Why didnt Peter Spann recommend Cash?

[Bill.L]

Hi all,

Market follower,

I think you are a Peter Spann supporter.

That is one of the funniest things I have read on this forum for years!!

Why don't you go and read some other threads involving Peter and myself.

What I'm so aghast about is the belief that what Peter says is more than his opinion. That is it, his opinion, end of story.

Nobody knows what is going to happen, many think they know, but are really guessing.

In the past I have bagged some of the investments suggested by Peter based on probabilities from past history, (my opinion, my guess).

To think and post that Peters opinion is somehow 'sacrosanct' and that he should have known "the secret", therefore was always correct, is a total exercise in naievety.

By the way, my opinion on the macquarie fund has not changed

bye

 

[crc_error]

cash doesnt pay fat trailing commissions.

and doesn't pay 4% entry fees?

 

[steveadl]

We all know property is overvalued, and people are streatched to buy it, property is a pyramid scheme which rely's on people constantly coming in at the bottom pushing up prices. Once the supply of people dries up, then property will fall in value. Look at what happened in the US? Each state has recorded property value falls over the last 12 months.

Cash has proven to be king, paying as high as 8.5%PA until recently, and your capital was preserved. Not so with shares, and property.

Mate, speak for your own property. Cash certainly wouldn't have been king in my book! But I'm sure you know better.

 

[ffc1883_1996]

I think you are a Peter Spann supporter.

Market Follower, I think you posted in this thread using more than one nickname.

Am I right?

 

[Peter Spann]

Why didn’t I recommend cash?

Firstly it’s against my investing philosophy which should be well known to our clients.

Simply put I believe investing is about establishing a plan to continuously invest regardless of market conditions.

When you “buy in” to somebody’s philosophy you have to take the good with the bad – even Buffett says that and goes on to nominate a number of reasons why his company could and does underperform other investments.

This does not mean I don't understand the impact that the market is having on people - it's hurting, but that you have to decide on a strategy and stick to it.

I believe generally that cash investments sub-optimise performance in the long term. It is almost impossible to pick the moment to go in and out.

BTW – there are MANY cash funds offering those commissions which some of you believe is my sole motivation for existence.

Why didn’t I “see it coming”?

The Australian share market was NOT over heated. Not even in hindsight. Forward PE’s were about 14 to 16 times, our economy was and still is good and profits and sales were up in most sectors.

I did see a sell off – in the order of 10% to 15% which I stated publically - and that’s certainly not enough to warrant going to cash. I did not see 25% to 30% coming but who (apart from CRC) did? I did say a number of times the next recession would be brought about in part by US debt, but I mean seriously, virtually nobody thought the US credit crisis would spread so far, so wide so fast.

What is happening in the markets now is so unprecedented I don’t think anybody can do better than guess in the short term what is going to happen.

As an adviser making a call to go to cash is a rock and a hard place decision – if the market goes down further nobody will give you credit, if it rebounds most people will be upset.

Our clients are being sensible – they are riding out the storm, adjusting their strategy where necessary and making decisions around their own circumstances.

20/20 hindsight trading is the easiest, most profitable of all - if only we all had a time machine!

 

[AUSPROP...]

The Australian share market was NOT over heated. Not even in hindsight. Forward PE’s were about 14 to 16 times, our economy was and still is good and profits and sales were up in most sectors.

so you see the market as a bargain now then?

 

[crc_error]

thank-you for your reply.. Peter.. do you see that we are now at the bottom of this correction, or do you see the problems in the US getting worse with more falls to come?

I have read somewhere that the US is printing money to pay for their buy-outs, and that hyper inflation is expected to kick in over the comming years.. they went as far as saying the whole US economy could go bankrupt.

From where I'm standing, things are looking bleak at present, and the best place for your money at present would be in your offset account..

 

[Peter Spann]

so you see the market as a bargain now then?

Yes and no.
Yes, I do see it as a bargain, especially for quality blue chips that have been oversold, but that statement depends entirely on your appetite for risk and your perceived time frame for investing.
I can’t imagine how, in ten years time I would be unhappy with the prices I would pay now for these stocks but we’ll be in for a rough ride in the near future.

 

[Peter Spann]

thank-you for your reply.. Peter.. do you see that we are now at the bottom of this correction, or do you see the problems in the US getting worse with more falls to come?

I have read somewhere that the US is printing money to pay for their buy-outs, and that hyper inflation is expected to kick in over the comming years.. they went as far as saying the whole US economy could go bankrupt.

From where I'm standing, things are looking bleak at present, and the best place for your money at present would be in your offset account..

I must confess I am confused – you start a thread to deride my opinion and now ask for it?

To be honest I think it’s anybody’s guess what’s going to happen in the short term in the US. As I said before this is so unprecedented I don’t think anybody can say with confidence.

Right at the minute it looks like deflation might be likely for the US but that could change in an instant.

The US economy is VERY stretched and while bankruptcy is too extreme I would not be confident about its short term future, but it will bounce back – eventually.

If I had a lot of cash I would be keeping it but I would also be selectively buying as well – what you do now totally depends on your appetite for risk and your time frame for investing.

 

[MarkB]

Something I have learned about funds managers in recent months is that alot of them have a modus operandi which they stick to.

As an example, an aggressive fund may always keep 70% or more exposure to "growth" assets, even at times when those assets are in for a rough trot. And an income oriented fund might have the inverse ratio (only 30% in growth assets) - even during times of bull markets.

Otoh, some funds (and these appear to be in the minority) have alot of flexibility and they'll dial down their exposure to growth assets at certain times (in favour of income / defensive assets like cash and bonds) and, at other times, they'll dial up the exposure considerably.

