Noel Whittaker's Blog With Christmas almost upon us it’s unlikely your thoughts today will be focused on finance. Therefore today let’s have some fun and recognise those who have made unique contributions to the world of money in 2020.
Rio not so grande
The standout contender for the Naughtiest Kid on the Block award is Rio Tinto the world’s biggest iron ore miner. Despite much publicised opposition from the Aboriginal traditional owners Rio went ahead with the destruction of the Juukan Gorge rock shelters which showed evidence of continuous human habitation dating back 46,000 years. They were among the oldest historic sites in Australia.
The three most senior executives lost over $6 million in bonuses but not their jobs.
Rio’s website proudly proclaims “We work hard to leave a lasting, positive legacy everywhere we work. “They sure got the “lasting legacy” bit right.
Invest now – win big
The Golden Lion Award for the Australian Share of the Year goes to Afterpay. Their shares were nudging $30 at the start of the year but at date of writing had almost quadrupled to $114. I must confess I have never owned the shares – they have always seemed overpriced to me. Now the price seems to be driven by fear of missing out. but how would you know. But if there was an award for the worst advice of the year it would surely go to the stockbroker who convinced a friend of mine to sell all her Afterpay when they got to $60. Surely the sensible advice would be to sell half.
Asleep at the wheel
The Leonardo Da Vinci award for procrastination goes to the Australian federal government. In December 2016 Treasury released a discussion paper stating it was aware that retirees were living too frugally as they did not know how long their money would last. The message was that Treasury wanted the industry to develop a suitable product to solve the problem. The May 2018 budget went a step further by introducing a retirement income covenant requiring trustees of super funds to offer Comprehensive Income Products for Retirement (CIPRs) which would provide lifetime income streams. Two years later CIPRS are still in the government’s too hard basket. Naturally, the delays are being blamed on Covid.
Coming home to roost
Last year I gave Mayfair Platinum the Nant Whiskey Award for the record number of full-page ads offering breathtaking returns. My suspicions had been raised by the advertisements themselves, then on 6 December online newsletter Crikey published an article by Adam Schwab, who reckons Platinum “raises more red flags than a North Korean military parade.” I wrote at the time “You pays your money and you takes your chances”. It was prophetic – it all went belly-up on 7 April 2020, when ASIC launched Federal Court proceedings against Mayfair, alleging they were engaged in misleading or deceptive advertising.
Barking up the right tree
And, finally for the fifth year running the Red Kelpie Award (for long-term, loyal and meritorious conduct) goes to … the Australian Stock Market. The kelpie sure gave us an exciting ride. The index stood at 6946 on 1 January then plunged to 4854 on March 20 when Covid became the big news. However, the good dog quickened its stride and quickly got back on track. The index has been steadily rising ever since and at date of writing was 6947 – exactly where it started. Despite zero capital growth the index did keep paying around 4% per annum.
Yes, you would have done much better with Afterpay, but that involves picking winners. The great thing about the index is there are no decisions to make – you invest your money and leave it alone.
Merry Christmas everyone and I wish you every success in the new year.