Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory & buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email pete@allenwargent.com

Friday, 30 December 2011

At what point does self-managing your super become viable?

With the market down the best part of 15% for the year it is unsurprising that more Aussies than ever before are looking to self-manage their superannuation in 2012.
There are 2 reasons for doing setting up a self-managed fund (SMSF):
1)      Cost – super fund managers charge an average of 1-2% of your fund balance as a management fee.  Fund managers also tend to turn over stocks at very high rate in order to chase short term results (funds are assessed quarterly in the financial press which doesn’t make a lot of sense for  long term investment) – this generates transaction costs and capital gains taxes;

2)      Control – by managing your super you are in control of your own destiny – a fund manager may try to optimise returns for you but by definition cannot be align his goals with those of every member of the fund
More than 90% of managed funds fail to outperform the stock market index, so if you want to improve your returns your best chance is to self-manage and lose the inefficiency of the fund management industry.
The flaw in the super system
There are several flaws in the super system but the biggest is this:
The higher your balance becomes the more the fund manager will charge you per annum.
Balance of fund
Fees at 1%
Fees at 2%
$50,000
$500
$1,000
$100,000
$1,000
$2,000
$150,000
$1,500
$3,000
$200,000
$2,000
$4,000
$250,000
$2,500
$5,000
$300,000
$3,000
$6,000
$500,000
$5,000
$10,000
$1,000,000
$10,000
$20,000


Ouch.  This is why your super fund never beats the index.  Even if the headline returns look OK, take out the insurance fees, capital gains taxes and the fees siphoned off by the fund managers (in losing years as well as winning ones) and there is not much left for your pension.
The difference that 2% per annum (an annual return of say 6% instead of 8%) can make to your retirement is simply staggering.  Your balance could be less than HALF of what it would be with an 8% return.  Amazing but true. And that’s YOUR retirement money that’s being siphoned off.
Low-cost funds
One option is to look for a low-cost fund – there are perfectly decent funds out there that only charge 0.5% or lower.  A higher fee does not by any means guarantee a better outcome.
One problem with this may be entry and exit fees which can make shifting between funds inefficient.
Self-managing costs
These vary depending on the complexity of your fund and which advisers you use.
The set-up costs might be anywhere from a thousand dollars to several thousand depending on the structure chosen – and the annual tax compliance, administrative and audit fees might be in the same ball park too (per annum).
There is also a cost to your time. 
Managing your pension must be done responsibly and you must comply with the ATO, SIS Act (1993) and other regulations (failure to do so results in a SMSF being taxed at the full marginal rate instead of the concessionary rate and may also result in fines – in other words if there is a chance you won’t comply for some reason, don’t self-manage).
Viability
There is no stipulated minimum balance but I would say you would want at least a balance of $50,000 before self-managing to invest in shares or $75,000 if you were going to invest in property.
With lower balances the administrative and other costs may outweigh the benefits.
Pooling
One option is to pool your balance with your spouse (or a friend, or other family member) to make your fund more viable for self-management.
If you are going to do so, think carefully about it first, of course!
***
Australia won the First Test after 4 brilliant days of cricket at the MCG.
Officially it’s 31 degrees today but after East Timor and Darwin frankly everywhere feels cold, even Perth.
Heading down for some lunch in St. Kilda and maybe a walk along the famous promenade with one of our Timor aid buddies who is spending her Xmas in Melbourne.
Forecast for NYE and the fireworks is forty degrees.  Surely that must be a typo, I thought, but apparently not?!

