Appropriate allocations can be uplifting

Jacquie Hayes

The mere physicality of being in a La Perla boutique can whisk anyone – female or male – out of the deepest funk. Photo: Reuters

One of the more benign but still irritating effects of the global financial crisis has been the dearth of really useful shops like La Perla.

The high-end Italian lingerie group once had a presence in Melbourne’s Crown Casino complex, but it was squeezed out the year before markets started going into a tailspin, making way for respectable Japanese restaurant Nobu.

Since then, local demand for the exquisitely constructed but expensive silk and lace underwear hasn’t been enough to justify opening another dedicated La Perla store here.

I sorely miss the La Perla boutique buying experience. This may sound superficial, given what’s going on in the world. But it doesn’t hurt to use beautiful things occasionally to distract yourself from the hard stuff of everyday life. The mere physicality of being in a La Perla boutique can whisk anyone – female or male – out of the deepest funk.

In London, for example, I loved how its austere-looking shopfront on Knightbridge’s Sloane Street used clever lighting and a flawless fitout to showcase the brand’s stunning array of delicates and clothing.

In stark contrast but equally alluring, the dark, sultry and heavily draped Las Vegas offering in The Forum shops can somehow make anyone look sexy in anything.

But it’s not every day one gets the opportunity to shoot off to the States or Europe for a La Perla purchasing moment. Your nearest prospects are Bangkok and Singapore, if you happen to be passing through.

In the meantime I found myself recently persuaded to go to a lingerie party in someone’s home. I was reluctant initially, thinking, “Is this going to be some sort of Tupperware for Tits?”

But you’ve always got to support your girlfriends. So I went along with six women and one curious husband. The poor man may be ruined for life. How could he have guessed the range a boob can bounce if the owner is insane enough to exercise without wearing a proper sports bra (8 centimetres for an A cup!) and the detrimental and irreversible effect that can have on soft breast tissue. Way too much information.

Then there was the “The Dream Bra”, so called because of the way its push-up style improved the shape of the less-than-endowed. There’s always the risk with this one, however, of over-promising and under-delivering, if you know what I mean. In fact, that pretty well sums up how people are feeling about sharemarkets at the moment, though under-delivering is probably an understatement at this stage.

So much for long-term investment theory – determine your objectives, work out how much risk you’re prepared to take on, then split your available funds into the appropriate investments and largely leave them there to get the desired result.

I’m sorry, but that sort of set-and-forget approach to investing is all over, especially for high-net-worth investors in wealth accumulation mode. It might have worked in rational markets but the GFC has brought things so unstuck that the buy-and-hold premise has gone out the window.

That’s why global commentators are now saying we’re going to have to be more dynamic with our asset allocation and, specifically, stock selection.

The problem here is that even sophisticated investors and professional fund managers can mis-time the switch.

Fortunately, if you talk to the people who head up private client businesses in Australia, we’re in good shape because HNW investors have already moved a large proportion of their funds into cash and paid down debt.

Over the past four years, the client base at ANZ Private Bank, for example, has doubled its cash book and halved its debt book, says the bank’s general manager of investment, Andrew Polson.

“[Clients] have taken steps to protect themselves,” he says. “Now they’re ready to get back in.”

But where to go, and when?

Well, there’s no one easy solution from the advisory community. No surprise there, as few of those working in it today would ever have seen an environment like the one they’re operating in now.

Knowing that, intelligent investors need to take a personal view of risk, meaning, ultimately, that they have to decide how to prioritise the protection of, say, their core standard of living, the holiday home, a component of their income stream or the collectable assets they enjoy.

In terms of individual stock selection, one suggestion is to seek those with a healthy discount to fair value, particularly among companies that provide a clear view of what they’ll look like in 10 years.

Polson says wealthy Australians are well-positioned to capitalise on such opportunities because of their cashed-up state, but the timing will be difficult.

Rather than jumping in, his advice is to average into areas of interest using, of course, high-quality specialists to help choose the best targets. The results may not be La Perla-esque. But you can always live in hope.

The above article does not constitute investment advice. It is the personal diary of the writer. jacquie.hayes@afr.com.au

The Australian Financial Review