A Dozen Quotes to Make (or Save) You Money

"Where a lot of investors make mistakes, I believe, is they go looking for a quick buck and that just doesn’t happen. Whether it be property or shares, it just takes a heck of a long time to get these things to work.”

Billionaire property developer Lang Walker


“It is far more important to minimise the inevitable investment mistakes than be obsessed with trying to find the tenfold investment winners.”

Hamish Douglass, Magellan Group CEO, CIO and lead portfolio manager

This circumspect investment approach has helped Hamish Douglas build a $30 billion listed funds management giant. If you want to get technical, Douglass says his job is to “to assess the likely cash flows a business will generate over its lifetime, discount these cash flows back to the present value” and determine if buying today will generate an acceptable rate of return. Simple? Not quite. Effective? You bet.


“There is no substitute for meeting management, competitors, employees, and suppliers of listed companies to truly understand the operating environment and growth prospects. It is critical to understand the people involved in the business.”

Ed Prendergast, Pengana Emerging Companies fund co-manager

If you own a position in a retail stock, for example, why not visit an outlet nearby and walk the floor? Examine the foot traffic, does the fit-out meet expectations and are your interactions with the staff satisfying? Sometimes the answers to your investment questions are right in front of your nose.


“We are looking to invest in changes. That could be the change induced by shifts in industry structure, the economic cycle, competitor behaviour, changes in the cost base, investor risk appetite. Generally there are lot of things changing for a company at any point in time so the key to investing is understanding the relative impact of changes and their likely longevity.”

Sean Fenton, Tribeca Investment Partners portfolio manager

Catalysts are where investors can make the best returns for their bet. While professionals will seldom admitto investing simply on the basis of a catalyst, the good investors will always have catalysts in their back of their minds.


“Capital preservation is the number one consideration. Don’t invest in blue sky. Ensure the business has a strong business model; sound and robust management. Do the numbers and focus on free cash flow.”

David Paradice, Paradice Investments founder

David Paradice has built a $10 billion funds management business starting with his highly regarded small caps fund. His philosophy is keeping things simple …no matter how complex a situation becomes, or seemingly endless the alternatives are, the best investors are always able to simplify the process.


“We consider the downside first. We look at balance sheet, cash flow, profitability. If you’ve looked at all these, then you’ve done your homework and you don’t have to worry too much. The other thing is, do your own homework.”

Nathan Parkin, Perpetual Investments deputy head of equities

Perpetual is one of Australia’s oldest and best-known funds management firms. Nathan Parkin was recently appointed deputy head of equities, known best for his ability to find opportunities the market might have missed.

6. Shares / Superannuation

“Rule one. Never lose money. Rule two. Never forget rule number one.”

Warren Buffett, Berkshire Hathaway chairman

Of all the investment aphorisms, this remains the simplest. Known as the world’s greatest investor, Warren Buffett finessed the simple yet demanding value investing creed developed by Benjamin Graham to build a personal fortune worth US$72 billion.

The observation has a special importance for investors at all stages. For those in the accumulation stage, it is a reminder that there is nothing harder than having to make up lost ground. However, apart from the many important factors to consider when investing, we do need to give ourselves the right timeframe.

7. Asset Allocation

“The way I have dealt with the risk matrix of our business has been to diversify across the different sectors.”

Lang Walker, billionaire property developer

They say diversification is key. While Walker is specifically referring to the major property segments such as retail, commercial, industrial and residential this can be just as easily adapted to your entire portfolio.

Take a look at your asset allocation. Are you heavily exposed to one asset class over another? Is that because of a comprehensive risk-reward analysis you have conducted or did it just happen? Take stock at least once a year and rebalance when necessary.

8. Superannuation

“At different points you’ve got to still expect inflation-plus, but the question is inflation plus what?

Harvey Kalman, Equity Trustees executive general manager

Everybody loves it when markets deliver double digit returns but you can’t expect your investments to do this consistently over the long term. One of the biggest funds in Australia for instance, the Future Fund, has a target of CPI plus 4.5-5.5 per cent.

If inflation is running at 3 per cent and you are getting another 5 per cent on top, that’s a pretty good result compounded over the past 10 years. Ground your expectations and don’t rely on bumper years to help you reach your goals.

9. Asset Allocation

“Your risk profile needs to be compatible with your goals. When your goals or circumstances change, you would need to revisit that risk profile.”

Wade Matterson, Milliman practice leader

Firstly, any investment plan needs to start with your goals and work backwards. If you are unhappy with the amount of risk you are taking on then perhaps it’s time to revisit your goals.

Secondly, the time to change your asset allocation is when your goals or circumstances change, not when markets in Greece or China rise and fall. Remember that the signal is always personal never universal.

10. Asset Allocation

“Most Australians are long property and shares. Automatically that tells you where you are underweight: fixed interest, global assets and securities outside the ASX top 20. “

Harvey Kalman, Equity Trustees executive general manager

It’s probably no surprise that for most investors their super fund is simply an extension of their investing preferences. But this can be a missed opportunity because your super fund can be structured to complement your other assets.

As long-term investment, super can be the perfect investment hedge. What’s more, investors have access to many more long-term investments than ever before with the proliferation of ETFs, LICs and high-quality options from industry funds.

11. Asset Allocation

“The most outstanding investment records have been built by people who specialise, develop a deep understanding and stay within their circle of competence.”

Hamish Douglass, Magellan Group CEO, CIO and lead portfolio manager

The vertically integrated model of bank-aligned advisers has produced great outcomes for the wealth management arms of the banks but some very ordinary ones for many of the clients they are supposed to be serving.

Consider your own investments. Is your fixed income exposure being managed by a specialist or by some coincidence is it being managed by the same company which appears on your adviser’s letterhead? Compare the performance of your portfolio manager with the rest of the market and have a good reason to stay with them.

12. Shares / Superannuation

“Managers will ensure that the best returns are coming from the flagship and that’s the balanced fund.”

Greg Medcraft, ASIC chairman and IOSCO chairman

Growth options get all the attention for their often double-digit returns and alluring mix of high-performing assets.

But as Medcraft outlined, the fund option with the most money invested and the most attention paid to it is almost always the balanced option.

When comparing funds look beyond the short term and consider its performance over five-, seven- and 10-year periods.