Market commentary

Is the chest beating and plumage preening about and over the Free Trade Agreement a bit of a joke?

Parliamentary Secretary to the Prime Minister, Josh Frydenberg, said the deal to be signed today with China could be worth (note the word ‘could’) up to $18 billion to the Australian economy over the next few years.  I think he actually said 10 years.  If that’s the case, it’s worth $1.8 billion per year.

Let’s put that into context.  Our total annual iron ore exports are 600 million tonnes.  At US$80/tonne, the total value is A$56 billion.  The total value of the FTA could be wiped out by a US$2.79/tonne move in the iron ore price.

The full terms of the deal are expected to be signed this afternoon and the details released then also. Stay tuned.

by Roger Montgomery Posted in Economics, Insightful Insights, Market commentary.

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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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Last week we spent some time reporting on our thoughts regarding the Financial System Inquiry and our interpretation of the submissions we’d read, as well as the possible impact on the competitive landscape for the big banks and their smaller, regional, would-be rivals… continue…

by Roger Montgomery Posted in Financial Services, Market commentary.

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Businessweek reports: “Billionaire Stephen Schwarzman, who oversees the largest manager of alternative assets as Chief Executive Officer of Blackstone Group LP (NYSE: BX), said the recent declines in financial markets are an “overreaction.” continue…

by Roger Montgomery Posted in Economics, Market commentary.

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Nobody is always right. With that said, it’s only natural that we gravitate in our listening to those we have seen demonstrate a notable track record. Humans are notoriously bad at picking turning points, so we like those rare canaries that have got it right more than once. Robert Shiller is one of those guys, and what makes him especially worthy of your attention is that he hasn’t been successful by forecasting frequently. continue…

by Roger Montgomery Posted in Market commentary.

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In my morning news trawl, I came across an interesting article on Bloomberg this morning. I have copied an excerpt below, and should you be so inclined, you can read the full article here. continue…

by Roger Montgomery Posted in Economics, Market commentary.

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In their recently released report entitled Investing in the future: How megatrends are reshaping the future of the investment management industry, KPMG looked at – amongst other things – analysing the economic and social risks associated with scarcity. continue…

by David Buckland Posted in Market commentary.

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On Bloomberg Radio, Barry Ritholtz chatted with James O’Shaughnessy of O’Shaughnessy Asset Management. You might know James O’Shaughnessy; he wrote the multi-variable stock selection guide book called What Works on Wall Street.

The interview challenges the bedrock of our beliefs when it comes to investing; that we add value. More specifically the interview challenges the ideas that smarter people make better investment decisions.

Here’s an excerpt:

O’Shaughnessy: “Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was…”

Ritholtz: “They were dead.”

O’Shaughnessy: “…No, that’s close though! They were the accounts people who forgot they had an account at Fidelity.”

Ritholtz also follows with some of his experiences in estate planning, where a family fighting over some inherited assets might not touch them for say, 10 or 20 years while they work out the problem, and later find that those 10 or 20 years are the best period of performance.

We reckon the ‘hands-off’ approach makes a lot of sense. Billionaire oilman J. Paul Getty famously advised: “Buy when everyone is selling and hold until everyone is buying”. He was onto something.

You can download the podcast of the interview here.

by Roger Montgomery Posted in Market commentary.

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Last week, the Vertigan Panel published their second volume from their review of the National Broadband Network (NBN), and other options for upgrading Australia’s internet infrastructure. For those interested, you can find a copy here. continue…

by Scott Shuttleworth Posted in Insightful Insights, Market commentary.

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A few weeks ago, Sydney Morning Herald journalist Barbara Drury spoke to David Buckland on what stocks look good (and not so good) this reporting season. The resulting article was published in the paper’s Money liftout, and can be viewed here.

by Roger Montgomery's Team Posted in Companies, Market commentary.

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