Slack Investor | How to invest successfully without too much effort

Optimism

Slack Investor has always been on the “glass half full” side of life – but acknowledges the decided benefits of pessimism.

The nice part about being a pessimist is that you are constantly being either proven right or pleasantly surprised.
George F. Will – from source

Slack Investor would much rather hold shares than not … and be involved with companies that are growing and part of the economy than using more passive investments such as cash. However, he must keep his eyes open occasionally – and keep a watch on major market trends.

ASX200 Weekly chart – From incrediblecharts.com

Let’s firstly have a look at the markets that Slack Investor is involved in. The ASX200, FTSE100 and S&P500 are all in a distinctive downtrend. Typical is the ASX200 weekly chart shown above. This downtrend may go further but Slack Investor is seeing some signs for optimism – At least in the Australian market.

There is a high level of uncertainty in global markets at present. Europe has Brexit and Italy. The US has investigations into Donald Trump’s election campaign. China has the threat of a trade war with the US. But my sense is that the market has become risk averse rather than fearful. There is no sign of panic selling as yet. But investors are clearly on the defensive and prepared to sell off vulnerable stocks.
Colin Twiggs – Trading Diary

But, all is not lost … Despite large amounts of emotion in the market. The fundamentals of emerging economies are still good. Vanguard estimates that a recession in 2019 is not likely – that the more likely scenario is a slowdown in growth, led by the U.S. and China.

Shane Oliver, head of investment strategy at AMP Capital, said “history tells us” a major bear market requires a recession in the U.S., but that is not happening. He advises that U.S. monetary conditions are “far from tight,” with fiscal stimulus still in play and no signs of excessive market conditions that normally precede a recession.

Marcus Padley is also on on the side of the optimists and concludes that the current situation in the ASX is more of an opportunity than a disaster. He notes that average correction for Australian markets is 13.72% and takes 109 days. The current correction has been 13.2% and it has taken 59 days -Brutal! On that basis, we have already completed an average correction in half the usual time. These corrections are never fun and test even the most strident of investor. But Slack Investor IS an investor much more than he is a trader.

Slack Investor has already had a hard look at his portfolio … and said goodbye to some … and is hanging on to most – as he thinks that most of his individual shares represent reasonable value at current prices. I’m sitting tight for now with a bit of cash in the bank should things turn around, Sadly, more decisions will have to be made at the end of the month – but for now, I am grateful for the good things in life … Happy Christmas to you all.

November 2018 – End of Month Update … and Hayne … You my Man!

Slack Investor remains IN for US, UK Index Funds. The jury is still out for Australian index shares.

Nervousness has crept into all markets as uncertainty on world trade (Thanks Donald!), Brexit, future US rate rises, and stock valuations prevail. The FTSE 100 is down 2.1% and S&P 500 is up 1.8% for the month.

The Australian ASX 200 is down a further 2.8% to 5667 and has slipped below its designated monthly stop loss of 5724. This is usually an automatic sell for the ASX 200 index. However, Slack Investor is hesitant to trade against momentum and the orange buffoon (President Trump) and President Xi from China have just come to a “Partial Truce” on their trade war for 90 days at the G20 summit. This “temporary certainty” will be good for world stocks and a bounce in most stock markets will probably happen on Monday 3 December – ASX 200 you have had a temporary reprieve!

All Index pages and charts have been updated to reflect the monthly changes – (ASX Index, UK Index, US Index).

Hayne Train Eases into the Station

Slack Investor Hero Royal Commisioner Kenneth Hayne – modified from SMH

Established Slack Investor Hero Royal Commissioner Kenneth Hayne wraps up his enquiry into the finance sector after 8 grueling months and 770 000 documents. and concludes his epic and momentous gathering of evidence. His interim report has suggested big changes to a flabby and rorting finance industry.

Through persistent effort, a new Slack Investor rolled gold Hero has also emerged. Senior counsel assisting the commission, Rowena Orr QC has covered herself with glory from the Royal Commission fray (With a special mention to her alternate senior counsel Michael Hodge, QC).

