Finance, Commerse and Trading - Your money

Saga over 40 million powerball win heads to court

THE lawyer for a man who claims he was shut-out of a $40 million Powerball jackpot has told a court the winning syndicate was operating “business as usual” and it was “unfair” and “unjust” for him to be blocked from the massive windfall.

A production manager at the Prysmian Group in southwest Sydney, Brendan King, has taken legal action against co-worker Robert Adams, claiming he had been shut-out of the syndicate and was entitled to a 15th of the winnings from Ma y.

Lachlan Gyles SC said the court had an opportunity to right a wrong for Mr King to join the lucky 14 who had won money beyond their wildest dreams.

The syndicate members had been contributing money for many years and were considered hard core loyal members, Mr Gyles told the Supreme Court in Sydney on Monday morning.

In his opening statement to Justice John Sackar, Mr Gyles said the syndicate members had been waiting patiently for their ship to come in.

He told the court it was assumed unless the members said they were leaving the syndicate they were considered to be included, and if members were behind on their payments would still be entitled to any winnings.

If the ticket wasnt successful, they would still be expected to pay.

There was no significant difference between the draw on May 4 that won the $40 million prize and other draws the workers had contributed to, Mr Gyles said.

It was business as usual.

However, Mr Adams believed he had formed a one-off syndicate of the core group minus Mr King to buy more tickets into the draw, the court heard.

He claimed he did not have the chance to contact Mr King to include him in the winning entry.

My Gyles said the winners had tried to put a ring fence around the syndicate, claiming members needed to pay upfront in order to protect their own share of the windfall.

This is something they had never had to do before.

Mr Gyles said syndicates were common place in businesses around Australia where workers were united by a common hope for financial rewards. The reason they stayed in the syndicate each week was to avoid the nightmare of stopping contributing and then the jackpot being struck.

He said the exclusion of Mr King, a father of five, was a breach of the basic obligations other syndicate members had towards him.

The share Mr King alleges he was excluded from amounts to $2,696,364.

The court has previously heard the winning ticket was purchased by a syndicate separate to Mr King and the particular syndicate Mr King was part of had been dissolved.

The barrister for Mr Adams, Michael Lee SC, cross-examined Mr King about a conversation the two men had in January and what he understood it meant.

Immediately following this conversation on January 11 What was described as the core syndicate was finished?

Mr King said that was correct, and confirmed that was, at that time, the only syndicate in place.

The reason Mr Adams gave for the winding up of the syndicate was due to the difficulty in getting money from members, Mr King said.

Mr King insisted he had told Mr Adams he wanted to be part of the Mothers Day draw. He denied a suggestion by the lawyer there were occasional one-off syndicates for big draws.

The hearing is expected to last three days.

The Powerball winnings have already been paid to the 14 winners, less $2.69 million which has been set aside pending the outcome of the hearing.

Winning the lottery is unlikely, but what are the odds of actually winning?

The one question you should always ask when investing

“WHY do I want to buy what they want to sell?”

Whether youre buying stocks, bonds, property or funds, its the fundamental question behind any investment. And if youre not sure of the answer, its worth bearing in mind the old gamblers maxim.

If you dont know who is the patsy in the room, it is probably you, Financial Times columnist John Kay writes in his new book, The Long and The Short of It.

Subtitled A Guide to Finance and Investment for Normally Intelligent People who Arent in the Industry, Kays book is a comprehensive and straightforward guide to the increasingly complex world of modern finance.

Kay, a Visiting Fellow at the London School of Economics and a Fellow of St Johns College, Oxford, starts out with the basics of investment and financial markets, before progressing to more modern developments such as derivatives and hedge funds.

Touching on themes like market psychology, irrationality and bubbles, Kay progresses to a blueprint for intelligent investing and offers practical tips on how to implement a strategy. For mum-and-dad retail investors, Kay advocates a contrarian approach.

Some of the biggest mistakes in my own investment history have been following the crowd when the crowd was going in the right direction for example, buying European property in 2006, when the mind of the market identified it as an undervalued asset class.

Even if the crowd is right about fundamental value (and in that case I think it was), the fashion is in the price. When the fashion fades, so will some of the money you have paid (and within two years, it had).

Kay notes that there is something paradoxical in the idea that the best way to use the expertise of the financial services industry is to do the opposite of what it recommends.

He concludes the book with the original question. Both buyers and sellers own securities in the hope of income and capital gains. But the returns the buyer will obtain are exactly the returns the seller could have obtained, he writes.

Why should you buy what they want to sell?

In any kind of market, where there is wide and unresolvable uncertainty or in which participants have different information or beliefs, many trades will be the result of mistakes. In financial markets, uncertainty and differential information are endemic, he writes. When you trade, you need to be confident that it is not you who is making the mistake.

How do you do that? Keep it simple.

If you dont understand a financial product, dont buy it, Kay writes. We purchase cars and computers and many other things without understanding how they work it is enough to understand their purpose. We rely on the reputation of Mercedes or Microsoft for our belief that their products will actually deliver what they promise.

Modern financial markets are complex, but much of the complexity is for the benefit of providers, rather than consumers, of financial services. If you dont understand it, dont do it.

That simple maxim would have saved both amateurs and professionals billions of pounds over the years, and the more recent the years, the larger the savings.

The Long and the Short of It: A Guide to Finance and Investment for Normally Intelligent People who Arent in the Industry by John Kay, published by Allen & Unwin, is available in stores now, $24.99.

CommSec Chief Economist Craig James takes a look at the outlook for the Australian share market which is forecast to end 2017 at around 6,000 points.