Monthly Updates | Slack Investor

August 2017 – End of Month Update … and Fund Returns FY2017

Slack Investor remains IN for US, UK, and Australian index shares.

A steady month for all markets that I follow – Slack Investor stays on the couch and does nothing …

The Chant West media release referred to in the previous monthly update has plenty of other useful information.

Fund Performance Results (Up to June 30, 2017)- Source Chant West

The above table quotes the median performance figures from various types of funds that Chant West monitors, ranging from All Growth to Conservative. As mentioned in a previous post, the 1-Yr column shows it has been a bumper year for all types of funds – If you owned any growth fund during the last 7 years, you would be tremendously pleased with the 10% pa returns.

The GFC (Global Financial Crisis) of 2008 (and later years) continues to weigh down the ten year returns (4-5% for growth assets).

Over the last 25 years, Chant West found the returns of growth funds were a more reassuring 8.3%. It just drives home the devastating affect of a major downturn that an event like the GFC has on growth funds. The figures are, in the jargon of the industry,”net of investment fees and taxes” … but curiously before admin fees and advisor commissions … but this is another story!

Growth Funds – Rolling 5-Year Performance (Returns %pa) – Source Chant West

The above graph compares the growth category median (rolling 5-year) with the average return objective for growth funds – CPI (Consumer Price Index) plus 3.5%. This is a typical target for growth funds. In an environment where cash returns are mostly below 2% there is risk involved with investing in growth assets.

I never ever ever thought I would be quoting the far-right (recently) former Trump employee on this site.

“My old firm, Goldman Sachs – traditionally, the best banks are leveraged 8:1. When we had the financial crisis in 2008, the investment banks were leveraged 35:1.”
― Steve Bannon, Media Executive and former Investment Banker source

However, “Breitbart Steve”, after the fact, your quote rings true … the signs are always there … Excessive borrowings (leveraging) and a willingness for people to pay top dollar for overvalued assets are sure signs that trouble is coming.

Slack Investor is comfortable with risk and would always prefer growth funds – especially with a large time horizon – but I will never be able to avoid ordinary fluctuations (corrections) in the stock market. A disciplined approach to stop losses should keep me out of the huge falls that the GFC presented to owners of shares.

Although valuations are generally high, Slack Investor does not see a bubble in the Australian or UK Stock Markets for now – Unlike the US market, Australian and UK share valuations are not too far higher than long term averages – and there has never been a calamitous fall in stock values without a bubble first. Regardless, my stop losses will protect me from huge losses of capital.

I have updated all Index pages and charts to reflect the end of month data.

July 2017 – End of Month Update … and Long Term Returns!

Slack Investor remains IN for US, UK, and Australian index shares.

A steady month for the ASX and gains for the UK market (0.7%) and the US Market (2.3%) – It must be the “Mooch” Effect. I am sad to see him go … In a circus you need heaps of clowns!

Chant West are a superannuation consultancy and research firm that release a trove of data on how superannuation is rolling along in Australia. The have excelled themselves in a very timely media release. outlining that this is the 8th financial year in a row of median gains for Australian Super “Growth” funds. They define growth funds as funds that invest 60-80% of their investments in growth assets such as shares and property. Their results for the past 25 years for Australian Super Funds is presented below.

Median Australian Growth Super Financial Year Returns (%) – net of fees and taxes – from Chant West

Despite the worries of the world, this last financial year, the median of Australian growth funds achieved a 10.7% return and some of the low fee funds discussed in the last post, such as HostPlus and Sunsuper achieved FY17 returns of 13.2% and 12.4% respectively in a year where the safety of cash could only yield 1.8%.

The five-year period up till now have been boom times for the share market. There will be high fives and bonuses all round for the suits that control your funds. This has been a good investing year and you should rejoice at the returns shown in your super statements when they are sent to you soon – and reflect upon the pitiful returns that you would have got if you had your super invested in a bank account.

But, it is a good reminder that not all years represent gravy for growth funds and it is the nature of these assets that their will be some yearly fluctuations. Slack Investor’s feeble memory is strong on the returns of the years 2008 and 2009 where the Global Financial Crisis caused asset prices and market returns to crash. I can remember many who lamented that this compulsory super business was a costly rort – it was tough to watch your retirement savings shrink even though money was taken out of your wages each week.

