TALKING FINANCE with Michelle Higgerson of Baiocchi Griffin Private Wealth IF YOU CAN'T HANDLE THE HEAT.... Is it just me or are Christmas festivities beginning earlier and earlier each year? Whether you're a staunch December 1st Christmas decorator or someone who is happy to bring this task forward to early-mid November, I think we can all agree that Christmas is a lovely time of year. The exchanging of gifts and well wishes, the plentiful supply of parties and gatherings, houses decorated to the nines in displays of LED madness, Mexican stand-offs in shopping centre carparks over the one remaining car space, the waves of anxiety upon realising that all shopping has been left until the last minute, and the joy of fighting the crowds in the supermarket aisles the night of the 24th. Ahhh the joys! Without a doubt one of the favourite events of Christmas Day is the feast, whether lunch, dinner, or both. Unfortunately, what usually precedes this joy (in my experience at least) is absolute calamity in the kitchen. With a desire to do something a bit special and a bit fancy, what starts out as a calm experience often ends in lumpy gravy, cremated roast veggies, forgetting to defrost the turkey or a late realisation that the turkey doesn't actually fit in the oven, the BBQ running out of gas midway through the cooking process, and tempers running hotter than the thermometer. Fortunately, what we discovered some time ago is that a pared down take on the traditional Christmas spread is equally as enjoyable - rather than attempting to recreate every page of The Australian Women's Weekly Christmas edition, keeping it simple and sticking to the tried and tested knowns is often the secret to success. The same can be said for investment strategies. Derivatives, collateralised debt obligations, binary options etc. all sound like sophisticated and upmarket investment vehicles capable of delivering significant outperformance. In reality, such investments are highly complex and experience such turbulent performance that often their long-term average return is not overly superior to the return of a standard blue-chip portfolio of stocks. Before taking the plunge in this area, you also need to ask whether you can stomach the turbulent performance of complex investments, where often frequent negative losses eventuate before any positive return is generated. For example, in 2007 Scion Capital, the hedge fund that provided inspiration for the 2015 film The Big Short, produced a return of -72% before delivering its positive return of 166% at year end. Had you been able to withstand the significantly negative return in 2007, you would have been cheering in 2008, but not many of us have the stomachs for this kind of ride. Often the complex strategies lead to calamity whereas the simple, just like Nan's trusty trifle, lead to an enjoyable experience with little chance of unexpected outcomes. BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1, 462-464 Peel St, Tamworth NSW 2340 6766 9000 AFSL No 424658 This article is general in nature and does not take your individual situation into account. You are advised not to act on anything contained herein, or discussed as a consequence of the contents of this document, without receiving financial advice from a suitably qualified person such as a financial planner, lawyer or accountant. Follow us on Twitter @Baiocchi Griffin Find us on Facebook facebook.com/BaiocchiGriffinPrivate Wealth www.bgprivatewealth.com.au AW7420117 TALKING FINANCE with Michelle Higgerson of Baiocchi Griffin Private Wealth IF YOU CAN'T HANDLE THE HEAT .... Is it just me or are Christmas festivities beginning earlier and earlier each year ? Whether you're a staunch December 1st Christmas decorator or someone who is happy to bring this task forward to early - mid November , I think we can all agree that Christmas is a lovely time of year . The exchanging of gifts and well wishes , the plentiful supply of parties and gatherings , houses decorated to the nines in displays of LED madness , Mexican stand - offs in shopping centre carparks over the one remaining car space , the waves of anxiety upon realising that all shopping has been left until the last minute , and the joy of fighting the crowds in the supermarket aisles the night of the 24th . Ahhh the joys ! Without a doubt one of the favourite events of Christmas Day is the feast , whether lunch , dinner , or both . Unfortunately , what usually precedes this joy ( in my experience at least ) is absolute calamity in the kitchen . With a desire to do something a bit special and a bit fancy , what starts out as a calm experience often ends in lumpy gravy , cremated roast veggies , forgetting to defrost the turkey or a late realisation that the turkey doesn't actually fit in the oven , the BBQ running out of gas midway through the cooking process , and tempers running hotter than the thermometer . Fortunately , what we discovered some time ago is that a pared down take on the traditional Christmas spread is equally as enjoyable - rather than attempting to recreate every page of The Australian Women's Weekly Christmas edition , keeping it simple and sticking to the tried and tested knowns is often the secret to success . The same can be said for investment strategies . Derivatives , collateralised debt obligations , binary options etc. all sound like sophisticated and upmarket investment vehicles capable of delivering significant outperformance . In reality , such investments are highly complex and experience such turbulent performance that often their long - term average return is not overly superior to the return of a standard blue - chip portfolio of stocks . Before taking the plunge in this area , you also need to ask whether you can stomach the turbulent performance of complex investments , where often frequent negative losses eventuate before any positive return is generated . For example , in 2007 Scion Capital , the hedge fund that provided inspiration for the 2015 film The Big Short , produced a return of -72 % before delivering its positive return of 166 % at year end . Had you been able to withstand the significantly negative return in 2007 , you would have been cheering in 2008 , but not many of us have the stomachs for this kind of ride . Often the complex strategies lead to calamity whereas the simple , just like Nan's trusty trifle , lead to an enjoyable experience with little chance of unexpected outcomes . BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1 , 462-464 Peel St , Tamworth NSW 2340 6766 9000 AFSL No 424658 This article is general in nature and does not take your individual situation into account . You are advised not to act on anything contained herein , or discussed as a consequence of the contents of this document , without receiving financial advice from a suitably qualified person such as a financial planner , lawyer or accountant . Follow us on Twitter @Baiocchi Griffin Find us on Facebook facebook.com/BaiocchiGriffinPrivate Wealth www.bgprivatewealth.com.au AW7420117