Rory Gillen's free book: "A guide to sound investing"

Discussion in 'Investments' started by Brendan Burgess, Nov 21, 2016.

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  1. Wollie

    Wollie Frequent Poster

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    First of all, Rory, it’s a pity that you won’t engage on the issue any further. No matter how much you know, and I’m sure that you are an expert in your field, I’m confident that, by engaging with serious investors, you will learn even more about the business. The problem you face is that we must pretend that we know all the answers when we’re in a teacher/ pupil situation, and the opportunities in such situations for the “teacher” to learn are few and far between. I assure you that some of the contributors on AAM know their stuff; it’s well worth interacting with them constructively in order to improve your own knowledge.

    I agree with most of what you wrote in your Sunday Times article. My only quibble, which is why I wrote to AAM in the first place, is with three sentences in the article

    Early on, you wrote:

    “In Green REIT’s case, its shares are now trading at a 16% discount the the balance sheet value. In Hibernia REIT’s case its shares are trading at a 12% discount to the balance sheet value, or net asset value.”

    I’ve no quibble with those two statements (although I haven’t checked your figures). That’s not where I disagree with you. My disagreement relates to the last sentence of your piece, where you wrote:

    “There’s always an opportunity to reinvest in the shares of Green REIT and Hibernia REIT knowing that they are already priced for a substantial 12 – 16% decline in Irish commercial property values.”

    This is a complete non-sequitur. By quoting exactly the same percentages that you mentioned earlier in the article, you were clearly implying that the two REIT’s are now trading at their “true” underlying NAV’s, which is less than the latest quoted NAV. My purpose in writing was to point out to AAM readers that REIT’s (or other investment trusts) don’t have to trade at net asset value (NAV). (As an aside, it’s worth mentioning that, for investment trusts that hold quoted securities, the net asset value is generally taken to be the market value of the underlying securities, less borrowings, etc.). Most of the time, investment trusts trade at a discount to NAV, sometimes at a substantial discount, as I demonstrated in my earlier posting. At the present time, the REIT in which I hold shares is trading at a 22% discount to the net asset value per the balance sheet at 30 June last. As I said in my earlier posting, the discount has varied between 41% and 14% of NAV at various balance sheet dates over the last five years. Whilst the discounts for this particular REIT are higher and more volatile than those for other REIT’s (for reasons I’ll discuss below), I think that anyone considering investing in a REIT should be aware of this further source of volatility. That’s the main omission from your article that I wanted to bring to AAM readers’ attention.

    Now to the reason for the volatility of the REIT in which I hold shares.

    jpd asked
    It’s important to emphasise at the outset that I never said that I never said that REIT’s are ALWAYS discounted to the NAV. The adverb I used was “generally.” In fact, what can arguably be termed the most famous investment trust of all is Warren Buffett’s Berkshire Hathaway. That trades at a substantial PREMIUM to NAV. I could be wrong, but I think the premium to NAV for Berkshire Hathaway is close to 50%; I’m sure some of our readers will enlighten us if I’m wrong. In BH’s case, investors are betting on the Sage of Omaha and his hirelings being able to continue to generate superior performance in future. For what it’s worth, my concern for BH is that, if anything were to happen to Mr Buffett (he’s not a spring chicken you know), investors might start to wonder why they were paying such a premium for the investment expertise of someone who mightn’t be around for much more, but that’s a discussion for another day.

    Now, back to jpd’s question. He’s right in theory that someone could buy all the shares, dissolve the REIT and pocket the profit. The problem is that a high proportion of the shares are owned by members of one extended family. Many of them are making a nice living from working in the business (in fairness some of them do a good job). They could be out of a job if they sold their shares. Do turkeys vote for Christmas? I knew that when I was buying into the company, and I’m happy to tag along, as I’m getting a higher yield on my investment since the share price is at such a discount to NAV. There is also the hope that sometime the family will decide to sell out, at which time I and other external investors hit the jackpot.

    This brings me to my final point. Rory, you say that I sound like a value investor. Yes, I am! I like to get good value in what I buy. Show me an investor who wants to get bad value? I think it’s interesting the way labels like “value investor” are thrown into discussions occasionally for unknown reasons. I’m not sure of the purpose, but I think that “value investors” are portrayed in some quarters as stick-in-the-muds, as opposed to the go-getters who want excitement and movement all the time. I’m afraid that’s me. I like my investments as boring as possible, provided they deliver value in the long term.

