The latest edition of the BRW magazine has a cover story focusing on the big losses suffered by some of what the author calls the "sharpest financial minds" in Australia. The names include Michael King and Philip Adams of MFS; David Coe of Allco Finance Group; Michael Maxwell and Peter Hofbauer of Babcock and Brown; Philip Sullivan of City Pacific; and Jeremy Reid of Everest Babcock and Brown. They have lost a combined total of more than $1 billion over the past 9 months reducing their combined net wealth from $1.7 billion to $650 million. (A fall of roughly 62%) The article goes on to report that over the past 6 months they have lost a combined 2/3 of their wealth compared to a fall of 9% on the All Ordinaries index.
The message that jumped out at me when reading this article was what hope do mum and dad investors have in predicting market sentiments and movements if the "sharpest financial minds" in the country can't? It highlights the principal that we continue to point out to our clients. It is extremely difficult, if not impossible, to time market movements. Rather, it is much better to keep a well diversified portfolio across all the major investable assets - cash, fixed interest securities, Australian shares, listed property and international shares.