Search Results for: bubble
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Why it’s time to focus on quality businesses
Roger Montgomery
August 3, 2020
In 1976, US economist, Herbert Stein, famously stated that “If something cannot go on forever, it will stop.” His observation could well be applied to the ballooning value of many technology companies, some of which have never made a profit, and possibly never will. Which is why this might be a good time to look at high quality businesses that have been left behind by the rally. Continue…
by Roger Montgomery Posted in Companies, Editor's Pick, Market commentary.
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Has the market run too hard?
Roger Montgomery
July 16, 2020
Who would have thought that, just four months after the market’s March nadir, many stocks would not only have recovered but be at new all-time highs? Or that businesses like Afterpay, which has still to turn a profit, would be trading at such lofty prices? The big question is: how long can this unbridled enthusiasm continue? Continue…
by Roger Montgomery Posted in Market commentary.
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Tech stock bubble warnings rise amid coronavirus rally
Roger Montgomery
July 15, 2020
Rachel Pupazzoni published an article in ABC News discussing the tech-bubble we are currently seeing. When Microsoft delivered the software company’s third quarter results in April this year, they commented on seeing two years’ worth of digital transformation in two months, thanks to the global pandemic. This rapid growth is emblematic of what has been happening in the broader technology space. Could history repeat with a pop in this sector? Read here.
by Roger Montgomery Posted in On the Internet.
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Why we no longer own shares in Auckland Airport
Roger Montgomery
July 8, 2020
Following the worst of the COVID-19 sell-off, the Montgomery Small Companies Fund increased our shareholding in Auckland International Airport (ASX:AIA) – which we’ve long regarded as a high quality business. But how quickly things change these days. In light of more recent news flow from airlines and health authorities, we decided to exit our position.
by Roger Montgomery Posted in Companies.
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Will today’s roosters be tomorrow’s feather dusters?
Roger Montgomery
July 6, 2020
I’m astounded by the stories of immediate success I’ve been hearing from those who have rarely, if ever, directly invested in the stock market. This success is often the result of mindless speculation in businesses whose share prices are out of step with future cash flows – and brings to mind Warren Buffet’s quip that “a pin lies in wait for every bubble.” Continue…
by Roger Montgomery Posted in Editor's Pick, Market commentary.
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Why I’m not a fan of the Fed buying corporate bonds
Roger Montgomery
June 23, 2020
In March, the U.S. Federal Reserve moved to prevent a coronavirus-induced downturn by promising to set up an entity to buy corporate bonds and ETFs, including junk bonds and junk bond ETFs. My concern is that the Fed has simply created another time bomb that future generations will have to defuse. Continue…
by Roger Montgomery Posted in Global markets, Market commentary.
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Why it’s so hard to pick the market direction right now
Roger Montgomery
June 22, 2020
In a recent interview, Peter Switzer asked me if I was a bull or a bear. It’s a simple question, but one that requires a nuanced response. Because these are complex and unprecedented times for investors. Continue…
by Roger Montgomery Posted in Editor's Pick, Market commentary.
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Why I’m being fearful during this market euphoria
Roger Montgomery
June 12, 2020
Warren Buffett famously said that, to be a successful investor, you should be fearful when others are greedy, and greedy when others are fearful. I think his advice is especially relevant in today’s ‘risk on’ environment, in which the fear of missing out is usurping the fear of loss. Continue…
by Roger Montgomery Posted in Editor's Pick, Market commentary.
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Crisis? What crisis? The market says it’s time to buy
Roger Montgomery
June 10, 2020
If you’re scratching your head over the market’s strong rebound since March, then join the club. Because there’s still a large cohort of economists and analysts who continue to see tough times ahead. Continue…
by Roger Montgomery Posted in Market commentary.
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A bull at a gate…
Roger Montgomery
June 3, 2020
While US consumer spending, the US economy’s fundamental driver, fell 13.6 per cent in April, and recorded the steepest decline since 1959, the data is now a month old. More recently, the US Institute for Supply Management’s (ISM) Manufacturing Index for May rose to 43.1 from an 11-year low of 41.5 in April, suggesting the economy is rising up off the matt after being KO’d. Continue…
by Roger Montgomery Posted in Market commentary.
