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Finance: Neil Woodford, financial genius?

Legacy Phuket Gazette

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Finance: Neil Woodford, financial genius? | The Thaiger

PHUKET: I know this has been written about in other media already, but as this fund and its manager have a great track record and I believe we are nearing a sale in stocks, it is a good discussion to review. For those of you who don’t know the fund or manager, Neil Woodford ran the Invesco Perpetual Income Fund for 25 years and achieved an average rate of return of more than 13 per cent. GBP 1,000 invested when he started would be worth more than GBP 25,000 today.

He has recently left the fund and opened one of his own, vowing to continue the exact same strategy upon which he built his success. His successor at the old fund is Mark Barnett, a former colleague who also has a successful track record, but with less experience. On the one hand, Invesco is a big institution and that helps investors feel safe. I personally have been burned on specialist funds enough by now to prefer the big name fund houses, yet the 25-year track record does speak for itself.

For overseas investors, it may be difficult to access the new fund on some of the international platforms, but a direct investment may be an option for those who simply love the manager. In my opinion though, the statistics quoted are a little bit deceiving as they ignore the impact timing would have on the results of investing with either manager. As so many academic studies have shown, asset allocation is far more important than individual security selection. I will explain this in simple terms next, but in my opinion it isn’t so important which manager you choose.

If you invested with either manager right before the last of the two big crashes, guess what? Your performance to date would be abysmal. If you bought either manager at the bottom after the last crash, your performance would be way above average. Do you see the picture? In the end you could have dollar cost averaged, for example putting 1,000 pounds per month into either fund, and made an extremely nice return over the last decades. Or you could have waited for a crash but missed the bottom significantly, and still have done extremely well. This matters far more than which fund within an asset class you invest in.

So how will you know when it is a good time to invest in either of these funds? The answer lies in the overall valuation of the developed world’s stock markets, and the S&P 500 is the most watched index by most traders even though the funds we are discussing would be investing in FTSE-based stocks. I would set a target on the price to earnings ratio of the S&P 500 at something like 12 to start nibbling (say 20 per cent or so of a position you hope to build from your cash holdings), and go in heavy when it dips below a P/E of 10. Historically, you would never have gone wrong buying at these valuations, even if you were still off the absolute bottom a little.

This strategy is good because a bull market always ends with valuations over 20, meaning even if corporate profits stagnated, which they never do over the medium term, you will likely double your money in the next bull market. The last few bulls have gone on to silly valuations, but setting a target to sell say half when the 20 level is reached and then scaling out at levels like 25 or 30 would have never steered you wrong.

David Mayes, MBA, resides in Phuket and provides wealth management services to expatriates around the globe, focusing on UK pension transfers. He can be reached at david.m@faramond.com or 085-335-8573. Faramond UK is regulated by the FCA and provides advice on pensions and taxation.

— David Mayes

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Governments & old media versus social media – who will win? | VIDEO

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Governments & old media versus social media – who will win? | VIDEO | The Thaiger

We look at the recent changes made by the Australian and Indian governments to except control over the world’s biggest social media platforms. India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social. There is now an open battle between the rise of social media platforms and the governments and ‘old’ media that have been able to maintain a certain level of control over the ‘message’ for the last century. Who will win?

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told. The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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The social media giants in battle with ‘old’ media and world governments | VIDEO

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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Never miss out on future posts by following The Thaiger.

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Business

Turbulence ahead for Thailand’s aviation industry | VIDEO

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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