Through persistent effort and an understated forensic style , Ms Orr has been responsible for grilling a parade of witnesses to reveal a shabby record of commissions, bribery, unfair payments, improper board oversight and rorts that have brought shame to the Australian Finance Industry.

… marshalling her facts patiently, leaving people in the witness box with nowhere to run from her logic, where they don’t know they’ve been filleted until they leave the room – from The Guardian

For example, When Ms Orr cross interviewed the Chief risk officer of ANZ’s digital and wealth arms, Kylie Rixon, about the raft of bad advice given to customers by bank financial advisors.

“One in every 20 pieces of advice given to customers failed to meet the requirement that the advice was likely to be in the best interest of the client?” Ms Orr asked.

“For the sample selected, yes that’s correct,” Ms Rixon said.

Later, Ms Orr asked: “What’s sampled in an audit is meant to be representative of what’s happening across the business?”

“Yes, that’s true,” Ms Rixon replied. – from abc News

Power to your Ms Orr. With hearings finalized, Commissioner Hayne and his team withdraw temporarily from the limelight to write their report. Slack Investor looks forward to their recommendations.

After a relationship breakup – When is the right time to start dating again?

Coco Chanel in 1920 ( ) – From bestlifeonline.com

Lets just get this out there … Slack Investor knows just the bare minimum on human relationships and isn’t qualified to give advice on matters of the heart. The only piece of useful knowledge that I can pass on is from, designer and business woman, Coco Chanel.

“As long as you know most men are like children, you know everything.” — Coco Chanel (1883-1971) from source

It has been a torrid last couple of months in the share market and Slack Investor has had to say goodbye to some of his old friends (Stocks that I have had a relationship with!) Last post I briefly looked at when its time to break up with individual stocks – this is something Slack Investor always finds a hard thing to do as I have to overcome the “confirmation bias” that tells me that I did the right thing in picking them in the first place – and, taking a loss sometimes is never pleasant. However, I steel myself with the conviction that it is the overall result that counts and to do that, you must associate with some winners

Let’s have a look at the overall Australian market. The economy is running along fine and the All Ordinaries is close to its long-term average value PE Ratio of 15 (15.6 Australian Financial Review 16/11/18). The US pundits are starting to talk about a possible recession in couple of years time – but this is now – and Slack Investor still whiffs (but does not know!) that the current downturn is an ordinary correction in the charts due to a change in sentiment. In the UK, things look a bit of a Brexit mess – so expect more bad news there.

I start with a watchlist of 15-20 companies that I like – or have been recommended in the press or internet. I then go to the most excellent site marketscreener.com where you can access a variety of analyst data on world stocks by free registration – entering your stock symbol and then going to the financials tab. The thing I love about this site is the predictive data for the next couple of years. These figures are just forecasts as they are based upon the companies sales predictions for itself … but a good company won’t try to “gild the lily” too much on its predictions of earnings.

For each company, I write down their future PE’s, yield and Return on Equity (ROE). ROE is really important and should be 15 or more. A company must have increasing sales, an increasing history of dividends and manageable debt. I setup a group of companies that have reasonable numbers and put them in a table (… like below!)

Company	Symbol	Future PE	Future Yield %	Future ROE	Sales Inc	Divdnd Inc	Debt	Chart Momtm
		2019/2020	2019/2020	2019/2020	EPS	History		Chge(Wk)
Costa Group	CGC	23/20	2.4/2.7	18/19	YES	YES	OK	YES
Macquarie Group	MQG	14/14	4.7/4.9	17/17	YES	YES	OK	YES
Service Stream	SSM	13/11	5.1/5.7	23/24	YES	YES	OK	YES
Amcor	AMC	15/12	5.0/5.3	67/71	YES	YES	OK	YES
Reece	REH	20/19	2.2/2.3	15/14	YES	YES	OK	YES

That is the” fundamental” part of my analysis … and then I wait patiently, watching the weekly charts until there is a change in momentum on a stock – this is the “technical” part of the analysis. I will try to buy the company as soon as I can after this momentum change … but set a stop loss just In case I am wrong!

