Dumb Investing
With news that retail ownership of shares are at the lowest level since the turn of the century (which is a more dramatic way of saying, in the last fifteen years), it’s quite possible there’s a great deal of opportunity. You can understand why many have lost interest. The problem for investors however is they’re focused on the index rather than individual companies.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Brett
:
Roger, I have lost interest [in this market] almost, but not because of low returns. As a retail investor I am quite frankly sick to death of the uneven playing ground, with computer automated systems plugged directly into the ASX, I can only trade in certain ticks while others can use any denomination they want and I have to buy/sell at a minimum value, yet some big company can sell one share on the ASX.
Let’s call it what it is. Rigged. I have made a profit and this is not a complaint, but it is very hard to do so when it feels like I have one hand tied behind my back, the keyboard is missing keys and I am using a dial up connection. At least in property and my bank account I am not competing with Institutions that can make the game up as they go along.
Chris
:
This is good news. Why ? Because it is very difficult to do well in something when everyone else is interested. Back in 2007, everyone was making money hand over fist in the sharemarket and it was becoming “too popular”. The secret was out and the “Johnny come lately(s)” were annoying to the rest of us who had been invested for years prior because easy money was being made. Well, easy come, easy go – a bit like the easy money of the mining boom that everyone spent (and then some more).
When everyone is interested, then valuations get expensive and bargains are not as easy to find.
Phil Crossan
:
What do you think about the RAFI index invented by Research Affiliates? Rather than using only market capitalisation, their index ranks stocks based on some ratios derived from financial data. A stock price gets a higher rating based on the difference between the actual stock price and the calculated fundamental value.
Roger Montgomery
:
Our own quant based fundamental selection filters have been shown to beat the market, so there is merit in smart beta investing. Human judgement however can add value. Man + machine may be better than man or machine alone…
Grant Duggan
:
Nice one Roger, but i have to say one persons loss is another persons gain so therefor while the dumb investor continues it should only create more opportunities for the value investors like the Montgomery funds to do better for people like me. Keep up the good work as i am happy to pay for quality.