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Financial Markets and Asset Allocation

The past 10 years on sharemarkets has been an extremely interesting period to say the least. From 2003 to late 2007 we saw a very strong bull market followed by what became the second worst sharemarket crash since 1900, bottoming in 2009. To put it into perspective, it was worse than both the sharemarket crash of the Great Depression and the famous 1987 crash. Since 2009 we have slowly but surely seen a recovery in markets, with the Australian All Ords index (top 500 companies) now having recovered approximately three-quarters of its fall.

Given that this recovery has now actually happened, despite all the doom and gloom, it’s an important time to reflect because it tends to be human nature to want to buy when everyone else is buying (i.e. when everyone is feeling confident) and sell when everyone else is selling as panic sets in about markets potentially falling further. As a result it is easy to end up on the wrong side of financial markets and suffer losses, leaving a bad taste in your mouth. It tends to happen in sharemarkets more than in property markets given the liquidity of sharemarkets and the ease of buying and selling. This is particularly interesting given that the performance of both asset types over the longer term is very similar.

As illustrated in the charts below, we know that growth assets (shares and property) outperform cash and fixed interest over the longer term. So how do we benefit from this fact and avoid ending up on the wrong side of markets and suffering losses? The famous Warren Buffett puts it as simply as “being fearful (selling) when others are greedy and greedy (buying) when others are fearful.”

On the surface you might think "OK, well this is all easier said than done". But you can apply structure to your portfolio that actually assists you in achieving growth by applying asset allocation in the management of your portfolio. Of course, no structure is of any use unless discipline is applied to maintaining that structure.  

Asset allocation is arguably one of the cornerstones to investment management.

As a result of the GFC and sharp falls in the sharemarket, you would have heard of some people being “wiped out by the sharemarket”. In fact, it’s not the sharemarket that wipes people out, but their allocation of assets to the sharemarket. The biggest issue leading into the GFC was that people became over-exposed to the sharemarket which resulted in panic and selling.

The objective of asset allocation is to design a portfolio that gives you an allocation to different asset classes that suits your investment objectives and life circumstances which, if followed correctly, puts you on the right side of markets; you reduce your exposure to markets when they are rising and buy as they are falling in order to maintain your asset allocation.  Thus you achieve the Warren Buffett discipline of “being fearful (selling) when others are greedy and greedy (buying) when others are fearful.”

In successful investment management it is critical to understand that markets will do what markets will do and no one can accurately or constantly forecast the outcome of financial markets, let alone pick the tops and bottoms. There is, however, one thing that you can control and that is your asset allocation. That’s why asset allocation is one of the major cornerstones to successful investment management, enabling you stay on the right side of investment markets.

Informality blended seamlessly with official duties as we celebrated opening our new building in late May.

More than 100 guests mingled with staff, enjoying drinks and variety of finger food, including Asian vegetarian dumplings, kataifi prawns and mini chunky beef pies.

The move to a new open-plan office came as the firm expanded and merged with Toowoomba accounting firm Calibre Accounting.

CEO Paul Hilton introduced Toowoomba Regional Councillor Geoff McDonald to cut the ribbon and officially open the building, thanking staff for loyalty and clients for their trust.

McDonald, a fifth-generation Toowoomba businessman and Chair of the Council's Environment and Community Committee, said Power Tynan was a "great corporate citizen", particularly through its Charitable Trust and school-leaver's scholarship programme.

"This is a great example of a local business doing well through giving back to its community," he said.

He joked that, with more than 20,000 visiting the local library located in the same building, the move had been astute.

"You're certain to find some new clients through that association," he said.

Guests praised the firm's work and the trust we have established with clients.

Power Tynan has shown its confidence in the region’s development by becoming a Platinum level member of regional development organisation Toowoomba and Surat Basin Enterprise (TSBE).

Our CEO, Paul Hilton, said the decision to upgrade our TSBE membership to a Platinum level was fuelled by a desire to connect within the TSBE network and further expose our brand.

“Becoming a Platinum Member allows us to participate in and contribute to all TSBE functions at a higher level," he said. "We can see the possible benefits of being able to utilise TSBE’s services now that we are a Platinum Member.”

TSBE Chief Executive Officer Shane Charles thanked Mr Hilton for the commitment.

“I am certain TSBE’s services, networking opportunities and industry knowledge will help Power Tynan to achieve its goal of building an invaluable presence within the Toowoomba and Surat Basin region,” Mr Charles said.

“Without the continued support of businesses, we couldn’t continue to do what we do. Mr Hilton and his team obviously share our vision for the region and their continued support ensures TSBE is an effective advocate for the area and can continue to attract investment to the region.”

The Toowoomba Hospice has gained a funding boost with a new donation from Power Tynan.

Our Charitable Trust presented a cheque for $3,500 to Hospice Chairman Graham Barron at a brief ceremony in May.

Management and staff have been involved in supporting the Hospice since it opened in 2003.

"Paul Hilton and his team have been a backbone of support for us," said Mr Barron. "They attend fundraising functions, including our annual race day and trivia night. The firm's Charitable Trust has provided us with a number of donations. Now they have decided to participate in our 'Adopt A Room' program."

