© 2015 123 Investment Management

When arriving at the Adelaide airport, you automatically

fall in love with it. The airport is more like a country

house; clear, peaceful. Looking outside the lounge glass

window, a panorama picture of blue sky sitting above the

shallow rolling mountains with wide open space. The

airport is a true Aussie style. I think it is the prettiest

airport in this country.

That’s just the beginning. Our first trip is to the Henschke

winery. The place people call "the most romantic winery"

in the country. In the early 1990s when I was a student, I

worked at a restaurant. One of the wine I loved the most

was the Hill of Grace, at $35 a bottle! (Grange was about

$150 at that time, both are currently priced at around $700).

Hill of Grace & Romantic New Adventure

“Love is patient, love is kind… It keeps no record of wrongs” “Love never fails… When I was a child, I talked like a child, I thought like a child, I reasoned like a child.” “And now these three things remain: faith, hope and love. But the greatest of these is love”

1 Corinthians, the Bible “Twinkle, twinkle, little star, how I wonder what you are” Song: Twinkle

December 2015

123 Investment Insights with investment implication

© 2015 123 Investment Management

A lovely girl with German heritage called Emma drove us up the hill to view

the 150 years old vines (Picture 1), the oldest in Australia, and the second oldest

vines in the world. They were planted by German immigrant Nicolaus Stanitzki

in the 1860s. With only 0.7 hectares of vines, how small the Hill of Grace parcel

of land is! In its smallest year, only about 500 bottles were produced! Taking a

small sip into the mouth, we could feel the Eden Valley fruit’s intensive rich

texture, it complimented by the Mozart style romantic flavour on the tongue.

We were wordless, just like to enjoy a moment of silence. The fine German

style craftsmanship played well in the harsh Aussie land. It is a true national

treasure.

The 1998 Saltram Mermebrook Cabernet Sauvignon is still my favourite wine.

Winner of the French wine Expo in 2000. So for the next leg of our journey we

headed down to the Saltram celler doors. There we met one of the best cellar

door masters in Australia, another charming women, Henlen Porton. She

energetically talked us into tasting (drinking) the Saltam family of Treasury

wines. What stunned us was Helen’s skill. After pouring just the right amount

of wine into a tasting glass, she lay the glass horizontally on the bar bench, then

gently rolled the glass a few rounds. She then handed it to us with a big sparkling

smile. The classic Saltram intensive Barossa fruit flavour just flew to our noses.

Now Saltram, together with Grange, belong to the Treasury Wine Group (TWE),

often quoted as a takeover target by the press.

After enjoying those nice wines, we boarded a flying kangaroo to regional South

Australia. A nice little airplane, where the attendants came over and took our

luggage from our hands. The feeling was more like a private jet. You need to

believe in Henscke’s romantic magic: the air hostess looking after us had the

sweetest smile I had ever seen (picture 2). I will report more about this trip in

another chapter.

It is estimated that around 5000 BC, the Egyptians invented the Grindstone*¹, the first Iron Saw was made around 800-700 BC in Mesopotamia; the Chinese

invented paper in AD105, but the technology did not reach Europeans until a

thousand years later. In the mid 15th century. When a German goldsmith

invented the Printing Press, Bibles were the first books printed. The wide spread

of ideas across the world since then saw the rise of European civilization, and a

boom of inventions including Edison’s screw-in light bulb. Thirty years ago we

© 2015 123 Investment Management

moved into the so called “Information Age”, and now, with the Internet Age,

the spread of knowledge is faster than ever. Our generation is in the middle of

an information & invention (“I & I” ) boom. Australia doesn’t lack of good

scientists and inventors: Nobel laureate Howard Florey from Adelaide is

credited with turning Penicillin into medicine, the refrigerator and Wi Fi were

invented by Aussies. The Prime Minister’s $1.1billion Innovation call was just

on time! We are looking forward to the second leg of the “mine + mind” boom.

Part of the world has changed, part of the world stays still: we consume wheat

as our ancestors consumed thousands of years ago. I would expect that when our

hearts feel pain or joy it would be the same as our ancestors thousands of years

ago.

“Innovation is at the heart of everything we do”, “Our continuing priority is to

develop innovative therapies and programs that make a real and lasting

difference to the lives of people……”, CSL stated in its 2011-2012 annual

report.

For investing & trading, the outside world keeps on changing, but the results we

seek are still the same.

In 2016, we would like to share our learning and knowledge of “price discovery”

with you in a new way. We plan to launch a wholesale fund called 123

Investment and Growth Fund for wholesale investors. The fund will be built

on my investment and trading experience. The core portfolio to be based on an

experiment I started in 1998. At the beginning of the year I selected a portfolio

of 10 companies, mainly from the ASX top 200 index, and at the end of the year

calculated the results and compared the return with the ASX 200 index (XJO).