There are many chart indicators that show a change in momentum. I like using the 11-week Directional Movement Index (ADX) on a weekly chart – or a breakthrough of a downward trend line. Examples of changes in momentum are shown below on the weekly charts of Amcor (AMC) and Costa Group (CGC)

This is not advice … But I have recently bought these companies and will report back in a year as to how things have worked out.

I have also admired the US Technology Index (NASDAQ) from afar for a long time – but never had a chance to buy it. It is available in Australia as a Beta Shares ETF (NDQ). However, NDQ is still moving south and has yet to break out of its downward trend.

Technically speaking, maybe it nearly is time to start dating again!

October 2018 – End of Month Update … and corrections

Slack Investor remains IN for US, UK and Australian index shares.

What a splash in the face this month was – with many rushing for the exits. All Slack Investor watched markets took the cold bath with big price drops all round. The ASX 200 index down 6.1%, the FTSE 100 -5.1% and S&P 500 -6.9%. However, this sudden downturn didn’t breach any of Slack Investor stop losses and he remains idle for another month on his index stocks.

It is a different story on his individual stocks though, as many took a sharp price dive and the portfolio needs a bit of re-assessment. I trade individual stocks in a different way to the index stocks and it isn’t as rules-based.

Each individual stock has the advantage that it can be assessed as a business. A breach of the monthly stop loss for individual stocks means that I have to look at each company and make a decision on whether to keep – or to ditch! The first thing I do is take a close look at the business (current price, PE, yield, future earnings, return on equity). I then ask myself ” would I buy the share at this price? If so, I then look at the current momentum of the stock and, if it is still heading south, then I think that there is something going on that I don’t understand – and try to sell at the next opportunity.

All Index pages and charts have been updated to reflect the monthly changes – (ASX Index, UK Index, US Index).

Department of Corrections – Part 2

The Trumpkin might like to lay off blame for the latest slump in US Stocks to the Federal Bank – but, in the same way that his tax cuts were good for the US economy, his talking up of a trade war and tariffs with China is causing concern in the US market – From News.com.au

The newspapers are full of scary stories about the stock market when prices take a sharp dip. Corrections are normal and just part of share trading – the market ramps up a little fast due to “excitement” and then quickly falls as people “panic sell”. Slack Investor discussed corrections earlier this year and doesn’t like to get involved with these short term trends. However, I will act if I must.

It is reassuring to listen to experienced investors such as Colin Twiggs, of Incredible Charts fame, who reflects on this most recent correction.

Truth is, there is no single reason that could justify the dramatic market falls. … Market sentiment has simply shifted. The scale has tipped and more investors are taking profits than new money coming into the market. When that happens, prices fall. And falling prices become a self-fulfilling prophecy, scaring off new investors and panicking investors with a short-term outlook. – The wisdom of Colin Twiggs

Chart showing the regular dips in stock market price over the past 5 years – ASX 200 and MSCI Wolrld index – Despite corrections, the trend is up. This is still a bull market! – from Shane Oliver, Switzer Daily

Slack Investor does not have a short term outlook. The share trading art is to stay invested in a stock when there is a relatively short-term correction – and to get out when there are more serious issues with the economy. Shane Oliver again

Corrections in the order of 5-15% are normal; in the absence of recession, a deep bear market is unlikely – From Shane Oliver AMP Capital

OK then … I’m heading back to the couch … but not before taking the opportunity to do a full review of my individual portfolio stocks this month. It might free up some capital to get into some bargains that the correction has revealed.

The Slack Way to Financial Freedom: Episode 1 – Saving

Generational wisdom … Homer style. – From Source (May be subject to copyright)

Now Slack Investor admits to being a lucky bloke. and recognizes that many are doing it tough and just haven’t got the income to engage on a savings program. This post is not for you, and I hope that your fortunes will turn around soon. This post is the first in a series – for people with choices on how they spend their income.

Save more than you spend … Duh! – Obvious you would think – Sorry Homer, It is worth doing!

According to a June 2018 Members Equity survey , of Australian households, less than half of them are putting something into the savings bucket each month.

Households who ‘typically spend less than they
earn each month’ (i.e. savers) eased further to 48%

Not only are the savers decreasing, but at the other end of the scale, the number of households that are in financial distress is increasing. The ME Bank report shows that more Australians are overspending – households who ‘typically spend all of their income and more’ increased 3 points to 11% during the six months to June 2018. Cripes!

