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.
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Roger Montogmery provides some advice for Chief Executives looking for new roles in this discussion on ABC1’s Inside Business broadcast 2 September 2012. Watch here.
Roger Montgomery discusses how the dramatic volatility in the price of iron ore is likely to continue in this discussion on ABC1’s Inside Business broadcast 2 September 2012. Watch here.
Learn Roger Montgomery’s insights into the latest 2012 results announcements in this discussion on ABC1’s Inside Business broadcast 2 September 2012. Watch here.
We have just written our monthly report to investors of The Montgomery Private Fund and the outlook for the large Materials stocks is not expected, in our view, to improve in the short term. Chinese steel mills don’t see demand picking up. Daily steel production falling 5% every two weeks. While blast furnaces are slowing down, capacity is high and shut downs not happening. We have noted already that inventory remains double that of 2007.
WHat does this mean? Prices can, and we expect will, continue to go down. Not is straight line of course but the outlook appears to be deteriorating even further for the widely held Materials stocks.
In China, steel prices are already hitting 2008 lows.Observers say Iron ore inventory levels at ports is still quite high
Our reading on Steel demand and after breaky with a member of the team at one of the the worlds largest short selling fund is that steel demand will continue to be weak into 2013. I think expectations for a recovery in the short term simply represent wishful thinking by those in denial.
I’d like to offer the opportunity to invest in my new business. No not the new Montgomery retail fund (although I’d be delighted to welcome you as an investor) but an operating company. Like many of the companies reporting earnings this reporting season I will guarantee it will report to you record earnings every year.
This promise is easier to keep than you might initially realise. If companies making such headline-grabbing announcements impress you, then you might be interested to know its not that hard to achieve.
All you need is a bank account and a rocking chair. Lets start with a million dollars in a bank account earning five per cent. First year earnings will equal fifty thousand dollars. Now let’s reinvest all of the interest. Now we have $1.05 million earning five per cent. Year two’s earnings would be $52,500. And there you have it, record earnings! Magic.
When a company reports record earnings, there is nothing more miraculous than the power of compounding. Indeed, if a company cannot increase its earnings, then perhaps a bank account is better.
You might recall back in December (Dec 8, 2011) with FMG trading at $4.84 (now $2.94), BHP at $37.00 ($31.36 today) and RIO at $66.09 ($50.19 today) we warned
“I now wonder whether we are seeing the bubble slip over the precipice? Falling property prices (10 per cent of the Chinese economy) leads to lower construction activity, leads to declining demand for Australian commodities, leads to falling commodity prices, leads to big drops in margins for a sizeable portion of the [Australian stock] market index…”
Since the start of 2012, commodities have, on average, fallen more than 20%, and in some cases much more. This is a pace of decline matched only by that experienced during the financial crisis of 2008.
At current prices many mining companies will now be making losses. As analysts we question the viability of some companies and Atlas Iron for example, one of the largest Iron Ore producers outside of BHP and RIO, may not be without outside help – should prices remain at or below present levels.
Roger Montgomery discusses the 2012 results season with Ross Greenwood on Radio 2GB, and how amongst technology stocks there are both big winners and big losers. Listen here.
This program was broadcast on 5 September 2012.
“Follow the steps outlined in Value.able, and I believe that over the long run, you cannot help but beat the market.”
The stock market can be richly rewarding and the broad market indices relatively simple to beat over time but you must first discover the steps to identifying the very best stocks and the steps to buying them for less than they’re worth. Value.able invites you to not only discover and master the steps to successful value investing but to also hear and watch how Roger Montgomery applies the steps to identifying the best stocks and avoiding the worst with stunning audiovisual clips and screencasts from his own trading screen and using the software he invented.
Using this visually rich and captivating premium version of Montgomery’s best seller will entertain, engage, educate and enrich through all of the stock market’s trials and tribulations.
Last night the US markets rallied. There was no good news. In fact the reason for the rally was that the US economy was floundering. A floundering economy means more stimulus and stimulus is good because it should eventually lead to a better economy.
In other words an unhealthy patient is about to receive another sugar hit which might make them better. Buy!
Clearly the irony was not lost on traders of Fortescue shares this morning. FMG’s share price rallied several percent on the open in response to FMG’s announcement that it will significantly cut back on capex and production targets. Apparently, investors in a pure play iron ore company are pleased that the company will be less exposed to iron ore. Evidently the company is worth more if it does less. Taken to its extreme, it worth the most if it does nothing.
We believe that over the long term, equity markets work effectively as a weighing machine. In the short term, however, they can sometimes seem a little odd – and thats putting it mildly!
Stay tuned we are cooking something mind boggling about FMG and its peers…
