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Unmasking the ‘mortgage cliff’: Are recession fears overblown?
Roger Montgomery
June 26, 2023
With all the talk of recession, we’ve been exploring its probability. As investors, it’s vital to understand which sectors and individual companies are most and least impacted. And helping in that task is appreciating the consumer’s important canary-in-the-coal-mine role. A consumer’s financial position will ultimately determine their propensity to spend on discretionary items and their ability to meet non-discretionary expenses such as utilities and the mortgage, so it is worth understanding each data point. Continue…
by Roger Montgomery Posted in Market commentary.
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Evidence of our predicted retail slowdown is mounting
Roger Montgomery
June 22, 2023
Over the course of the last twelve months, we have warned investors off consumer discretionary stocks, consistent with the positioning of our domestic equity funds and the posture of Brett Craig’s private credit funds, which have also been eschewing extending credit to the sector. Continue…
by Roger Montgomery Posted in Companies, Consumer discretionary.
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Barrenjoey issues its economic outlook – and it’s all a bit grim
Roger Montgomery
April 24, 2023
Recently, our small-cap team listened to Barrenjoey Capital’s chief economist, Jo Masters, discuss the prospects for the Australian economy. In brief, Masters forecasts the economy to slow rapidly and unemployment to rise to five per cent, with a recession the most probable outcome. She also foresees persistent inflation, which will force the RBA to hold interest rates at the current level until May 2024. If she’s right, investors are in for interesting times ahead. Continue…
by Roger Montgomery Posted in Economics, Market commentary.
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A note to young investors part 1: Why you should rethink investing in index funds
Roger Montgomery
April 19, 2023
If you’re a younger investor, you’ve likely heard about – and even possibly invested in – index funds, whose promoters argue it’s easier, cheaper, and wiser to stick to investing in broad benchmarks such as the S&P/ASX100 or 200. Continue…
by Roger Montgomery Posted in Investing Education.
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Woosh! Cochlear’s share price growth just hit 10,000 per cent
Sean Sequeira
April 18, 2023
Cochlear (ASX: COH) – the world leader in the profound hearing loss market – is, in our opinion, one of the highest quality companies on the ASX. Since listing in 1995, its share price has grown from $2.50 to around $250. That’s a rise of almost 10,000 per cent! This meteoric rise reflects the company’s ability to deliver consistent double-digit revenue and earnings growth each year. And with its market still significantly underpenetrated, we believe there are many more good years to come. Continue…
by Sean Sequeira Posted in Companies, Stocks We Like.
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Australia – the outlier with a highly levered consumer
David Buckland
March 27, 2023
Early in 2022, the official cash rates for most English-speaking developed economies were at or around zero. This historical low too often pushed many investors, for fear of missing out, into speculating on things they may now have preferred to avoid. Continue…
by David Buckland Posted in Market commentary.
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This too will pass
Roger Montgomery
March 20, 2023
Market and finance commentators have expended enormous energy writing on the subject of the collapse of Silicon Valley, Signature and Silvergate banks, and the subsequent challenges faced by Credit Suisse. And equally expert commentary will soon speculate about who’ll be next and then about those that subsequently do collapse (First Republic Bank anyone?) Continue…
by Roger Montgomery Posted in Global markets.
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Time to get back to basics
Roger Montgomery
March 8, 2023
In this week’s video insight Roger discusses his views on what long-term investors should be focused on. Roger believes quality growth companies will ultimately return to popularity and when they do watch out. Continue…
by Roger Montgomery Posted in Editor's Pick, Video Insights.
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Cash-strapped borrowers are hammering the housing sector
Roger Montgomery
March 7, 2023
Rising interest rates are already having a major impact on the Australian housing sector. Dwelling approvals are down, an increasing number of off-the-plan buyers are trying to exit their purchases, and furniture and appliance sales are declining. If you’re looking to invest in companies exposed to housing, I’d suggest it’s a case of buyer beware. Continue…
by Roger Montgomery Posted in Market commentary, Property.
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A tough road ahead for consumer discretionary businesses
David Buckland
March 2, 2023
In late-2022 Australian household deposits were $175 billion above trend, and this “extra cash” was largely in the hands of the 65+ years of age cohort. After many years of financial repression, these older Australians will enjoy earning a more reasonable return on their spare cash. Continue…
by David Buckland Posted in Companies, Consumer discretionary.