Now the hard truth is out there … what can you do? Slack investor doesn’t pretend to have invented how to save. Any financial website will contain similar information. The advice is sound because it works. Just get started … this is the first step.

“Go and have a long hard look at yourself in the hall of mirrors” Roy and HG

Analyze your financial situation … Over a month or two, see what is coming in and what is going out. Many banking apps assign categories for your monthly spending in your statements. A pen and paper would do, but free software makes this task easy ( e.g. for PC, MS Money Sunset (Slack Investor way); or Phone: Pocketbook). Track your financial habits – you have to get an idea of what is going on in your financial world first … and then, take control.

2. Set yourself some savings goals. ...

Now the interesting part, and this is the “Art of the Possible”. Be realistic here and set goals that you can actually get done. Unless you can you work more hours or get an additional job, it is difficult to adjust the income side. The real power you have is over your spending. There are some things that you just have to spend – Rent, Bills, food etc. However, it is the discretionary things that need looking at. It doesn’t mean that you cant have fun anymore … just less expensive fun!

“The purpose of discipline is to live more fully, not less.” Master Po – From Kung Fu (see below)

The objective is to build up some savings – for a house or retirement. Naturally, if you have any personal debt (Credit Cards, Personal loans) you should get rid of this first. Keep your savings account separate from all others. The best savings method is what works with you – It can be a jar, or a monthly transfer from your transaction account to your savings account. Young Slack investor always found saving easier if he didn’t see the money. – A direct debit just after payday into your savings account will get this done.

What you should aim for when you get your first full-time job is to set up good habits. There is a good “Rule of Thumb” known as the 50:30:20 rule where you divide up your take home salary into parts – 50% for essentials, 30% for discretionary items (Fun!) and 20% for saving. There is a little bit of mathematics to back up this 20% savings rate. The Money Under Thirty table calculates that it will take 41 years of 20% saving (earning 5%) to get your savings to 25 times your inflation adjusted income – This is the amount that is generally agreed to be sustainable using investment earnings to replace your income, using the 4% rule.

Do not despair with these calculations, they are just a rough guide – and there are some things going in your favour as:

You don’t need to replace your whole income in retirement – just enough to cover your yearly expenses.
Over the long term, investment return earnings would hopefully better than 5% – this will get you to your goal quicker.
In Australia, if you earn over $450 per month, your employer is already contributing 9.5% of your wages to your retirement savings (Superannuation).
In Australia, we are in the very fortunate to have Medicare, a universal health system that subsidises health care for Australian citizens and permanent residents.
Although Slack Investor encourages readers to aim for complete financial independence in retirement. Under current rules, for Australians, there is a “sweet spot” for home owning couples of $400 000 in superannuation savings. Using a mix of the Age Pension and Super, couples can have a retirement income of $52,395 per annum. This bizarre sweet spot will be expanded upon in later posts.

3. Build an emergency fund.

In June 2018, a significant majority of households (62%) continued to report that they ‘could not easily raise $3,000 for an emergency’ – a percentage point lower than six months ago … ME Bank survey

Do not be part of this 62%, it is so important to have that “cushion of cash” – from which your financial independence can build. You must be ready for the many unexpected things that life can throw at you -$3000 in an online account is a good start and will help you sleep better at night.

Youtube excerpt from Kung Fu (3:35) where wisdom is imparted from Master Po to Grasshopper (May be subject to copyright)

The next part of the Slack Way to Financial freedom is Investing. But, to paraphrase Master Po from the old TV Series (1972) Kung Fu

“Grasshopper … you are not ready for this … until you have mastered saving”

PS … If the discipline of saving gets too much, I recommend a bit of Youtube Roy and HG magic (12:39) here for light relief.

September 2018 – End of Month Update … and 2018 SPIVA Results

Slack Investor remains IN for US, UK and Australian index shares.

