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It has been a while since we reported on the major banks, which have now all provided half-year updates to their operating performance. 

Before reporting on their results, I think it worthwhile to provide you with a usefully simplified framework for analysing or comparing a bank’s performance.  Despite claims of complexity in their reporting and differentiation in their offerings, the big four banks are relatively simple businesses to understand at a high level, and broadly undifferentiated, offering everyday banking, loans, credit cards, wealth management and insurance.  Continue…

by Roger Montgomery Posted in Companies, Economics, Editor's Pick.

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The combination of a growing cohort entering salaried employment for the first time, a very high proportion of that salary being disposable, and the first generation to be comfortably and familiarly globally connected through social media can have a stratospheric impact on the revenues of companies that drop a product that becomes a smash hit with Gen Z.  Continue…

by Roger Montgomery Posted in Companies.

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Baby boomers won the genetic lottery in so many ways, not just because a whole chicken in 1973 was $1.09 (Figure 1).  

Take Wayne, for example, born in Sydney in 1945 after World War II. As a teenager, he lands a job earning the national award wage of £13.80 per week. He changes his mind after a couple of years and decides to study engineering. University is free (no HECS), so he continued to work part-time while at university and became an engineer in 1965, earning the average wage of £1,145 per year.    Continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Property.

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For almost a decade, I have described Australian residential property owners as a “protected species”; Whether we look at the banks, the banking system in its entirety, regulators, including the Australia Prudential Regulation Authority (APRA), the government and even individual politicians – many of whom own multiple residential investment properties – nobody wants to see property prices fall.  Continue…

by Roger Montgomery Posted in Economics, Property.

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I have previously written here that one of the most repeatable ways to make money on the Australian Stock Exchange (ASX) is to buy into a retail store rollout story early. Catching the steepest part of the ‘S’ curve when revenue and profit growth are accelerating while head office becomes simultaneously more efficient usually produces good results thanks to the accompanying rise in the share price.  Continue…

by Roger Montgomery Posted in Companies, Editor's Pick.

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The Australian superannuation system is often seen as one of the envies of the world. With assets totalling $3.7 trillion, our system is the fourth largest in the world and grew by 10 per cent over 2023 from a combination of contributions made to superannuation and underlying investment performance.   Continue…

by Michael Gollagher Posted in Companies, Editor's Pick, Stocks We Like.

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I recently wrote here about the economics of borrowing 100 per cent of the purchase price for a two-bedroom apartment, and the results weren’t compelling. Despite the annual losses incurred from carrying the property and the historical lack of sufficient capital gains to offset those losses enough to render the investment superior to an equivalent investment in private credit, most Australians will trip over themselves to own an investment property. Bragging rights at dinner parties and keeping up with the Joneses may have something to do with it. As they say, you can lead a horse to water… Continue…

by Roger Montgomery Posted in Editor's Pick, Property.

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In what is perhaps a case of tail wagging the dog, a plunge in electric vehicle (EV) sales in Europe is causing at least one government there to revise the dates by which automotive manufacturers must transition to manufacturing only EVs. Continue…

by Roger Montgomery Posted in Editor's Pick, Market commentary.

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One of the questions we get asked often is about the size of the companies that we can invest in with the Montgomery Small Companies Fund. So, I thought we would take a moment to have a look at the S&P ASX Small Ordinaries Index so we can understand some of the names in the market that could form part of our fund and investment universe.  Continue…

by Michael Gollagher Posted in Small Caps.

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I recently met with a dear friend who was celebrating the full repayment of his mortgage. Putting aside the fact most people might think that’s an unusual milestone to celebrate, he used the gathering to discuss what investments he could fund by borrowing against his house. From the frying pan into the fire. Continue…

by Roger Montgomery Posted in Aura Group, Property.

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