    In closing, I would like to say that I’m happy to continue to engage with you, Rory, or with anyone else who would like to contribute to the discussion. I’m sure I’ll learn something new in the process. That should be the aim for all of us.
     
  2. Rory T Gillen

    Rory T Gillen Registered User

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    Last edited: Dec 1, 2016
    Wollie, no problem engaging, very busy at present. Also, I feel enough has been said on that issue as I was even beginning to bore myself. For a free website (AAM), I think I've given you enough engagement on this topic. I have a website where subscribers pay for quality advice/information. That's an option for you. Engaging with others who know as little as oneself was never an option I considered in the past when looking to learn, it's hardly an ideal way to advance one's knowledge. The subscription-based investment newsletter is a huge one in the US, different mentally over there perhaps.
     
    Last edited: Dec 1, 2016
  3. Rory T Gillen

    Rory T Gillen Registered User

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    The Free offer has ended, but a PDF copy of the booklet can be bought for €6.99 - just Google the title or call our office - 012871400.
     
  4. Dan Murray

    Dan Murray Frequent Poster

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    I got this free awhile ago and read it out of curiosity. From what I can see, Mr. Gillen's investment services and commentaries, seem to divide the jury. My vote, for what it's worth, would be very unfavourable. The fact that it's no longer available for free is neither here nor there.
     
  5. Rory T Gillen

    Rory T Gillen Registered User

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    Last edited: Dec 10, 2016
    There's really nothing for the jury to be divided about. GillenMarkets offers a range of investment services from training to a subscription-based newsletter to asset management services. Those who believe they can do the investing themselves are unlikely to avail of any third-party services, and there's nothing wrong with that. Many others don't feel proficient enough to invest in a vacuum and should use professional, third-party services. We compete in that marketplace.

    The booklet is simply a bit of marketing on our part. Brendan posted the offer, not myself. Brendan did so as I believe he trusts that I don't sell sizzle and have sound views worth sharing. The booklet was free for a period and should assist many existing private investors and would-be private investors to gain a better understanding of investing. It's 30 years of experience in 56 pages and written in a style that should allow even an inexperienced investor to follow.

    Those who read the weekend Financial Times know of Lord John Lee and his style of investing and communicating. I enjoy his monthly articles and I was grateful to him for providing a 'Foreword' in the booklet. I doubt he provided it lightly, as his own reputation is on the line.

    Over 200 from this website availed of the Free booklet offer. I hope they enjoy the read and, who knows, someday we might be doing business with some of them.

    On the other hand, if there's something in the booklet you disagree with then just say so; that, at least, could add some value to users of this website by encouraging debate, which after all is the foundation of AAM. Otherwise, you're in danger of sounding like a whinger, and God knows there's a few of them lurking on this website. But, in the spirit of empowerment through knowledge-sharing I will not be put off by those who appear to have nothing but negative opinions on everything and little by way of facts to back them up.
     
    Last edited: Dec 10, 2016
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  6. trajan

    trajan Registered User

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    My problem with the Rory Gillen approach is that it tries to oversimplify things that are and always will be multi-dimensional and therefore complex.

    You always have to keep in mind that for most people the money invested is not casual punting money but rather their life's hard-earned savings.

    A long time ago I read the famous rule of thumb of investing: put a third in high-interest savings accounts in case you need to overdraw cash for medical operations, emergencies, etc; put a third in government bonds as they are state guaranteed and gains tax free; and put the rest in either companies whose industries/markets you understand and have up-to-date information on or else in unit trusts.

    Mr Gillen is in an industry (brokering) that benefits from other people's activities in several ways but principally through the application of transaction fees. The more people engaging - even in a small way - then the more revenue the brokering sector receives. Naturally he wants to generate interest in his sector's services and get more people trading in stocks. But most people are not competent or comfortable in this process and would be like babes in the wood if they were to proceed down the Teach Yourself Investing route: they need someone competent, trusted and accountable - to most, this means socially as well as legally - to manage things for them.
    In the long run I don't think the stock market is a place for people with superficial perspectives, limited knowledge or business analysis abilities. And it's certainly no place for amateurs who simply cannot afford to lose their hard-earned savings.
     
  7. Itchy

    Itchy Frequent Poster

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    I think that is a very disingenuous post about Rory and his business. You make it sound like he is the wolf of Wall Street! He wants to 'get more people trading in stocks'? Why? To what end?

    Surely he just wants to manage your money in his fund so he can earn the management fee? Rory, on his website (satisfied customer here, no connection to him) explains how he runs the money so people can copy it through a third party broker if they want. No transaction fees for him there. Also, afaik it is 100k minimum to deposit in the fund, not 'casual punting money' by any stretch!