Justice Kenneth Madison Hayne reflects on the “Inexcusable greed and dishonesty” shown by segments of the finance industry – Image modified from the Brisbane Times

September heralds a change of season and there is some nervousness creeping into the Australian market (ASX 200 index -1.8%) as the Banking sector continues reeling from the interim report on the finance sector by Royal Commissioner and Slack Investor Hero – Kenneth Hayne . Wall St is steady (S&P 500 +0.4%) and the FTSE 100 has bounced back a little (+1.0%). However, the Slack Investor stop losses are not breached and decisions are put away till the end of October.

All Index pages and charts have been updated to reflect the monthly changes – (ASX Index, UK Index, US Index).

SPIVA … What’s the score?

Image result for roy and hg festival of the boot — Peerless sporting commentators Roy and HG – from The Roar

It is the end of season for winter football codes in Australia. Slack Investor welcomes back Roy Slaven and HG Nelson for brightening up his weekend and helping him keep score with their commentary on the “Festival of the Boot” – This is a distraction, but you can get a taste of the genius of Roy and HG here, here or, for a great Australian Bradbury moment here. For the “Festival of the Boot” here. It might be a sign of my perpetual immaturity, but I just don’t tire of these gentlemen.

One of the scorekeepers in the financial world are a group of boffins known as SPIVA (S&P Indices Versus Active). For 16 years they have been collecting world financial data and comparing actively managed funds to passive (Index) Funds – Slack Investor has looked at their findings before.

Their 2018 June report continues on the theme where (for a 5-yr period), almost 69% of Australian active funds failed to perform better than index funds. In the US, actively managed funds perform even worse with 84.23% of funds under performing the index over 5 years.

Over 5-years, 68.69% of AUSTRALIAN EQUITY FUNDS UNDER PERFORMED THE S&P/ASX 200 (Index ASX 200) – as of Jun 30, 2018 – From SPIVA Report 2018

The data reveals that there are some funds that beat the index, but they tend to invest in small to medium sized companies. As Roy and HG would say … You would have to be in the “Dream Room” to ignore the power of the SPIVA message.

APRA … its even better than OPRAH

Hang on Slack Investor … What are you saying? Oprah, the font of lifestyle guidance … has a rival! How can the Australian regulatory authority APRA match Oprah wisdom that spouts such useful advice as this …

You can either see yourself as a wave in the ocean – or you can see yourself as the ocean – Oprah Winfrey – Source

Wheras Oprah has been an inspiration to millions, Slack Investor has a different, more researched, inspiration … he has fallen in love with an Australian statutory body – APRA is the Australian Prudential Regulation Authority.

Australia’s total superannuation assets rate of return – From APRA report

Oh APRA …. I do love you … You are the Ocean … it’s the indifference that you show me … the complete lack of spin … just information …. Oooohhh! you may have let us down in the distant past (HIH collapse, 2001), but your new muscular stance on differentiating between superannuation products is appealing … it gives me hope for all statutory bodies. One of APRA’s duties is to collect information on the superannuation sector and report. They report the total superannuation assets in Australia grew to $2.7 trillion in the year to June 2018. The Self Managed Super sector has a staggering 27.7% of these funds. Slack Investor is gladly part of this self managed sector and enjoys the flexibility of an SMSF. Last years average rate of return for all super funds was almost 8%.

The chart shows some great annualized Australian super returns for the past 5 -years of 7.9%

The Productivity Commissioner and Slack Investor hero Karen Chester argues that there is a need for the Super system to look after the default member who is likely to remain disengaged.

“what workers need is not “bells and whistles” – which bring with them higher fees – but “low-cost, top performers” with a “balanced investment strategy” Karen Chester From The Guardian

APRA continues to monitor performance of Industry vs Retail Funds and the yearly percentage advantage of having Industry funds(rather than Retail) is shown above.

While we wait for the politicians to act on these matters, get engaged and consolidate your super into one fund – and it should probably be an Industry fund. If Slack Investor can’t motivate you – then perhaps Oprah can … Right On Oprah!

“If you’re sitting around waiting on somebody to save you, to fix you, to even help you, you are wasting your time because only you have the power to take responsibility to move your life forward.” Oprah Winfrey – Source

August 2018 – End of Month Update … and the recent advantage of being Slack

Slack Investor remains IN for US, UK and Australian index shares.