Investing outlook for 2012

2011 review
2011 has been a rough ride for investors.
Before today, the Aussie stock market is down nearly 15%, though by 4pm it may finish the year slightly ‘less down’ than that.  In property, the prices in certain cities have taken a tumble too (Perth, Brisbane, Melbourne) by varying degrees.
What for 2012?
Shares
It’s impossible of course to know how the stock markets will fare over the next 12 minutes let alone 12 months.  That doesn’t stop a lot of pundits predicting though!
One possibility is that international debt fears cause the world to slip in to a double dip recession.
Alternatively the world may shrug off the pessimism and return to growth.
The most likely pattern seems to be the middle ground of moderate gains which are intermittently wiped back out by ‘shock’ bad news.  The whole debt crisis seems unlikely to slink away quietly.
Stock values
One interesting observation is that the Aussie ASX 200 market (XJO) is only hovering around 4,000 when its low point in February 2009 was above 3,000.
The Dow on the other hand is still valued at around 12,000 which a world away from where it was in the depths of the GFC.
A share market bull might suggest that there is value to be found in the Aussie market, with plenty of the blue chip stocks (such as BHP) trading at single figure price-earnings ratios.  The more bearish pessimists might say that is simply because it’s going to be another rough year ahead!
Property - Australia
As ever there are a lot of conflicting views about the state of the property market.  We’ll know more later today when RP Data releases its hedonic home value index for November which will show the impact of the first interest rate cut.
Despite the rate cuts buying activity seems to have remained steadfastly low.
The most likely outcome would seem to be either moderate gains or moderate value declines, but nothing too dramatic.
Property – UK
There doesn’t seem to be a whole lot happening in the UK property market either at the moment. 
Some more appealing lending products are filtering back in to the market from Barclays and other lenders and interest rates are still at all-time lows. 
There is a definite and growing housing shortage in certain urban areas (mainly southern England) but in spite of all this demand is still low.
Strategies for uncertain times
The dull outlook presents a problem for investors – how to put the money to work in uncertain times?
Yields on fixed interest investments are poor but growth investments present a risk of loss.
One option is to look for high-yield stocks that pay a great dividend.  There are plenty of these on sale at the moment though some of the dividends may not yet prove sustainable and the risk of capital loss in the short term remains.
My own strategy will just be to look at the long term and to continue accumulating by:
·         Continuing to contribute monthly to a UK index fund
·         Trading Aussie resources stocks
·         Adding 2 properties to my portfolio (one in NSW and one around London)
Nothing too exciting likely to happen in the short term - but over the long term adding to your ASSET column (as opposed to acquiring toys and liabilities on consumer credit or finance) in this manner will generate handsome wealth.
And my final prediction...most of these predictions will probably prove to be wrong.  Such is the nature of predictions!

Thursday, 22 December 2011

More great Super swindling

I was doing some research for some writing this week on superannuation and was pretty amazed at what I discovered.
It’s no secret that fund managers tend to charge a percentage of your super balance to manage your fund - up to 1 or 2% of your balance per year depending on the fund. 
What I was shocked to discover was the outrageousness of the exit fees – up to 5% of your balance being swiped by some funds just for leaving the fund, which you should surely be entitled to do if the fund is not meeting your retirement needs.
The most ridiculous fees I found were for a fund proclaiming:
-Entry fee – 5% of balance
-Management fee - 2% of your balance per year
-Exit fee – 5% of balance
Good luck trying to make a decent pension with those kind of numbers.
I won’t name the firm (I used to work for them once upon a time in my backpacking days) but you can see for yourself on SMH’s website here.
It seems mean-spirited to me that such funds sell themselves under the heading of being a ‘value*’ fund.  Value for whom?


*Value, in this instance, refers to the style of investing - i.e. buying value stocks at lower than their intrinsic value.  But, still...
***
Have slowly crept along the Great Ocean Road over the last week.  It’s belting hot during the day and rather cold at night on the coast. 
Staying in Warrnambool tonight, about 300km left to go to Melbourne or so. Looking forward to a day at the cricket when there is no driving to be done.  It’s my wedding anniversary #3 today! 

