MFG (ASX) Ann: Video update from Chief Investment Officer and Chairman

Originally posted by Jack1960: ↑

I appreciate the last few well developed thoughts and experiences of posters here. They appear to be both genuine and well intentioned contributions.

Quite clearly each of us has our own unique investment journey.

The common thread l draw is that we are all ongoing learners with individual responses to the lessons we are given. They is no right or wrong here.

My investment experience has been to bet on the certainty of cycles and try not to invest in businesses or funds that demand faultless success.

l relate to jman0076 and his Platinum and Magellan performance anecdote. I guess the difference we have experienced is l have actively rotated funds between the 2 by investing when each underperformed the other. I generally backed underperformance as the "abberation". They are both star performers but go about their process very differently.

Although l have by no means executed this contrarian approach perfectly, it has broadly generated exceptional exceptional alpha. This investment approach is described as blending and works by complementing the different strengths and weaknesses of each conviction.

l currently believe that MFG will be under pressure to regain index outperformance and this presents the greatest risk to investors. They are in the spotlight and pressured to perform. This is not a positive as investment opportunities early present themselves just at the time you want them.

l have been raising substantial cash in the last 6 months from successful positions which l am lightening and from many stocks in my portfolio being taken over.

l was looking forward to a heavy cash overweight this Christmas. Then Magellan (MFG) happened. That l have invested very heavily is not something l have hidden from my posts. I also continue to add each day.

l am very comfortable with this but it has unexpectedly depleted my desired cash holdings. l expect a very significant correction in markets as interest rate pressures are perceived to rise. Cash was to be my best weapon to take advantage of this. Now it is depleted.

My plan has been sideswiped by a crisis in which l saw opportunity.

As a private investor, this is a simple dilemma. If l was a public fund manager it poses a great problem. There have been years and l mean years where my private strategies have underperformed markets. I was ridiculed by peers. However, l invested with conviction and the determination to test and retest my thesis and then give it time to play out. Lots of time.

Usually unexpectedly, when my positions prove correct my portfolio outperforms by multiples of the market so it reinforces my style. Buy in gloom sell in boom is not as easy to execute in real life as it sounds but private investors have a better chance of doing it, just without the public glory.

I recognise in Hamish a much younger and far more disciplined version of myself. I will back him in to restore index outperformance quite easily when the indices fall.

He may need 3 years to defeat the contrived market levels reached as a result of nothing more than global monetary and fiscal stimulus largesse that will destroy the finances of millions of overleveraged, overconfident investors in very mispriced markets.

The catalyst of change in my view will be global cost push inflation that will lead to unrest of Joe public who will demand action. The money printing will end, excess liquidity will end, zero interest rates will end and people will panic.

Posters may ridicule my polarised view. It was not a view l held 18 months ago when investors were genuinely concerned about the economy and their will being. It is the view l now hold because investors are not fingerboard about the economy or their well being.

By their limited experience, many younger investors believe governments have the capacity to save markets and will.

l simply do not share that view and l am happy to underperform indices in the late stages of every bull market. I have been in the other side of this trade when l was young. My vibid recollection is that l thought l was smarter than l was, and was forced to learn a cheap lesson. l did not have a lot to los in the 1970s and 1980s.

Today l know l am not that smart. I also know l have a lot to lose. I remain an ongoing student of life and investing and understand l may also be wrong today. But it is a risk l will happily take.

GLTASH

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Some excellent points you make Jack. I hope you are right in your predictions. Even Warren Buffet recommended that average Joes should just buy an index fund and hold for 30 years.

Value investing will only return when you only have smart money looking for value. The unrelenting increase to the money supply has found its way into the weirdest of assets, no matter its underlying value. I agree that inflation and money supply reduction will be the catalyst for change. An exposure to value investing such as Hamish's MFG is a reasonable play. I purchased some more Friday but overall expect we need to wait 12 months and $14.50 a share before this turns around. Averaging down will be the key to an excellent long term investment in the years to come.

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(20min delay)
Last $11.45		Change 0.190(1.69%)		Mkt cap ! $2.047B

Open	High	Low	Value	Volume
$11.32	$11.50	$11.28	$7.057M	618.8K

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