Power to the US – It might be bewildering from afar (and probably from within!) – but Wall St booms again with a 3.0% monthly rise. A small rise in the Australian Index (+0.6%), and the UK Index sinks with a -4.1% fall. All Markets are staying clear of their designated stop loss limits – So Slack Investor puts away any Index decisions for another month.

All Index pages and charts have been updated to reflect the monthly changes – (ASX Index, UK Index, US Index).

A recent bit of Beneficial Slackness

Slack Investor as long been a fan of Rudyard Kipling’s poem “If” and it is worth a read in full. But in particular the stanza

“... If you can meet with Triumph and Disaster

And treat those two impostors just the same; … ”

– Rudyard Kipling -1910 – Source

I like to think Slack Investor is in tune with the ebbs and flows of fortune – and he was on the good side of a stroke of luck this past week. In my last monthly update July 2018 I wrote of my worry with my holding of Altium (ALU) shares. I feared that the declining share price in July might indicate that there was bad news ahead at their reporting date. The upshot of the post was that I would leave this sort of stuff to the day traders and continue with the Slack plan of only making sell decisions at the end of the month.

The imposter of trumph prevailed on this occasion with a rise of ALU share price of over 30% on the day of their positive results announcement (FY18 Revenue up 26%).

Altium Daily share chart at 02/09/2018 – From Incredible Charts

With an estimated 2019 P/E ratio of 53.4, there is no doubt that the stock is relatively expensive. But, it is a growth stock with some very good tail winds. With the “internet of things” there will be more and more household appliances connected to the internet and to each another.

The current Australian household has an average of 14 connected devices under the one roof – this is expected to grow to over 30 devices by the year 2021. – from Andrew Mitchell – Livewire

Altium sells design software for printed circuit boards (PCB) which appear in all of these devices. ALU has been increasing its market share for PCB design software from 18% to 22% in this past year – and aims for 30% by 2025. These are good omens and I am happy to be an owner of ALU. To risk one more quote from “If”

If you can keep your head when all about you

    Are losing theirs and blaming it on you,

If you can trust yourself when all men doubt you,

    But make allowance for their doubting too;

– Rudyard Kipling -1910 – Source

Yes Mr Kipling I will keep my head – and make allowance in a Slack way – by adjusting my monthly stop loss upwards for ALU to $24.85.

Do Not Be Afraid of the Bogleman

Jack Bogle -Now retired at a youthful 89 – photo from The Inquirer

In fact, John “Jack” Bogle earns the embrace of the investing community. He is a “rolled gold” Slack Investor hero. Way back in 1974, Jack Bogle started Vanguard Investments. Bogle’s philosophy was that: instead of trying to beat the index and charging high costs, he would offer a low-cost alternative. High costs were typical of all other investment funds at the time – the Vanguard index fund would try to closely follow the index performance over the long run – thus achieving higher returns with lower costs than the costs associated with actively managed funds.

Average expenses for an actively managed mutual fund run to about 2 percent annually. Investors can avoid that by using low-cost index funds – Jack Bogle

Almost single-handedly, Jack Bogle changed the landscape for individual investors. Before Vanguard, there as no real choice for someone that wanted to invest in shares but didn’t have the will (or knowledge) to invest in individual stocks through a broker. The small investor would have to hand their cash to a managed fund – who would gratefully accept an up-front fee, at least 2% yearly management fee, plus a trailing commission. The typical Vanguard retail fund charges less than 0.90% for domestic or international shares – This is a great way to start investing and avoiding the fees of retail managed funds – Empower yourself!