Slack Investor has a soft spot for the bard

“Ay, to the proof, as mountains are for winds, that shakes not, though they blow perpetually.” ― William Shakespeare, The Taming of the Shrew

So “shake not” dear investors … think long term and think growth … and despite the occasional disappointment … you will be rewarded! Compound interest will be doing its work on your savings in all those years that are blue in the above image – It is only fair that you have got to give compound interest the occasional year off – for recuperation!

I have updated all Index pages and charts to reflect the end of month data. .

June 2017 – End of Month Update … and Stop Losses!

Slack Investor remains IN for US, UK, and Australian index shares.

Despite a bad month for the UK index where the previous month gains were wiped out, there are no alarm bells yet. All markets have had a reasonable financial year (to Jun 30, 2017) with 12-month returns for the US, UK and Australian Index of 15.2%, 13.0% and 9.6%, respectively. These returns, for simplicity of calculation, do not include dividends. For the Australian market, the dividends would add another 4-5%!

And now for a confession …. Slack Investor has been slack … and not moving his market index stop losses properly! I put this down to an oversight and have included an extra few columns on the Index pages to help me not do this again.

Stop Losses are very important to the Slack Investor’s method and offer a detached way in which to make decisions at the end of every month. The stop losses are set at the time of share purchase and moved upward according to a modified version of Dow theory. This trend method was discussed in an earlier post The Trend is Your Friend …

Slack Investors’s Index trading method involves moving the stop loss level upwards to a new higher low when it is established on the monthly chart. There are a couple of rules that I have to keep me in the index trade as long as possible.

Stop Loss Rule No. 1: A Higher Low can only be established below the 10-month moving average (the wavy black line on the index chart pages).

Stop Loss Rule No. 2: Stop Loss Rule No. 1. does not apply if the monthly closing price is more than 20% above the set stop loss.

For the UK Index, back at the end of February, the end of month price rose 21% above the stop loss level. I should have moved the Stop Loss level then … but I have now caught up and include the adjustment on the UK Index page. I include the technical chart information for some readers who are interested … but don’t worry, Slack Investor will tell you at the start of each month what each of his decisions are in the monthly updates for the US, UK and Australian Index.

Warren Buffet has some much more famous investment rules …

Rule No. 1: Never Lose Money.

Rule No. 2: Never Forget Rule No. 1.

Mr Buffet is being a little flippant here, and even the great investment master has lost money at times on individual investments. However, overall he has not lost money … and this is the same approach that Slack Investor is trying to emulate. It is impossible to completely avoid losses, it is just part of investing, and there is no use beating yourself up about a loss when it happens … However, you can limit losses by using stop loss levels … and, with Slack Investor Stop Loss rules … they should be limited to around 20% (there may be some slippage!.

I have updated all Index pages and the Portfolio page.

May 2017 – End of Month Update … and FHSST!

Slack Investor remains IN for US, UK, and Australian index shares.

Despite a bad month for the Australian index, the Slack Investment Cycle returns for the US, UK and Australian markets are 141.0%, 12.7% and 8.9%, respectively.

Extract from the ASX Index Fund (STW) May 2017 – Incredible Charts – More detail on the individual Index Chart Pages

May 2017 still finds the monthly price range bar is well above the 10-month moving average in all markets (This is the last bar on the far right of the charts on the index pages – and it is above the black wavy line that represents the 10-period moving average). This is Slack Investors comfort zone … so no action again this month.

For more information on parameters such as progressive gains, try the Slack investor ASX Index, US Index and UK Index pages for updated details – and a look at the charts. Next end of month update on the index charts will be early in July.

FHSST … First home super saver scheme

Slack Investor has probably gone a little early on this as, although announced in the 2017 budget, it is still a twinkle in the government’s eye as the legislation is still to be presented to the quite fickle senate and passed as law. But, it is a sensible proposal that should give first home savers in Australia a bit of a kick along if passed.

The scheme opens up the great tax-saving vehicle of salary sacrifice. Salary sacrifice is not normally on the radar for young first home buyers as it is normally associated with saving for your superannuation – and locking away your money for decades. FHSST lets you save up to $30000 for individuals ($60000 couples) – and lets you access your money when you buy your first house.

