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Friday, 16 October 2009

Apparently Praying doesn't Boost Investment Returns

I'm guessing that while lots of investors might have resorted to prayer as they watched the value of their life savings plummet during the GFC, it wouldn't have had any material effect (apart from any purely psychological benefits). This story provides some evidence to that effect. The Glebe Administration Board (apparently an Anglican Church body) posted a $160 million loss for the year to December 2008, or a -60% annual return!. Its highly geared share portfolio crashed amid the global share market downturn. Unfortunately they won't be benefiting from the recent strong rally in the equity markets, as the board reduced its bank debts from $140 million to just $14 million between December 2007 and December 2008 as part of an attempt to reduce its gearing and "protect" its assets from further falls. Not very inspired decision making, although if they had attempted to ride out the downturn any longer they would have probably been completely wiped out by the time the market bottomed out in March.

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