There are just some people whose advice is best taken with an industrial-sized pinch of sodium chloride. Or, in other cases, not taken at all.
In fact, there are some investment “experts” who have a track record of giving great advice…. to themselves, but utterly disastrous advice to others.
Some examples spring to mind; Dick Fuld, Bernie Madoff, Fred Goodwin and, in Australia, John McGrath.
For those not obsessed with the Australian property market (i.e. the other 7.417bn people living in the rest of the world), you may not of heard of the financial disaster zone who is the self-styled “million dollar agent”, John McGrath, let’s quickly catch you up;
John is an estate agent (“realtor”, in North American speak) with a chain of 90+ franchise offices across the country. He started his business in 1988. There might be something significant about the year which we’ll come back to later.
In a recent opinion piece, John offers sage advice to people who might find themselves somewhat underwater with property that is worth less than they paid for it… that’ll describe anyone who bought property in most Australian cities in the last year, for example.
What is that advice then, is it nuanced for owner-occupiers, amateur investors, those nearing retirement, etc.?
Hold, don’t sell.
What, even someone close to retirement, hoping to maximise the capital available to buy an annuity and worried that they’re exposed to a falling asset?
Hold, don’t sell. I repeat; Hold, don’t sell.
Crikey (in the vernacular), that’s ballsy.
Ok, but he’s a seasoned veteran of 30 years in the industry, he knows what he’s talking about, doesn’t he? He’s seen the cycle multiple times.
What cycle?
Oh, he’s barely experience a recession or significant economic downturn in his adult life, let alone when he managed any material level of financial asset. He started work in 1988 and the last recession was 1992. He probably didn’t notice as he was still living with his parents.
Ok, so what if all he’s ever known is large percentage asset growth, he’s proven himself a canny advisor to assist others to make great investments.
Witness; the share price of his business, the imaginatively-titled McGrath Ltd. since the launch in 2015;
To paraphrase Sesame Street, “today’s chart was brought to you by the words ‘shareholder‘, ‘value‘ and ‘destruction‘”.
Perhaps the fairest thing one can say about John McGrath is that he gives very canny investing advice….. to people named John McGrath.
It’s a fool who says they know what will happen to a particular asset price. But, with a property market that seems to be desperately searching for any good news, and failing to find any, the greater fool is someone who thinks that John McGrath has a Scooby about what’s about to happen next and, if he does, he’s about to tell you the truth.
Bill’s Opinion
If you really want to become a millionaire, take 6 million dollars and invest it in whatever John McGrath tells you to.
A cynic might suggest John would like you all to not flood the market with your firesales until he’s finished the conveyancing on his.
Caveat emptor, indeed. Perhaps he ought to change his name to “the 900 thousand dollar agent, 899, 898, 897…….“
William
Also bear in mind McGrath says don’t panic and sell. In a major bear market, if we are in one – and I suspect we are – the rational investor walks first. Does not panic.
Why do I suspect we are in a bear market?
Property shares, globally, have and are tanking. The word from investors, globally.
We are increasingly likely in an ERA of globally rising interest rates – a generational change.
Prices lost reality prior to 2008. They’re even crazier now.
Thanks for writing, as ever. Listen to me @boomsbustsshow on itunes or audioboom.
I’m honoured you’ve commented JD, I’m an avid listener to the podcast. Freedom, liberty and no socialism!
At the same time (is there an internet acronym for this like ATST perhaps) he displays a certain amount of altruism. If everyone sells up then there’s a lot of agency commission to be earned. Which perhaps explains the share price. I didn’t know that you could list a non-profit.
If you read Buffettology you’ll understand the wisdom of ignoring market sentiment, unless naturally there is a Z in your country’s name in which case you should take the money and run. “When they’re yelling I’m selling. When they’re crying I’m buying.”
I like the “z in your country’s name” tip.
See also; “green on the flag”.