Toowoomba Hospice, a community-based private healthcare facility, is the brainchild of Sister Frances Flint, a Brigidine nun who worked with the community in Toowoomba.

Mr Barron said the hospice costs about $1.5 million to operate each year and relies upon community support for nearly half that amount.

He worked with a team to raise the funds to build the hospice and remains as voluntary Chairman of the Board.

During the ceremony, Philip Saal said the Charitable Trust had provided more than $100,000 to support community organisations in the Toowoomba area and across the State since it was launched in 2010.

"Funding for our Trust has come almost entirely from our staff," he said. "We have now opened the Trust to our clients and the community to participate. Donors know that every dollar from this Trust goes to community organisations such as the Toowoomba Hospice as well as Lifeline, the Cancer Council, RACQ CareFlight, the Rural Fire Brigade and many more."

Mr Barron said the hospice includes accommodation for six people to "spend their last moments in love and dignity".

It is staffed by two full-time professionals and up to 25 part-time people.

"Most are qualified Registered Nurses or personal care assistants," said Mr Barron.

People wishing to donate to or learn more about the Toowoomba Hospice can contact the hospice on 07 4659 8500 or go to the web site www.toowoombahospice.org.au for more information.

The Power Tynan Charitable Trust also donated $3,500 to Frontier Services, the organisation running the Give Back and Buy A Bale campaigns.

After reading the plight of Australian - predominantly Queensland - farmers who were destroying their cattle and, in some cases, being forced off their land, the team at The Give Back Campaign decided to do something to help. After some brainstorming it was decided to ask Australians to Buy a Bale of Hay and the feed would be delivered where it was most needed.

Charles Alder from Buy A Bale attended a lunchtime presentation to accept the donation on behalf of the organisation as well as explain to staff what the charity stands for and how our donation would be used.

A few of our staff members have recently celebrated their Power Tynan anniversaries. Justin Still has worked for Power Tynan for 10 years and Fiona Vasta celebrates five years with the firm.

Fiona Vasta

1. Date & Place of Birth  
   5^th December in Tenterfield, a small town in the New England area of NSW, about two hours' drive south of Toowoomba           
2. Education
   I attended primary and secondary school in Tenterfield then moved to Brisbane and went to Sarina Russo Business College to study a Diploma of Business Administration.  I originally trained as a legal secretary but was offered a job with an accounting firm in Tenterfield and decided to take it.
3. Hobbies & Interests
   I love movies and books and enjoying catching up with friends over a coffee.  Dragging my three daughters - Jaiden, 16, Bella, 9 and Angelina, 6 - along on bush walks is a new activity we are all enjoying – well at least I am.
4. When did you start working at Power Tynan? 
   I came to Power Tynan via the merge with Calibre Accounting in March 2014. My first official day was April 1^st – no joke!
5. Why did you apply for a job at Power Tynan?
   Taking me was part of the merger with Power Tynan – I didn’t have to apply for a job. I’m sure they don’t regret it
6. Why do you enjoy working at Power Tynan?
   A great bunch of people are employed here and the firm has a very family orientated feel about it – which is handy given I have three kids.  From what I have seen so far, Power Tynan’s ethics and dedication to its clients is outstanding and I feel proud to be a part of such a successful firm and look forward to a long future here.

“We’ve been so inspired and motivated by the young, energetic people in the Challenge. All of us are doing what we love and really making a life out of it. It’s a story of rejuvenation.”

Clients Lachlan and Anna Hughes took part in the MLA (Meat & Livestock Australia) challenge, a 12-month program that saw six farming families make improvements to their businesses with the help of research outcomes, mentors and benchmarking.

Lachlan Hughes is a fifth generation beef producer managing two of the family’s properties at Dulacca, north-west of Toowoomba on the Darling Downs. He and his family run a 7,000-head herd of Angus-cross cattle over four different properties: Banchory Station outside of Clermont, Crescendo near Capella, Dulacca Downs and Heatherlea at Dulacca.

After a year in the MLA Challenge, Lachlan said they have feed on offer for the next year and have increased cattle numbers, with average weights being around 40kg heavier than the same time last year. Drought plans are in place, with cattle removed from pastures when they reach 1000-1200kgDM/ha and orderly destocking ready to go if the area has another dry Spring.

“We put cattle into our feedlot system every two weeks, so we need a constant supply of cattle, the right amount of pasture, and a good monitoring system," said Lachlan. "We didn’t have any of that before the Challenge.  

“Now that we’re using the Feed on Demand Calculator and the Stocktake App, we have structure in how we manage the country and deal with the weather. It has removed the stress of not knowing how much grass is there.

 “We’ve been buying in cattle to make the most of the feed on offer. This time last year we didn’t have enough cattle to take advantage of it, and we lost the chance to convert grass to kilograms.”

Lachlan said the main outcome of the Challenge has been understanding the impact of efficiencies on the business and accepting what couldn’t be changed, such as prices and weather.

“Before the Challenge we thought we were very efficient," said Lachlan. "If things went wrong we tended to blame the weather.”

