Insightful Insights

It was December 14, 2011. The Australian Resource Boom was in full swing and the Pilbara was ground zero. In Port Hedland the median house price had almost doubled in four years from $600,000 in 2007 to more than $1 million, according to Real Estate Institute of WA figures. In Wedge Street, you needed plenty of ‘wedge’ – $995,000 to be exact – to buy a brand new ‘off the plan’ two-bedroom unit in a multilevel apartment complex.

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by Roger Montgomery Posted in Energy / Resources, Insightful Insights, Property.

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With everyone getting very hot under the collar or excited (depending on whether you are a borrower or a lender) about the prospect of Australia’s cash rate falling below two per cent, we thought it might be interesting to point to something even more interesting that transpired last week in Europe. continue…

by Roger Montgomery Posted in Economics, Foreign Currency, Insightful Insights.

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For the historically minded reader you will note that this title was a famous quote attributed to John Maynard Keynes, the grandfather of Keynesian economics. The quote is said to have been made by Keynes as he commented on the harsh post-war conditions placed on Germany at Versailles in 1919. In short, one condition required that Germany repay the Allies for the cost of the war. continue…

by Scott Shuttleworth Posted in Economics, Foreign Currency, Insightful Insights, Market commentary.

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A couple of weeks ago at the World Economic Forum in Davos, Switzerland, Ray Dalio spoke with CNBC.  Prominent economic thinkers in Davos believe the U.S. economy is strong, but its ability to deal with the next crisis is in doubt. “The U.S. is growing and I think that’s a non-debatable fact,” Gary Cohn, president of Goldman Sachs, said Thursday at the World Economic Forum in Switzerland. “What I am concerned about is the actual ability of the U.S. to raise rates with what’s going on with the rest of the world.”  Below, we summarise the outtakes.

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by Roger Montgomery Posted in Economics, Insightful Insights.

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In late 2013,  I wrote a number of blogs on Liquefied Natural Gas (LNG) concluding that unless the industry cost structure in Australia changes and productivity improves, there are unlikely to be any new offshore “green field” LNG projects, except for Floating LNG facilities. continue…

by David Buckland Posted in Energy / Resources, Insightful Insights, Technology & Telecommunications.

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There is a definite element of contrarianism to value investing. Not always of course, but sometimes the market’s negative reaction, to news that is of a temporary nature, prices the shares of a company as if the problem were permanent. Going against the tide in these cases can produce very satisfactory investment outcomes. continue…

by Roger Montgomery Posted in Foreign Currency, Insightful Insights, Investing Education.

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For the past few months we have written regularly about the headwinds facing the retail sector. Numerous retailers have downgraded sales and earnings, which were subsequently followed by share price declines. On Monday however, one listed retailer separated itself from the pack with the most sobering trading update yet. Kathmandu (ASX: KMD) has historically been favoured by Montgomery Investment Management. Yet with a business model that has a high degree of operational leverage, we were quick to exit the position in 2014 as it became clear that the company would not be immune to the deteriorating industry conditions. We have discussed the concept of operational leverage on many occasions. Retailers are subject to high levels of fixed costs such as rent, wages and electricity, which means that any price discounting will have a profound impact on the bottom line: a one per cent reduction in gross margin can often translate into a five per cent reduction in earnings. continue…

by Russell Muldoon Posted in Companies, Consumer discretionary, Insightful Insights.

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I didn’t think the Reserve Bank of Australia would cut just yet. David Buckland however did. You can find his call on the video. But it makes no difference to our investment strategy or long term results if we are right or wrong. continue…

by Roger Montgomery Posted in Insightful Insights.

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Chris Joye (who wrote this piece about Montgomery) and whom I regard extremely highly, has written a useful piece for the Australian Financial Review today, which he has also distributed via email. It’s a piece that yield hungry investors MUST read. Too much money can be lost by not heeding his words and we couldn’t have written it better ourselves. Chris’ email reads below:

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by Roger Montgomery Posted in Insightful Insights, Investing Education.

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We consider Carsales.com (ASX:CAR) to be one of the highest quality businesses on the ASX and has been favoured by Montgomery Investment Management for a number of years. Yet in September 2014, we exited our position based on a number of concerns which we detailed here. continue…

by Ben MacNevin Posted in Insightful Insights, Investing Education.

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