Meet Jeff: The musical master with a penchant for picking stocks
Jeff has had what some may call a storied career, having started off in tech with Telecom Australia (now Telstra), retraining as a professional musician, and later becoming an events manager. His career in music would see him play the trombone for operas, ballets, and even alongside musical greats — like Shirley Bassey and Jerry Lewis, every time they came to town.
But the one constant in his life has been investing. He fell in love at just 12 years old, after his father bought him some shares in copper producer Mount Isa Mines (which was later taken over by Glencore). Since then, he has been investing in small-cap growth stocks, using his profits to fund further education, weddings, and even buy a new house.
Now, having retired, Jeff is transforming his growth portfolio into one that can produce steady income. And he's helping his wife, Amanda, to invest as well.
In this profile, Jeff candidly shares some of the ups and downs of his investing journey and reveals why he believes Wilson Asset Management founder Geoff Wilson is a "standout" investor. Jeff also imparts some lessons that may help you become a better investor.
Livewire investor profile
Employment status: Retired
Years investing: 41 years
Investment goals: To fund our income in retirement
Products used: Industry super fund, Australian share portfolio, rental property, bullion
Biggest portfolio holding: Afterpay (ASX: APT)
How old are you and how long have you been investing?
I am 53 and started investing when I was 12 years old. I am the youngest of seven children, and my father gave me a parcel of Mount Isa Mines (which has since been taken over), which would have been worth around $2000 at the time — a fair amount of money for someone that young.
My father's aim was to get me interested in the mechanisms that companies go through with regards to shareholders and reading annual reports. It worked.
I have been investing at various levels ever since then. Actually, investing helped buy the house that we live in now. So this act by my Dad gave me a start on the path to understanding personal financial matters, which allowed me to achieve financial security at an early age.
What is your objective from your investing? What is your appetite for risk? Are you still working?
I have always aimed to become financially independent, as relying on someone else, including the government, could be so hit and miss, especially with the significant changes that were happening in the 1980s and 1990s.
I like to think of all investing as a calculated risk, and my share portfolio reflects that. My industry super fund invests in all the big names locally and globally, so I can afford for my shares to be a little more speculative.
Like everyone's investment journey, mine has been up and down. When I left school, I worked at Telecom Australia for seven years, and in the background, I had been playing music the whole time. So I decided to leave work and went back to study at the Queensland Conservatorium of Music. So I liquidated quite a few of my shares to help me through my studies. Then I got married, so I started to try to accumulate my investments again, knowing I would need to buy a house. Then I liquidated some of my shares to help buy the house. So, it's been an up and down journey, but it has also been about allowing those funds to work for me as I reached each of life's landmarks. I retired from full-time work in my early 40s. Although my wife still works, she is now also looking at retiring in the next year or two.
How would you describe your strategy?
Calculated. I am happy to move my industry super to cash when suitable growth has been achieved, and move back to high growth when major falls have occurred. Half my shares are for future dividends which are reinvested into new opportunities, the other being semi-speculative.
What products do you use to execute your strategy?
I've always tried to make sure there are dividend shares in my portfolio because I'd rather use my dividends to take on a new opportunity. I am not planning on using any fixed income products. We have enough money invested in income-producing equities that, between that and the refund of franking credits, and the rent from our rental property — which is basically now positively geared, we don't need to, at least not yet. And then there's a huge whack of industry super sitting there as well. I also invest in gold and silver.
What are your top five holdings in percentage terms? Why do you hold each of these positions?
Tipped by Wilson Asset Management at a shareholder meeting five years ago pre-merger with Touch Group, it was clear it was a first mover in the buy now, pay later sector and was gaining traction, and the WAM Team started using the word Afterpay as a verb — it had all the hallmarks of a success story appealing to millennials. I accumulated shares up to $23 per share, including parcels for my wife. I have been selling down since $150 to put the money to use in other securities, but it remains my largest single holding.
Dicker Data (ASX: DDR) — 11.5%
Originally mentioned by Motley Fool in a general article, and paying quarterly dividends, and being founder-led, I was sure a few thousand dollar investments at $1.60 would be worth the risk. Accumulating along the way and including capital raisings post-COVID crash 2020, there is a nice stream of dividends coming in to put to use on other opportunities that are presently arising.
