Many investors assume infrastructure is simply a sub sector of the stockmarket, and will behave as other shares. But the myths fail to recognise the special long-term characteristics that give more resilience.
Despite some challenges, not all companies that are consumer-focussed face difficult times. Some are well-positioned, and the market has sold them off to relatively low valuation multiples.
As heads turn to the hottest tech or niche stock, some companies in traditional business sectors get left behind because they are boring. But overlooked means not overcooked.
SMSFs are currently the largest segment of superannuation, but by 2020, industry funds are expected to dominate, having recently overtaken retail funds. Labor’s franking proposal will accelerate the trend.
The US inverted yield curve has many worried about whether it indicates a coming recession, but the Fed has move to a more dovish stance. A diversity of equity and bond exposures is the best way to cope.
Most companies recognise the benefits of employee diversity for better decision-making, but it’s not only about choosing people from different backgrounds. There must be an effective means of aggregating views.
If Labor legislates to withdraw franking credit refunds, retirees have an alternative for their pension superannuation to retain the refund. It shows the proposal does not have ‘horizontal equity’ between structures.
Australia’s major banks face many challenges but they are strong and remarkably adaptive and resilient. They have also finally accepted they are too big to behave badly.
If you have been maintaining a small inactive superannuation fund purely for insurance purposes, you need to act quickly to avoid losing cover which might be difficult to replace.
Structuring an investment team around geography or sectors leads to manager bias in poor sectors. Better to focus on a few areas of fascination where product and business expertise can develop.
Real assets such as airports will benefit significantly from a massive growth in Asian tourism and a growing middle class, and are less subject to the vagaries of the business cycle.
Bond markets are far larger than stockmarkets, and the BBB segments in the largest of all in the corporate market. Many analysts have pointed to potential weaknesses but it pays to look a bit deeper.
Thematic trend investors relies more on recognising how the world is changing over the long term, and finding sectors that will benefit, rather than the more cyclical approach of picking short-term winners.
The ‘direct investment options’ may have structural advantages for franking credit refunds, but that does not mean SMSFs do not have their own specific advantages. What’s best for the superannuant?
It’s as legitimate an investing technique to short sell an expensive company as it is to buy or go long a cheap company, with the added advantage of less competition on the short side.
Check the cash flow characteristics and sustainability in any company before investing, as various ratios can be an early sign that the business is churning through rather than generating cash.
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