For the period of 1998 to 2013 (no selection was made in 2000), the return of

the portfolio was averaged 9.3% pa compared with the ASX 200 Index of

average 6.3% pa (excluding dividends). The satellite trading portfolio tries to

copy some of the trading techniques I used with one of my DIY trading

portfolios, which yielded more than 200% from 2006 to 2013, compared with

the return of the All Ordinaries Accumulate Index of about 25% during the same

period.

Note: Past returns are not an indicator of future performance. Future performance may be determined by economic

and market influences.

© 2015 123 Investment Management

As we review the invention history, I would like to provide a summary of the

Adviser Insights I have written from early 2012 to 2014 (Appendix 1) for your

interest, I hope you had enjoyed them.

I would like to thank my colleague Teddy, staffs and consultants who assisted

me for their dedicated work in 2015, and once again, thank you for your loyal

support.

Merry Christmas and Happy New Years

Charley Wang

Managing Director

123 Investment Advisors Pty Ltd

123 Investment Management Pty Ltd

Tel: 03 9639 7773 Mobile: 0417868336

Email: charley@123investment.com.au

Website: www.123investment.com.au

102W, Level 1, “The Block Arcade”

282-284 Collins Street, Melbourne Vic 3000

Charley’s Bio: Charley has been in the financial market for 20 years, including 15 years with Morgsn Stnaley (formerly Citigroup ). His academic

qualifications include a Master of Finance degree from Melbourne University.

Note & acknowledgment

*¹ “Inventions, A Visual History”, Richard Platt

Important Information:

This document is published by 123 Investment Management Pty Ltd (ABN 39601788274, AFSL 469061), who can be contacted at 102W, Level 1, “The Block

Arcade” 282-284 Collins Street, Melbourne Vic 3000, or on +61 03 9639 7773. This document provides market commentary and strategy ideas to clients of

123 Investment Management Pty Ltd or its subsidiaries. Such commentary and ideas are based upon generally available information. Although the information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, and such information may be incomplete or condensed. This document

and its contents are proprietary information of 123 Investment Management Pty Ltd and may not be reproduced or otherwise disseminated in whole or in part

without our written consent unless required by law. This material contains general advice. General advice is prepared without taking account your objectives, financial situation or needs and because of this, you should seek professional advice before acting on the general advice. Information on investment performance

or returns is based on historical information. Investments can go up and down. Past returns are not a reliable indicator of future returns. Future returns may be

affected by a range of factors including economic and market influences

© 2015 123 Investment Management

Appendix 1

Charley’s 2012-2014 Adviser Insights quotations & summary February 2012 “You don’t chose the moment, very often the moment chooses you” - Bob Carr

March 2012 “The best thing that happens to us is when a great company gets into temporary trouble. … We want to buy them when they’re on the operating table.” -Warren Buffett “The reports of my death are greatly exaggerated” - Mark Twain Recommend long the market through STW, AFI, suggested keep an eye on COH due to its recent set back

April 2012 “Be sure you put your feet in the right place, and then stand firm.” -Abraham Lincoln “The most powerful force in the universe is compound interest” -Albert Einstein Recommended TLS, target price $4.2 comparing with then price of $3.60 Relay a message by Warren Buffett warning about the high gold price

May 2012 “Don’t collect any more than you are required to,” he told… -Luke 3:13, the Bible I’ve found that when the market’s going down and you buy funds wisely, at some point in the future you will be happy. You won’t get there by reading “Now is the time to buy.” - Peter Lynch Recommended the major banks, value attractive: “ Buy Low, Sell High”

June 2012 “When it comes to reputation, we understand that trust in our company is not based solely on our ability to deliver strong financial results. Our stakeholders across the CCA Group include not only our shareholders, customers, consumers, suppliers and our staff, but the entire community.” -David Gonski, CCL chairman “More importantly for you, our shareholders, is that over a 10 year period, annual dividends have increased nearly 275% – from 14 cents per share in 2001 to 52.5 cents today.” –Terry Davis, CCL CEO Australian Champions ( 1 ) Presented the CCL’s successful story under CEO Terry Davis

© 2015 123 Investment Management

July 2012 “Barton Biggs, Morgan Stanley strategist who predicted dot-com crash, dies at 79”-The Washington Post “Barton left an indelible mark on our business, our culture and our shared notion of leadership at Morgan Stanley. He was known as an independent thinker, colorful writer and one of the pioneers of emerging markets investing, and our Firm benefitted from his vision.” – James Gorman, Morgan Stanley CEO The Australia Dollar: discussed the reasons behind the strong Aussie dollar August 2012 “You need to lose before you win” – Rory Mcllroy “If you get a bronze medal in the Olympics you’re a hero, if you finish third at a major championship, you’re a choker in golf” –Grey Norman TLS result update: argued TLS is a “Golden Goose” and should be kept

September 2012

“ ‘O hear us when we cry for Thee, for those in peril on the sea.’ We cry for a nation that is in peril on the blustery seas of the economy. Our people are drowning in employment; our government is drowning in debt.” – Richard Fisher

“There was never a good war, or a bad peace” – Benjamin Franklin Stock to watch: SYD ( Sydney Airport )