"We’ve changed our whole attitude now so that we can work with the conditions we have, manage our environment sustainably and achieve astonishing triple-bottom-line outcomes.

“We’ve been so inspired and motivated by the young, energetic people in the Challenge. All of us are doing what we love and really making a life out of it. It’s a story of rejuvenation.”

Please note, from 30 June 2014, we will only continue to support the following versions of accounting software:

Toowoomba business student Kristelle McCleverty is celebrating a Distinction to a Bachelor of Commerce degree this week after winning a scholarship with Power Tynan.

Kristelle is the latest student to benefit from the scholarship program run by Power Tynan in co-operation with the University of Southern Queensland.

"It's an exciting moment after four years of study," said Kristelle.

"I joined the Power Tynan program straight out of school and began full-time work while studying part time.”

"There hasn't been much time for relaxation since then, so I'm looking forward to a little more time for shopping and working on the house I bought just two months ago with my sister."

Her sister, Sammi McCleverty, is also going through our scholarship program.

The program was set up by CEO Paul Hilton and our management team in 2010, offering Year 12 students the opportunity to work and study a business degree with USQ.

"We pay them a salary, provide mentoring and time off for study and exams. Importantly, we cover their entire HELP fees for every subject they pass," explained Paul.

"The scholarship program works in two important ways for us. Most important, it is our way of giving something vital back to the community that supports us. Second, it means we have a team of young, enthusiastic accountants coming through the business and the profession."

USQ Vice-Chancellor Professor Jan Thomas said industry partners are important to the support and development of future University graduates.

“USQ is grateful for the scholarship opportunity Power Tynan has provided to our students,” Professor Thomas said.

“The program’s value is not only through its financial component, but also the industry relationship students can build upon with Power Tynan to help establish their future career which provides an invaluable experience.”

For Kristelle, it is the next step in her career.

"One day I would like to work as an accountant or financial controller in the corporate sector," she said.

In the meantime, she is back at work, helping our clients and settling in to her new home.

Each quarter, we interview one of our clients to get an insight into their business. This issue, we spoke to Greg and Sally Parr.

When did your business commence? 
We commenced business in 2007

What does your business do?
Plumbing/Roofing

What makes your business successful?
A great deal of time, hard work and being versatile is what has made our business successful (plus a good woman behind the man)

What has been your biggest achievement to date?
Still being in business today by developing good relationships with builders and other stakeholders in Weipa

What is one piece of advice you would give to someone starting up a business?
Be choosy with who you employ

How do you relax from the pressures of being in business?
Fishing, camping, target shooting and XXXX Gold

Some may remember that our CEO, Paul Hilton, took part in the Toowoomba Hospice “Hang Ya Boss Out to Dry” fundraiser last year and raised more than $3,500 for the Toowoomba Hospice.

This year, Paul decided to move aside and let someone else represent the Power Tynan team. Executive Director Philip Saal stepped up to the plate!

The event involved businesses on the Darling Downs nominating literally to “hang their boss out to dry”. The Boss is placed in a scissor lift and raised to the platform of a fully extended cherry picker. From that lofty height, the Boss has to raise a minimum of $750 before he or she can come back down.

The 2014 event was held on August 15 at Tilly’s Crawler Parts in Toowoomba. The 4GR Big Breaky Crew, Lee and Lizzy, broadcast live from the event, with Wilsonton Lions Club cooking Breakfast Burgers and the Coffee Cruiser providing some much needed warmth on a chilly morning!

Phil raised $1,530 for the Hospice and this event as a whole raised a whopping $90,000, which is a brilliant result for a well-deserving charity!

June 30 Celebrations

Power Tynan’s annual June 30 celebrations were held on Friday, 27^th June. The theme was for staff to dress up as something beginning with ‘P’ or ‘T’ (for Power Tynan).

It was great to see everybody taking part in the fun and we had a variety of costumes on the day, ranging from Palm Tree to Papa Smurf, from Teapot to Taco.

Staff in each office were asked to place their votes for Best Dressed. In Toowoomba, Fiona won as Trevor the Truckie, and Morena Howard took out the award in Stanthorpe for her portrayal of Penguin from Batman.

Wedding Bells

On Saturday, 6^th September, Chelsea Brunckhorst married her partner Kurt Vedelago in an intimate ceremony held at Mason Wines in Stanthorpe surrounded by a small group of their closest family and friends. We wish the happy couple all the best for their new life together.

National Blood Donor Week

National Blood Donor Week is an annual event held by Australian Red Cross Blood Service, to recognise the outstanding, life-saving contributions of blood, bone marrow and Anti-D donors.  

This year our own Don Carlson was acknowledged for his remarkable support of this cause, donating over 200 times. Don first gave blood when the Red Cross visited USQ when he was studying in the '70s, and during the past decade he has been donating plasma each fortnight.

Farewell Megan!

After 13 years with Power Tynan, our CFO Megan Lipp has decided it is time for a change of pace. Megan started with the firm in 2001 as a senior accountant and progressed right through to being an equity owner and Chief Financial Controller. We wish to thank Megan very much for her contribution to Power Tynan over the years and we wish her all the best for the future.