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Published 05 July 2012 05:05, Updated 05 July 2012 08:47
What investments do you like at the moment?
We still have some very attractive fixed-interest investments in Australia thanks to our interest rates remaining relatively high. The bank paper further down the risk curve, the Tier 2 and subordinated debt, I think is attractively priced. But it won’t be for too much longer because rates are falling. Second, Australian equities make sense – a lot of the bad news has been priced in; I’d think we’d be heading into an up market at some stage in the next six months.
It’s time to be getting set.
What are you avoiding or selling?
Sovereign bonds across the world, even Australian bonds at these prices look like a bubble, as many others have said. We could all be wrong but the bond market is pricing in Armageddon and I don’t think we’re at that stage. I’d also avoid any investment with leverage in it, just in case the credit markets have another freeze.
What was your best ever single investment decision?
Being around to be issued shares in the demutualisation of Colonial Mutual in 1996, which I was then part of. That was pretty handy. Everyone did pretty well on the demutualisation of the big life companies in the ’90s and Colonial was no exception.
Now describe your worst investment decision and what you learnt from it.
I’ve got a bucketful of worst decisions unfortunately.
At a personal level, I probably invest too much in early-stage enterprises. I’ll fall for the dream of the founder and get my fingers burnt. So I think I’m learning that in venture capital, you need to be extremely careful. I’m on the side of those who say the government should encourage venture capital more – they’ve tried in the past but there’s still no safety net, not enough upside, not enough tax breaks.
Who is your investment hero and why?
Same as most people, you can’t help but follow Warren Buffet but I also have a lot of time for a guy called Howard Marks. He’s one of the principals of a group called Oaktree Capital Management. He’s a value investor and every three months or so he’ll post a new essay on oaktreecapital.com – I just find it incredibly insightful stuff.