• When markets behave like a voting machine, they tend to ignore a business’ underlying fundamentals. Learn more.

Hang onto your hat, as the free money epoch comes to an end

Hang onto your hat, as the free money epoch comes to an end

The last couple of years have been one helluva ride, haven’t they?  Thanks to a heady cocktail of record low interest rates and massive government stimulus, we’ve seen ballooning valuations for companies with no profit – and little or no prospect of making any.  But the free money epoch is now ending, and the dire consequences have only just begun for these companies and their shareholders.

The end of the free money epoch is now well and truly upon us. Over the last six months, the US Federal Reserve has pivoted from telling markets interest rates would remain at zero during 2022 to warning them it would move ‘expeditiously’ to a neutral setting. Meanwhile, supply chain disruptions and a lack of labour have contributed to previously unfathomable price increases for finished goods and services. And finally, COVID in China and a war in Ukraine have resulted in rapid price increases in raw materials, fuel, and food.

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INVEST WITH MONTGOMERY

Roger is the Founder and Chief Investment Officer of Montgomery Investment Management. Roger brings more than two decades of investment and financial market experience, knowledge and relationships to bear in his role as Chief Investment Officer. 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.

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