Market commentary
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Stand clear as the Unicorn bubble unwinds
Roger Montgomery
November 6, 2019
Growth investors are having a field day criticising the poor performance of value investing. Their views have been bolstered by the booming price of some growth stocks – notably, profitless Unicorns – and research by two accounting professors, found that not only had value investing failed for investors in recent years but that it had never worked. continue…
by Roger Montgomery Posted in Investing Education, Market commentary
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Bond Market Shenanigans – should you be worried?
Roger Montgomery
November 4, 2019
Our very good friend the founder and CIO of Narrow Road Capital, Jonathan Rochford, writes a terrific monthly missive about the goings-on in financial markets around the globe.
The October report had this to say about trend in corporate bonds… continue…
by Roger Montgomery Posted in Market commentary
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Why we need to cut taxes for lower paid workers
Roger Montgomery
October 22, 2019
In September, the Reserve Bank of Australia lowered its cash rate by 25 basis points to a new record low of 0.75 per cent. It was the third rate cut this year. The rate cuts aim to boost our economy and support employment. But I seriously doubt they will be enough, on their own, to stimulate growth. To my mind, it’s time to cut taxes for lower paid workers. continue…
by Roger Montgomery Posted in Market commentary
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Are negative interest rates coming to Australia?
Andrew Macken
October 18, 2019
The concept of negative interest rates makes the mind boggle. And yet, over recent years many central banks around the world have set their policy rates to negative levels. A number of examples can be observed in the chart below which is sourced from a recent note titled: “Yield Curve Responses to Introducing Negative Policy Rates” produced by Jens Christensen of the Federal Reserve Bank of San Francisco. continue…
by Andrew Macken Posted in Market commentary
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Are Investors Being Overly Bearish?
Amit Nath
October 14, 2019
Over the last 12 months we have borne witness to one of the most significant portfolio reallocations of modern times. Investors have sold around US$250 billion of global equity funds and bought approximately US$780 billion of bond funds (including money market). continue…
by Amit Nath Posted in Global markets, Market commentary
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Our economy is getting simpler – and that’s not good
Andreas Lundberg
October 10, 2019
KISS, an acronym for ‘keep it simple, stupid’, is a principle that works well in the field of design. But not when it comes to the national economy. It is thus a real worry that recent research finds Australia has a ‘simple’ economy that depends on relatively few sources of export income. This leaves us exposed to changes in demand for our products, and creates risks for our national wealth. continue…
by Andreas Lundberg Posted in Market commentary
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How to prevent a recession we don’t have to have
Roger Montgomery
October 8, 2019
Back in November 1990, with the Australian economy deep in the doldrums, Treasurer Paul Keating uttered his now famous remark that this was “a recession that Australia had to have”. It was, remarkably, Australia’s last recession. Today, with our economy again looking into the abyss, I believe there is a simple measure the government could take to prevent the next one. continue…
by Roger Montgomery Posted in Editor's Pick, Market commentary
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Should the Australian government actually be increasing its debt?
Andrew Macken
October 8, 2019
As news is emerging that Australian Treasurer, Josh Frydenberg, will soon deliver a balanced budget for the first time since the GFC, one needs to ask if this is even appropriate today. While surpluses are prudent and allow for protection against future downturns, the logical time to build government surpluses is when growth is strong and interest rates are rising. continue…
by Andrew Macken Posted in Editor's Pick, Global markets, Market commentary
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Rebalancing a portfolio in a volatile market
Roger Montgomery
October 2, 2019
As the sharemarket gyrates around record highs, it is easy to conclude that risks are low. In fact, if a simple market truth is observed – that the higher the price you pay, the lower your return – then it must be true that as the market registers new highs, conditions are riskier. continue…
by Roger Montgomery Posted in Investing Education, Market commentary
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It pays to pick the right industry
George Hadjia
September 27, 2019
Peter Lynch, the legendary investor, once quipped that it’s best to invest in businesses that any idiot could run, because sooner or later one will. This begs the question of what drives the economic returns of businesses: is it the competitive forces of that industry or the skill of management? It’s likely a combination of both. continue…
by George Hadjia Posted in Investing Education, Market commentary
