There have been volatile times recently on the ASX. With prices for oil, iron ore and coal falling sharply, the mood in the resources sector has turned decidedly sour. Further, the negative mood seems to have been adopted more broadly by the market, with a wide range of stocks showing meaningful price declines. Continue…

by Tim Kelley Posted in Insightful Insights, Investing Education, Market Valuation, Value.able.

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Alert readers will recall that in June this year we set out to explore the merits of applying machine learning technology to stock selection. We went through a process of “training” a learning algorithm called a Support Vector Machine (SVM) to pick stocks, and then in mid-June we asked it to nominate a top 20 and a bottom 20 from the ASX200. Continue…

by Tim Kelley Posted in Companies, Investing Education.

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The ASX has gone nowhere this year. After strong performances in 2012 and 2013, 2014 is looking decidedly lacklustre going into the home straight.

One of the features of the year to date has been the very poor showing by resources companies. The Australian equity market has a heavy weighting to resources, and when commodity prices decline, the Australian equity market can lag those of other nations. Clearly this can be a positive as well – in boom times a strong resources market will drive the ASX higher. Continue…

by Tim Kelley Posted in Energy / Resources, Insightful Insights, Investing Education.

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Students of value investing will know that in past times, value investors paid great attention to accounting book values. One of the better-known strategies employed by the spiritual father of value investing, Ben Graham, was to try to acquire companies at market prices that were below their conservatively-estimated liquidation value.

This was not a strategy for the timid – companies that found themselves in this position frequently did go into liquidation. However, a diversified portfolio of companies that fitted this description could do well on average. Continue…

by Tim Kelley Posted in Insightful Insights, Intrinsic Value, Investing Education.

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Domino’s Pizza (ASX:DMP) has been one of the standout success stories on the ASX in recent years. The business has achieved excellent financial metrics with good earnings growth, and shareholders have enjoyed exceptional returns over many years, with a +60 per cent share price gain in the past 12 months alone.

However, while we applaud the management of the business for excellent financial performance over this period, we wonder whether the share market might have pushed Dominos beyond a sensible valuation range. Continue…

by Tim Kelley Posted in Companies, Consumer discretionary, Insightful Insights, Investing Education.

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Consistently beating the market is clearly not an easy thing to do. Analysis of fund manager performance typically shows that a large proportion of them do not add enough value to cover their fees.

Some of them – admittedly – may not be trying all that hard. A manager who has accumulated many billions of dollars of funds under management (FUM) over the years potentially has a lot to lose from trying to beat the index, and maybe not much to gain. Continue…

by Tim Kelley Posted in Investing Education, Market commentary.

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Proponents of the efficient markets hypothesis argue that the only way to achieve higher investment returns is to take more risk. Clearly, there’s some truth to this – very low risk asset classes (like cash) tend to deliver lower returns – on average – than higher risk asset classes (like shares). However, when you look within the shares asset class, the picture is rather more interesting. Continue…

by Tim Kelley Posted in Insightful Insights, Investing Education.

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Back in June, we posted series of articles exploring the application of pattern recognition technology in identifying good and bad equity investments. Continue…

by Tim Kelley Posted in Insightful Insights, Intrinsic Value.

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I had the good fortune to attend presentations and discussions with a range of leaders from the telecommunications industry on Tuesday. The space is going to be an interesting one in the years ahead. Continue…

by Tim Kelley Posted in Insightful Insights, Technology & Telecommunications.

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