Insightful Insights
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How to become poor
Roger Montgomery
April 4, 2013
Recently I have been ramping up the discussion about a serious fix we need for our business. The business of Australia requires motivated staff, great products and services, and a lid to be kept on costs.
Looking at our balance of payments however, you can see that we are a profligate country, spending more than we earn and selling off assets to pay for it. Keep going and eventually all our assets will be owned by foreigners from whom we will rent the properties, sending our income offshore at an even faster rate.
continue…by Roger Montgomery Posted in Economics, Insightful Insights.
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The RBA Tea Leaves
Roger Montgomery
April 4, 2013
For the 30 seconds before the Reserve Bank’s decision flashes across the RBATCTR page of trader’s Bloomberg terminals, silence descends on dealing room floors around the country. Someone then cries out; “up 25bips” or “no change” and mayhem ensues. As a young graduate in a dealing room it all seems very exciting and front line. But as a more seasoned observer and participant, one does wonder what all the fuss is about.
Investors can do much better investing in ‘businesses’ rather than trying to use interest rate changes as a predictor of stock prices. In any case, once you have predicted correctly whether interest rates will rise or fall, you then have to predict what the reaction will be by investors in each individual stock. And generally it is worth being reminded of the fact that economists have had a mixed track record over the long run at predicting rates in the first place.
continue…by Roger Montgomery Posted in Economics, Insightful Insights.
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Trouble brewing? Coal seam gas and the water table
David Buckland
April 3, 2013
I caught up with a few of my country friends over Easter. One conversation topic that kept coming up was the current approval process for the coal seam gas industry. To say that they are furious about it would be an understatement.
They quoted cases where bore water, which has been running for decades, has suddenly dried up within months of coal seam gas production commencing nearby. So what’s going on?
by David Buckland Posted in Energy / Resources, Insightful Insights.
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Telstra’s Growth Conundrum
Tim Kelley
March 27, 2013
Today’s AFR reports on Telstra’s (TLS) capital investment plans, and states that the man in charge of those investment plans, Brendon Riley, believes that “the answer to the growth question is to keep investing.”
We don’t disagree with this in principal, but note that historically, TLS has not had much success in investing for growth. continue…
by Tim Kelley Posted in Insightful Insights, Technology & Telecommunications.
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Telstra (TLS) vs M2 Telecommunications (MTU)
David Buckland
March 27, 2013
Interviewed by Peter Switzer last Thursday, I was asked why Montgomery doesn’t own any Telstra (ASX: TLS) shares.
Montgomery is a value investor that uses a highly disciplined and fact-based investment process.
We focus on investing in “extraordinary businesses” trading at a discount to their estimated intrinsic value.
by David Buckland Posted in Insightful Insights, Intrinsic Value, Technology & Telecommunications.
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Operating leverage and financial leverage is a No No
David Buckland
March 26, 2013
Shi Zhengrong received his Doctorate from the University of New South Wales’ School of Photovoltaic and Renewable Energy Engineering in 1992 under Professor Martin Green, the “father of photovoltaics”.
After working for Pacific Solar, a university spinoff, Dr Shi returned to China in 2001 to start the solar power company, Suntech.
Suntech Power Holdings Limited listed on the New York Stock Exchange and over the two years to late 2007 its share price climbed from $15 to above $88.
continue…by David Buckland Posted in Companies, Insightful Insights.
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Burying your head in the mineral sand…
Roger Montgomery
March 25, 2013
Last week, The Australian Financial Review’s Angus Grigg and Jamie Feed wrote a neat summary of the growing cries of concerns around China’s economy.
We summarise as follows:
– Dong Tao, Chief Regional Economist at Credit Suisse says there is “no good news to report on China…the Chinese economy is struggling”
– Greg Lilleyman, RIO’s President of Pilbara Iron Ore Operations says “additional exports and a slowing in steel demand growth would hurt the price in tens second half of the year”
– Andy Xie says “This is not good news for Australia” and “the Australian housing market and dollar were vulnerable to slowing growth in CHina, which could fall as low as 5 per cent in coming years”
continue…by Roger Montgomery Posted in Economics, Energy / Resources, Insightful Insights.
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The NEW NORMAL from the horse’s mouth.
Roger Montgomery
March 23, 2013
Jeremy Grantham is a Co-founder and Chief Investment Strategist of Grantham Mayo Van Otterloo also known as (GMO). He has 44 years experience and is also the founder of one of the first index funds in the 1970’s. With about US $100 billion in funds under management, he is also the founder of one of the world’s biggest if not the biggest managers.
He is a contrarian and just last week was quoted as saying: “I bought more long-term Treasuries in the last month than I’ve bought in four years. I am a fan of Treasuries now. I wasn’t a fan of Treasuries in July.”He believes in and indeed coined the term, The New Normal – lower rates of growth for the US permanently.
continue…by Roger Montgomery Posted in Economics, Insightful Insights.
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Put not your trust in money, but put your money in trust. -Oliver Wendell Holmes
Roger Montgomery
March 22, 2013
If you have been following the Montgomery story for some years, you will know that here at Montgomery we are focused value investors. If you have been also following the Skaffold journey you will know it is the online investing platform through which anyone can adopt and implement a value investing approach.
It is encouraging then, for all value investors, to observe that the approach we have adopted, and which we try our best to share is working.
continue…by Roger Montgomery Posted in Insightful Insights, Investing Education.
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Cyprus and the proposed “deposit tax”
David Buckland
March 21, 2013
Cyprus’s parliament rejected an unprecedented levy on bank deposits, dealing a blow to European plans to force depositors to shoulder part of the Country’s rescue in a standoff that risks renewed tumult in the Euro area. The deal sought to raise E5.8b by drawing funds from Cyprus bank accounts (known as a deposit tax) in return for E10b in external aid.
Of the 17 countries in the Euro, the Cypress economy with GDP of E16b, ranks number 15, ahead of Estonia (E13b) and Malta (E5b) and accounts for less than 0.2 per cent of the Euro E9.4 trillion economy.
continue…by David Buckland Posted in Economics, Insightful Insights.
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