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.
Tag Archives | shares
Investors whose income may be hit by Labor’s franking credits proposal can reallocate away from fully franked dividends to other investments to maintain their income, but it will involve different risks.
Notwithstanding the popularity of ETFs, Australians are increasingly trading directly on foreign exchanges as online brokers make execution easier. But traditional local names remain popular.
Labor thinks disallowing excess franking will generate billions of dollars of additional revenues, but there is growing evidence that behaviour changes will severely limit the amount raised.
Among the focus on tech stocks and healthcare sectors, the quality in consumer staples stocks tends to be overlooked, but these are the companies we continue to buy from in all economic circumstances.
Large companies supported and promoted by investment managers, brokers, analysts and investment banks have disappeared quickly sometimes. Retail investors should manage equity risk by diversification.
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.
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.
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.
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.
Many ‘baby boomer’ retirees contemplating decades of retirement prefer a sustainable lifestyle based on a steady income that keeps up with inflation. New perceptions of risk are required to meet such income demands.
The idea that stocks should be divided into growth and yield categories diverts us from fundamentals. Intrinsic value eventually manifests in higher cash flow, whether or not share price appreciation anticipates it.
Companies ranked 51st to 100th by ASX capitalisation are in the mid-cap sector. They have better historic returns, industry diversity, insider ownership, and growth prospects than the S&P/ASX50.
Labor’s policy on franking credits denies some taxpayers the benefit of taxes paid on their behalf, but a franking credit is money withheld by the ATO until the shareholder’s tax return is completed, just like a PAYG taxpayer.
Earnings downgrades are not always bad news. They may present buy-side opportunities if the stock is oversold. It’s best to assess the circumstances via a checklist without panicking.
Market fundamentals are pointing toward an era of high volatility and lower returns, which have not been factored into current prices. Better to wait till there is blood in the streets rather than be fully invested.