Macquarie Group (ASX: MQG) — 8.8%
Only recently pipping one of the "Big Four" out of their spot, Macquarie has been a stalwart, and when market dips have created a buying opportunity, I have taken that chance to build up my holding as MQG will become one of my dividend providers throughout my retirement. $200+ per share sounds a lot to pay, but I thought $60 was a lot in 2016.
Orocobre (ASX: ORE) — 4.29%
With a head office in Brisbane, Orocobre gave me the opportunity to buy into a company that seemed to have all its ducks lined up. I go to the AGMs, talk to the directors and staff, which has to date confirmed that my money has been in the right place. Again I took advantage during the COVID crash to participate in the capital raising in October 2020 at $2.52, which proved to be a great decision and it is onwards and upwards for this company — because lithium will be a critical component for batteries long after I have left this earth.
WAM Microcap (ASX: WMI) — 3.55%
Much of my portfolio was what would be considered micro cap at one stage or another, so why not give one of my favourite fund managers some of my money to find the next ones that I have never heard of? Oh, and they pay a steady (and growing) stream of dividends!
Is there a standout product, asset class or fund manager in your strategy?
The standout is Geoff Wilson and his team, mainly because they continually look for new opportunities, like alternative and unlisted assets.
It has always peeved me that it's too hard for a retail investor to get into those sorts of things. I invest in WAM Microcap, WAM Global, and WAM Strategic Value.
While diversification has always been very important to me, fully franked shares will be a cornerstone in the future, with a draw-down on cash as/if required.
Could you tell me about your worst investment?
A Chinese-made leather couch! It cost us $3500 for what turned out to be bonded leather and was worthless in 18 months. In shares, it was Merlin Diamonds.
I shared a tip with a friend of mine and he shared a tip with me. He thought he was onto a winner with Merlin Diamonds (now delisted). I tipped him West Wits Mining (ASX: WWI). Thankfully, I only invested $2,300 as Merlin has now been wound up. But that offset some of the capital gains in Afterpay.
How does Livewire help with your investing process and what tips can you share with other investors about using Livewire?
Livewire is a great resource with varied opinions informing and educating me. I'd recommend readers listen to everyone but weed out the noise. Once you find a voice that suits you, let it guide you on your journey.
My advice would be to listen to all, learn more about what they are saying, get rid of emotional recommendations, learn more, weigh up the options and make a call, knowing it could be right or wrong, and if it is wrong, learn from that mistake.
It also highlights to me that getting advice or information from one person/broker/adviser is fraught with danger, so that is why I self manage my own affairs, do my own tax (and my wife’s) — as that way I can only blame one person if I screw up!
Do you have a favourite contributor you recommend other investors follow?
I seem to consistently like the work of James Marlay, and most recently, I enjoyed Andrew Papageorgiou's article on China's property developers. I also follow Wilson Asset Management's team, like Tobias Yao.
Buy Hold Sell is my favourite weekly wire, and I always read what James Gerrish has to say. I try and read everything about retirement. And I also try to participate in the various surveys that are published, like the 2021 Income Series Survey.
What can Livewire do better or what do you dislike about Livewire?
I think Livewire excels at getting a broad range of contributors, but sometimes a contributor bags a stock just because it doesn’t fit within their own investment thesis, which I think is bad for everyone — it also reflects badly on them.
Is there a lesson you’ve learned as an investor that could help others?
Yes — manage your own finances. Learn about tax, investing, risks and opportunities. Only invest what you are willing to lose.
My biggest thesis though is “Don’t pay someone to do something you can (and should) do yourself!” On that matter, the one book that changed my life in financial matters was Making Money Made Simple by Noel Whittaker.
I think too many people invest money that they are not willing to lose. Then they go, "Ah, my Bitcoin portfolio went up 15% overnight." And the next day, "It's down 15%." You're better off putting that money into some shares, getting some dividends, and learning a little bit more.
I am not investing in cryptocurrencies at this stage. One of the first lessons my father taught me is that when the taxi drivers start talking about a stock or an investment, that's the time to get out.
Can you share a personal passion or ambition you have for your future?
My hobbies are cooking, baking sourdough, beekeeping and still playing the trombone! I started beekeeping two years ago, and that has been wonderful for my garden and for some extra hobby money from the sale of the honey. And I am looking forward to spending 24 hours a day with my wife when she decides to finish work!
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Ally Selby is a content editor at Livewire Markets, joining the team at the end of 2020. She loves all things investing, financial literacy and content creation, having previously worked for the likes of Financial Standard, Pedestrian Group, Your...