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How ‘devastating’ childhood moment shaped Aussie investor

·5-min read
During a skirmish, two American soldiers fire their guns at enemy positions, while other soldiers, including South Vietnamese regulars, take cover in a shallow ditch by the side of a dirt road, near Dak To, Vietnam, mid 1969. The US tank at right is an M42A1 'Duster.' (Photo by Larry Burrows/The LIFE Picture Collection via Getty Images)
During a skirmish, two American soldiers fire their guns at enemy positions, while other soldiers, including South Vietnamese regulars, take cover in a shallow ditch by the side of a dirt road, near Dak To, Vietnam, mid 1969. The US tank at right is an M42A1 'Duster.' (Photo by Larry Burrows/The LIFE Picture Collection via Getty Images)

In the late 1960s, nickel was in high demand due to the Vietnam War. The US army needed it to create more sophisticated weaponry involving nickel-hardened steel.

So when mining company Poseidon Nickel uncovered a promising deposit in Western Australia, its shares shot to $280.

But within months they crashed. And when they crashed, they did so spectacularly.

For share equities analyst and author of Shareplicity: A Simple Approach to Share Investing, Danielle Ecuyer, the Poseidon Bubble is a defining childhood memory.

“My mother had some money and a friend of hers who was a stockbroker put her onto a share called Poseidon. It turned out to be one of the most awful bubbles,” Ecuyer told Yahoo Finance.

“It was one of those childhood experiences - I was around eight years old - and she basically lost a huge chunk of her savings to Poseidon because she received bad advice. And that was quite devastating for her, in terms of her mental and physical health.”

Danielle Ecuyer. Image: Supplied
Danielle Ecuyer. Image: Supplied

And while she and her family recovered and moved on, it left an imprint on Ecuyer.

“I went to university and decided I wanted to do a degree that would lead me down a path where I could find financial independence as a woman.”

She did a commerce degree and ended up getting a job at a stock broking firm, before going on to become an equities analyst in London and working at some of the biggest institutional investment firms in the world.

She describes the initial learning curve as “mega steep”.

And while she worked in investing from the 1980s, Ecuyer was set for another major learning curve in 2003 when she moved back to Australia and soon decided that rather than having other people manage her personal investments, she would do it herself.

“I took full control at the beginning of 2008, just as the GFC started. I’ve been managing my own money in a dual capacity, my investment money that both myself and my son live off, and my self-managed super fund and it’s been a big learning curve,” she said.

“It’s one thing to advise some of the largest clients in the UK or Australia but it’s a completely different thing when you’re actually investing for yourself. Because when you’re investing for yourself, it’s about your own risk tolerance and it’s about the risk-reward of what you’re prepared to take and what your goals are and how much you need to generate out of shares.”

For Ecuyer, who has seen a few share market crashes, the biggest lesson she’s had to learn is getting over the emotional cost of investing.

She said that while share investing shouldn’t be emotional, it can be really hard to detach.

“The problem is, trying to actually control those emotions and keep your plans in place.”

Where does she invest?

Ecuyer focuses on “quality shares”, which have strong cash flows, strong balance sheets and secure supply chains.

She warned against sticking with the old “stalwart” shares like the major four banks, saying they face a lot of headwinds and investors need to be careful in differentiating where the “new economy” and change is.

She said she generally looks at stocks in the healthcare and technology sector, like CSL, Resmed, Cochlear, Fisher & Paykel Healthcare.

She’s also been monitoring tele-health company Levongo.

“[Quality shares] are businesses that are very good at adapting and changing to market circumstances, they have a strong moat - or competitive advantage.”

On top of that, Ecuyer said she’s been looking at cloud-computing firm Xero, TechnologyOne, Appen and Altium.

“But again, it depends on what kind of portfolio you want. With my portfolio, I structure is very definitively between where I want growth and [these are all] growth shares, and where I need something that’s going to be economically resilient in the time of a recession.”

For these, she has Ansell, Amcor, Goodman Group, Woolworths and Coles.

Where should investors start?

For those starting out, Ecuyer suggests investing in an exchange-traded fund (ETF).

With most ETFs, investors can put in as little as $500 and gain exposure to the major indexes.

“Most ETFs on the ASX200 will provide you with an income. Of course, they have a heavier weighting to the finance sector in Australia because that’s about 40 per cent of our index but nevertheless, you will pick up those other shares.”

She said if she had $10,000 and was someone who was starting out, she would personally look at buying an ETF on the ASX200 and another on the S&P500 and buy another on the Nasdaq.

She said that irrespective of politics, the Nasdaq offers a lot of potential growth - especially for younger investors.

“So for the investors that are starting out, ETFs really are the lowest-cost investment vehicle.”

From there, investors keen to expand can keep their ETF but consider adding a share. She said “one of the best ones” is CSL, and that investors really cannot go past it.

“If you want to have a bank, probably the best bank to have is Commonwealth Bank.”

But there’s one area she steers clear of entirely: the oil sector.

Ecuyer doesn’t invest in those companies as they’re hard to invest in, and because she aims to run her portfolio in the most ethical and sustainable way.

“I’m a huge advocate for investing in companies that can change the world for the positive.”

This is not investment advice. Financial advice should be sought from a professional according to personal circumstances.

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