Walk, then run (22/10/2013)
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
OliveLyons13
:
I enjoyed reading your comments on shares
Daniel Victor
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The problem with going into cash while waiting for the current overvaluation to correct,is that the current negativity in real interest rates could actually increase ! This could happen if countries continue printing money, and using it to buy bonds to hold interest rates down artificially.
You need to find some alternative to cash and overvalued shares.
Roger Montgomery
:
Any ideas Daniel? Just finished writing a piece on the bubble expanding further if Yellen and the current nominee for vice chair take charge. On the subject of the latter individual; read the (Oct 25) lecture at Johns Hopkins University, entitled “Monetary Policy in the Post-Crisis World: Lessons Learned and Strategies for the Future” by Christina Romer
craig.cory.54
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Dude, if you think things are overpriced you need to ask yourself will earnings soon catchup to lessen the overpricing? If so you may want to stay in. If not you may decide to take the money off the dude who rightly or wrongly thinks different to you and sell. Or you may just ride it out. Or you may just not decide to do anything and see what happens regardless. These are all your choices and no one will make them for you or share the fruit of the result. These are good times to assess your own rationale and decision making. Get it right and sell and if things tank you will save yourself some pain and some money, get it wrong and sell and if things dont tank you can just buy back in paying just a small opportunity cost while your cash is on the sidelines and under much less risk. Anyways, nothing is permanent and what ever you decide now will be reconsidered down the track when the story changes again. All the best. C.
Daniel Victor
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Yes,there are plenty of opportunities now for taking profits on overvalued stocks – but what then ? The whole market is overvalued,so there are no undervalued stocks to get into,And holding cash is a slow death,as interest rates are below inflation – especially after tax.
Roger Montgomery
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So stay in overpriced stocks until they fall and then you can sell and carry forward a tax loss?
Daniel Victor
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The problem now is that there are plenty of opportunities for taking profits on overvalued stocks,but then what do you do with the money ? There are no cheap or even fairly valued stocks – the whole market is overvalued ! And holding cash is a slow death,as interest rates are below inflation [it’s even worse after tax].
Roger Montgomery
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The risk of course is that prices slide. Cash at 3% looks great if the market falls 20%.
Daniel Rosenthal
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Thoughts on SIV’s global expansion aspirations?
Do you guys still hold these in the fund?
Kind Regards,
Daniel
Roger Montgomery
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Hi Daniel,
can’t comment at moment. WIll do shortly.
craig.cory.54
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Roger, sounds easy to do, until you try and do it. I’m sure if you could run through how to practically find things like equity per share and the other valuation components in a real annual report it would help many. Cheers, C.
Roger Montgomery
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Hi Craig,
Grab a copy of Value.able if you haven’t already. Its all there. if not, its not what you are after we should put together an updated version…
garry howlett
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IMF continues to warn of growth trends. Policy wars and currency wars in play. Some stocks trading at 40 plus earnings with no sign of pulling back. The risk trend continues.. So hard to trade the irrational.
Roger Montgomery
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Nicely put Garry.