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Why you shouldn’t worry about ‘what comes next’
Roger Montgomery
February 28, 2023
Lately, I’ve seen a number of media reports pondering if world economies – and equity markets – are headed for a soft, hard or no landing. To me, this kind of talk is a bit of a distraction. Because, as a long-term investor, the objective is still the same: to buy quality companies at good prices. Continue…
by Roger Montgomery Posted in Market commentary.
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Just how bad will the consumption slowdown be?
David Buckland
February 27, 2023
Continuing to explore the breadth of the expected slowdown in consumption, granular analysis of the Australian Prudential Regulatory Authority (APRA) monthly deposits and the RBA’s October 2022 Financial Stability Review, the following data is worth highlighting. Continue…
by David Buckland Posted in Consumer discretionary.
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I was late to the party, but “I’ve got to contain inflation”
David Buckland
February 22, 2023
“I’ve got to contain inflation. I’ve got to convince the community that we’re serious about that. That’s our job and its unpopular and I accept that”. Philip Lowe, Governor of the Reserve Bank of Australia. Continue…
by David Buckland Posted in Market commentary.
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Why I steer clear of whisky – and distillers
Roger Montgomery
February 7, 2023
Just how do you value a company like Lark Distilling (ASX:LRK), whose main asset (award-winning Tasmanian whisky) is locked up for years, but increases in value as it matures. The answer: it’s hard. Continue…
by Roger Montgomery Posted in Companies, Editor's Pick.
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Aura Private Credit Insights: Letter to investors 04 October 2022
Brett Craig
October 4, 2022
The Reserve Bank of Australia (RBA) monetary decision now has access to a key datapoint for their meeting today, with the first monthly CPI data (move from quarterly). We may be seeing some positive movement off the back of the RBA’s aggressive rate hiking cycle with household spending beginning to taper, although with inflation still on the rise the RBA will likely be driven to conduct further rate rises over the coming months. Continue…
by Brett Craig Posted in Aura Group.
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Why mortgage stress could be worse than the RBA thinks
Roger Montgomery
July 28, 2022
The Deputy Governor of the Reserve Bank of Australia (RBA), Michele Bullock, last week offered a cheerful, if not upbeat, interpretation of the circumstances faced by Australian mortgage holders, who are facing the brunt of the RBA’s interest rate rises. For Bullock, and presumably for the RBA, there’s no need to stress. I hope she’s right, but I fear things could get very difficult for a lot of borrowers. Continue…
by Roger Montgomery Posted in Editor's Pick, Property.
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Is Flight Centre part of the recovery theme?
Roger Montgomery
July 27, 2022
In this week’s video insight Roger discusses Flight Centre (ASX:FLT). This week Flight Centre saw its stock jump more than five per cent on the day it declared travel is recovering slightly faster than expected, and consequently, its losses should be smaller. Is the share price prematurely pricing in a recovery? Continue…
by Roger Montgomery Posted in Companies, Editor's Pick, Video Insights.
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The Polen Capital Global Growth Strategy is now available via BT Panorama
Dean Curnow
April 29, 2022
Our partnership with the U.S. based Polen Capital has evolved since we formally announced the relationship in March last year. Since then, we have launched two of their strategies in Australia with a third, the Polen Capital Global Emerging Markets Growth Fund, in the works. The first strategy, the Polen Capital Global Growth Fund, is now accessible to investors via the BT Panorama platform. The fund is accessible to investors via Netwealth and HUB24 IDPS and Super/Pension. Continue…
by Dean Curnow Posted in Montgomery News and Updates.
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Musical chairs for Australian financial planners in 2021
Dean Curnow
February 21, 2022
If you only look at the headline data published annually by RainmakerLive on changes in the advice industry, 2021 will read much the same as 2020. The exodus from the advice space continued, with total registrations down 11 per cent in 2021, continuing the trend which saw 12 per cent of registered planners leave the industry in 2020. However, if you look underneath this data you will see some interesting trends continuing at the licensee level which are outlined below. Continue…
by Dean Curnow Posted in Financial Services.
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Why I think 2022 will be a very good year for investors
Roger Montgomery
January 5, 2022
A year ago, I wrote an article in The Australian which set out the factors I thought would make it a very good year for equities. So far, the local market has behaved as expected – despite all the turmoil in the world – with the All Ordinaries up 13.6 per cent for the 12 months to 31 December 2021. Looking ahead, I think markets will continue to reward investors, particularly those who invest in quality businesses. Continue…
by Roger Montgomery Posted in Editor's Pick, Global markets, Market commentary.