Many people are hoping bank profits and share prices will resume growth once the Royal Commission is done with, but new competition from digital disruptors could mean disappointment for bank shareholders.
There is no single asset class that consistently outperforms all others year on year but over the long term (>10 years), actively managed asset classes have performed better, and all asset classes have outperformed inflation.
Investors in Tesla at current prices are not neglecting the obvious. Disruptors come at a high price because they do not carry the sunk costs of infrastructure and outdated distribution models.
The sizeable increase in the market capitalisation of the technology leaders has inadvertently led to reduced diversification via a reduction to a mid cap exposure in portfolios represented by the Russell 1000.
Labor’s franking proposal could affect many more super funds than expected, not only SMSFs, depending on the allocation to Australian shares, their franking and the percentage of assets in pension phase.
Assessing the barriers to entry, formal and informal, is always relevant in investing, but particularly for small cap stocks, where forecast growth can only occur if such barriers persist and grow.
Many investors who hold offshore securities do not realise that much of the return comes from the FX hedge rather than the asset itself. And now US rates have risen, the benefit for Aussies has turned around.
Disruption investing is not the same as investing in technology. It’s about knowing which companies are best placed to capitalise on the next big trends, and the winners are not always obvious.
Many new ‘disruptive’ businesses are simply older-style businesses dressed up, and even if it’s an attractive and ultimately profitable new space, competitors will join the party.
Value and contrarian investors often buy shares in companies rejected by the market, which makes it the hardest way to invest. It looks great when it works but idiotic when the market continues to disagree.
This brief history of the GFC and the lessons we should learn is a reminder that similar events will happen again at some stage, and this time we have no excuse not to be ready.
About half of companies reported as expected in their latest financial results, and the rest were split between favourable and disappointing. Valuations are not cheap but some companies deserve to be expensive.
The past few years have seen strong performance for Momentum and Growth strategies but poor outcomes for some with a Value bias. But is Value really due for a comeback as many people are arguing?
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.