If an investor had been living on the moon or under a rock for a year and returned on 30 June 2019, on seeing their portfolio, they would have thought it was a delightful year full of good news.
Author Archive | Ashley Owen
Australian bond rates are now lower than during recessions and depressions of the past, but it’s not driven by local fundamentals. The world of interest rates is in a place it’s never been before in history.
Total returns from the local stock market have averaged 10.5% per year since Federation, with 12% p.a. under right-leaning governments and 8% p.a. under left-leaning governments. But it’s mainly luck.
The Budget surplus in the 2018-19 year is mainly due to fortuitous tax revenue gains from the mining boom. In the past five years, government spending has risen by an incredible 21%.
While hot stocks generate media coverage and attention from investors, for the overall health of the market, they are irrelevant. A few big companies drive the Australian market.
There are enough negative factors in play to suggest great caution with asset allocation in portfolios, as a wonderful run of results for investors came to an end in 2018. Here are four common factors in market collapses.
The history of the Big Four banks is littered with bad strategies by overpaid executives, taxpayer-funded rescues and a lack of competition. As the banks clean up the Royal Commission mess, Macquarie has overall done better.
It’s too easy to look at a long-term chart of rising share prices and be reassured about performance. But adjusted for inflation, many of our largest companies have gone nowhere in half a century.
Australian companies have a long and frustrating history of wasting billions of dollars of capital on overseas dreams, and institutional investors should be taking a harder line to protect their capital.
The Australian market again delivered strong returns in 2017-2018 with big sector differences, but there were large variations in global performance depending on the currency hedging strategy.
Investors are complacent and expect double-digit profit growth to continue for many years, but the market consensus for EPS growth is now in dangerous territory with more downside potential than upside.
After test matches resumed in 1993, Australia held the upper hand and peaked at the bottom of the GFC. In stock markets, South Africa is edging it in US$ terms but killing it in local currencies.
The Australian share market offers a dividend yield of about 4.2% at the moment, supported by franking credit of 1.5% to give an attractive 5.7%. The focus is on the refund of this credit.
In the last seven years, commodity prices and the fortunes of many Australian producers went through a boom/bust cycle and are now on a recovery rebound. It’s a volatile ride but a sector worth another look.
What is it about shares that most investors want to buy as they become more expensive, then sell when the price falls? We don’t do that with other goods. There are four main choices when reacting to a market fall.
It’s been a golden period for investing for those willing to take some risk. Australia has experienced six straight years when everything went up, and this has never happened before in history.