Markets: The Perpetual star playing the long game

'Buy quality, buy once, pay the right price and ...' Perpetual strategist Matt Sherwood has had a long love affair with markets but turns to his wife for advice on people.

Few of the so-called strategists at investment banks and fund managers are prepared to put their money where their mouth is. Matt Sherwood of Perpetual is one.

In 2006 Sherwood sold all the shares in his personal Australian stock portfolio. Concerned that share prices were too heated, he also needed the cash to buy a house in Sydney’s Willoughby. By February 2009 Sherwood told his wife Natasha to start buying. Natasha today hasn’t sold any of her stock investments.

“You buy quality, buy once, pay the right price and seek contentment,” says the 41-year old Sherwood, a kinetic, forthright personality that mixes Down Under charm and robust confidence not unlike his financial industry peers.

He views himself as one of the very few in Australia who can analyse, write and present on financial markets. Craig James, ComSec’s chief economist, and Shane Oliver, AMP Capital’s chief economist, Sherwood generously opines, are among the others.

Trained, he says, for six years by the Reserve Bank of Australia in how to view financial markets, Sherwood left the central bank 11 years ago to join ING. Two years later he was hired by the 128-year old Perpetual. He has become somewhat the face of Perpetual with his frequent appearances in newspapers, on TV screens and the radio. Widely quoted, Sherwood’s morning note on markets goes out, by his estimate, to more than 20,000 people.

Sherwood arises at 5.30am Monday to Friday to produce the morning note that hits recipient inboxes by 7.15am. Leaving his computer he breakfasts with his two children, Abbey and Sophie, the former named after The Beatles album Abbey Road. By 8am he is at his Perpetual desk on Pitt Street.

He leaves the office by 6pm, returns home to bath the children, oversees the cleaning of their teeth and then reads them stories until the bedroom light is turned out at 7.30pm. He then retires to the kitchen where he cooks the evening meal for Natasha, usually a curry. Sherwood says he makes a “wicked” laksa.

He is a published author. Sherwood’s book Intelligent Investing will have a second edition. The book’s thesis is age old: income generation is the basis of wealth creation. It was true 2300 years ago when the Greeks first recognised it, says Sherwood, and true today. This contrasts with the modern perception that capital gains are the prime driver of riches, he says.

Stocks are the best asset class to invest in, Sherwood believes. Since 1974 the annual income produced from the blended All Ordinaries 300 Index has risen 1300 per cent, more than double the rate of inflation, he says. Annual cash income has fallen 62 per cent during the same period, says Sherwood.

The biggest mistake people make when investing is purchasing liabilities, thinking they are assets, he says. Gold is a liability, Sherwood says. It makes no income yet costs someone money to buy and store it.

Like many successful men, Sherwood is protective of his image. He once described his wife as smarter than himself. He retracts that statement a tad over coffee and orange juice in a Perpetual conference room. Instead Sherwood praises Natasha’s emotional intelligence and counsel. He turns to her for advice on how to deal with people, praising her as “insightful”.

Apart from music produced by The Beatles, which he calls the “best in history” – Hey Jude being his favourite song – he is also effusive in his admiration of Collingwood, Rafael Nadal’s forehand and Steve Waugh’s “grit”.

“He was a great thinker, Waugh,” says Sherwood, who adds that in finance, knowledge is knowing what something is while wisdom is knowing what it means.