the buy sell spread (about 3% and in fee terms that's significant).

Which helped me become further convinced of the argument for near full investment under any circumstances.

 

[Peter Spann]

Off topic I know (you look like you could use a break ), but what did you think of the new Warren Buffet book Snowball? Had a chance to read it yet?

I haven't had the chance to scratch myself lately let alone read! It's stacked up in my Kindle but I'll probably have an iPad by the time I get to it!

 

[Aaron Sice]

But Winston what you are asking for is near impossible – capital preservation in all circumstances. The Buy Write has a capital preservation strategy in that the yield helps off-set risk – if that’s not good enough for you fine, but the only strategy that mechanically preserves capital is cash.

now add inflation tot he mix - there's NO PHYSICAL way of 100% preserving one's capital unless the preservation involves some sort of profit on said capital.

 

[WinstonWolfe]

Winston, if you didn’t like it I’ll personally send you a cheque with a refund – no problems. We don’t want to work with people who don’t want to work with us.

The money in this instance is trivial Peter, it is my time and energy....which you attach less value to than I....which is unnecessary, don't you think?

If I had always thought you were of Henry Kaye calibre, I wouldn't have attended your seminar. However, I have in the past thought you were a smart guy with a conscience (affected by Marist brothers no less) who wrote some good stuff, about property. And I can't help but think you could do so much better today.

All the rest, including BlueCard's temporary loss of sanity , has to do with what any good and worthy fund manager would concern themselves with - ensuring their investors are not left muddy minded about the relationship between a fund's risk and reward. Gee you could even collect a pool room full of industry awards for transparency and client education Peter, if you set your mind to it.

As you point out in your PDS, the MOO fund is medium to high risk. I say high risk is a concept you could direct your considerable communication skills in dumbing down complex topics towards, to the benefit of the many novice investors who attend your seminars......and ultimately yourself.....because more cows means more milk, which means more cream, to skim.

 

[Peter Spann]

The money in this instance is trivial Peter, it is my time and energy....which you attach less value to than I....which is unnecessary, don't you think?

I don't believe we can get past your cynicism – as I said these were some of our best received seminars in a long time and you ignore the fact that 50% of the room were long term experienced clients who also loved the event.

In the end you can't please all the people all the time.

I think I did a good job and enjoyed presenting the seminar and the positive feedback we received. I am sorry if you didn’t share that positivity.

And as I have said I am very confident that anybody who read the PDS would understand the risks involved in the investment.

 

[cu@thetop]

Hey- I saw the Red Ferrari in the photo gallery today and was reminded of this thread. How is the fund that all the hoo haa was about travelling nowadays?. I'm a bit of a share spaz so any help is appreciated.