Letters of the Week

Capital safety success, the Woolies property float, and bonds protection.

I am retired and have been running my own SMSF for around 15 years. Prior to the GFC I was 100% equities. After the GFC I sold all my equities and remained in cash until 12 months ago. Even though I dropped over $150,000 on my pre-GFC share values, when converting to cash, I had made so much capital gain and dividends in the previous years that I was still a long way in front of term deposits. My reason for getting back into equities was concern for inflation and long-term low interest rates. The exchange rate for Australia is a big problem and I can only see interest rates going lower. What is interesting though is not my decision to get back in, but the analysis of how I have gone over the past 12 months. I purchased 26 different equities and have at present an average capital gain of 11.3%. I chose the usual old favourites like the banks and Telstra to protect against low interest rates, however, I also chose 14 of the 26 from recommendations by Roger Montgomery and Alan Kohler. Their capital gain has been an average of 21%. I did not invest as heavily in their recommendations hence my lower overall capital gain. Many of us have spent a long time in business, making tough decisions and following our gut instincts. In retirement, I have found the need for gut instincts and tough decisions persists. There is no capital safety if you find yourself spending it because of inflation and low interest rates. Eureka Report has proven to be an honest sounding board for me, in this time, helping protect my real, ever changing capital.


On Friday November 23, the Eureka Report edition included a piece by John Abernethy Shopping for yield in Woolies’ property float. This float opened on October 15 and closed before John's article was released on Friday.



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