CHRISTMAS 2018… SEASON’S GREETINGS!!!
Thanks for the pleasure of working with you for another great year. We are very privileged, and we look forward to continuing the journey with you for an even bigger and better year in 2019.
2018 has been a year of consolidation here at Fortitude, with the 2017 new hires of Ollie, Huw and Grace all settled in and applying their terrific skills. We’ve had one new addition to the team during the year with Federico Quaia (aka ‘The Italian Stallion’) joining our ranks. Welcome Fed and congrats also for recently finishing your Bachelor of Applied Finance and becoming a full time Fortitude fellow.
As such, the team has increased to six, and we remain ever vigilant and focused on continually improving our speed, quality and responsiveness of service to you. As always, we welcome and value any suggestions or feedback you have.
It was a busy year for client events, leading with Ollie and his dad Peter Thornhill running 3 seminars (A Rational Path to Financial Freedom), all packed to the rafters. Ollie will continue to roll these out throughout 2019.
We also had Rob Coombe (Chair of GDG), Brendan O’Dea & Frank Gooch (Milton), Andy Brown (E72), Tom Millner & Will Culbert (BKI) share their time, thoughts and wisdom with us all.
We continue to stay close to our preferred investment partners, with one on one updates throughout the year from key management of DUI, BKI, WHF, SOL, MFF, AFI, ARG, MLT, BKW and BRK (OK, there were 40,000 other investors at this last one). We recently attended the Sohns Hearts and Minds Conference in Melbourne listening to the key stock analysts of 17 highly rated Australian and International investment houses. A new catch cry was born at this event .. ‘beware the Orange Swan in 2019’ … you’ve likely heard of a Black Swan event .. make use of ‘The Orange Swan’ (Trump) at your next BBQ.
To the Markets – As at the time of writing this (ASX200 at 5,728), post the 11% pullback we’ve had since the end of August, the snapshot for the ASX200 including dividends for the last 12 months is -0.5% (or-4.5% excluding dividends). The 4 major banks & TLS (TLS, NAB &WBC all off 9-11% including dividends) were the key negative performers for the year, and the stars performers were CSL, MQG, BHP & WOW (up 23%, 20%, 17% and 16% respectively including dividends).
We are again very pleased with the performance of your investment portfolios over the year despite the flat Aussie market.
Dividends – Whilst AFIC maintained its dividend, ALL of our other preferred investments increased their dividends (MFG, MFF, SOL, BKW, ARG, BKI, MLT, WHF, DUI)…. MFG the stand out with a 91% increase (yes, you read that right) in its final dividend. Try getting that from an investment property!
Share prices – Whilst the ASX200 was off -4.5% for the year, stellar performers were SOL (+69%!), MFF (+23%) and BKW (+13%). Berkshire Hathaway was up a rock solid 16% .. thanks Waz. There were no blowups.
2019 will no doubt be very interesting. Expect lots of noise and negativity, driven by the press and the market’s reaction to themes such as any US interest rate increases and any flow on effects to Aussie cost of capital (ie out of cycle bank-initiated interest rate increases), over-reaction of banks to the Royal Commission, Australian unemployment level increases & impact on highly leveraged home owners, any further deterioration in our property market and flow on effects from that, Brexit, escalating US/China tension, slowing US growth … and any tweets from the Orange Swan!
How will we handle any volatility to these or other unforeseen themes? We’ll stick to our knitting, invest in only that which we understand, and of course expect, embrace and take advantage of volatility. Reduction in stock prices is the market de-risking any new investments made, which gifts us with the ability to lock in even better long-term returns. Buy on the sound of cannons! (Nathan Rothschild, 1810)
Berkshire’s great Charlie Munger gets this year’s quote:
“Over many decades, our usual practice is that if something we like goes down, we buy more and more. Sometimes something happens, you realize you’re wrong, and you get out. But if you develop correct confidence in your judgment, buy more and take advantage of stock prices.”
Our office will be closed from lunch on Friday 21st December 2018 until Monday 7th January 2019. We’ll be available on our mobiles if there’s anything urgent.
Thanks again for all your support, and our very best wishes to you over this fabulous time of year from the whole incredible team at Fortitude who make it all happen … Ollie, Fletch, Huw, Grace and Fed.
Luke Rathborne CA (FPS), CFP,BCom, F Fin, SSA, GAICD
Managing Director, Fortitude Private Wealth Pty Ltd
AFSL No. 435732
T: +61 (02) 8215 1560