This article, by Justin Baiocchi, was originally published in The Northern Daily Leader on 25 March 2017.

Late last year we moved house and now live about 40 kilometres away from the office. As far as commutes go, it’s not as bad as it sounds. It’s about half an hour door to door – in Sydney that would be almost like living in the same suburb as your work. It’s also highway driving almost the entire way, which gives me plenty of time each day to observe the other drivers. It has reached the point where I have started categorising drivers into general behavioural types. There’s the Go-slow-Go-fast driver – that’s the one that drives at 80km/h in a 100 zone, but when it drops to 50km/h in a town, just keep their foot glued to the accelerator and blow through at 80km/h. It’s as though they’re only comfortable driving at one speed, regardless of the actual signed limit. Either that or they’re simply not noticing that they’ve entered an urban area, which is even worse.

Another familiar face on the highway is one we all know too well – the Tailgater. Don’t you just love it when you’re stuck behind a 30-tonne truck doing 50km/h in a 100 zone, and the Tailgater roars up your behind and thinks that sitting two feet from your back bumper is somehow going to make the truck in front of you go faster? They’re either just overly helpful or incredibly short-sighted – maybe they just can’t see the truck in front of you, and if you gave them the appropriate hand-signal (the universal one for ‘hello’), they might realise their error and retreat to a safe distance? That’s what I think anyway, but it never seems to work. The other common highway driver is of course the P-plater. I don’t mean to generalise, but I’ve begun to think that the ‘P’ doesn’t stand for ‘Provisional’, but rather it means you’re sharing the road with a ‘Philosophical’ driver. I say this because most P-platers seem to adopt a philosophical approach to speed limits – they are there to be considered, not obeyed. Philosophical drivers interpret speed limits as they see fit, as being up for debate and most oftentimes outright ignored.

So what does this have to do with finance? The commonality is that irrational drivers (like the ones helping you push the B-Double up the hill) are as prevalent as irrational investors. People want to buy when they should be selling; sell when they should be buying; want gold when they should be in oil; and want shares when they should be in cash. Irrational investment choices can be just as damaging for your financial health as a run in with the Tailgater is bad for your rear bumper. Avoid both as much as you can.

This article, by Justin Baiocchi, was originally published in The Northern Daily Leader on 11 March 2017.

I recently set up a Wi-Fi enabled indoor/outdoor weather station at home. From anywhere in the world it allows me to log in and check the temperature both indoors and outside; investigate CO2 and sounds levels in the kitchen and a host of other functions. If I could be tempted to pay for the optional extras it would also automatically measure rainfall and wind speed, all nicely plotted with charts and diagrams. At the same time I also set up a bunch of Chromecast Audio devices. These nifty little devices allow you to connect all your old stereos and sound systems to your home network. You can stream music to every room in the house at the same time, or just to a particular room if you felt like it. No need for an expensive new sound system, as one of these turns your old boom-box into a smart radio. And all this technological whiz-bangery is on top of the solar-powered internet relay station I had to build in the top paddock to beam the internet down to the house. The fact is, the average house these days probably has more technological devices and gadgets than the first few shuttles that NASA sent into space. We take it for granted that we can hold a video conversation with someone on the other side of the world while sitting in the kitchen holding a mobile phone. I’ll bet that NASA wished Skype existed 50 years ago – no question of the moon landings being faked, we could have all watched it live on our phones.

Technological change has not missed the financial sector either. Some people have a financial adviser they’ve never met; having only ever had conversations via video. If a video relationship isn’t your thing, you can let a computer make investment decisions for you – just upload your portfolio (and credit card details), click ‘Go’ and sixty seconds later get back a computer generated report telling you what to buy and sell. Automatic spare change investments, peer-to-peer lending; crowdfunded capital raisings, fractional residential property investment…the list of investment-related technological initiatives is a long one. However, it’s probably worth asking whether or not all of the clever technological advances actually result in better outcomes? Just because a computer can select a portfolio for you and deliver it in a snazzy way straight to your mobile phone, should you let it? While it might be fun (for a while) to check the temperature in my house from anywhere in the world, would I want my weather station to look after my life savings? Not before hell freezes over – an event my weather station tells me is most unlikely.

This article, by Justin Baiocchi, was originally published in The Northern Daily Leader on 25 February 2017.

Now that I am on the wrong side of 40 (to be fair, I’ve been on the wrong side for some time), I have noticed a very unwelcome development. Every night, while I sleep, something or someone, is slowly transplanting John Howard’s eyebrows onto my own. It started off innocently enough – a stray eyebrow hair here, the odd misaligned hair over there…now however, whomever is doing this to me is working very diligently at giving me the full John Howard makeover. My hair appears to be in on the act too, rapidly pushing me to a place where I’ll be forced to ask the hairdresser for the ‘John Howard’ look when it comes time to discussing potential styles. It’s got to the point where complete strangers stop me in the street to discuss WorkChoices. Seriously though, why is it, that as you age your body stops growing where you want it to keep going – your brain, your hair – but keeps growing just where you want it to stop – your nose, your ears and your eyebrows? Why can’t your body direct its meagre resources to where they are needed most? Don’t give me ears the size of dinner plates, give me a head of hair that would make an Afghan Hound proud.

