CBD
It was Anzac Day on Thursday, and CBD paused to remember some of the business types who have sacrificed not their lives, but a fragment of their credibility by making predictions that turned out all wrong.
Spare a thought for ABC TV/News Limited finance guru Alan Kohler, who in December 2011 told readers of his subscription-only Eureka Report: "I believe the conditions are in place for another major panic sell-off on the sharemarket ... On Monday I will be significantly reducing my already reduced exposure to equities, possibly to zero." Since then the market's risen more than 25 per cent.
Doff your hat to former Future Fund boss and Alan Jones BFF David Murray, who in March last year said the carbon tax would be "very, very bad for this economy, particularly in terms of its international competitiveness". Fast forward a year and Murray was right: the tax has turned out to be a dud ... because it is unlikely to raise anywhere near as much money as forecast.
And think of NBN Co's Mike Quigley, who in December 2010 reckoned 511,000 homes would be connected to the super-fast porn pipeline by the end of June this year. This was downgraded to 54,000 connections in August last year, but by December only 10,400 homes had been connected.
How the cards fall
In the end, he didn't know when to fold 'em and walk away.
A man identified only as "The Gambler" has made a losing bet against the house that never loses, the Taxation Office, failing to force it to withdraw tax bills totalling $1.15 million. The ATO hit him with the tax bills over four days in August 2010, citing "numerous unexplained deposits" into his bank accounts in 2007 and 2008.
Not so, The Gambler said. He told the Administrative Appeals Tribunal the money came from "windfall gambling gains", which are not taxable income.
The Gambler hadn't had much luck in business since arriving in Australia from Vietnam in 1991. He'd tried his hand at a variety of trades - sewing, selling chickens, running a mobile phone and record shop, pawnbroking and building - but, according to AAT deputy president Stephen Frost, earned "at best, modest financial returns".
But his financial woes ended, The Gambler said, after a trip back to Vietnam in 2006, during which he and a friend discovered a system for winning at James Bond creator Ian Fleming's favourite card game, baccarat.
Apparently he had, in the words of Kenny Rogers' famous gambler, "the secret to surviving": "knowing what to throw away, knowing what to keep".
The Gambler claimed to have won more than $US4 million at casinos in Vietnam and Cambodia before returning to Australia in 2007, where he carried on his winning streak at Sydney's Star casino. "I was afraid that casino might think I was too good," he told the AAT. Although he couldn't remember how much he won, he said it was "a lot of money".
He was certainly a valued customer, pumping more than $2.4 million through the casino in 2008 and earning its highest high-roller membership level, "black".
Star's records also show he lost $169,000 at the casino in 2007 and won $464,000 in 2008.
Not enough winnings, the AAT's Frost said, to undermine the ATO's tax bill. "The taxpayer's proposition is also underpinned by the inherently improbable notion that he and his friend discovered a system for winning at baccarat up to 95 per cent of the time," Frost said in his ruling on Wednesday.
"He claims that their system is based on mathematical science, but it seems to me that one needs more than mathematical science to turn the sow's ear of complete randomness into the silk purse of virtual certainty."
Perhaps he should have heeded another piece of Rogers wisdom: "You never count your money when you're sitting at the table. There'll be time enough for counting when the dealing's done."
Got a tip?
bbutler@fairfaxmedia.com.au
Frequently Asked Questions about this Article…
Treat dramatic stock market predictions with caution. As the article notes, pundits like Alan Kohler urged cutting equity exposure to near zero in December 2011, yet the market rose more than 25% afterward. For everyday investors that means avoid making drastic portfolio moves based only on sensational forecasts—focus on diversification, a long-term plan and disciplined rebalancing instead.
Not always. The article cites former Future Fund boss David Murray warning the carbon tax would be “very, very bad” for the economy, but the tax turned out to be a dud and raised far less than forecast. Everyday investors should weigh policy warnings as one input among many, assess likely economic impacts, and avoid over‑reacting to single predictions.
The article highlights NBN Co’s Mike Quigley vastly overestimating early connections (511,000 then downgraded to 54,000 and later 10,400), showing execution and timing risk in large projects. Investors in infrastructure and tech should account for delivery risk, phased rollouts, possible delays, and the impact those delays can have on cash flow and valuations.
The article describes a case where the ATO issued $1.15 million in tax bills over unexplained deposits; the taxpayer claimed windfall gambling gains but the Administrative Appeals Tribunal found the gambling‑win explanation insufficient. While pure windfall gambling wins aren’t automatically taxable, large unexplained deposits can trigger ATO scrutiny and taxpayers should be prepared to substantiate their claims.
Keep clear, contemporaneous records: bank statements, transaction receipts, casino statements or membership records, travel and contemporaneous notes where relevant. The gambler in the article relied on recollections of wins, which the AAT found unconvincing—detailed documentation helps if the ATO queries deposits or income sources.
No. The article notes the taxpayer had Star casino’s highest ‘black’ membership and pumped more than $2.4 million through the casino, yet still faced ATO tax bills and lost on appeal. High‑roller status does not exempt someone from providing credible evidence about the source of funds.
It’s fairly common — the article gives multiple examples of experts (journalists, fund managers, and executives) whose forecasts missed the mark. When forecasts conflict, everyday investors should focus on their own investment goals, maintain diversification, stress‑test portfolios for different scenarios and avoid market timing based solely on any one forecast.
Stick to a written investment plan, diversify across asset classes, regularly rebalance, verify sources and assumptions behind predictions, and consider the long term rather than chasing headlines. The article’s examples of wrong forecasts and disputed claims show why discipline and documentation matter more than reacting to sensational commentary.
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