Australians Share The Spoils: We Are A Lucky Country
The Age
Saturday May 6, 2006
I WAS talking to a mate at a first-birthday party last week. He reads this column and the newsletter. He told me that he was sick to death of being told to buy the banks and Woolworths. And how right he is.
Portfolio investment is relatively easy in Australia.It used to be that people didn't know much about the sharemarket. Access to broker research was limited. No broker likes to have to find an envelope and address it, let alone get out of his desk and work out how to use the fax machine.Even when the information got through you only got one bit of research, one opinion, one perspective, one broker's view and it was one week old. In the old days (1999) the disclaimers were also missing. You simply wouldn't know your broker floated the company and was lunching the managing director.Even the newspaper journalists, the hunter-gatherers of all things financial, were an inefficient vehicle for research dissemination. Brokers were ordered not to talk to them without clearance from the head of research. Journos weren't trusted. They were deliberately kept out of the loop unless it suited the broker's purpose. In those days there was value in telling people which stocks to put in a long-term portfolio. They really didn't know. But all that has changed. With the internet came a flood of information. Big brokers now lay bare their intellectual property for any Tom, Dick or Harry to pick up. The mysteries of portfolio construction are now but a click away. What do you want? Income? Growth? Value? Please misappropriate the appropriate list of stocks. Not surprisingly, the banks and Woolworths are in every portfolio.On top of this broker leakage, the Australian portfolio constructor has some other natural advantages not found beyond our shores. Advantages he may not even realise he has. With this sort of driver you'd have to be pretty unlucky (to be polite) to muck it up. Here they are. Australian advantages:? Monopoly stocks. Lots of them. And they perform (except for Telstra and AWB). Banks up 358 per cent in 10 years.? Franking, the "Australian gift". ? Political stability. If the Government's biggest problems are accusations of lying about children overboard, lying about the AWB and losing a soldier's coffin, there isn't much wrong.? Population growth is in-built. Something Europe doesn't have.? Growth in super fund contributions. It's legislated. That money is feeding the market.? A government that promotes tax-efficient off-market share buybacks. How else can you sell CBA and claim a capital loss? Make the most of it.? Takeovers. The ACCC is going to wake up one day to find that the whole country has merged into one huge conglomerate. And they will have failed. All good news for investors.? Tax cuts. Tax is penal in this country. If it weren't for my wife's good looks, the weather, the people, the attitudes, the AFL, the rugby and the fun, I'd be back in Blighty with the 25 per cent tax rates, the VAT and the warm beer. There is only one way taxes can go in Australia and that's down. We have years of generous budgets ahead. ? Growing shareholder ownership. Fifty five per cent of people own shares, 44 per cent directly, and it's growing. ? We are on the doorstep of Asia. Better than being on the doorstep of Europe, where everything's built and everything's old. Asia spells untold growth, long term. Leighton Holdings is up 700 per cent in 10 years. Australia is a great base from which to exploit Asia.? The main one at the moment. Australia has fluked a spot on the doorstep of the biggest economic revolution in our lifetime: China. It is a boom not a bubble. Real not imagined. It will last for years.Feeling comfortable? Portfolio investment in this country is a doddle even before you take access to all the broker research for granted. But let's not go there. Not today, anyway.Marcus Padley is a stockbroker and the author of the daily sharemarket newsletter Marcus Today. www.marcustoday.com.au
© 2006 The Age