Ultimately, whichever sort of fund you're in, you should know how it works and in particular how it reconciles with your attitudes towards risk and investing.

 

[Andrew_A]

Peter, I'm sure you have noticed what Warren Buffett is doing at the moment, and the huge one day jump in BRK recently, just amazing I reckon. He's still performing pretty well I reckon, retirement in 2050?

Solid vote for the 'world in not ending for the US economy' play I reckon.

 

[Peter Spann]

Peter, I'm sure you have noticed what Warren Buffett is doing at the moment, and the huge one day jump in BRK recently, just amazing I reckon. He's still performing pretty well I reckon, retirement in 2050?

Solid vote for the 'world in not ending for the US economy' play I reckon.

Hard to miss! $6bil here, $7.5bil there, $25bil ready to go. That ain't chump change.

I'd have to agree it's a huge vote in confidence - but he is a long term player.

I hadn't been tracking the share price (even though I own a few) but all I can say is "Wow - may he live forever!"

 

[evand]

You think he wouldn't be buying green bananas.

Legend is a word that gets thrown around a lot these days, mostly undeserved. In Warrens case, its appropriate.

I'd have to agree it's a huge vote in confidence - but he is a long term player.

 

[jagmcmanus]

I think this thread may have gone off topic a bit...

Anyway, I was at the doctors the other day and happened to flick through a copy of the bulletin or perhaps it was investor magazine.

It featured 'experts' from the big 4 banks plus craig james from comsec. They all gave their take on the market for 2008. The article was from Nov. so the sub prime crash had already occured in August (although not to the extent it would).

Each one claimed the market would be in excess of 6800 with most over 7000, craig james claimed the market would hit 7400.

Now these aren't spruikers. These are the people employed by our largest banks.

It made me laugh out loud reading that "the market would steam ahead and produce another bumper year for super funds".

I had a large debt that came due at the end of Jan 2008. I pretty much got out of the market and left about 10% of my previous portfolio in.

I am in no way claiming I predicted the market - I put it down to luck, and the fact I had no money to get back in as the market slid further and further.

I really wonder if I would have had the discipline to get out when the market turned south later in the year.

 

[crc_error]

jagmcmanus, thats the point I'm trying to make... Its not just Peter Spann I'm having a go at, its all these so called 'experts'. People look to them for 'advise' and they get paid for it in a very handsome way.. yet their predictions are worthless.

If any other profession got it so wrong, they would be fired.

At least I'll give credit to Mr Spann, he is encouraging people to invest, through good and bad times, and I guess this message is a good one.

 

[Ausprop]

jagmcmanus, thats the point I'm trying to make... Its not just Peter Spann I'm having a go at, its all these so called 'experts'. People look to them for 'advise' and they get paid for it in a very handsome way.. yet their predictions are worthless.

If any other profession got it so wrong, they would be fired.

At least I'll give credit to Mr Spann, he is encouraging people to invest, through good and bad times, and I guess this message is a good one.

i think you are expecting too much. if they were that great they would just tell you next weeks lotto numbers

 

[ffc1883_1996]

thank-you for your reply.. Peter.. do you see that we are now at the bottom of this correction, or do you see the problems in the US getting worse with more falls to come?

jagmcmanus, thats the point I'm trying to make... Its not just Peter Spann I'm having a go at, its all these so called 'experts'. People look to them for 'advise' and they get paid for it in a very handsome way.. yet their predictions are worthless.

CRC, You just did it again! You asked for Peter's opinion and then you stated that it's "worthless". What are you hoping to achieve?

 

[WinstonWolfe]

Hard to miss! $6bil here, $7.5bil there, $25bil ready to go. That ain't chump change.

I'd have to agree it's a huge vote in confidence - but he is a long term player.

I hadn't been tracking the share price (even though I own a few) but all I can say is "Wow - may he live forever!"

a vote of confidence in central banks to bend over backwards and guarantee the socialization of private losses.

which just shows central bankers don't value capital like the private sector...cos they get it free.

 

[crc_error]

CRC, You just did it again! You asked for Peter's opinion and then you stated that it's "worthless". What are you hoping to achieve?

Peters opinion is just that, an opinion. Its not gospel. Just like I have a yarn with a taxi driver, I also have a yarn with Peter.. Although Peter should give a more educated guess, but certainly it doesn't mean it will pan out that way.. in 6 months time, everyone could be back to normal and a new bull run commences, you just don't know..

I'm not going to base my investing decisions on so called expert opinions. I will listen to what is said, and make my own decisions.. and take responsibility for them as well. I will also question if paying these people for their advise is worth it..

But Peter does say you should invest on a regular basis regardless of market conditions, this I do agree with him, as no one really knows what will happen.. if Peter was so confident in his own predictions, then he probably would be saying when to get in and out of cash.. fact remains, no one can pick markets, not even Mr Spann.

 

[keithj]

jagmcmanus, thats the point I'm trying to make... Its not just Peter Spann I'm having a go at, its all these so called 'experts'. People look to them for 'advise' and they get paid for it in a very handsome way.. yet their predictions are worthless.

You appear to want black & white answers..... most forecasters work on a 'balance of probabilities' basis. As Peter said above, with the info he had available he recommended to stay invested in equities. No smart forecaster would ever make 100% guarantees about anything. And anyone who expects forecasters to be right 100% of the time is naive.

If any other profession got it so wrong, they would be fired.

ummm.... weather forecasters, doctors, politicians, economists,.....