However, Slack Investor recommends you really get serious about owning your own future and “bite the bullet” and start your own broker account. Slack Investor uses Commsec … but if he was starting from scratch he would use a low-cost broker such as the 2018 Money Magazine winner SelfWealth – at $9.50 per trade. Using a broker, you can buy the same Index funds offered by Vanguard (as a retail managed fund) on the stock market as an Exchange Traded Fund (ETF) – at a substantially reduced rate! e.g., Vanguard ASX 300 Index ETF VAS (Management Expense Ratio 0.14%); Vanguard World Index – ExAustralia ETF VGS (Management Expense Ratio 0.18%)

Bogle argues for an approach to investing defined by simplicity and common sense. Slack Investor likes this. Bogle has eight basic rules for investors:

Select low-cost funds
Consider carefully the added costs of advice
Do not overrate past fund performance
Use past performance to determine consistency and risk
Beware of stars (as in, star mutual fund managers)
Beware of asset size
Don’t own too many funds
Buy your fund portfolio – and hold it

The Vanguard data above shows that over a 10-yr period, less than 25% of active funds outperform index funds. JL Collins points to research that over a 30-yr period, less than 1% of active funds outperform.

Bogle has more fans than just Slack Investor. An entire community of “Bogleheads” has been inspired by his approach to investing. They run a forum that dispenses (mostly US-based) investment, money issues, and retirement planning advice that gets a remarkable 4 million hits a day. Jack Bogle likes to …

“to give ordinary investors a fair shake.” – Jack Bogle

Slack Investor likes Jack Bogle’s approach and is not afraid of the Bogleman. He owns an ASX ETF Vanguard fund VAE that has management costs of 0.40% (1-yr performance 12.51%)

July 2018 – End of Month Update … and Upcoming Reporting Season

Slack Investor remains IN for US, UK and Australian index shares.

It has been a good start to the financial year in all followed markets. Rises in the Australian Index (+1.4%), the UK Index (+1.5%), and the US index up a remarkable 3.6%. Slack Investor is cautious – but not afraid. Bull Markets are where the investor makes money. Stop losses are the insurance that enables sleep at night.

All Index pages and charts have been updated to reflect the monthly changes – (ASX Index, UK Index, US Index).

Reporting season for end of FY 2018

Related image — Robert Hays as Ted Striker apprehensive about landing the plane in Flying High (Airplane!) gif from source – may be subject to copyright.

Despite the general market indicies doing well, July 2018 has seen some of the big Slack Portfolio achievers in the last financial year lose a bit of their froth. Although not quite as nervous as Ted Striker, Slack Investor is a “on alert” about the impending reporting season. The animated gif above is from the classic 1980 film Airplane (or Flying High) – and the full movie is most worthy of a viewing when the tension of the season becomes too great.

Australian companies are obliged to report on their earnings at least twice a year within two months of putting a line under their balance sheet. As 30 June marks the end of the financial year, the main reporting season takes place during August when most companies release their full-year results to the market. The accountants have been busy collating the figures and the management team has crunched the numbers and are ready to give updates on their company earnings and project some earnings outlooks. The CEO may offer his take on any changes to the economic environment at the shareholder meeting.

The day of this report release is usually the most momentous …

51 per cent of the two hundred and sixty major results (Last year) saw their share prices move more than 3 per cent on the day of their results. 35 per cent moved more than 5 per cent and 11 per cent moved by 10 per cent. – Marcus Padley in this report

There are strict rules on keeping this financial market sensitive information “in house” till the date that the results are announced. This way, everybody gets this information at the same time. Sounds fair … but sometimes information inadvertently leaks out and a decline in the share price is noticed before the actual reporting date … or, it might just be that after a sharp rise in price, the short term traders are just taking profits. There are a lot of possibilities – and it appears that something is going on with one of my major holdings Altium (ALU). There is a distinct decline in price since financial year 2019 started.

Daily chart Altium – from Incredible Charts

Regardless, I will leave action to the short-term traders, as at the end of July, ALU finished above my monthly stop loss ($19.16). Slack Investor has a plan and remains above the daily market murk and has an approach that has got him through so far. Let the market do what it must do – and if, at the end of the month, the stock price is below the monthly stop loss – then sell.

In Flying High (Airplane!), Ted Striker had a pretty good result. He overcame his fear of flying, landed the plane safely and won back the affections of his ex-girlfriend. Slack Investor is not aiming for this Hollywood finish but I have overcome my fear of rapid price declines – they are just part of investing in growth stocks.

I am diversified, have a plan and have stop losses for protection. (OK … slightly flushed with the exhilaration of reporting season!)