Tuesday, 20 December 2011

2011 - high Beta, high pain

So the Aussie stock market is down 12% for the year (so far!).
But there are plenty of stocks that are down a lot more than that; some are off by 50% or more.
Why?  Because, simply, some stocks are more volatile than others.  The measurement of volatility* is known as Beta or:
β
A stock that moves up and down perfectly in line with the overall market is said to have a Beta of 1.
A stock that is only half as volatile (i.e. it only moves up and down half as much in magnitude) as the overall stock market is assigned a Beta of 0.5….and if it is twice as volatile as the market is said to have a Beta of 2.
Westfield is an example of a stock in today’s market with a relatively low Beta.  It doesn’t shoot upwards in value in a boom period, but nor does it fall very sharply in times of stock market distress. 
Westfield pays a high dividend and investors tend to stay the course.
Small and speculative stocks tend to have higher Beta values and are more volatile.
This is useful to know when the stock market is booming back from a crash, as giving yourself exposure to high Beta stocks can result in great capital returns.
The big problem for 2011 was that everyone thought we were due to continue recovering nicely from the 2008/2009 meltdown...and it certainly started out that way.
Then the tide turned on debt fears and those with massive exposure to volatile stocks are nursing some horrendous losses.
This is why you often hear reference to risk and return in the market being linked.  The fastest capital gains (and losses) are often those obtained by exposure to riskier stocks.
***
*and if you really care, how it’s calculated is at the bottom of the post.

The Beta value is a key variable in the CAPM model which attempts to determine a theoretically appropriate required rate of return of a stock - if that stock (or other asset) is to be added to an already well-diversified portfolio, given that stock’s non-diversifiable risk.

The theory made for a great University thesis but it doesn’t really stand up and here’s why:

If the stock market crashed tomorrow and BHP’s share price fell from $35 to $20 per share, according to the CAPM model, BHP would be a more risky purchase.  Why?  Because it has just become more volatile.

In reality, if the underlying economics of BHP are unchanged, I would far rather buy it at $20 than $35 thanks very much.  It’s common sense, right?

In other words, like many of the classical theories of finance, it’s a clever theory for the mathematics boffins, but in the real world, it’s a load of tripe.  As Buffett has proven over decades of outperformance.

***

Currently in Meningie at the start of the Great Ocean Road, on the limestone coast.

Staying on a beautiful lake (Lake Albert).  About 3 days drive to Melbourne for Xmas from here.

Beta formula:



\beta_a = \frac {\mathrm{Cov}(r_a,r_p)}{\mathrm{Var}(r_p)},~

Monday, 19 December 2011

Stock market hammered on random bad news!

Stocks got hammered by 2.5% in Australia again today on fears of European ratings cuts, the death of the North Korean leader and poor Billabong results. 
How’s that for a random trifecta of news?!
Stock market (ASX 200) is now down 14.2% for the year and super funds have had the worst year since the financial crisis in 2008.
What was I saying about roll on 2012???
***
Had a cracking day in Adelaide today.  Went to Glenelg on the tram this morning; beautiful day for a coffee on the marina.
Went to watch Mission Impossible in the arvo at Piccadilly Movie Theatre.  Probably the best movie house I’ve ever been to – in a great art deco style. 
Well worth a visit…even for average Tom Cruise flicks!
Going to hit the Great Ocean road for Melbourne tomorrow.

Sunday, 18 December 2011

The investing week ahead...

Outlook for the week ahead:
Stocks – likely to start flat
Property market – another very lacklustre performance over the weekend
Retail – relatively slow Xmas period so far
I think everyone has just about had enough of 2011.  Roll on the New Year!
***
Been in the Barossa valley winery region yesterday and spending a couple of days in Adelaide now.
It would have to be the most pleasant of all cities.  Never spent a bad day here yet.

Wednesday, 14 December 2011

Will we get a Santa Claus rally?

Say what?
A Santa Claus rally is a surge in the price of stocks in the week between Xmas and New Year’s Day.
Why does it happen?
A lot of theories on this!
·         Tax considerations (in the US - perhaps)
·         People investing their Xmas bonuses
·         General goodwill around the festive season
·         Buying in anticipation of a strong January performance (known as the January effect)
My view

The Santa Claus rally is possibly just a self-fulfilling phenomenon now.  Traders expect there to be a rally so they buy in anticipation of quick gains.

