Austin Donnelly

Just wondering if any of the die hard old school investors have followed the late Austin Donnelly and his work. He was the founder of the Investing Times and a leading figure in the development of Investment management in Australia.

Hos biggesy legacy in financial terms is the zone system, which was his greatest tool to understand whether to invest in shares or remain conservatively postioned in cash or bonds.

His basic premise is that the Aust share market tends to produce 6.5% returns per year excluding dividends. At the time of hos analysis, Donnelly pointed out that the share market and other markets spend about 2/3rds of the time between 25% below and 35% above the long term trend. It also spends about 1/6th of the time above 35% and 1/6 of the time more than 25% below!

Just surprised his name hasnt been mentioned on this forum!

Cheers.

 

This reminds me I had one of his books many years ago and lent it to someone who never gave it back.

I recall he said the property growth statistics were misleading as the growth figures included all the improvements that people had made to their properties to increase their value. So true.

 

They tell me the 'sensible share investing' book is a classic, cant get my hands on it anywhere to read! Second hand stores, ebay, book depository nothing!

 

You can put an alert on booko so if it pops up for sale you will get email notification
Prices for SENSIBLE SHARE INVESTING. Better Results Through Careful Timing (Revised 2nd Edition) by Austin Donnelly

 

His Realistic Real Estate Investing is interesting if you want to analyse how people thought about property in a very different economic environment.

 

I was more into Bruce Bond from 70s

 

@pippen I've also been surprised to find no mention on PC. Certainly don't consider myself die hard old school but have a copy of sensible share investing edition3 (and realistic real-estate investing edition2)

Maybe I should list it on ebay

 

Didn't realise/forgotten this was from Austin Donnelly but it has definitely stuck with me!

 

My copy of “Sensible Share Investing” by Donnelly and some old newsletters went into the recycle bin long ago.

If one is interesting in history then time would likely be better spent reading about history of the sharemarket not some author with yet another valuation / timing strategy. Nothing is a secret anymore if ever it was. A sound knowledge of share market history (important psychological value) and understanding the simple concepts authored by the likes of Bogle, Ellis and Malkiel is all that’s needed for most.

Then again who am I to lecture anyone else as I was also lured into thinking some author / publication held the secrets of short cuts to investing riches.

 

Fully agree with you! As you have mentioned Ellis, Bogle and the like preach a common theme however was wondering whether Donnelly preached a similar theme whilst being an Australian investor? Similar to me liking to read up on noel whittaker (all books residing in the study) who emphasizes diversification as well as PT who says diworseification!!!!! Also Barefoot investor as well with his (Dave Ramsey type baby steps to wealth).

I agree zoning and timing is not for me as mentioned previously the missus is probably doing better than me without logging onto her account for couple months now! I do the ol honors for her (via vanguard wholesale funds) she doesnt really care as we have stocked up emergency fund and years salary at bank doing sweet FA. She wont be withdrawing any time soon!

 

I must be still in the 'accumulation phase' . Funny - when I was 21 I didn't want to own anything more than would fit in the boot of a car. When I was in my early 30s my wife and I bought our second home - which was about 3 times the size of our first. The first night in the home (after we'd unpacked all of our meager possessions in a few hours) swimming around in all the space of our new home we wondered how we'd possibly fill all the rooms and cupboards. Three children later we found the answer .

Back to "sensible share investing", as far as I remember, at the time there wasn't much better general written advice. It's been a while since I read it but I don't remember there being anything in there around shortcuts - more an approach to medium term volatility management, plus a whole lot of general investment advice (remember this was pre mainstream internet adoption).

 

@pippen if you're still curious, how about a public library (yes, apparently they still exist!). It's available in 18 public libraries across the country... Check out trove !
Sensible share investing / Austin Donnelly. - Version details

 

Tried that a while back! No luck!

 

Gee this is going back quite away but nothing like what Bogle etc recommended. I had a couple of Donnelly’s books including “Sensible Share Investing”. Rather than rely on my poor memory the following might help.

His simplest rules but not the full Zone System is along these lines:


Have used Dividend Yield myself at times so guilty as charged.

And this edition of Investing Times explaining the Zone System:

https://p8s8a2t3.stackpathcdn.com/wp-content/uploads/2015/04/The-Zone-System-research-paper.pdf

Note:


And some more:

Trouble is with many of these systems you might find yourself sitting on the sidelines for extended periods of time.

Bogle and the like would simply tell you to pick an asset allocation and maintain that balance. Basically a simple market timing strategy by default (I hear Bogleheads in uproar over that comment) in that it’ll have one investing in the asset class offering best value at the time. Low stress, no thinking required and likely to produce a much better result over the long term. Importantly simple asset allocation / rebalancing along with Dollar Cost Averaging is likely to result is less bad behaviour / fiddling compared to trying to implement deliberate timing / valuation systems.

 

I’d expect this to be as useful as all other timing strategies.

 

I've got the book somewhere around I think. Don't recall much of it apart from the property quote and his apparent disdain for another popular finance person who is still around I understand.

What is it about the ego thing with some of these characters? As long as you invest and continue to do so through thick and thin who the eff cares if the portfolio ain't perfect according to another's viewpoint? Better to invest than not invest at all.

 

Thinking back the mystery is why did the likes of you and I ever buy these books? Then again investing information was much scarcer back then. I had a bad habit of wandering into bookshops and couldn’t resist checking the business / investing section. I’d often fall victim to buying something which ended up collecting dust on our bookcase. All books are long gone now either given away or ended up in the recycle bin.

 

I only discovered this forum 18 months ago and from reading post after post and reading a few recommended books, I gleaned the most useful information that suits our investment strategy from here(shares). Thanks everyone

 

Yeah but it's possible it's because I for one only learned very slowly there is no secret to investing really. At least in regard to how I wish to invest.

Others have their own special sauce and good on them I say. If it suits all fine and good, if it doesn't then I guess their approach will alter until they are where they want to be. That's all fine and good too.

Apart from the stupid pollies on both sides drawing attention to the franking fracas and now every man and his dog wants in on the act which is going to cause issues downstream. I think I'm really going to be pee'd off in the not to distant future.

 

Fair call but if you’re not looking to shoot the lights out then the evidence towards index investing is compelling, which is the avenue we’re going down being VAS, currently 50% of our portfolio