Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory & buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email pete@allenwargent.com

Sunday, 20 October 2013

The Zulu Principle

About 20 years ago now, a Pommie accountant and investor named Jim Slater published a book called The Zulu Principle: Making Extraordinary Profits from Ordinary Shares.


Slater's premise was that becoming a leading expert in one specific field could help investors to secure outstanding returns, echoing the ideas of focus investing.

He came up with the idea of the 'Zulu Principle' after his wife read a book on Zulus and having done so was able to demonstrate a superior knowledge to him on that very subject of Zulus.

He rationalised that if his wife read every book she could find on Zulus and then spent some time in Africa studying the subject in detail she could quick quickly become a leading authority thereon.

Slater's point is that through identfying a "narrow and clearly defined area of knowledge" then applying the knowledge learned in your area of expertise you can profit from what you have learned.

This is very much true. 

I'm often asked questions about stock markets and property markets I know very little about and have learned that when you don't know an answer, it's much better to say so! 

How many times in the corporate world do people seemingly have an answer for every question which is full of buzzwords and management mumbo-jumbo that doesn't actually mean anything? Far too often.

Much better to become an expert in a few areas in which you can excel and then apply your knowledge directly to those markets.

I'm not convinced that most average investors have anything like the skill-set to properly analyse a company and its financials and then apply those skills consistently. It might sometimes be better to be well diversified via a Listed Investment Company or index fund and spread your risk by not trying to time the market too much and acquiring shares over time.

I sometimes also worry about investors venturing into property in remote locations because of supposedly attractive rental yields. 

Yield isn't the most important part of a property investment - long-term demand for the property is. 

Investing in another state which has outstanding growth prospects can be fine, of course, but make sure you do your due diligence and research or else use a professional to help you. 

Investing overseas can also sometimes be OK, but do remember to consider foreign exchange risk and whether you may be missing out on tax benefits at home.