October 2012 “When Brian took over in 1990 CSL was a domestic focused government enterprise, now CSL is a proud Australian company, one of the world’s largest global plasma therapeutics businesses.” –John Shine, CSL chaiman “The ASA would like to put on record that Brian McNamee…… would rightly claim to be one of the most successful CEOs currently serving in Australia” –Don Hyatt Australian Champion 2 Presented CSL’s story under the most respected CEO Brian McNamee Argued Australia should continue to build its strength in the Health Care and Medical sector beside the mining and agriculture sector

November 2012 “Everybody has difficult years, but a lot of times the difficult years end up being the greatest years of Your whole entire life, if you survive them” -Brittany Murphy “Christmas is the time when kids tell Santa what they want and adults pay for it. Deficits are when adults tell government what they want and their kids pay for it.” –Richard Lamm

© 2015 123 Investment Management

Argued the AAA rated 10 years Australian Government bond at 3.14% yield’s attractiveness Stock watch: FSF (Fonterra Share Fund )

January 2013 “It is spring again. The earth is like a child that knows poems by heart” –Rainer Rilke

“There are two ways to live your life. One is as though nothing is a miracle. The other is as though everything is a miracle.” –Albert Einstein Presented the Charley’s 2013 10 stocks selection and the result of his 2012 selection February 2013 “You don’t choose the moment, very often the moment chooses you” – Bob Carr March 2013 “Autumn is a second spring when every leaf is a flower.”-Albert Camus "Of course, the immediate future is uncertain; America has faced the unknown since 1776. It’s just that sometimes people focus on the myriad uncertainties that always exist while at the other times they ignore them" - Warren Buffett Major companies’ result review

April 2014 “Computershare has built its reputation on exceptional service”- Chris Morris, CPU’s founder "Since floating in 1994, Computershare has grown, mostly by acquisition, along the value chain, laterally and geographically near 100 fold." – Stuart Crosby, CPU’s CEO Australian Champion 3 Presented the successful story of entrepreneur Christ Morris and his company Computershare

May 2013 "Congratulations to Adam Scott on becoming the first Australian to win the Masters. I have been a huge believer in Adam Scott and I am so proud of him, as is the rest of Australia.” – Grey Norman Discussed the Japan’s QE and the “Currency Carry Trade”

June 2013 “Every morning waking me up is not the alarm clock, but my dream” A former wresting champion

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July 2013 “ Almost heaven, West Virginia; Blue Ridge Mountains, Shenandoah River…… take me home, Country Roads” – Song “Take Me Home, Country Roads” “ Tho’ we gotta say goodbye for the summer…… Knowing the love we’ll miss…… and sealed with a kiss” -Song “Sealed with a Kiss” “ The demand for a strong leadership is in need in our country more than ever as our economy has pass the summer season and the end of the commodities super cycle” I wrote.

August 2013 “The board is deeply appreciative of Mr Teele’s and Mr Argus’ outstanding contribution over many years. The company and its shareholders have greatly benefitted from their experience, wisdom and strong commitment to the best interests of shareholders.” – Ross Barker, AFI’s MD Bruce Teele’s retirement from AFI

September 2013 “Mona Lisa is the only beauty who went through history and retained her reputation” - Will Rogers “Honour the work” - Melbourne High School’s Motto

October 2013

Title: “The V Formation & Myth Busters” “People who share a common direction and sense of community can get where they are going quicker and easier because they are travelling on the thrust of each other”

-Michael Pacitti We argued the need of the Coalition and the Government to combine efforts together to get the country moving Stocks recommendations: TLS and MQG

December 2013

Title: “The Sydney Opera House” “It stands by itself as one of the indisputable masterpieces of human creativity not only in the 20th century but in the history of the humankind.” -Report "Imagination is more important than knowledge. For knowledge is limited to all we now know and understand, while imagination embraces the entire world, and all there ever will be to know and understand" -Albert Einstein

“The sun did not know how beautiful its light was, until it was reflected off this building” Stock recommendation: SYD Aussie Christmas menu

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January 2014

Title: “Deep, Deeper, Deepest”

“We’re farming the fertile soils on the slopes of the volcano, even though it has already started to smoke.” – Unknown Investor “Success is not final, failure is not fatal: it is the courage to continue that counts”-Winston Churchill The story of BBG (Billabong); Charley’s 2014 10 stocks selection and the result of the 2013 selections

June 2014 “A garden requires patient labour and attention. Plants do not grow merely to satisfy ambitions or to fulfil good intentions. They thrive because someone expended effort on them.” -Liberty Hyde Bailey Australia Supermarket Players 100th year anniversary of Coles, discussed the major supermarket players in Australia

August 2014 “I believe that the measure of my soul is my capacity to love imperfect people.” Joseph Grenny

“I am strong when I am on your shoulders; you raise me up to more than I can be” -Song “You Raise Me Up”

Bond and Equity Discussed the US government bond and the relationship with the equities markets