    Your opening accusation that Rory 'oversimplifies' a multidimensional issue is closely followed by your own 'famous rule of thumb of investing'?

    To be fair to Rory he provides an excellent service in my experience. He has great 'business analysis abilities' which IS an important attribute in the world of investing. His service is unique in Ireland and if you examine his thought process you will learn something, even you reach different conclusions. If you are interested in his service, I recommend you buy his book for €20. If you want to know more, get the FREE trial on his website. There is no pressure from him to trade stocks, it's simply market/stock analysis, I haven't spotted any agenda or anything so far. I agree that the market is no place for amateurs who can't afford to lose money but Rory is imparting (selling) his knowledge on the subject. I would recommend the service anyway :D
     
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  8. trajan

    trajan Registered User

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    Evening, Itchy.
    I did not intend the rule of thumb as something to be guided by. And it ain't my own, as you know well ! It's just simplicity and of little specific use except where no pro help is at hand and large sums deposited temporarily in a current account must be put somewhere else fast out of the hands of a predator bank manager. That rule of thumb is purely defensive - a sort of kick for touch to gain breathing space to think before a proper investment plan is made. As you know well, everyone's circumstances (age, family, needs now, needs going forward, existing assets, priorities, ethical preferences, etc) differ and the investment plan must be accordingly different
    On the odd time I heard Gillen giving tips on the car radio, he also gave generalised macro-observational advice like that. Never said much about analysing a company, an industry or the economies it operates in. It always seemed odd to me then that while his day-job company, Merrion, were doing things analytically - and rightly so - by studying actual consumer behaviour in relation to take-up of Magner's cider in UK for C & C, their main man was promoting investment tools that were quite superficial by comparison.

    Buy the book ? This whole thread started with the book being FREE online, I thought.
    €20 for a booklet of some 64 pages ? Haaaahhhhh! :eek:
    I just paid €6 for an imported surplus US stock imported hardback bio of oul Joe Kennedy (Mr Short-Selling) and I'm getting fierce satisfaction from that books 800 pages + 100 odd pages of references.

    Goodnight, Itchy.
     
  9. Itchy

    Itchy Frequent Poster

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    The book: http://www.askaboutmoney.com/threads/rory-gillens-new-book-3-steps-to-investment-success.174019/ 20 quid I think and more substantial than the booklet.

    Listen, I just dont get what you have against the man. None of your points are logical, I can't follow your line of argument and I don't think you should put the man or his business down on the back of it. You should be called out for your non-factual statements and the conclusions you draw from that.

    For example, you didn't address any of the points I raised in your first post and then you double down with your impression of him from the 'odd' statement on the radio? What's that got to do with his business which is clearly different and more substantial than a radio piece? Then you go on to disparage him by alluding to a supposed conflict of interest with his former employer? Afaik (open to correction please) he left Merrion before he started promoting "[superficial] investment tools"? At least elaborate on what these are to give us some idea of what your issue is?

    I think the theme of your two posts is a point about amateurs getting caught out in the market, which is fair enough. But why is Rory the target? All we've got so far is that he "oversimplifies" and gives "generalised macro-observational advice" on the radio. Both generic and unsupported points. At least say you read his stuff and you disagree. At least actually detail your issue a la Wollie so people know why you disagree with him. Your argument can't be credible otherwise.

    I am a subscriber, I do think it's a great service, particularly for amateurs as Rory goes out of his way to explain how NOT to get caught in the market. And if you think you are, you can ask him directly and specifically about an issue. Spend your €6 and don't get caught in the market, good luck to you. But your grossly generalised and unsubstantiated comments about a good business are not warranted.
     
  10. Gordon Gekko

    Gordon Gekko Frequent Poster

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    There is something sinister about some of the contributions to this thread. I do not know Rory Gillen, but I do know that he is a good operator, and I welcome his contributions to this forum.
     
  11. mathepac

    mathepac Frequent Poster

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    Which contributions?
     
  12. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Posts by Wollie, Dan Murray, and Trajan.

    Frankly, I was appalled to read them.

    Someone comes to this site without the veil of anonymity and is subjected to what I would call abuse and innuendo.

    Disgraceful.
     
