Now that the investment books for the 2007-08 financial year are closed it is worth having a look at some of the forecasts and predictions made at the beginning of the financial year to see how they turned out. The Sunday Mail ran a piece over the weekend – "Redemption time – Stock experts shrug off a painful year of investing".
The article looked at the 5 stock picks by four experts at the beginning of the 2007-08 year:
Tony Dennis - Director equities, ABN Amro Morgans - Average performance of picks -3.6%
Tim Lincoln - MD, Lincoln Intelligent Sharemarket Solutions - Average performance of picks -19.32%
Joel Palmer - Principal Palmer Portfolios - Average performance of picks -41.76%
Joseph Kingsley - Client adviser, Wilson HTM - Average performance of picks -25.68%
To put these results in context, the ASX200 Index returned -16.54% over the year (not including dividends). The average performance across the 4 experts was -22.59% or 6.05% below the ASX200. Well done to Tony Dennis for beating the market but based on pure chance you would expect two of the four to have out-performed and two to have underperformed so basically the group as a whole did worse than pure chance.
An index fund would have to have had fees and costs of 6.05%to have matched the performance. (Vanguard’s Australian Share Index Fund has a fee of 0.75% on the first $50,000 or 0.34% for wholesale investors)
I know where I would have preferred to have my hard earned money invested.
For more examples of the failure of forecasts take a look at the following website - Failed Forecasts.
Regards,
Scott Keefer
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