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Savvy Peace of the Action

by Anna Fenech, The Australian

Many people e-mail us wanting to know more about Professor Price. How did he get started? What is his background, etc. Anna Fenech, the deputy editor of the Wealth section of the Australian, recently interviewed John as part of the True Confessions series (Oct 8, 2003). Here is the article:

University academic John Price's first investment experience of receiving BHP shares when he was 12 helped him learn what the world of profit and loss was to be all about.

What happened? My father gave them to me and I remember diligently filling in sheets to record the dividends and the various share splits and special offers. Almost 50 years later I still have some of those shares. A £4 ($8) share is now worth around $375 before tax assuming that dividends were reinvested.

What are your investment goals? My investment goals are to help grow Conscious Investing into an enduring international company that will teach people how to invest consciously and with integrity. Its core aim is to bring maximum benefits to members through successful investments. And maximum benefits to society through the companies that they invest in.

On a personal level my goal is to fund centers or “peace palaces” around Australia where people can contribute to peace by meditating and unwinding after work. Oh, and I can’t forget building a house up the north coast near the water and the bush.

What's the best investment decision you've ever made? Using Conscious Investor I search for great companies with features such as stable and strong growth in sales and earnings. Some of my best successes are ARB in Australia (up nearly 500 percent over five years) and Bed Bath and Beyond in the USA (up around 350% over the same period).

What about the worst? The two worst investments came about ten years ago when I listened to other people and got caught up in their urgency. “If you don’t get in now it will be too late,” they both said. Excitement took over causing me to put aside common sense, let alone any rational analysis. In both cases the companies went bankrupt. Fortunately I got out way before that.

What's the best piece of investment advice you've received, and who was it from? When I went to the annual meeting of Berkshire Hathaway, Warren Buffett said to invest in companies with a high return on equity and capital. You can say that these have been one of the cornerstones of my investing. Both these criteria are important measures of how well management is doing with investors’ money. If a company consistently gets a return on equity of five percent or worse, then this is likely to be the return you will get as an investor over the medium term. After all, money can’t come from nowhere.

What advice would you give to an investor who's just starting out? Take your time. It is important to get it into your mind that you are investing for the rest of your life. So be prepared to have money sitting in the bank earning low interest while you look for quality investments. Also recognize that you are investing in companies with real products and services. Ask your self the question, “If I had the money, would I buy the whole business?”

How do you react when the markets get rocky? I recognise that I don't invest in the market -- I invest in quality companies. So a volatile market just enables me to buy the stocks I want at even better prices.

What's the biggest investment risk you've ever taken? And did it pay off? The biggest risk I took was investing in Save the World Air, a USA company. No production, no sales. Only a single untested product for reducing harmful emissions and improving fuel efficiency for motor vehicles. But the potential was so great for reducing air pollution, particularly in developing countries, that not only did I invest in the company, I also offered to help them with their research and testing program. The company has gone through a bumpy time. I bought shares at around 20 cents. Within a few years they had gone to US$14. Then the SEC took it off the market. Fortunately that is all in the past. Ed Masry, the lawyer who was portrayed in the film Erin Brokovich, is now the chairman and CEO and things are coming together. The real Erin Brokovich and Bobby Unser Jr. are now on the board of advisors and I was appointed to the company board about a year ago.

What would you never do with your money? Invest in companies that make their profits by exploiting the weaknesses of others such as tobacco and gambling.

Where do you source most of your investment information/research? All the information and screening comes through Conscious Investor. Next this is supported by as much material as I can get directly from the company: financial reports, ASX submissions, and so on. I also read articles written by analysts and market reporters. [That is what the article said. What I actually said was, "And a distant third, articles written by analysts and market reporters.]

What, for you, are the most important attributes of a good financial planner? A combination of sensitivity to clients’ needs and a thorough understanding of the difference between investment and speculation.

What are your views on socially responsible, or ethical, investments? A core principle of the investing strategy that we teach our members is to invest in companies with products and services that you believe in and possibly use. Not only does this benefit society, it gives integrity and makes you a more savvy investor. You are in a better position to notice changes in the success of the company well before it is picked up by analysts.

Would you feel comfortable about running a portfolio of individual direct shares? I regularly get asked to manage people’s money for them. It will likely happen in the future. But when it does it will be a natural outgrowth of what we do now in terms of helping people understand and implement a common sense approach to investing. Another thing is that I am looking forward to when Conscious Investing floats. Then many people will be able to invest directly in us and participate in our success.

How do you feel about investing overseas? Initially people should focus on their own market because these represent the companies they understand best. But later they can start to invest overseas. I invest in Australia and the USA.

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