Saturday, 10 December 2011

Britain stands alone...again

26 of 27 EU member states voted in favour of a new tax and budget pact aiming to help resolve the European debt crisis.
Only the Brits voted against.  PM David Cameron was adamant that it was not on Britain’s agenda.    
European markets stayed flat as they hoped for more intervention from the European Central Bank.
The Dow was more positive, up 1.5%.
Frankly, who knows how it will all pan out?  Expecting the Aussie market to be up on Monday probably but a little more circumspect, perhaps 1%.
***
Currently in the delightful tourist town of Busselton, WA. 
Walked down the restored jetty last night, nearly 2km long.  Going to check out a couple of Margaret River breweries and coffee roasters today.  It's surprisingly cold down here!
Will then soon be undertaking the drive across the mighty Nullarbor to Melbourne.  Bit of a trek from Perth - try 3,500km for size.
But it will all be worthwhile for it will mean I can again be there for the finest Aussie tradition of all.  December 26....10.29am....80,000 people...
That's right: Boxing Day Test Match vs India! ;-)

Friday, 9 December 2011

Types of insurance

Driving to Margaret River this afternoon which has recently been tragically hit by bushfires.
Sadly, these fires were deliberately lit by the Government as a controlled burn-off that went wrong and lives were lost.  Worse, many families would not have been in insured.
There are so many different types of insurance that it is a vast topic and I won’t try to cover it all: mortgage insurance, house insurance, motor vehicle, income protection, life, landlord’s, contents….the list goes on and on. 
It can be intimidating.  If you are unsure check with a financial advisor; they can help you to decide what you need.
Investing in shares with insurance
Worth mentioning as I’m driving to the bush later today:  how about insuring your share portfolio?
Here are two easy ways you can do it:
·         put options (the right – but not the obligation - to sell options at a pre-determined price on or before a particular date)
·         sell-stops
Sell-stops are a very easy protection you can take.
It's possible to place an order online that automatically sells some or all of a parcel of shares should they fall below a certain price.
In fact, sell-stops can more sophisticated still if you so wish. 
One of the handiest tools if you are travelling like me is the trailing sell-stop that sells when a share has fallen a certain percentage from its peak – by say 10%, or whatever percentage you decide.
This means that if a share price moves from say $2.00 to $4.00 in price you can participate in all of that upside (while off snorkelling somewhere or whatever) but if the price fell to $3.60 then the sell stop would trigger locking in your profit.
Remember you should only move sell-stops in one direction, that being the direction of your trade!

If you are buying shares, that is up as the price rises (and if you are shorting shares, that is down as the price falls).

Banks pass on rate cut...in full!

Pleased to say that Chris Joye was absolutely right and the 4 major Aussie banks passed on the rate cut in full after a lot of umm'ing and ahh’ing.
With 3 year fixed rates already available below 6% before the cut this will bring some investors back in to the property market.
Interestingly ANZ said that they would no longer pay heed to the Reserve Bank announcements and would tread its own path.  Could be good for consumers.
***
Went out to Rottnest Island yesterday, it was one of the nasty semi-overcast sunburn days.  Driving to Margaret River today but not until I’ve had some caffeine.

Wednesday, 30 November 2011

Reasons people don't invest

A topic I have glanced at before.  A few reasons people don’t invest for the future:
·         Can’t afford it (you can begin investing with $50 a month or less)
·         Fear of losing
·         Not sure what they’re doing
·         “She’ll be right mate” attitude
The problem with the she’ll be right mate attitude is that for a lot of people, she won’t.  The average pension balance is very poor because it’s a poor system run by greedy fund managers.
I was looking at my super balance having recently shifted to a Self-Managed Super Fund.
I’ve worked in Australia for the past 6 years, starting on a salary of $80,000 and earning around $150,000 plus bonus in the last year.  Don’t really want to talk about my salary but it’s kinda required for explanation purposes...
So, on a decent salary what would you think my pension balance would be after 6 years?
Answer: about $50,000. 
So after 6 years work I have around 6 months’ worth of living costs saved up (if $50,000 sounds like a lot of money to you, let me assure you in Sydney, that does noooo go very far!).
Thatalso  does not make for a good retirement.  Bear in mind that we might live for several decades after we retire.  The numbers are downright terrifying if you think about it.
That's why investing outside of your super is important.
As I have alluded to before, the super system is not set up in a way that is going to provide for a good retirement and that is one reason why the contributions will be heading northwards to 12% soon.
I also had some ‘amusement’ working out how what return my fund manager had achieved for me over the 6 year period.
After the deductions for admin fees, fund managers fees, insurance and taxes - the return, as near as makes no difference, was zero.  Great!
Hate is a strong word – but I hate the whole industry.