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  13. Logo

    Logo Frequent Poster

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    At the end of the day, financial advice is a bit like a blind-folded dart player who is sometimes right on target - but at other times gets it spectacularly wrong. I'm amazed when logical people rely totally on the advice of others (Eddie Hobbes springs to mind) for financial advice as no one can really forecast without a crystal ball. Investors can only base predictions on information at hand at the time of investment. Everything else is an educated guess. Thanks and you can donate to Simon Charity if you wish.
     
  14. Gordon Gekko

    Gordon Gekko Frequent Poster

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    That is utterly wrong. The markets reward people who stay invested in a diversified manner for a very long time. As I understand it, Mr Gillen encourages people to invest in high quality companies on a diversified basis and to remain invested. What compliance etc prevents advisors from saying is that, if you do this, you will not lose money. But all the noise etc about people who lost their shirts punting on rubbish bank stocks or "the abandoned Detroit homes market" contaminates people's views on investing.
     
  15. Logo

    Logo Frequent Poster

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    You're probably right Gordon Gekko because I was basing my assumptions on a one-time investment i.e. property. Hey while I'm on here would you advise a 52yo to move pension investments to cash fund or to stay diversified?
     
  16. Gordon Gekko

    Gordon Gekko Frequent Poster

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    One would need detailed background info before giving a definitive view, but typically the advice would be to remain invested on a high-quality and diversified basis.
     
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  17. Gordon Gekko

    Gordon Gekko Frequent Poster

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    The ridiculousness of trying to time the market is best illustrated by a stat I heard a while back:

    $10k invested in the S&P500 from 1995 to 2014 grew to $65k.

    However, if the investor only missed the 10 best days over that period, that collapses to $32k!

    Also salient is the fact that six of those 10 best days occurred within two weeks of the 10 worst days!

    Time in the market rather than timing the market is the key to building wealth, especially in a world where cash and bonds can't deliver.
     
  18. Wollie

    Wollie Frequent Poster

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    Gordon, I fail to understand what was, or could be considered, sinister in anything I posted. My sole purpose was to point to a non-sequitur in the final sentence of Rory’s Sunday Times article. I made it clear that I agreed with nearly all the rest of what he wrote. Furthermore, I did not rise to any of Rory's put-downs (e.g. a little knowledge can be a dangerous thing, showing inexperience, not seeing the wood for the trees, rudeness, engaging with others who know as little as myself). Please tell me what you considered sinister in my contributions.
     
  19. dub_nerd

    dub_nerd Frequent Poster

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    There's an implication there that if you tried to time the market you were likely to miss out on the best growth. But the anecdote itself suggests that the good and bad days are so interspersed that even by random chance you are as likely to miss the bad days as the good days and thus make more than the average market growth.

    The statistic seems misleading anyway, on several scores. First, if you were trying to time the market you would be presumably doing it on the basis of some special knowledge, otherwise it would be just gambling. I don't claim to know a whole lot about it but wouldn't it be hard to have special knowledge about a broad market index like the S&P 500? Almost by definition it seems that someone trying to "time the market" wouldn't be investing in that.

    Second -- the anecdote itself does exactly what it derides: it times the market, but worse than that it handpicks a year (1995) in which the index happened to take off like a rocket. One could just as easily roll the start date forward just five years to 2000. Now the annualised growth drops from over 10% to under 2%. And if you want to take a longer term perspective, the S&P Composite Index from 1871 shows exactly the same rate: just under 2%. If timing the market is a lost cause, retrospectively crowning a particular winning period is even more problematic (at least, for anyone without a time machine at their disposal).

    Finally, with all these stats I think one has to avert one's gaze from the giant lumbering elephant in the corner. That is, the utterly improbable rate of 17% annual growth from early 2009, without which all the numbers crumble. Is anyone really under the illusion that all of it is real growth based on fundamentals, and not a bubble blown by the presence of QE money sloshing around the system?

    If there's anything special about 1995 it seems to be a time when market volatility increased. It means that even over periods of 20 years you better hope you got your market entry timing right because you may well be down rather than up overall.
     
  20. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Interesting post, but it ignores the main point which is that, once invested, one shouldn't leave and then re-enter the market again based on noise. That's where the individual misses out. The same argument holds for the period 1999 to date where missing the 10 best days for markets would also have damaged one's prospects.

    The difference between 1999 and now (because now is what's relevant) is valuation. Why was the investor in 1999 condemned to poor returns? Because he overpaid. And where are valuations now? Pretty average ex US and a little higher in the US. Therefore the investor is very unlikely to be condemned to poor returns for the next 17 years. But if he chops and changes in response to macro events, he will be, because he will miss the upswings.
     
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