Living in a Material World
When pop singer Madonna wrote Material Girl in 1985 I suspect she wasn’t thinking about BHP or FMG. But nearly thirty years later that is exactly the material world that will determine whether you retire materially well-off or not. BHP’s share price has fallen 30 per cent in the last twelve months so it’s easy to say the shares are now cheap but does BHP represent value or is it a value trap? What I can tell you is that consulting geologists who spend their days planning exploration programs for large miners are in no doubt about whether we have seen the peak of the resources boom.
Six months ago these experts were being told by their major-miner clients that money is not an issue, that the issues were resourcing – labour and drill rigs. “Just make it happen” the geologists were being told “there’s $80 billion of planned infrastructure spending in the pipeline”.
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.
Chris Story
:
Excellent. I need to protect my company from this international risk somehow????
cruze.ptyltd
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Interesting comments and information as expected.. thank you Roger and team..All the best Jim..
Webmaster of accountant, consultant,smsf specialist
garry peck
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Hi Roger,
As a retiree now relying on the sharemarket for some sort of a return, i never make a share investment decision without first checking your blog and websites first for reference, and currently i am ahead of the pack.
As my wife said can you imagine this world without Coca-Cola or Roger Montgomery share and financial insights.. i hope not, keep up the comprensive reporting as you have many followers.
shane.hellmrich
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Where does that leave gold mining stocks? If the ECB and the FED print more money, wouldn’t that be good for gold?
Yavuz Atasoy
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Roger, I like the new look of your web site.
Eamon Chau
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Looking good with the new layout.
ashley.little.581
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Hi Roger,
Congrates on the new look website and a nice post. Cheers
Yes the World is a mess and we have been largely immune so far. That is unlikely to continue but some companies will still do well and it’s our job to find them.
Thanks
Andrew Legget
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Very great essay Roger, and some really interesting things to think about. The GDP graph shows just how linked we are to China as Australia’s graph almost mimics the path of China but just at a lower rate and this will have ramifications on Australia as a whole as your great little flow chart indicates.
This whole scenario is again why i like to stay away from commodity companies beacause as we all know that when the price of a product decreases only those with the lowest costs can afford to supply the good. Reducing costs is about the only thing you can do and this erodes a lot of the competitive advantages i like to see in companies I seek to invest in.
I really like this post Roger, keep up the good work.