The slow and insidious process of relocating John Howard’s eyebrows onto my own is an example of significant change happening at such a slow pace that it is easily missed. I only noticed it myself when my wife lunged at me one day with the garden shears and a whipper snipper. It’s very easy to miss the fact that a series of small, seemingly unimportant changes, actually amount to a complete paradigm shift. Global events over the past twelve months may well represent one of those occasions. Political developments in the UK, US and Europe may not individually be earth-shattering, but taken together there is evidence to suggest that serious change is afoot. Brexit, Trump and political events in Europe all have underlying commonalities which should not be ignored. From an investment perspective, change can be both an opportunity and a threat. The threat, of course, is that political change brings economic and financial change which your investments are ill-equipped to manage. The opportunity is to make changes to your investment approach such that you are ahead of the curve. It may well be that we are entering a period where return of your capital is more important than return on your capital. Taking a conservative approach is of course one which John Howard himself would approve.

This article, by Justin Baiocchi, was originally published in The Northern Daily Leader on 11 February 2017.

When it comes to lunch at work, I’m a little bit old school, preferring to bring lunch to the office from home, rather than popping out to grab a sandwich from a shop or takeaway. It’s often a healthier choice and generally much cheaper too. One day last week I was particularly looking forward to lunch – the previous night’s dinner had been an Asian-style BBQ pork salad; a refreshing mix of chargrilled pork, fresh salads, garlic, chilli and coriander. A perfect dinner during the hot summer months. There were enough leftovers to cater for lunch the next day and Liz offered to make a sandwich with the leftovers for me to take to work. So you can imagine my sense of anticipation the next day when I sat down to eat my lunch while reading the Financial Review, as is my usual habit. You can also imagine my disappointment when I opened my lunch box to find only a sad looking Vegemite sandwich. To be fair, the lunchbox itself should have been a giveaway – it has been a long time since I demanded that my lunch was packaged in a Star Wars lunchbox.

As great as my disappointment was, I can only imagine how great was Jack’s surprise (at about the same time as I discovered my Vegemite sandwich) at finding his lunch was a delicious Asian-style BBQ pork salad sambo. No doubt his fellow classmates in Year 1 were impressed with Jack’s sophisticated palate. While most them were most likely also having a Vegemite or jam sandwich, Jack was on the cutting edge of Asian fusion style cuisine. Alas, I know for a fact that all he did was take two small bites out of the crust and politely returned the sandwich to his mum, along with the request that he never ever again be sent to school with such a disgusting lunch.

For my part, as I unenthusiastically ate my Vegemite sandwich, I reflected on the fact that this experience was not unlike that of investing. When you make an investment decision, what you get is not always what you expect. You may be expecting annual returns of 10% plus, but may find that the real outcome is something entirely different. As far as investing goes, the potential for disappointment in the outcome is part of the territory. Just as there are risks in getting someone else to make your lunch for you, there are risks in investing too. Unfortunately, what you end up with may not be so much gourmet, as garbage.

This article, by Justin Baiocchi, was originally published in The Northern Daily Leader on 29 January 2017.

This past week I have been busy ‘renovating’ the laundry at home. I’ve put the word renovating in inverted commas as, theoretically what I have been doing is a renovation, but in practice it’s in a category all of its own. When the previous owners added on the laundry extension they stopped after putting in the framework and studs – there were no walls or ceiling and no flooring on the slab. As you can imagine, this became a haven for spiders, bugs, dust, dirt, snakes and who knows what else. I could feel my white business shirts cringe every time I took them into the laundry for a wash. Accidentally dropping a shirt on the floor was enough to make you cry.

Armed with some nails, a hammer and lacking only really a clue about what I was doing, I set about finishing off the laundry. To be honest, looking at the finished article, I wonder why I bothered. I’m not entirely sure I have made an improvement on the dirt, dust and spider heaven. It’s as though you got a builder in to do the work for you, but before he could start you got him drunk and then made him work in the dark. I now have to find a way of convincing my wife that she need not go into the laundry ever again and we’re better off just buying new clothes every time something needs a wash. An expensive solution yes, but better than letting her see my unhandiwork in the laundry.

As I stood there and reluctantly viewed my ‘renovation’ job, it occurred to me that my attempt to finish the laundry was not unlike the approach that many people adopt to looking after their finances. Just because I had the tools to tackle the laundry (the hammer and nails), didn’t mean I had the knowledge how to use those tools to do the job at hand. In the same manner, the ability exists for you to manage your own investments and finances – the tools are there, but that doesn’t mean you necessarily know how to use them. In the wrong hands, an online stockbroking account can be more dangerous than a badly wielded hammer (and I saw a lot of that during the past week, and felt it in my thumbs too). The convenient and cheaper approach of doing it yourself is not always best. Getting professional assistance may be more costly, but the outcome usually more than justifies the cost. Ask yourself if you realistically have the skills required; and if you don’t, get some help. A badly managed retirement plan is much more serious than a badly mangled renovation job.