Advisers wary of QR’s big price tag
Despite a glossy $15 million marketing campaign QR National has been rejected by many advisers and retail investors, including Roger Montgomery. Read article.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Lloyd Taylor
:
Roger,
A very interesting article in today’s Sydney Morning Herald suggests that there will be a few shenanigans by the promoters of QR National in the days and weeks following the listing. http://www.smh.com.au/business/big-sell-goes-close-to-the-edge-20101112-17rb9.html
Your readers should be aware of this and the potential to be sucker punched in the process:
Quote
There are also signs that even regulators are prepared to suspend normal rules to allow an investment bank-operated mechanism called the ”green shoe” – designed to support prices after QR starts trading on the market.
Supporting prices is normally known as market manipulation. It is illegal under various sections of the Corporations Act.
But the cavalcade of investment banks apply for and receive explicit waivers from the law from the Australian Securities and Investments Commission and, consequently, the ASX, allowing them to actively support prices in the days after a public float. The ”stabilisation manager” for QR, Goldman Sachs, will do this by buying shares in the market if the price dips below the initial public offering price.
Investment bankers are full of undoubtedly talented, driven and ambitious people. As demonstrated above, they know when to apply to ASIC to bend the law.
Unquote
The conflicted interest of the regulatory authorities in promoting share trading while at the same time enforcing regulation is very apparent.
Don’t be fooled.
Regards
Lloyd
Pat
:
HI Roger,
I am currently thinking about buying my first home but cant decide if its the right thing to do. Is the debt from the bank something you would stay clear from. I have 50 k deposit and would need to borrow 300k. Am i better off renting and investing the money into something else. i know you are a big Warren Buffet fan he he suggest staying away from large debt. Does hes rule only apply for stocks.
Your thoughts would be greatly appreciated
Ric
:
Google “Jeremy Grantham”….See what he says about housing…Along with every other intelligent person on the planet…It’s going to crash…..
Rob Walker
:
Hi Pat,
Some time ago I remember reading an article probably written by Paul clitheroe not sure ?
The context of the article was that if a person rented instead of taking out a mortgage and invested the difference each week, then the person renting would be.
As per your question, To me buying your first house if it is to be your home, does not constitute an investment. Therefore the choice should be based upon yourvown goals and life style. If you decide to take a mortgage, just make sure can pay for a few extra percentage points should they continue north.
Also if you are planning on owning a home for a long time, then don’t worry if the prices will go up or down in the short term. If the property you purchase has similar attributes to the companies discussed on this blog then you will do alright over time. Actually I probably would not purchase a house with a moat around it. :)
Rob Walker
:
Error correction, the renter would be better off