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What will be of the new financial year?

What will be of the new financial year?

Australia is one of the few countries in the world that close out their financial year in June. So to Australian investors, we wish you a happy financial new year and ask what will be of the twelve months to come?


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Andrew Macken is a Portfolio Manager at Montgomery Global Investment Management. Andrew joined Montgomery in March 2014 after spending four years as a Research Analyst under Jim Chanos at Kynikos Associates in New York.

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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  1. Andrew Macken

    Hi Anthony,
    Apologies for not getting back to you sooner.
    Many in finance believe that risk = volatility and certainly that is what many universities teach. It can be a proxy for risk, for sure, but we do not believe it is risk. We believe risk is the probability of permanently impairing capital. This is much more qualitative (which means less friendly for mathematical models) but much more relevant, in our view.
    So my recommendation would be not to focus too heavily on standard deviations. They are interesting for comparative analyses but that’s about it.
    Many others would probably disagree with me so I would encourage you to gather a wide range of opinions on the subject.

  2. Dear Mr Macken,
    Thank you for the article. This is a question about volatility raised the article and how to identify opportunities based on volatility.

    I understand volatility is a measure of the variation in the underlying security. I understand that standard deviation (‘std dev’) and variance = std dev squared are measures of volatility. I also understand simple volatility is = (price at t+1 – price at t)/price at t.
    How does one measure volatility of a security?
    Do you use a moving window over time say 20 data points and measure the std-dev volatility?
    Also what is the measure of volatility that enables use to identify opportunities to buy/sell a security? I am assuming that one is using other measures to assess the value of an underlying security.
    Thank you,
    Anthony, LLB(UNSW)(recently) of Belfield

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