Ann: Funds Under Management Update, page-39

The dividend announcement was a calculated play, yet moronic.

Sadly, Magellan know the psyche of most Australian investors. That is, an outright obsession for franked dividends - even in the face of disastrous news - the prospect of a dividend can turn sentiment.

And look what happened following the announcement. It rallied. For a brief moment, contrary to all logic, investors pumped up the price with little regard to whether even paying a dividend was the best decision for a company floundering.

You see it across the Aussie market. Stagnant, low quality companies and funds loved by investors because of high yield, franked dividends.

I don't know if it's financial illiteracy, but somewhere along the way Australian investors lost sight of the bigger picture.

As you said, when you are bringing in big profits you need to continually expand and diversify. Sadly, not in Australia. Just pay everything out to satisfy the thirst for dividends.