There is a nice calculator and graph here provided by SCOMO Someone on $60000 who puts $10000 per year into the scheme would have $25578 saved up after 3 years. This is a bonus of $6239 as measured against just putting the savings into a bank.

For those who are young and saving for their first home … hope for a quick legislative passage and get on it! … Its really dope!

2017 April – End of Month Update

Slack Investor remains IN for US, UK, and Australian index shares.

April 2017 has seen rises, in the US and Australian markets and a dip in the UK Index. So far, the Slack Investment Cycle returns for the US, UK and Australian markets are 141.0%, 7.6% and 12.0%, respectively.

Bull markets are a funny thing – and there is no doubt that all markets that Slack Investor follows are in various stages of a bull run – they are comforting as the Slack Investor can congratulate himself on what a stock market genius he is (Ironic comment!) – And yet, I can’t help but feel a sense of unease that things have been “too good for too long”.

Looking at the index chart pages, I get the feeling that it has been a long time since my stop losses have been adjusted upwards in the UK and ASX markets – and this will have the potential to erode any gains should the markets fall suddenly. However, I am comforted that the Slack Investor monthly-decision based method is tried and true and has brought rewards in the past … so I’m staying the course … the objective Slack method is designed to keep you in the markets as long as possible and only withdraw from the fray during a major downturn.

I am also comforted by the fact that we frail humans have behavioural biases, we lack patience and we want to tinker with things! Although Slack Investor is unable to track down the original source, an often quoted study by Fidelity (e.g., Business Insider) investigating the Fidelity trading accounts between 2003 and 2013, found that its best performing accounts were the inactive ones – Either owned by people who had forgotten that they had an account, or by dead people!

The Slack Investor does not recommend complete inaction though – but trading less has its merits.

While it is fresh in my mind I will drop in another example of the fine New Zealand experience below…

Day 3 Milford Track NZ – Slack Investor’s corpulence is almost eclipsed by the magnificence of Sutherland Falls. Reminder … must exercise more often!

For more information on parameters such as progressive gains, look on the Slack investor ASX Index, US Index and UK Index pages for updated details – and a look at the charts. Next end of month update on the index charts will be early in June.

2017 March – End of Month Update

Slack Investor remains IN for US, UK, and Australian index shares.

The Slack Investor has been true to his ethos and not published any general interest posts for a month … this will happen from time to time … but I will commit to prompt monthly updates for those who follow the US, UK and Australian indexes and who may value the Slack input to their buy/sell decisions – these will be published in the first couple of days of each month.

I have been off to New Zealand. The great advantage of the Slack approach to investing is that I can be away from the markets – even out of internet range for up to a month at a time – the lack of required decisions on a daily, or weekly, basis suits my style.

New Zealand is a remarkable country to which Australia is the older, louder, uglier, more arrogant brother! I had a great time and the the Kiwis would often impress with their manners, integrity and general genuineness(?).

Day 3 Milford Track NZ – Thanks sister-in-law for the photo

We were mostly in the South Island and the scenery was jaw-droppingly beautiful. … I want to go back! Slack Investor and travelling companions are shown casting appropriately shadowy figures on Day 3 of the Milford Track – Nice photography skills from my sister-in law … Enough of the travelogue.

March 2017 has seen rises, in the UK and Australian markets and a refreshing pause with the US Index. It is also dividend season down under and Slack Investor always enjoys this time when each company (hopefully) shows their appreciation for supporting them with a little trickle into the bank accounts.

For more information on parameters such as progressive gains, look on the Slack investor ASX Index, US Index and UK Index pages for updated details – and a look at the charts. I have also updated my Portfolio page – this portfolio page will only be updated occasionally and is not presented as an investment guide – it just shows the type of companies that Slack investor is interested in – mostly growth companies with established dividend records. Next end of month update on the index charts will be early in May.

2017 February Monthly Update

Slack Investor remains IN for US, UK, and Australian index shares.

Please forgive the early call … but all markets had an ebullient month … and I am off on a holiday. The great advantage of a monthly system for index funds is that no decisions need be made until early April after analysing the end of March charts.

February 2017 has seen rises, in the 3 markets that Slack Investor follows. I am always glad to be able to raise the stop loss on any of my index funds in a hope to trap any hard fought gains. The US market (SPY) had a rules-based rise in stop loss from 199 to 208 – small … but every little bit counts!