Wednesday, 23 November 2011

Changing States

Most books I read are either from the library or off Amazon. 
Those that I buy I generally read once or twice and then pass on to St. Vinny’s.  Occasionally I come across a ‘keeper’ that I know I’ll come back to.
As I mentioned I’m currently reading Awaken the Giant Within by Tony Robbins.  I think it may be the third or fourth time I’ve read it and it, and it’s been brilliant each time.
I’ve never read a better book for simply improving the quality of your life.
Today’s tip: changing states
As Tony rightly notes, we all at times feel frustrated, sad, angry, morose, upset, lonely, anxious, depressed, miserable.
Just as surely we all develop triggers for changing the way we feel (or our ‘state’) too.
Trouble is, for most of us we use bad triggers: reaching for a (packet of) Marlboro Gold, eating too much Dairy Milk or McDonalds, retail therapy, a line of Charlie or drinking a VB long-neck.  In others words, addictive and destructive behaviours.
Robbins' top tip, is to write down a huge list of other ways to change you state, that do not involve food, drink or drugs, perhaps 50 other triggers. 
Here are 10 I thought of that can work for me:
-listening to AC/DC Back in Black on my iPod
-calling my Mum on Skype
-buying presents for my nieces
-going for a relaxing hot tub/spa
-driving somewhere and listening to Run DMC
-heading to the beach for some body-boarding
-20 minutes on a cross-trainer and some weights
-watching Test Cricket or State of Origin Rugby League on Fox
-going to the pool for a swim
-phoning my mates
So next time I get a craving for a smoke….it’s an excellent book, anyway, I’d definitely recommend it.
***
Markets down 0.6% today so far.  French and Spanish bond yields are the latest to spiral upwards.  Been a miserable last 8 days of trading.
Westpac and JP Morgan are now tipping FOUR consecutive interest rate cuts.  Not so sure about that but it shows how significantly the sentiment has inverted.
***
Managed to fix up the flat tyre with a bit of elbow grease. 
Driving down towards Geraldton today, though will probably end up bush camping tonight.

Monday, 21 November 2011

A system for winning at Blackjack...and at life.

If you’ve ever been to a casino you’ll know that the odds tend to be loaded against you.  In Roulette, for example, the house has a green zero number giving it a 3% edge (or in the US a ‘0’ and a ‘00’ giving it a 6% edge).
There is one game where you can theoretically steer the odds in your favour: Blackjack.
By counting the high cards (10 through colours) and low cards (2 through 6) dealt you may ascertain the odds of favourable cards being dealt to you and adjust your bet accordingly. Not easy, but possible.
Poker and Bridge players know the tactic intuitively.  The way to win the game is not to split your chips into 10 equal piles and bet the same amount on 10 hands.  Instead, you wait until you have a strong hand and increase your bet.
The Kelly Model
A bright spark managed to put this idea in to a formula:
2p-1=x  
P represents the probability of the outcome and x represent the percentage of you capital you should bet.
Don’t worry if algebra brings you out in a cold sweat (it does me too) as I’ve done the maths for you here:

% likelihood of outcome
% of capital to allocate
100
100
90
80
80
60
70
40
60
20
50
-


