Damien Klassen


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


MB Fund takes gold medal in 2020 performance

An ounce of prevention is worth a pound of cure. Coronavirus has shown this to be accurate, both in managing the virus and in managing investment portfolios over the year to 30 June. At the end of January, we inoculated our portfolios against coronavirus. Our best performing fund in an absolute sense was our international


May 2020 MB Fund Performance

May saw share markets extend their bounce in the face of worsening economic conditions. In particular the last week of May and the first week of June we would characterise as a blow-off top. Value and cyclical stocks rallied hard, completely at odds with earnings and economic outcomes. Our portfolios continue to be positioned for


MB Fund April 2020 Performance

April saw a bounce back in share markets after March was one of the worst months ever. Our portfolios continue to be positioned defensively and so only took a limited part in the bounce. Over the last year, our Tactical Growth fund is beating the Chant West median superannuation fund by 10%. In our direct


MB Fund March performance on top of the world

Chant West finally released its returns for superannuation funds for last month. Our growth fund smashed the median fund by 9.4% in March, courtesy of our aggressive move out of shares at the end of January. Our other funds also considerably outperformed their benchmarks.   Unlisted Assets And those results don’t include the “massaging” of unlisted asset


Why hold government bonds if the yields are so low?

One of our most frequent investor questions is around our government bond holdings and the unique risks that low-interest rates present. Government (as opposed to corporate) bonds are typically a low-risk investment. However, there plenty of doomsayers for the government bond market calling for a bond Armageddon.  And the doomsayers are (technically) correct that if


Coronavirus: The limits of forecasting

A lot of people think a model and a forecast are the same thing. They aren’t. They are very different and knowing when you can forecast, and when you can only model is a critical investing skill. Coronavirus forecasting is a testament to the difference – many elements can be modelled, very few can be


MB Fund March 2020 performance: When the music stops

March was one of the worst months ever for stock markets. As discussed in our January and February reports, our portfolios were positioned for this outcome. Given we can only hold blue-chip liquid assets with no shorting or derivatives, our performance was as good as we could have hoped: Our tactical funds ranged from down


Your Industry Superannuation Fund is about to lie to you

Most superannuation funds, and especially industry funds have significant balances in unlisted assets. Many are telling you that these assets haven’t lost money, or are only down a little despite sharemarkets being down close to 30%. This gives rise to perverse incentives for superannuants: if you leave one of these funds now, you will get


Performance fees: Paying more doesn’t make your fund manager smarter

I don’t think performance fees help. Actually, I suspect performance fees probably do more harm than good.  Reason 1: Work smarter not harder First, it is tough to incentivise people to be smarter. Numerous studies have shown that while bonuses make people work harder at simple tasks, they don’t make people smarter. Some even argue it makes people worse at


MB Fund smashes the competition

Chant West released its returns for superannuation funds for last month and a preview of the March massacre. Our funds beat the benchmarks by up to 3.7% in February. In March returns to date our funds look to be beating benchmarks by closer to 10%.  We moved decisively into international cash and bonds at the


COVID-19 may not stop in Summer

One factor I have been watching closely is the spread of the coronavirus through summer or tropical countries. For most of February, it appeared travellers brought COVID-19 to summer or tropical countries, but the spread within those countries was limited. That looks to be changing. The raw chart comparing the two still suggests a stark


A Wile E. Coyote moment for Aussie house prices

For a few weeks in late January and early February, stock markets suspended belief. Pundits on every channel emerged, suggesting a small economic dip followed by a massive stimulus package meant it was time to bid expensive stocks even higher. Meanwhile, in the real world: Earnings growth had already stalled. Valuations had reached lofty heights


MB Fund February 2020 Performance: The storm hits

Last month we threw in the towel on share markets. This month share markets were the ones to throw in the towel. From our previous monthly report: Share valuations have not been this expensive since the tech wreck. Earnings growth is pretty close to zero. A supply shock is accruing in China. So is a


Coronavirus: It is time to look at the data differently

About a month ago, I posted here about how to look at coronavirus statistics. At the time, it was all about early warning signs, ignoring China data and focussing on the rest of the world. That analysis worked well for highlighting the problem early and changing investment strategy in front of the herd.  But that


A memo for MB Fund investors

As you may be aware, there have been significant falls in share markets over the last few days on the back of COVID-19 concerns. We have had concerned messages and calls from investors, and I wanted to give you more information. In our tactical portfolios, we manage the asset allocation for you. About a month


COVID-19 Daily data dump

First, the news from China: At 04:00 on February 26, 31 provinces (autonomous regions and municipalities) and the Xinjiang Production and Construction Corps reported 433 new confirmed cases and 29 new deaths (26 in Hubei and 1 in Beijing, Heilongjiang, and Henan). 508 new suspected cases were added. On the same day, 2,750 new cases


MB Fund January Performance

It would have been difficult to lose money in January. Bonds, Aussie shares, international shares, residential property, it seemed like every asset was marching higher. Our own funds were no exception, our tactical funds all outperforming benchmarks.  But, by the end of the month, we had thrown in the towel. Share valuations have not been


COVID-19 China updates

First, the news from China: At 04:00 on February 23, 31 provinces (autonomous regions, municipalities) and the Xinjiang Production and Construction Corps reported 409 new confirmed cases, 150 new deaths (149 in Hubei and 1 in Hainan), and new suspected cases. 620 cases. On the same day, 1846 new cases were cured and discharged, 16758


COVID-19: Seek, and ye shall find

When you have a lot of COVID-19 cases, is it because you have a poor hospital system? Or is it because you have a really good one. Cases: Versus hospital efficiency: Source: World Health Organisation For reference, Australia rates 32, US 44, China 144.