The SPY is 236.74 at the ‘end’ of February – a 140% increase since the initial buy. The Australian, and UK markets were bought much more recently (2016) and have had modest increases of, respectively, 8.6% and 8.5%. All rises are based on end of month prices only – Dividends and transaction costs are not included.

I beseech dear readers to mine further on the Slack investor ASX Index, US Index and UK Index pages for updated details – and a look at the charts. Next monthly index update early in April.

2017 January Monthly Update

Slack Investor remains IN for US, UK, and Australian index shares.

January 2017 has seen no great plunges, or rises, in the 3 markets that Slack Investor follows. In these crazy times of Trumpenomics, I am naturally nervous – but our stop losses have held for another month.

I am particularly watchful 0f the US market as it is very deep into a bull run. Slack Investor bought in to the US stocks through the ASX listed SPY – an Exchange Traded Fund (ETF) that emulates the US top 500 companies. The initial investment was at 98.81 in July 2009 on a monthly Directional Movement Index (DMI) BUY signal. The SPY is 227.53 at the end of January – a 130% increase since the initial buy – a staggering annual average performance rate of over 17%!

The Australian, and UK markets were bought much more recently (2016) and have had modest increases of, respectively, 5.7% and 5.6% .

There are plenty of opinions on where the various markets will be heading in 2017, Slack Investor will admit to being in the first category of investors as described by the American financial academic William Bernstein,

“ There are two kinds of investors, be they large or small: those who don’t know where the market is headed, and those who don’t know that they don’t know. Then again, there is a third type of investor –the investment professional, who indeed knows that he or she doesn’t know, but whose livelihood depends upon appearing to know.”

So, Slack Investor tries to follow objective rules that define his stop losses on a monthly basis knowing the markets will do what they do and he can react accordingly. In the mean time, he can relax for another month!

Normally, I would beseech dear readers to mine further on the Slack investor ASX Index, US Index and UK Index pages for updated details – however, due to technical difficulties, these pages, and the Portfolio page, will not be updated this month – they will be updated for the 2017 February monthly update, early in March.

2016 December Monthly Update

Slack Investor remains IN for US, UK, and Australian index shares.

December has been a jolly month for the markets that Slack Investor follows. The US, Australian, and UK markets climbed 1.4%, 2.7%, and 3.8%, respectively.

This is also time to rub the belly and review the calendar year 2016. The Slack Self Managed Super Fund, which is my main retirement vehicle, had a mixed year due to some not so wise investments in telcos and medical stocks. However, it still returned 7.5% overall for the 12 months. This was below the benchmark ASX return of around 11% but well above the online cash rate of around 2%.

As Slack Investor has a general policy not to directly invest in mining companies, it can be expected that the Slack Fund would underperform the benchmark in a year that mining companies did exceptionally well (2016, +52%).

Although the festive spirit prevails, it is good to remind myself of the words of Rudyard Kipling from “IF”

… If you can meet with Triumph and Disaster
And treat those two impostors just the same

Slack Investor tries to follow these wise words of British stoicism and treat the transient good and bad news of the stock markets with some detachment … and remain ever vigilant in a mostly slack way!

See the ASX, US and UK-Index pages for updated details.

2016 November Monthly Update

Slack Investor remains IN for US, UK, and Australian index shares.

There has been US elections, past and upcoming European elections and referendums, uncertainty with OPEC and the oil price … Cripes! Lucky we have the old stock proverb

“The market climbs a wall of worry … and slides down on the slope of hope”

What this means to Slack Investor is that sometimes you have to tune out the noise and rely on the fact that stock markets are a great place for the long term investor. According to Fidelity, over 30 years, average annual returns for Australian shares are 9.5% and for Global shares 7.1%.

In the US, for the world of commerce, there seems to be a feeling of optimism about the upcoming Trump presidency (For me it is a little weird … and alarming, putting those last two words together). I am naturally on alert when markets like the US are at an all time high. However, I have my monthly stop loss to protect me and we soldier on for ASX, US and UK-Index stocks. The UK and US are both well above the 10-month moving average (black line on the monthly charts) and of no immediate concern. The ASX index breached the stop loss early in November but as Slack Investor makes decision on the end of month prices – and they finished well above the stop loss (red line) – no action required. See the ASX, US and UK-Index pages for details.