It’s logical enough: if you’re 100% certain of an outcome (e.g. the sun coming up tomorrow) bet 100% of your money.
If you are only 50% sure of an outcome then your odds are no better than winning a game of Two Up on Anzac Day, and you shouldn’t bet.
Applying this to investment
You super fund manager doesn’t play to win, he plays not to lose.  That’s why he will hold up to 100 or 200 stocks on your behalf (and fail to beat the stock market index).
The richest investors don’t do this; instead they place big bets on high probability events. 
In 1991, George Soros foresaw the ‘Black Wednesday’ meltdown coming and took a monumental $10 billion short position against the British sterling, netting himself a $2 billion profit.
Buffett thinks similarly.  Through 1988 and 1989 Buffett took a position of $1 billion in Coca Cola shares (back when a billion dollars was a serious amount of cash) and by 1998 the holding had grown in value to $13 billion.  He was well on his way to being the richest man alive.
Buffett wasn’t fazed with more than 40% of his entire net worth being tied up in the stock of one company.
He still works on similar principles today; recently he took a $10.7 billion position in IBM – a big bet on what he sees as a high probability event.

Thursday, 17 November 2011

Buy and hold; not cool but very effective

What do fund managers tell us to do?  Buy and hold, ride out the bumps, stay invested for the long term.
But behind the façade, do they practice what they preach?  Negative.  They buy-sell-buy-sell-buy-sell in a frantic and desperate bid to top the performance tables for the next quarter. 
That’s why they under-perform the average stock market growth.
Three problems with high-frequency trading
1)      Transaction costs - these tend to be lower in shares (brokerage costs, stamp duty – though no stamp in Oz thankfully) than they do in property (stamp duty, legal fees, agent’s fees), but they are still there and they do have an impact

2)      Poor timing – most people are rubbish at timing the top and bottom of the market

3)      Capital gains tax
Effect of tax
Here’s a hypothetical investment that doubles in value each year and then tax is paid at a notional 30% on the profits before reinvestment:

Starting capital
Capital doubled to:
Tax at 30%
Finishing capital
$10,000
$20,000
$(3,000)
$17,000
$17,000
$34,000
$(5,100)
$28,900
$28,900
$57,800
$(8,670)
$49,130
$49,130
$98,260
$(14,739)
$83,521
$83,521
$167,042
$(25,056)
$141,986


Here’s another hypothetical investment where the investor holds for the full 5 years then sells, incurring capital gains tax at the reduced rate of 15% (see note below):

Starting capital
Capital doubled to:
Tax at 15%
Finishing capital
$10,000
$20,000
$-
$20,000
$20,000
$40,000
$-
$40,000
$40,000
$80,000
$-
$80,000
$80,000
$160,000
$-
$160,000
$160,000
$320,000
$(43,500)
$276,500


Note: capital gains tax rules are different in the UK (CGT allowances and indexation) and in the US.
In Australia there is a 50% exemption where an asset is held for more than 12 months. Complicated, but the principal here is the important thing!
Table 2 shows that while the tax is Year 5 is rather eye-popping the net result is far better.
Do the rich pay much tax?
Well, we know that companies sure don’t - but what about individuals?
We know that Kerry Packer wasn’t a fan of tax telling the Senate that people who didn’t minimise their tax “need their heads read” because governments tend to waste a lot of taxpayer money.
George Soros took a different approach, incorporating his famous Quantum Fund in a tax haven (Netherlands Antilles).
Warren Buffett minimises his tax in two ways.  Firstly his company Berkshire Hathaway has only ever paid one dividend (dividends from company profits are effectively taxed twice, once in the company and once in the hands of the recipient).  He mused: “I must have been in the bathroom at the time.”
The second way he reduces the impact of tax is by not selling.  Buffett’s preferred timescale for holding a quality investment is forever.
What does it mean for us?
The buy and hold strategy offers the average investor the best chance they have of not being average. 
The strategy that is most often effective is:
1)      Identify a quality asset (shares in a great company or property in a great location)

2)      Buy it at the right price (also known as investing counter-cyclically or “don’t follow the crowd”

3)      Hold it for the long term
It’s a long way removed from the Gordon Gekko image of the mad-crazy-impulsive Wall Street trader. But guess what?  It also works.
***
Arrived in Coral Bay in time for lunch.  First impressions, it’s beautiful!