Damien Klassen

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Property affordability June 2021 update

Australian property market prices continued to climb over the last month, with the past six months seeing some of the strongest growth on record. Mortgage interest rates edged higher as the Reserve Bank of Australia ended its Term Funding Facility. There are some extraordinary divergences in affordability. It has never been cheaper in some markets

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MB Fund May 2021 Performance

The market is oscillating between value and growth months. In May it was the turn of value portfolios (including ours) to outperform. Our direct equity portfolios beat benchmarks by over 1% on the month and our tactical asset portfolios finished up between 1% and 2.7%. We have, however, called time on the value trade. The

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Beware the inflation snap-back: today’s inflation isn’t 1970s (part 1 of 4)

Runaway inflation is the theme du jour. “Protect your portfolio from hyperinflation” scream headlines from investment newsletters. I have an alternative scenario for you. Current inflation is supply-chain and commodity bubble-based, temporary, and the recent price signals will actually create the opposite effect.  It is a detailed argument. So, I’m going to present the alternative

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April Australian property market update

Australian property market prices continued to climb over the last month, and mortgage interest rates stayed constant. There are some extraordinary divergences in affordability. It has never been cheaper in most markets to service a mortgage, but never more expensive to save for a deposit or pay off the loan. In general, housing valuation and

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Quick Q1 2021 reporting season update

The Q1 2021 reporting season is in full swing in the US, Europe and Japan and profits are booming. Markets are expensive, but if the upgrades keep coming the current prices won’t look so bad… In the US, even the company at the worst 25th percentile has seen upgrades to forecasts: Disclaimer: Q1 2020 to

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Australian property market March update

March 2021 Australian property market update Australian property market prices continued to climb over the last month, and mortgage interest rates continue to fall. There are some extraordinary divergences in affordability. It has never been cheaper in most markets to service a mortgage, but never more expensive to save for a deposit or pay off

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MB Fund March 2021 Performance

March was a month for value stocks to shine. Global markets boomed, up 5% and Australian markets rose 2.4%.  We had positioned our portfolios for a rise in bond yields and a rotation to value stocks and so our portfolios outperformed benchmarks. Our asset allocation portfolios all rose as well, our growth portfolio the best,

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Commodity super-cycle hype: Copper edition

Over the last few months, there has been an increase in analysts calling a commodity super-cycle. I disagree. Many commodity prices are at super-cycle levels. It is the volumes that are not in a super-cycle.  And high prices without an increase in volumes is a sure recipe for price reversion. Or, in other words, a cycle. Not

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MB Fund January 2021 Performance

January saw equity markets take a breather after a strong rally into the end of the year. Equity markets were mixed, the Dow down 2%, S&P 500 down 1%  while Nasdaq powered on +1.4%. Globally, France lost 2.7%, the United Kingdom slipped 0.8%, Japan added 0.8% while here in Australia we edged forward 0.3%. Defensive

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Six lessons from the Gamestop saga

There has been a lot written about the Gamestop saga in the last week. I want to discuss the medium-term market impacts rather than moralising about who is right and wrong. While I doubt it marks the top of the current market, there are some concerning signs. Quick background  The wallstreetbets forum on Reddit spawned several short squeeze raids

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MB Fund November performance

November saw equity market returns surge on the back of US election result clarity and positive news from a trifecta of COVID19 vaccine results. Markets broke many global records and the US equity indices hit new all-time highs as the vaccines fuelled the rotation into cyclical stocks and regions as well as providing a boost

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MB Fund October 2020 performance: Tactical portfolios

October saw domestic multi-asset portfolios achieve small gains with Australian equities the prime driver. International markets fell reflecting uncertainties of the US election and the deteriorating lockdown situation in Europe.  Australia equities gained with the improving situation in Victoria with respect to Covid shutdowns, and proved one of the better equity markets over October as

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MB Fund October 2020 Performance – Core Share Portfolios

Note: This is part 1 of our performance report looking at Australian and International direct share portfolios. Part 2 is the asset allocation performance report that will come out after the returns for comparable funds become available.  Inaction on a second American fiscal stimulus bill and a rise in global COVID-19 cases put pressure on

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MB Fund September 2020 Performance

September has historically been the worst month for the stock market, and this year was no exception with global equities producing their first monthly negative return since bottoming in March. In Australia, rising concerns about the deteriorating trade relationship with China, Victoria’s continuing shutdowns and looming end-September step-downs in income support programs all took a

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A quick rant on the Australian budget

I wanted to talk about the Australian budget. I’m not seeing what the admirers are seeing. At first, I was worried that I’d missed something. But yesterday’s dovish speech by Governor Lowe suggests the Reserve Bank are seeing exactly the same thing I am. Four months ago, I wrote what good government stimulus would look like. This budget

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Your diversification free lunch is not “all you can eat”

Nobel prize winner Harry Markowitz gets the credit for coining the phrase that “diversification is the only free lunch in finance”. Add the insight that stock markets are at least semi-efficient, and a multi-trillion dollar exchange-traded fund (ETF) industry was born.  And indeed, many exchange-traded funds are worthwhile investments, providing low-cost diversification. But some take

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The macroeconomics of Australian residential property investing

Before COVID-19 hit, Nucleus Wealth launched an Australian property calculator. The idea I wanted to illustrate is that house prices are very sensitive to interest rates. So, with interest rates so low, property was going to be stuck in purgatory: if the economy improved and interest rates increased then higher interest rates would cap property

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MB Fund August Performance

August saw the market continue the recovery as investors cheered positive news of a potential COVID-19 treatment and welcomed a month-long succession of upbeat economic data. The month’s recovery was underpinned by a series of better than expected economic reports, including an increase in manufacturing activity, better-than-anticipated factory orders, and a lessening of new jobless

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eSports are sexy, but expensive

The digital games and interactive media sector is probably much larger than you think and still growing. To put it into perspective, one of the highest rating movies ever, Avengers: Endgame, grossed US$858m during its opening weekend. Grand Theft Auto V’s release, earned US$1b in just over three days.  Originally just a PC/console experience, ubiquitous

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Is your super fund a cork in the storm?

Markets took a tumble last week, is this the start of the end? It could well be. Markets certainly looked like they were in the final stages of a blow-off top over the last week or two with fewer and fewer stocks driving the gains and technical issues in options markets driving stocks higher. Maybe

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MB Fund July performance: In the eye of the storm

Investment markets are in the eye of the storm. The initial storm danger came as COVID-19 hit, decimating jobs and smashing demand. Governments and central banks ably stepped up to stem the damage, and investment markets calmed. But insolvencies and bankruptcies have only been delayed, not avoided and the employment recovery is unlikely to be

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Could Trump be right about… ethical investing???

Many of you will have seen Trump’s announcement essentially trying to prevent pension funds from considering ethical issues for investing. To quote The Australian: After a remarkable run of success in the investment sector, ethical investing has received an unwelcome jolt from the US government with a Trump administration proposal to remove so-called Environmental, Social and

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An investor’s guide to good government stimulus

We are in a strange political environment. Globally there have been trillions of dollars of government stimulus announced, deficit hawks have turned chicken, and formerly staunch opponents of government intervention have been leading the charge. How should investors assess each government stimulus announcement? One day the Australian government told us they had the right level