Golden opportunities

Can 630 self-funded Gold Coast retirees with spare cash and spare time move the stock market?

Yes, or so it seems, if you analyse what happened yesterday in the gold sector of the ASX.

Rather than fall (in line with the lower gold price), one company enjoyed a strong start to trading and held on to a small portion of its gain even as other gold stocks tumbled.

Northern Star (NST) was the exceptional performer, as was its chief executive, Bill Beament, at a resource stocks conference held at the Royal Pines Resort.

Beament started his talk at the Resources Rising Stars conference at 10:00am, just as the market opened. First Northern Star trades were booked at $4.41, down 10c on Tuesday's close after a weak night for gold, but by 11:00am the stock was up to $4.60, eventually closing the day at $4.53 for a gain of 2c.

Newcrest (NCM), the gold-sector leader, had a different sort of day, opening down 31c at $20, and then sputtering along to a close to $20.05, down 25c on the day, or 1.23 per cent.

The two stocks obviously have gold as a common link and it was probably reasonable to think that all gold stocks would have a bad day after a fall of $US25 an ounce on overseas markets. That's exactly what happened to Newcrest, Evolution (EVN), OceanaGold (OCG) and most other goldminers.

Northern Star was different and that seems to have been thanks to the reaction of the 630 investors who filled a conference room at Royal Pines to hear the chief executive spruik the case for his company, not that a hard sell was required given that his appearances at the same event in previous years, and the spectacular rise of Northern Star, has seen Beament attract a cult-like following.

Whether anyone at the event was buying Northern Star shares yesterday will probably never be known but what is certain is that the conference itself remains one of the most interesting in Australia thanks more to the composition of the audience than the speakers on the podium.

Most of the 630 people who attended fit a common description of being relatively wealthy, retired, and in charge of the own money, generally through a self-funded retirement fund – with a portion of “fun money” set aside to play the market as a hobby, or as a way to keep their brains active in the same way some people play Sudoku or do crosswords puzzles.

And in the same way some people take their crosswords seriously the Gold Coast crowd proved to be remarkable astute in dissecting what was being said and critical of under-performers as quickly as they were to spot a strong performer.

Warren Buntine, a semi-retired accountant, uses the conference to assess the quality of chief executives to help decide whether a company would be a worthwhile investment.

“Some of the communication skills of executives at the conference have been poor,” Buntine says. “That tells me a lot about the company. It tells me that the chief executive is not going to drive the stock and it's probably not going to be a good investment.”

Assessing an investment on such a personal, eyeball-to-eyeball level, is a fading feature in today's investment world which is dominated by electronic data and video communication, but it's the way most of the older investors at Royal Pines prefer to make their judgments.

Glenda and Neil Robson, retired civil servants and now a husband and wife team running an investment fund as a hobby, are Northern Star acolytes having first bought into the stock when it was a fraction of today's price but which now represents 25 per cent of their portfolio.

“Some people might say we're too exposed to gold but it's been very good for us,” says Glenda.

Annette Lee, a retired public relations executive, uses the stock market to boost the return of her self-managed superannuation fund, trading actively in goldmining stocks that include Dacian (DCN), Saracen (SAR) and Northern Star.

Like a number of people at the conference, Lee says the latest changes to superannuation rules had left her confused and annoyed.

Superannuation was not, however, on the mind of Ray Peterson, a retired owner of caravan parks. He reckons the stock market, particularly resource stocks are the best way to gamble. “Much better than the horses,” he says.

Apart from individual views of people at the conference it was interesting to ask as many as possible how they saw the current state of the resources sector which has been showing the first signs of recovery after five years in the sin bin.

One of speakers, Hedley Widdup, investment manager at Melbourne-based Lion Selection Group, also addressed the question of the likely future direction of the Australian resources sector by referring to an “investment clock” invented by his father Robin when he worked for JBWere.

According to Hedley's interpretation of the family clock the resources sector is at 6 o'clock, a “time” which signals the start of a sustained revival with 12 o'clock on the Widdup timepiece signaling the peak and the start of a downturn.

The golden oldies at Royal Pines were not quite as enthusiastic as young Widdup. A common reaction to the question of where is the market today on a scale of 0-to-10 (with 0 the bottom and 10 the top) was a rating of four – off the bottom, but with a long way to go.

Jeanette and Clyde Sumner, who made the tip to Royal Pines from Wollongong, used the conference to rebuild their knowledge of the resources sector which they believe is close to an upturn. Jeanette rates the market at three. Clyde is the optimist at four.

“We have a limited portfolio but now seems to be a good time to start looking again,” Clyde says.