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Why car sales could be headed for a fall
Roger Montgomery
June 2, 2020
Lately, we’ve seen a decent bounce in second-hand car sales, which is reflected in the rising share price of Australia’s largest listed car dealer, AP Eagers. But the big concern for dealers is that this uplift is being caused by the government’s economic stimulus measures, and that times will get very tough when the stimulus ends. Continue…
by Roger Montgomery Posted in Companies.
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Why I don’t expect a V-shaped recovery
Roger Montgomery
May 26, 2020
The massive dislocations caused by the coronavirus pandemic are having only a temporary impact on stock markets, which are pricing in a V-shaped income, earnings and economic recovery. But is this optimism warranted? Or will we continue to see businesses negatively impacted for some time to come? Continue…
by Roger Montgomery Posted in Market commentary.
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Investing in pandemic markets
Roger Montgomery
April 22, 2020
Stuck with one per cent returns on cash balances, investors migrated to equities for their superior yields and hoped-for capital gains. What was forgotten in the mad dash for a better return, was that ‘one per cent is better than minus twenty.’ Continue…
by Roger Montgomery Posted in Whitepapers.
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Beware when the market and the economy are out of sync
Roger Montgomery
April 16, 2020
Following its one-month 36 per cent decline from peak (20 February 2020) to its low (23 March 2020), the ASX200 has bounced 20 per cent. That’s a return most investors would be happy with over a year. The question is whether such optimism is warranted. Continue…
by Roger Montgomery Posted in Editor's Pick, Market commentary.
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Beware wealth destroying capital raisings
Roger Montgomery
April 9, 2020
The stock market sell off validated an internal decision to abstain from the bubble in the months leading up to January 2020, but it wasn’t the only forecast that came to pass. We also discussed at length the likely prevalence of deeply-discounted capital raisings by companies needing to shore up balance sheets, to weather the COVID-19 lockdowns or simply be rescued from insolvency. Continue…
by Roger Montgomery Posted in Companies, Market Valuation.
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Are we there yet?
Roger Montgomery
April 7, 2020
That’s the question on many investors’ minds these days. And it’s certainly one that our team is starting to ponder as the prices of many high quality businesses become more reasonable. However, before we start investing significant amounts of our clients’ capital, there are four things we want to see. Continue…
by Roger Montgomery Posted in Editor's Pick, Market commentary.
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Your questions: Markets and Macroeconomics
Roger Montgomery
March 31, 2020
We recently ran a webinar explaining how we had positioned our domestic funds as markets were peaking in February and ahead of the Coronavirus pandemic. Attendees were shown our testing data analysis, as well as our suggested framework for navigating the market meltdown. At the conclusion of the webinar, we invited attendees to submit their questions only some of which we were able to answer in the time allotted to us. Continue…
by Roger Montgomery Posted in Companies, Market commentary.
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How value investors could benefit from this market correction
Roger Montgomery
March 12, 2020
It’s been a tough few years for value investors, with value stocks now trading at the largest discount to growth stocks since the 1999 tech bubble. But I think the discount will close as the market correction separates quality businesses from expensive, high beta, high hope stocks. Continue…
by Roger Montgomery Posted in Global markets, Investing Education, Market commentary.
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Don’t look back in anger
Roger Montgomery
March 10, 2020
Back in 2000, there were about 2,000 registered private equity firms globally. Twenty years later and that number has now hit 10,000. It’s a five-fold increase reflecting a boom in Private Equity investing by endowments, sovereign funds and the wealthy. Continue…
by Roger Montgomery Posted in Market commentary.
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Are you overweight in growth stocks?
Tim Kelley
February 26, 2020
In an uncertain world, should investors have a strategy that looks beyond current trends and accommodates a range of different possible futures? In recent years growth stocks have had a winning streak, is now a good time to consider shifting the balance of your holdings towards companies that can demonstrate the ability to generate profits today. Continue…
by Tim Kelley Posted in Investing Education.
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